United States Office of Water & SW - 183C
Environmental Protection Waste Management November 1979
Agency Washington DC 20460
Solid Waste
Hazardous Waste
Management Issues
Pertinent to Section 3004
of the RCRA of 1976
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Prepublication issue for EPA libraries
and State Solid Waste Management Agencies
HAZARDOUS WASTE MANAGEMENT ISSUES PERTINENT TO SECTION 3004
OF THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976
This report (SW-l83c) describes work performed
for the Office of Solid Waste under contract no. 68-01-465?
and is reproduced as received from the contractor.
The findings should be attributed to the contractor
and not to the Office of Solid Waste.
Copies will be available from the
National Technical "information Service
U.S. Department of Commerce
Springfield, VA 22161
U.S. ENVIRONMENTAL PROTECTION AGENCY
1979
U.S. Environmental Protection Agency.
Region V, Library
230 South Dearborn Street
Chicago, Illinois 60604
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This report was prepared by International Research and Technology Corporation
under contract no. 68-01-4657.
Publication does not signify that the contents necessarily reflect the
views and policies of the U.S. Environmental Protection Agency, nor
does mention of commercial products constitute endorsement by the
U.S. Government.
An environmental protection publication (SW-183c) in the solid waste
management series.
S. Environment?! Protection Agency
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CONTENTS
PREFACE 9
INTRODUCTION 11
CHAPTER I FINANCIAL RESPONSIBILITY 23
A. BACKGROUND 23
B. LEVELS OF POTENTIAL LIABILITY " 23
C. GOALS OF THE OPTIMUM REGULATIONS AND OBSTACLES
TO THEIR ACHIEVEMENT 28
D. ALTERNATIVE METHODS OF MEETING FINANCIAL
RESPONSIBILITY OBJECTIVES 30
1. Liability Insurance 30
2. Trust Funds 39
3. Captive Insurer 41
4. Insurance Pool 42
5. Self Insurance 44
6. Posting of Collateral 44
7. Bonding 45
E. POST-CLOSURE FINANCIAL RESPONSIBILITY 46
F. SUMMARY OF ALTERNATIVES TO PROVIDE
FINANCIAL RESPONSIBILITY 49
G. ECONOMIC ASPECTS OF FINANCIAL RESPONSIBILITY
REQUIREMENTS - 51
CHAPTER II CONTINUITY OF OPERATIONS 69
A. STATEMENT OF THE PROBLEM 69
B. CHARACTERISTICS OF AN IDEAL SOLUTION 75
C. BASIC CONTINUITY OF OPERATION COSTS 76
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TABLE OF CONTENTS (Continued)
D. MEETING CONTINUITY OF OPERATION OBJECTIVES 83
E. ALTERNATIVE METHODS OF MEETING CONTINUITY OF
OPERATION OBJECTIVES 84
1. Guarantee Closure and Post-Closure
Responsibilities 84
a. Minimum Owner Assets Requirements 84
b. Trust Fund Requirements 86
c. Bond Requirements 101
d. Escrow Requirements 106
e. Industry Mutual Assessment Requirements 108
2. Providing Access to Sites 116
f. RCRA Sections 3008 and 7003 117
g. Site Transfer Requirements 118
h. Easement Requirements 121
3. Regulating Alternative Uses of Sites 123
i. Covenant Requirements 123
j. Zoning Requirements 125
F. CONTINUITY OF OPERATION OBJECTIVES AND THE MOST
EFFECTIVE WAYS OF MEETING THEM 126
G. OWNERSHIP REQUIREMENTS 136
CHAPTER III CONTINGENCY PLAN STANDARDS 139
A. INTRODUCTION 139
B. EVALUATION AND INTEGRATION OF FACILITIES, EVENTS,
AND WASTE TYPES 140
1. Facilities 141
2. Events 144
3. Hazardous Wastes 146
4. Integration of Facilities and Events 150
5. Integration of Hazardous Wastes with
Facilities/Events 155
C. CONTINGENCY PLAN STANDARDS 161
ORGANIZATIONAL STANDARDS 163
COMMUNICATION STANDARDS 167
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TABLE OF CONTENTS (Continued)
ASSESSMENT STANDARDS 169
RESPONSE AND RECOVERY 172
D. STRATEGY ISSUES FOR THE IMPLEMENTATION OF
CONTINGENCY PLAN STANDARDS 177
E. COMPATIBILITY OF CONTINGENCY PLAN STANDARDS WITH
EXISTING FEDERAL LAWS AND REGULATIONS 182
F. RELATIVE COSTS OF CONTINGENCY PLAN STANDARDS 188
G. CONTINGENCY PLAN STANDARD SETS 194
H. REFERENCES 210
CHAPTER IV TRAINING AND CERTIFICATION 217
A. STATEMENT OF THE PROBLEM 218
B. PROS AND CONS OF TRAINING CERTIFICATION 221
C. A TRAINING PROGRAM FOR THE HAZARDOUS WASTE INDUSTRY 226
D. EXAMPLES OF CERTIFICATION PROGRAMS 238
E. A CERTIFICATION PROGRAM FOR THE HAZARDOUS WASTE INDUSTRY 243
COMPREHENSIVE CERTIFICATION PROGRAM
LIMITED CERTIFICATION PROGRAM
GRANDFATHER CLAUSE CERTIFICATION
SUMMARY
F. COSTS OF TRAINING AND CERTIFICATION PROGRAMS
COSTS OF TRAINING
COSTS OF CERTIFICATION
G. ALTERNATIVE CERTIFYING AGENCIES
APPENDICES 247
1. EXAMPLES OF INSTITUTIONS THAT PROVIDE FINANCIAL
RESPONSIBILITY AND CONTINUITY OF OPERATIONS 247
2. STATE HAZARDOUS WASTE REGULATIONS 266
3. HAZARDOUS WASTE FACILITIES 280
4. HAZARDOUS WASTE RELEASE EVENTS 293
5. HAZARDOUS WASTES 299
6. DAMAGE SCENARIOS 328
7. CONTENTS OF TRAINING MODULES 344
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List of Tables and Figures
Table
1 Revenues and Number of Firms in the Hazardous Waste
Disposal Industry 15
2 Financial Aspects of the Hazardous Waste Management
Industry 16
3 Projections of the Size of the Hazardous Waste
Management Industry to 1983 18
4 Distribution of Firms Engaged in Hazardous Waste
Management by Sales Revenues 20
5 Selected Generator-Disposer Industries 22
6 Hypothetical Frequencies for Various Levels of Liability 52
7 Probability that Events with a Given Frequency will Occur
within 20 Years in an Industry Consisting of 150 Sites 54
8 Premiums Associated with Various Levels of Coverage Under
Hypothetical Liability Frequency Sets 1-4 55
9 Expected Values of Liability Claims not Covered for Various
Levels of Coverage by Hypothetical Liability Frequency Set 53
10 Probability that an Event not Fully Covered by Insurance
will Occur in One Year at One Site by Hypothetical
Liability Frequency Set 59
11 Total Premiums Per Year in Millions of Dollars for Various
Numbers of Hazardous Waste Management Sites and Levels of
Coverage 61
12 Annual Expected Value of Costs (dollars) Born by Hazardous
Waste Management Firm and by General Public Under Various
Insurance and Self Insurance Assumptions 67
13 Annualized Costs Per $100,000 of Fund Size for Alternative
Funding Mechanisms 82
14 Multipliers for Annual Expenditures by Real Rate of Interest
and by Length of Time Expenditures Must be Continued 91
15 Real Interest and Site Life: Five-Year Annual Deposit
Payment Schedule to Provide a Fund Sufficient to Product
a Post-Closure Annual Income of $13,000 in Perpetuity 93
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Table
16 Real Interest and Site Life: Ten-Year Annual Deposit
Payment Schedule to Provide a Fund Sufficient to Produce
a Post-Closure Annual Income of $13,000 in Perpetuity 93
17 Real Interest Rate on Ten Year U.S. Government Securities 94
18 Length of Time (Years) a Cash Fund Computed According to
an Assumed Real Interest Rate Will Last at Various
Actual Real Interest Rates 96
19 Failure Rate Per Site Year Below Which an Industry Wide
Trust Fund Plus Internal Fund is Preferable to an Individual
Trust Fund Approach 99
20 Total Annualized Costs of Providing for Continuity Through
the Use of Surety Bonds and Internal Funds per $100,000 104
21 Failure Rates Per Site Per Year Below Which a Mutual Assess-
ment Association Plus Internal Funding of Continuity
Requirements is Preferable to a Full Lump Sum Approach 112
22 Annualized Cost (dollars per year) of a Mutual Assessment
Fund Assuming All Members Have the Same Probability of
Closure and Annual Post Closure Costs of $13,000 Per Year 113
23 Failure Rates Per Site Per Year Below Which a Mutual
Assessment Association Plus Internal Funding of Continuity
Requirement is Preferable to a Cash Deposit for Firms with
Near 0 Probability of Failure 114
24 Annualized Costs of the Proposed Surety Bond and Cash
Deposit System: Assuming Annual Post Closure Operating
and Monitoring Costs of $13,000 Per Year (dollars per year) 134
25 Annualized Benefits to Cost if Entire Fund is Returned
10 Years After Closure (dollars per year) 135
26 Summary of Model Training Programs for Hazardous Wastes
Processing Facility Personnel 224
27 Summary of Requirements for Comprehensive Certification at
Various Levels for Employment in Hazardous Wastes Management
Facilities 232
28 Tasks Associated with Various Positions for a Hazardous
Wastes Processing Facility 233
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Table
29 Phases and Tasks of Video Tape Lesson Production 239
30 Costs and Use of Video Tape Production Facilities 241
31 Cost to Product a Typical 30 Minute Video Taped Lesson 242
32 Classification of Events 294
33 N.F.P.A. Standard No. 10 297
34 Possible Classification System Bases 301
35 Advantages and Disadvantages of Classification Systems 302
36 Summary of Criteria for Hazardous Substance
Classification Systems 308
Figure
1 Hypothetical Liability Frequencies and Financial
Responsibility Levels 26
2 Hazardous Wastes Site Histories 70
3 Post-Closure Cost Deposit: Surety Bond and Cash Deposit
Schedule for a Fund of $866,667 at Closure, Assuming a
20-year Operational Life. Cash Deposits Total $662,776.
Interest Earnings Raise the Fund to the Required Level. 132
4 Integrate I Facilities and Events 151
5 Integrate II Facilities, Events and Hazardous Waste Sites 156
6 Decision Model for Screening and Selecting Hazardous 310
Compounds
7 Flow Diagram: Evolution of Waste Categories 317
8 First Hybrid Integration 318
9 Second Hybrid Integration 319
10 Third Hybrid Integration 321
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EXECUTIVE SUMMARY
Section 3004 of the Resource Conservation and Recovery Act of 197f
(RCRA) requires that regulations be promulgated by the U.S. Environmental
Protection Agency (EPA) Administrator
establishing such performance standards, applicable
to owners and operators of facilities for the treat-
ment, storage, or disposal of hazardous waste . . .
as may be necessary to protect human health and the
environment.
The standards are to include requirements respecting
contingency plans for effective action to minimize
unanticipated damage from any treatment, storage,
or disposal of any such hazardous waste [§3004(5);
and] the maintenance of operation of such facilities
and requiring such additional qualifications
as to ownership, continuity of operation, training
for personnel, and financial responsibility as may
be necessary or desirable [§3004(6).]
On June 8, 1977, E'PA commissioned International Research and
Technology Corporation to examine the issues pertinent to these standards
and to evaluate the possibility of EPA certification of operations. The
resulting study defined regulatory objectives under four headings: finan-
cial responsibility; continuity of operations; contingency plans; and
training and certification. It identified and evaluated alternative
approaches and methods to meet the objectives, and estimated potential
costs where possible. The study was specifically required to furnish
recommendations on the issues of training and certification.
The hazardous waste management industry is not monolithic:
term covers significantly different types of firms, types of operations,
and types of wastes. For purpose of this study the industry was defined
to include only those required to obtain permits pursuant to RCRA §3005.
First, the industry includes manufacturing companies for whom hazardous ;
waste management is an incidental responsibility generated by their own
activities; it includes independent firms principally in the business of
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taking the hazardous wastes generated by others and disposing of them;
it includes private sector firms as well as public facilities operated by
states, municipalities and regional authorities. Second, the industry
includes different types of operations: storage, treatment, and disposal,
each with different management problems, potential liability exposures,
challenges to continuity of operations etc. Some firms may be involved in
only one of these operations, others in all three. Third, while the
definition and identification of hazardous wastes under RCRA had not been
completed during the period of the study, it is evident that waste
materials to be classified as hazardous will range from the very hazardous
to those hazardous only under relatively rare conditions. Some wastes will
be toxic, others flammable, corrosive, mutagenic, etc. The longevity of the
hazard associated with some wastes will be, for planning purposes, infinite
while the hazardousness of others will be substantially over in a few
months or less.
Each of these variations has some significant implication for
the ease with which the purposes of Section 3004 can be met. One of the
objectives of the study has been to identify regulatory mechanisms and
performance standards applicable generally to all variations found wichin
the industry.
The principle findings of the study may be summarized as follows.
Financial Responsibility
"Financial responsibility" was taken to mean the ability to pay
for injuries to others resulting from escape of hazardous materials.
To establish standards for financial responsibility EPA must estimate the
possible extent of an owner/operator's potential liability and decide to
what degree EPA can and will require the individual firm to insure itself
against this potential liability. A review of liability awards arising
specifically out of hazardous waste management failures, did not yield
data adequate to derive a frequency/liability curve. So far, most
claims have been in the $100,000 to $1 million range. However, current
trends in casualty insurance suggest that claims are rising rapidly. New
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awareness of the potential effects of unintended releases of hazardous
material into the environment, combined with the rapidly increasing
dollar amount of judgements being returned by the courts, lead to the
conclusion that potential liability levels are likely to be substantially
higher in the future. Against this is balanced the increased safety and
effectiveness of the industry that can be expected with the implementation
of RCRA operational and contingency plan standards. Regardless, the mini-
mum financial responsibility level to be required will be determined by a
policy decision, rather than mathematical analysis.
Typically, firms protect themselves against liability by pur-
chasing insurance. Other methods of assuring financial responsibility
include trust funds, captive insurers, self insurance, net assets, and
bonding. After examining each of these alternatives, the study concluded
that, given the very high, but infrequent, potential liability levels
faced by the industry, commercial insurance would prove the most effective
way of meeting §3004 financial responsibility requirements. However, there
are two obstacles to the insurance solution. The first is that the insur-
ance industry is unwilling to provide substantial liability coverage for
small operators at any premium in keeping with the revenue of such firms.
The second is that insurance companies are generally reluctant to offer
liability insurance for non-sudden releases because of the industry's
awareness of the almost unlimited potential liability that could result
from gradual progressive environmental deterioration from unjustified causes
such as slow seepage. With the issuance of the RCRA hazardous waste manage-
ment operations regulations some of the uncertainty will be reduced, but
until a loss history for the industry is compiled, insurance premiums for
sudden accidents will be conservatively over-estimated and coverage for
slow leaching of toxic materials will be available only within narrow limits.
It appears likely that an insurance industry pool arrangement may be re-
quired to meet the financial responsibility objectives of RCRA §3004.
The objectives can probably be met without Federal government
assistance or direct financial participation. However, formal EPA encourage-
ment and initiative is essential if the insurance industry is to respond
effectively to the financial responsibility requirements q-f the hazardous
waste management industry.
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Continuity of Operations
Continuity of operation objectives cover three stages in the
life of a hazardous waste management site; active operations; site closure
and post-closure operations. Continuity of operation problems arise when
the facility operator is 1) no longer available or has gone out of busi-
ness, or 2) incapable of or unwilling to carry out the functions re-
quired for the safe and proper operation of the site. The likelihood of
this happening increases when the site ceases to be an economic asset,
i.e., if and when the costs of treatment and disposal exceed income from
the service, or when the site is filled and can accept no further wastes.
The physical needs of the site, which include post-closure care, will
generally outlast the immediate economic interest of the operator in its
operation.
The problem of meeting post-closure responsibilities is aggra-
vated by the difficulties inherent in predicting when the hazard is term-
inated. In addition to the uncertainties surrounding their potential
exposure to post-closure liability and clean-up costs, hazardous waste
management companies may find themselves incapable of judging when their
obligations for post-closure operations will end, and faced in some
instances with obligations in perpetuity.
In addition to the active operation, closure, and post-closure
aspects of continuity of operations standards, other concerns may be
considered; emergency access to the site; termination or limitation of
operator responsibilities where these may prove an obstacle to the emergence
of a healthy hazardous waste management industry; and land-use limitation
on closed hazardous waste disposal sites.
Various mechanisms can be brought to bear on these objectives.
They include: owner asset requirements, trust funds, bonds, escrows,
mutual assessment associations, statutory authority, site transfer, ease-
ments, covenants, and zoning.
Trust funds present a general advantage over other possible methods
of meeting continuity of operations objectives: funds are built up during
the time an operator's income from a site is greatest, and then secured for
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use when an operator's immediate interest in a site is at its lowest, when
it has ceased producing revenue but still requires maintenance expenditures.
It is the isolation of the funds that makes this scheme attractive. Re-
gardless of the subsequent history of the operator, society is assured, to
the extent it can be, that hazardous waste sites receive the treatment they
require over periods of time potentially so long that they exceed the
degree of permanence that can reasonably be expected of all hazardous
waste management firms. But for the same reason, trust funds present a
significant problem: they require the setting aside of funds to which
the operator no longer has access. These funds might otherwise be used
by the operator in expansion, technological investment, or profit-taking.
The two different types of trust funds—a central industry-
wide fund,or individual funds per site and operator—have different ad-
vantages and disadvantages. A central industry-wide fund used only for
emergency purposes where an operator has defaulted would require a
smaller total capital amount than the total capital that would be set
aside under an individual trust fund approach. The industry-wide approach
takes advantage of the assumption that defaults would happen infrequently
and requires all members to share in that risk. The advantage of the in-
dividual trust fund approach is that with a strong incentive to meet
continuity of operation obligations. Each operator would be reimbursed
from the trust fund as the sequence of closure and post-closure obliga-
tions was met. Under a central fund approacn, where funds are only
available for defaults, the individual operator may have no direct financial
incentive to carry out its obligations. The central fund, set up for
emergency use, may instead find itself having to cover a greater number
of sites than originally thought likely, as individual operators who
find they have nothing else to lose abandon their filled sites. Indi-
vidual trust funds would be particularly vulnerable to inflation and
the source of the funds would presumably have discharged its financial
responsibilities for closure and post-closure costs at the time the fund
was created. A central trust fund, with annual assessments being made
against industry members for its upkeep, would be able to withstand
inflation better as the assessments would reflect costs charged
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to the fund.
Surety bonds may be used to assure the funds needed for contin-
uity of operations during the period in which the trust fund is built up.
Bonds cannot cover long-term or indefinite obligations.
Another key objective is to provide rapid or emergency access
to a site that is being mishandled or has been abandoned. RCRA Sections
3008 and 7003 provide for such access, but involve court procedures that
are time-consuming. The establishment of a more direct access to
hazardous waste sites, possibly as a part of the permit mechanism, is
desirable.
The most difficult issue considered under continuity of operation
objectives concerns the possibility of transferring ownership of or respon-
sibility for the site from the operator to the government. Providing long-
term continuity of operations and financial responsibility for a hazardous
waste site is not a trivial undertaking, and a state takeover requires
the establishment of a substantial operational capability. Nonetheless,
some states, such as Oregon, now require site transfer.
The advantages of site transfer for purposes of terminating a
perpetual burden are that individual hazardous waste companies will be
able to close their books at the end of each fiscal year with statements
of measurable liabilities and obligations outstanding, and that prospec-
tive entrants into the hazardous waste industry will not be deterred by
the prospect of an open-ended—and potentially catastrophic—responsibility
overshadowing their commitment. The disadvantage is that hazardous waste
operators would be relieved of legal obligations that have traditionally
been assumed by the private sector, only because the structure of the obli-
gation is unusually onerous.
Requiring that the permittee own the land in which disposal
is taking place will held assure that the land is not subsequently
misused, and that access to the site by monitoring and emergency person-
nel is possible. It also helps prevent insulation of company assets
in the case of intentional default.
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Post-closure financial responsiblity needs may be met through
liability insurance. Annual premiums could be funded, in case of operator
default, though the same mechanisms used to pay annual maintenance and
monitoring costs.
Contingency Plan Standards
Contingency plan standards are required to help control physically the
accidental release of hazardous wastes into the environment. The standards
must cover a variety of different types of disposal techniques, different
types of hazardous wastes, and different types of incidents that result in
the release. The standards selected are relevant to landfills, incineration,
deep well injection, waste lagoonsand ponds, near-surface land burial, land
burial at depth, above-surface storage, and neutralization. The waste
materials covered include flammable or explosive vapor, flammable solids
and liquids, explosive solids and liquids, bioconcentratives, corrosives,
reactives, radiologicals, and other wastes that present an environmental
hazard, or an airborne, waterborne, or contact health hazard. The release
events covered by the standards include non-routine liquid, solid, and gas
releases, fire, explosion, dike failure and direct human and animal contact.
Standards were examined under the following headings: organization,
communication, assessment, and response and recovery. Organizational
standards are aimed at insuring a well-defined, effective and coordinated
emergency effort, and deal primarily with authority and responsibility in
maintaining, implementing and activating a contingency plan.
Communication standards are intended to insure positive and pre-
planned notification to emergency authorities in the event of accidents
or hazardous discharges. An automatic alert to a detached fire department
may be required in case of all fires, including short-lived ignition of
unexplained free gases, any detonation except one controlled entirely
within the operating limits of an incinerator chamber, any situation requiring
employee evacuation, any employee injury due to spontaneous rupture of a con-
tainer, or any release of hazardous gases, fumes or dusts outside the regu-
lated area of the facility.
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Assessment standards are aimed at providing prompt appraisal of
the extent and severity of dispersion and contamination from the accidental
release of hazardous wastes to the environment or assisting in selecting an
appropriate response to mitigate potential adverse effects from the release
of any contaminants.
Response to an emergency situation must follow immediately after
assessment. Response and recovery standards include notification;
shut-down of facility; evacuation; monitoring and modeling; collection
and/or containment of released wastes; continuing assessment of affected
areas; personnel availability; medical treatment; water supply; and fire
fighting and prevention.
Noneof the contingency plan standards proposed are incompatible
with existing Federal regulation, or in conflict with the authorities
granted under other acts. However, hazardous waste management operators
may have to meet additional standards under other acts.
Training and Certification
Most of the operations at a hazardous waste management site
require skill and training. Certification is a way of verifying that
the labor force at a site has the requisite skills and training. How-
ever, a training program need not be accompanied by certification, and
vice versa. Under a "grandfather clause" provision, persons who have
been in the hazardous waste management business for a period of time may
be exempted from either training or certification requirements.
A training and an independent certification program is recommended
for the hazardous waste management industry. The industry is in an embryonic
form: its personnel are often new to the business and new requirements are
being made of the operators in areas in which they may have little experience.
The current capabilities found in the industrv vary widely, from well
managed, sophisticated, responsible companies to antiquated landfills, to
fly-by-night dumpers. A strong training and certification program will help
raise and unify standards and help eliminate incompetent operators from
what is likely to prove an increasingly demanding and sophisticated
industry. A grandfather clause should be included with regard to the
training program, but all operators should have to meet the same certifi-
cation requirements.
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PREFACE
The following draft report describes the principal findings and
conclusions of a study on hazardous waste management problems. The study
was sponsored by the Hazardous Waste Management Division, Office of Solid
Waste, of the U.S. Environmental Protection Agency (EPA) and executed by
the International Research and Technology Corporation (IR&T) and its
subcontractor Dames and Moore during the period June 8, 1977 - September 8,
1978, under EPA Contract No. 68-01-4657.
The purpose of the study has been to examine a number of manage-
ment issues pertinent to Section 3004 (5) and (6) of the Resource Conser-
vation and Recovery Act of 1976. The study was divided into four tasks,
covering:
1) Financial responsibility of hazardous waste management firms;
2) Continuity of operations at hazardous waste sites;
3) Contingency plan standards for the hazardous waste industry;
and
4) Training and Certification for hazardous waste management
employees.
Generally, IR&T played the leading role in Tasks 1 and 2.
Dames and Moore played a similar role on Task 3. Task 4 was shared by
IR&T and Dames and Moore.
IR&T was given invaluable assistance by Dr. John S. McGuinness
of Scotch Plains, New Jersey, a specialist in actuarial science and the
insurance industry.
The project director of the study was Lawrence H. de Bivort.
Other key IR&T personnel were Charles C. Humpstone, Robert Burt, Polly
Neill, James Arnold and Eileen Glennie.
The Dames & Moore principals in charge of this project were
Richard C. Tucker and Porter C. Knowles. The following individuals pro-
vided key contributions to the various technical areas: F. Larry Doyle,
Michael D. Foley, Joseph Fulton, Philip Gagnard, W. Andy Moser, and
Patrick Parks.
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During the course of the study, numerous interviews took place
with representatives of the hazardous waste industry, the insurance and
surety industries, U.S. EPA and other government agencies, State environ-
mental departments, various Federal and State insureance corporations,
hazardous waste generator firms, trade associations, safety organizations,
etc. We wish to thank the many persons who shared their knowledge with
us, sometimes in confidence.
Comments, suggestions, or criticisms are most welcome, and may
be addressed to:
Dr. Lawrence H. de Bivort
International Research and Technology Corporation
7655 Old Springhouse Road
McLean, Virginia 22102
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INTRODUCTION
The Resource Conservation and Recovery Act of 1976 (RCRA)
requires in Section 3004 that the U.S. Environmental Protection Agency
(EPA)
promulgate regulations establishing such per-
formance standards, applicable to owners and
operators of facilities for the treatment,
storage, or disposal of hazardous waste . . .
as may be necessary to protect human health
and the environment. Such standards shall
include . . . requirements respecting . . .
(5) contingency plans for effective action
to minimize unanticipated damage from any
treatment, storage, or disposal of any such
hazardous waste; (6) ... qualifications as
to ownership, continuity of operation, train-
ing for personnel, and financial responsibili-
ty as may be necessary or desirable . . .
These requirements defined the scope of this study. Four basic
tasks were specified: 1) to examine how the standard for financial
responsibility might be met; 2) to examine the problems affecting
continuity of operations and alternative solutions, including those
affecting conditions of ownership; 3) to propose contingency plan standards
and examine alternative strategies for implementing the standards; and
4) to evaluate the role of certification in regulating the hazardous
waste industry and describe a training program suitable to the industry.
