Improvements in U.S. EPA’s Superfund Program Improvements in U.S. EPA’s Superfund Program

Improvements in U.S. EPA’s Superfund Program

Amidst all of the debate and rancor over the U.S. Environmental Protection Agency’s (EPA) reversals on climate change programs and the “waters of the United States” rule under the new administration, EPA rather quietly announced the recommendations of a task force for improvements to the Superfund program. Superfund is the federal program enacted by statute in 1980 that addresses the country’s most seriously contaminated industrial, mining and waste disposal sites. The lack of fanfare for the recommendations is not entirely surprising. Except at a few of its largest sites, Superfund has received relatively little publicity during the past two administrations. The new task force recommendations could herald significant changes in the program that are worth notice in the manufacturing community that funds much of the Superfund activities through litigated or negotiated resolutions of liability with EPA. In July 2017, EPA Administrator Scott Pruitt emphasized the importance of the task force report by directing the immediate implementation of several recommendations.
 
The task force was composed of senior Superfund personnel and received suggestions from a variety of stakeholders. It made 42 recommendations (the full report is available at www.epa.gov/superfund/superfund-task-force-recommendations) focused on achieving five goals. The goals are to: 1) expedite remediation of sites, 2) re-invigorate cleanups funded by potentially responsible parties (PRPs), 3) incentivize voluntary private-party cleanups, 4) encourage site redevelopment and community revitalization and 5) engage stakeholders to achieve the goals. 
 
Some of the recommendations are addressed to internal EPA processes and policies, and others are specifically directed at federal facilities (e.g., closed military bases). These will have less direct impact on the manufacturing community. Still, many of the recommendations could directly impact the pace and cost of remediating sites and thus impact manufacturers.
 
Several recommendations target the slow pace of remediation by promoting the use of adaptive management (AM) and the use of interim and early response actions. Traditionally, Superfund sites plod through the program in a step-by-step progression. Starting with site identification, the process also includes scoring for inclusion on the National Priorities List (NPL), remedial investigation, study of feasible alternatives, remedy selection, remedial design and, at long last, remediation. At many sites, the process does not take years – it takes decades. AM is an approach applied at a few Superfund mega-sites (complex sites where cleanup is expected to exceed $50 million). AM requires the early development of a comprehensive site strategy and goals, an approach to dealing with uncertainties and the early identification and implementation of interim or early actions to address obvious risks. A wider application of AM and interim action approaches could accelerate cleanup at some sites, which will likewise accelerate the financial impact on the PRPs that fund the work. While avoiding undue delay is surely positive, sometimes EPA has pushed sites into interim actions before adequate investigation has been conducted to identify whether a risk to public health or the environment even exists. The manufacturing community, along with other PRPs, will need to be alert to circumstances in which EPA is too aggressive in pushing presumptive remedies or other interim actions without adequate scientific support or analysis.

Two additional recommendations seek to address the slow pace of remediation by designating a Top 10 list of slow-moving NPL sites and a Top 20 list of NPL sites with the greatest reuse potential. Of course, these recommendations may improve and speed-up the outcomes at the sites that make the lists. EPA will undoubtedly trumpet those successes as evidence of the effectiveness of the program changes. The impact on sites that do not make the lists, especially if the proposed 25-33% cuts to EPA’s budget are passed into law, is less clear and probably not so promising.
 
Another recommendation has the clear potential to improve decision-making and reduce costs. Addressing contaminated groundwater has long been a staple of the Superfund program, especially when the impacted groundwater is used as a drinking water source. But, at many sites, the groundwater resource has not been used for drinkable purposes in the past and is not expected to be in the future. The task force recommended drafting a new policy and updating others to clarify the flexibility allowed in groundwater remediation decisions, particularly where groundwater is not used as a drinking source. This recommendation is consistent with the risk-based corrective action approaches developed in many states that allow remediation to be considered complete without active remediation of groundwater that is not used as a drinkable resource.
 
The task force also made welcome suggestions regarding EPA oversight costs and financial assurance requirements. Superfund requires EPA to oversee a PRP-led remediation and then allows EPA to recover its oversight costs. In addition to staff time and other costs allocated to a specific site, most courts have said the agency can also recover indirect costs like overhead.  EPA’s indirect costs typically range from one-half to two-thirds of direct costs and are almost impossible to challenge. The task force directed each EPA regional office to report on its practices in regards to what counts as an indirect cost. That is long overdue as EPA’s explanation of its indirect cost rates has lacked any shred of transparency. The task force also suggested developing a plan to provide increased oversight cost forgiveness, particularly for indirect costs, to PRPs that timely perform quality work at Superfund sites. Financial assurance refers to EPA requirements that PRPs post a bond or other security to ensure completion of the work at a site.  The task force recommended more realistic financial assurance requirements by possibly allowing parties to provide assurance incrementally or by adjusting the discount rate used to calculate the assurance obligation.
 
Not surprisingly, the task force recommended greater evaluation and use of federal and state remedial authorities other than Superfund and greater use of states as the lead agency.  These suggestions are consistent with Administrator Pruitt’s desire to shift the federal-state balance on environmental issues towards the states. The Superfund program has always allowed states to be the lead agency designated for a particular site, but historically, EPA has been in the lead at most NPL sites. The success of this recommendation could vary greatly as many states lack the manpower, funding or the technical expertise to be effective leads at many sites. The task force also recommended developing a pilot program to use independent third-parties to oversee some aspects of PRP-led response actions. This appears to be a federal equivalent to the use of licensed environmental professionals (LEPs) under many state cleanup programs for review and approval of PRP work in lieu of direct government oversight. Whether this recommendation can be fully implemented without statutory or regulatory amendments is not clear, because the statute requires either EPA or a state to be designated as the lead agency.
 
A potentially troubling recommendation is that remedial decisions should fully incorporate future re-use of sites, including encouraging PRPs to perform “enhanced cleanup or betterment” work. Consideration of site re-use has always been an element of the Superfund process, but this recommendation seems to go a bit further. “Enhanced cleanup” and “betterment” are EPA code for work that is not strictly required by Superfund, but that will make the site more attractive for re-use. This sounds great for those who benefit from the site re-use, but that is rarely the PRPs who perform and/or fund the work. The task force vaguely suggested utilizing “financial credits” to incentivize such actions. What that means in practice is not explained. For this approach to work, EPA will have to follow other recommendations of the task force that allow for incentives to private non-PRP investors and for oversight cost forgiveness, and possibly other incentives, for the PRPs.
 
For manufacturers interested in creating new jobs by putting a Superfund site back into use, the task force made a number of important suggestions. Those include re-invigoration of the use of prospective purchase agreements to enhance the statutory protection for bona fide prospective purchasers (BFPPs). The use of such agreements was deemed unnecessary following the addition of the BFPP defense in 2002, but in practice, maintaining the BFPP defense has been problematic. The task force also recommended revising guidance on what is required to maintain the BFPP defense and developing model agreements to provide liability protection to non-PRP private parties who volunteer to conduct remedial action. 
 
As with any set of recommendations affecting a program as massive and procedurally-grounded as Superfund, there is much left to do to fill in the details and fulfill the promise of the task force. Still, after years of largely running on autopilot, this first step to improve the Superfund program holds promise and bears watching.
 
Tom Dimond is a partner in Ice Miller’s environmental practice group. If you have questions about this topic, please contact Tom at 312-726-7125 or thomas.dimond@icemiller.com. You may also contact partner Don Snemis at 317-236-2341 or don.snemis@icemiller.com.
 
This publication is intended for general information purposes only and does not and is not intended to constitute legal advice. The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.
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