SDMS DocID 283299

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ISSUE BRIEF:

Superfund and Municipal Landfills: A Blessing or a Curse?

Contents

I. Introduction 1 II. Background and Definit ions 2 III. How a Superfund Site is Determined 3 IV. How Municipalities May be Affected 4 V. The Rhode Island Situation 7 VI. What is EPA's Solution? 11 VII. Conclusions and Recommendations 12

Bibliography

Acknowledgements: Persons interviewed in preparing this Issue Brief are listed in the Bibliography section. Their knowledge and insights were invaluable to the completion of this work. Their cooperation is gratefully acknowledged. In addition, thanks are expressed to Robert K. Griffith, Chief of the Office of Strategic Planning; Dr. Gaytha Langlois, Bryant College; Kenneth Payne, Federal Program Coordinator, Office of Senator Pell; Stephen Alfred. Town Manager of South Kingstown; James Fester, Associate Director for Regulations, DEM; Thomas Getz, Chief of the Division of Air and Hazardous Materials, DEM; Terrance Gray, Supervising Engineer, DEM; and additional DEM staff for their review of the draft version of this paper.

Credits: Author: Kevin J. Nelson. Senior Planner. Word processing: Kim Geifuso, Senior Word Processing Typist. Cover: Mansuet J. Giusti, Supervising Draftsman. Map: John Stachelhuas, GIS Manager

Introduction

The topic of Superfund sites first came to our attention when the Environmental Protection Agency (EPA) contacted trie Division of Planning in order to request an "Intergovernmental Review in accordance with Executive Order 12372." EPA was in the process of investigating a Superfund site in South Kingstown (Rose Hill Landfil l) and needed to know if the state had any plans which would affect the area (e.g. highways). The review process quickly disclosed mat there are no state plans for the area but that the remediation process has the potential to bankrupt the Town. Further investigation uncovered the unsettling conclusion that Rose Hill is the tip of a Superfund iceberg lhat could sink the State. The Town of South Kingstown has become the first Rhode Island community to discover,

that doing the right thing under Superfund is very difficult and almost always expensive. There are many scientific uncertainties. Experts disagree about the risks from unknown quantities of toxic wastes and what technical solutions will work. In addition, the legal and procedural complexities of the Superfund program are formidable. More often than not, managers find themselves caught in a crossfire with federal and state officials, industry, and concerned citizens1.

This paper is intended to present basic information on the Superfund process, the financial implications for the state with regard to municipal landfills, and possible courses of action to minimize those impacts.

Background and Definitions

A great deal of misunderstanding exists about the Supertund program. The following excerpt, taken from the Providence Journal (7 26-91). illustrates this misunderstanding.

The Environmental Protection Agency yesterday proposed that a former town dump near the University of Rhoc;e Island be placed on a national list of hazardous waste sites eligible for federal cleanup.

'What this means is that the site is now eligible for federal funds fcr further investigation (by EPA).1 said EPA spokesman Jim Sebastion. Sebastion said the South Kingston site will likely be placed on the Supertund list by the end of the year, making it eligible for a long range clean-up paid for by EPA.

In fact EPA will not pay the full cost of investigation and remediation. Under the law that created Supertund, "Responsible Parties" are'held I00°o liable for investigation and cleanup. The Town of South Kingstown could be named by EPA as one of the Potentially Responsible Parties. If the town or other co-defendants cannot pay. then federal Supertund monies become available, but the State will be responsible for reimbursing EPA at least half the costs of investigating and cleaning-up the site, and the State will be responsible for 100% of the ongoing operations and maintenance costs once the remediation is complete. While half a loaf is better than none, the town- state share may easily reach millions of dollars. As attorney Rena Sleinzor aptly expressed, "Slowly but surely local governments are realizing that Supertund is not just a federal grant program with no strings attached, but rather a system fcr enforcing retroactive and unforgiving

on those whcse activities brought about the contamination."

For clarification. "Supertund" is the common term used fcr the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCIA). CERCLA created a federal fund (the Hazardous Substances Trust Fund) to pay for addressing emergency health threats and for the investigation and cleanup of the country's worst hazardous waste sites where no responsible parties can be found to pay for the cleanup. This became known as the "Superfund". The second part of CERCLA' s financing method is by far the more important in terms of political and legal impact, i his is an aggressive liability scheme that shirts the burden of cleanup to responsible parties wherever possible. Municipalities have been a frequent target of those seeking to assess liability. Why this is so and the consequences of this targeting of municipalities will be examined in more detail later.

In 1986 Congress passed the Supertund Amendments and Reauthorizaticn Act (SARA). SARA extended the program and adoressed levels of cleanup required, settlement procedures, state participation in managing cleanups, and other issues.

CERCLA identifies four basic categories of statutory responsible parties, referred to as Potentially Responsible Parties (PRP's). The first croup, owners, includes net only the owner of the site at the time when hazardous waste was disposed, but aiso subsequent owners of a previously contaminated site. A tenant may also be considered an owner. The second category, operators, includes present as well as past operators of a site. Third, the transporters, comprise any party that transported waste to the site. The fourth category, generators, are the parties that sent or actually "arranged for" the wastes to be disposed of at a site. In most instances a generator is the producer of those wastes, but some local governments could be pursued as generators under the theory that they "arranged for" the collection and disposal of municipal trash.

How a Superfund Site is Determined

The following is a simplified explanation of the total process.

Step One: The S^cerfund process begins with "site discovery". The U.S. Code requires the puciic to notify the Environmental Protection Agency (EPA) of any potential sites cr facilities that might come under the jurisdiction of CERCLA. This is accomplished primarily through state environmental protection departments. Upon discovery, the site is logged onto EPA's computerized inventory known as the Comprehensive Environmental Response. Compensation, and Liability Information System (CERCL1S). Over 31.000 sites nationally are listed on CERCLIS. Rhode Island has approximately 300 sites on CERCLIS of which 70 are municipal or municipal/private landfill sites.