It has always been the case that current generations have had
immense impacts on future ones, impacts both helpful and onerous. The
balance of each generation's legacy has generally been positive, and so
progress from generation to generation has been possible. Recently.,
side-effects of industrial activity in the twentieth century have raised
the possibility that the balance of benefits and burdens to be passed on
now may have been significantly altered for the worse. Hazardous waste
generation is one of these side-effects. The degree of inherent hazard
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they present to human health and the environment, the longevity of the
hazard in many of the wastes, and the predictability of the process that
produces the wastes, pose a fundamental question about the nature of
intergenerational responsibilities, rights, and duties. The passage of
RCRA Section 3004 provides an initial response to this question. The
hazardous waste management industry will be regulated to provide for the
long term care of hazardous wastes, in perpetuity if necessary, to
minimize the chance of a release of hazardous materials to the environment,
to minimize the extent of the release if it should occur, and to provide
compensation for damages caused by a release. Inevitably, the regula-
tions required, if these objectives are to be met, will be far reaching
and have a direct impact on the development, structure, and financial
well-being of the industry.
The hazardous waste management industry is young. It is
composed of different groupings that may not have much in common other
than the fact that they each handle in some way some wastes that will
be defined as hazardous by the assessment protocol being developed by
EPA. Upon examining the current hazardous waste industry one
is struck by the dissimilarities between its members, rather than the
similarities. It is almost more useful to think of it as a number of
different industries, rather than a single industry. This view was re-
flected in the comments made by hazardous waste facility operators during
the study.
The hazardous waste industry is fragmented along a number of
basic lines. These include:
1) The inherent hazard of the waste materials. Toxics,
corrosives, flammables, etc. each present different types of hazards of
differing degrees of severity to different types of targets. Hazard
will also vary with concentrations. Some hazardous materials will be very
hazardous and under the best of conditions represent an ominous threat.
Other hazardous wastes maintained under relatively simple conditions may
present a threat only under the most unlikely circumstances.
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2) The relative hazard of waste sites. Proximity of a site to
populated centers, proximity to active mechanisms of transport (such as streams,
or acquifers) and proximity to potential sources of site disruption
(such as earthquakes, floods, etc.) will effect the relative hazard of a
given material.
3) Longevity of the waste hazard. Some materials will maintain
a highly hazardous form virtually indefinitely, while others may be
neutralized, naturally or deliberately, within very short periods after
being generated. Longevities will also be affected by disposal strategy,
e.g. incinerator or landfill.
4) Ownership and business context. The industry can be divided
into three ownership categories: ]) the "generator-disposers," who are
primarily concerned with manufacturing, and only incidentally dispose of
their own hazardous wastes, and tend to be relatively large firms; 2)
the independent disposers, who are primarily in the business of waste
disposal, including hazardous wastes, under contract to waste generators; and
3) public facilities owned by municipalities, counties or States.
5) Technological and financial sophistication. Hazardous
waste management firms will have different levels of technological and
financial sophistication. The industry has some very up-to-date
operators, and some companies with low levels of technology.
6) Hazardous waste operation involved. The industry is
composed of those who treat, who store, and who dispose of hazardous
wastes. Some only perform one of the functions, others all three.
Each of the variations along each of the lines described here
has some significant implication for the ease with which either the
financial responsibility or continuity of operations objectives of RCRA
3004 (6) can be met. For instance, a major generator-disposer producing
medium hazard level wastes of low longevity should have little difficulty
purchasing more than sufficient liability insurance, or providing
13
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assurances of continuity of operation. A municipality handling highly
toxic materials of long longevity may easily meet continuity require-
ments, but be incapable of providing proof of financial responsibility.
An incinerator disposer located up wind from a populated area,
and handling materials that leave a highly hazardous residue after
incineration,may meet all continuity needs but not find liability insur-
ance, while a similar disposer located away from a populated area may
meet both objectives with no difficulty.
Economic data on the industry played an important role in this
study. It was available in a number of EPA reports, and is summarized
below in the terms in which it was used in the study.
Economic Aspects of Hazardous Waste Management
In 1975, the hazardous waste management industry, i.e. those
companies disposing of hazardous wastes generated by others, the so-called
"off-site disposers," had revenues of 107 million dollars divided among
95 firms. Both revenue and number of firms were subject to a rapid growth
in the early 1970's that seems to have leveled off more recently (see
Table 1). There were only 110 hazardous waste management facilities, or
sites, in 1975, thus the vast majority of firms operated only a single
facility. The majority of these facilities are operated by private cor-
porations, partnerships or family operated companies. The remainder are
operated by common stock corporations, or divisions or subsidiaries of
other large corporations. A limited number of facilities are publicly
owned, and these are concentrated in California.
The industry has shown reasonable profits on invested capital
(see Table 2), but has shown strong increases in its dependence on debt
financing. For those firms whose main objective was hazardous waste
management, approximately 40% had working capital deficits in 1975.
Projections of the future of the industry have been quite
varied depending on such critical assumptions as the type of regulatory
regime, and on the extent to which growth takes place through expansion
at present facilities or through creation of new facilities. Foster D.
14
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Table 1
Revenues and Number of Firms
in the Hazardous Waste Disposal Industry
1971
1972
1973
1974
1975
Real Revenues
(millions of 1975 dollars)3
59
83
106
113
107
Number of
Firms
76
82
87
91
95
a. Current Dollar Revenues converted to 1975 dollars using
Business-Non Farm GNP deflator.
Sources: Current Revenues and Number of Firms from Foster D.
Snell Inc., Potential for Capacity Creation in the
Hazardous Waste Management Industry. Business Non
Farm GNP deflator from U.S. Bureau of Economic Analysis,
Survey of Current Business.
15
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Table 2
Financial Aspects of the
Hazardous Waste Management Industry
1971
1972
1973
1974
1975
Net
Income
(millions
of dollars)
4.1
3.7
5.6
6.6
7.5
Total
Tangible
Assets
(millions
of dollars)
41
69
77
91
90
Total
Tangible
Equity
(millions
of dollars)
19
30
32
34
33
Return on
Tangible
Equity
(per
cent)
21.5
12.3
17.5
19.4
22.7
Return on
Tangible
Assets
(per
cent)
10
5.3
7.2
7.2
8.3
Debt
Equity
Ratio
1.21
1.30
1.59
1.74
1.64
Source: Foster D. Snell Inc. "Potential for Capacity Creation in the
Hazardous Waste Management Industry. " (NTIS, Washington, DC, 1976)
16
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Snell Inc., in a study for EPA, provided two estimates, one assuming no
new regulations and one assuming a stringent regulatory regime requiring
the use of environmentally adequate hazardous waste disposal facilities
for all hazardous wastes listed as potentially hazardous in EPA sponsored
waste assessment studies. The results of these two estimates are shown
in Table 3. While the differences in number of facilities and firms is
fairly close for these two estimates, the range in revenues (and in
turn total capacity) is from 150 to 350 million dollars. A somewhat
different approach toward estimating size of the hazardous waste industry
was taken in EPA's 1974 Report to Congress on disposal of hazardous
waste. This report assumes virtually no generator-disposers. This
assumption is based upon a model demonstrating transportation versus
scale economies in hazardous waste disposal for various types of hazardous
wastes. This study presents a range of forecasts, two of which are
shown in Table 3. The lowest cost is associated with a system
having only seven regional multipurpose hazardous waste disposal
centers managed by the government. This approach is interesting as
representative of a direction toward concentrations that at least some
observers of the industry anticipate. It is quite possible that 10 to
20 years from now the vast bulk of hazardous waste disposal may take
place in a relatively small number of general purpose facilities. At the
other extreme,is the high cost estimate associated with a system of 247
small hazardous waste disposal facilities.
This overview of the industry tends to cause one to overlook
the enormous diversity of hazardous waste management operations. Virtu-
ally excluded from the above discussion are firms whose primary purpose
is to engage in specialized types of resource recovery and reclama-
tion operations such as petroleum re-refiners and solvent reclaimers. It
is not entirely clear at this time the extent to which such recovery
operations are to be included as treaters of hazardous waste, given that
the product produced has actual value. Even among those facilities cur-
rently classified as hazardous waste management operations, there exists
"Report to Congress, Disposal of Hazardous Wastes," EPA, Office of Solid
Waste Management Programs (SW-115) (U.S. Government Printing Office,
Washington, DC, 1974.)
17
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Table 3
Projections of the Size of the
Hazardous Waste Management Industry to 1983
Foster D. Snell3
(No new regula-
tions)
Foster D. Sneir Report to Report to
(stringent Congress^ (small Congress
Federal regula- number of (large number
tions) national centers) of facilities)
Revenues
(millions of
dollars)
Number of
Facilities
Number of
Firms
150-160
130-140
75-85
330-350
160-170
90-100
627
1295
273
a. Source: Foster D. Snell Inc., "Potential for Capacity Creation in the
Hazardous Waste Management Service Industry" (NTIS, Washington, DC,
1976).
b. Source: U.S. EPA, "Report to Congress, Disposal of Hazardous Wastes
(SW-llS)" (U.S. Government Printing Office, Washington DC, 1974).
Revenue estimate is equivalent to cost estimate cited in that
Volume.
18
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an enormous variety of sizes and combinations of operations. Some
facilities provide only a single simple service such as deep well in-
jection or incineration. At the other extreme are facilities that will
accept virtually any type of hazardous waste and provide a broad range
of treatment and disposal options within the single facility.
One specific class of facility, the landfill, is of special
importance to this study due to the continuity of operations problems
it presents. EPA's. directory of "off-site" hazardous waste management
facilities for 1977 lists 20 secure landfills and 43 landfill lagoons.
Among the new facilities called for in the high forecast are approximately
20 new secure landfills.
Hazardous waste sales revenues by firm vary from $35,000 to
$12,000,000 per year, with median sales revenues of 1 million dollars
per year. Table 4 shows the distribution of sales revenues. Total
assets of firms engaged in hazardous waste management varies even more
widely, since the industries include small single facility firms as well
as branches of such large firms as Monsanto. Conversations with
persons knowledgeable about the industry,and the Foster D. Snell projec-
tions suggest that both the average size of facilities and the number
of facilities per firm will grow as a result of current regulations.
Describing the nature of generator-disposers and determining
such general information as the number of sites involved is difficult
due to both the enormous diversity of generator-disposers and a number of
definitional problems. The first definitional problem is that of the
precise definition to be used of hazardous waste. During the period of
this study, EPA had not yet defined this term. Studies of potentially
hazardous wastes sponsored by EPA have included as hazardous any waste which
produces a leachate which is not of drinking water quality. Such a broad
definition includes an enormous number of plants now acting as generator-
disposers, and probably also covers industries not yet examined by EPA. The
second definitional problem lies in the operational definition of the
-------
Table 4
Distribution of Firms Engaged in
Hazardous Waste Management by Sales Revenues
1975 Sales Revenues Percentage of Firms
0-$100,000
100,000- 500,000
500,000- 1,000,000
1,000,000- 2,000,000
2,000,000- 5,000,000
5,000,000- +
19
21
15
31
10
4
Source: Foster D. Snell, Inc., Potential for Equality Creation
in the Hazardous Waste Management Service Industry.
20
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legislative term "hazardous waste treatment, disposal or storage facilities.1
Virtually all hazardous waste generators engage in some degree of treat-
ment, including such processes as sludge dewatering, limited reclama-
tion, and treatment prior to recycling. If treatment is defined suffi-
ciently broadly, then virtually all generators are hazardous waste
management facility operators.
Table 5 shows for selected major hazardous waste generation
industries the total number of potential generators in the industry,
an estimate of the number that engage in either final disposal
or long term storage of hazardous wastes (normally in lined lagoons),
and an estimate of the total costs to the industry of a high level of
control of hazardous wastes. As can be seen, the number of sites in-
volved is enormous, even if sites which engage only in final disposal or
long term storage are included.
The economic structure of these industries could not be more
diverse. It includes samples of most U.S. manufacturing industries.
Included are both industries dominated by Fortune 500 firms, such as
primary metals, chemical process industries, and petroleum refining, and
industries in which the typical firm is extremely small and total capi-
talization is extremely low, such as job shop electro-plating.
With these observations on the fragmented nature and economic
characteristics of the hazardous waste industry in mind, we turn to our
draft report on the four issues that form the basis of this study, how to
ensure financial responsibility, how to provide continuity of operations,
contingency plan standards, and training and certification.
21
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Table 5
Selected Generator-Disposer Industries
Industry
Petroleum Refining
Inorganic Chemicals
Organic, Explosives,
& Pesticides
Metals Smelting &
Refining
Textiles
Pharmaceuticals
Electro-Plating
Electronic Components
Manufacturing
# of
Sites
247
143
2200
690
5366
1600
3000-
20,000
2855
Estimated Number of Site
Engaging in Final Disposal
of Long Term Storage
120
121
1760
690
5100
165
small number
uncertain
Annual Cost in
Millions of Dollars
Per Year a
74
20
243
31
n
9
300-400
20
a. includes costs of off site disposal
b. IRT estimates based upon the sources below, and the summary in
Foster D. Sne!1 op. cit.)
Sources: Versar, Inc., Assessment of Industrial Hazardous Waste Practices,
Inorganic Chemical Industry. TRW Inc., Assessment of Industrial
Hazardous Waste Practices, Organic Chemicals, Pesticides, and Explosives
Industries. Battelle, Columbus Laboratories, Assessment of Industrial
Hazardous Waste Practices - Electroplating and Metal Finishing
Industries. Wapora Inc., Assessment of Industrial Hazardous Waste Practices,
Paints Industry. Jacobs Engineering Co., Assessment of Industrial
Hazardous Waste Practices, Petroleum Refining. Arthur D. Little, Inc.,
Hazardous Waste Generation, Treatment and Disposal in the Pharmaceutical
Industry. Calspan Corp., Assessment of Industrial Hazardous Waste
Practices in the Metal Smelting and Refining Industry. Versar, Inc.,
Assessment of Industrial Hazardous Waste Practices, Textiles Industry.
22
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Chapter I
FINANCIAL RESPONSIBILITY
A. BACKGROUND
The Resource Conservation and Recovery Act of 1976 (RCRA) pro-
vides at Section 3004(6) that EPA "shall promulgate regulations estab-
lishing such performance standards ... as may be necessary to protect
human health and the environment . . . (including such) . . . requirements
respecting . . . qualifications as to ownership, continuity of operations
and financial responsibility as may be necessary or desirable . . . ."
The following portion of this report deals with qualifications as to
financial responsibility.
The only guidance as to the meaning of "financial responsibility"
appearing in the committee reports, especially significant because it
accompanied the Senate version which was ultimately adopted, states:
"One of the specific conditions . . .is the
requirement that facilities providing treatment . . .
meet minimum qualifications on ownership, financial
responsibility, and continuity of operations. "In a
situation where the best accepted method of dealing with
a hazardous waste may be long-term stabilized storage,
a permit must contain provisions to assure that the
storage site will be maintained over that period. In
addition, there must be adequate evidence of financial
responsibility, not only for the operation of the site,
but also to provide against any liability if the
material escapes the storage."-
Based on this guidance it appears that by "financial responsi-
bility" Congress meant the ability to pay for injuries to others resulting
from escape of hazardous materials.
B. LEVELS OF POTENTIAL LIABILITY
To meet its responsibility EPA must estimate the possible extent
of an owner/operator's potential liability and decide to what degree it
"Solid Waste Utilization Act of 1976," Report of the Committee on
Public Works, U.S. Senate, to accompany S.3622, June 25, 1976, p. 16.
23
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can and will require the individual firm to insure itself against this
potential liability.
In order to help estimate potential liability, IR&T reviewed
reports of incidents of injury and associated monetary claims arising
out of operations of hazardous waste disposal sites or otherwise resulting
from improper disposal of such wastes. In doing so it primarily relied
upon the recitals of incidents set forth in the House Committee report^,
those documented in EPA's own series of reports on the problem5, from re-
viewing the current file of newspaper and magazine clippings on the subject
maintained by EPA and from a literature search. The information available
is for the most part ancedotal and lacking in detail with respect to the
actual dollar value of claims paid. It does not yield any statistically
valid basis from which to derive reliably the probable range of valid claims
or the probable frequency of any given level of liability. It does show the
recurring nature of accidents involving hazardous waste disposal under
unregulated conditions. Damage claims in the range of $100,000 to $1
million are most common, but there have been several incidents, each
resulting in the loss of a single human life, in which the dollar amounts
claimed and claims paid, if any, are not reported. Claims involving
unintended non-explosivedispersal of non-nuclear hazardous wastes in the
United States, although not necessarily as the result of disposal, have
led to losses in excess of $4 million. The large number of fragmentary
reports of incidents reviewed in the course of this study do provide the
factual basis for the short series of composite scenarios set forth in
Appendix 5 to this report. These provide background
for discussion of hypothetical ranges of loss, but are not based upon
statistical analysis of dollar claims or frequency.
n "Resource Conservation and Recovery Act of 1976," Report of the
Committee on Interstate and Foreign Commerce, U.S. House of Representa-
tives on H.R. 14496, September 9, 1976, pp. 17-23.
§
U.S. Environmental Protection Agency, Office of Solid Waste
Management Programs, "Hazardous Waste Disposal Damage Reports," SW-151,
December 1975; SW-151.2, June 1975; SW-151.3, May 1976; U.S. Environ-
mental Protection Agency, Report to Congress: Disposal of Hazardous
Wastes, SW-115 (OSWMP, 1974), pp. 41-46.
24
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For this reason, this report has not adopted formal estimates,
but has proceeded on the assumption that claims of up to $1 million will
happen with some frequency, less frequent claims of between $1 million
and $10 million may be anticipated on the basis of past experience, and
claims of between $10 million and $100 million involving a major
catastrophe, although very infrequent, may still be anticipated on the
basis of the history of industrial accidents in the U.S. and Europe over
the past several decades.
Deriving an accurate measure of loss or liability frequencies
for the hazardous waste management industry will depend on two key
factors: 1) liability claims and judgements have escalated enormously
in recent years-, and 2) hazardous waste management operating and contingency
plan standards have yet to be implemented.
Even if statistically validated loss frequency functions were
to be derived this would only assist EPA in setting a dollar value to
represent "financial responsibility" for purposes of satisfying the
Congressional intent. Choosing such a dollar value requires a policy
decision rather than a mathematical analysis. Because it is impractical
to expect the level of financial responsibility to cover the highest
possible liability levels, EPA will have to decide the general degree of
responsibility it will seek to assure. The nature of the policy decision
is shown in Figure 1.
The higher the level of financial responsibility, the larger the
percent of incidents that'will be fully covered. The financial responsi-
bility level decision therefore requires a basic judgement about how much
of the total liability to be faced by the hazardous waste management
industry will be covered by the mandatory minimum financial responsibility
requirement. The degree of protection of human health and the environment
afforded by the requirement is balanced by the size of the burden the
requirement will place on the industry. The responsibility for providing
this protection will not fall solely on EPA's financial responsibility
requirement, however. The requirement will establish only a minimum level
of protection: the larger companies and the more responsible ones will
assess their own potential liability exposures and supplement their
25
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Fig. 1 Hypothetical Liability Frequencies and Financial Responsibility Levels
Liability
Levels
($106
log
scale)
10
Percent of Incidents Covered
Fully at Level A
Percent of Incidents Covered Fully at Level B
Percent of Incidents in X Time Period
A. Financial responsibility Level A set at $1 million: 65% of incidents
fully covered; coverage up to $1 million for remaining 35% of incidents;
total liability not covered in time period shown as
B. Financial responsibility Level B set at $10 million: 82% of incidents
fully covered; coverage up to $10 million for remaining 18% of incidents;
total liability not covered in time period shown as
NOTE: The available data are insufficient to develop a real liability fre-
quency curve. The hypothetical curve depicted here is an imaginary one,
used to illustrate the point that even if such a curve could be constructed
the setting of a minimum financial responsibility level would remain a
question of policy.
26
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ability to meet the loss beyond the level mandated by EPA. Thus some of
the liability area shown as "uncovered" in Figure 1 will be covered at
the initiative of the companies with higher loss exposures than the level
set by EPA.
At the heart of an insurance program is the classification of the
activities to be insured into risk categories. Premium rates, based on
loss records and estimates, are established for each category. The hazar-
dous waste management industry is considered a single industry only because
of the general function it performs. But, in reality and from the point
of view of an insurance program, the industry is made up of many different
types of operators, each possessing different risk characteristics. First,
there are those who treat wastes, those who store them, and those who
dispose of them. Not all companies will carry out each of these functions.
Second, some companies will handle all hazardous wastes available; others
may specialize in only one type of waste materials. Third, the techniques
used by the firms will vary, reflecting such things as the date of purchase,
volume of materials, local, state and Federal requirements, and the prior
experience of the operator. Fourth, the longevity of the hazard inherent
in the wastes will vary widely with the materials being handled; some will
become benign in months, others will remain hazardous for thousands of
years. And fifth, the location of the site will affect the degree of risk
the operation represents. A site located near a town, say, will present a
potential loss for greater than one in an isolated locale.
EPA will not be able to set risk levels and financial responsibil-
ity requirements for each one of its permit-holders separately. Risk-
associated categories may emerge from the permit structure now being
developed by EPA, and, over time, the loss records of the industry will
form patterns from which the insurance industry will be able to develop
risk classifications and premium rate categories. EPA may decide to
require a single level of financial responsibility for all its permit
holders, on the premise that within a relatively short time the insurance
industry will begin to adjust the premiums of the insured operators. Thus
while the required level of financial responsibility would continue to be
27
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the same for all permit holders, the different degrees of risk that they
represented would be reflected in the premium payments.
C. GOALS OF THE OPTIMUM REGULATIONS AND OBSTACLES TO THEIR ACHIEVEMENT
Regulations intended to insure financial responsibility
ideally would assure a source of assets, accessible to legal process,
that would be sufficient to meet all legitimate claims of damage. These
assets should be in a form that claims against them could not be defeated
by economic conditions, or the waste disposer's negligence or intentional
misconduct. The simplest solution would be for each firm to be required
to maintain liability insurance sufficient to meet the largest foreseeable
claim. For reasons that will be discussed below, this alternative is
not feasible. A second solution would be to have insurance supplied for
all hazardous waste disposers by a pool of participating insurance com-
panies. The possible obstacles and alternatives to formation of such a
pool are also explored.
The policy decisions that will have to be made by EPA will be
of two sorts. First, it must consider whether the costs of the maximum
solution (protection against very rare but catastrophic occurrences) are
to be built in to the costs of all hazardous waste disposal. Second,
it must decide to what degree the non-availability of the optimum solu-
tion for most firms now in the hazardous waste business should operate
to reduce the regulatory standard. That is, to what degree would it be
desirable to give a reduced degree of protection to the public to avoid
excluding a large number of the firms, currently in the hazardous waste
management business, from further participation?
The principal obstacle to overcome in drafting regulations
enhancing "financial responsibility" of hazardous waste disposers is the
small size of the current off-site industry and of most of the off-site
firms now engaged in the business. As the description of the industry set
forth in the Introduction of this report indicates, the industry consists
of several kinds of firms. There are between 90 and 100 companies in
28
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the contract hazardous waste management business, although some of these
obtain most of their revenues from non-hazardous waste disposal. In
addition, an unknown number of firms currently dispose of their own
hazardous wastes. These firms will be termed generator-disposers. For
purposes of this study, the number of generator-disposers expected to
continue as generator-disposers under the forthcoming EPA regulations is
assumed to be a larger number than the number of companies primarily in
the disposal business. No effort was made to estimate the number of such
companies or their average revenues. They were assumed to be larger than
those primarily in the off-site hazardous waste management business. Of
the firms primarily in the waste management business, the median for gross
sales revenues is less then $1,000,000 per year. These factors, the small
number of participants and the small average size, are the most important
limitations to consider in determining regulatory requirements.
The material that follows will consider the most promising of
the regulatory opportunities for enhancing financial responsibility.
In addressing the question of financial responsibility, the provisions
set out by Congress in other environmental legislation were considered.
The Federal Water Pollution Control Act provides at § 1321 (p)(l),
that any vessel over a given size that might carry oil as hazardous
materials in U.S. waters "shall establish and maintain . . . evidence of
financial responsibility of $100 per gross ton or $14,000,000, whichever
is the lesser, to meet the liability (for clean-up costs incurred by
the U.S.) .... Financial responsibility may be established by any one
of, or a combination of, the following . . .: (a) evidence of insurance,
(B) surety bonds, (C) qualifications as a self-insurer, or (D) other
evidence of financial responsbility."
The Price-Anderson Act, amending the Atomic Energy Act of
1954, provided under section 170(a) that: "Each license shall . . . have
as a condition of the license a requirement that the licensee have and
maintain financial protection of such type and in such amounts as the
Commission shall require ... to cover public liability claims."
29
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In practice, EPA and the Nuclear Regulatory Commission have
offered to allow, as alternatives to liability insurance, self-insurance
in the form of an audited financial statement showing liquid assets
sufficient to meet the amount specified in applicable regulations, a
letter of credit from a bank, a deposit of securities, a bond, or in the
case of water pollution, a guarantee agreement from another company with
sufficient liquid assets (usually a parent corporation) to pay the
required sum if needed. The NRC usually obtains evidence of liability
insurance for most of the liability requirement and accepts one or another
of the alternative methods to cover the amount for which the licensee
seeks to self-insure itself.
D. ALTERNATIVE METHODS OF MEETING FINANCIAL RESPONSIBILITY OBJECTIVES
1. LIABILITY INSURANCE
The alternative which received the greatest emphasis in this
study has been liability insurance. The critical insurance protection
for liability from hazardous waste disposal is so-called "non-sudden,
non-accidental" coverage. All other liability insurance covers only the
consequences of sudden and accidental events such as explosions, pipe-
line ruptures, or abrupt failure of containment vessels. These risks
are common to all industrial facilities working with hazardous materials.
The circumstances that are peculiar to hazardous waste management are those
that can be associated with such steady-state operations as emission of
combustion by-products from incinerators and unintended leaching from
landfills. The latter will typically be a slow process in which rainfall
or surface water from a stream or pond percolates through previously
deposited wastes, dissolving or entraining hazardous materials.
Hazardous waste disposal landfills typically are located above
natural or man-made catch basins of impermeable materials. Leakage
from such sites would usually result from design error, deterioration
of sealing materials, or through unanticipated faults in a natural catch-
basin, all non-sudden, accidental events. Only where seismic shock or its
equivalent caused fissures through which leakage occurred, would the
escape o'f hazardous material be sudden and accidental.
30
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In general, business organizations in the United States have
substantial insurance protection against sudden and accidental releases
of materials that cause injury to others.11 This had been the traditional
standard coverage offered by the insurance industry prior to 1966.
Organizations wanting protection against damage from gradual
releases could obtain it at that time, as an optional endorsement, for
a modest charge, usually less than five percent of the sudden and accidental
release premium. With the industry-wide adoption of the 1966 Comprehensive
General Liability (CGL) Standard Policy, this additional coverage ceased
to be an option and was included in the standard protection offered to
all insurers under their CGL. Erosion of this coverage began during the
early 1970's when the insurance industry reacted to the pollution lia-
bility potential demonstrated by such events as the Japanese mercury
incidents and the proliferation of the state and federal regulatory
legislation erecting new standards of performance and due care for
industrial insureds. An endorsement excluding damages from contamina-
tion or pollution was devised in January of 1971 and widely copied. In
1973, a new CGL standard form institutionalized this change and excluded:
. . . bodily injury or property damage arising out of
the discharge, dispersal, release, or escape of smoke,
vapors, soot, fumes, acids, alkalis, toxic chemicals,
liquids or gases, waste materials or irritants, con-
taminants or pollutants into or upon land, the
atmosphere or any water course or body of water; but
this exclusion does not apply if such discharge,
dispersal, release or escape is sudden and accidental.
