The Daily Caveat loves, loves, loves...the GAO. Formely the General Accounting Officer (the GAO acronym now stands for the slightly more cuddly title of Government Accountability Office) the GAO's stated goal is to eliminate from fraud, waste and abuse from the federal government. In doing so, the "congressional watchdog" claims to generate an annual savings of $44 billion for the American public. That represents a $95 return on every dollar invested in GAO (which has an annual budget of a little less than $500 million.

A bit about how they work:

The GAO gathers information to help Congress determine how well executive branch agencies are doing their jobs. GAO’s work routinely answers such basic questions as whether government programs are meeting their objectives or providing good service to the public. Ultimately, GAO ensures that government is accountable to the American people. To that end, GAO provides Senators and Representatives with the best information available to help them arrive at informed policy decisions--information that is accurate, timely, and balanced...

...With virtually the entire federal government subject to its review, GAO issues a steady stream of products--more than 1,000 reports and hundreds of testimonies by GAO officials each year. GAO's familiar "blue book" reports meet short-term immediate needs for information on a wide range of government operations. These reports also help Congress better understand issues that are newly emerging, long-term in nature, and with more far-reaching impacts. GAO's work translates into a wide variety of legislative actions, improvements in government operations, and billions of dollars in financial benefits for the American people.

While they aren't a particularly sexy agency and they don't generate tons of press coverage, the GAO does send down the occasional whallop to the more wasteful, recalcitrant and deceptive organs of the federal government, usually in the form of research reports critical of an agency's activities. Take, for example, the recent GAO excoriation of the Environmental Protection Agency for it's failure to ensure enforcement the Superfund program:

Via The News Tribune:

GAO blasts Superfund enforcement

Les Blumenthal
The News Tribune
August 17, 2005

A week after Asarco filed for bankruptcy, congressional investigators are warning that other companies might take similar action to shed environmental responsibilities and leave taxpayers liable for billions in cleanup costs. In a report highly critical of the federal Environmental Protection Agency, Congress’ Government Accountability Office said the agency has failed to ensure that financially ailing companies meet their obligations under the Superfund program.

The report, due for release today, also said some companies have transferred their most lucrative assets to parent corporations or subsidiaries to limit their exposure in bankruptcy proceedings. While such transfers are generally legal, it is unlawful to transfer assets with the intent to hinder or defraud creditors. Such cases, however, are difficult to prove, especially when foreign ownership is involved, according to a draft copy of the report obtained by The News Tribune.

Sen. Maria Cantwell (D-Edmonds) plans to discuss the GAO report during a news conference today in a Ruston yard that was abandoned by an Asarco contractor after last week’s bankruptcy filing. “This report confirmed what I feared – corporate polluters are using bankruptcy and other corporate gimmicks to get out of their environmental cleanup obligations,” Cantwell, one of three senators who requested the study, said in a statement issued Tuesday. “Corporate polluters are contaminating our backyards and water, and then sticking us with the mess and the cleanup bill. I’m tired of this abuse. EPA officials had no immediate comment.

Asarco could be liable for more than $1 billion in cleanup costs at more than 30 sites nationwide, including the former copper smelter on the border between Ruston and Tacoma. Grupo Mexico bought Asarco in 1999. Four years later, Grupo Mexico took control of Asarco’s most lucrative assets – two Peruvian mines in the foothills of the Andes and a smelter along the Peruvian coast.

The EPA initially sought to block the deal, but after weeks of negotiations allowed it to proceed. Asarco received an infusion of $765 million at a time it was teetering on the edge of bankruptcy. The company also agreed to set up a $100 million trust fund that would be used to pay some environmental cleanup costs over three years.

The GAO report does not mention Asarco or Grupo Mexico by name. But the report said the complicated financial relationships between a parent company and a subsidiary can be difficult to unravel. “Those who seek to pierce the corporate veil, such as the Department of Justice on behalf of EPA, face a task that has been likened to peeling back the layers of an onion,” the report said.

In addition, parent companies are often stockholders in their subsidiaries, and stockholders can’t be held accountable for environmental liabilities, the report said. Grupo Mexico owns Asarco’s stock. “Federal bankruptcy law, like corporate law, presents a number of significant challenges to EPA’s efforts to hold bankrupt and other financially distressed businesses responsible for their cleanup obligations,” the report said.

Asarco filed a petition for Chapter 11 reorganization in a Texas bankruptcy court. Asarco officials said the company was overwhelmed with financial problems, including cleanup and asbestos liabilities, pension and health costs, downgraded credit ratings and a strike by production workers in Arizona and Texas.

EPA officials have said privately that they were not surprised by Asarco’s decision to file for bankruptcy, but they thought the company would hold on until next year before taking the step. The agency’s lawyers are trying to determine the company’s liabilities site by site and are expected to pursue EPA’s claims in federal bankruptcy court. Cantwell said it shouldn’t stop there.

“Corporate polluters who try to pull this kind of disappearing act after they’ve contaminated our neighborhoods and put our health at risk need to be held accountable. There’s more this administration could be doing to hold Asarco and other companies like it responsible for the harm they’ve done,” she said.

The Superfund, created in 1980, is the nation’s top federal program to clean up dangerously polluted sites. When a “responsible party” for a cleanup could not be found, money from the Superfund was used. The cash came from a special tax on oil and chemical producers and an environmental tax on corporations.

But the tax was allowed to lapse in 1995 and the trust fund used to pay for the cleanup is almost empty. Every year, Congress has provided about $1 billion in general tax funds to continue the work. There are now more than 1,230 sites listed for cleanup under the Superfund program. It is estimated that the 142 largest toxic sites could cost $20 billion to clean. The EPA is already wholly or partially funding cleanup of 60 of these large sites, the GAO report said.

Sen. Maria Cantwell and others will discuss the GAO report during a news conference at 11 a.m. today at a home in Ruston.

The original article appears here. A selection of their recent reports can be found here.

-- MDT

Labels: Department of Justice, GAO