Step two: A Preliminary Assessment to determine possible health risks, potential hazarcs (e.g. fire or explosion;, potential drinking water contaminaticn, and potential environmental harm is conducted. If a site poses negligible risks, it is assigned a "No Further Action" designation, but remains in the computer inventory for reference. If further investigation is warranted, a Site Inspection (SI), typically including on-site sampling and laboratory analysis, is conducted. Based en the results of the SI, further investigation may be required through an Expanced Site Investigation (ESI). All of the data collected in the SI and ESI are used in scoring the site, if warranted, using EPA's Hazard Ranking System (HRS). (At any point in the process, when the site is an imminent threat to public health, an emergency cleanup called a Removal Action is performed. This ac:icn is used to address only those conditions which warrant immediate attention.) This "pre-remedial" phase typically costs $300.000.

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Step three: Site sccres are used to determine if a site will be added to the National Priorities List (NPL). Sites with HRS scores greater than 28.5 (out of 100) are proposed for the NFL. At this point public comments are solicited and eventually the site listing is finalized. It is the NPL sites that are being actively pursued through Superfund. There are approximately 1.250 NPL sites nationally and more are being added, at the rate of about 100 sites per year. Rhode Island currently has 12 NPL sites.

Step four: An extensive and detailed investigation is conducted on ail NPL sites to determine the nature and extent of the contamination. This is called the Remedial Investigation (Rl).

Either conducted simultaneously with the Rl or immediately upon its completion, a Feasibility Study (FS) is undertaken to examine appropriate cleanup alternatives and recommend ;ne preferred option. Both of these studies are subject to public comment. Tr.e Rl/FS typically costs 52 million to S3 million.

Step five: The ~P~ announces its Record cf Decision (ROD) which becomes legally binding ""cr cleanup. The ROD is also subject to formal public comment. It specifically documents state, municipal, and public acceptance of the remedy. In order for EPA to expend Superfund money, the state must concur with the ROD and agree to a Superfund State Contract to memorialize state assurances and obligations.

Step six:. Engineers develop a detailed technical plan intendedchosen remedy. This is the Remedial Design phase.

to implement the

The final long term cleanup is composed of Remedial Action (the actual removal or containment of contaminants) and Operations and Maintenance (O&M) which maintains the site and monitors the effectiveness of the cleanup for a period of years. This O&M phase typically las;s 30-*- years and costs a great deal of money.

According :c EPA the average time from the start of the cleanup study to the implementation of the remedy is six to eight years.

How Municipalities May be Affected

The EPA estimates that 20% of the NPL sites are municipal landfills and that local governments are involved at approximately 25% of NPL sites. According to a study conducted by Clean Sites, a non-profit group specializing in hazardous waste problems, although the majority of local government involvement is due to municipal landfills, a significant number of public schools and government owned hospitals and medical facilities are also being pursued as PRP's. Clean Sites also contends that EPA has underestimated local government involvement at NPL sites which they believe to be closer to 33% rather than 25%2.

Municipalities face CERCLA liability issues under three different scenarios. Liability may occur because a municipality (or municipal agent such as a school or hospital) shipped hazardous substances* generated by that municipality to a disposal site such as a private or municipal landfill. Liability may also result when a municipality ownec and/or operated a facility that contains hazardous waste such as a landfill. This second category also could include non-landfill sites owned by a municipality such as a town garage or former Department of Defense property given to a town after the closing of its operations. Finally, liability arises for transporting hazardous substances to a site. The site may be either a municipal cr private landfill.

The liability aspects of CERCLA are "strict, joint and several." The standard of liability is "strict". This means that a party is absolutely liable even if the actions which led to the contamination were perfectly legal. The scope of liability is "joint and several". This means that "the federal government has the discretion to sue a small subset of those potentially liable, putting the burden on those chosen and unlucky few to chase their joint torrfeasors for contribution.3" in other words, each and every responsible parr/ to the contamination, even if they were acting in full accordance with the law, is 100% liable for the cleanup costs. Although EPA can and does enter into negotiated settlements, technically, all EPA has to do is cite one party and let that party begin the process of ferreting out and suing other PRP's. This is a very efficient method from EPA's perspective. In practice it allows EPA to concentrate on only the most easily identified PRP's and not tie up an unnecessary amount of their time in tracking down and suing every one of the possibly hundreds of contributors to a CERCLIS site.

In 1989 EPA issued an "Interim CERCLA. Municipal Settlement Policy" which included a policy by EPA net to cite local governments as a PRP when their role was as a transporter or generator (but not as an owner;operator) of Municipal Solid Waste (MSW) unless there is site specific information that the MSW contained hazardous waste derived from a commerciai. institutional, or industrial activity. However, this policy dees not provide local governments an exemption from liability or protect them from being sued by a cited PRP. This puts municipal governments who operated a landfill in a very vulnerable position since they are easily identified. Perceived as "deep pockets" by private parties, it is now virtually a routine practice for industrial PRP's to file suit against a local government that was in any way connected to a NPL landfill site. In fact federal courts

* Both hazardous material and ordinary municipal solid waste composed primiarly of household trash are subject to liability. EPA has an agency policy which does treat hazardous material and ordinary municipal solid waste differently. This will be examined in more detail later in this paper.

have consistently ruled that municipal trash is covered under CERCLA's definition of hazardous substances. This was recently upheld again by a federal court of appeals despite the "burdensome consequences" to cities and towns.