Today, standard Comprehensive General Liability policies for
non-marine insurance no longer give an industrial organization coverage
against claims for damages from gradual leakage or steady-state discharge
of pollutants.
This omission from CGL coverage has prompted two organizations
to market insurance coverage designed specifically to cover non-sudden
11 See C. Humpstone, "Pollution Insurance Comes of Age," R.isk Manage-
gement, Vol. 24, No. 8, August 1977, pp. 18-21.
31
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non-accidental risks. One of these organizations has ceased to offer the
coverage. In addition, a specialized form of such coverage for the
most part restricted to the oil industry for drilling and storage of
petroleum has been and continues to be available from Lloyds underwriters.
Each of these is discussed below.
The only standardized policy that is currently available has
been offered in the United States since 1974 by a syndicate of insurers
and re-insurers organized by the London-based firm of H. Clarkson
(Overseas) Limited. In the United States, the program is administered
on behalf of the syndicate by Howden Agencies, Ltd., of Cranford, New
Jersey.7^
A significant prerequisite for coverage under this policy is
an engineering survey made by a surveying firm designated by the insurance
group, but paid for by the would-be insured.
The Clarkson's policy provides broad coverage. In its current
form, the insurers:
"... agree to indemnify the Insured against all sums
which the Insured shall be obligated to pay for
damages by reason of the liability imposed on account
of:
(a) Personal injury, including death at any time
resulting therefrom;
(b) Property damage;
(c) Impairment of, diminution of, or other inter-
ference with, any other environmental right or
amenity protected by law;
. . . caused by Environmental Impairment ..."
*•*•
There exists some confusion over the use of the terms "accidental" and
"non-accidental." A non-accidental release, a release that is a known part
of the process, may cause unintended damage. This type of non-accidental
release is insurable. If the damage itself is predictable or intentional,
however, the event is not insurable.
TJ
The information on the policy is drawn from staff interviews with.
Mr. Bernard Daenzer, President, and Mr. Walter Foster, Senior Vice
President, of Howden Agencies, Ltd.
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Environmental Impairment is then defined as:
(a) The emission, discharge, dispersal, disposal, seepage,
release or escape of any liquid, solid, gaseous or
thermal irritant, contaminant or pollutant into or upon
land, the atmosphere or any water course or body of
water;
(b) The generation of smell, noises, vibrations, light,
electricity, radiation, changes in temperature or any
other sensory phenomena.
This policy also covers costs of litigation and clean-up costs,
whether incurred under a legal obligation or in an effort to avert loss
under the policy. As currently administered, the policy contains limi-
tations of $4 million on payments for any one claim and $8 million on
total claims during a given period of insurance, usually one year. It
provides "claims made" coverage, that is, coverage for any claims made
during the year regardless of when the event upon which the claims are
based took place (as contrasted with "occurrence" insurance which covers
events taking place during the term of the policy). Reduced premiums
are available based on alternative deductible options.
The policy excludes some causes of liability absolutely; others
are only provisionally excluded. The absolute exclusions are specified
nuclear risks, workman's compensation and environmental impairment
resulting from knowingly failing to comply with applicable regulatory
requirements unless a temporary variance has been granted permitting
noncompliance for a limited time. There is also an absolute exclusion
covering fines, penalties and punitive damages.
The provisional exclusions include environmental impairment
involving a sudden, unintended and unexpected happening, genetic damage,
damage to the insured's property or property in his care, custody or
control, and joint or several liability with others. The policy permits
deletion of one or more of these exclusions for an additional premium.
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As of the writing of this report, inquiries about the insurance
had been made on behalf of three large hazardous waste disposal firms, and
one small firm that disposes of electric power plant fly ash. The fly ash
disposer and one of the hazardous waste disposers had been surveyed and
had purchased the insurance; another large disposer was in the process of
being surveyed.
The second non-sudden, non-accidental policy was marketed by
Excess Underwriters, Inc. of Chicago for approximately 18 months ending
in mid-1976, when it was dropped for apparent lack of a market for its
coverage Pfi
Although no longer offered, it is discussed here because its
terms and the restrictions placed on its availability may be helpful
as indications of the insurance industry's possible responses to EPA
regulations promulgated under RCRA 3004(6). The coverage was marketed
as the "Environmental Protector Liability Insurance Program." It
required that the insured be in compliance with applicable regulatory
standards. It covered personal injury and property damage caused by
"seeping pollution or contamination which is not a sudden or accidental
happening . . . ." Like the Clarkson's policy, it did not insure against
fines or civil penalities, only against liability for injury. It dif-
fered from the Clarkson's policy in that it provided "occurrence" rather
than "claims-made" coverage. The distinction is significant: an occur-
rence policy covers a liability, regardless of when it arises, if the
event causing it took place during the term of the policy. Under an
occurrence policy, with a one-year term effective January 1, 1972, a
leak that drained a catch basin during 1972 would be covered even though
the leakage did not contaminate a neighbor's water supply until 1977.
A 1972 one-year claims-made policy would cover only a claim made during
1972, regardless of when the event causing the injury took place.
^Information on the Excess Underwriter's policy was obtained through
correspondence and a telephone conversation of July 5, 1977 with Mr. John
Van Cleave, Senior Vice President, Excess Underwriters, Inc.
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The Excess Underwriter's policy also differed from Clarkson's
in that it required execution of a much more detailed questionnaire
describing operations and effluents, pre-insurance "certification" by a
pollution control engineer, and subsequent audit by an environmental
control engineer at the insured's expense. The insured was also required
to adopt any recommendations for emission controls made as a result of
the audit as a condition of maintaining coverage. Promotional material
describing the policy included the statement:
"As an additional assist to you in evaluating your
clients acceptability, the following industries will
not be eligible, unless full compliance is possible:
Electric power generation
Fruit and vegetable canning and freezing
Steel production
Paper and pulp mills.
Since the policy stated elsewhere that it was available only
to facilities operating in compliance with applicable regulations, this
statement suggested a high degree of insurer anxiety even ever risks
with relatively low hazard (although voluminous and widely publicized)
waste streams. This anxiety would have direct bearing on the avail-
ability of non-sudden, non-accidental coverage for hazardous waste
disposers. Excess Underwriters, Inc. has indicated that it believes
the activity is too hazardous to obtain commercial insurance coverage
and that government participation would be a necessary element if there
is to be effective insurance coverage.
The only other standard type of policy extending coverage to
npn-sudden and non-accidental steady-state releases is the Lloyds policy
•>. ,
referred to above. This insurance, entitled "Seepage, Pollution and Con-
tamination Insurance," was developed by Lloyds Underwriters to coveroil
drilling and storage. In its simplest form it covers "seepage, pollution
or contamination" which , without further clarification, appear to be non-
sudden and non-accidental events. An option is available, at increased
premiums, to cover "sudden unintentional and unexpected happenings."
The policy is similar to the two described above in that 'it covers lia-
bility for injury to persons or property, but not criminal fines or
35
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penalties. Like the others, it covers cost of clean-up and litigation.
Also like the other two, it requires that the insured be in compliance
with applicable regulatory standards. It differs principally in that it
does not require a pre-insurance audit, but requires instead that the
insured permit the underwriters to inspect the insured's premises during
the term of the insurance.
As noted above, this policy is one of the standard policies
written by Lloyd's underwriters, but ordinarily only applied to the oil
industry. While its terms do not expressly limit it to oil, the wording
of several paragraphs indicates its common application, e.g., paragraph
7:
"If during the period of this Policy the insured
drills any additional wells, Underwriters agree to
cover such additional wells . . . ,"
and paragraph 8(d):
"This Policy does not cover the cost of controlling
a well nor the cost of drilling relief wells whether
or not the relief well be successful."
Although this non-sudden and non-accidental coverage could
theoretically be extended to any policy written by a Lloyd's underwriter,
in practice Lloyd's underwriters, when insuring a risk in the United
States, typically follow the terms of the standard U.S. CGL policy
described above. There can be exceptions to that practice. Lloyd's
underwriters are free to construct custom-designed coverage for any
risk they care to insure. Called "manuscript policies," these can
contain a variety of non-standard provisions. If a major purchaser of
insurance asked to have provisions similar to the oil seepage, pollution
and contamination language added to his policy, the Lloyd's underwriter
might be willing to cooperate. In general, however, the insuring of oil
drilling operations is a highly specialized activity; the organizations
which do it specialize in it, and there is little exchange of informa-
tion between them and the general insurance community. For this reason,
a broker seeking to obtain non-sudden and non-accidental coverage for a
hazardous waste disposer would not ordinarily learn of the possible avail•
ability of this Lloyd's coverage.
36
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In addition to these standard forms of insurance, other in-
surers are also allowed to write so-called "manuscript" or custom-
designed policies to cover their client's special insurance needs. Non-
sudden and non-accidental pollution insurance could be written into such
policies, although in practice this type of coverage is rare.
Recent developments in state law may change the availability
of non-sudden coverage. Kansas has recently amended its waste disposal
law to provide that hazardous waste disposal firms must obtain liability
§ §
insurance "including coverage against non-sudden occurrences. ..."
The one waste disposer currently complying with the Kansas Statute has
obtained the necessary coverage from the Hartford Insurance Company.
A recent amendment to New York law prohibits the issuance of
non-sudden, non-accidental coverage in that state, except where required
to meet financial responsibility requirements of New York and Federal
law. It provides:
The kinds of insurance which may be authorized
in this state, subject to the other provisions of this
charter, are set forth in the following paragraphs . . .,
13. Personal injury liability insurance . . .
policies, except those purchased to satisfy the finan-
cial responsibility requirements for any federal
law . . . issued to commercial or industrial enterprises
providing insurance against the legal liabilities
specified in this subdivision shall expressly exclude
therefrom liability arising out of pollution or con-
tamination caused by the discharge, dispersal, release,
or escape of any pollutants, irritants or contaminants
into or upon land, the atmosphere or any water course
or body of water unless such discharge, dispersal,
release or escape is sudden and accidental.
§46.
§§Xansas Statutes Annotated, 1976, Supp. 65-3407.
^McKinney's Consolidated Laws of T!ew York, Title 27 Insurance Law,
37
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A similar provision applies to property damage liability insur-
ance. These sections suggest a legislative hostility to pollution
insurance presumably resting on a concern that such insurance could have
the effect of a license to pollute, enabling the polluter to pass along
the cost of premiums to his customers.
It is not clear to what extent enactment of these provisions
reflected lobbying efforts by industry representatives seeking to obtain
legislative protection against current judicial inroads into the restric-
tive language currently written into the standard CGL coverage. Although
no examination of case law was undertaken in this study, nearly every
insurance company official or representative of an insurance industry
trade organization contacted during this study commented on the increasing
willingness of courts to override the non-sudden and non-accidental exclu-
sionary language. The focus of the controversy lies in the judicial
tradition that ambiguities in insurance contracts are construed against
the interests of the insurer. In one case, for example, gasoline from a
storage tank leaked into a municipal sewage system over an extended
period of time before the gasoline fumes exploded, causing property
damage. The court held that the occurrence insured against was the
explosion rather than the leakage.
This judicial trend has several consequences for the anticipated
RCRA §3004(6) regulations. Some insurance companies are seeking.to
strengthen the exclusionary effect of the present CGL wording by liti-
gating all claims involving non-sudden, non-accidental elements. Their
position is mirrored in the new New York statute. Other companies have
shown a willingness to abandon the exclusion in the face of judicial
determination to weaken it. These companies make a practice of paying
otherwise meritorious claims without litigating the distinction between
non-sudden and sudden events. At present, several insurance company
representatives, acting under the aegis of an industry-wide organization,
are in the process of drafting language to supplant the existing
CGL exclusion in the expectation that broader coverage eliminating the
distinction between sudden and non-sudden, but not that between accidental
and non-accidental, will return to more general acceptance.
*•
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In order to estimate the availability of ordinary CGL coverage
for hazardous waste firms, senior representatives of major insurance
companies were asked for their opinions as to the availability of such
insurance for such firms. The concensus of opinion was that a hazardous
waste disposer with annual sales of $500,000, perhaps with some diffi-
culty, would be able to obtain ordinary CGL coverage for up to $1 million
in liability. A larger firm with sales in the million to several million
dollar range might be able to obtain coverage of up to $5 million. Larger
organizations with sales in the tens of millions should be able to obtain
liability coverage of between five and ten million dollars. The largest
organizations in the industry and many large generator-disposers will be
able to obtain liability coverage of $50-100 million. In many, perhaps
most, cases where more than a million dollars worth of coverage is in-
volved, several firms will be involved: a primary insurer and one or
more re-insurers.
In general, the industry representatives see no limitation in
the capacity of the insurance industry to provide coverage at these levels
for well managed firms operating within strict EPA regulations. The
difficulty would come if the regulatory process were to impose a standard
liability amount greater than the scale suggested above. As total
liability figures increase, insurance companies prefer to see substantial
increases in "retention". Retention is that portion of a policy defining
the dollar level up to which the insured will pay itself rather than seek
payment from its insurer, similar to the deductable limits in automobile
liability policies. If, for example, following the oil spill precedent,
a $15 million liability requirement were imposed, the insurance industry
might not be willing to provide such coverage to any but the very largest
integrated chemical companies disposing of their own wastes, because
satisfactory retention levels might not be possible.
2. TRUST FUNDS
As an alternative to traditional liability insurance, the
feasibility of regulations contemplating the formation of one or more
trust funds was examined. The proposed trust fund would have
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been financed out of contributions from hazardous waste disposers and
administered by a fiduciary organization formed for the purpose. Its
role would have been to accumulate contributions, invest its funds, and
pay meritorious claims against participating waste disposers.
The investigation disclosed two shortcomings with this approach,
one of which appears to eliminate it from further consideration. The
first of these drawbacks, the narrow financial base upon which such a
trust fund would rest during its initial years, would not eliminate trust
funds from consideration, but would only partially assure financial res-
ponsibility. Assuming that contributions were comparable to the level of
CGL insurance premiums that participating waste disposers would have to
pay for conventional liability insurance if available, the fund would not
have either the capital base or the diversification that would ensure
adequate funds to pay foreseeable claims. However, if no major claims
arose, over a period of years a large financial reservoir would eventually
accumulate that would provide the necessary resources to meet large claims.
The second major drawback affects many states and does not appear to
have a solution. The insurance laws of many states contain express prohi-
bitions against any organization providing insurance or services analogous
•ifJf'Jr
to insurance unless it is a fully qualified insurance company. The
closest analogy to the proposed waste management trust fund examined during
the study was the special trust fund established by the New York Stock
Exchange in 1964. After several decades of prosperity, during which no
member firms failed, one went bankrupt in 1959. The Board of Directors of
the Exchange decided to apy the firm's losses of approximately $900,000
so that no member of the public would be injured. In 1963 a much larger
firm failed as a result of the so-called "salad oil" scandal. The
***
See e.g. McKinney's Consolidated Laws of New York, Title 27, In-
surance Law, 3§40, 40; Deerings California Code, §700. Other states, such
as New Jersey, allow trusts to provide insurance to its participants, in
effect the equivalent of self-insurance. Were it not for the first
shortcoming of the trust approach it might be one way to meet EPA objec-
tives in those states that allow the arrangement.
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Exchange again assessed its members to pay the resulting $27 million
deficit. To avoid the imposition of such large ad hoc assessments, the
Exchange amended its constitution to provide for a trust fund, to be
administered by its directors, for the purpose of providing assistance
to customers of insolvent or failing member firms. In the years follow-
ing 1964 the fund paid out approximately $90 million to customers, and,
in fact, paid every eligible customer of every insolvent member firm.
It became inactive when Congress enacted Federal legislation creating a
Federal insurance corporation, similar to the Federal Deposit Insurance
Corporation, to extend similar coverage to customers of all exchanges.
Because of the state laws prohibiting the furnishing of insur-
ance by other than a qualified insurance company, the terms of the trust,
from its inception, provided:
"Whether or not expenditures from the Fund shall
be made in any particular case and, if so, in what man-
ner, to whom and to what extent, shall at all times re-
main exclusively within the sole and absolute discretion
of the trustees of the Special Trust Fund."
Although applicants for hazardous waste management permits might
be required to belong to an organization operating a similar trust fund,
as a condition of obtaining their permits, its existence would not nec-
essarily furnish the assurance of financial responsibility required by
RCRA, if because of state law such an organization would have to operate
without any legal obligation to pay. Also, the creation of such an optional
payment trust would appear to create a potential opportunity for financial
abuse that would be difficult for EPA to prevent.
3. CAPTIVE INSURER
There is a possibility that hazardous waste management operators
may choose to set up a "captive" insurer, an insurance company established
specifically to meet their needs. This would require reinsurance, in
effect providing the regular insurers with a uniform deductible or reten-
tion level above which their coverage could take effect. The advantage of
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this alternative is that the particpating operators could share, on a
reciprocal basis, responsibility for meeting losses up to the amount of
the retention. As a result of this risk sharing, the capital requirements
of a reciprocal captive insurer can be quite modest. A further advantage
is that the profits of the insurer, which would accrue if the loss record
of the participating operator were lower than expected, would benefit the
insureds through their ownership of the insurer.
4. INSURANCE POOL
The most promising of the opportunities for ensuring financial
responsibility is an insurance pool. Such a pool, if the insurance indus-
try could be encouraged to form one, would consist of a joint undertaking
by a number of insurance companies to participate in meeting claims against
hazardous waste managers buying insurance from it. Participating insurance
companies could determine, in advance of joining, the percentage of the
total risk each would be willing to accept. Such pools exist for liabil-
ities associated with nuclear hazards, marine oil spills, aviation acci-
dents, and similar high-risk activities. The advantage of a pool from
the insurers' point of view is that it provides a convenient mechanism
whereby a large number of insurers can each be responsible for only a
small fraction of the risk. It overcomes the insurance law prohibitions
that would exclude trust funds because the participants would be fully
qualified as insurance companies. The advantage from the insureds point
of view would be that the pool would be familiar with waste hazards,
knowledgeable about disposal technology, and able to make an informed
decision whether to underwrite and what premium to charge.
There are substantial obstacles to the formation of an insurance
pool to cover hazardous waste disposers. Although EPA may have the
regulatory power to deny a permit to any hazardous waste manager who does
not insure through such a pool, it does not have the authority to compel
insurance companies to form one. The insurance industry in the United States
has suffered a succession of heavy losses over several years arising out
of products liability, medical malpractice liability, and automobile operators
liability insurance. The industry is in the process of attempting to reduce
42
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its exposure to high risk liability in which there is a potential for
very large claims. The industry representatives contacted in the course
of this study were all, in some degree, skeptical that insurance companies
would be willing to form a pool to deal with a new set of major risks at
this time. There was, however, some difference of opinion among the
individuals interviewed over the probable degree of unwillingness. Some
felt that the industry would form a pool although somewhat reluctantly,
partly out of a sense of collective responsibility for meeting such
problems, partly to discourage legislature resulting in the further
entry of the Federal government into the role of insurer.
A number of individuals interviewed volunteered suggestions
concerning circumstances that would operate to increase or decrease the
attractiveness of participation in a pool. There were repeated cautions
against the pool being forced by government pressure into the role of
accepting assigned risks.
"Assigned risk" in this context means a hazardous waste manager
whose operation, because of its financial condition or operating record,
would not be acceptable to the pool. In a number of states, insurance
companies have been by statute prohibited from writing any insurance of a
particular kind unless willing to participate in extending coverage to a pool
of assigned risks not otherwise acceptable as insureds. Industry represen-
tatives asserted that every assigned risk pool loses money for the
participating insurance companies because the rate fixing process always
lags behind the loss experience. The industry is also wary of being put
in the position of having to pay for injury resulting from behavior that
should be prevented by exercise of the government's regulatory standards,
but which the government for political reasons is unwilling to prevent.
The suggestion was made that the financial responsibility regulations not
attempt to establish the characteristics of an acceptable insurance pool
in such a way as to require the pool to accept all EPA permit applicants.
A second caution was extended against any procedure that resulted
in a "selection against" the insurers. In this context, "selection
against" means eliminating the lowest risk potential participants from a
pool in such a way that the remaining participants are all in the highest
43
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risk category. This kind of selection process could be expected if the
regulated group were free to select among alternative methods of estab-
lishing financial responsibility and the low risk participants were
eligible to establish financial responsibility by less expensive alter-
natives then participation in the pool. This, for example, would be the
case if major generator-disposers were permitted to file audited state-
ments showing the availability of liquid assets sufficient to meet a
specified liability figure, instead of joining the pool.
5. SELF INSURANCE
The precedents of the oil spill and nuclear financial respon-
sibility regulations are useful to review in evaluating methods of
assuring financial responsibility that do not involve insurance. The
most frequently used alternative in meeting the oil spill $15 million
requirement and in meeting the $5 million self-insurance portion of the
nuclear financial responsibility requirement is the filing of a special
auditor's report showing that the permit applicant has adequate resources
to provide the required financial protection. In practice this has meant
net current or liquid assets equal to the required dollar amount. For a
firm with sufficient assets, the accountant's charges for preparing such
a report are always significantly less than insurance premiums for a
liability policy in the same amount. For smaller firms, of course, this
alternative is not available. In the hazardous waste management field,
this alternative would be available, depending on the liability coverage
chosen by EPA, to only a few of the present off-site waste disposers,
but to an important fraction of the large generator-disposer. A variant
on the filing of the company's own financial statement allowed by the
oil spill regulations is the filing of a guarantee agreement from another
company together with the financial statements of the guarantor company.
State insurance laws are usually interpreted as permitting an isolated
guarantee by a company of an affiliate's performance without violating
prohibitions against insurance activities.
6. POSTING OF COLLATERAL
The oil spill regulations (which contemplate that payment will
be from the permit holder to the Government for its clean-up costs) also
44
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permit filing of an irrevocable letter of credit from an acceptable bank.
The alternative is seldom, if ever, used. Obtaining a letter of credit
is, in practice, very much like obtaining a loan. Where the liquid
assets of the company seeking the letter are insufficient to repay it on
demand, the bank will typically seek collateral equal in value to the
required letter.
The oil spill regulations also permit the permit applicant to
deposit suitable securities equal in value to the required amount. The
drawbacks of these two methods will be similar. Each requires the permit
applicant to produce very large amounts of liquid assets. These will not
be available to small firms. Large firms will be reluctant to divert
liquid assets into a static and unproductive function, and will prefer
to pay the operating costs associated with certification of financial
condition or the premiums on liability insurance.
7. BONDING
The portion of this report dealing with continuity of opera-
tion discusses, in some detail, the nature and availability of bonds
as a device for assuring that specified responsibilities are met. Insofar
as assuring financial responsibility to withstand large liability claims
is concerned, bonding is not among the feasible alternatives. A sum-
mary of the opinions given by representatives of major bonding companies
and by a national trade organization of such companies will indicate
why.
Bonding is not perceived by surety companies as a form of
insurance. It is a certification service. It consists of an evaluation
by the surety company that the bond applicant will be able to perform a
stipulated activity. Bonds are never written on the assumptions that the
stipulated responsibility will not be fulfilled. The premiums on bonds
are not intended to accumulate as a reserve against the anticipated
responsibility not being carried out. Instead they are intended to
cover the cost of the evaluation process by which the surety determines
that the company seeking the bond will, in fact, be able to carry out
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the stipulated responsibility. Bond premiums are often but not always a
small fraction of what liability insurance for the same amount would be.
When a bonded firm defaults on its obligation, unlike a liability insurer,
a surety expects to recover whatever it pays out under the bond from the
firm. In many cases, where the stipulated activity involves financial
responsibility, the bondsman requires up to 100 percent collateral to
secure the bond. Where less than 100 percent collateral is required, the
surety must be satisfied that the firm's net liquid assets are sufficient
to meet the obligation. Although a surety will consider other assets than
cash and marketable securities, it requires assets that can be realized
upon with a minimum of delay. Typically, land and equipment are not
considered satisfactory assets for this purpose.
Finally, an important distinction between bonding and liabil-
ity insurance is that a bond is usually held by the entity that will
bear the initial injury if the condition of the bond is not fulfilled.
In the case of the oil spill clean-up on the typical contractors comple-
tion bond, the Government agency that will have to absorb the initial
costs of non-performance holds the bond and recovers on it from the
bonding company in case of default. In the case of liability for injury
of persons or property resulting from hazardous waste disposal operations,
it is not possible to determine in advance who would be injured. The
Government or some other identifiable institution would have to accept
the role of the obligee and undertake to pay all meritorious claims
wherever any bonding mechanism is to be utilized.
E. POST-CLOSURE FINANCIAL RESPONSIBILITY
The foregoing discussion presupposes the participation of a
current permit holder or applicant. Under some circumstances there may
be injury but no permit. During the operation of a site there will always
be a permit holder to whom injured persons may look for indemnification.
After a site has been closed, however, there is an increased likelihood
that the former operator, although legally responsible for post-closure
monitoring and maintenance and in meeting financial responsibility re-
quirements, may default in these responsibilities. So long as a
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permit holder is currently operating other sites, for which it requires
a permit, there is no difficulty in requiring continued compliance with
financial responsibility standards. If, however, the closed site is a
business's only hazardous waste disposal activity, there will be an
increasing financial incentive to abandon it by allowing the permit-holding
organization to go out of business. There will also be organizations going
out of business for valid financial reasons.
The following chapter on continuity of operations deals with
ways of assuring that even in such situations, the costs and responsi-
bilities of closing and carrying out necessary post-closure maintenance
and monitoring can be met. This section will anticipate the application
of the same or similar mechanisms to the post-closure financial respon-
sibility requirements.
The underlying problem is that under the hypothetical but fore-
seeable circumstances identified above, there would be no permit holder
to pay liability insurance premiums or otherwise meet financial respon-
sibility requirements. Insurance premiums, whether paid to an individual
insurance company or to an insurance pool and whether applied to a policy
written on an occurrence or a claims-made basis, typically run for a
specified period, usually one year. It therefore would be necessary to
assure the continued existence of a source of funding to meet future
premium costs. These costs would be more in the range of monitoring costs
and maintenance, i.e., $10 thousand to $100 thousand per year, than in
the range of potential liability costs.
There are several ways such a fund could be created. These
are discussed in detail in the chapter on continuity of operations and
will be summarized here.
Common Premium Trust Fund or Assessment -- Permit holders could
be obligated to belong to an organization that would collect annual pay-
ments based on members' revenues and hold them in a common trust fund
to meet the possible future need to pay premiums for any defaulting
members. Alternatively, the Federal Government or cognizant state
governments could hold the fund. Such a fund, whether separately identified
47
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or incorporated into a larger trust fund intended to meet other post-
closure costs,would need to be only relatively small. During its initial
years of accumulation, it might have no premiums to pay at all. Even
after several firms had defaulted, the pro-rata premium costs per default
per year (assuming $100 thousand per year premiums for each defaulter and
200 members) could be modest. Because these costs might be so low, funding
them in advance might not be necessary. At least until a significant
number of firms had defaulted, it might be preferable to simply assess
member firms to pay subsequent premium costs whenever a default occurred.
