Standing Committee Symposium on The Role of Private Institutions in Public Environmental Decisionmaking: Private Facilitating and Adjudicative Functions: A. Superfund Disputes and the Role of Clean Sites, Inc.

Sandra M. Rennie

Sandra M. Rennie is Coalescing Executive, Clean Sites, Inc., Alexandria, VA.

Introduction

The Superfund¹ statute, while lacking an explicit provision on the subject, is a law that lends itself well to alternative dispute resolution (ADR). The nature of the disputes as well as the appearance of the same parties in many of these cases give rise to an interest among the parties in being able to maintain ongoing relationships. Also, there are features in the law itself that create practical problems that demand intensive resources in a short time.

I would like to review the features of Superfund, identify the circumstances that tend to inhibit settlement short of the courtroom door, and then describe how Clean Sites is delivering a service that is specifically designed to eliminate or reduce these apparent stumbling blocks.

Superfund

Superfund creates a revolving fund from taxes on the chemical and petrochemical industries to be used to identify, characterize, study and clean up hazardous waste sites throughout the country. Anyone who generated waste, arranged for transport, or actually transported the waste, as well as the owner/operator of the site, is made liable for the cost of cleanup through reimbursement to the Fund or through direct participation. The two liability standards are 1) strict and 2) joint and several.

Superfund defines hazardous materials explicitly and by reference to other statutes. It provides for a national priority list of sites to be cleaned up under the program. The process works as follows: The Environmental Protection Agency (EPA) selects a site for the national priorities list and schedules it for action and use of funds. Then technical studies are initiated. The studies consist of a Remedial Investigation and a Feasibility Study (RI/FS). The former focuses on the problem generically, and the latter considers alternatives that might be used to remedy the problem. These studies take from a year [17 ELR 10264] to a year and a half (sometimes longer) to complete.

The next step is the adoption of a record of decision based on the studies and on other information acquired through the comment process. The period of time for the adoption of a record of decision is from one to several months. The final step is construction design and cleanup, which follows a one-to-two year schedule as well.

Identification of the private parties and, in some cases, public agencies as responsible parties is typically ongoing over a period of months. It can begin at any time in the process, from the very beginning to a period after the record of decision has been completed.

Superfund cleanups are extremely expensive, often many millions of dollars per site, and it is in the interest of both the government and the private sector to settle. The government has limited resources, not merely in light of Gramm-Rudman², but relative to the cost of litigating these suits in general. Also, the Fund itself can go further if parties step up and settle these suits voluntarily.

The private sector, for its part, can generally perform cleanups at a lower cost than can the government. This serves as a strong incentive to settle.

Why haven't more of these sites been settled? The answer lies in Superfund — the legal standards, the technical complexity, and the difficulty of documenting what happened 10, 20 or 30 years ago (in some cases even longer) at one of these sites. These factors tend to combine in ways that create numerous points of dispute and a series of stumbling blocks to settlement.

I would like to turn to a more detailed discussion of the points of dispute and to explain why a neutral third party is able to do what the private parties and the government have frequently been unable to do. First, however, let me describe Clean Sites as an organization.

Clean Sites: A Neutral Third Party

We are a not-for-profit Title I-C-3 corporation, two years old, formed exclusively to facilitate hazardous waste cleanups. There are three divisions: the Coalescing Division (of which I'm a member), Technical Services, and Project Management. To my knowledge, we are the largest existing environmental dispute resolution organization. We have 47 full-time employees including nine coalescers. We have one office in Alexandria, Virginia, and are preparing to open a second office in the Midwest, probably in the suburbs of Chicago.

I will focus here on the Coalescing Division's alternative dispute resolution activities. We provide the full range of dispute resolution services offered by others, including simple conciliation and facilitation through mediation, as well as arbitration. Our coalescing staff is balanced in two ways. First, we come from law, management or technical backgrounds. Secondly, about half of us come from the public sector, and half from the private sector. Like most ADR people, we become involved only when we have been invited into a case. We can be invited into a case by EPA, by a subset of the private parties, or even by an interested community group. Of course, we cannot function unless all of the parties are willing to have us participate.

Other aspects of our practice are also similar to that of other ADR professionals. We provide confidential treatment of sensitive information. We advise the parties on how to establish an effective, fair and open process. We play a variety of roles depending on the need, including convenor, minutes taker, gatekeeper, and scapegoat. We help to educate and ease communication among the parties. We identify common ground among the parties and practice shuttle diplomacy. These functions are similar to the function offered by alternative dispute resolution professionals generally.

