Subsidies
and Bad Actors
By
Phil Mattera, Dirt
Diggers Digest
These questions take on
increased relevance in light of two new developments.
The
first is that utility giant Duke Energy is being fined $25
million by environmental regulators in North Carolina. The penalty, the largest
in state history, relates to the contamination of groundwater by coal ash from
Duke’s Sutton power plant near Wilmington.
Federal
prosecutors are reportedly pursing a separate and broader case against Duke in
connection with its large spill of toxic coal ash from another plant into the
Dan River.
The
other development is that my colleagues and I at Good Jobs First are about to make
public a new version of our Subsidy
Tracker that for the
first time extends coverage to the federal level (the release date is March
17).
Duke
got about half of its subsidies in the form of grants from Energy Department
programs designed to promote renewable energy and smart grid development. The
other half came from a Recovery Act provision that allows companies to receive
cash payments for the installation of renewable energy equipment.
Like
other large utilities, Duke has taken steps in the direction of renewables
while still deriving most of its power from fossil fuels and nuclear.
Are
federal subsidies helping to wean Duke off dirtier forms of energy, or are they
simply enriching a company that is still committed to dirty energy and has
shown some serious lapses in its management of its fossil fuel facilities?
Duke
is hardly the only major subsidy recipient with a tainted track record. Previously,
I discussed the fact that both U.S.
banks andforeign
banks that received
huge amounts of bailout assistance later had to pay billions of dollars to
settle allegations on issues such as currency market manipulation and abetting
tax evasion.
Federal
officials may argue that they were not aware of these practices when the
bailouts happened (though these banks hardly had spotless records as of 2008),
or they may claim that they had no choice but to bail them out, since they were
too big to allow to fail.
Yet
the list of large federal subsidy recipients includes other major corporate
miscreants. Take the case of BP, which the new database will show as having
receiving more than $200 million in federal grants and allocated tax credits.
Much
of that money postdates its 2010 catastrophe in the Gulf of Mexico, and even
more came after the 2005 explosion at its Texas City, Texas refinery that
killed 15 workers and for which the company $60 million in fines to the EPA and $21 million to OSHA.
In
the wake of the Deepwater Horizon disaster, BP was barred from receiving
federal contracts, though the debarment was later lifted.
Perhaps
an even stronger case can be made for disqualifying regulatory violators from
receiving federal subsidies, since they are more akin to gifts than payment for
goods or services rendered.
This
is not likely to happen anytime soon, but the release of the new Subsidy
Tracker will make it a lot easier to identify which bad actors have been
enjoying Uncle Sam’s largesse.