An unfortunate unintended consequence has resulted from this arrangement. EPA intended their policy of not citing municipal transporters or generators or MSW as PRP's to be beneficial to the municipality involved. But the result can be that a municipality only becomes aware cf their potential liability when they are named in a third party suit by an industrial PRP. This severely hampers a local government's ability to take a pro-active role regarding settlement issues.

One key factor in controlling liability expenses is becoming actively involved in the process while there are still opportunities for negotiating settlements and design parameters for the Rl-FS. A very important element for communities negotiating a settlement with EPA is the notion of "contribution protection". This provision allows a PRP to agree in advance to pay for a certain portion of a cleanup. In return, this party is protected from third-party suits later in the process. The importance of early involvement and pre-emptive actions cannot be overemphasized. Over the years, the business community has developed a sophisticated and experienced body cf lawyers, consultants, and other experts to deal with EPA and the CERCLA law. The experience gained did not come cheaply. Businesses spent millions of dollars in unsuccessful battles to avoid all liability. The trend now is for businesses to minimize their personal costs by negotiating with EPA and using third party suits to spread the costs out among numerous parties. A realistic assessment, according to Steinzor, is that.

Most local governments have only a vague understanding of how the law operates until they are notified of potential liability at a Supertund site and even then many function at a level of sophistication that lags years behind the strategic abilities of private industrial participants in such situations. The lack of information among local governments concerning such problems stands in stark contrast to the abilities of their corporate counterparts and co-defendants. Those who do not understand the basic rules of the program cannot hope to compete in the intensive advocacy that accompanies the allocation of cleanup costs and the weakest advocates often end up paying a disproportionate share of the final bill. Local governments' lack of sophistication can translate directly into increased, sometimes disastrously high costs fcr the genera! taxpayer.4

The average city solicitor simply does not have a sufficient level of expertise in this field. Furthermore, it is very possible that given the fact that Rhode Island communities have had little exposure to the intricacies of the Superiund laws, many towns will make the same mistake as the early business PRP's. That is. they will spend very large sums of money fighting unwinnable legal battles.

A city or tcwr. that has been named as a "potentially responsible part/" must face the realization thai this is almost the equivalent of being named a "totally" responsible party. Defenses acainst the PfiP designation are slim and are almost always a fruitless waste of time anc money. Municipalities must realize that they are not going to escape the responsibility cf being connected to a Supertund site, no matter how unfair they think it is to them. Their foremost goal must be to minimize the financial impact to the community, not to avoid it entirely.

The financial impact facing a community named in a PRP suit is enormous. Tfr average cost of cleaning-up a Superfund site is ranges from $25 million to $30 millr dollars. Typically, one to three million dollars is spent just on the Reme' Investigation/Feasibility Study alone. {The Minnesota Pollution Control Agency conclf that Supertund cleanups require much more expensive paperwork during the RI.FS If scientifically necessary because the conclusions must be totally defensible 3 potential lawsuits.) Neither of these figures takes into account "transaction costs".

costs (primarily from legal fees and special consultants) are estimated to add an additional one-third to the final overall cost of the cleanup process.

In addition tc direct costs, municipalities face a major indirect financial impact as a result of being named as a PRP. The issuance of municipal bends is one standard method by which local governments can raise the large sums of money associated with Supertund cleanups. Financial investment advisory services, such as Moody's Investors Service Inc., evaluates the soundness of state and local financial conditions so as to determine the relative safety of their bond issuances. Moody's takes entanglement as a PRP as a negative factor in making their assessments. The interest rates paid on government issued bonds is heavily influenced by these ratings. According to the Rhode Island Public Expenditure Council, "The impact of a lower rating is usually seen in increased borrowing costs through higher interest rates as a result of the greater risk assigned to the securities, although rates are also impacted by market conditions...". Whether the community needs the bond money to pay for the cleanup or build a new school is not material; the bottom line is that the municipality will incur higher costs.

Some municipalities lack the legal authority to issue bones. This presents a different set of prcolems in finding the needed financing. Most local governments are prohibited from operating at a deficit.' If the community cannot issue bonds and yet cannot create a deficit, that leaves raising taxes as the only significant source of revenue. Needless to say. no local official will eagerly embrace this prospect. Furthermore, Clean Sites estimates that a municipality must have a population of at least 50,000 in order to have a tax base large enough to raise the funds to pay for the average cleanup and related costs.5 Cf Rhode Island's thirty-nine cities and towns, only Cranston. East Providence, Pawt'jcket. Providence, and Warwick have a population of at leas; 50,000 residents.

EPA has net been oblivious to these concerns. They have agreed to treat municipal parties differently from corporate parties in some respects. Two notable concessions to municipalities are that EPA will consider allowing the municipality to extend its payments to EPA over a number of years, interest free, and EPA will consider in-kind services provided by the municipality toward the final settlement. In-kind services include using public works trucks to bring cover to a landfill, having municipal workers maintain a vegetative cover at a site, or using a sewer authority to treat leachate. While these concessions help, it can still leave a community in severe financial difficulty.

State governments have a direct financial interest as well. Only federally owned sites which have been selected as Superfund sites are fully paid for entirely by federal money. Most often these sites are connected to military activity. For private sites at which Superfund monies are expended, the state must provide a 10% share of the construction costs plus the costs of all future operation and maintenance activities. At sites which were owned and operated by the state or a municipality, the state must provide at least a 50% match for all expenses to the federal Superfund money plus 100% of operation and maintenance costs."*

"Rhode Island state law includes all of its municipal governments in this prohibition. ""'States shall be required to share 50 percent, or greater, in the cost of all Fund-Financed response actions if the facility was publicly operated at the time of the disposal of hazardous substances. For other facilities, except federal facilities, the state shall be required ot share 10 percent of the cost of the remedial action." 40 CFR Ch. 1, Section 300.510

Any PRP that has the notion that they can in some manner be uncooperative and "drag their heels" faces the prospect of up to a 325,000 per day fine for failure to comply with an administrative order. If the EPA actually has to provide cleanup action due to a "recalcitrant" PRP. then treble damages (i.e., three times the cleanup costs) may be assessed.