We do a couple of unusual things as well, however. We have a sophisticated computerized information system in our office that allows us to do a substantial amount of fact finding and analysis of available information. We are also somewhat unique in that our facility was physically designed for the purpose to which it is being put. We have several sizes of conference rooms, and a number of private phone booths, where people can close the door, call home and check things out before they commit themselves in a meeting. We consciously sought to build a light, airy place that people would feel good about. People comment regularly on what an improvement it is over the basement of the Holiday Inn at LaGuardia Airport and the like. Facilities can have a powerful effect on the mood of the participants.

There are two fundamental categories of dispute with Superfund. One of them is among the members of the PRP group (potential responsible parties), and the second is between the individual PRPs and the government.

Disputes Among the PRP Group

PRP groups are virtually always searching for greater fairness and equity than the legal standards provide. They have a strong incentive, then, to organize effectively and agree on a private basis for cost allocation.

Since the government is neutral with regard to who pays what share of the cleanup of a site, it is also neutral as to what the parties do in preparation for negotiation with the government.

There are two kinds of disputes within the PRP group. The first has to do with organization and representation of the parties. These are typically large, multi-party disputes, ranging from three to 800 (we have been asked to look at one site with 4,000 PRPs). The organization of these groups differs with both their size and their categories of interest. Typically our cases number around 100 private parties.

The parties rely on the voluntary cooperation of EPA in identification and notification of the remaining parties. They cannot get organized unless they know who their fellow parties are. In about half of our cases, we have identified PRPs that the EPA had not identified, and we have found how to communicate with a vast number more. I am now involved in a case in which the EPA sent either information request letters or formal notice letters to a total of 120 parties. Our first efforts in identifying parties have caused that total to rise to 275, and it will probably double from the 275 before we're through.

There is a difficulty in organizing effectively with broad representation. The instinct of the big actors is to come to the table, and the tendency of the small actors is to stay away. Those who have experience with Superfund and sophistication about joint and several and strict liability standards are more apt to come, and those who lack it are somewhat less anxious to do so. Large companies with vast resources are more inclined to show than small businesses or individuals (there are a great number of the latter). Generators of waste are more likely to come than transporters, even though the law does not distinguish between their responsibility.

In addition to the above, it is not easy to convene adequate representation, because not everyone can fly in from all over [17 ELR 10265] the country every three weeks to meet and discuss the status of affairs or the tasks that remain to be done.

Typically these cases are organized around a steering committee. Some wonderful techniques have been tried. One that impressed me the most was described to me by a lawyer for the Air Force. He described a case in which people were corralled in a room, and the door was barred until certain organizing objectives were achieved. Anyone who wanted could be on the steering committee. Since these people were looking around the room at people whom they did not know, about 50 percent of the group joined the steering committee. After about the fourth meeting, it dropped from 50 people down to about 15. After time, people became comfortable with the notion that they would not be sold down the river if they were not scrutinizing this process all along the way. I would describe the process as strong participatory democracy in the context of a forced march (which I thought appropriate, given the person telling the story).

It is often difficult to get the right kind of leadership when these groups organize. At times the people who step forward are not the people who have the best chance of moving the group along. There ought to be a balance in the group between technical, management and legal talent. The vast percentage of the representation tends to come from lawyers, yet management and technical skills are important and very much needed.

At one meeting in which Clean Sites was trying to negotiate the procedure to be used by the parties, I suggested that the parties on the finally selected steering committee ought to have the authority to commit the companies to the appropriate dollar amount. The outside counsel became very nervous, because they doubted that they would have such authority. The shares we were discussing were very large indeed. In an open fashion, we negotiated a procedure that was mutually acceptable. We wanted to make sure that the right people were at the table, not just people who would listen carefully, hear other people commit, and say: We can't commit to anything. We have to go confer with someone else and then come back at another time.

There is also a problem in planning and holding meetings. Many people will object to the way any given party writes up the minutes of a meeting, particularly when those minutes are supposed to reflect a consensus. It is a much more sensitive task than one might think.

Raising money is a problem as well. As people take their seats around the table, the companies may say: How are we going to pay for these talks? Shall we do analysis in-house? Although it has been tried, it is generally unwise for the parties to use in-house personnel for data development and cost allocation. The work has low credibility if it comes from one of the parties with a vested interest in the outcome. One alternative is for everybody to contribute a set amount of money to hire an independent consultant who does the work.

All of these issues of organization create stumbling blocks. It is hard to raise money if somebody has a problem with the liability standards or has not seen any evidence that he really belongs at this site.

