Implementing EPA's "90-Day" Management Review of the Superfund Program: How Enforcement Comes First

Glenn L. Unterberger

Glenn L. Unterberger is Associate Enforcement Counsel for Waste at the U.S. Environmental Protection Agency (EPA). The views expressed in this Article are those of Mr. Unterberger, and do not necessarily represent the official position of EPA or of any other EPA official.

[19 ELR 10547]

Oh, boy. Another government study and plan. Just when you thought you had cleared off enough shelf space for those 20-pound bookends your sister bought for you on her last vacation.

What is there to induce anyone to take seriously the self-analysis issued last June by the U.S. Environmental Protection Agency (EPA) entitled "A Management Review of the Superfund Program"? Or the follow-up implementation plan which EPA submitted to Congress in September?

This Article explains how the Agency is taking the recommendations of this "90-Day Report" seriously, and why parties outside of the Agency who are affected by the Superfund program should do so as well. Indeed, the 90-Day Report is emerging as the blueprint for EPA's Superfund management strategy for the foreseeable future.

The Genesis of the 90-Day Report

The comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA),¹ as amended by the Superfund Amendments and Reauthorization Act of 1986,² and EPA's administration of this law have both been the center of controversy since enactment. EPA is still disassociating itself from public scandals arising in the early days of this program as it seeks a higher level of credibility from Congress and the public at large for its hazardous waste site cleanup efforts.

This was one of the first issues that new EPA Administrator William Reilly faced during his confirmation last winter. During this transition time EPA was digesting and formulating responses to more than 30 different studies and reports from private and public parties regarding the shortcomings and (on occasion) successes of the Superfund program. Given this attention, and the emerging perception of the Superfund program as the public's litmus test of the sincerity of EPA's environmental protection efforts, Reilly promised at his confirmation hearing to conduct his own review of the program within 90 days to help target new directions for the Agency to pursue, within the context of its existing statutory authorities.

This "90-Day Report," which EPA published in June 1989, was based primarily on the contributions of Agency professionals working in the Superfund program, with significant consultation from state representatives and other interested groups. The Agency followed up by going public this September with a set of action plans for each of the approximately 175 recommendations provided in the report.

Major Themes of the 90-Day Report

To date there has been a (almost surprisingly) favorable public reception from congressional oversight committees regarding what this effort has wrought. This has been so even though the 90-Day Report explicitly omitted major issues being handled in EPA's work on revising the National Contingency Plan, such as bases for determining appropriate Superfund site cleanup levels ("how clean is clean?") or the appropriate role for states to play in administering the Superfund program.³ Moreover, reviews have been favorable even though much of the report is devoted to non-glamorous bureaucratics, such as refining how EPA measures and tracks program success or develops and retains capable staff, which actually can be quite important to achieving Superfund's objectives.

But the 90-Day Report also contains a great deal of substance which should be of considerable interest outside the government. The report's recommendations flow from three fundamental principles intended to set a somewhat revised tone for administration of the Superfund program:

Worst Threats First. EPA should focus its cleanup authorities first on controlling the most serious and immediate threats to public health and the environment.

Enforcement First. EPA should employ a presumption that wherever feasible it will attempt to obtain hazardous waste site cleanup from private parties before using the federal Hazardous Substance Response Trust Fund to finance response action to address environmental or health threats.

Bias For Action. EPA should focus its efforts on attaining [19 ELR 10548] cleanup results quickly and minimize protracted debate or deliberations which can stall efforts to remedy environmental problems.

This is not to suggest that the 90-Day Report overlooks other important areas. For example, there are plans to improve (1) development of effective and less-costly cleanup technologies, (2) EPA's ability to select consistent remedies which meet statutory mandates, and (3) EPA's efforts to involve local communities in cleanup at individual sites. Nevertheless, the overarching theme of the report shows the Agency's interest in moving out with the tools it presently has to get something positive and significant accomplished for the environment, and in mobilizing private parties to be primary contributors to that effort.

