Statement of Elliot P. Laws
Assistant Administrator, Office of Solid Waste and Emergency Response, U.S. Environmental Protection Agency, Before the Committee on Government Reform and Oversight Subcommittee on Natural Growth, Natural Resources, and Regulatory Affairs, U.S. House of Representatives
February 13, 1997
Good morning, Mr. Chairman, and Members of the Sub-Committee. I am pleased to have this opportunity to appear before you to discuss the Agency's accomplishments in fundamentally improving the Superfund program. We understand the Subcommittee has been concerned about the November 22, 1996 draft report prepared by the General Accounting Office (GAO) reviewing Superfund cleanups. However, it is EPA policy not to testify on GAO draft reports, as changes may occur between the time EPA reviews and comments on the report and the final release. For that reason, my primary purpose today is to provide you an overview of the current status of the program, and the many administrative changes that have made Superfund a fundamentally different program, than that of just four years ago. Through three rounds of Administrative Reforms, EPA has produced significant changes in the Superfund program, ranging from national programmatic changes, to changes that address individual sites at every stage of the cleanup and enforcement processes. Though broad in scope, these changes have all been implemented within the context of EPA's fundamental principles of reform:
- Increasing the pace of cleanups
- Lowering the cost of cleanups, while protecting public health and the environment over the long-term
- Promoting fairness in the liability scheme, while reducing transaction costs and litigation
- Involving the community and States in decision making
- Promoting economic redevelopment at Superfund sites
Though the Superfund program has been criticized in the past due to problems with early implementation, the program's recent accomplishments are substantial. For example, the Agency has completed cleanup construction at 418 sites on the National Priorities List (NPL). As a result of the President's leadership and commitment to protect human health and the environment, the President's budget request for Fiscal Year 1998 would raise the goal to 900 completions by the year 2000, representing approximately two-thirds of sites currently on the NPL. Additionally, since 1981, approximately 4,000 emergency cleanup actions have been completed, with over 1,200 of these actions occurring at sites on the NPL.
The Superfund Enforcement Program's accomplishments are also substantial. Currently, responsible parties perform more than 70% of Superfund long-term cleanups, saving taxpayers more than $12 billion. As an important goal of the Administrative Reforms, EPA continues to promote fairness in the Superfund enforcement program by reaching settlements with more than 14,000 small parties at Superfund sites. EPA is also providing orphan share compensation to responsible parties willing to negotiate long-term cleanup settlements.
Superfund Administrative Reform accomplishments are being acknowledged outside the Agency as well. In a recent report, the Superfund Settlements Project (SSP), performed an in-depth study of the implementation of Round 3 reforms in Regions 1 and 3. This report, published in December 1996, acknowledges EPA's "substantial" track record "since EPA began implementing the October 2, 1995 administrative reforms...especially in light of the severe obstacles that EPA encountered during fiscal year 1996 as it began implementation of these reforms." These positive comments, from a group of large corporations involved in many Superfund cleanups, echo the Agency's recent Superfund Administrative Reforms Annual Report, for Fiscal Year 1996, which details other significant program accomplishments.
Increasing the Pace of Cleanups
The completion of 418 Superfund toxic waste site cleanups (as of January 31, 1997) is just one indication of the record pace EPA has set for cleaning up Superfund sites. At the Lord-Shope Landfill near Erie, Pennsylvania (the 400th site to be cleaned up) parties used innovative technology to remove contaminants. Tons of industrial wastes had been dumped over 20 years (including debris, rubber scrap, organic and inorganic chemicals, solvents, cooling acids, and caustic agents) that resulted in ground water contamination. Today, the community no longer needs to worry about the safety of drinking water, the impact on farmland near the site, the effect on property values of their homes and businesses, or the possibility of children wandering onto the site and playing among the drums of toxic chemicals.
EPA (with the support of the Corps of Engineers and the Bureau of Reclamation and their cleanup contractors) also has implemented reforms which streamlined its rapid action cleanup authority. EPA's Superfund Accelerated Cleanups Model (SACM) accelerates cleanup and risk reduction at sites by consolidating site-assessment into a one-step process. SACM includes the following initiatives: taking early actions while assessing long-term cleanup; using "presumptive" remedies where appropriate; initiating enforcement activities earlier; and addressing the worst threats to people and the environment first. SACM reduces cleanup time through a single, continuous site assessment and early action process.