The shortcoming of such a trust fund or assessment procedure
would be that responsible members would be sharing costs that properly
should be borne by the defaulters alone. The alternative procedure
described next avoids this problem, but raises others: administrative
complexity and excessive governmental involvement in business operations.
Prepayment and Refund of Post-Closure Costs -- Instead of joint
participation in a collective remedy, permit holders could be required to
make payments out of current revenues from a specific site into an account
held by the government or an escrow agent identified with the particular
post-closure obligations of the individual permit holder. Such an account
would accumulate during the operation of the site. Closure costs expended
by the permit holder would then be repaid to him out of the fund. The
fund would be designed to be large enough so that post-closure costs could
be met out of interest on the remaining principal. Insurance premiums,
in the case of a continuing business, would be paid in the first instance
by the permit holder and reimbursed to him by the fund. In the case of
a default, the government or other escrow agent could pay the premiums
directly.
The process of accumulating a large fund and reimbursing an
operator from what were originally his own revenues, seems an extremely
cumbersome one. It holds promise of disputes in which the operator claims
larger amounts for closure costs or post-closure operations than EPA deems
reasonable. It presupposes that the governmental entity or escrow holder
is a more reliable custodian of the funds than the waste disposer and
depletes the operator's available operating capital requiring him to pay
the additional costs of obtaining substitute capital.
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Under the circumstances, EPA may find that regulations imposing
assessments or joint financial responsibility premium costs on non-
defaulting operators, however inequitable, may be preferred by the
operators as an inherently less expensive and less burdensome means to
assure long-term funding of liability insurance premiums.
F. SUMMARY OF ALTERNATIVES TO PROVIDE FINANCIAL RESPONSIBILITY
Liability Levels -- Examination of data on recent damage inci-
dents indicates that there is no reliable classification process by
which the relative hazards from differing waste storage, treatment and dis-
posal processes (e.g., incineration, land fill, deep well injection, or the
like) can be established. The dollar value of damages in the reports reviewed
ranged from $100,000 to $4 million. Large industrial organizations some-
times carry liability insurance of up to $100 million or more.
Availability of Conventional Liability Insurance -- Large firms
will be able to obtain insurance coverage against sudden and accidental
occurrences in the range of $5 million to $10 million. Very large organi-
zations, able to absorb retentions of $500,000 to $1 million, will be
able to obtain liability insurance aggregating $50 million to $100 million.
Most contract hazardous waste disposers, with annual sales of $500,000
or less, will be able to obtain coverage of $1 million, but will have
some difficulty in doing so. Availability of non-sudden coverage is
more speculative. One insurance group offers such coverage up to $4
million per claim. A major insurance company is willing to provide such
coverage under a manuscript policy where it is required by state law.
There is a tendency in judicial opinions to minimize the sudden/non-sudden
distinction. There is some industry support for eliminating it.
Availability of an Insurance Pool -- Given sufficient EPA
encouragement, and regulations that require participation by all firms
including major on-site disposers, the insurance industry may be willing
to form an insurance pool. Such a pool, if formed, would probably be
willing to offer pool-wide coverage of $10 million and might be willing
49
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to offer between $50 and $100 million, if not initially, perhaps after
some accumulation of premiums and of loss experience data. A pool would
be less likely to form if there is a strong likelihood that it will be
required to accept assigned risks.
Trust Funds -- State insurance laws may prohibit the substi-
tution of a jointly financed liability fund in place of conventional
liability insurance offered by authorized insurance companies or a pool
of such companies.
Self Insurance -- Only the largest industrial organizations
will be able to demonstrate the ability to self-insure in the contem-
plated range of liability values. As indicated above, elimination of
these companies from inclusion in a potential insurance pool would almost
certainly jeopardize the formation of such a pool.
Posting of Collateral -- Only very large organizations could
afford to post collateral in the amounts contemplated. Even organiza-
tions with adequate resources would be very reluctant to do so.
Bonding -- Payment of damages from accidents would be an inap-
propriate use of the surety bonding mechanism. Bonding companies would
be unwilling to issue bonds without full collateral or proof of a disposer's
ability to pay equal to the amount of the bond. Use of the bonding
mechanism would require regulatory creation of a requirement that EPA,
or a designated stakeholder, be responsible for paying all meritorious
claims out of the proceeds of the bond.
Post-Closure Financial Responsibility -- Promises must be made
to pay premiums on liability insurance, even for an indefinite period, for
firms that abandon sites, go out of business, or otherwise become unable
to meet the financial responsibility requirements. Permit holders could
be required to make small payments into a fund from which insurance pre-
miums on abandoned sites could be met or to agree to be assessed for
pro-rata payment of such premiums as they come due. Alternatively, a
fund for each permit holder could be held by the government or by an escrow
50
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agent in connection with the payment of closure and other post-closure
costs, large enough so that interest on the fund could meet premium costs.
Where the permit holder did not default it could be reimbursed for closure
and post-closure costs out of the fund. Although the joint fund or assess-
ment would transfer the defaulter's costs to non-defaulting permit holders,
they might prefer bearing those costs rather than the costs of the indi-
vidual account coupled with the complexity implicit in its refund mechanism.
G. ECONOMIC ASPECTS OF FINANCIAL RESPONSIBILITY REQUIREMENTS
This section illustrates certain economic advantages and disad-
vantages associated with various means of meeting financial responsibility
requirements. The first step in this exercise ideally would be a set of
statistical frequencies and associated liability levels for various possi-
ble hazardous waste related accidents. As already noted, however, current
data do not permit any statistically sound acturarial estimates of
frequency of accidents associated with hazardous waste management facili-
ties as they will be operated with forthcoming RCRA Title C regula-
tions. This is due both to the absence of a thorough accident file and to
the relatively brief experience to date with environmentally adequate
hazardous waste management facilities. It should be noted that the available
data indicate that major liability claims are relatively scarce. The
data gathered also do not record a single instance of a major liability
claim against an environmentally adequate hazardous waste disposal site.
Depending upon the exact definition of environmentally adequate, there
has been a minimum of 150 to 450 site years of experience at environmen-
tally adequate hazardous waste management facilities.
In order to illustrate the economic features of various options
for meeting financial responsibility requirements, it is necessary to use
some estimate of frequency of liability claims. For this purpose, four
possible sets of liability frequencies were constructed, and are shown in
Table 6. These liability frequency tables are a judgement estimate from
existing data and discussions of possible accidents in hazardous waste
51
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52
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facilities with a variety of individuals. They are therefore, primarily
illustrative and do not represent sound actuarial estimates. It could
well happen that the eventual frequencies lie outside even the broad
bounds shown by these liability frequency sets. The sets assume progres-
sively greater frequencies of accidents involving large liabilities. The
first might be considered to correspond to the estimates implicitly
associated with the relatively low liability requirement set by some states.
The fourth represents the assumption of an extremely high-risk industry.
Associated with each liability frequency set is an expected
value. This number is equal to the frequency of a claim times the level
of liability. It may be thought of as the average cost per year numeri-
cally equivalent to the cost of occasional accidents. These expected values
range from $2,000 per year to $122,500 per year. If the liability frequency
given is accurate, then the expected values represent average costs per
year that will be incurred by someone as a result of accidents at a single
hazardous waste management site.
In dealing with relatively remote events, it is important to
remember that even extremely unlikely events occur. Table 7 provides a
simple illustration of this point. Even if there are only 150 hazardous
waste management sites, it is highly probable that events of a frequency
of as low as 1 per 1000 site years of operation will occur over the next
twenty years and at least a one in four chance that events as rare as one
in 10,000 site years of operation will occur.
Insurance
The simplest and most conventional method of dealing with
potentially large liability problems is insurance. In order to clarify the
possible cost of insurance, we first examine the cost of various levels
of coverage will be examined first, assuming the above liability frequency
sets represent actuarial probabilities that might be used by insurance compan-
ies. The problem of whether hazardous waste management facilities can be con-
sidered to be insurable risks will then be taken up briefly, as well as
53
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Table 7
Probability that Events with a Given
Frequency will Occur within 20 Years in an Industry
Consisting of 150 Sites
Frequency
(incidents per site-
year of operation)
Probability that at
least one such
incident will occur
1/100
1/500
1/1000
1/2500
1/5000
1/10,000
.9999
.998
.95
.70
.45
.26
Derivation: If events follow a Poissin Distribution then the formula for
the probability of at least one event over a given level of set of ex-
perience is 1-expl-ft where f is the frequency and t is the number of site
years of experience.
aA site year is defined as 1 year of operation at one site.
54
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mechanisms insurance companies might use to overcome the lack of a
statistically sound actuarial basis for computing premiums. Table 8
shows premium levels by liability set and by levels of maximum coverage.
It should be carefully noted that these premium levels are intended to
represent solely premiums for insurance against liability due to exposure
to hazardous wastes by persons other than employees and to property. Also
excluded are exposures that result from transporting hazardous wastes. These
premiums are not intended to represent the costs of other general liability
coverage, or the cost of umbrella coverage, and do not include workman'^
compensation insurance costs. Premium levels are calculated assuming that
actual liability payments constitute 70 percent of the cost of insurance
coverage. This is consistent with major fire and liability lines for
which actual payments average 60 to 70 percent of premiums. The remainder
of the premiums are for claims adjustment, underwriting and other adminis-
trative costs, and an average profit of 5 percent of premium values.
Premium levels vary enormously according to the liability
frequency set deemed appropriate, as would be expected given the order
of magnitude variation in the expected value of the various liability
frequency sets. These premiums range from 12 to 17.5 percent of revenues
for a typical site, depending upon level of coverage and liability
frequency set assured. Two general principles should be noted from these
premium levels, first, the cost per million dollars of coverage declines
steadily with the costs of additional coverage as in most lines of
insurance. Secondly, the bulk of the premium costs associated with covering
the maximum possible accident in a liability frequency set are associated
with the rare but high value claims (10 million dollars and up). This is
true for all liability probability sets. The cost of coverage for rare
accidents would account for over 25 percent of all premium costs even if the
frequency of such rare accidents were assumed to be an order of magnitude
smaller than the frequencies used in developing these estimates. In this
respect, these liability frequency sets do not closely resemble most
liability lines, but are similar to premiums for nuclear liability insurance.
55
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This property is based upon the assumption that similarly stringent safety
and operating standards will be sufficient to prevent frequent accidents
involving low levels of liability. Thus the decision of whether coverage
should be required for rare but large accidents is critical to the
question of estimated premium levels.
The choice of coverage level therefore, implies a tradeoff
between insurance premium costs for hazardous waste managers and exposure
of others to costs of a hazardous waste accident. Tables 9 and 10
are designed to clarify this tradeoff. Table 9 shows the expected value
of costs not covered by insurance for various levels of coverage under
various probability frequency sets. This may be considered a measure of
the costs of liability imposed upon the hazardous waste facility but not
fully reflected in cost structure of the firm. (For further discussion of
this point, see the following section.) Table 10 shows the probability
that an event not fully covered will occur at any given site in a single
year. For all liability frequency sets, coverage of 1 million dollars covers
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coverage are required.
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insurance will be available at any price, especially for non-sudden non-
accidental occurrences. The basic reason for this is the same reason
that forced this study to use four liability frequency sets
varying in expected values by an order of magnitude; there are not adequate
data available now to estimate accurately the nature of the risk involved.
Nevertheless, insurance is provided in very large quantities for a variety
of difficult-to-estimate risks by American insurance companies. The
first requirement is that the total premiums must be large enough to
justify the investment in a specialized engineering and underwriting
staff that could develop engineering (as against statistical) estimates
57
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of the probability of various liability claims. Table 11 shows the
range in premiums per year associated with various levels of coverage and
numbers of sites. For comparison, total liability (and associated lines)
premiums in 1974 were approximately 1.9 billion dollars. Thus for 100
million dollar coverage levels, at 150 sites total hazardous waste premiums could
amount to over 1% of all liability premiums. For a higher number of sites
a similarly high share of all premiums is associated with only 10
million dollars worth of coverage. Nuclear insurance pools in 1976
maintained a specialized staff and insurance treaty arrangements with
current premiums of under 16 million dollars. This arrangement began
with far lower levels of premiums. However, insurance companies may have
become involved anticipating significant growth of the industry. The
size of potential premiums from hazardous waste managers thus may be large
enough to offer an attractive insurance market. Because of the size of
the potential claims, this market would almost certainly have to be served
by either a formal or informal insurance pool. Further, the tendency to
act conservatively in a poorly understood risk situation would mean
that at least initially the premiums would probably be at least as high
as those associated with liability frequency sets 3 or 4. A related approach
would be the formation of an institution such as the nuclear insurance pool.
In addition to providing a formal treaty and a specialized engineering and
underwriting staff, these pools also have a large reserve fund. The
importance attached to this reserve fund is not clear. One function
could be to cover all or a significant portion of the costs of a possible
nuclear accident. If the reserve is intended for such a purpose, and is
part of the reason the nuclear insurance pool has been so successful, then
for an industry that is small relative to the remoteness of the risk of
a large accident, the premiums would need to include a significant
safety loading over and above the premiums which might be expected for
conventional insurance. Such a safety loading seems to be present in the
case of current nuclear insurance rates. The size of liability rates
cannot be explained by the existing liability record nor by an respected
estimates of the liklihood of a large nuclear accident. The nuclear
insurance pool partially compensates the nuclear industry for this large
60
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safety loading by returning 70% of premiums after a 10 year period.
At an interest rate of 10% however, return of 70% of a payment 10
years in the future wqjjld have a present value of only about 25% of the
initial payment. Thus, at least in the early years of such a pool, the
offset to premium costs offered by such a return is rather small.
Before leaving the subject of insurance, it may be noted that the
private insurance industry is not the sole possible source of insurance.
States and the Federal government have offered insurance or reinsurance
in such diverse areas as flood damage, ghetto fire and property, hurricanes,
and workman's compensation. However, the problem is that the hazardous
waste industry even on a national basis is relatively small compared to
the size of potential losses, so that a state or federal program would
require either a large safety loading or a committment of the governments'
own funds if a large accident occurred. Very few states could afford to
commit themselves to a possible 100 million dollar expenditure, and those
that could would probably be reluctant to do so. On the other hand, a
state-run insurance program for smaller levels of coverage might be
appealing to some states in the absence of any insurance industry response
to this insurance need.
It is likely that an insurance plan will have to be carried out
at the national level to be feasible: the risk must be spread as widely
as possible. The risk can also be spread over several perils, as well as
geographically. For instance, it may be possible to have the existing
nuclear insurance pools extend coverage to the non-nuclear hazardous waste
management industry.
Self Insurance and Going Bare
"Self insurance" is defined as accepting a risk for which the firm
has sufficient assets to cover the liability in question. "Going bare" is
accepting a risk that could not be met if it occurred and would cause the
failure of the firm. (Dunn and Bradstreet estimated that in 1969 disasters
caused 1.7% of all manufacturing business failures.) Distinguishing between
self insurance, which might represent a viable method of assuring responsibility
and going bare is a somewhat difficult problem.
62
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State workman's compensation programs which allow self insurance
usually do so on the basis of the judgement of a state board as to the
financial viability of the firm and usually do not require assets sufficient
to cover remote possibilities of disaster. If a rule were to be set
up there are approaches that might be considered, with varying degrees
of certainty that the necessary assets would be available. A relatively
certain system would be a requirement that the liquidation value of the
firm exceeded its total debt by an amount sufficient to assure whatever
level of coverage was deemed appropriate. This would be an extremely
stringent criteria, and for smaller firms might well require the special
services of an accountant to estimate liquidation values. A somewhat
less stringent test would simply require a tangible net worth of
greater than the amount of coverage desired. Because tangible net worth
is based on the book value of assets it can readily overestimate (as
well as underestimate) the true net worth of the firm. For these reasons,
greater assurance of adequate assets could be provided through requiring
tangible net worth that was some multiple of the desired degree of
coverage. This approach would have the advantage that the resulting
value would be easily obtained as part of the annual reports of the firms
in question. A third approach would be a requirement on net working
capital (the difference between current assets and liabilities). A firm
with net working capital equal to or greater than the total coverage
requirement could be expected to have be able to meet any liability require-
ments. Combinations of these rules are also possible.
Self insurance may be less adequate than commercial insurance
in that commercial insurance can be written on a per occurrence basis,
covering more than one occurrence per year. The question
arises, therefore, as to whether a self insurer should be prepared to
cover more than one accident per year. For a single site, the probability
of a second accident is extremely remote. Even for a firm with up to 20
sites the probability of a second accident within a year is still at least
an order of magnitude smaller than the probability of a single accident.
On the other hand, as the number of sites approaches 100, the probability
of a second accident starts to equal the probability of a single accident
at a single site. As a result, if some hazardous waste management firms have
63
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large numbers of sites, self insurance might reasonably require sufficient
assets to cover two accidents.
Using a simple rule of tangible net worth in excess of required
coverage levels, no more than 2 or 3 of the firms now engaged in hazardous
waste management could meet a 100 million dollar liability requirement.
The overwhelming majority of firms in the industry could not meet even a
10 million dollar liability requirement. The average firm in the industry
engaged primarily in hazardous waste management could not even assure the
ability to meet 1 million dollars in liability from its own assets.
On the other hand, the number of firms that could meet a total liability
requirement by combining present insurance and their net worth is signi-
ficantly greater than the above at all levels of coverages. If the required
limit coverage were limited to sudden and accidental events, many firms
could handle a 1 million dollar liability claim and several could
even handle a 100 million dollar liability claim.
The situation for generator disposers is highly variable and
depends upon the industry in question. However, for at least some
industries self insurance is at least a possibility for a significant
number of producers. Thus, for example, all of the top 50 chemical pro-
ducers have tangible net worth sufficient to cover 2 one hundred million
dollar accidents.
Self insurance or self retention to some degree is feasible
for almost all firms. Reliance only on self insurance is not prudent
for any firm however. The general health of the industry requires some
form of risk sharing.
The costs of self insurance begin with costs of the expected
value of loss not covered by insurance (see Table 11) In addition to
these costs are the costs associated with the following factors;
1) Insurance premiums are tax deductible whereas the liability
loss is tax deductible only if it actually occurs.
64
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2) Exposure to a major loss could force the firm to engage in
very high cost, short-term borrowing and might dangerously reduce working
capital and increase debt-equity ratios.
3) Most firms and most individuals are risk avoiders and prefer
a small certain stream of income to a higher average but more uncertain
i ncome.
4) Cost of loans is larger in the absence of adequate insurance,
and credit will generally be tighter.
As a result, where insurance is available, most firms will use commercial
insurance in some form in preference to self insurance. In most
cases the perceived costs of self insurance are greater than the
insurance premiums for an equivalent risk. There are two types of exception
to this. First, a firm may be large enough that a given type of risk can
be treated as an expected cost; thus, many large firms may have high
deductibles for certain types of insurance since they can effectively self
insure for smaller accidents. Many larger firms self insure for
•
workman's compensation or carry only excess or umbrella coverage for disas-
ters, since for a large firm workman's compensation expense can, in fact,
become a fairly predictable regular expenditure. The second exception
is where due to uncertainty of the risks involved, the premiums are highly
conservative or include such a large safety loading that the firm believes
that even with special costs of self insurance it is cheaper to self
insure than to accept the high risk estimates of tne insurance industry.
No data base exists to tell us how hazardous waste managers subjectively
estimate the risks of their operations, however, the high levels of
liability coverage and high associated expenses found in our conversations
with selected firms indicate that many firms or their creditors perceive
a significant degree of liability risk associated with their business.
As noted above, "going bare" is simply the act of exposing the
firm to a potential liability payment that the firm will be unable to cover
with its assets. Going bare is generally incompatible with EPA's goal of
requiring financial responsibility. However, at the very highest potential
liability levels market and policy conditions may make risk sharing impossi-
ble. In the absence of a limitation on liability by Congress and the Courts,
65
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hazardous waste management firms will inevitably "go bare" at those
highest levels. With respect to the highest levels of liability coverage,
virtually all firms now engaged in contract hazardous waste disposal are
effectively going bare, and, in the absence of regulation, this is a
reasonable practice for them. For a firm with an acceptable rate of return
on investment, the actual value of the firm to its owners can be expected to
exceed the book value of net worth by a factor of 2 to 4; and even for a
non-risk-averter it would be advantageous to insure the firm against
liabilities to at least this level. This point should be made very clearly
in considering the incentives of a hazardous waste management firm; a firm
with the average rate of return typical of the industry has at risk an
asset with a value of almost three times the book value of tangible equity.
Thus, the average hazardous waste management firm has at risk an asset with
a value to its owner of over one million dollars. If financial responsi-
bility is defined not as ability to meet the worst case liability, but
only as having a significant value of assets at risk, then many of the
firm currently in the industry could well be considered to meet such a
criteria. On the other hand, a smaller firm that goes bare for higher
liability values will still fail to cover a significant portion of
the expected value of accidents under any of the above scenarios.
Table 12 shows the expected value of the various types of costs
both for the hazardous waste firm and for those parties injured, assuming
that the firm has normal profitability. The costs to the firm include both
insurance premiums and remaining exposure up to the total value of the
firm. The costs to the public are the costs of any claims that could not
be met by either the insurance or the firm. Except under probability
frequency set 1, a firm bears costs of less than a third of those born by
the public. For a larger firm, with 10 million dollars of liability insur-
ance and 10 million dollars in book value of net worth, the risks born by
the company are approximately equal to those born by the public under all
four probability frequency sets.
66
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Table 12
Annual Expected Value of Costs (dollars) Born by
Hazardous Waste Management Firm and by General Public
Under Various Insurance and Self Insurance Assumptions
Insurance and
Self Insurance Limits
300,000 Net Worth
1,000,000 in Liability
Coverage
10,000,000 Net Worth
10,000,000 in Liability
i Coverage
Liability Frequency Set »1 i
!
Cost to the Firm
Risk to . Total Cost to !
Premiums Own Assets to Firm the Public ,
1,430
2,700
100
1,530
2,700
900
Liability Frequency Set #
300,000 Net Worth
1,000,000 in Liability
Coverage
10,000,000 Net Worth
10,000,000 in Liability
Coverage
4,700
,600
300
3,000
5,000 11,600
11,600
8,000
Liability Frequency Set Ł3
300,000 Net Worth
1,000,000 in Liability
Coverage
10,000,000 Net Worth
10,000,000 in Liability
Coverage
5,700 1,500
25,000 15,000
7,200 67,500
40,000 50,000 j
300,000 Net Worth
1,000,000 in Liability
Coverage
10,000,000 Net Worth
10,000,000 in Liability
Coverage
Liability Frequency Set *4
7,800 3,000 16,000 116,000
42,500 30,000
63,000 72,500
a. From Table 8 .
b. Equal to probability of uncovered events times the difference between
insurance coverage and liability up to 3 times net worth.
c. Equal to difference between total insurance covered plus value of
firm and the expected losses.
67
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Trust Funds
Trust funds may be relevant to two different situations, a trust
fund to cover a single party, and joint trust fund to cover liability
expenses. A trust fund would provide a relatively assured method, more
certain than the assets of the firm itself. The costs of such a trust fund
would tend to be rather high however, being simply represented as the
difference between the return on the trust fund (which would accrue to the
party setting up the trust fund) and the opportunity cost of capital.
Such a system would normally cost.the firm between 1 to 3% of the total
cost of the trust fund, even assuming that he could in some manner obtain
the necessary capital. A joint trust fund would work rather like an in-
surance pool, except that there would be no insurance company back-up
if the fund were exceeded. We would thus expect the cost to approximate
those of an insurance premium plus a safety loading necessary to build
up the size of a fund to a level where it could cover an accident. This
safety loading could initially readily double the costs over simple premium
costs, depending on the number of members of a_trust fund.
68
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Chapter II
CONTINUITY OF OPERATIONS
A. Statement of the Problem
Hazardous waste management activities carry with them a series
of functional requirements that extend from the time the site is inaugu-
rated through the termination of the hazard associated with the final
disposal of the wastes. As shown in Figure 2, the stages include:
•Operations (during which hazardous wastes are collected,
treated, stored, and disposed)
•Site Closure (when a site that is filled or has become
uneconomic is closed) and
•Post-Closure Operations (during which monitoring, main-
tenance, effluent capture and treatment, and security
programs are in effect.)
In addition, an operating site may be suddenly abandoned by its licensed
operator. It must then be closed or turned over to a new operator.
During each of these stages provision must be made for continuity of
operations, financial responsibility, and contingency response capabili-
ties. The difficulty with which each of these goals can be met varies
from stage to stage.
Continuity of operation problems arise when the facility
operator is 1) no longer available or has gone out of existence, or
2) is incapable of or unwilling to carry out the functions required for the
safe and proper operation of the site, and so abandons the site during
its operations or post-operations phases. The likelihood of this happen-
ing is increased when the site is no longer an economic asset, i.e. if
the costs of treatment and disposal exceed income from the service, or
when the site is filled and can accept no further wastes. Thus, the physical
needs of the site, which include post-closure care, will inevitably
69
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Figure 2
HAZARDOUS WASTES SITE HISTORIES
Sites in operation
pre-EPA reg's
Closure w/o
EPA supervision
Closure under
EPA supervision
' EPA monitoring i
i & corrective I
1 action i
Operation with
interim EPA
permit
Operations
Under EPA reg's
Site abandonment
EPA intervention
Closure under
EPA supervision
Meeting RCRA Section 3004 Objectives
-Site status of immediate concern to EPA
-Site status not of immediate concern to EPA
Post-closure
program
Termination of
site hazard
-------
outlast the immediate economic interest of the operator in its operation.
The problem of meeting post-closure responsibilities is
aggravated by the difficulties inherent in predicting when the hazard
is terminated. In addition to the undertainties surrounding their
potential exposure to post-closure liability and clean-up costs, hazardous
waste management companies may find themselves incapable of judging when
their obligations for post-closure operations will end, and faced in some
instances with obligations in perpetuity.
Longevity of the hazard posed by materials disposed of in
hazardous waste sites will be affected by many considerations. The nature
of the material is critical. Hazards were assumed to last 50 years for most
organic residues (range 0-100 years); 200 years for certain persistent
organics (range 100-500 years), and 5000 years for metal elements (range
500-10,000 years).
The methods used to treat hazardous material prior to disposal
are another key variable affecting longevity. Some materials can be
neutralized with other wastes. In other cases neutralization is overly
expensive, or physically impossible. Disposal methods are another
variable affecting longevity, as are the strategies used by the
disposer in segregating wastes. Long longevity materials, for instance,
could be isolated on a fraction of the land used for disposal. Thus the
hazard longevity mix of the sites will reflect the decisions of EPA on
defining hazardous wastes, on treatment, and on disposal standards. The
study assumes that hazardous waste sites would continue to be considered
hazardous until an explicit judgement had been made that the hazard had
diminished to non-threatening levels, and that the process to be followed
in reaching this judgement forms part of the continuity of operations
management structure. It assumes, also, that this process will allow for
discrimination between future alternative uses of the land on which the
closed sites are located. For example, the land may be suitable
for parks, golf courses or farming, but not for well-drilling, or resi-
dential construction. Hazard longevities will be reflected in the different
71
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uses. A disposer may therefore be able to use a portion of the site
for new purposes immediately after completing the closure program, and
a second portion some time later for a limited number of alternative
uses. A remaining portion of the site may, for all intents and purposes,
never be available for alternative use, and the site itself require
perpetual care.
