As always, the question is who pays for old environmental sins.

As always, the question is who pays for old environmental sins.

Environmental groups are calling on the Obama Administration or Congress to direct General Motors Company to adhere to a contract signed by the old GM requiring it to pay for the removal and disposal of mercury switches from GM vehicles headed for the scrap yard.

Given the criticism the Administration is taking over the unpopular auto bailouts, it is unlikely that it will interfere in bankruptcy law, so another solution must be pursued.

A spokesperson for Motors Liquidation Company – the legal name of the old bankrupt GM that is being liquidated – told The Detroit Bureau that it “is carefully analyzing about half-a-million contracts of the former General Motors Corp. This agreement is among them. Ultimately, any decision made on any contract will be consistent with our obligations under the bankruptcy code.”

Translation: there is no legal reason to continue the contract, so GM will not.

The problem is a serious one that will not go away anytime soon.

Mercury switches were used to operate hood and trunk lights in virtually all U.S. made vehicles before 2004, when automakers, under increasing pressure from environmental groups and states, finally stopped their use.

According to industry estimates, GM vehicles on the road contain more than 18 million mercury switches, or 39,000 pounds of the highly toxic substance.

Unless these switches are removed before scrapping, the mercury will be released into the air as automotive steel is recycled at mills, which virtually all of it is. This contributes to both localized and global mercury pollution, the contamination of fish used for food, and ultimately can cause devastating effects in human beings.

At the center of this dispute is funding for the National Vehicle Mercury Switch Recovery Program (NVMSRP). It is result of what is now a two-year collaborative effort involving The Environmental Protection Agency, vehicle manufacturers, the American Iron and Steel Institute, the Steel Manufacturers Association, the Institute of Scrap Recycling Industries, the Automotive Recyclers Association, and representatives of the Environmental Council of the States, among others.

EPA and these groups worked out a voluntary program in 2006 to recover mercury switches from scrap cars and trucks before they are shredded for recycling.

The program was set up after years of political squabbling over whom should pay for the recycling of mercury switches. Auto and truck makers repeatedly delayed action on the national  level. Steel mills flatly refused to install the necessary pollution equipment that would stop toxic emissions when steel was re-melted. State attorney generals had no interest in taxing their voters to cover the clean-up costs but insisted someone, anyone pay.

Ultimately, EPA cut a deal with vehicle manufacturers, and a bounty system was set up to pay otherwise uninterested scrap yards to remove the switches before the vehicle was crushed or shredded and sent to the mills.

A company known as End of Live Vehicle Solution (ELVS) administers the program, and a $4 million fund was established using a proportional fee system based on the number of mercury switches produced. Fees rewarded dismantlers/recyclers in the participating states on a first-come, first-serve basis over a planned 3-year period.

ELVS has now told participating states and the EPA that unless GM acts now, it will have to stop accepting mercury switches from scrap-yard bound GM vehicles starting January 1, 2010. This could result in tons of unnecessary mercury emissions pouring from smoke stacks across the country, especially given that more than 700,000 vehicles are now in the system because of the recently concluded “Cash for Clunkers” program.

Environmentalists working on this matter, say that more states are about to apply political pressure to force a resolution. We haven’t heard the last of this issue.

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