A logical question at this point is whether there is anv defense against liability. The answer is yes, there is, but it is very limited. Research for this report indicates a municipality's legal defense as a site owner/operator is limited to the following scenarios:

1. The release of contamination was caused solely by an act of God; 2. The release of contamination was caused solely by an act of war; 3. The activities of a completely unrelated third party actually caused the problem

without the defendant's cooperation or consent. 4. The contaminated land was acquired by the municipality through escheat or other

involuntary transfer.

While there may in fact be other legal defenses, (especially if the municipality only transported household garbage to a site owned by another party) all indications are that very few municipalities, if any, have successfully avoided all liability.

The Rhode Island Situation

Prior to the creation of the Central Landfill in Johnston, Rhode Island had a plethora of smaller local landfills. Many of these landfills were owned and.or operated by the city or town in which they were located. Many sites were privately owned but were contracted by the city or town for disposal of wastes. The third type of landfill were those that were privately owned and contracted only to industrial firms. The first two categories of landfills total between 60 to 70 CERCLIS sites in Rhode Island. Rhode Island municipalities could be named as PRF's in every one of them and the State could be responsible for a 50 percent cost share with EPA if Superfund monies are expended at those sites which were municipally owned and operated. CERCLIS sites in Rhode Island with municipal involvement are described in Table 1.

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10

15

20

25

30

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Table 1, CERCLIS LANDFILLS IN RHODE ISLAND

Community Total Number of CERCLIS Number of Sites Municipally Landfill Sites Owned, Operated, or Contracted

1. Harrington 5 5 2. Bristol 1 1 3. Burrillville 2 2 4. Central Falls 0 0

. Charlestown 4 3 6. Coventry 2 1 7. Cranston 2 1 8. Cumberland 3 2 9. East Greenwich 2 2

. East Providence 3 3 11. Exeter 3 3 12. Foster 1 1 13. Glocester 2 2 14. Kopkinton i 1

. Jamestown 1 1 16. Johnston 6 5 17. Lincoln 4 4 18. Little Compton 1 ." 1 19. Middletown 2 2

. Narragansett 0 0 21. New Shoreham 1 1 22. Newport 1 1 23. North Kingstown 3 2 24. North Providence 1 1

. North Smithfield 1 1 26. Pawtucket 2 1 27. Portsmouth 2 2 28. Providence 2 1 29. Richmond 3 2

. Scituate 3 3 31. Smithfieid 2 1 32. South Kingstown 2 2 33. Tiverton 4 2 34. Warren 1 1

. Warwick , 2 2 36. Westerly 1 1 37. West Greenwich 1 1 38. West Warwick 1 1 39. Wccnsocket 1 1

Source: Rhode Island Department of Environmental Management. Office of Air and Hazardous Materials, reported as of August 1992.

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It is important to note that a community could be named as a PRP even if it does not contain a CERCLIS landfill site. For example, the Town of Narragansett which does not contain a single CERCLIS landfill, is a PRP along with South Kingstown for the Rose Hill Regional Landfill site located in South Kingstown. The pattern of interconnectedness among where wastes were generated, by whom, who was responsible for transporting them, and where :hey finally were buried means that every Rhode Island city or town could conceivably be sued as a PRP.

It should be noted that the vast majority of these landfill sites are awaiting the MRS scoring phase of the Superfund Site Assessment Program and thus are in the pre-NPL stage. These sites are also part of a much larger national backlog of sites awaiting evaluation, in order to manage this backlog, EPA is evaluating the feasibility of using some type of quick priority setting scoring system. Drafts of this evaluation system take remediation agreements between responsible parties and the state into account in determining the priority of the site. They are weighted in a manner such that a site with a state remedial agreement would result in a low priority for action. Therefore the EPA Superfund liability would be indefinitely delayed (but not eliminated).

Four sites with connections to state or local governments have already been named as NPL sites (Table 2).

Table 2, NPL Sites Involving State or Local Governments

Name of landfill Location

1. Central Landfill Johnston 2. Davis (GSR) Landfill* Glocester 3. Rose Hill Regional Landfill South Kingstown 4. West Kingston Town Dump .' URI Disposal Area (a.k.a.

Plains Road Landfill) South Kingstown

Source: EPA National Priorities List Sites: Rhode Island and; Rhode Island Department of Environmental Management

* A private landfill which accepted municipal solid waste from Glocester, Smithfield, Warwick, and Providence.

At this time it is impossible to say which Rhode Island communities might be named as part of third parry suits by private parties seeking to share costs with other PRP's. There is a distinct possibility that the State could be named as a PRP in the Plains Road Landfill and Rose Hill Landfill situations due to a direct link between the sites and the University of Rhode Island.

The actual costs to remedy a CERCLIS site will range from zero (for those sites designated by EPA as "no further action") to hundreds of millions for the nation's largest sites which attain NPL status. Costs depend on both the size of the site and the type of remedy selected by EPA. Rhode Island's municipal landfills are in the relatively early stages of the Superfund process so specific estimates are not available. It is far beyond the capabilities of this paper to formulate specific cost estimates for Rhode Island CERCLIS or NPL sites. However, in order to provide a rough idea of what the financial impacts conceivably could be, the figures presented in Table 3 were developed with the aid of the Rhode Island Department of Environmental Management.

