Re: [CPEO-MEF] Guardian Trust

[pparks@igc.org]

1.  Why do you think the government oversight costs are so high?  How would
the Guardian Trust cut costs 25-45%?

2.  Would the Guardian Trust be taking on the potential long-term liability
costs or just the cost if the remedy did not work?  In other words, how is
this different from the Clean Base Initiative?

3. I thought the problem for the federal government was not that it can't
generate interest (otherwise I think the fed would be really broke right
now; maybe I'm wrong), but that any "profits" or "un-used" monies must be
remitted to the Treasury unless Congress establishes an exception; not the
easiest thing in the world, but more a factor of developing political will
rather than a legal impediment.  I also am not so sure that reliance of the
Guardian Trust on interest for any surprises would lead to the adequate due
dilligence that the government (be it federal or state) provides.

Which brings me to another point.  I beg to differ that federal and state
government do not have experts in finance, administration, and insurance.
They most certainly do amongst the civil servants, military professionals,
and political appointees.  Also, I think you make a rather specious
argument in saying PhD engineers and geologists don't want to do the work.
In the civil service (and the military -- and the private sector) PhDs are
generally given jobs that reflect their skill set level; which means middle
to senior management (this is also known in some instances as the "Peter
Principle.").  While they may have some responsibilities in the field, it
always includes a high supervisory element.  The exceptions to this are in
the private or ngo sector, not the government sector.  This seems to be
more an issue of definition of mission, re-organization and budgeting than
lack of skill sets.  

While I acknowledge that the government has it times been an ineffective
and unreliable steward of long-term controls, I prefer civil servants
and/or military professionals being in the driving seat on long-term
stewardship planning and community involvement rather than short-term
political appointees (i.e. the government picks the trustees).  My
experience has been that all too often issues of the environment are
subordinated to other issues by the political appointees.  Rarely is that
behavior initiated by the workforce and administrators of a particular
agency who is tasked, simply because it is their   job.  Of course I
acknowledge that in our weakened democratic state, "to the victor goes the
spoils," but I think in the instance of the issues that affect the future
of this nation -- national security and the environment among them; it is
best to inculcate the issues and budget as much from partisan politics as
possible.

Operationally (in terms of at least how DoD works) I don't see this saving
significant funding (or securing significant funding) any more securely
that anything else that has been posed as an organizational solution since
devolvement in 1997.  In fact, this seems like taking devolvement even one
further step down so that it is next to impossible for Congress to
undertake proper oversight; much less the responsible parties.  If
devolvement were reversed, this concept might work (in terms of long-term
stewardship), Because frankly, this is all about budgets.  Yes, when the
Defense Environmental Restoration Budgets were centralized under the Duputy
Under Secretary of Defense for the Environment, the services were able to
achieve economy of scale as well as much more effective management.  In a
sense, it was a public-private partnership with the civil servants/military
professionals providing the public side and the Secretaries providing
private sector perspective (as they are political appointees).  That ended
with devolvement.  If the proposed Guardian Trust is administratively
subordinate to the budget making process of "customer" agencies rather than
directly to Congress, I don't think any long-term stewardship is going to
take place as there will not be any qualitative improvement over the
current status quo.

Thanks for the opportunity to discourse and I'm interested in any comments.

Polly Parks





There are several reasons why it would be cheaper to utilize a
non-governmental entity for long term stewardship.  Among these are:

1.  Current estimates of costs for government oversight are that they
comprise 40%-60% of total hard costs of cleanups.  The Guardian Trust
would employ a management entity that would signifantly reduce these
costs.  We estimate that these costs should not exceed 15%;

2.  The Guardian Trust would purchase the required engineering, title
insurance, liability insurance and other services in bulk, negotiating
significant discounts over current market rates.  Government has shown
an inability to effectively minimize these costs; and

3.  Unlike the government, The Guardian Trust could and would hold its
funds in insured interest bearing accounts, generating receipts that
would be used to offset costs to the users of the Trust. 

As important an issue as reducing costs is, just as vital are issues
such as skill sets, safeguarding of assets and determination to succeed.

Our environmental regulators have talented and energetic engineers,
geologists and other such professionals.  The regulators do not have
equal talent in the areas of management, finance and insurance. An
effective stewardship program for land use and engineering controls
requires the creative talents in these important areas which will be
supplied by a private sector approach.

The Trust will hold assets paid by responsible parties in long term,
interest bearing accounts which the govt. is unable to do.  Likewise,
with an independent Guardian Guardian there is no risk that in times of
budget crisis the money will not be spent in order to reduce accounting
deficits.

Finally, there are several studies that demonstrate that our govt. has
been an ineffective and unreliable steward of long term controls.  These
studies indicate that stewardship is performed poorly or not at all, and
that PhD engineers and geologists do not want to perform these duties.

Thus we have concluded that it is in everyone's interest to utilize a
public-private approach where the govt. exercises its influence through
its power to choose the trustees and determine the policies and programs
of the Guardian Trust, with management of those responsibilities being
performed by The Guardian Trust.  Note that the Guardian Trust is not a
replacement for our govt.  Responsible parties still have the same
obligations to the regulators that they would have without The Guardian
Trust.  But now the govt. will also have The Guardian Trust from whom
they can require performance.  The Guardian Trust will measurably
increase the ability of the govt. to perform its obligations.

A final question you posed concerns the longevity of the Trust.  The
Guardian Trust is designed as a long term entity and unlike ordinary
corporations is subject to stringent financial and operational
regulation.
Also, by providing stewardship services for a large mass of sites, we
allow the law of large numbers to work in our favor, generating
economies of scale and spreading rather than concentrating risks.

No solution is perfect.  But given the current situation we believe the
attempt to provide an alternative model of environmental stewardship is
a worthy goal.  Effective environmental management is too important to
all of us to ignore such potential improvements.

I value the importance of the questions you have posed and appreciate
the opportunity to respond.  Thanks.

Bruce-Sean Reshen

      

Polly Parks wrote:
> 
> Why would it be cheaper to establish a non-governmental trust rather than
> to use a governmental entity (either federal or state) if there are
> admittedly lots of legal minefields to traverse?  Also, I wonder about the
> ability of a non-governmental entity to ensure its continuity given the
> length of time some of the cleanups may take.  Is that addressed in the
study?
> 
> Thanks.
> 
> At 09:41 AM 11/7/02 -0500, you wrote:
> >The Guardian Trust Pilot Study was finded by PA DEP, Region 3 and the
> >EPA.  The Trust would be funded by its users, private or public
> >responsible parties and by states wishing to provide for their orphan
> >properties.  Fees could be paid to the Trust on either an annual basis
> >or by a lump sum payment covering the life of the engineering and land
> >use controls.
> >Bruce
> >
> >pparks@igc.org wrote:
> >>
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> >>
> >> The Guardian Trust does sound interesting.  But a few financial
> >> questions. Who (and by what mechanisms) would fund "The Guardian
> >> Trust"?  And, who funded the MPG Environmental Partners study?
> >>
> >> Thanks so much.
> >>
> >> Polly Parks

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