The Agency is saving time and money by using standardized or "presumptive" remedies for certain types of sites. Presumptive remedies are based on scientific and engineering analyses performed at similar Superfund sites and are used to eliminate duplication of effort, facilitate site characterization, and simplify analysis of cleanup options. EPA issued presumptive remedy guidances for the following: municipal landfill sites; sites with volatile organic compounds in soil; wood treater sites (with an update two years later); and a ground water presumptive response strategy. Regions are reporting significant reductions in costs and time required to complete remedies. A recent Office of Inspector General report focused on an independent review of the use of a presumptive remedy and concluded that "Use of a Presumptive Remedy increased consistency in decision making by taking advantage of lessons learned at similar sites, and allowed speedup of the Feasibility Study process."
Providing Protective Cleanups at Lower Costs
EPA has initiated a number of administrative reforms that aim to promote national consistency and the use of up-to-date technology and experience gained from over 15 years of implementing the program. These reforms will lower costs, while maintaining long-term protection of human health and the environment.
National Remedy Review Board
EPA has achieved significant success in creating substantial future cost reductions for parties at complex, high cost Superfund sites across the country, by creating a national board of technical and policy experts within EPA to review of high cost, long term cleanups. This newly established National Remedy Review Board, comprised of both Headquarters and Regional experts is providing targeted review of these cleanup plans, so that overall program pace is not affected, prior to final remedy selection. Overall, the Board's analysis indicates potential reductions of $15-30 million in total estimated future costs for reviews completed during FY96.
Using Technology and Science Updates to Save Money
The Agency's preliminary analysis indicates that approximately $280 million in future cost reductions may result from the Agency's review, and updates to earlier remedy decisions made in the early years of the Superfund program. These early remedies were based on "state-of-the-knowledge-and-practice" available at the time. Where science and technology have advanced and adequate levels of public health and environmental protection are assured, EPA is revising remedies where future cost reductions can be achieved while still maintaining appropriate levels of protection, as well as the current pace of the program.
Clarifying the Role of Cost in the Remedy Selection Process
Through a recently issued fact sheet, EPA summarized information on the role of cost in the Superfund program which was, prior to this point, scattered in guidance, statutes, and regulations. EPA's aim is to ensure that all stakeholders involved in the Superfund process fully understand the important role of cost in remedy selection under both existing law and policy and in recent initiatives aimed at enhancing the cost-effectiveness of remedial actions.
Better Land Use Assumptions in Remedy Selection
EPA has improved its cleanup decisions by consistently using reasonable assumptions about current and future land use. Recognizing that land may be appropriate for industrial uses, rather than residential uses, can yield a more realistic risk assessment and more cost-effective remedy selection. EPA is working with local land use planning authorities, other government officials and the public as early as possible during site investigation to discuss land use issues. EPA also is making extra efforts to reach out to communities which may have environmental justice concerns to ensure that they are fully informed and able to participate in these decisions. An analysis of EPA's Records of Decision (RODs) from 1991 through 1993, indicate that 60% of RODs realistically include a land use scenario other than residential land use, typically where there is no residential land use on-site or adjacent to the site.
Setting Priorities for Cleanups
To ensure that available funds are directed to the highest priority response projects on a national basis, EPA established a National Risk-Based Priority Panel (Panel) in August 1995. Prior to this reform, individual Regions established the relative priority of their cleanup projects which were then funded on a first-come, first-served basis. This reform established a national priority system to fund cleanups based on the principle of "worst problems first." The Panel evaluates proposed cleanup actions, looking at the following factors: risks to humans and the ecology; stability and characteristics of contaminants; and economic, social and program management considerations. With the exception of emergencies and the most critical removal actions, cleanup projects are generally funded in order of priority based on the recommendations of the Panel. By early 1997, the panel had ranked more than 150 sites and operable units approaching $1 billion in cleanup costs.
PRPs Performing Risk Assessments
High quality risk assessments can often be performed faster and cheaper by PRPs under EPA's supervision, saving taxpayer money and accelerating the pace of cleanup. In January 1996, EPA issued a directive encouraging the performance of Superfund site risk assessments by PRPs in appropriate cases. Eight Regions have now identified Superfund sites for PRP-led risk assessments.
Promoting Fairness in Enforcement
A core principle of the Superfund program is that the cost of cleaning up toxic waste sites should be borne by the parties responsible for the waste. EPA's "Enforcement First" strategy has assured that responsible parties perform or pay for more than 70% of long-term cleanups, thereby conserving the Superfund trust fund for cleaning up sites for which no viable responsible parties can be identified.