Table 3, Cost Estimates of Rl CERCLIS Landfills

Average area of the above listed municipal landfill sites - 20 acres Average cost of a simple soil cap - approximately Sl65,000/acre Average cost of a multi-layer soil cap - approximately $290.000/acre

Soil caps are only one of a number of remedial and. or removal actions which may be required at a site. In addition to these costs are the costs of the RI.FS (estimated at $1.8 million for the Rose Hill site), legal and consultant fees (estimated at one-third the total cleanup cost), long term monitoring, operation and maintenance, and any other open or hicden costs, seme of which have been previously discussed.

How the final costs will be allocated among the EPA. State government, local government, and private parries is not predictable. It is important to remember that, in most cases, the State will have a cost share which must match any Superfund expenditure (Table 4).

Table 4, CESCLA State / Federal Cost Shares

CSRCLA Stage Cost Share Cost Share (Municipally Owned Site) (Privately Owned Site)

Pre-remedial 50% state 50% federal 100% federal Rl FS 50% srate 50% federal 100% fecsrai Remedial Design 50% state 50% federal 100% feceral Remedial Action 50% state 50% federal 10% state 30% federal Operation & Maintenance 100% state 100% state

The Rhode Island Department of Environmental Management (RIDEM) is responsible for administering the Environmental Response Fund dedicated for this purpose, as well as for site investigations, emergency response removals, site evaluations, remeaial actions, temporary water supplies, and resident relocations. The primary source of money for the Fund is bonds with a small portion from cost recoveries and penalties or fines. With a balance of $2,000,000 the Fund appears severely undercapitalized to meet future demands upon it.

Rhode Island must carefully assess Rena Steinzor's warning that. "... as more municipally owned and operated sites reach the final stages of cleanup, the 50 percent matching share requirement could become a significant source of friction between local governments and the states. While the statute clearly specifies the 'State' as the entity responsible for assuring this payment, it is possible, maybe even likely, that some states will seek to hold their political subdivisions responsible for meeting this unwelcome financial obligation."6

RIDEM's role in the Superfund process goes beyond simply administering the Emergency Response Fund. In addition to insuring that all state laws are met. the Division of Air and Hazardous Materials performs a technical support role. The Division is involved in document reviews up to and including the Rl FS. They can also support certain preferred remediation alternatives and can officially dissent from EPA's Record of Decision. At the RD.RA stage. RIDEM must concur before EPA can expend any Superrund monies.

In general, according to Steinzor "...the statute attempts to forge a partnership between EPA and the states in conducting the cleanup by carefully defining the roles each should play in the process. The EPA is authorized to sign a cooperative agreement giving a state in which the site is located authority to supervise its cleanup and enforce the law against parties responsible for creating it."" However, state law must provide the authority to enforce the CERCLA provisions before EPA will agree to this arrangement. (It is not clear that Rhode Island law provides this authority to our state.) The statute also requires

"State law must provide trie authority to enforce the CERCLA provisions before EPA will agree to delegate responsibility through a "cooperative agreement" It is not clear that Rhode Island law provides sucn authority to this state.

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that the EPA consult the states at all stages of the cleanup process. But. "Although the states are given the ultimate veto authority to refuse the EPA's request to delis; a site within their jurisdiction. Supertund remains a program driven by the stronger federal partner."7

In 1990, James Fester . A s s i s t a n t Director for Regulation. Department of Environmental Management, echoed this feeling to Anna Prager of the Executive Office. He stated, "The intent of the Superrund program is to make EPA and the state regulatory programs partners in the involved process from site discovery through site remediation. EPA is to insure state cooperation through an open public process. However in cur, and other states' experience, the state is the junior partner in the process, not an equal partner."8

What is EPA's Solution?

EPA has been buffeted with Superfund controversies since the inception of the program. SARA was one major attempt to address some of the initial flaws. The Interim Municipal Settlement Policy was another attempt by EPA to address an area of perceived unfairness. EPA remains committed to improving the Superfund program but it is very uncertain as to whether or when proposed reforms might benefit municipalities. As we shall see, a recent effort seemed only to produce a great deal of confusion.

EPA has spent considerable amounts of time and effort trying to develop a policy which would "facilitate quick and equitable" settlements at municipal landfills. A number of arcane formulations such as the Delta Theory, the Double Delta Theory, the Reverse Delta Theory, the Pie-Chart Theory, and the Volume.Toxicity Approach have all been suggested at one time or another. EPA had announced in July 1991 that they planned to choose a formula soon. Superfund chief Don Clay floated a "trial balloon" in December 1991 when he stated that EPA would likely select the double delta method. Double delta is basically a volume based approach to allocating cleanup costs. A preferred choice of industry, double delta would place 60% to 75% of cleanup costs on municipalities although the toxic content of municipal solid waste is around 1% .

Opposition to double delta from local officials and some members of Congress was fierce. EPA officials quickly shifted into reverse and announced that there would not be any immediate issuance of a preferred option, and according to one official, "We're back to the drawing board." Ey Spring 1992 the double delta approach was supplanted by a very different alternative.

A draft guidance document, dated March 10. 1992 announced that generators and transporters of municipal solid waste would pay 4% each of the total cleanup costs in settlements with industrial polluters. Furthermore, the 4% payment could be met with an offer of in-kind services.$ It is very important to note that the document was very limited in its good news for municipalities since it did not cover municipalities as owners or operators of landfills. This would still leave the great majority of municipal lancfiil sites subject to the original stringent CE.RCLA liability scheme. Still, the rationale for the 4% figure, a unit-cost formula which is based on the ratio of cleaning up strictly municipal solid waste versus strictly industrial waste, represented a dramatic improvement over double delta's vclurr.e based approach.

