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Who's paying to clean up environmental mess in St. Louis? Taxpayers

Dec 19, 2014

The old chemical plant site will cost an estimated $350 million to clean up. Taxpayers will pick up the majority of the bill.
Credit Lindsey Smith / Michigan Radio

This week, we’ve told you about efforts to clean up the old Velsicol Chemical plant. There’s a threat to the local drinking water supply after the first attempt to clean up the plant failed. Birds still die from DDT, decades after the plant stopped producing it.

But we haven't told you who's paying to fix it.


To help figure out who’s paid to clean up the pollution from the old Michigan Chemical plant and its parent company Velsicol caused, we want to take you back.

A clip from a 1982 documentary film called “Cattlegate" explains: 

"Michigan Chemical’s owners have changed its name. But the factory still operates under the original management."

The plant’s new name was Velsicol.

Plant changes hands and loses liabilities

In 1982 the government reached a settlement with the company over the contamination.

The State of Michigan agreed to drop its lawsuit. Velsicol agreed to close the plant and clean up the factory’s mess.

 

"Now as previously, it forms part of Velsicol Chemical Corporation, which in turn is controlled by Northwest Industries, a Chicago-based conglomerate, that this year expects record profits on sales of 1.6 billion dollars." –1982 "Cattlegate" documentary

So in 1982, Velsicol owned the plant in St. Louis. Northwest Industries owned Velsicol. But soon after, both companies were bought out by a different company, Fruit of the Loom. At that point, the underwear company took on Velsicol’s liabilities. 

"And the guy who bought it in the early '80s then sort of took all of the money out of the company and eventually it went bankrupt," said Ed Lorenz, a professor at Alma College. He’s been studying the clean-up for almost 25 years.

"So basically all of the money had been taken out of Fruit of the Loom and all of the other parts of this what we call conglomerate."

Cleanup costs add up

As part of the bankruptcy, Fruit of the Loom got to shed some of its liabilities, including that old chemical plant site in St. Louis.

Velsicol Chemical still exists post-bankruptcy, but a different company owns it now, and it doesn’t have all the liabilities it used to.

Lorenz’s best guess is the companies responsible for the pollution in St. Louis ended up paying roughly $50 million to clean it up.

"Basically it doesn’t have any assets today that we can get. So all the current costs are coming from tax money." Lorenz said. "We call this an orphan site. It has no parent."

Yards are being excavated in the neighborhood near the old Velsicol Chemical plant. The EPA is trying to get rid of the contamination. They hope to be done with the yard cleanup next year.
Credit Mark Brush / Michigan Radio

And this orphan is expensive. It’s going to cost $45 million to build a new water system that’s not contaminated. It cost $100 million to dig up a bunch of DDT-laden sediment from the Pine River, $23 million to clean another area where Velsicol used to burn and dump waste, and $150 million to re-do the cleanup the company botched the first time around.

Eventually the State of Michigan will take responsibility for the old chemical site. MDEQ estimates it'll be in 2033. When that happens, it’ll cost $5 million a year — indefinitely — to contain the ground water contamination.

For a while, chemical and oil companies had to pay a special tax to clean up these kinds of orphan sites. But Congress allowed that tax to expire in 1995, so that money is gone.

"There is no fund, so the money comes from taxation and since in an overall picture we have a deficit in the country, in a way our children and grandchildren are paying for the cleanup," Lorenz said.

Altogether, Lorenz estimates the cleanup will cost somewhere around a half a billion dollars. The companies responsible will get away with paying perhaps a little more than 10% of the bill. 

You can read the rest of the stories in our series here.