TED Case Studies

El Florido Power Plant and Pollution (FLORIDO Case)

CASE NUMBER: 211

CASE MNEMONIC: FLORIDO

CASE NAME: El Florido Power Plant

I. Identification

1. The Issue

In June of 1993, the Dallas based lead recycling firm, RSR Corporation, agreed to pay $2.5 million in environmental fines for the illegal dumping of toxic material near Tijuana, Mexico. RSR had hired the California waste transportation/disposal company, Alco Pacific, to salvage lead from used car batteries at its facility in El Florido, Mexico. The processing plant's hazardous emissions, and open dumping of toxic by-products near the semi-rural community prompted an investigation by Mexico's environmental protection agency. Findings from this investigation led to a disposition from the Los Angeles County District Attorney's office against Alco Pacific and the RSR Corporation.

2. Description

In 1981 the RSR Corporation, one of the largest automobile battery recycling firms in the United States, contracted Alco Pacific in Los Angeles to handle the salvaging process. Alco Pacific was to smelt the batteries in order to extract reusable lead for shipment back to RSR. Under the provisions of Mexican ecological regulations, Alco Pacific was required to properly dispose of the recycling process hazardous by-product, lead sulfate. Inspection of the facility by Mexico's environmental protection agency, the Secretariat for Urban and Ecological Development (SEDELOS), in March of 1992, proved the operation to be in violation. The 80,000 tons of lead sulfate produced at the facility were mounded in open fields near a local dairy. In addition, discarded battery acid was dumped on the plant grounds, causing an underground fire.1 Residents of El Florido, an impoverished locality in the environs of Tijuana, complained of dust particle emissions, respiratory irritations, and cattle deaths caused by their proximity to the plant.

In a publicized effort of bilateral cooperation, the environmental crimes division of the Los Angeles District Attorney's Office charged the two companies with three misdemeanor counts of illegally transporting hazardous materials. In June of 1993, RSR pleaded no contest and agreed to pay the full amount in fines, which included $300,000 to support medical monitoring of El Florido residents. In December of 1993, the chief executive of Alco Pacific, Morris P. Kirk, was sentenced to 16 months in prison on three felony counts of unlawful transportation of hazardous wastes.2

Both critics and supporters of the North American Free Trade Agreement (NAFTA), have cited this case to illustrate future ecological ramifications resulting from the agreement. Critics argue the abuse of Alco Pacific is an indication of the degradation that will result from an economically developing Mexico. Waste disposal problems were overlooked in Mexico's rush to create employment during the debt-crisis recovery of the 1980s.3 At least half of the 2,000 plants have had serious waste discharge problems. Failure to crack down on these polluters was never a problem of resources but of political will. Now, cleaning the industrial wasteland of the maquiladora belt presents a formidable bilateral challenge. Skeptics argue this is an indication of Mexico's willingness to subvert environmental protection in its quest for Newly Industrialized Country (NIC) status.

On the other hand, it appears NAFTA worries have prompted reform in Mexico's environmental regulatory framework. Since 1992, its inspection apparatus has been reorganized and has ordered 116 plants suspected of violations to close.4 Supporters of NAFTA counter that the bilateral cooperation involved with the El Florido case exemplifies the cross-border enforcement of environmental regulations under the agreement. Furthermore, the Clinton Administration has proposed a North American Commission on the Environment (NACE) as a vehicle to mandate and enforce ecological policy in the free trade area. This commission draws from NAFTA Article 1114 stating "it is inappropriate to encourage investment by relaxing health, safety, or environmental measures. Overriding concerns about sovereignty, this provision acknowledges that people in one NAFTA jurisdiction have a stake in the environmental practices of another -- even when their aquifers and air-sheds are hundreds or even thousands of miles apart."5

3. Related Cases

BORDER case
NAFTA case
CEMEX case

Keyword Clusters

(1): Industry = UTILity

(2): Bio-geography = DRY

(3): Environmental Problem = Pollution Land POLL

4. Draft Author:

Douglas R. Freeman

II. Legal Clusters

5. Discourse and Status:

DISagreement and COMPlete

This case became a legal proceeding and was resolved out of court. The indicted party, RSR Corp, agreed to pay the full amount of $2.5 in fines to clean up the site at El Florido. In addition, the chief executive of Alco Pacific was sentenced on three counts of unlawful transportation of hazardous wastes in California.

6. Forum and Scope:

NAFTA and BILATeral

The case was tried under California environmental law, with basis from the U.S.-Mexico Lapaz Agreement, a 1983 cooperation accord for protection and improvement of the border are environment (see LAPAZ case). Annex III of this treaty governs issues of trans-boundary shipments of hazardous waste and substances. Activities monitored under this provision include the handling, transportation, treatment, recycling, storage, application, distribution, reuse or other utilization of toxic materials.6 Under this provision, the designated authority of the exporting country must notify the importing country's counterpart of the proposed hazardous waste shipment well in advance of the planned export date.

The investigation of the waste site was provided by SEDELOS. Alco Pacific was found in clear violation of the Secretariat■s General Law of Ecological Equilibrium and Environmental Protection. This law required the maintenance of waste storage separate of the treatment facility. In addition, Alco Pacific failed to comply with protective regulations for workers, community residents, soil, and groundwater.