The extreme post-closure longevity of some of the hazardous
wastes raises important questions about legal responsibility for the site.
Normally, the owner of land and facilities is legally responsible for
maintaining them in such a way that they pose no off-site threat. When
they are sold, the new owner becomes responsible. The prior owner is
only responsible if he or she failed to advise the new owner of an
existing danger and the new owner could not reasonably be expected to
discover it. In the case of a closed hazardous waste disposal site, the
prospective new owner may be advised of the site's history but be, like
everybody else, incapable of estimating the actual longevity of hazard,
or its potential for producing catastrophic damage, or whether a release
into the soil that will eventually cause damage has already taken place
and will be traced back to the site. Because of these unknowns, the
transfer of ex-hazardous waste disposal land, and responsibility, to
new ownership poses a further challenge to continuity of operations and
ownership requirements. Thus to the problem that the functional
requirements of a closed site will continue to exist well after the princi-
pal economic interest of the operator has ended, are added the problems
that legal responsibility may endure long beyond the corporate existence
of the responsible entity, and that transfer on the open market of the
most hazardous sites may not be possible at all.
Continuity of operation requirements may have at least five basic
purposes, covering 1) post-abandonment, pre-closure maintenance of
operations, 2) site closure, 3) post-closure site activities, 4) termina-
tion or limitation of operator responsibilities, and 5) land-use limitations.
Organization of the activities required for continuity and provisions of the costs to
72
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cover them are included in the goals of continuity of operation requirements.
In summary form, the purposes may be described as follows:
1) Post-abandonment, pre-closure operations
a. Provide continuation of operation by new operator, or
b. Provide closure of abandoned site
2) Site closure
a. Ensure availability of site closure funds
3) Post-closure operations
a. Ensure availability of funds for annual post-closure
costs where operator continues to exist:
(monitoring, maintenance, security,
operations, maintenance of contingency plan)
b. As in (a), but where operator has gone out of business
or is otherwise unavailable (includes access to site)
c. Ensure availability of funds for extraordinary, unpredictable
post-closure costs, where operator continues to
exist
i. implementation of contingency plan (including
clean-up)
ii. liability costs
d. As in (c), but where operator has gone out of business
4) Termination of operator responsibilities for closed sites
a. Transfer or terminate operator responsibilities
5) Land-use limitations
a. Maintain prohibition on inappropriate land-uses
73
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State, state subdivision, municipal and public authority permit-
holders will have different institutional characteristics from private
sector permit-holders. These differences suggest that different financial
responsibility and continuity of operation standards should be applied to
the public facilities. With regard to standards for continuity of opera-
tions, the key characteristic of the public facilities is the permanence
and reliability of the institutions to which they are attached. Rightly or
wrongly, the longevity of the government is not at general issue, and
indeed is likely to exceed that of an industry association. Too, these
entities have funding mechanisms that make it unlikely that the costs of
operating public hazardous waste management facilities cannot be met.
EPA may therefore wish to exempt these entities from the standards required
of private entities to assure continuity of operations.
A special problem is posed by current hazardous waste management
owners and operators that fail to get permits and are prepared to leave
the business instead. It appears that it is impossible to require of
them the full set of requirements that permit-holders will have to meet.
They are unlikely to have funds available; unlikely to be admitted to a
mutual assessment association; and unlikely to qualify for pool insurance.
Also, it may be contrary to legal principle to impose requirements on
them retroactively if they choose to leave the business rather than comply
with the new regulations. The most basic functions which EPA is interested
in seeing performed are that of closure and post-closure monitoring. At
least, EPA will then have warning of a situation that is developing and
requires attention. Without monitoring nothing can be done. Closure and
post-closure monitoring alone could be required of those about-to-be-
closed operators. Costs would be relatively low, and could clearly be
justified as a measure that any manager of hazardous materials could rea-
sonably be expected to carry out anyway, regardless of the new regulations.
The new regulations, in this view, only affirm the need for a practice
that should be routinely implemented anyhow.
As with any continuity of operation requirement that may be
imposed on these non-permit operators, the problem revolves around the
74
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question of the costs that may be imposed on him. We believe that it would
be difficult to force many of the operators who will fall into this cate-
gory to put up significant cash funds without causing considerable hardship
and, possibly, bankruptcy. Thus, while proper closure and post-closure
monitoring can be demanded, requiring a capitalized fund to do so, as proof
of capability, seems to present insuperable difficulties.
B. Characteristics of an Ideal Solution
Unlike financial responsibility requirements, which seek to
protect responsible entities from potentially catastrophic and unpre-
dictable events, continuity of operation requirements seek to ensure
that largely predictable, relatively constant, normal functions are
carried out despite the actions of irresponsible entities, i.e. those
that would default on any of the functional responsibilities connected
with hazardous waste management, including responsibilities that exist
after a site is filled and ceases to produce revenue, and over a period of
time that may exceed the life of the entity.
Continuity of operations requirements differ from those of financial
responsibility in basic ways, therefore. The challenge of continuity is
basically to create an enduring institutional and operational capability;
that of financial responsibility is to create a way of sharing risk.
Continuity deals mostly with relatively small sums that can be accurately
calculated on an entity-by-entity basis; financial responsibility deals
with sums that are potentially very large, for which only a few members
of the industry will ever be directly liable, and then only occasionally
Continuity of operation requirements are only needed because institutions
may failj financial responsibility, because operations may be inadequate
and accidents will occur.
The characteristics of an ideal solution to continuity of
operation problems are oriented toward the institutional interests and
capabilities of the hazardous waste industry. The characteristics may be
described as follows:
75
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1) Strengthening the ability of hazardous waste management
companies to meet functional responsibilities, including operations, site
closures, post-closure monitoring, maintenance and operations;
2) Providing compelling incentives to the companies to carry
out these functions;
3) Creating an enduring back-up institution to step in if
companies fail to carry out these functions. The back-up institution must
have the capability to organize remedial efforts, legal capacity to do so,
and the funds with which to pay for the efforts; and
4) Providing for an orderly, safe return of closed site
land to other uses.
Two principles should guide the continuity of operations
structure. First, the funds required to carry out functions on sites that
are abandoned or otherwise inadequately maintained must be assured before
the abandonment happens, and during the time the site is generating
income, i.e. while it is still accepting wastes. Alternatively, funds
could be gathered from existing site operators for ex post facto applica-
tion to an abandoned site. Second, funds gathered in anticipation of a
potential default by operators should be refunded to the operators who
fulfill their obligations. If refund is not made, operators will lose
incentive to discharge those obligations, and the institution designated
to handle occasional and emergency site abandonments will instead find
itself routinely handling an unnecessarily large number of stie closures and
post-closure operations.
With the exception of those things done to respond to the pro-
blem of the excessive longevity of hazard and responsibility, the intent
of continuity of operation requirements is not to relieve hazardous waste
operators of their obligations, but to ensure operational needs in the
event of their default.
C. Basic Continuity of Operation Costs
1 . Closure and Post-Closure Expenditures
76
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While it is not the purpose of this study to determine closure
or post-closure operating requirements or their associated costs, some
rough estimates of costs are necessary to provide perspective on the
issues involved. Ideally, continuity of operation expenditures can be
divided into three categories: 1) single lump sum expenditures (of which
the most important is site closure) 2) predictable annual expenses (main-
tenance, monitoring, operations, security, etc.), and 3) unpredictable or
extraordinary annual expenditures (contingency plan implementation, and
liability).
Unfortunately, little data is now available to estimate these
various categories of costs. They will depend in part upon the closure
and post-closure requirements to be set by EPA, the precise nature
of the site, and the types of hazardous waste involved. Given the
difficulty of general estimates, most states have set up laws that leave
the precist cost estimates to be determined on a site by site basis. The
state of Oregon provided the study team with a breakdown of estimated
costs for the one hazardous waste site in that state: these included
$8000 for permanent closure of the site, five years of intensive monitoring
at $2930 per year, and long-term monitoring and security also at $2930
per year.
The costs of premiums associated with post-closure liability
insurance, if this liability is to be met through insurance, would depend
upon the level of coverage chosen, and even then cannot be predicted
with accuracy (see Chapter I). For low levels of associated risk and
of coverage, premiums of $2000 to $10,000 per year might be in order.
For the highest levels of risk, premiums in the $175,000 per year range
can be readily justified, if insurance is available at all.
The cost of providing for continuity requirements annualized
over a period equal to the active pre-closure life of the stie is dependent
upon the actual life of the site and the points in time at which the firm
must part with the money. A number of schemes to finance continuity of
operations were considered. Their annual ized costs vary considerably.
77
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Five basic approaches may be summarized as follows:
1. The firm must place a sum of money equal to the estimated
fund size into some form of account, but may collect any interest on this
account other than that necessary to assure that the size of the account
keeps pace with inflation, the "full lump-sum" approach.
2. The firm places in an account a sum of money calculated to
provide an adequate fund if all interest is retained for growth of the
account, the "lump-sum plus interest" approach.
3. The firm makes an annual payment into the account which is
calculated to provide an adequate fund at the end of the operational life
of the site, the "annual payment approach.
4. The firm sets up a fund for continuity costs at the end of
the life of the site, the "end-of-s-Lte" approach.
5. An on-going firm earning profits pays for continuity
expenditures as they occur, the "payment upon occurrence" approach.
The above mechanisms are listed in order of costs, with the most expensive
system first and the least expensive last. The precist difference among
these mechanisms is dependent upon the operations! and post-closure life
of the site, the real interest rate, the real opportunity costs of capital
to the firm, and the definition of cost used. The remaining operational
life of the site will vary both /vith the remaining capabity of the site
and the rate of demand for its usage. As noted above, real interest
rates vary over time, and are also dependent upon the types of securities
on which the interest is accruing. Ordinary savings accounts, U.S.
government bonds and high rated state and municipal bonds would provide
the lowest real interest rates, high rated corporate bonds would perform
somewhat better, and investments in selected high grade stocks the best.
However, the degree of risk to the fund would also go up with the real
interest rate. The real opportunity cost of capital to the firm will
78
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vary according to the profitability of the firm, the particular tax
advantages open to it, and the debt equity ratio of the firm. Assuming
government bond rates are used in calculating the real interest rate, the
real opportunity cost of capital to the firm could be from 1.5 to 2.5
times the real interest rate. Finally, one must take care in the defini-
tion of costs employed. The definition use in this context throughout
thos text is that costs are defined as the necessary increase in revenues
per eyar to assure that the profits remain constant. (Under this defini-
tion, the costs of an annual expenditure are simply equal to the size of
that expenditure.) A somewhat more complex definition would be loss
to the firm if it is unable to pass on the costs. In this stiuation the
costs to the firm would be approximately 1/2 those computed under the first
definition, with the remainder of the costs being absorbed by the government
through reduced corporate profit taxes.
For the full-lump sum approach described above, the annual
constant dollar costs over the life of the site may be calculated as:
1 - (1 + r2)-L ' /
Where F is the required fund size in dollars
L is the life of the site
rl is the real interest rate earned by the fund
r2 is the real opportunity cost of capital
For the lump sum plus -Interest approach, annual costs over
the life of the site may be calculated as:
r?
— r- (1
79
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with the abbreviations the same as above. The term (1 + r) F represents
the required initial size of the fund.
For the annual payment approach, the annual costs over the life
of the site may be calculated as:
(1
This computation also gives the required size of the annual payment in
current dollars.
For the end-of-site approach, the annual constant dollar costs over
the life of the site are:
r2)
The payment upon occurrence approach calls for recalculation of
the required fund size, using the opportunity costs of capital relevant
to the firm; a formula would be:
0
Where C, is site closure cost
C2 is annual predictable cost and the average yearly
non-predictable cost
Combinations of these approaches, such as an initial payment
of half the amount required followed by annual payment for the remainder
over the life of the site, may be calculated by simply using the appropriate
fractions of the fund size. A final possibility, a series of annual
80
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payments over a time period T less than the life of the site, can be annualized
to actual site to cost per year of operation by the following formula:
rl
1 -
r2
(1 + rJ"L
C-
(1 +
(1
N t
ri}
+ r?
- 1
) t
Table 13 shows the results of these formulas in annual costs
per one hundred thousand dollars of required fund size for various site
lives, and combinations of real interest rates and real costs of capital.
In general, the greater the difference between the real interest rate on
the account and the real opportunity costs of capital to the firm the
greater the difference between the various approaches. The actual size
of the costs however, is uniquely dependent on the actual real interest
rates and real opportunity costs of capital employed. For most firms, the
typical situation will fall between the costs of the second two combina-
tions of interest rates and costs of- capital shown in the Table. The
end-of-site and payment upon occurrence approaches represent the minimum
possible costs to the firms of meeting continuity requirements, with
the end-of-site approach applicable to firms which do not continue to
exist following closure, and the payment upon occurrence approach to
firms which continue other activities after the closure of the specific
site.
For a typical site currently in the hazardous waste management
industry (see Introduction), these costs range from .031 to 1.3 percent of
revenues per $100,000 of required fund size, depending on the site life
interest rates, and opportunity costs of capital. If a $350,000 fund, as
estimated above, is a typical requirement of continuity, then the various
mechanisms entail annual costs of .11 percent to 4.55 percent of revenues.
The dffierence in cost between the full lump-sum and the payment upon
occurrence approaches (which respectively are maximum and minimum possible
continuity expenditures) ranges from .5-1.1 percent of revenues per $100,000
of required funds, for similar sites, interest rates and opportunity cost of
a capital conditions.
31
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82
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D. Meeting Continuity of Operation Objectives
A number of alternative methods for meeting continuity of opera-
tion objectives have been proposed, some complementary, some redundant. The
discussion here distinguishes between mechanisms or schemes that may enable the
objectives to be met, the source of funds to implement the schemes, and
the agency responsible for organizing and implementing the scheme.
The alternative schemes for meeting different continuity of
operation objectives are: owner asset requirements; trust funds; bonds;
escrows; mutual assessments, RCRA 7003; site transfers; easements; covenants;
and zoning.
Alternative sources of funds to implement the schemes are:
hazardous waste generators; hazardous waste management operators; and the
general public, through tax revenues.
Alternative agencies to organize and implement the schemes are:
government agencies; the hazardous waste generators; the hazardous waste
management industry; and third party trustees.
Diversity within the hazardous wastes industry makes it diffi-
cult to conceive of a single method to meet continuity of operation objec-
tives that is both fully equitable and fully effective.
Included in the industry are some of the largest industrial
firms in the world, as well as small companies grossing under $100,000.
Many of the future EPA hazardous waste permit holders will only inciden-
tally be in the hazardous waste business, a side activity required by their
primary manufacturing activities. Others will be solely in the business
of taking the hazardous wastes generated by others, treating and disposing
them. While most will be private sector firms, some municipal, county
and state facilities will be included in the industry. Some companies
will have up-to-date technology and management; others will be less capable
of meeting high technological and managerial standards. Finally, some
83
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permit holders will be handling the most hazardous, most long-lived wastes;
others only relatively safe, short-lived wastes.
Taking all these considerations into account, to say nothing of
specific waste treatment strategies, or geographic, hydrological and
geological characteristics, presents an administrative task of unmanageable
proportions. Inevitably, we must conclude that some inequity for some
members of the industry will be considered one of the costs of membership
in the industry, and that a less-than-perfect effectiveness will be
accepted by society as one of the costs of our economic system. A
combination of the methods described here can minimize but not resolve
the dilemma.
E- Alternative Methods of Meeting Continuity of Operation Objectives
1. Guarantee Closure and Post-Closure Responsibilities
The first series of alternatives to be considered are those that
seek to guarantee that closure and post-closure responsibilities will be met
by site operators, or in the event of an operator's default, that funds will
be otherwise available to meet the responsibilities. These alternative
schemes include: minimum owner asset requirements, trust funds, bonds,
escrows, and mutual assessment associations. Subsequent sets of alternatives
will examine what can be done to: provide emergency access to an abandoned
site; terminate operator responsibilities; and prohibit future misuse of a
closed site.
a. Minimum Owner Assets Requirements
Under this approach the net assets or liquid net assets of a
hazardous waste management firm would be used as a basic indication of
the stability, capacity, and reliability of the firm. The presumption is
that a firm with substantial assets is sufficiently unlikely to abandon
a site that it need not be obligated to meet the requirements imposed on
an operator with smaller assets; the assets are a surrogate measure of
long-term commitment, such as ownership of other newer sites.
84
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Pros and Cons
The advantage to this approach is self-evident. Companies with
adequate asset levels would qualify under continuity of operations stan-
dards without requiring a reserve. The disadvantages are equally self-
evident: 1) Only the reliable companies, presumably, would qualify, while
the need is to cover those companies that are less reliable. 2) A company
with a high level of assets might find those assets plummeting in a short
period of time. For a regulatory agency to monitor the company, catch it
as it fell below the minimum level, and immediately impose on it the re-
quirements that the other weaker companies have had to meet -- and precisely
at a time when the fortunes of the company are already under pressure -- seems
of dubious reliability. 3) If the presumption that reliability is directly
related to assets is incorrect and a company becomes insolvent, the regulatory
agency, and society generally, are left with no recourse, no assets to
apply to the needs of the site.
Costs
For those who qualify, the costs of this approach would be
extremely low, amounting only to the cost of establishing the appropriate
assets to site cost ratios, and assessing the evidence of assets produced
by the applicants. Except for these administrative costs, the costs of
this approach will be those associated with the end-of-life and payment
upon occurrence approaches; the former if the firm ceases to exist with the
closure of the site, and the latter if the firm continues as a profit-
making entity.
Implementation
The basic" obstacle to implementation of a Minimum Owner Assets
requirement appears to be the uncertain nature of the relationship between
assets and reliability. Though continuity of operation functions and
costs are relatively predictable, the study did not uncover existing
programs that ha-ve turned this type of approach into an operational
85
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reality. The State of Maryland, for instance, provides that permit appli-
cants may be required to maintain a surety bond, assure self-insurance, trans-
fer operation of ownership to the State, or "provide evidence of financial
ability to properly operate and maintain a facility" (08.05.05 Control of
the Disposal of Designated Hazardous Substances, .10.A.4, Maryland Registry,
V. 4, no. 3, Feb. 2, 1977). The administering agency does not expect at
this time to construct formulae for assessing financial responsibility.
Instead, each applicant will be judged separately by a variety of general
criteria, such as size and operating budget. Those companies that appear
clearly capable of meeting continuity of operation responsibilities will
be granted permits. Those of uncertain or marginal capability will be required
to post a surety bond in an amount to be determined on a case-by-case
basis, not to be less than $10,000. Whether the imprecision with which
the evidence required is defined will permit an effective use of the
regulation remains unclear at this time, as it is only now being put into
effect.
Feasibility and Praeticality
Of all the alternative methods of ensuring continuity of
operations, that of requiring minimum owner assets is the easiest to
implement, requiring little more than the regulation itself and an evalu-
ative process within the administering agency. But because of its rela-
tively imprecise nature, and because it would exclude applicants with fewer
assets who might nonetheless prove reliable members of the hazardous waste
management industry, the requirement is impractical if used as the sole
method of meeting continuity objectives, and largely unnecessary if proposed
for use in combination with any of the other methods discussed here.
b. Trust Fund Requirements
A second possible method of meeting continuity of operation
objectives is to require the establishment of trust funds, the principal
and revenues of which would go to ensure the performance of continuity of
operation functions -- site closure and post-closure monitoring, mainten-
86
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ance, security, operations, etc. In addition, trust funds might be
used to pay premiums for post-closure liability insurance, if this is to
be required under the RCRA 3004 financial responsibility standard.
Of all the possible methods of meeting continuity of operation
needs, only the trust fund approach contemplates the establishment of an
independent entity charged with assuring continuity of performance. The
necessary funds, administered by a trustee (a fiduciary who is legally
responsible for the appropriate use of the fund), are isolated in the trust
and used only for specified purposes. The entity lasts, then, as long as
the funds and their purpose exists subject to legal limitations on indefinite
operation which can be provided through appropriate structuring of the trust.
Typically, a trust fund is established to take care of future
needs. A common arrangement is to use the investment earnings of the
fund to meet the purpose for which it was established, leaving the principal
intact. No refund need be contemplated under a trust fund arrangement, nor
is the original source of the fund obligated, by the mere fact of having
established it, to contribute further should the fund not be sufficient to
meet its stated purpose.
Within the hazardous waste industry trust funds could be used to
meet continuity of operation objectives in two basically different ways:
1) Individual trust funds could be set up for each site, or
each operator. Disbursements from each fund would only be applied to the
closure and post-closure needs of the site or operator for which it had
been set up.
2) A central trust fund could be created on an industry-wide
basis, built up from the contributions of every industry member.
Disbursements would be used on an emergency basis to meet the closure and
post-closure responsibilities that individual operators have failed to
carry out.
The central trust fund approach is based on assumptions that
only a few defaults will occur. Therefore, the size of the central fund
would be much smaller than the sum of the individual, site-specific trust
funds, which are based on the assumption that the functions at any site
may be defaulted.
87
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If the first approach were adopted, one trust fund per site or
operator, the fund and its interest earnings would presumably be re-
imbursed as the operator met the sequence of closure and post-closure
actions required by EPA. If the second option is adopted, where a
central trust fund is established to meet the needs of only those sites
that have been abandoned, presumably no reimbursement would be available,
though the fees required to build and maintain the central fund might be
adjusted to reflect the level of disbursements made.
PTOS and Cons
Trust funds present a general advantage over other possible
methods of meeting continuity of operations objectives: funds are built
up during the time an operator's income from a site is greatest, and then
secured for use when an operator's immediate interest in a site is at its
lowest, when it has ceased producing revenue but still requires mainten-
ance expenditures. It is the isolation of the funds that makes this
scheme attractive. Regardless of the subsequent history of the operator,
society is assured, to the extent it can be, that hazardous wastes re-
ceive the treatment they require over periods of time potentially so
long that they exceed the degree of permanence that can reasonably be
expected of all hazardous waste management firms. But for the same
reason, trust funds present a significant problem: they require the set-
ting aside of funds to which the operator no longer has access. These
funds might otherwise be used by the operator in expansion, technological
investment, or profit-taking.
The two different types of trust funds -- a central industry-
wide fund or individual funds per site and operator -- have different
advantages and disadvantages. A central industry-wide fund used only for
emergency purposes where an operator has defaulted would require a
smaller total capital amount than the total capital that would be set
aside under an individual trust fund approach. The industry-wide approach
takes advantage of the assumption that defaults would happen infrequently
and requires all members to share in that risk. The advantage of the
individual trust fund approach is that each operator would be reimbursed
-------
from the trust fund as the sequence of closure and post-closure obliga-
tions was met. Under the individual fund approach, the operator is left
with a strong incentive to meet continuity of operation obligations.
Under a central fund approach, where funds are only available for defaults,
the individual operator has no direct financial incentive to carry out its
obligations. The central fund, set up for emergency use, may instead find
itself having to cover a greater number of sites than originally thought
likely, as individual operators who find they have nothing else to lose
abandon their filled sites. Individual trust funds would be particularly
vulnerable to inflation and the source of the funds would presumably have
discharged its financial responsibilities for closure and post-closure cash
at the time the fund was created. A central trust fund, with annual
assessments being made against industry members for its upkeep, would be
able to withstand inflation better as the assessments would reflect costs
charged to the fund.
Costs
The size of funds necessary to provide for closure and post-
closure costs are dependent upon the actual size of the various expendi-
ture items listed above, the length of time that these costs must be
maintained, and the real rate of interest that the fund can earn. The
real rate of interest is defined as the actual rate of interest minus the
inflation rate. Historically it has averaged from 1% to 4%, with lower
figures in periods of rapid inflation. The formula for computing the
fund size is:
-n
1 - (1 + r,)
F • cl + - F -
Where F is the size of the fund in constant dollars
C, is site closure cost
89
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C2 is annual predictable cost and the average
yearly non-predictable cost
n is the length of time the annual costs must be
maintained
r, is the real interest rate
Table 14 shows how the size of the multiplier for the annual
costs varies with length of time the annual costs are anticipated to be
required and with the real interest rate. Because of the adjustment
for inflation implied by the use of a real interest rate and the choice
of low risk investments for the necessary funds, the size of the fund is
significantly affected by the choice of the length of time the expenditure
must continue. At a 2% real interest rate, the difference between a
minimum assumed average life for hazardous waste of 50 years and of
perpetuity still results in an increase in the size of the fund by 58%.
If Oregon's assumptions about monitoring and shut down costs are accepted,
the necessary fund to be able to meet them in perpetuity is approximately
$150,000. Since this does not cover insurance premiums or provisions for
contingency plan implementation, additional costs requiring a minimum
additional fund of $200,000 could readily be included, for a total fund
size of $350,000. This is considerably in excess of Oregon's actual cash
bond requirement of $75,000, which does not apparently include provisions
for post-closure contingencies or for post-closure liability, and uses
a nominal rather than a real rate of interest.
The above calculations were developed in constant dollars. The
actual size of the fund in current dollars will need to grow over time.
Even at an inflation rate of 2%,(which has not been observed since 1965,)
a sum that would originally have been adequate would fall over 33% short
after 20 years. At a more realistic (but some would still argue too
low) inflation rate of 5%, the originally adequate sum would be over 66%
too small to adequately cover the calculated expenditures. How this
problem should be dealt with depends upon the exact nature of the option
chosen. Systems in which the continuity is assured through demonstration
90
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of the existence of adequate assets, such as owner asset minimums or
surety bonds, could either have a constantly escalating minimum requirement,
or could be set as a multiple of 2 to 4 times the estimated current dollar
size of the funds needed for continuity. For situations involving either
a full coverage payment, such as a cash bond, escrow account or trust
fund, and for situations involving annual payments to an escrow account
or trust fund, the problem of inflation can be resolved by conducting all
calculations of required fund size or payments using a real interest rate.
The real interest rate is the net of the interest gained from
investment and inflation rates. As post-closure funds are likely to be
invested in interest bearing securities of the U.S. (or possibly some
other secure investment) the real interest rate is likely to be relatively
low. The rate of 0.015 (1.5%) is used in this report. EPA may wish to
choose a different real interest rate. The effect of doing so is suggested
in Tables 15 and 16. These show the different annual payments that a
permit-holder would make to the post-closure cost trust fund under differ-
ent real interest rate and site operational lifetime assumptions. Table
15 assumes a five year annual cash deposit schedule; Table 16 a ten year
schedule.
The payment of the cash deposit which will provide funds for
post-closure costs could be spread over the first five years of the permit.
EPA may wish to sepcify a different period of payment. Later payment,
i.e. payment stretched out over a longer period of time, will require a
higher total deposit. Earlier payment will require a lower total deposit.
The different effects of a five and of a ten year payment period, under
various real interest rate and site operational lifetime assumptions,
are also shown in Tables 15 and 16.