Industry's opposition to this plan was every bit as fierce as was municipal officials' opposition to EFA's previous choice. According to a New York Times article, "...they [industry groups] unleashed a barrage of complaints to the Office of Management and Budget, the Competitiveness Council headed by Vice President Dan Quayle. and Clayton Yeutter, President Bush's advisor on domestic affairs."'0 In response, the White House ordered the EPA to "re-examine" the whole issue. It seems extremely doubtful that the 4% liability cap will emerge from this review intact.

Despite their best efforts and intentions, it is probably not unfair to say that EPA is at a conlused impasse. EPA officials have been unable to even hazard a guess as to when another-initiative will be forthcoming or what shape it will take As one EPA official put it.

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"We are getting input from all sides. We are pretty deluged at the moment."" Even the "pro-municipal" draft excluded municipalities as owners.operators (this would exclude most of the seventy Rhode Island CERCLIS previously mentioned but it would cover towns that sent waste tc the Central Landfill). Given this limited protection and the level of uncertainty as tc wr.at direction the next settlement may take, it would be ill advised for the state to remain passive hoping that EPA will design a remedy that will solve our problems.

Conclusions and Recommendations

Two towns have already been cited as PRP's by EPA. The prospect that even more of Rhode Island's cities and towns will be named as PRP's in Superfund actions is immediate and very sencus. Essentially all thirty-nine of our cities and towns are in potential danger of being named in third party suits. Our local governments face, at a minimum, enormous legal costs if named as a FRP. In the worst cases, they could be held responsible for miilicns of dollars in cleanup costs as well as all the legal and technical fees typically associated with these suits. The financial impact on our communities could be devastating.

It might be tempting for the State to rationalize that this is a local problem that the State cannot afford to address in these difficult financial times. To conceive of these problems in a state verses local framework would be a very serious error for two reasons. First and foremost, this is a taxpayer's problem. Whatever portion of Superfund costs that are not paid for by private parties will be paid for by the taxpayers. Local citizens are state citizens as well.

Secondly, CERCLA makes the state a financial partner in federally financed cleanups. The requirement for a 50 percent state match if Superfund monies are expended on municipally owned and operated landfills will be a severe financial blow to the state budget unless the state is well prepared in advance.

State government, as a servant of the public, has a role in devising a fair and equitable method of sharing the financial burdens. We must realize that the municipal and state shares of financing cleanups are both taxpayer shares. The only difference is the taxpayer base and method of raising funds. We as State officials need to carefully decide what methods of financing cleanups are best for our populace as a whole.

The question now is how do we get prepared to address this challenge? In order of usefulness, we suggest the following:

Action Items

1. The State should schedule and sponsor a Municipal Superfund Conference(s) as soon as possible. Through this paper we are attempting only to shoot up a warning flare. The details, strategies, and intricacies of CERCLA require a lot of time to explain and experts to explain them. Fortunately resources are available to help. The International City County Management Association (ICMA) offers three programs of relevance. They are the Peer Exchange Program, the Public-Private Partnerships Program, and ;he Superfund Assistance Program. The state should take advantage of the experience and resources of ICMA in designing and presenting a conference tailored to Rhode Island's needs. In addition, Gary Pulford of the Minnesota Pollution Control Agency has expressed his willingness to come to Rhode Island in order to provide advice and council. Minnesota is widely recognized as being on the forefront in developing state and local strategies to deal with NPL municipal landfills. (There may even be money available to allow him to travel at no cost to the State.) Such an effort should be coordinated through RIDEM and the Governor's Office. Other state agencies with connections to Superfund issues such as the Department of Health and the Attorney General's Office should also participate.

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2. The most comprehensive approach to solving the Superfund problem is to have the state create some type of Superfund Municipal Liability Program. The scope of this program could range from the state providing low interest loans or grants to aid communities in meeting cleanup costs to having the state assume the entire responsibility for dealing with all aspects of cleaning-up municipal landfill sites. It is likely that EPA will adopt an evaluation system which will lower the priority for federal intervention at sites which have a state remedial agreement. The more comprehensive the approach, the greater the opportunity for cost control and savings overall.

In general, the components of a state program should include:

a. A central state agency to oversee the program and act as an "ombudsman" for towns interactions with EPA.

b. A system of ongoing and equitable financing for site cleanups.

c. A legal component which would aggressively pursue compensation from private parties responsible for contamination.

d. Limits on the financial burdens placed on communities which hosted landfill sites.

e. A defense fund to defray the costs of PRP suits.

f. Specific assessments, goals, and cleanup targets for all municipal landfill CERCLIS sites.

The Minnesota Pollution Control Agency offered one example when they issued a report in November 1991 which proposed, "... that the state assume all costs of cleaning up MSW landfills, except for closure and corrective action expenses, which would be borne by the owner or operator, assuming a financially-responsible party can be found. Cleanups would be paid for by a state trust fund, drawn from a broad-based property or waste-collection tax, or tipping fees imposed on waste haulers. State officials figure that in the long run, the state may be better off assuming the costs of the cleanup itself, because of savings on legal and EPA administrative costs. The state would retain the right to pursue persons who willfully dumped hazardous wastes...".12

Given that legal and administrative costs account for one third of the total costs associated with cleaning up a site, the savings could be very substantial.

It is worth reiterating that the state's current Environmental Response Fund is undercapitalized. Furthermore, its method of capitalization, voter approved bonds, is a slow, uncertain, and expensive method of funding. The concept of a broad-based tax and polluter reimbursement to finance a state trust fund is a key element of reform.