Enforcement First: Maximum Private Party Involvement in Superfund Site Cleanup

Which leads the discussion around to enforcement. EPA has taken its lumps as much in enforcement as any other area of the Superfund program. Partly this is a matter of perception: the Agency's Superfund enforcement program already has taken a significant upswing in recent times. For example, EPA can point to more settlements for long-term site cleanup by potentially responsible parties (PRPs) (the total value of those commitments recently passing the $ 1 billion mark over the history of the program) and broader use of statutory enforcement authorities such as unilateral administrative orders.

Nonetheless, even the Agency perceives there remains room for improvement. The 90-Day Report contains a full chapter of discussion and recommendations relating to the enforcement program. The goal of heightened enforcement will be to maximize private party involvement in cleanup, particularly in long-term remedial action, so as to achieve as broadened an environmental impact under the Superfund program as possible. Quite possibly, it is in enforcement that the impact of the 90-Day Report will first be felt outside of EPA and where the Agency will first be tested on how seriously it is committed to new directions. So what are the initiatives flowing from the 90-Day Report that will be most significant and noticeable to PRPs? And to their legion of lawyers?

EPA Has Put Its Money Where Its Mouth Is

The first impact the 90-Day Report is likely to produce in the enforcement area, and possibly the most important from a practical perspective, is that there simply will be more people working on enforcement for EPA. Lots more people. EPA now has authority to fill approximately 500 new, permanent staff positions to help implement the recommendations of the 90-Day Report. More than half of those positions are dedicated specifically for enforcement. Some 131 of those positions, for example, are targeted for EPA's offices of regional counsel. Snide remarks aside about whether this program can solve its problems by hiring more lawyers, this hiring represents more than a 50 percent increase in regional staffing levels for legal support to Superfund. That can only mean more enforcement at Superfund sites.

EPA Will Be Pushing to "Fish or Cut Bait" in Settlement Negotiations

A much greater emphasis on completing settlement negotiations "on time" might not show up immediately in practice, but EPA is developing timetables for managing Superfund sites through the site cleanup process. Regional officials' performance will be scrutinized much more closely, for example, to make sure that settlement negotiations are not dragging out, and that EPA is either invoking its enforcement authorities under CERCLA § 106 unilaterally to require PRP response action or activating the fund to finance cleanup work if settlement is not reached in a timely manner. All parties will have to keep their eyes on negotiating deadlines if settlement without unilateral enforcement and civil ligitation is an important objective.

Unilateral Administrative Orders Will Be a "Growth Industry" in EPA

EPA will focus on using unilateral administrative orders requiring PRP remedial action as a primary mechanism for implementing the "enforcement first" philosophy of the 90-Day Report. If EPA and PRPs do not reach agreement on a consent decree covering remedial response and outstanding cost recovery and other liability issues within established timeframes, EPA's presumption will be that it will issue a non-negotiated administrative order under CERCLA § 106. This order will require some or all of the PRPs to perform the remedial response to implement the long-term cleanup plan identified in a record of decision for a Superfund site.

As mentioned above, EPA has been using this enforcement authority with more frequency recently and has found its use generally to be quite successful in getting PRPs started on necessary response work. As EPA proceeds with this strategy, it will need to monitor its administrative orders to see whether they continue to be successful in compelling desired PRP response work. EPA also may need to consider under what circumstances, if any, it will continue to negotiate a consent decree for remedial action once it has issued an administrative order covering the same ground, and may need to refine its thinking on which PRPs it will name in a unilateral administrative order.

PRPs, on the other hand, also have some thinking to do about the ramifications of EPA's greater propensity to resort to unilateral administrative orders. For example, does this mean that PRPs should push harder to organize more quickly for managing settlement negotiations? How much harder should PRPs work to reach timely settlement to avoid a unilateral administrative order — which can set EPA's own terms, does not provide contribution protection under CERCLA § 113(f)(2) as a settlement does, and raises the prospect of civil penalty liability under CERCLA § 106(b)(1) or punitive damages liability under CERCLA § 107(c)(3) if PRPs fail to comply with the order?

Naturally, EPA hopes that its inclination to resort more quickly to unilateral administrative orders will push PRPs to settle more quickly and thus begin response work more quickly.

