For years, the problem of what to do with used auto tires in Colorado has been a vexing one.
They’ve been piled in illegal dumps around the state, and the program that was supposed to encourage cleanup and reuse of the rubber waste wasn’t working according to plan.
Those problems were supposed to have been solved with a 2010 legislative overhaul, but it seems the reforms might need revisiting.
That’s the takeaway message we get from a Denver Post story about how a particular company, Magnum d’Or Resources, took state stipends even as it was the subject of a federal investigation and shareholder lawsuits alleging securities fraud.
The story, by reporter David Migoya, said the company shredded tires and then stockpiled the product in vast pits.
Though some of the tire material was reused as cover for a landfill operation, and there were plans to sell some of the rest of it for fuel, it seems there could be more robust oversight.
We know the market for reused tires isn’t exactly booming, but one of the main thrusts in the reform legislation was to use the $1.50 collected per tire sold to subsidize recycling efforts.
The folks at the Colorado Department of Public Health and Environment tell us they support a long look into whether there could be better compliance rules or legislation giving the department additional authority.
In July, the CDPHE began enforcing rules that allowed the agency to give a significantly higher subsidy to companies that had reuse plans.
That was a good tweak to the regulatory scheme. Anything that encourages a second life for shredded tires, as opposed to having them pile up in storage pits, is a better use of a public subsidy.
The case involving Magnum, however, is complicated in ways that leave regulators without the right tools to oversee them.
The U.S. Securities and Exchange Commission has alleged in a lawsuit in federal court in Florida that Magnum’s ex-chief executive took part in a kickback plot that employed phony consultants to siphon more than $7 million in illicit proceeds from the company’s securities.
In all, the state gave the struggling company nearly $500,000 during a 15-month period, at least some of it after learning of the company’s financial trouble.
State officials told us they have no statutory authority to halt payments if a company is having economic difficulties.
Now, we don’t think the government ought to be poring over the books of every company that wants a state subsidy and is willing to attempt to make it in the dicey recycled-tire business.
However, we do think there can be better oversight and more targeted use of public money to ensure the state’s waste tires are collected and reused.