The General Assembly will make the final decision as to whether the state should have a comprehensive program for landfill closure and remediation, and to how extensive this "State Superfund Program" should be. State and local government can begin this process of discussion and debate by making this one of the key issues explored in a Superfund conference.

3. Cities and towns could begin planning for pre-emptive actions now. An ICMA sponsored Superfund conference in March 1992 presented a series of expert opinions that can be summed up in the following quote.

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The best defense is a good offense and [CERCLA] gives local governments several important affirmative opportunities to both accomplish cleanup and minimize their liability risks. Although the initiation of an affirmative suit takes a substantial commitment of resources and requires a local government plaintiff to surmount several legal and practical pitfalls, such suits can accomplish cleanup faster and save considerable resources over the long run. '3

Affirmative suits can be brought against PRP's when a local government has incurred costs for remediating pollution at a site or when they wish to recover damages to natural resources within their jurisdiction.

The above quote succinctly summarizes the benefits and problems associated with this approach. The benefits are speedier cleanups and opportunities for lessening the financial impact to the community. The problem is that it still requires very substantial outlays of money for initial remediation, for legal and consulting assistance, and it requires a wealthy PRP that a municipality can pursue. Consequently this approach is not suitable to all local governments or to all situations. However, in those instances where all the stakeholders involved are agreeable to a settlement without going through the courts, and where the community has the financial resources to contribute to the cleanup, this can be an effective and efficient approach.

There are many variations of the "pre-emptive" action theme. The general guiding principals are:

a. Get involved immediately and continue being involved through negotiations and comments at every step of the process. Take the initiative in identifying other PRP's. Identify all landfill sites that community wastes were shipped to as welt as landfill sites located in the community.

b. Be prepared to spend money.needed to do a good job.

Hire the specialist lawyers and consultants

c. Settle as early as possible. Seek contribution protection from EPAexchange for an early settlement. Transaction costs continue to mount as the process moves along.

in

d. Ask EPA or the State to officially cite appropriate parties as PRP's.

e. If the EPA or State do not cooperate, then notify the private parties directly that they will be pursued as PRP's by the municipality. Threaten to sue but offer an opportunity for a negotiated settlement too.

f. Minimize the above costs by innovations such as sharing experts with other communities, seeking reimbursement from insurance companies, and forming cooperative relationships with other PRP's.' Offer EPA in-kind settlements.

g. If all eise fails, bring a CERCLA lawsuit. Remember being part of a lawsuit, even as plaintiff, will be time consuming, expensive, and difficult to comply with.

'Local governements snould check wirn insurers for coverage at the time hazardous wastes were being desposited in the lanctui Some older insurance policies did not include a pollution disclaimer Also, insurance carriers should be notified as soon as a municipality begins the supertund process. Insurers probably will not pay for any portion of lerjal costs preceding the insurers notification. Notify all past insurers as well as present ones.

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4. Finally, the state could lobby Congress and EPA for changes in CERCLA and EPA's operating policies with regards to municipal landfills. This is listed last, not because it is least important, but because it is the alternative over which the state and our communities have the least control. The ultimate solution may well lie in an improved CERCLA but as mentioned earlier in this paper, it would irresponsible to leave the physical and financial fate of our state hanging in abeyance while awaiting a federal savior.

American Communities for Cleanup Equity (ACCE) is a lobbying group comprised of a coalition of over 100 local governments. They have staked out the "pro-municipal" legislative reforms which were embodied in the unsuccessful effort to pass the "Toxic Cleanup Equity and Acceleration Act" of 1991 (S 1557 and HR 3025). The essential elements for reform include:

a. Empowering only the federal government to sue local governments or other persons for cost-sharing under Superfund when they handle only municipal solid waste.

b. Turn EPA's "Interim Settlement Policy" into law.

c. Easing settlement procedures for local government generators or transporters of municipal solid waste or sewage sludge.

d. Protecting public rights-of-way (e.g. roads and sewage pipeline) from being a justification for bringing a lawsuit.

e. Securing retroactive relief.

Another major push for reform is more general, aiming at the basic CERCLA funding mechanism. The insurance giant, American International Group (AIG), has been advocating the creation of a National Environmental Trust Fund. This fund would be financed by a broad based revenue raising system. AlG's key element is a national two percent surcharge on all commercial insurance policies. This "no-fault" trust fund would replace current liability schemes for all past waste sites. Cleanup liability would be retained for all future disposal sites. There are several variants to this no-fault proposal which include limiting it only to municipal landfills and establishing a revenue system based on a sliding scale surcharge to commercial liability insurance premiums. The basic concept of establishing a no-fault system to reform the Superfund process deserves serious consideration.

It has beer, said that being named a NPL site is both a blessing and a curse. The blessing is that municipalities can have access to immediate funding in emergency situations and that industrial generators of hazardous waste will have to at least share in the expense of cleanups at municipal landfills. By this time the curse should be obvious. The overwhelming financial burdens that are being placed on our communities and the legal maze that a local government PfiP must wander through, can only detract from the quality of life and level or services that our citizens deserve. Let's act to alleviate the curse, now.

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REFERENCES

1. Kelly, Cynthia C. and Bendict. Leah B.. "Superfund: What Every Manager Should Know", Public Management. August 1990.

2. Clean Sites. "Main Street Meets Supertund: Local Governement Involvement at Supertund Hazardous Waste Sites" Janaury 1992.

3. Steinzor, Rena, "Local Governments and Supertund: Who Will Pay the Tab?", The Urban Lawyer. Volume 22. No. 1 Winter 1990.