Over the course of the Superfund program's implementation, however, stakeholders have expressed a variety of concerns regarding the fairness of the liability system. Issues related to excess litigation and associated transaction costs, the perceived inequities in the issuance of cleanup orders, and the liability of parties contributing small amounts of hazardous substances to Superfund sites, parties that have limited assets, and parties that disposed of municipal solid waste, have all contributed to criticisms of the program. Most of these criticisms stem from the way private parties, rather than EPA, have chosen to litigate claims for cleanup costs. Through Administrative reforms, EPA has addressed many of these concerns.
Recognizing the Orphan Share
EPA has fundamentally changed the way it conducts settlements at Superfund sites through implementation of its 1996 "orphan share compensation" policy. The policy encourages parties to settle, rather than to litigate, and enhances the fairness and equity of settlements. Without a settlement, responsible parties at a site are potentially liable under the Superfund law for the entire cost of the cleanup, including the share that might be attributable to other parties that are insolvent or defunct. Under the new orphan share reform, however, EPA offers to forgive a portion of its past costs and projected future oversight costs in cleanup settlements to cover some or all of the orphan share at the site. This creates a major incentive for responsible parties to agree to perform the cleanup without litigation, and thus reducing transaction costs. In FY96, the Agency offered over $57 million in orphan share compensation to potential settling parties across the United States. The President's budget continues Administration support for reforms that enhance fairness by providing $200 million of mandatory spending to fund orphan shares.
Getting the "Little Guy" Out Early
EPA's reforms are removing thousands of small volume waste contributors from the liability system. PRPs that are liable for cleanup costs have sometimes sued huge numbers of small businesses that had little or no connection to the toxic contamination sometimes simply by naming every business in the local yellow pages as a defendant in a contribution lawsuit. EPA's reforms have responded to the burden this can place on parties that made a very limited contribution to the pollution at a site by using its settlement authority to get small waste contributors out of Superfund litigation. To date, the government has completed settlements with over 14,000 small volume contributors of hazardous waste at hundreds of Superfund sites. These settlements with the federal government protect the settling parties from expensive private contribution suits. In addition, EPA has stepped in to prevent the big polluters from dragging untold numbers of the smallest "de micromis" contributors of waste into contribution litigation by publicly offering to any such party $0 (i.e., no-cost) settlements that would prevent lawsuits by other PRPs.
Site Specific Special Accounts
Prior to the Administrative Reforms, any funds recovered in early settlements at a particular site were usually deposited in the Superfund Trust Fund, and could not be spent until appropriated. When appropriated, these funds could be spent at other sites. Through the use of Site Specific Special Accounts, EPA is able to direct settlement funds, as well as interest earned on those dollars, to future response actions at a specific site. As of August 31, 1996, $226 million in principal, and $35 million in interest, have been set aside for exclusive use at specific sites.
Equitable Issuance of UAOs
To address the criticism that EPA routinely issues cleanup orders under section 106 of the Superfund law (unilateral administrative orders or UAOs) only to a subset of the parties identified at a particular site, EPA has established a protocol for requiring a detailed explanation of the basis for not including certain parties when issuing a UAO. This new requirement will ensure greater equity amongst parties receiving UAOs, as EPA will issue these orders to the largest number of manageable PRPs at each site.
EPA is conducting pilot projects that test a fundamentally different approach to the allocation of Superfund costs (called the allocations pilots) in order to promote fairness in settlements. Under this approach, PRPs may settle their liability based upon their allocated share of cleanup costs. A neutral party known as an allocator, selected by parties to the process, conducts an out-of-court allocation. The allocator assigns shares of responsibility for cleanup costs among all PRPs at a site. Under this scheme, EPA expects to pay the "orphan share," which includes the shares of parties which are defunct or insolvent. To date, EPA has offered allocation pilots at 12 Superfund sites. A great deal has been learned about the strengths and weaknesses of the allocation process through the implementation of allocation pilots. Initial pilot results indicate the need for site-specific flexibility and further review of alternative dispute mechanisms to help resolve disputes among parties at Superfund sites.
Reducing Costs for PRPs Through Reduced Oversight
PRPs incur costs at sites in part because of EPA's need to oversee the quality of cleanup work. Oversight is the process EPA uses to ensure that all studies and work performed by PRPs are technically sound and comply with statutory requirements, regulations, guidances, policies, and the signed settlement agreement. Oversight may include submission of reports for approval, meeting interim cleanup milestones, or the scheduling of site visits. As the Superfund program matures, parties performing cleanup work have developed a considerable body of experience in conducting response activities at sites. EPA can reduce oversight of such parties while continuing to exercise sufficient oversight to ensure that the work is performed properly and in a timely manner.