Both real and nominal interest rates on U.S. government secur-
ities have varied enormously historically; Table 17 shows the post-war real
rates of return for U.S. government 10-year securities (both shorter and
longer term securities tended to have slightly lower real rates of return
during this period). During the post-war period, real rates of return on
10-year government bonds have varied from -2.89 percent to a high of 2.36
92
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Table 15
Real Interest and Site Life: Five-Year Annual Deposit
Payment Schedule to Provide a Fund Sufficient
to Produce a Post-Closure Annual Income of $13,000 in Perpetuity
Real
Interest
.005
.010
.015
.020
.025
Site Life (L) Years
10
493,654.09
240,081.84
153,837.69
110,910.25
85,305.62
15
487,338.57
228,428.11
142,799.87
100,454.83
75,397.74
20
475,339.81
217,344.83
132,555.29
90,985.04
66,640.62
25
463,621.74
206,795.89
123,044.89
82,407.95
58,900.59
30
452,208.55
196,758.03
114,218.44
74,639.42
52,059.54
Table 16
Real Interest and Site Life: Ten-Year Annual Deposit Payment
Schedule to Provide a Fund Sufficient to Produce
a Post-Closure Annual Income of $13,000 in Perpetuity
Real
Interest
<-i>
.005
.010
.015
.020
.025
Site Life (L) Years
10
252,940.19
123,028.00
79,779.59
58,198.28
45,282.49
15
246,709.75
117,023.29
74,056.23
52,711.97
40,023.12
20
240,631.57
111,345.22
68,743.46
47,742.86
35,374.61
25
234,703.64
105,969.33
63,811.82
43,242.18
31,266.00
30
228,921.60
100,826.00
59,233.99
39,165.77
27,634.59
93
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Table 17
Real Interest Rate on Ten Year
U.S. Government Securities
Year of
Issue
1943
1944
1945
1946
1947
1948
1949
1950
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1S62
1963
1964
1965
1966
1967
Real
Interest
Ratea
-2.89
-2.45
-2.34
-2.79
-1.74
- .16
- .04
- .76
- .59
.28
.68
.41
.62
.77
1.32
1.01
1.99
2.36
1.11
1.10
.55
.43
- .38
- .77
-1.14
a. Derivation: real interest rate equals nominal interest rate
minus the inflation rate divided by 1 plus the inflation rate.
This formula is an approximation which somewhat underestimates
the real interest rate when the bulk of the inflation occurs
in the final years and overestimates when the inflation occurs
early in the life of the bond.
Source: Nominal Interest Rates from Moody's Investor Services, Inflation
Rates from Economic Report of the President (1977), derivation
of real interest rates by IR&T.
94
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percent, and there have been as many issues characterized by a negative rate
of return as a positive one. The key to the periods of negative return has
been significant periods of unanticipated inflation; the first set of
negative real rates were brought about by the unanticipated Korean war
inflation and the second set by the inflation related to the unanticipated
energy crisis. The arithmetic mean for the period examined is approximately
zero. Table 17 shows real interest rates only through 1967 because after
this date the bond would not yet have matured. However, if we examine
inflation rates to date and assume a 5-6 percent rate of inflation for the
future, real rates of return would show the same pattern as that within
the period examined, i.e., some negative and some positive rates of return,
with a near zero average rate of return. A zero or negative interest rate
means that no possible fund size could be expected to provide fund perpe-
tually.
Given this problem, it is useful to examine the question of
how long a fund using a given real interest rate for computation purposes
could last if actual real interest rates are below those used in calculat-
ing fund sizes. Table 18 shows how long a fund would last for a site with
a life of twenty years under various assumed real interest rates and
various actual interest rates. If a 1.5 percent interest rate is used in
the fund calculation formula, even a zero actual interest rate would still
result in adequate operating funds for over 50 years. Thus, while not
providing for true perpetual maintenance at historical interest rates,
the resulting funds do provide for post-closure operation and monitoring
for a significant period.
The two basic trust fund approaches, individual or central,
have different cost structures. The costs of the individual approach
include the opportunity cost to the operator of setting aside funds
initially, from which are subtracted the actual costs of closure, and the
interest accrued by the fund between the time of collection and disburse-
ment. The costs of the central approach include the funds contributed
by each operator, to which are added their own actual costs of closure.
95
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TABLE 18
Length of Time (Years)
A Cash Fund Computed According to an Assumed Real Interest Rate
Will Last at Various Actual Real Interest Rates
Actual Real
Interest Rate
(percent)
-2.0
-1.0
- .5
0
.5
1.0
1.5
2.0
i
i
Assumed Real Interest Rate
Used in Calculating
Fund Size (Percent)
1.0
40
54
66
84
121
-
-
-
1.5
years
28
36
42
51
64
90
-
-
2.0
21
26
30
35
42
52
72
Derivation: for actual real interest rate = 0, formula is
5 • AP
AC
where AP is annual payment to the fund and AC is annual cost of post
closure monitoring and operation.
For actual real interest rate other than 0, number of years equals
,„ [! . , (
5 • AMI + I
In (1 + i)
where i is the actual real interest rate and L is the life of the site.
For the above comoutations a site life of 20 vears was assumed.
96
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The two basic trust fund approaches, individual or central,
have different cost structures. The costs of the individual approach
include the opportunity cost to the operator of setting aside funds
initially, from which are subtracted the actual costs of closure, and the
interest accrued by the fund between the time of collection and disburse-
ment. The costs of the central approach include the funds contributed
by each operator, to which are added their own actual costs of closure.
For an individual trust fund the costs are those of the full
lump-sum, lump-sum plus interest, and annual payment approaches described
above, depending upon the exact rules for the trust fund. The cost of
a centralized trust fund will depend upon the failure rate of the mem-
bers of the trust fund. Present data does not permit an estimate of
this figure for the hazardous waste disposal industry. Failure rates
for business enterprises as a whole average .l-.6% per year. Exits from
business not involving formal business failure average 7-10% per year.
The rate of hazardous waste firms failing to provide adequately for con-
tinuity could probably be expected to fall between these two figures.
While capitalization is higher than for many types of businesses, this is
a relatively new business and could be expected to have many young and
inexperienced firms, which tend to be more failure prone. If a central-
ized trust fund is set up requiring that adequate funds be placed in it
initially to cover all future failures with the interest in the
trust fund, then the total annualized cost of such a trust fund per site
would be given by
r-, 1 - (1 + r2) "L '
plus the costs of the end-of-site and payment upon occurrence approaches
as appropriate. Rather than calculate these costs for various failure
97
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rates, Table 19 shows the percentage failure rate at which a centralized
trust fund plus paying continuity costs under the end-of-site and payment
upon occurrence approaches is preferable to the full lump sum approach.
Unfortunately, these break even failure rates are small enough so that
it is difficult to determine which scheme would typically be preferable.
Imp lementation
A small number of States provide for trust funds, or their
functional equivalents, in their hazardous waste management closure and
post-closure regulations. Oregon, for example, requires that a $75,000
cash bond be built up within ten years after a license is issued. Non-
refundable, the bond is in fact a trust fund, out of which the State pays
closure and post-closure costs automatically. As the site has been deeded
to the State under the Oregon scheme, there is no obligation upon the
operator to carry out these functions. The State of Washington has a
similar scheme under consideration, though Washington expects to purchase
the hazardous waste site directly and contract for the disposal service.
The contract operator will pay fees to the fund, calculated to offset
pre- as well as post-closure costs. Oregon expects to have no more than
one hazardous waste site; Washington to have one extremely hazardous site
and a number of dangerous material sites. Their funds therefore resemble
the individual fund approach discussed above. Kansas, with more than one
site or operator, requires the equivalent of an individual operator trust
fund, in addition to a mixed surety and cash bond requirement. Called a
non-refundable "escrow account", it is set up to provide the Kansas De-
partment of Health and Environment funds for post-closure monitoring in
perpetuity. In Wisconsin, the proposed hazardous waste management regu-
lations require operator ownership and responsibility for a site at least
ten years after its closure. A Waste Management Fund is established for
the State. One of the purposes of the Fund is "acquire and maintain
abandoned sites". The Fund will be built up by fees collected quarterly
from all operators. Operators carrying out closure and post-closure
operations are not reimbursed. The Wisconsin draft regulations resemble
the central trust fund approach.
98
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Outside the hazardous waste industry, the use of trust funds
is a well established mechanism for assuring the isolation of large sums
for a variety of purposes. Some of the more important funds, described
in the Appendix to this report, include the Deposit Insurance Fund of
the Federal Deposit Insurance Corporation, The Insurance Reserve Fund
of the Federal Savings and Loan Insurance Corporation, the Mutual Central
Savings Fund of Massachusetts (with a Deposit Insurance Fund and a
Liquidity Fund), and the Maryland Savings Share Insurance Corporation
(with a Deposit Insurance Fund and a Central Reserve Fund). In each of
these examples, a central fund was created on an industry wide basis to
meet the requirements of both the industry and State or Federal law.
Participation in the funds is a requirement of operation within the
industry.
An example of individual trust funds was found in the regulatory
framework controlling the operation of cemeteries. In Virginia, for
example, each cemetery has a perpetual endowment fund, with an initial
deposit of $25,000 made by the cemetery operator. Interest from the fund
is used for maintenance, security and perpetual care. The principal
cannot be disbursed. The trust fund is increased by a minimum of 10% of
the sale of each lot as long as the cemetery continues to sell lots.
Feasibility and Practicality
There appears to be no insurmountable obstacle to implementing
a trust fund system within the hazardous waste management industry, the
organizational effort would be considerable, especially if the trust fund were
to be a central, industry wide fund. Potential objections to both the
central fund and the individual fund approach are foreseeable. The indivi-
dual trust fund would require larger original payments than a central fund,
though they would be fully reimbursable. The central trust fund, though
requiring less of an assessment, would have no refund. Furthermore, the
more reliable licensees might object to having to pay the continuity of
100
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operation costs of those less reliable operators who abandoned their sites,
particularly if there were no incentives at work to discourage site abandon-
ment. Whether membership in the central fund is selective or not will have
a major impact on the response of the industry to the possibility of
establishing such a fund. Where the costs that the fund is expected to
meet are predictable and will have to be met by all permit holders, an
individual trust fund system seems most appropriate. Where the costs are
unpredictable, the source of the need is unknown, and the need occasional
and limited to a few members, a central trust fund is appropriate.
Generally, the trust fund provides the most effective way of
ensuring that the largely predictable costs of closure and post-closure
maintenance, security, operations, and monitoring are met for all sites,
short of the assumption of this responsibility by the government itself.
c. Bond Requirements
Bonds are used when a regulatory or contracting agency requires
some assurance that a contractor or licensee will carry out an activity
according to the terms of the license or contract. It is a widespread
device, and has been recently incorporated into many state regulations on
hazardous waste. Bonds are used to guarantee the performance of an obligor
over a specific period of time, usually no more than two or three years.
Performance is defined very specifically. The bond issuer, such as a
surety company, "stands in place of the principal" and pays the amount
of the bond to the agency in whose name the bond was issued if the obligor
fails to meet the performance requirements. Depending on the extent of
non-performance, only part of the bond may be forfeited. The surety
company then looks to theobligor for indemnification. Unlike insurance,
a bond does not relieve theobligor of its obligations. Instead, bonds
simplify for the agency the task of collecting the assessment for non-
performance. The surety company serves as an organizing intermediary
and, for a fee, relieves the agency of the trouble and uncertainty of
collecting from the non-performer.
Bonds can be arranged in. a number of different ways. Commonly,
a surety company will issue a bond only when it is satisfied that the
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obligor has adequate assets to reimburse the surety company for the amount
of the bond if it is forfeited. It the surety company is not confident
that it will recover, the bond applicant may be required to put up
collateral for the bond. The collateral may reach 100 percent of the
bond value, a cash bond, and be held through the period of the bond. A
surety bond is good for a specific period of time, e.g. the expected
duration of a construction project or the duration of a license. Bonds are
not issued for indefinite periods, but may be renewed by agreement of the
parties involved.
Bonds are used to guarantee short-term rather than long-term
performance. They are not designed to cover risks, and provide no
mechanism for risk sharing. Surety companies do not ever expect to lose
financially on any bond (unlike insurance where losses will be incurred
on some policies, and profits made on others.) Fees charged for bonds
cover the cost of evaluating the financial condition and performance record
of the bond applicant, administration, and company profit.
Pros and Cons
Bonding is a well-known device to assure performance by permit
holders and contractors. Its advantages are important. 1) Bonds will
provide a near-absolute guarantee that the permit holder performs
appropriately, or that the funds required to hire an alternative operator
will be available (assuming the bond amount is calculated to cover the
cost of the remaining functions.) 2) The bonding mechanism is relatively
simple and already in place. 3) From a regulatory standpoint, bonding
is a simple requirement to administer. 4) For those applicants who qualify
for surety bonds and do not have to post collateral, bonds are a relatively
cheap requirement. Bonding also presents a number of important disadvantages
1) For the companies judged unbondable by the surety firms a ]QQ% collateral
will be required to meet the bond requirement, which may prove a serious
obstacle or burden to the financially weaker firms, though they may
otherwise be fully reliable and stable. 2) Bonds can guarantee performance
over short periods of tine only. They cannot have, in the words of the
surety bond industry, 'lone tails." Thus bonds could be used to cover
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performance during the operational phase of a hazardous waste management
site, and closure of the site. But a bond could not be posted at the time of
closure to cover, say, an indefinite or long-term post-closure maintenance
and security obligation. Bonding could cover post-closure functions on
a year by year basis if the operator purchased the bond anew each year.
3) Bonds, typically, are only good for relatively short periods. Thus a
hazardous waste management firm facing financial difficulties that jeopar-
dize its future ability to fulfill its performance obligations may discon-
tinue its bond, or, more likely, find that the surety company will not
renew the bond, precisely at the time the bond is most needed. A firm
facing these difficulties is almost certain to let the bond expire before
it fails to meet performance standards, thus avoiding a forfeiture of
the bond which would leave it liable to the surety company. A 100 percent
collateral cash bond avoids this problem, but poses the problem of burden
noted above. A surety bond provides an incentive to perform for the company
that expects to continue in business. For a company going out of business,
a surety bond provides no guarantee at all (though failure to renew the
bond could signal the declining condition of the firm.)
Costs
Surety bonds and cash bonds have different types of costs. The
costs of surety bonds are those of evaluating the applicant's reliability
and financial stability, administering the bond, and the surety company's
profit. The cost of a cash bond is the opportunity-cost of the collateral
posted. This cost may be mitigated, if the collateral is in liquid form,
by depositing it in an interest bearing account, due within the bond period.
Thus the costs of a cash bond are those associated with the
full lump-sum approach described above. The costs of surety bonds depend
on the charge for the surety bond. Using a surety bond rate of 1 percent of
face value per year, Table 20 shows the total costs of meeting continuity
requirements with a surety bond, both for firms ceasing operation with the
closure of the site and for on-going firms. For a firm going out of
business with the closure of the site, the total annualized costs over the
life of the site are simply the annual costs of the surety bond plus the
103
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cost of the end-of-site approach. For on-going firms, the total cost of
annuali zed surety bonds are the costs of the payment upon occurrence:
si
where S is the cost the surety bond as a percentage of bond
value.
The costs of a surety bond transformed into a cash bond will
depend on the rate at which this transformation occurs. For a transition
from a surety to a cash bond over the life of the site, the cost is
equal to the cost of the annual payment approach plus the following term:
F -
For a surety bond rate of 1%, this will add between $500 and $1000 per
year per $100,000 of fund size to the costs of the annual payment approach.
Inrp lementat-ion
Implementation by EPA of a bond requirement for hazardous waste
management permit holders appears to present no significant problem.
Bonds are a common feature of a number of State hazardous waste regula-
tions already in existence. Nonetheless, bonding presents the drawbacks
discussed above: A cash bond may be burdensome to a small firm because
it ties up capital that might better be used on site development; a surety
bond guarantees performance only during the life of the bond, and may not
be renewed by a company on the decline, or by the surety company perceiving
the decline of its client.
At least one state, Oregon, has found a way of threading between
these two problems. Upon receiving its hazardous waste disposal license,
the recipient must post a 575,000 surety bond. This is gradually trans-
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formed Into a cash bond by means of annual cash payments of $18,750 the
first year and $5,625 per year for the next ten years. The advantage of
this system is that the least onerous of the two bond types is accepted
during the early years of the site, when,because of its high earnings
potential, it is least likely to be abandoned or prove uneconomical to
operate. The more reliable and effective of the two bond types, cash
bonds, are then in place when the need becomes greatest, i.e. when the
site's closure is imminent; yet the cash bond was built up gradually, soften-
ing the financial burden that it imposes on the licensee. Of course,
those applicants who are not able to secure a surety bond in the first place
are still left with the difficulty of securing a cash bond immediately.
Feasibility and Practicality
As we have noted, implementing a bond requirement for the hazar-
dous waste industry poses only the problem of burdening the unbondable
companies with heavy collateral requirement. Generally, bonding is a
well established practice. The surety industry is large and could meet
the bonding needs of the hazardous waste industry, provided they are limited
to specific performance standards, and to specific short periods of
duration. Bonds become impractical when considered for long-term or
perpetual care purposes. The bond would have to be maintained year by
year, and so the extension through time of the bond would have to be
matched by the longevity of the operator. To meet this need, a permanent
fund is required, which allows for the eventual disappearance of the
operator, but leaves a financial capacity behind to meet the residual
obligations of the operator. Oregon's cash bond is designed to do this.
The principal is calculated to generate enough interest to cover annual
post-closure needs. The term cash bond is, in this case, a misnomer for
it is not refundable to the obligor. It is, in effect, a permanent fund.
d. Escrow Requirements
Escrow requirements of possible use in the implementation of
RCRA 3004 share many of the functional characteristics of cash bonds and
trust funds for individual operators and sites. As used here, an escrow
requirement would operate as follows. Funds would be set aside by the
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operator for a specified future use, and released either to pay for the
use specified, or returned to the operator upon completion of continuity
of operation responsibilities. Unlike the type of trust fund that might
be set up for the long-term care of closed sites, an escrow requirement
assumes the termination of the escrow, and of the problem that gave rise
to the need for the escrow, within a predictable period of time. While
this period may be longer than the 1-3 years typical of bonding schemes it
is finite. An escrow requirement assumes the endurance of the entity
putting up the escrow funds through the period when the escrow is dissolved.
Pros and Cons
As with cash bonds and trust funds, the principal advantage of
an escrow system is that the funds for continuity of operations can be
secured and isolated well in advance of the time at which they are likely
to be needed. The funds would be gathered at a time when operator income
is relatively high, and available for use when the economic interest of
the operator in the site is at its lowest. An advantage of the escrow
approach over cash bonds is the greater flexibility of the escrow. A
cash bond is a forfeitable instrument, dependent on an evaluation of
overall performance. Used as a guarantee of performance, bond forfeiture
is in the nature of a punishment for substandard performance. An escrow
account can be designed to support future performance directly, by sup-
plying funds when they are needed to cover the costs of performance. The
advantage of an escrow system over trust funds is that the escrow can be
made directly refundable, and that the initiative for use of the escrow
can come principally from the operator, with the escrow administrator's
role limited to verification of performance. A trust fund requires the
eatablishment of a separate organization to administer the funds and
decide on their best uses.
The basic disadvantages of an escrow are its finite duration,
and its requirement that operators set aside funds for future use, when
they might otherwise be used for expansion, technological development,
or profits.
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Costs
Cost categories of an escrow system include cost of capital,
opportunity costs, and administration. The costs would be equal to
those of the full lump-sum approach normally, but might be those of the
lump-sum-plus-interest approach if organized accordingly.
Imp lementation
There are few instances of escrow systems used for continuity
of operation purposes within the hazardous waste industry. Kansas, which
also has a non-refundable escrow account to cover long-term monitoring,
has established an escrow system to guarantee closure and post-closure
activities for ten years after closure. The escrow amount, $100,000, is
made up of a $50,000 bond and $50,000 in deposits over an approximate
period of ten years. The bond is returned to the licensee five years after
closure; after ten years all remaining escrow funds are returned.
Feasibility and Practicali-ty
Of the three basic approaches to securing and isolating funds
for future uses -- bonds, trust funds, and escrows -- escrows appear the
simplest system to implement. Bonds require the cooperation of a private
sector intermediary, the surety company. Trust funds require the
organization of an independent fiduciary, whose responsibilities require
considerable technical knowledge and will be subject to potentially contro-
versial policy issues. The escrow can be administered by the same organi-
zation that administers the licensee monitoring and evaluation program.
However, the escrow approach cannot be used for perpetual care purposes.
e. Industry Mutual Assessment Requirements
A fifth approach to meeting the continuity of operation objec-
tives of RCRA 3004 is to provide for mutual assessment by hazardous waste
management industry members to cover the closure and post-closure costs of
abandoned sites. These costs would be divided between each member of the
mutual assessment association on a predetermined basis, each member being
liable for its share of the costs.
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The formation of a mutual assessment association within the
hazardous waste industry would depend to a large extent on industry
initiative. The association would have to take on a formal responsibility
for abandoned sites, and each member commit itself to meeting its
assessment. The definition of goals, standards, and coverage would have
to be arrived at in cooperation with EPA, and be compatible with EPA
RCRA 3004 responsibilities.
An important factor that will affect the formation of a hazardous
waste mutual assessment association is the degree of homogeneity between
potential members of the association. The potential risk of failure repre-
sented by each member is the key element. Low risk-of-failure licensees
are unlikely to be willing to accept association with high-risk members,
(the same problem confronting the establishment of an industry-wide central
trust fund.) One solution is to differentiate between the levels of
potential closure costs and post-closure hazard of the particular disposers
and set assessment rates accordingly. An alternative solution might be
the creation of a number of mutual assessment associations, representing
different level of risk categories. Levels of risk are expected to range
widely within the industry, reflecting the materials handled, disposal
techniques, and site location. Size of operation is not likely to be an
important obstacle, as the assessment formula could easily reflect licensee
receipts, for example. As with the central trust fund concept, the
question of whether an EPA hazardous waste management permit should be the
only requireemnt for membership is raised by the mutual assessment associa-
tion approach. The answer lies partly in the degree of effectiveness to
be found in EPA permit standards and the stringency with which they are
enforced.
The reliability and durability of the scheme chosen to guarantee
continuity of operations objectives has been a key concern, due to the
longevities of the hazard associated with hazardous wastes. A further
aspect of the mutual assessment association approach is that the collec-
tive reliability of the industry would be used to guarantee the failures
of its weaker members. However, if less than the whole industry belonged
109
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to the association, care would have to be taken to prevent associations
consisting entirely of one site firms of approximately the same age.
For the sake of a timely response to the needs of an abandoned
site, the mutual assessment association may establish a relatively small
standing trust fund, calculated to cover the immediate costs of one or
two new site abandonments.
To meet the Icng-term costs of the abandoned sites, the association
could form a site specific trust fund, or continue to assess itself on an
annual basis to meet its current obligations.
Pros and Cons
An industry-wide mutual assessment association has a number of
advantages: 1) the initiative for self-administration will have come from
the industry; 2) the industry will have a collective interest in the
content, implementation, and enforcement of the EPA hazardous waste manage-
ment regulations; and 3) the funds required to implement the assessment
system will be not much larger generally than the costs of providing for
those sites that are abandoned. If no sites were abandoned, no assessments
would be required, conceivably for long periods of time.
The principal disadvantages of an industry-based mutual assessment
association appear to be: 1) its dependence on the voluntary cooperation
of industry members. 2) If site abandonment problems prove greater than
expected, disintegration of the association may follow as the low risk
members withdraw in favor of other schemes to meet EPA continuity
objectives, such as individual operator trust funds. 3) The mutual assess-
ment approach does not offer the strong incentives, present in some of the
other approaches, for operators to meet their closure and post-closure
obligations. 4) The waste management institutions of future generations
may have to pay for the consequences of incorrect disposal procedures
used by previous generations, if these consequences became evident long
after the operational closure of a site.
110
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Costs_
The cost categories of a mutual assessment association include
assessments per se, association management costs and trust fund capital
costs (if implemented).
The basic analysis of costs for a mutual assessment association
are similar to those of a centralized trust fund, with the key difference
that a mutual assessment association need have no donations except when
failures occur. In order to evaluate this option, Table 21 was generated
showing failure rate below which membership in a mutual assessment associa-
tion and the use of the end-of-site and payment upon occurrence approaches
by non-failing firms is preferable to individual systems typified by the
full lump sum approach. For a pure assessment association, the failure
rates can be quite high and the association would still remain preferable
to the full lump-sum approach. Combinations of a central trust fund and
a mutual assessment association would become workable at failure rates
between those shown for a centralized trust fund and an assessment
association. One cost not shown here is the inherent risk of a large
number of failures to which members of an assessment association are
exposed, due to diminished performance incentives.
If all members of a mutual assessment association have equal
probability of failing to meet their post closure requirements, then the
annualized cost of a mutual assessment association are identical to those
of the end of site or pay as you go methods (annualized costs are shown in
Table 22). For higher costs of capital and longer site lives, the resulting
annualized costs fall to less than 1 percent of annual revenues. The pro-
blems in forming such an association derive from the problem that different
firms will have different probabilities of closure. This problem can be
dealt with in part by charging different fees if there is any objective
basis for making the assessment of probability of failure. One measure of
the difficulty of forming such an organization is the difference in
perceived closure rate such that, if all members are charged the same
price, the firm would choose the deposit fund rather than be a member
of the association. Table 23 presents a set of such difference in closure
111
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rate, depending upon real interest rates, opportunity cost of capital
and 1 ife of the site.
Imp lementation
No mutual assessment associations exist within the hazardous
waste management industry, nor do the State laws and regulations
examined in this study make provision for meeting management objectives
by means of such associations. The reasons for this may reflect the
embryonic and as yet poorly defined character of the industry as a regulated
entity, and the lack of communication and homogeneity within the industry
itself.
The mutual assessment approach is used in several states to
cover policy owner losses for insolvent insurance companies.
The efforts of the New York Stock Exchange to protect the
public from the bankruptcy of Exchange members, described in some detail
in the section of this report on financial responsibility, provided an
interesting example of an industry based mutual assessment association.
Between 1959 and 1964 the New York Stock Exchange assessed its members
in order to cover the losses incurred by a small number of members who
went bankrupt. In 1963, a bankruptcy resulted in an eventual $27 million
loss, made good through member assessments. In 1964, to avoid
such large ad hoc assessments, the Exchange established a trust fund
system to meet the same responsibility.
Feasi-'oili-tii and
Implementation of a mutual assessment association within the
hazardous waste industry will depend on the responsiveness of the industry
itself to the responsibilities that EPA outlines for the industry. Lack
of homogeneity of levels of risk within the industry may prove an insur-
mountable obstacle to a full development of this approach to meeting
continuity of operations objectives. The members of the New York Stock
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Exchange had a compelling common interest in maintaining the highest
possible level of public confidence in the Exchange. The hazardous waste
industry has no immediate comparable interest. Continuity of operation
objectives in the hazardous waste industry may have to be met by schemes
that reflect government rather than industry initiative.
If the industry were to respond, a mutual assessment association,
probably combined with an emergency use trust fund, appears to offer a
relatively cheap and effective method of meeting RCRA 3004 continuity of
operations objectives.
