CHAPTER 4 THE CUTTING EDGE: CURRENT REGULATION AND JUDICIAL DEVELOPMENTS
| Jurisdiction | United States |
(Nov 1988)
THE CUTTING EDGE: CURRENT REGULATION AND JUDICIAL DEVELOPMENTS
Solid Waste and Emergency Response Division U.S. Environmental Protection Agency
Washington, D.C.
ROCKY MOUNTAIN MINERAL LAW FOUNDATION*
Lisa Friedman —
Associate General Counsel
Solid Waste and Emergency Response Division
United States Environmental Protection Agency
I thought the most helpful thing I could do would be to follow-up on some of Lisa Finklestein's remarks concerning the importance of having knowledge of clean-up issues when you are either entering into a real estate transaction or, god forbid, you've gotten stuck with a contaminated piece of property. At some point you may end up with a piece of property on which hazardous waste management activities have taken place or with a property that has underground storage tanks. You need to understand what type of remediation may be necessary at that site and the process for clean-up. It is important not only in the negotiation phase, but in understanding what your responsibilities may be as an owner/operator.
Let me make a few introductory remarks before I go into the clean-up process at least at the federal level. First of all as other speakers have pointed out, the remedies are getting increasingly expensive, due in large part to cost of living increases but also due in part to the fact that hazardous waste management is getting more expensive as a result of increased standards at the federal and state levels and because both the states and EPA are requiring more treatment of hazardous waste and hazardous substances, which tends to be more expensive than disposal. As a result, we are seeing clean-up costs escalate from $5,000,0000 to $10,000,000 for a typical site up to $25,000,000 to $30,000,000.
EPA has four major clean-up programs: (1) Superfund or CERCLA; (2) RCRA- Subtitle C Corrective Action; (3) RCRA-Subtitle D Corrective Action (applicable to nonhazardous waste facilities); and, finally, the underground storage tank program. They all differ somewhat in procedure, in the nature of the cleanup, and who may order the cleanup. Whether you have to cleanup and the extent to which you have to cleanup are going to depend on which program you fall into. It would be very nice to know as the owner/operator of contaminated property or property with underground storage tanks what the dollar extent of your liability may be. Even under the most explicit regulations, which I am going to talk about in a little bit, the standards are extremely vague. Certainly, no cookbook exists to allow you to figure out how much it is going to cost to cleanup a site and the dollar ranges can be incredible.
How can you find out more? One of the things I would suggest is looking at some of the Records of Decision for Superfund
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sites issued to date. Hundreds of these have been issued since the program started and you can get some idea of liabilities, remedies, and costs by identifying a site similar to yours. EPA is starting to do corrective action under RCRA and the corrective action requirements will be included in comments or orders. Again, you can get copies of those comments or orders and determine exactly what the clean-up requirements may be. Subtitle D Corrective Action requirements have just been proposed and the underground storage tank program is just getting underway so a history in those particular areas does not yet exist.
The point I would like to make is that EPA is not the only player in corrective action. In most cases you are going to have to deal with the State. In some cases the State may have the lead, particularly in the Subtitle D program. The RCRA Subtitle C program and also the underground storage tank program start out initially as federally managed programs, but the authority to run these programs, hopefully, will be delegated to the States. In addition, State or local requirements may exist beyond the federal requirements. Another problem associated with corrective action and CERCLA clean-up is that the standards are constantly changing as scientific information improves. At EPA we have a "chemical of the month" program, one month it's dioxin the next month it's PCBs, and the following month something else. So if you think you've cleaned up a site, the new chemical of the month suggests you may have to do more. Regulations and legislation are also constantly changing at the federal and the state levels; usually by getting much more stringent. For example, the changes made to Superfund in 1986 made it a much more stringent program, which will inevitably increase the cost of cleanup. Obviously, these types of changes are very hard to predict.
All this means that when you are negotiating for the sale of contaminated property, it is a real "mine field." You negotiate today based on liabilities and costs that may be very uncertain and that are constantly changing. If you are on the hook for clean-up costs because you are an owner/operator, you need to understand the process and standards and how you can influence the agencies decision.
I am going to discuss the four clean-up programs under EPA's jurisdiction and some of the similarities and differences between them. I will start first with Superfund. This is the most long-standing program and we have had the most experience with it. As you will see, most of the other clean-up programs have been based on Superfund as a model.
Let me just briefly explain what the process is under Superfund, then we can talk a little bit about the clean-up
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criteria. There are two types of actions under Superfund: (1) Remedial Actions, (2) and Removal Actions. The Remedial Actions tend to be the long-term actions that are taken at a site to achieve some type of permanent remedy. These tend to be the $25 to $30 million cleanup projects. In addition, the statute authorizes EPA to take or to order other parties to take Removal Actions. These are the shorter term activities, such as removing drums, erecting fences, and so on. Removal Actions also include doing studies at a site to determine the nature and extent of contamination or possible alternative remedies. In order for a site to be eligible for fund-financed Remedial Action it has to be listed on the "National Priorities List" ("NPL"). The NPL is derived from a master inventory of sites where hazardous substances have been identied, which is known as CERCLIS (The Comprehensive Environmental Response Compensation Liability Information System). There are 25,000 sites on CERCLIS. Gradually the Agency is going through this list, doing additional studies on sites listed, and running the information gathered from these studies through a model which is known as the "Hazard Ranking System". If a site scores above a certain number on the Hazard Ranking System it is added to the NPL. Over 800 sites are currently listed or proposed for listing on the NPL. If you own or are thinking of buying a site that is on the NPL, (I don't know why you would do that!), you are almost certainly going to come under the Superfund system at some time during the life of the site. Studies can be required and Remedial or Removal Actions, as well as enforcement actions, can be taken at any site. So even if you have a non-NPL site, EPA may get you at some point. We are not going to get to all of the sites, however, because I said there are 25,000 sites on CERCLIS. There are sites out there that have not even made the CERCLIS list. It is very unclear whether EPA or any other governmental entity will ever get around to doing anything at those sites.
In the case of a Removal Action, the process for determining remedies and the amount of public participation will generally depend on how quickly the Removal Action is moving. If you have an emergency, like a fire or an explosion, generally there will not be any advance planning for selection of a response action or any opportunity for public participation so that the owner/operator at the site will not have an opportunity to influence the remedy. If the planning process is under six months, we try and provide as much planning and public participation as is feasible, given time constraints. If it is over six months, there is a more formalized evaluation of alternatives and more of an opportunity to influence the selection of a response action.
The Remedial Action process is much more formalized. Two studies are done at the site: one is called a Remedial
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Investigation where EPA or a responsible party determines the extent of contamination at the site; and the the other is some-thing called a Feasibility Study where EPA or the responsible party examines alternatives that will address the problem at the site. These are referred to simply as an RI/FS. After the alternatives have been identified, EPA examines them according to some criteria, which I will talk about in a few minutes, selects one alternative as the leading alternative, and puts that out for public comment along with the RI/FS as the "Proposed Plan for the Site." If you are a PRP and do not participate in commenting on the Proposed Plan and the RI/FS, you have passed up probably your most important opportunity to influence the selection of a remedy. A review of remedies in the Superfund process, whether it is in a cost recovery action or in an enforcement action, is based on an administrative record. If your comments do not appear in the record, the court is going to rule in favor of EPA's Remedy. You cannot challenge the Remedy de novo, so participating in the public participation process when a proposed plan and the RI/FS go out for public comment is very important. As a result of public comment, EPA may revise the Remedy or it may select an alternative Remedy. Once the Remedy is selected, a final Record of Decision or "ROD" is issued. The project then...
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