4. Ibid.

5. Clean Sites. Qo. cit.

6. Steinzor, Oo. cit.

7. Ibid

8. Fester James, "Supertund Program: Impacts on Local Government and OEM's Role", draft report to Anna Prager August 7. 1990

9. Supertund Report - March 25, 1992

10. Feder, Barnaby J. "E.P.A. Proposal on Costs of Waste Cleanups is Halted". New York Times, May 18, 19Q2, page 1.

11. Ibid

12. Land Use Law Report, December 18, 1991 page 202

13. Steinzor, Oo. cit.

BIBLIOGRAPHY

1. , An Analysis of State Superfund Programs: 50-State Stuay.

2. , Comprehensive Environmental Response, Compensation, and Liability Act. Statutory Framework: Federal Stattues Affecting Real Estate Transactions.

3. , EPA Deems 4% a Fair Share for Cities To Pay at Landfill Sites. Superfund Report; March 25, 1992.

4. , How the Superfund Program Works. Catalog of Superfund Program Publications (EPA).

5. , Minnesota Eyes Getting Municipal Landfills Out From Under Superfund. Land Use Law Report; December 18, 1991.

6. , National Priorities List Sites: Rhode Island. EPA; Septemoer 19SO.

7. , Reversal Brings EPA Full Circle on Allocation Scheme. Superfund Report; January 1, 1992.

8. , Rose Hill Regional Landfill Superfund Site. Superfund Program Fact Sheet; June 1991.

g. , Superfund. Washington News; October 22, 1991; 9(6).

10. Alfred, Stephen. South Kingstown Town Manager. Interview

11. Alfred. Stephen A. Presentation to NLC's Energy, Environment, & Natural Resources Steering Committee; May 29, 1992.

12. American Communities For Cleanup Equity. Various position papers and news releases.

13. Anderson, Eugene & Rodriguez. Giovanni. Liability Insurance May Be Pollution Policy. American City & County; July 1992.

14. Brostorf, Steven. Superfund Program Ripe For Overhaul, At A Says. National Underwriter; March 16, 1992.

15. Eurke, William K. Trashing the Superfund. In These Times; June 12-25, 1991.

16. Clean Sites. Main Street Meets Superfund: Local Government Involvement at Superfund Hazardous Waste Sites: January 1992.

17. Curnow, Alfred, Director of Public Works (South Kingstown). Interview.

18. Feder, Barnaby J. E.P.A. Proposal on Costs of Waste Cleanups Is Halter. New York Times; May 18, 1992.

19. Feder, Barnaby J. In the Clutches of the Superfund Mess. The New York Times; June 16. 1991.

20. Fester. James W.. Assistant Director for Regulation. Rl Department of Environmental Management. Superfund Paper. Inter-office memo to Anna Prager of the Governor's Office.

21. Gilbert, Evelyn. Experts Clash On Superfund Reform. National Underwriter; October 28, 1991.

22. Glickman, Joan, Project Manager, ICMA. Interview

23. Gray, Terrance, Supervising Engineer. Rl Department of Environmental Management. Inter/lew.

24. Guyer, Jocelyn, American Communities for Cleanup Equity. Interview

25. Jennings, John. Joint Effort Needed For Pollution Ills. National Underwriter; September 16. 1991.

26. Jennings, John. Superfund Hampers New U.S. Products. National Underwriter; September 16, 1991.

27. Johnson, Tom. Polluters Try Legal Tactic To Dump Cleanup Cost On Local Governments. Star-Ledger; December 17, 1990.

28. Kelly, Cynthia C. and Benedict, Leah B. Superfund: What Every Manager Should Know. Public Management; August 1990.

29. Ketchum, Julie M. Alternatives to Superfund for Landfill Cleanup. Minnesota Pollution Control Agency.

30. Laswell, Dixie Lee. Buying Real Estate Can Be A Risky Business: Lawyer. National Underwriter; September 2. 1991.

31. Lefkin, Peter. Superfund: Who's Cleaning Up?. National Underwriter; December 23, 1991.

32. Murphy, Kevin. A Funny Thing Happened on the Way to the Landfill. Western City; April 1991.

33. Newton, David J., Remedial Project Manager, EPA Region I. Interview.

34. North, Cheryl A. Negotiated Justice. Risk and Insurance; June 1992.

35. Payne. Ken. Federal Programs Coordinator. .Interview.

36. Pendergrass, Jay, Environmental Law Institute. Interview

37. Pillsbury, Dennis. CERCLA Cuts Deep and Wide. Risk and Insurance; May 1992.

38. Ringler Associates Incorporated. Superfund and the Environment: A New Opportunity For Structured Settlements; 1990.

39. Schneider, Keith. Industries and Towns Clash Over Who Pays To Tackle Toxic Waste. The New York Times; July 18, 1991.

40. Shotwell, Jo Ann. Preventing and Managing Landowner Liability Under State and Federal Superfund Laws. Manuscript.

41. Sloane. Todd. Costly Cleanup Of Toxic Waste: Locals Facing Huge Bills. City and State; October 21. 1991.

42. Sloane, Todd. Locals Hit Roadblock On Superfund Liability. City and State; April 6, 1992.

43. Steinzor. Rena. Local Governments and Superfund: Who Will Pay The Tab?. The Urban Lawyer; Winter 1990; 22(1).

44. Superfund Seminar: Strategic Advice for Local Officials. Boston, Massachusetts: March 5-6. 1992.

45. Tomsho, Robert. Big Corporations Hit By Superfund Cases Find Way To Share Bill. The Wall Street Journal; April 2, 1991.

46. Weinstein, Mindy. Superfund Study: Costs Exceed Rewards. Risk and Insurance; July?. 1992.

47. Weinstein, Sara, Director, MA Bureau of Waste Site Cleanup. Interview

48. Winograd, Daniel, EPA Region I. Interview.