State: Dead Sea Works must pay for damage to area
Assistant district attorney Avi Licht, who published the document, also determined that the industries have to increase the portion of their profits they pay the state.
By Zafrir Rinat

The Dead Sea mineral works on the southern Dead Sea shore must pay most of the cost of protecting the area’s hotels from the rising water level in its evaporation pools, the attorney general’s office has announced.

Assistant district attorney Avi Licht, who published the document, also determined that the industries have to increase the portion of their profits they pay the state.

Licht had been asked to state his office’s legal opinion as to how funding should be divided in the salt-harvesting project that will keep the evaporation pools from overflowing and flooding the hotels.

The Dead Sea Works belongs to ICL, which is owned by the Ofer Brothers. It operates on the basis of a franchise that the state gave them to exploit Dead Sea minerals until 2030.

Licht notes in his opinion that the cost of harvesting the salt until the end of the franchise period will be NIS 3.76 billion.

In his opinion, Licht has adopted the principle set out by the Environmental Protection Ministry that “the polluter pays” – since the Dead Sea Works created the hazard, it must pay most of the cost of the solving the problem.

Licht also said that the Dead Sea Works, like any other manufacturer, must take responsibility for the environmental damage its manufacturing causes.

“Even if the activity cannot be seen as pollution in the ordinary sense, it still creates an environmental hazard and a real risk to various public interests,” he stated.

Licht also noted that harvesting the salt will save the Dead Sea Works major costs in terms of having to continually build containment berms to prevent the rising water from overflowing. But the government must also take part in funding the harvesting operation, Licht’s opinion also stated, since the state also has an interest in maintaining the level of the pool steady in order to maintain tourism.

Negotiations should be allowed, and the state should be given some leeway. Nevertheless, if negotiations fail, legislation may be enacted forcing the industry to pay.

Licht also addressed the royalties the Dead Sea Works pays, although this was not part of his brief.

He noted that although the natural resources under exploitation belong first and foremost to the public, the public’s part in the industry’s profits was declining.

Thus, over the past decade, ICL has issued $3.9 billion in dividends to its shareholders, while the public received only $303 million.

Licht conceded that this situation came about partly because of pledges given in the past by government ministers to the purchasers of the Dead Sea Works not to increase the royalties they pay. They did so partly to make the company more attractive to purchasers.

Legally, it is difficult to undo these pledges, Licht said. He therefore proposed levying a tax on profits above a certain figure, similar to the system recently determined for producers of natural gas and oil.

Licht said his proposal must be studied more deeply before it is implemented.

The Dead Sea Works responded that Licht “clearly prefers that the issue of the salt harvesting be resolved by consensus between the Dead Sea Works and the state, [and] that although he proposes that most of the cost be borne by the Dead Sea Works, he confirms that some of the cost should be borne by the state and other bodies responsible for the Dead Sea.”

Deputy A-G recommends raising Dead Sea Works royalties
09/05/2011 02:27

Green groups pleased with suggestions but caution gov’t not to cave in to captains of industry.
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Deputy Attorney-General Avi Licht issued a recommendation on Sunday to the Finance Ministry stressing the need to raise the royalty fees that the Dead Sea Works company pays.

Green groups praised the move as a step forward in achieving public interests.

Licht’s report follows a May study commissioned by the Tourism Ministry’s Dead Sea Preservation Government Company, which advocated dredging all 20 million tons of salt from the southern Dead Sea Basin as the most effective method of combating the dangerously rising water level. The study, however, estimated that dredging the salt over the next 20 years would require about NIS 6.5 billion, a sum that both the authors and green groups thought should mostly be paid by Dead Sea Works, as its mineral evaporation process is causing the rising water level.

At the end of May, the tourism and environmental protection ministers also endorsed the study’s suggestions.

“Our legal stance is that Dead Sea Works must bear the most significant part of the costs of the harvest,” Licht wrote in his report.

The ever-rising water level in Pool 5 and the ongoing mineral consumption, Licht continued, “causes damage to public interests and is expected to cause future damage to the tourism industry and to additional environmental interests.”

Therefore, because its production methods are causing the problems, it is most suitable that Dead Sea Works bear the brunt of the costs of the salt harvesting and beach protection, according to Licht.

Dead Sea Works has a permit to operate in the basin until 2030, and the company estimated that until this point, the salt harvest would cost about NIS 3.76 billion; however, the benefit to the company of having a harvested sea would be equivalent to about NIS 2.5 billion, the report estimated.

If negotiations between the government and Dead Sea Works to achieve a suitable deal do not go smoothly, Licht suggested that lawmakers step in to determine how the costs will be distributed to achieve the “long-term vision” of harvesting salt.

“The recommendation of the report of the deputy attorney- general, Avi Licht, is an important step in the right direction,” Gidon Bromberg, Israel director of Friends of the Earth Middle East (FoEME), said in a statement. “Dead Sea Works earned millions at the expense of public natural resources that we know as the Dead Sea, and it is responsible for the loss of 150 million cubic meters per year. Therefore, in accordance with the ‘polluter pays’ principle, the plant must bear 100 percent of the salt harvesting expenses.

The Treasury must stand firm against the pressures of captains of industry who are trying to evade responsibility for damage they caused and are generating further damage that will yield them profits – in the form of the construction of Pool No. 6.”

Bromberg was referring to the potential establishment of an additional mineral evaporation pool for Dead Sea Works, an idea in which the company has expressed interest.

Amit Bracha, executive director of the Israel Union for Environmental Defense (Adam Teva v’Din), agreed that any negotiations must not included a policy that would allow the company to set up an additional mineral evaporation pond.

Following the release of the deputy attorney-general’s legal opinion, it is necessary to ensure that the government does not slacken its efforts until the recommendation is fully implemented and until the royalties are raised, Bracha added.

Last week, Adam Teva v’Din had made similar recommendations to Prime Minister Binyamin Netanyahu’s Trajtenberg Committee, arguing that additional income generated by charging Dead Sea Works more could be given to public sectors in need.

“In these days of social protest, it is inconceivable to have public funds finance the salt harvest while the main beneficiaries of the harvest are the [processing] plants,” Environmental Protection Minister Gilad Erdan said in a statement.

“I welcome the opinions of the deputy attorneygeneral, which are anchored in important environmental principles, such as: ‘polluter pays’ and ‘extended manufacturer guarantee.’”