2. Provide Access to Sites
The alternatives examined above are those that might be used to
meet the objectives of continuity of operations that seek to guarantee per-
formance of closure and post-closure responsibilities by the operators, or
the funds required to carry them out if the operator abandons the site.
A second objective of continuity of operations is to provide rapid, emergency
access to a mishandled or an abandoned site. The alternatives considered
here seek to provide this access. They include: RCRA §3008 and 7003; site
transfer; and easement.
Section 3004 of the Resource Conservation and Recovery Act of
1976 requires that such hazardous waste management standards be established
"as may be necessary to protect human health and the environment". To this
end the physical behavior of hazardous wastes in a hazardous waste disposal
site will be monitored, and operation of the site regulated to help ensure
that no release of hazardous material that may endanger human health or
the environment occurs. To meet this objective, rapid access to the
site by responsible authorities will be required under two conditions:
1) the monitoring system indicates a release is taking or has taken place
and there is inadequate indication that the site operator is responding
properly; and 2) a site is abandoned and may release hazardous materials
to the environment because of neglect. Access to the site must be of two
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kinds. Authorities must be able to come on site to assess the potential
danger of a release, and they must be able to organize an emergency effort
to bring the site back to proper condition, whether operating or closed.
Above all, access must be timely.
f. RCRA Sections 3008 and 7003
Section 3008 of RCRA provides for federal enforcement of the
RCRA Hazardous Waste Management requirements. The enforcement procedure
provides 1) that a violator be notified of his failure; 2) if the viola-
tion extends 30 days beyond notification the Administrator may either
issue an order requiring compliance within a specified time, or initiate
a civil action for relief; 3) if the violation occurs in a state which
maintains its own authorized hazardous waste program, the state shall be
given 30 days notice prior to initiating civil action of issuing an order
to the violator. 4) If the violator fails to respond to the order, he
may be subject to a civil penalty of $25,000 for each day of continued
non-compliance, and the violator's license may be suspended or revoked.
Section 7003 of RCRA provides for response to an imminent hazard.
It provides that if a hazardous waste operation presents "an imminent and
substantial endangerment to health or the environment, the Administrator
may bring suit . . .to immediately restrain any person for contributing
to the alleged disposal ... or to take such other action as may be
necessary". The Administrator is required to notify the affected State
of any such suit.
Clearly, neither of these sections provide for the type of
access needed to protect human health or the environment from the potential
release of hazardous materials from a site that is being improperly oper-
ated, or one that has been abandoned. While access for fact-finding and
site assessment is provided in another section (see § 3007), these sections
do not permit access to correct hazardous conditions on site, nor do they
provide for rapid or emergency access. It is somewhat unclear what
purpose will be met in levying a daily fine against an abandoned site,
or one whose operator has gone into bankruptcy. With these concerns in
mind, a number of State regulations have sought to provide for more
effective means of access. These provide for transfer of the site to
State ownership, and for placing easements on the site.
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g. Site Transfer Requirements
Under a site transfer requirement, ownership of the site would be
transferred to State jurisdiction at a specified point in the history of the
site. The transfer has a fourfold effect. 1) The State gains full access
to the site, and can meet the emergency response need inherent in the
requirement that sites be operated in such a way that human health
and the environment be protected. 2) The State becomes fully responsible
for the future operation of the site (which it may contract out to the
private sector) and for continuity of operation and financial responsibility
requirements. 3) The initial owner of the site is relieved of these same
obligations, but may retain residual responsibility for events that took
place during the period of ownership prior to the transfer of title to the
State. 4) The State gains immediate control over alternative uses of the
site.
There are three basic transfer schemes: each has advantages
and disadvantages.
TRANSFER ALTERNATIVES
1. Transfer at Time of
Licensing
2. Transfer at Closure
CON
Increased state
responsibility
Operator responsibili-
ties for post closure
site condition turned
over to state
3. Transfer after a
Period of Time
Post-Closure
PRO
Access guaranteed over
full life of site
Access and control
guaranteed over post
closure activities.
Operator responsibili-
ties end with termina-
tion of income from site.
Operator not faced with Operator has costs on
obligations in perpetui- site that no longer
ties but ahs demonstrated produces revenue; state
adequate post-closure assumes perpetual care
preparation of site obligations
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Pros and Cons
Site transfer provisions may have two purposes. If the primary
purpose of a site transfer requirement is to provide emergency access to
a site to correct a hazardous condition, the requirement appears somewhat
drastic. Providing long-term continuity of operations and financial
responsibility for a hazardous waste site is not a trivial undertaking,
and a State takeover requires the establishment of a substantial opera-
tional capability. If the purpose of a site transfer requirement includes
relieving a hazardous waste firm of a perpetual burden incompatible with
the uncertainties of a private enterprise economy, the requirement provides
an appropriate method of doing so. The pros and cons of the requirement
are therefore dependent on the objectives that are included in the continu-
ity of operations framework.
The advantage of site transfer for purposes of providing access
is that full access is assured without further legal effort and provides
no delays, as exemplified by RCRA Sections 3008 and 7003. The disadvant-
ages are that the State has had to assume total responsibility for all
the present and future needs of the site including continuity of opera-
tions, which was intended by the transfers, and financial liability re-
sponsibility, which was not, for at least those releases that take place
post-transfer.
The advantages of site transfer for purposes of terminating a
perpetual burden are that individual hazardous waste companies will be
able to close their books at the end of each fiscal year with statements
of measurable liabilities and obligations outstanding, and that prospec-
tive entrants into the hazardous waste industry will not be deterred by
the prospect of an open-ended -- and potentially catastrophic -- respon-
sibility overshadowing their commitment. The disadvantage is that
hazardous waste operators would be relieved of legal obligations that
have traditionally been assumed by the private sector, only because the
structure of the obligation is unusually onerous.
Costs
The costs of a site transfer requirement will vary widely on
a site by site basis, reflecting the value of the land itself. Where
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the land is in a prime location (which could well be the case after 20
or 30 years of operation), the longevity of the hazardousness of the
materials contained within the site low, and the alternate uses to
which the land can be put numerous, the value of the land could be very
high. The cost of the transfer, whether absorbed by the operator or met
by the State could be substantial. Where the land was in an area of low
land values with hazards of indefinite or perpetual hazard, and for which
no economically important alternative uses could be allowed, the value
of the land could well be negative, i.e. it could represent a net liability.
Implementation
There are three basic approaches to site transfer requirements.
These are exemplified in the existing or proposed hazardous waste regula-
tions of Washington, Oregon, and Wisconsin.
Following private sector difficulties in locating a site for
permanent hazardous waste disposal, the State of Washington decided to
purchase land directly. The site, located on land surrounding the Hanford
nuclear facility, will be leased out by private bid to a contractor. Up-
on termination of the site operation contract, the State will assume re-
sponsibility for all post-closure obligations.
In Oregon, a successful hazardous waste management permit
applicant is required to deed the land upon which the wastes will be
disposed to the State of Oregon within thirty days of licensing. No
provision is made for payment for the land.
Draft legislation in Wisconsin provides that a site operator
retain full responsibility for ten years after closure of the site. At
the end of this period the status of the site is to be reviewed, and a
determination made whether it still represents a hazard or not. If it
is decided that further long-term care is required the operator may
choose either to continue providing that care, or to sell the land to
the State, which then assumes full responsibility for the site. The
selling price is to be based on the fair market value of the site.
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Feasibility and Practicality
There appear to be no inherent major obstacles to implementing
a site transfer requirement in the hazardous waste industry, provided
there is a recipient agency that can effectively and economically carry
out the full range of functions associated with the closure and post-
closure needs of the facilities. State liabilities would have to be
defined, and would probably be reflected in accompanying legislation.
However, site transfer requirements may, in some interpretations, clash
with the intent of that part of RCRA Section 3004 that prohibits the
criteria developed for ownership, continuity of operation and financial
responsibility from precluding private entities "from the ownership or
operation of [hazardous waste] facilities" where the entity can provide
assurances that it can meet financial responsibility and continuity ob-
jectives. Site title transfer after the useful life of the site is
evidently compatible with this condition, as closure and post-closure
requirements clearly pose challenges that may exceed the institutional
capabilities of operators. But mandatory transfer before that time
precludes ownership, though, as indicated by the approval of the license
application, it is recognized that the operator is capable of meeting
continuity of operation and financial responsibility requirements.
If the purpose of a site transfer requirement is to ensure
prompt and effective access to a site rather than to relieve hazardous
waste firms of unusually long-termed and indefinite obligations, a less
drastic alternative may be found in the form of easements.
h. Easement Requirements
An easement grants to non-owners specific rights on a piece
of land. Typically, an easement provides transit rights to land owners
who must cross the subject land to get to their own property. Easements
can be drawn up to cover a wide range of rights, and can run with the
property, i.e. they convey with the property at time of sale. Easements
are a simple mechanism for tempering the unlimited control a property
owner typically has over access to his property.
121
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For purposes of ensuring continuity of operations at a
hazardous waste disposal site, the site owner could be required as a
condition of his permit to grant an easement providing for immediate
access by the proper authorities to the site for monitoring, evaluation,
and corrective operations.
Pros and Cons
The advantage of an easement approach to the access problem
is that it provides an effective mechanism at no cost and minimal in-
stitutional disruption. A potential disadvantage is that in the rare
cases where the owner is hostile to remedial action by regulatory
authorities and bent on obstruction, the owner could constrict the
range of actions that the environmental and human protection authorities
might wish to take. Judicial intervention might be necessary to permit
long-term, large-scale intervention.
Costs
The cost of establishing an easement would be insignificant.
Imp lementation
Of the regulations examined, only one, Kansas, requires an
easement of its hazardous waste management permit applicants. Kansas
provides that the permit applicant execute an easement that authorizes
the Kansas Department of Health and Environment representatives to:
1) complete unfinished site closure work; 2) perform work for which
surety has been provided; 3) sample, repair or reconstruct monitoring
facilities; and 4) require the operator to preserve and protect
monitoring facilities. In this respect, the Kansas regulation offers
a model of how an easement could be used to secure access to a site for
continuity of operation purposes.
Feasibility and Praatiaalitu
Easements present no implementation problems, and appear to
provide an effective means of ensuring adequate access to sites for
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continuity of operations purposes in all but the most difficult cases,
where an owner decides to oppose intervention actively. Court interven-
tion to uphold the easement would then be necessary.
3. Regulate Alternative Uses of Sites
The alternatives examined so far are those that seek 1) to
guarantee closure and post-closure performance by operators or the funds to
pay others to carry out those activities, and 2) to provide the authorities
with adequate access to sites that present a threat to human health and
the environment, and/or to terminate perpetual operator obligations to
closed sites. A third category of alternatives could be used to control
the various uses to which the site of a closed hazardous waste disposal
operation might be put. The alternatives considered are covenants and
zoning.
Different types of sites will have different requirements in
this respect. Some sites may be available for any alternative use after
a relatively short waiting period. Other sites might be available for
only the least disruptive uses, such as golf courses, in perpetuity.
i. Covenant Requirements
A covenant is, typically, a condition imposed upon a buyer of
land by the seller, restricting in a specific way the freedom of the buyer
or his successors in title to use or develop the land. For instance, a
new property buyer may agree for himself and subsequent buyers not to put
up a television antenna on his roof, or to paint his house other than a
natural earth color. Often, covenants are a condition of sale required
by a residential developer to ensure that a certain style is maintained
throughout his development. Covenants, once imposed, survive subsequent
title transfers. Redress for a covenant violation may be sought through
the civil courts. The sanction may be court enforced performance of the
required standard or forfeiture of title to the original seller.
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In the hazardous waste industry, covenants might be used to
restrict the future uses made of a closed site, by requiring that the
permit applicant establish a covenant against improper future use of the
proposed site. The covenant could prohibit use of the land in ways that
might so disturb the site after closure as to release hazardous material.
Pros and Cons
The advantage of a covenant approach to the problem of controlling
post-closure uses of hazardous waste disposal sites lies in its relative
simplicity. The disadvantages are 1) that covenants typically are used
to moderate relations between private parties, and 2) that a covenant
requires a specific definition of what is being prohibited or required of
a property owner. As the acceptable uses to which a closed site might be
put would vary with the actual waste inventory in the site, it is not
clear that sufficient specificity could be given to a site at the time the
site was inaugurated. An agreement to subject future users to a covenant,
drawn up at closure, could be adequately specific, but the earlier
uncertainty over what that covenant might specify could lead to owner-agency
disagreement.
Costs
The costs of implementing a covenant scheme would be negligible.
Imp lamentation
Of the State hazardous waste management regulations examined,
only Kansas has a provision for a covenant. It is to be issued by the
permittee, and specify post-closure uses of the site.
Feasibility and Practicality
There appears to be no obstacle to implementing a covenant
requirement in the hazardous waste industry. However, because such an
agreement would require a high degree of specificity it might leave too
124
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little room for administrative control and flexibility. A zoning approach,
in which alternative uses are specified by broad categories, might be more
effective than a covenant.
j. Zoning Requirements
Zoning is a technique used to control land use patterns. Broad
use categories (such as residential low density; mixed residential-
commercial; heavy industry, etc.) are defined and applied to given areas.
Only those activities compatible with the zoning category are allowed
within each area. For hazardous waste site protection purposes new
categories .may have to be created that would prohibit any activity, say,
that required disturbing the ground below a specified depth. Golf courses
could be allowed, but high-rise buildings prohibited.
Pros and Cons
The main differences between the zoning and covenant approaches
are that zoning is done by municipal or county government, rather than by
private parties, and sets forward broad criteria against which individual
land-use applications can be evaluated. Enforcement of zoning is the
responsibility of the local government. The initiative for enforcing cov-
enants must come from other private parties whose rights under the covenant
have been breached. Each of these differences represent an advantage to the
zoning approach. The disadvantage of zoning is that it requires the formal
involvement of the local land-use authorities. In unincorporated areas, where
a significant number of hazardous waste sites are located, or where the
zoning approach to land use planning has been rejected, this authority may
not exist.
Cos^s
The costs of implementing a zoning mechanism for controlling
the land-uses of closed hazardous waste sites are probably limited to
the administration of land-use applications. Integrated into existing
125
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zoning systems, the costs are unlikely to be significant. Costs might
be substantial to implement a zoning mechanism in areas in which there
are no zoning authorities.
Imp lamentation
No examples of the zoning approach were found in the State
hazardous waste regulations examined during the study.
Feasibility and Practicality
In areas where a zoning authority already exists, the addition
of a zone category for hazardous waste sites would be quite easily provided
with the help of the local authority concerned in the Federal regulatory
scheme. In other areas it might require the provision of a new authority,
or the extension of an existing one beyond present boundaries.
F. Continuity of Operation Objectives and the Most Effective Mays of
Meeting Them
Clearly, some of the methods that might be implemented to help
meet continuity of operation objectives will prove more effective than
others. Based on the evaluations described above, the methods that are
likely to prove most effective may be summarized as follows:
Continuity of Operation
Objective
1. Continuity during operations
Effective Methods of
Meeting Objectives
1. Cash bond
2. Surety bond
3. Trust fund (immediate
lump-sum)
126
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Continuity of Operation Objective
Effective Methods of
Meeting Objectives
2. Closure
3. Post-closure: annual expenditures
(maintenance, monitoring, opera-
tions, security, etc.)
4. Post-closure: extraordinary, un-
predictable expenditures (liabili-
ty, implementation of contingency
plans, clean-up of release, etc.)
5. Termination of operator response
bilities
6. Access to site
7. Control of future uses of site
1. Cash bond
2. Trust fund (from
principal)
3. Escrow
4. Surety bond
1. Trust fund (from interest
earnings)
2. Industry mutual assessments
3. Escrow (from interest
earnings)
1. Trust funds (interest
earnings to pay premiums
for liability insurance)
2. Industry mutual assess-
ments (interest earnings
to pay premiums for
liability insurance)
1. Title transfer to state
1. Easement
2. Title transfer to state
1. Zoning
2. Covenant
The most challenging set of objectives are 1 through 4, covering continuity
during operations, closure, post-closure annual expenditures, and post-
closure extraordinary expenditures. Two basic schemes, "A" and "B",
emerge from our examination of the alternatives. Each involves a combination
of two methods: a surety bond and a trust fund. Variations between the
two are shown in italics. A third scheme, "C", combines some of the features
of "A" and "B".
127
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Scheme A
Scheme B
1. Continuity During
Operations
A surety bond would be
required of all licensees
at the time the license
was granted. (If a sure-
ty bond was unavailable,
a cash bond would have to
be posted instead.) The
sum of the surety bond
would be if forfeited,
sufficient to cover the costs
of site closure and provide
-interest adequate to
cover post-closure re-
quirements. These costs
could be estimated on a
site by site basis.
During the first few
years of site operation
(e.g. five years) the
licensee would make an-
nual payments into a
site specific trust fund
so that by the end of
the period the trust
fund equalled the amount
of the surety bond.
During this time the
amount of the bond would
be decreased, so that the
total value of the bond
and the trust fund
equalled the sum required
to cover the costs of
closure and post-closure
A surety bond would
be required of all
licensees at the time
the license was granted.
(If a surety bond was
unavailable, a cash bond
would have to be posted
instead.) The sum of
the surety bond, if forfeited
would be sufficient to cover
the costs of site closure
only. These costs could
be estimated on a site
by site basis..
During the first few
years of site operation
(e.g.five years) the
licensee would make an-
nual payments into an
industry, State, or EPA
administered central
trust fund. The total
size of the central trust
fund would equal the
estimated yearly costs of
providing continuity of
operations within the
industry for abandoned
sites. The payment of
each licensee could be
prorated to licensee in-
come. The central trust
fund, which would be
deliberately kevt as small
128
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2. Closure
Scheme A (cont'd)
requirements, the latter
funded from the interest
generated by the site trust.
(See further explanation
below, Figure 2.)
The licensee would be
responsible for site clo-
sure. Upon carrying out
this requirement the
licensee would be reim-
bursed the prearranged
ammount alloted for
closure and deposited in
the trust fund. If the
licensee failed to close
the site, funds would be
used from the site trust
to pay a contractor to
close the site.
Scheme B (cont'd)
as possible to reduce
costs to the members,
would be backed up by
a mutual assessment
industry association.
The surety bond would
be retained through the
time of closure.
The 1icensee would be
responsible for site clo-
sure. No reimbursement
would be made the licen-
see. The surety bond
would be terminated follow-
ing closure. If the licensee
failed to close the site, the
surety bond would be forfeited
and applied to the cost of
hiring a constractor to
close the site, if the bond
has expired, funds would
come from the central trust
fund and mutual assessment
association.
3. Post-Closure
Annual Obligations
The licenseewould be
responsible for post-
closure requirements
(subject to possible
termination of respon-
sibility provisions.)
I'pon carrying out each
cf these requirements,
the licensee would be
reimbursed -he ~rezr-
The licensee would be
responsible for post-
closure requirements
(subject to possible
termination of respon-
sibility provisions.) ;fc
mac.e -he licensee. If
the licensee failed to
carry out post-closure
129
-------
Scheme A (cont'd)
Scheme B (cont'd)
panged amount alloted
for each post-closure
function and deposited
earlier in the trust
fund. If the licensee
failed to carry out
post-closure functions,
funds would be used
from the stie trust to
pay for a contractor
to perform the required
functions.
functions, funds would
be used from the central
trust fund and mutual
assessment association
to pay for a contractor
to perform the required
functions.
4. Post-Closure
Extraordinary,
Unpredictable
Obligations
Extraordinary poten-
tial liability obliga-
tfons are translated
into annual payments by
means of liability in-
surance and its premiums.
The licensee is respon-
sible for premium
payments (subject to
termination of respon-
sibility provisions).
The premiums to cover
abandoned sites are
paid by the site trust
fund, which becomes
the insured entity.
Extraordinary poten-
tial liability obliga-
tions are translated
into annual payments by
means of liability in-
surance and its premiums,
The licensee is respon-
sible for premium
payments (subject to
termination of respon-
sibility provisions).
The premiums to cover
abandoned sites are
paid by the central
trust fund and mutual
assessment association,
which becomes the
insured entity.
130
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Scheme C
A further alternative, Scheme C, might adopt the provisions of
Scheme A for Continuity of Operations, Closure and Post-Closure Annual
Obligations, and the provisions of Scheme B for Post-Closure Extraordinary
Obligations, thus combining a surety bond with both an individual site trust
and a central trust/mutual assessment association.
The basic fund scheme, as outlined in "A" is illustrated in
Figure 3. Cash deposits are made by the permit-holder during the first
five years of operation. A surety bond covers during the first four
years the difference between the accumulated cash deposit and a sum
adequate, with interest, to meet post-closure site costs in perpetuity.
In this example, a site trust fund of $866,667 is required at the end of
the operational life of the site, which is estimated at 20 years.
The objective of Scheme B is to minimize the financial impact
of these requirements on the hazardous waste industry, while meeting the basic
RCRA 3004 continuity of operations purpose. The selection of this
regulatory scheme appears reasonable: it should meet the RCRA purpose of
protecting human health and the environment without imposing an undue
hardship on the hazardous waste management industry, or the generators
of hazardous waste, or on consumers. However, as with any scheme that may
be contemplated, it reflects a number of tradeoffs and faces significant
obstacles to implementation.
As noted above, the objective of scheme B, which features a
surety bond during site operation, and a central industry trust fund and
mutual assessment association to meet the needs of abandoned sites, is to
minimize the financial burden placed on industry. The concomitant is that
it places a larger organizational responsibility on the industry as a
whole, to police itself on continuity of operations, and to share the
cost when that breaks down. Whether the "hazardous waste management in-
dustry" has sufficient cohesion and similarity of interests and needs to
form such an industry institution(s) is a question that only the industry
can answer. The alternative is to impose a scheme on the industry that
reflects its inability to organize itself for continuity purposes. The
131
-------
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132
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scheme, which would probably be similar to "Scheme A," would necessarily
place a substantially larger financial bruden on each operator. A
second potential drawback to Scheme B is that it removes the financial
incentive of an operator to continue post-closure operations. In Scheme B,
industry peer-pressure and the inherent responsibility of operators
offer the main assurance of continuity. Scheme A provides such assurance
through the set-aside of significant sums of money that are reimbursable
to the operator only upon performance of continuity functions. The fall
back position to Scheme B is Scheme A.
The cost of a Scheme A system, annualized over the life of
the site depends upon the real interest rate chosen, the cost of capital
to the firm, the life of the site, and the size of the post closure
operating costs. Using the assumption that 13,000 dollars per year is
required for post-closure monitoring and operations, Table 24 shows the
annualized cost of the system proposed for various combinations of site
life, assumed real interest rate, and cost of capital. The cost of the
gradually declining surety bond is included in these calculations, but
in no case constitutes more than 2.5 percent of the annualized costs. For
a typical site with revenues of one million dollars a year, these annual-
ized costs would call for cost increases of from 3 to 13 percent to avoid
a decline in profits. The economic impacts of such a cost increase would
need to be evaluated as part of an economic impact analysis, but it
should be noted that other industries have been forced to bear costs of a
similar magnitude in other regulatory programs.
Further these apparent costs may be reduced by the provision
allowing for the assumption of responsibility by the Federal of State
government, as discussed above, with a return of that portion of the fund
allocable to insurance costs. Table 25 shows the size of this offset if
100 percent of the fund were to be returned (for the effect of returning
the insurance portion of the fund, the percentage of costs represented by
insurance should be multiplied by the offset shown in the table). For
firms with either short lives or low cost of capital, this offset could
be considerable. For the more likely case of longer lives and higher
133
-------
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cost of capital, the resulting offset would be only a small percentage of
total annualized costs. One problem in dealing with this offset should
be noted however. If real interest rates are significantly below those
used to calculate fund size, the government may need to retain all of
the fund or even ask for additions to it in order to insure that adequate
funding remained for expenditures other than insurance.
G. Ownership Requirements
RCRA §3004(6) calls for the issuance of such regulations of
ownership requirements as may be necessary or desirable. It is
a commonplace response of individuals and organizations , exposed to
high risks of potential liability, to attempt to shield some or all of
their assets from potential claimants. So, for example, it is a widely
held belief that police officers regularly transfer all their assets to
other members of their families to defeat attachment process arising out
of claims of false arrest or official misconduct. Suspicion of a plan
to accomplish a similar result underlay the unsuccessful Federal criminal
prosecution of Allied Chemical Corporation for alleged conspiracy to
avoid liability in setting up Life Sciences Corporation of Hopewell,
Virginia, to manufacture the pesticide, Kepone. At least one of the
major hazardous waste disposers currently in operation utilizes an
extremely complex set of interrelated subsidiaries in operating an
essentially unitary integrated business. Different sites are owned by
different subsidiaries. A special subsidiary owns and operates most of
the vehicles. Another subsidiary, with no significant assets of its
own, conducts the actual operations. There is no implication of inten-
tional misconduct. The organization exercises a high degree of care and
advanced technologies in its operations and has an excellent reputation
with EPA. Nevertheless, there is at least ground to infer that the organi-
zation seeks to partition its assets in such a way as to give some protection
in the event of catastrophic loss.
136
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The possibility of such a structure being adopted as part of an
intentional pattern of misconduct was also raised in the course of
several interviews. Two insurance industry representatives from New
Jersey reported that in that State, the waste management industry generally,
and the hazardous waste management industry in particular, included firms
affiliated with organized criminal activities. Whether these reports
were reliable or not, the possibility still exists that individuals
entering the hazardous waste disposal business might meet permit require-
ments for closure and post-closure planning without intending to carry
out the required plans. Such permit holders might contrive to harvest
the profits from active stie operation while making preparations to
transfer these profits and to abandon the site, as soon as the site was
filled to capacity.
A second problem associated with ownership is the possibility
that a waste disposer might utilize a rented site over which he would
have no authority after termination of his lease.
For the foregoing reasons, it would appear that requirements
preventing the insulation of corporate assets from claimants and ensuring
the government the opportunity to gain access to a non-complying site,
may be necessary or desirable. The most straightforward regulation to
achieve that end would be a requirement that the organization obtaining
the permit own all of the land used for waste disposal outright, as in
"fee simple" as well as the assets in cash, buildings, vehicles and
facilities used in the operation for which the permit is issued. In the
alternative, where a permit holder chooses to lease equipment or buildings
or otherwise to make use of assets not the property of the permit holder,
it would be required to file proof of financial status showing current
net assets in excess of the value of the rented utilized equipment or real
estate, or a guarantee in a like amount of an affiliated corporation able
to make such proof of financial status. Under such circumstances it
should also be required to show that its authority to control and have
access to the land will extend beyond the biologically active life of the
wastes to be disposed of on the land.
137
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"Fee Simple" is a term denoting unqualified ownership of land;
unlimited as to duration. It distinguishes land held outright by a
single owner and subject to disposition by at his sole discretion from
land that is held under lesser forms of ownership or possessory right such
as a lease, ownership by a trustee in trust for another, occupation by a
life-tenant of property in which the remainder interest passes to another
at the life tenant's death, or tenancy-in-common or joint tenancy with
others.