Already, EPA Regions have identified approximately 100 sites where reductions in oversight of ongoing work for cooperative and capable PRPs have occurred or will occur significantly reducing PRP costs at some of these sites. EPA also may look at opportunities to involve communities in deciding the appropriate level of PRP oversight.
Involving Communities and States in Decision making
The Agency supports the principle that communities must be involved in the cleanup process from the time a site is discovered to the time it is finally cleaned up.
Involving Communities in Remedy Selection
EPA is promoting "consensus-based" approaches to the remedy selection process by involving community stakeholders in site pilot projects. This effort is intended to empower local citizens and other stakeholders to help develop mutually acceptable, common sense remedies that meet statutory and regulatory requirements. For example, at the Lower East Fork Poplar Creek Site in Oak Ridge, Tennessee, the cleanup strategy, agreed to in August 1995, reflected the concerns of the local community in the remedy selection process. This included input into a change in cleanup goals. Through a citizen working group established by the Department of Energy, working in partnership with EPA and the State of Tennessee, the citizens' influence on the remedy selection decision averted the expenditure of more than $100 million of cleanup costs while protecting human health and the environment in a more timely manner.
EPA established an Ombudsman in every Region to serve as a direct point of contact for stakeholders to address their concerns at Superfund sites. Prior to this reform, stakeholders raised concerns with Regional personnel, but had no formal mechanism for having their issues elevated. The Ombudsmen now serve as facilitators for stakeholders on concerns that have not been resolved between Regional personnel and the stakeholder through informal means. The Ombudsman reports to a top Regional management official in every Region to assure management attention to issues raised.
Improving Public Access to Superfund Information
EPA recognized that improving communication with stakeholders and improving access to Superfund information will help the public become more aware of, and informed about, Superfund. EPA is using electronic tools to improve communication, including having sites for both the Office of Superfund Remediation Technology Innovation (OSRTI) and the Office of Site Remediation Enforcement (OSRE) on the Internet, with separate pages devoted to Superfund reform. Each Region also is developing Internet "home pages" which will include information on Regional Superfund programs, such as Superfund site lists, site-specific information, successful site cleanup actions, and links to State Superfund activities.
State Programs Speed Cleanup of Non-NPL Sites
EPA recognizes the important role that State environmental agencies have in encouraging economic redevelopment of brownfields. EPA plans to provide $10 million, earmarked in FY97 appropriations, to encourage the development or enhancement of State programs that encourage private parties to voluntarily undertake early protective cleanups of less seriously contaminated sites, thus accelerating their cleanup and their redevelopment. EPA recently issued a memorandum setting out an interim approach for its relations with State voluntary cleanup programs. The memorandum includes criteria for State voluntary cleanup programs that are enabling EPA and the States to start negotiating a division of labor between EPA and the States in memoranda of agreement (MOAs). Even before these criteria were set out, eight States worked out MOAs with EPA regarding sites cleaned up under voluntary cleanup programs.
Greater Power for States in Picking Remedies
EPA is sharing its authority with qualified States and Tribes to select remedies and decide which sites to list on the NPL. States selected for this reform enter into agreements through which they conduct the remedy selection process, consistent with applicable law and regulations. Participating States supervise the entire remedy selection process with minimal EPA oversight or involvement, giving the State significantly more control than usual over NPL site cleanups, and maximizing EPA resources, which can then be used at other sites.
Promoting Economic Redevelopment
EPA is promoting redevelopment of abandoned and contaminated properties across the country that were once used for industrial and commercial purposes ("brownfields"). While the full extent of the brownfields problem is unknown, the United States General Accounting Office estimates that approximately 450,000 brownfields sites exist in this country, affecting virtually every community in the nation. EPA believes that environmental cleanup should be a building block, not a stumbling block, to economic development, and that cleaning up contaminated property must go hand-in-hand with bringing life and economic vitality back to communities. EPA's Brownfields Economic Redevelopment Initiative places a new focus on brownfields. The Brownfields reforms are directed toward empowering States, communities, and others to work together to assess, safely clean up, and sustainably reuse these sites. EPA efforts are being accomplished through the Brownfields Action Agenda an outline of specific actions the Agency is conducting.