Subtitle C of the Resource Conservation and Recovery Act (RCRA) governs the conduct of those who generate and transport waste, as well as the actions of owners and operators of treatment, storage, and disposal facilities. Under this cradle-to-grave system, hazardous waste exported to Mexico is tracked from its initial production in the U.S. until it reaches its ultimate destination.7

7. Decision Breadth:

2 (USA and MEXICO)

Legal and environmental officials from Mexico and United States prosecuted the case against two U.S firms.

8. Legal Standing:

TREATY

III. Geographic Clusters

9. Geographic Locations

a. Geographic Domain: North America [NAMER]

b. Geographic Site: Western North America [WNAMER]

c. Geographic Impact: United States [USA]

10. Sub-National Factors:

YES

Although this was a trade/environmental case involving two countries, it was litigated under the California State legal framework. California environmental fines were imposed on RSR Corp., and the Alco Pacific chief executive was convicted under state environmental statutes.

11. Type of Habitat:

DRY

IV. Trade Clusters

12. Type of Measure:

Regulatory Standard [REGSTD]

Mexico's environmental regulation requires waste producers to register with government. Once registered, waste handlers are obligated to report production and movement of the material are a regular basis.

13. Direct v. Indirect Impacts:

DIRect

The findings against RSR and Alco Pacific had a direct impact on the trade of hazardous waste between the United States and Mexico. California's regulation of hazardous material transportation and Mexico's regulation of toxic waste dumping will limit the amount of battery recycling trade for the RSR Corp. In addition, the media attention from the case will prompt stricter regulation enforcement in the hazardous waste trade.

14. Relation of Trade Measure to Environmental Impact

a. Directly Related to Product: YES, Waste

b. Indirectly Related to Product: NO

c. Not Related to Product: NO

d. Related to Process: YES, Pollution Land [POLL]

Environmental regulations affect transportation and waste disposal relevant to the recycling process. Any additional cost cause by environmental regulations will be included in the final cost of recycled lead.

15. Trade Product Identification:

WASTE

The product involved in this case is recycled lead, and it would be considered an intermediate good for consumption. The lead is extracted from automobile batteries, melted into ingots, and resold for alternative production.

16. Economic Data

17. Impact of Trade Restriction:

18. Industry Sector:

WASTE

19. Exporters and Importers:

USA and MEXICO

RSR Corp. exports used car batteries under contract with Alco Pacific. The Alco facility, which includes Mexican investment and employs domestic workers, salvages the lead from the batteries for eventual sale by RSR in Texas.

V. Environment Clusters

20. Environmental Problem Type:

Pollution Land [POLL]

21. Name, Type, and Diversity of Species

Name: Many

Type: Many

Diversity: 4,569 higher plants per 10,000 km/sq (Mexico)

22. Resource Impact and Effect:

LOW and PRODuct

23. Urgency of Problem:

LOW and 10-20 years

24. Substitutes:

VI. Other Factors

25. Culture:

NO

26. Trans-Boundary Issues:

YES

The contamination of groundwater and soil along the frontier makes this case a trans-border issue. Flows of contaminants could pass from Mexico into the United States depending on the local topography. The interesting aspect of this trans-border case is that both the plaintiff and defendant in the legal proceedings were from the United States. The activities of Alco Pacific and the RSR Corp., illustrate the increasing economic interrelationship between Mexico and the United States, and the possible negative effects on the ecology of the border.

27. Rights:

YES

The human rights of El Florido residents are an issue in this case. This community has been exposed to toxic materials without any consent or recourse of action. The producers responsible for generating the waste had neither monitored nor compensated these individuals for exposure and harmful effects caused by the waste. The possible harmful effects due to this exposure is the reason funds for medical examinations were apart of the settlement. The situation in El Florido, where citizens are denied their right to live in a healthy environment, is common throughout the U.S.-Mexico border region.

28. Relevant Literature

Clifford, Frank.  "Executive gets Prison Term in Pollution
	Case."  Los Angeles Times, December 16, 1993, A3.
Ford, Andrea.  "Firm Agrees to Help Clean Up Tijuana Site."
	Los Angeles Times, June 16, 1993, A3.  
Orme, William A.  Continental Shift: Free Trade and the New
	North America.  Washington: The Washington Post Company, 1993.
Scramstad, Barbara.  "Trans-boundary Movement of Hazardous
	Waste from the United States in Mexico."  University of the
	Pacific, McGeorge School of Law, Spring, 1991. 
Simon, Joel.  "NAFTA-The View from Tijuana."  The Nation  255
	(November 11, 1992): 664-667.
Solis, Dianne.  "Jail Term given in Cross-Border Pollution
	Case."  The Wall Street Journal, December 16, 1993, A11.

References 1. Joel Simon. "NAFTA-The View from Tijuana." The Nation, 225: November, 1992, 664. 2. Dianne Solis. "Jail Term given in Cross-Border Pollution Case." The Wall Street Journal, December 16, 1993, B1. 3. William A. Orme, Continental Shift, (Washington: The Washington Post Company, 1993), 115. 4. Orme, 118. 5. Orme, 112. 6. Barbara Scramstad. "Trans-boundary Movement of Hazardous Waste from the United States in Mexico." University of the Pacific, McGeorge School of Law. Spring, 1991, 5. 7. Scramstad, 7.


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