My name is Luke Metzger and I am the Executive Director of Environment Texas, and I am here in support of HB3035. The problem we hope to address today goes back decades.
In 2003, the State Auditor found that TCEQ’s enforcement policy “does not consistently ensure violators are held accountable”. After looking into 80 cases and finding an economic benefit of $8.6 million, it was discovered that fines totaled to only $1.6 million, or 19% of the economic benefit.
According to TCEQ’s updated 2014 policy, when the economic benefit that a company receives as a result of breaking environmental law is higher than $15,000, TCEQ will increase penalty by 50%. For example, if a violation with a base penalty of $2000 allows a company to save $20,000, TCEQ increases the base penalty 50% to $3k. So in this case, even after paying the penalty, the company comes out ahead with a $17,000 profit.
This does not serve as an effective deterrent and instead creates a perverse incentive to break the law.
It’s also not fair for those companies who spend the money to comply with the law and puts them at a competitive disadvantage for doing the right thing. How would you feel if one of your business competitors was able to sell their products at a lower cost than you, simply as a function of them breaking the law and you abiding by it?
In 2019 so far, in 17 out of 110 enforcement orders, or 15%, the penalty faced by companies as a result of illegal environmental activity has been less than the economic benefit they recieved. The total economic benefit for these 17 firms was $244k, while total penalties were $135k. This means that these companies came out $109k ahead.
In one of the most egregious examples, TCEQ found that Formosa Utility Venture illegally dumped 439k pounds of debris and plastic pellets called nurdles ito Lavaca Bay and a local creek in Calhoun County. These nurdles are littering beaches up and down the Texas coast, especially in the Coastal Bend region. In addition, scientists are finding them in the bellies of birds, fish and turtles where they can lead animals to starve to death, while toxic chemicals leaching from pellets can also cause great environmental harm.
TCEQ found the economic benefit of this illegal dumping to be $156,000, but fined Formosa just $121,000, a differential of $34,000 that the company saved due to their illegal activity.
What this bill aims to do is end this perverse incentive to pollute, properly punish illegal actions, and, for those who make an honest mistake, return the ill gotten gains.