The second kind of dispute among the PRPs is the allocation of cost responsibility. It is difficult to assemble and analyze records pertaining to the waste. Sometimes there are no records. With the cooperation of EPA and the private parties, Clean Sites gathers up all the publicly available documents. Then, through the course of the negotiations, we request and normally receive a variety of confidential documents as well, which we use in a generic analysis of the allocation issue.

In one case, we went to the EPA records, and they had 23 cardboard boxes of material, much of which was not even in file folders. There was no storage space at the agency, not even file drawers. Nobody could find anything. None of the parties knew what the government had on them. The government, for the most part, did not know for sure what it had on the parties. But they did agree that this documentation was essential to settlement and therefore would be available on a public basis. Secondly, they agreed to allow Clean Sites to make a copy of essential parts of it and take it home with us. We set it up in a physical system that allowed for direct and easy access. A computerized indexing summarized each document. It was analogous to a computerized litigation support system, except that it went further in that it had a document summary as to the content, not just the author and date.

Another difficulty in allocation is the need to consider defenses, particularly the initial question of hazardousness, and the subsequent question of the degree of hazardousness. In our efforts to develop allocation models for private parties, we have considered questions of toxicity, incinerability and the degree of inertness, among others. The first step is usually to consider how much waste was brought to the site.

In addition, there is the problem of apportioning liability among the three classes of private parties: generators, transportors, and owner/operators. Also, how does one treat orphan shares, those shares of responsibility appropriately attributed to companies that are no longer in business? How does one treat the non-settling shares at the site? Should the private parties assume the responsibility for paying for the non-settling share and then bear the burden of bringing third party contribution suits? Should the government make temporary use of the Fund?

Disputes Between the PRPs and the Government

The most difficult issue, however, is the issue of the liability standards under the law. The strict liability standard of Superfund is a bitter pill for people who are following the law, who are not guilty of negligence, who may even have been following specific instructions of a government agency as to what they should do with their waste. This creates a good deal of anger, which must be dealt with in the negotiations.

The joint and several liability feature demands a very creative and thoughtful application of the principle in the settlement. Without doubt, it is a powerful incentive for the parties to get their act together and voluntarily settle a case. However, if it is rigidly applied by the government, some problems can arise. There may be selective pursuit of the deep pocket companies regardless of how much they contributed to the problem. There may be an unwillingness to use mixed funding, even when there is a large recalcitrant and perhaps also a large cumulative corporate share at the site. There may be a plain unwillingness to sue recalcitrants, as the government turns its back on the idea that it has any responsibilities in this area at all.

Technical issues can be the source of dispute as well. They include whether the technical studies (the RI/FS work) have been properly conducted. It cuts both ways. The private parties may use the opportunity to comment on technical studies as an excuse to try to get the cost and scope of the cleanup reduced. Or, the private parties may be worried about a containment strategy. They fear a resolution that would cover up the problem but not remove it, leaving them open to continuing liability. They would rather clean the problem up than see it put under a pad. The problem arises in cases where the [17 ELR 10266] process is well along at the time companies are notified. The companies have had no opportunity to comment on the technical solution.

We are dealing with this problem in a recent case. We have arranged for the PRP group with its own money to conduct a pilot microbial project to see whether the cleanup method that they prefer would in fact be better. It will be done during the next phase in the process, the construction design.

Beyond all of the problems raised so far is the human element, which can create conflicts that are not substantively based. This includes the mistrust by private parties of one another, between the parties and the government, and sometimes mistrust of Clean Sites. When we enter a case, there is at times a skepticism as to whether we can be effective when all of these class-A lawyers have failed.

Conclusion

Resolution of these problems, both among the PRPs and between PRPs and government, is very resource-intensive. Steering committee members may be called to attend a dozen or more meetings not necessarily in the cities in which they work. And Clean Sites may devote a thousand or more professional hours to the various activities that we undertake. Of those, the largest share goes into cost allocation work (when we are asked to do it).

Superfund is complex, and there is a discrepancy between the EPA's straightforward obligations to meet the legal standards and the work required to create an atmosphere conducive to settlement. The intensive fact finding and communication that also must be done are beyond EPA's mandate and most often are not done by the agency. In addition, there is a real need for a third party without a vested interest in the outcome to make determinations on such matters as cost allocation.

These are some of the reasons why Clean Sites is overwhelmed with work and turns away two to three cases a week. We invite imitators with open arms.

1. Superfund is the popular name for the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601-9675, ELR STAT. 44001.

2. Pub. L. No. 99-177, 99 Stat. 1037, Dec. 12, 1985.