Brownfields Pilots are Encouraging Redevelopment
The Brownfields Assessment Pilots form a major component of the Brownfields Action Agenda. EPA exceeded its commitment to fund at least 50 pilots by actually funding 76 pilots at up to $200,000 each by the end of 1996. These two-year pilots are intended to generate further interest in Brownfields redevelopment by bringing together public and private efforts including Federal, State, and local governments. The Brownfield pilots will develop information and strategies that promote a unified approach to site assessment, environmental cleanup, and redevelopment. Many different communities are participating, ranging from small towns to large cities. Stakeholders tell the Agency that Brownfields development activities could not have occurred in the absence of EPA efforts. As the National Community Reinvestment Coalition (NCRC) said "[W]e wholeheartedly support the EPA's Brownfields Economic Redevelopment Initiative. NCRC believes that [EPA's] multifaceted initiative represents a significant step forward by the Administration in working with distressed communities on the local level in their revitalization efforts."
Getting Sites off the "List"
Prior to reform, EPA kept track of all potential hazardous waste sites in an inventory known as the Comprehensive Environmental Response and Liability Information System (CERCLIS). Even sites where no further Federal Superfund interest was warranted remained in the CERCLIS inventory. This practice led to unintended barriers to the redevelopment of these properties because sites listed in CERCLIS could be automatically considered risky by some lenders, making it difficult for potential purchasers to secure loans to develop these properties. To avoid this result, EPA redefined CERCLIS, deleting or archiving sites from the active CERCLIS inventory. EPA has archived over 27,000 sites (e.g., sites where no further federal remedial action [is] planned') from CERCLIS to date, and EPA expects to archive over 1,000 additional sites from CERCLIS per year over the next several years.
Deleting Clean Parcels from the NPL
Prior to the Administrative Reforms, EPA's policy had been to delete sites from the NPL only after evaluation of the entire site. However, deletion of entire sites does not communicate the successful cleanup of portions of those sites. Total site cleanup may take many years, while portions of the site may have been cleaned up and become available for productive use before cleanup has been completed at other portions of the site. Some potential investors or developers may be reluctant to undertake economic activity at a cleaned up portion of real property that is part of a site listed on the NPL. This reform allows EPA to delete portions of sites, as appropriate, upon the receipt of petitions from interested parties, allowing redevelopment to occur quickly. To date, four parcels are now in the deletion process.
Removing Redevelopment Barriers Based on Liability Concerns
EPA is promoting redevelopment of contaminated properties by protecting prospective purchasers, lenders, and property owners from Superfund liability. EPA's "prospective purchaser" policy is stimulating the development of sites where parties otherwise may have been reluctant to take action by clarifying (through agreements known as "prospective purchaser agreements") that bona fide prospective purchasers will not be responsible for cleaning up sites where they did not contribute to or worsen contamination. EPA issued new guidance in May 1995, which allowed the Agency greater flexibility in entering into such agreements. The new guidance expanded the universe of sites eligible for such agreements to include instances where there is a substantial benefit to the community in terms of cleanup, creation of jobs, or development of property. Of the 45 agreements to date, over 50% have been reached since issuance of the May 1995 guidance. At the Indiana Woodtreating Site near Bloomington, Indiana, the work performed under a prospective purchaser agreement will prevent contaminants from entering Clear Creek, which is a drinking water source for the City of Bloomington, Indiana.
People owning property under which hazardous substances have migrated through ground water also feared liability under the statute. EPA responded by announcing that it will not take enforcement actions under CERCLA against owners of property situated above contaminants which have migrated in ground water, but where the property is not also a source of contamination. Further, EPA also will consider providing protection to such property owners from third party lawsuits through a settlement that affords contribution protection.
EPA has given reassurance to the lending industry and to government entities acquiring property involuntarily. EPA outlined in guidance what it considered appropriate actions a lender may undertake without becoming a liable party. In September 1996, Congress passed legislation very similar to EPA policy and guidance on lenders. EPA also is providing assurances ("comfort/status letters") in appropriate circumstances to new owners, lenders, or developers that they need not fear incurring Federal environmental liability.
Through Administrative Reform, Superfund is now a fundamentally different program than it was just four years ago. By considering the differing perspectives of the various stakeholders in the Superfund process during the development of the reforms, EPA has succeeded in: promoting cost-effective cleanup choices that protect human health and the environment over the long-term; reducing litigation so more time can be spent on cleanups and less on lawyers; and helping communities become more informed and involved so that cleanup decisions make the most sense at the community level. These reforms ensure that Superfund cleanups are faster, fairer, and more efficient.