[19 ELR 10549]

EPA Will Be Gearing Up to Litigate, Where Necessary, Issues Related to PRP Liability For Response Action and Sanctions For Inadequate Response Implementation

EPA recognizes in the 90-Day Report the need to establish its willingness to litigate liability issues or pursue sanctions for inadequate performance under administrative orders and consent decrees. This maintains leverage for negotiating appropriate up-front cleanup agreements and for obtaining successful performance under those agreements. Even if EPA did not recognize this need, the heat generated from congressional and other public overseers in this area has simply been too intense for the Agency to ignore as a matter of enforcement credibility.

EPA will look for opportunities to prove its commitment in these areas. As part of its implementation plan for the 90-Day Report, the Agency will pursue closer scrutiny over PRP compliance with administrative orders and consent decrees and develop litigation and settlement guidance for civil penalty and punitive damage claims for administrative order violations.

PRPs thus must recognize that the Agency will decide whether to pursue litigating these claims based not only on the facts of an individual case but also on how litigation of legitimate claims might support a national policy of showing willingness to unsheathe the enforcement sword. No doubt further legal precedent on matters such as the "sufficient cause" defense in CERCLA §§ 106(b)(1) and 107(c)(3) for administrative order violations will result.

EPA Will Be Tightening Up on Its Activities to Collect Information From Third Parties

The 90-Day Report provides an explicit EPA commitment to more aggressively pursue proper responses to information inquiries EPA issues under CERCLA § 104(e). These responses help develop a better understanding of the substances deposited at a site, who contributed to their disposal, and how contaminants at the site may be released to the environment. Naturally, proper responses from recipients of these inquiries help ensure that EPA can properly inventory the hazardous substances at the site, decide on an appropriate remedy, and determine liability. Moreover, EPA needs to reinforce that recipients of these inquiries will not be disadvantaged by acting cooperatively in responding properly, compared to parties who choose not to provide adequate responses.

EPA expects greater use of the administrative, civil, and criminal authorities provided in CERCLA § 104(e) (and, where EPA also has sought information under the Resource Conservation and Recovery Act, RCRA § 3008) to ensure that the proper incentives exist for voluntary responses to these inquiries. EPA may bring enforcement claims for inadequate responses either as a separate enforcement case or in conjunction with other litigation the Agency pursues at a site, such as cost recovery.

While EPA presumably will not be immediately heading to court for every late or incomplete response, widespread benefits can result from continuing to establish positive precedent in this area, as with the $ 140,000 civil penalty imposed in the recent Crown Roll Leaf decision.⁴ PRPs looking to make the Superfund process work should also be thinking of ways to make sure that all proper parties are identified and brought into the site cleanup process at the outset.

EPA Will Be Looking to Narrow the Areas of Potential Controversy Regarding Cost Recovery

The 90-Day Report recognizes that an effective program for obtaining reimbursement of its hazardous waste site cleanup costs from liable parties under CERCLA § 107(a) helps ensure proper management of public funds and deters PRPs from avoiding up-front, effective participation in site cleanup in the hopes of escaping liability later. As more Superfund sites move through the remedial action "pipeline" toward full cleanup, particularly those sites for which the Superfund has paid long-term site remediation, the dollars at stake in a Superfund cost recovery action will grow considerably, as will the incentive to contest Agency claims for those larger amounts.

Faced with these concerns, the Agency has looked for ways to simplify its ability to prepare for and pursue cost recovery claims so as to maximize the enforcement resources it can devote to pursuing and obtaining environmental cleanup from PRPs. A linchpin to the Agency's strategy emerging from the 90-Day Report is EPA's decision to pursue a cost recovery rulemaking which would resolve a number of issues generically (and presumably as advantageously to the government's interest as possible) rather than through litigation in innumerable cost recovery actions.

While much work remains for EPA to refine its thinking in this area, the Agency can consider tackling questions such as (1) which program costs (either direct or indirect) are assignable to responsible parties for purposes of recovery under CERCLA § 107(a); (2) what documentation is necessary for EPA to prove up those costs; (3) how can EPA best handle confidential business information claims in documenting its cost recovery claims; and (4) how should EPA interpret portions of the statute affecting cost recovery, such as the collection of prejudgment interest or the application of the statute of limitations.

These issues can greatly affect PRP liability at Superfund sites. PRPs will be well advised to monitor the progress of this rulemaking as it clarifies rules of the road in cost recovery and helps define what reasonable expectations EPA and PRPs can bring to valuing a cost recovery case.

