Yet another example of what happens when you combine the dynamic forces of our most awesomest free enterprise system with kinder, gentler government oversight:
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.
So, okay, what the heck are these mercury-switch thingies?
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.
Hmmmm. This doesn't sound good:
Very high exposures to mercury vapor in the air can cause acute poisoning. Symptoms usually begin with cough, chest tightness, trouble breathing and upset stomach. This may go on to pneumonia, which can be fatal.If the inorganic mercury compounds are swallowed, nausea, vomiting diarrhea and severe kidney damage can occur.
Exposure to any form of mercury on a repeated basis, or even from a single, very high exposure can lead to the disease of chronic mercury poisoning. There are three main symptoms:
• Gum problems. The gums become soft and spongy, the teeth get loose, sores may develop and there may be increased saliva.
• Mood and mental changes. People with chronic mercury poisoning often have wide swings of mood, becoming irritable, frightened, depressed or excited very quickly for no apparent reason. Such people may become extremely upset at any criticism, lose all self-confidence, and become apathetic. Hallucinations, memory loss and inability to concentrate can occur.
• Nervous system. The earliest and most frequent symptom is a fine tremor (shaking) of the hand. A tremor may also occur in the tongue and eyelids. Eventually this can progress to trouble balancing and walking.
But back to our narrative. So naturally, after they stopped using mercury in light switches, the government simply ordered GM to issue a series of batch recalls of all their pre-2004 cars and had the switches removed, right? Mercury is a known carcinogen, after all.
Oh wait. That would assume that there had not been . . .
. . . 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. (Emphasis added.)
And you thought Cash-for-Clunkers was a clean, green program? Bwahahahahahahaaaa!!
Ladies and gentlemen, the New GM: Your latest EPA Superfund site. Being a taxpayer never felt so good.
Don't get me wrong here: in theory at least, the CARS program was a terrific idea. And in one sense, as a cost-effective form of short-term stimulus, the plan was an unqualified success. Assuming (conservatively) an average price of $25,000 per new car sold under the program, that works out to some $17 billion dollars in new-vehicle sales. It also means an infusion of somewhere between $1 and $2 billion dollars to state and local governments in the form of sales tax receipts, vehicle registration fees and the like; and a roughly equal amount found its way into the pockets of thousands of dealership employees across the country in the forms of sales commissions, salaries and bonuses. So strictly in terms of dollars and cents, that's not bad for a $3 billion outlay.
But clearly, some parts of the plan were not very well hashed-out. And it's not too surprising to see why, when you think about it. Look at it this way: Did anyone in the Washington policy establishment really think that the program would have any discernible effect on the economy beyond the purely symbolic? I mean, who's gonna go shopping for a big-ticket item like an automobile in the middle of a recession---for only a piddly $4,500 rebate, and with 30-odd pages of government restrictions for consumers to plow through? How else, then, to explain CARS's utterly muddled execution after millions of Americans actually decided to take the government up on its offer? Neither Congress, nor NHTSA, nor the Obama administration actually envisioned this scenario ahead of time, hence the lack of preparation for for the tidal wave of demand that the program stimulated. At least that's my read of it.
And, as is becoming clearer, the potential environmental impact of having to dismantle and recycle 700,000 junk cars---which are chock-full of all sorts of noxious substances---not to mention the issue of who was actually going to pay for the cleanup---appears to have been given short shrift in the discussion.
Long story short: well-intentioned though it surely was, the CARS program was clearly not very well thought-out on some basic and elemental levels. And now, it looks like someone---guess who---will need to dole out another few billion dollars to clean up tons of toxic OEM waste that the Feds should simply have outlawed years ago.
And the long-term stimulus effect of Cash for Clunkers? For what it's worth, not much.
---Vitelius
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