The "Carrots" For Settlement: EPA Will Evaluate Ways to Use De Minimis, Mixed-Funding, and Information-Sharing Authorities More Effectively

The recommendations in the 90-Day Report explicitly acknowledge that EPA needs to make better use of particular settlement authorities and strategies. These recommendations should interest PRPs because they focus on providing [19 ELR 10550] certain "carrots" to encourage PRP settlement as distinct from the enforcement "stick."

Specifically, the report recommends that EPA make greater use of its de minimis and mixed-funding settlement authorities under CERCLA § 122. The de minimis settlement authority is intended to fully resolve early in the settlement process the liability of PRPs with minimal connection to the hazardous substances posing environmental risks at a site. Mixed-funding authority allows EPA to fund certain cleanup costs to induce one or more cooperative PRPs to assume immediate responsibility for implementing full remedial response.

EPA has identified several internal institutional barriers to the use of these authorities. These barriers involve administrative protocols, not legal or policy constraints. EPA plans to alter budget and training strategies and internal procedures and checkpoints to provide greater incentive to use these authorities. Moreover, EPA recognizes that it needs to be able to demonstrate a good-faith effort to use these authorities in a balanced approach in implementing a statute grounded in joint and several liability, and thereby preserve the credibility of that liability scheme with the courts and Congress.

Finally, the recommendations call for EPA to make greater efforts to share with PRPs early information about the nature of a site and contributors to that site, so as to encourage early PRP steering committee organization, evaluation of liability, and agreement to perform remedial work. EPA has to be careful not to implement this recommendation in a way that disseminates faulty information or impedesits ability to prosecute a successful enforcement case; nonetheless, EPA will look for ways to provide incentives to its enforcement staff to implement this recommendation to promote quicker, more successful settlements.

Each of these recommendations are steps that the PRP community has supported in discussions with EPA. While PRPs must view these recommendations as positive signs, it still remains to be seen whether use of these authorities as carrots can compete adequately for EPA's attention with the pressure EPA will be facing to pursue greater use unilaterally of its enforcement sticks.

Conclusion

There are credible signs that the 90-Day Report is one government study that the government will take quite seriously. EPA already has put a great deal of money where its mouth is by substantially beefing up its Superfund staff, particularly in the area of enforcement. This decision embodies a philosophical recognition that Superfund is not the short-term hazardous waste site cleanup program first envisioned by Congress, relying heavily on contractors to manage a cleanup program over the short term, but rather is a long-term part of the nation's environmental effort.

Beyond that, there is a sincere commitment to implementing the report's recommendations among Agency professionals from top to bottom. They want this program to succeed environmentally and to rebut the criticism of the last several years. The Agency as a whole recognizes that it needs to achieve faster results in the Superfund program, in part to build credibility as the statute heads toward reauthorization in 1991. To achieve those results, EPA will be pushing the PRP community to assume as great a share of the load as possible.

Obviously, if the Agency follows through on each of the recommendations and plans of the 90-Day Report, particularly in the area of enforcement, the impact on PRPs will be significant. Because the strategies in the enforcement area focus on heightened disincentives for PRPs to avoid good-faith commitments to cleanup through the settlement process and further incentives to encourage participation, EPA will have to refine its ability to distinguish among PRPs worthy of the incentive carrots and the disincentive sticks.

Similarly, PRPs will have to take a harder look at whether their actions and involvement at existing Superfund sites will be perceived by the Agency as warranting a carrot or stick response. Moreover, there will be all the more reason for private parties to look critically at their past and present waste disposal practices to ensure that they can minimize the creation or continuation of hazardous waste management practices which expose them to Superfund liability in the first instance.

1. 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA 001-075.

2. Pub. L. No. 99-499 (1986).

3. On the pending amendments to the National Contingency Plan, see Freedman, Proposed Amendments to the National Contingency Plan: Explanation and Analysis, 19 ELR 10103 (Mar. 1989).

4. United States v. Crown Roll Leaf, Inc., No. 88-831 (D.N.J. Apr. 28, 1989). Facts of the case are described in an earlier opinion of the court at 10 ELR 20262 (D.N.J. Oct. 20, 1988).