In general, the requirement that a permit holder own land in
"fee", "fee simple" or "fee simple absolute" does not mean that it cannot
be mortgaged in most states. Originally, under its common-law interpreta-
tion, a mortgage required a conveyance of legal title in the land to be
mortgaged to the lender. The borrower, or original owner, retained only
an equitable right to compel a re-conveyance of legal title back to him
when he paid off the debt. Today, in most jurisdictions, positions are
reversed. The borrower keeps legal title to his land when he mortgages
it, but the lender gets a security interest or lien upon the land that
can be legally enforceable.
The possible requirement that permit holders own land in fee sim-
ple is not intended to prevent permit holders from mortgaging their land
but to ensure that the permit holder has absolute control over disposition
of the land and so can place enforceable restrictions on the potential
buyer of his closed'site.
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Chapter III
CONTINGENCY PLAN STANDARDS
A. Introduction
Section 3004 (5) of RCRA requires owners of hazardous waste
management facilities to develop contingency plans for effective action
to minimize unanticipated damage from the treatment, storage or disposal
of hazardous wastes.
This chapter sets forth possible contingency plan standards,
the associated relative costs that would be incurred by owners and oper-
ators of hazardous waste facilities, and various strategy options for the
implementation of these standards.
Contingency plans are formulated in advance of emergency situ-
ations that could occur at a hazardous waste management facility. The
standards against which proposed contingency plans are to be measured
are presented in Part "C" of this chapter. The approach used to develop
them is explained in Parts "B" and "C". Although there is a general lack
of literature on contingency plan standards, the Nuclear Regulatory
Commission (NRC) has addressed the problem in developing such standards
for use in handling nuclear wastes and has set forth comprehensive
contingency plan standards. The contingency plan standards presented
here have been grouped into the same general categories used by NRC:
organization, communication, assessment and response/recovery.
The proposed standards and associated costs are based on
scientific and engineering judgement and employ best estimates of present
day costs incurred in the establishment of such standards.
Before the standards could be written, an evaluation and inte-
gration of all facility, event and waste types had to be made. Part
B summarizes this procedure. Once all possible facility-event-waste
groupings had been developed, appropriate contingency plan standards were
written. Associating the various standards with the facility-event-waste
groupings highlighted certain conclusions. Specifically, all standards were
found to be virtually independent of hazardous waste type. Standards
139
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are directly related to the environment (i.e., atmosphere, subsurface
water, etc.) into which a given release occurs. Although some standards
relate more to specific events such as fires and explosions, the majority
of standards apply "universally" to all facility-event-waste groupings.
After the contingency plan standards were completed, relative
costs for implementation of the standards were developed. These are
costs incurred by the owner for necessary measures or actions required
in the event of hazardous waste release. The relative costs incurred
are dependent on facility type, size and annual production. The two
general facility types addressed are incinerators and landfills.
Four sets of strategy issues to be resolved before implementing
contingency plan standards were examined to determine the advantages and
disadvantages inherent in each strategy.
Finally, three sets of contingency plan standards were selected
and an overall evaluation of each set was made with regard to its advan-
tages and disadvantages. The three sets were intentionally chosen to
present a wide range of possible alternative standards.
B. Evaluation and Integration of Facilities, Events, and Waste Types
The procedure employed in the development of contingency plan
standards was a detailed review of all pertinent literature and avail-
able data concerning hazardous waste management facilities, an identifi-
cation of the conceivable events (including natural disasters) that
could occur at such facilities, and an examination of the various hazardous
waste types that have been or are being treated, disposed of, or stored
at such facilities. An effort was made to identify by this procedure all
possible combinations of facility, event and waste types.
Appendices 3, 4, and 5,'on facilities, events and wastes,
respectively document the results 'of these investigations and elaborate
on the procedures used in arriving at the results. Summaries of these
findings are presented here.
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1. Facilities
Available information on hazardous waste management techniques
and present technology indicates that only certain disposal facilities
or final treatment methods can provide effective treatment, storage or
disposal of hazardous wastes, without having adverse effects on the
environment. Thus, only those disposal facilities or final treatment
methods likely to be deemed suitable for the treatment, storage
and disposal of hazardous wastes were evaluated. Disposal
facilities include landfills, incinerators, deep well injection, waste
lagoons or ponds, land burial at depth, near-surface land burial and
above surface storage. Final treatment processes include oxidation/
reduction, neutralization, chemical degradation, detoxification, open
burning, detonation, hydrolysis, biological degradation, and resource
recovery.
Landfills
Landfills that may potentially hold hazardous wastes are termed
secure landfills. These must isolate their contents from the environment,
without compromising air and water quality. Other types are approved
landfills, in which inert solid wastes and decomposable organic materials
must be separated from underlying or adjacent usable water; and general
landfills that can contain water along with the wastes. Sites fully
meeting the specifications for secure landfills will be extremely limited
under certain geologic and hydrologic conditions.
Incineration
Incineration is a controlled process that utilizes some type of
combustion/burning process to convert a waste to less bulky, less toxic,
or innocuous gas, liquid and/or solid. Incinerators can be used to
dispose of combustible solids, semi-solids and concentrated liquid wastes.
In general, carbon dioxide, water and ash (of various compositions) are
the major constituents of incinerator products. When the combustion
141
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product contains undesirable compounds such as toxic hazardous waste
gases (i.e., hydrogen cyanide), additional treatment such as after-
burning, scrubbing, or filtration is necessary. Subsequently, the solid
and liquid effluents, for example toxic inorganic oxides, are either
treated further or disposed of at a hazardous waste facility, such as a
secure landfill. In some instances, by-products, such as hydrogen
chloride or lead slag, are recovered during the incineration process
and recycled.
Deep Well Injection
Subsurface disposal of liquid wastes (deep well injection) has been
practiced for many years. The mining and oil industries have used deep wells
for the disposal of oil field and chemical brines. The major industries that
dispose of hazardous wastes by deep well injection today include the chemical,
petrochemical and pharmaceutical industries. These industries inject solvents,
corrosives, heavy metals, pesticides and other hazardous wastes as liquids,
which usually are pretreated prior to disposal. Injection wells in the United
States generally range in depth from 1,000 to over 12,000 feet (Warner 1973).
Treated wastes are injected by gravity flow or under pressure into subsurface
strata that contain non-potable brackish or briny waters. Receiving strata
must be bounded above and below by confining strata, such as clays and shales,
to preclude any migration to and eventual contamination of potable water supplies,
The composition of the hazardous waste is usually altered by pretreatment
processes to insure that the wastes are compatible with the existing waters and
subsurface environment, thus minimizing the possibility of clogging the in-
jection zone. Inasmuch as earlier laws focused on the potential pollution of
surface waters and only indirectly addressed the problem of ground-water pol-
lution, disposal by deep well injection has gained in popularity among waste
generators. However, deep well injection is likely to be deemphasized in favor
of incineration and secure landfills under the new EPA RCRA standards.
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Haste Lagoons and Ponds
Waste lagoons and ponds can consist of small concrete tanks or large
excavated basins several acres in area. If a natural impervious material is
absent at the base of the excavation, the larger facilities must be lined with
relatively impermeable natural or synthetic liners such as clay, asphalt,
concrete, or plastic to preclude the migration of hazardous wastes to the sub-
surface environment. Also, routine monitoring and detection systems such as
wells, usually need to be installed along with diversion structures (trenches,
berms, etc.) to intercept surface water runoff from surrounding areas.
Ideally, lagoons and ponds are located in geographical areas
where favorable climatic conditions prevail. Such areas include those where
evaporation rates are high and precipitation is low. The organic chemicals,
pesticides and tannery industries are some of the major industries that dispose
of hazardous wastes in various sizes and types of lagoons and ponds
(EPA, 1976f; 1976k).ftt
Near-Surface Land Burial
In near-surface burial, the hazardous waste is placed directly into
the ground or is deposited in a variety of stainless steel tanks, concrete
lined pits or a combination of these devices beneath the ground (Powers,1976).
Although the hazardous wastes can be in a liquid or solid form, generally
prior to burial, the wastes are converted to a solid form (i.e. by cementation,
solidification, etc.) to reduce the mobility of the hazardous wastes in the
subsurface environment.
Presently, near-surface burial of various hazardous wastes from the
chemical industry is being conducted at several sites.
Various types of monitoring devices are installed, depending on the
type of hazardous waste, to detect any leaking or leaching to the subsurface
environment. Trenches are usually equipped with drains and pumps to capture
potential leakage.
T References for Chapter III are listed at the end of the Chapter.
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Land Burial at Depth
Burial in deep subsurface openings is not widely practiced.
Serious consideration is being given to this method, especially for radio-
active wastes.
Above-Surface Storage
Small quantities of hazardous wastes might be stored in tanks,
vaults or other containment devices, on or above land surface, until the
wastes are collected and transported to another type of hazardous waste
disposal facility. These wastes might include highly toxic organic
chemicals and pesticides or lethal gases that may eventually be disposed
of at other hazardous waste facilities, such as deep injection wells or
incinerators.
Final Treatment Processes
In this report, a "final treatment" process is defined as one
which alters or destroys hazardous wastes completely, leaving only innocuous
substances whose by-products do not adversely affect the environment. The
wide variety of treatment processes provides a broad range of treatment
capabilities for the numerous hazardous waste types generated by industry.
For the most part, these processes are performed by hazardous waste genera-
tors and often are incorporated directly into the processing plant system.
2. Events
The purpose of this section is to describe a classification of
accidents or events whose occurrence at hazardous waste treatment, storage
or disposal facilities might require emergency response measures. In this
report, the words "accidents" and "events" are synonymous. Only events
which relate directly to confirmed releases are considered. Natural disaster
warnings, (e.g., for tornados and hurricanes, etc.) will be covered under
RCRA §3004 operating plan regulations, not under contingency planning. A
more detailed discussion of the events classification is presented in Appendix
4.
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Non-routine Liquid Release
Liquid releases are divided according to cause of release
(i.e., event subcategories): seepage, failure, or personnel error.
These three groups are then further broken down into surface and subsurface
groups since detection and response for these two types of release will
differ significantly.
Non-routine Solid Release
Non-routine solid releases can occur at any hazardous waste
facility that treats, stores or disposes of wastes in a solid phase,
such as "dried" chemicals, explosives, sludges, etc. Typically, these
releases would result from improper handling or breakage of containers
used in the transport of these waste types within facility boundaries.
Additionally, wind erosion is a mode of solid release.
Non-routine Gas Emission
This class of events includes ncn-rcutine emissions from
incinerators, reaction products from the improper mixing of reactive
wastes, failure of gas storage vessels and other accidental gas releases.
Non-routine gar, emissions can occur in both the surface and subsurface
environments depending on the facility type.
Fire
Fires can best be classified along the guidelines established
by the National Fire Protection Association Standard Number 10, described
in Appendix 4.
Explosion
Explosions can occur in both the surface and subsurface environ-
ments according to facility type.
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Dike Failure
While the class of events described by the term dike failure
could be included in the category of non-routine liquid releases, dike
failures represent a common and specific type of accident of potentially
serious magnitude and, therefore, merit separate consideration. Dike
failures can result from either natural causes, or from improper design
and construction.
Direct Human and Animal Contact
These exposures can occur as the result of non-routine liquid
and gas releases, and also in the course of routine operations. For
example, a worker might accidentally step or fall into a disposal trench
containing highly corrosive wastes. The potential for contact with
hazardous wastes exists at every type of facility.
3. Hazardous Wastes
This section defines the hazardous waste category system developed
for this study. The classification system has been devised so as to address
comprehensive all conceivable waste types, i.e., it is capable of
representing any type of existing or future hazardous waste stream. In
addition, the classification presents the waste categories in a way which will
relate meaningfully to contingency plan standards after incorporation with .
facility/event pairings.
In general, existing waste classification schemes fall into one of
four general categories:
1) classification of wastes by source
2) classification of wastes by disposal method
3) classification of wastes by chemical properties
4) classification of wastes by associated hazard.
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For the purposes of developing standards for contingency plans,
the following waste classification scheme was adopted. A complete dis-
cussion of the logic and rationale behind the development of the hazardous
waste categories is presented in Appendix 5.
Flammable/Explosive Vapor
This category is reserved for gases and vapors which are
flammable and/or explosive. In addition, it is applicable to liquids
(or solids) which are extremely volatile and give off flammable/explosive
vapors.
Flammable Solids/Liquids
This category is reserved for liquids, solids, sludges, slurries,
etc. which are flammable.
Explosive Solids/Liquids
This category is reserved for solids, liquids, sludges, slurries,
encapsulated or contained gases, liquids, etc. which may present an
explosion hazard.
Bioconcentratives
This category is reserved for substances which may concentrate
in a single species or through a series of species (plant or animal) in
the human food chain to a level, above the ambient level, which are
toxic or injurious to humans.
Corrosives
This category is reserved for substances which are corrosive
to equipment, structure, containers, etc. which are likely to be found
in hazardous waste facilities or which may be used at such facilities
during emergencies.
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Reactives
This category is reserved for substances which tend to react
spontaneously in a hazardous way with common materials. Included in
this category are substances which may undergo synergistic interactions.
In this definition the term "hazardous way" means that the substance may
react so as to produce any of the following effects:
a. violent reaction (spewing reactants)
b. rapid heat generation
c. generation of hazardous products
The term "common material" would include:
a. air
b. water
c. structural metals
d. other construction materials
Radiological
This category is reserved for materials which spontaneously emit
ionizing radiation to the environment. This includes radionuclides and
materials contaminated with radionuclides. It does not include materials
covered by NRC regulations.
Environmental Hazard
This category is reserved for substances which pose a threat
to the environment. . This would not include the hazards of fire, explosion
or radiological materials, nor would substances producing adverse effects
on humans alone can be classified as environmental hazards. The emphasis
of this definitional category is on materials with special effects on
plants, crops, fish, shellfish, livestock, etc. and on those at higher
levels in the food chain.
In addition, materials which might effect the structure, function,
etc., of non-living objects in such a way that it may cause harm to plants,
animals, or humans would be classified as an environmental hazard.
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Airborne Health Hazard
This category is reserved for substances which may be transported
via the air and which pose a health hazard to humans. This health hazard
would not include the normal hazards associated with fires, explosion or
radioactive materials. Hazards which would be included are:
a. inhalation toxic
b. dermal penetration toxic
c. irritating
d. sensitizing
e. etiologic
f. carcinogenic
g. mutagenic, teratogenic, etc.
h. ingestion toxic (applies to materials which might settle
on the surface of plants which are subsequently eaten).
Waterborne Health Hazard
This category is reserved for substances which may be transported
via water, in solution, suspension, or by flotation, and which pose a
health hazard to humans. This health hazard would not include the normal
hazards associated with fires, explosions or radiological materials.
Hazards which would be included are:
a. ingestion toxic
b. dermal penetration toxic
c. irritating
d. sensitizing
e. etiologic
f. carcinogenic
g. mutagenic, teratogenic, etc.
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Contact Health Hazard
This category is reserved for substances which may be transported
via direct contact and which pose a hazard to human health. The direct
contact might be via fallout from an explosion, splash from or contact
with a spill, or mishandling of materials. The normal hazardous effect
associated with fires, explosions, or radiological materials are not
considered under this category. Hazards which would be included are:
a. dermal penetration toxic
b. irritating
c. sensitizing
d. etiologic
e. carcinogenic
f. mutagenic, teratogenic, etc.
Unknown
This category is reserved for materials whose compositions or
properties are unknown. An example of an UNKNOWN hazard would be an
unlabeled (perhaps due to corrosion or negligence on the part of an
operator) drum of material which is in close proximity to a fire at
a hazardous waste disposal facility.
As previously mentioned, at the time of this study EPA had not
promulgated regulations defining what its hazard categories will be or
what degree of danger will be necessary before a substance would be defined
as "hazardous" Until threshold values are specified by regulation, it will
be necessary to define waste categories in qualitative terms only.
4. Integration of Facilities and Events
In carrying out this study, a matrix (Integrate I shown in
Figure 4) was used to correlate all possible facility types with all
conceivable events to assess the applicability or non-applicability ("NA")
of each facility/event pairing. All pairings considered possible were
150
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examined in the subsequent analysis. Furthermore, by inspection, certain
subcategories of events and facilities (e.g., classes of fires) were
grouped and have been represented below as general categories.
Examples of the approach used in forming general categories
and in eliminating from consideration the non-applicable pairings are
discussed below:
Non-routine Liquid and Solid Releases
Surface failures and seepages onto the surface of liquid
hazardous wastes are by definition unlikely in underground hazardous
waste facilities (i.e., land burial facilities) and are indicated accord-
ingly as being non-applicable. However, some surface facility types
such as lagoons and landfills, etc., can experience liquid releases
induced by either structural failures or natural geohydrologic conditions
which might affect both the surface and subsurface environment. Similarly,
both environments could be affected by leaks or breaks in tanks, vaults
or pipe lines used in final treatment processes and in above-surface
storage facilities.
Also, Integrate I shows similar conclusions in the subcategories
of landfills and incinerators listed regardless of the event type. These
two groups are further considered in Integrate II (Figure 4), which
will correlate specific event/facility types with hazardous waste types.
Non-routine Gas Emissions
Non-routine gaseous emissions can occur both above ground and
in ,the subsurface environment depending on the facility type utilized
for the disposal of hazardous wastes. Generally, hazardous wastes in
a gaseous form are treated, stored or disposed of at a facility as a
primary hazardous waste (i.e., chlorine gas, etc.) or are created as
a secondary product of a particular facility treatment process or chemical
reaction. A non-routine gaseous emission from hazardous wastes buried
152
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at depth or in a near-surface land burial facility is considered highly
unlikely because of the types of hazardous wastes that are usually stored
or disposed of in these facilities (i.e., liquid and solid wastes).
Gaseous emissions normally occur at or above land surface.
All facility types have the capability of releasing hazardous wastes in
the gaseous state, depending on the hazardous waste type being
processed.
•
Fire
Fire would appear to be one of the most common events likely
to occur at hazardous waste facilities. Figure 3 indicates that the
applicability of the N.F.P.A. classes of fires is similar for each
facility type, suggesting the grouping of all fires under a single
event category would be adequate for future comparisons.
Explosion
In general, serious consequences due to explosions will
apply to surface facilities, threatening the lives of employees and
creating fires which could spread to other areas in the vicinity of
the explosion. In addition, the possibility of subsurface explosion
exists in the inadvertent mixture of reactive hazardous wastes in man-
made subsurface storage structures such as silos, tanks and vaults and
in natural cavities in geological formations. The proper design of
facilities and hazardous waste identification should greatly reduce the
possibility for this type of accident.
Dike Failure
The most commonplace events cited and documented for particular
facilities, whether due to natural disasters, improper design or human
error, include dike failure, surface-seepage and subsurface leakage,
usually resulting in non-routine rel'eases of liquids to the surface or
153
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subsurface environment. Figure 4 indicates that these particular
events are directly related to certain facility types. For example, the
possibility of dike failure exists at a hazardous waste landfill. A
dike failure is not applicable at all facilities listed, but would
commonly be associated with landfills, lagoons and ponds. However, in
certain cases, similar backup systems (i.e., dikes or berms) are employed
at other facility types. The release of hazardous liquid wastes after
a dike failure is defined as a "non-routine release." A dike failure
not associated with a release would be repaired in accordance with
operational procedures. Only when the dike failure is associated with
a release event would control and repair of the dike be covered by
contingency plan standards.
Direct Human and Animal Contact
The matrix in Figure 4 indicates that direct contact by
wildlife or humans is conceivable in nearly all cases. Obviously,
mechanized hazardous waste disposal operations (i.e., deep burial) or
enclosed facilities would limit the possibilities of direct contact by
wildlife or humans. Access to certain types of facilities such as
incinerators, and deep burial sites could also be minimized by proper design
specifications. However, facilities such as lagoons, ponds and landfills
could be vulnerable to intrusion from contiguous populated areas. Wild-
life, especially from adjacent wilderness areas, would often have access
and therefore a risk of exposure to these areas.
Causes of Events
Some causes of the aforementioned events are notable. For
instance, any major natural disaster, such as an earthquake, tornado,
hurricane or flood, will always have some type of adverse effect(s) on
those facilities which operate at land surface (i.e., incinerators,
landfills, etc.). Any natural disaster could conceivably damage a
facility, resulting in the release of hazardous wastes. Actions taken
154
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in response to warnings of natural disasters are covered by operational
plan standards. Releases resulting from natural disasters would fall
into one or more of the categories described above and responses to such
releases would be dealt with under contingency plans.
5. Integration of Hazardous Wastes with Facilities/Events
All applicable facility/event pairings were correlated with the
various hazardous waste types to assess the applicability or non-applicability
of each facility/event/waste grouping (Figure 5). As in the case of
the integration of facilities and events, groupings became evident. This,
together with the non-applicability of some pairings, reduced the number
of possible facility/event/waste combinations. The contingency plan
standards were developed using this integration.
Examples of the approach used in the elimination and grouping
of the combinations follow.
Events Applicable to All Facilities
First, those events which are independent of the facility type
were considered and related to all hazardous waste types; special cases
where events and facilities are dependent on one another were then
examined.
Figure 5 shows some general trends in comparing facility/event
types with hazardous waste types. It is conceivable that any of the
hazardous waste types, with the exception of those classified as
flammable/explosive vapors and airborne health hazards,could reach the
environment in the form of non-routine liquid or solid surface release.
Similarly, there is no apparent correlation between waterborne health
hazards, liquid or solid explosives or liquid or solid flammable wastes
with an event such as non-routine gas generation at the surface. All
other waste types, however, could conceivably be related to or occur
in the form of a non-routine gas generation (i.e., corrosives, reactives,
155
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contact hazards, etc.). If a non-routine gas generation did occur at
a facility, it would be characterized by one of the other hazardous waste
types listed.
Figure 5 indicates that there are inherent differences between
the events of fire and explosion even though these events often occur
concurrently at hazardous waste facilities. In the event of an explosion,
corrective measures would obviously have to be taken regardless of the
facility or hazardous waste type. Any of the various types of wastes
could enter the atmosphere, surface and/or subsurface water environments
depending on the severity or magnitude of the explosion. On the other
hand, in the event of a fire, the applicability of hazardous wastes such
as bioconcentratives, corrosives, reactives, radiological and waterborne
health hazards is not directly apparent. Normally, these types of
wastes would not enter the environment as gaseous emissions which would
be released during a fire. However, the remaining hazardous wastes
(i.e., flammable vapor, contact hazards etc.) could very likely reach
the environment if a fire were to occur.
Direct human contact with hazardous wastes at any facility is
always applicable (see Figure 5 ) regardless of the hazardous waste type.
Existing definitions of the term "hazardous waste" imply that pre-
cautions and measures must be taken to minimize the possibility of direct
human contact with any hazardous waste. Also, responses would vary
greatly in the event of direct human contact, depending on the hazardous
waste type contacted.
Events Dependent on Facility Type
Deep-Well Injection
At certain facilities, events could occur in ways directly
related to the facility type. One of these events, not addressed in
the previous sections, is non-routine subsurface liquid relearse. • In
the specific case of a deep injection well, the non-applicability of
157
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introducing hazardous wastes in the vapor state is apparent. Another
event type that could occur at a deep well injection facility is an
equipment malfunction. For the most part, the applicability of equip-
ment malfunction is related to all hazardous wastes, excluding flammable/
explosive vapors, and airborne health hazards, whose inapplicability was
discussed above. It is conceivable that a contact hazard, as defined,
could have adverse effects if an equipment malfunction occurred at or
near land surface. Furthermore, any equipment malfunction including a
well blowout, casing failure, pressure loss or pipe failure, could
result in a non-routine surface liquid release. Therefore, appropriate
corrective actions should be included in that event category. These
actions will be discussed in later sections.
Landfills, Lagoons, Near-Surface Burial and Burial at Depth
Figure 5 indicates that the non-applicability relationships
between waste types and non-routine subsurface liquid releases at other
hazardous waste facilities, including landfills, lagoons, near-surface
burial and burial at depth, is similar to that discussed above for a
deep injection well facility. An exception, however, might be radio-
logical wastes; pertinent literature indicate that it is a common practice
to store or dispose of radioactive wastes at burial facilities located
near the surface and at depth. Also, it is conceivable that in the
event of a non-routine subsurface liquid release, airborne gaseous emis-
sions could be created indirectly because of a change of state in the
waste as it reached the land surface. Because it would be very difficult
to detect a subsurface gaseous emission before it migrated to the surface,
examination of remedial actions will focus on the primary event, a non-
routine subsurface liquid release.
Equipment malfunctions are a common occurrence at landfills,
lagoons, ponds and burial sites and must be addressed. Figure 5
indicates that an equipment malfunction at that facility type is
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applicable to all hazardous waste types. A wide variety of equipment
is utilized depending on the facility types. More importantly, these
facilities are used to treat, store and dispose of a wide variety of
hazardous waste types. Many types of hazardous wastes may be present
in a particular landfill facility. For this reason, an equipment
malfunction at any of these facilities theoretically could cause the
release of virtually any hazardous waste type to the environment and
specific measures would have to be undertaken to mitigate potential
adverse effects depending on the hazardous waste type.
Incinerators
Some hazardous waste facilities, especially incinerators and
other process-intensive final waste treatment techniques, rely extensively
on equipment, mechanical or electrical, to store, transmit or process
the wastes. Because of the numerous operations and functions at these
hazardous waste facilities, the occurrence of an equipment malfunction
is more probable as compared to facilities such as landfills and lagoons.
Several types of incinerators are used to dispose of hazardous
wastes in a liquid, solid or gaseous form. The equipment needed to handle
these wastes will vary. Presently, incineration is a major technique
used for hazardous waste disposal. Theoreticially, most hazardous waste
types can be reduced in volume or disposed of by this method; however,
in practice, high costs of fuel, power and air quality standards prevent
the use of incinerators for many wastes. Most hazardous waste types are
disposed of in a more cost-effective manner at other types of facilities.
Figure 5 shows that almost all of the hazardous waste types
could be released to the environment in the event of an equipment
malfunction.
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Final Treatment Process
Some industries that generate hazardous wastes dispose of or
contract out for disposal by means of various final treatment processes.
These processes effectively degrade, alter, destroy, or completely
recover hazardous wastes. Detoxification, detonation and chlorination
are a few examples of final treatment processes that effectively elimi-
nate some wastes so that they will not detrimentally affect the environ-
ment. Usually, chemical industries incorporate final treatment processes
directly into the production system to treat hazardous wastes, thereby
reducing the wastes to innocuous by-products which can be disposed of
by conventional methods (i.e., sanitary landfill, etc.).
Figure 5 indicates that all hazardous waste types with the
exception of radiological wastes, can be treated at least partially by
some final treatment process. The complicated mechanical and electrical
systems and equipment used to convey, alter and finally produce chemical
substances increase the opportunity or probability of an equipment mal-
function. Because of the large variety of equipment, plant location and
possible paths to the environment, each final treatment process and
hazardous waste type must be evaluated separately to determine appropriate
measures that must be taken to correct a possible release of the waste
to the environment.
The analysis of the facilities, accident events, and hazardous
wastes that characterize the hazardous waste industry is reported here
in considerable detail to demonstrate the wide variation on a site-by-
site basis that can be expected in the contingency plan needs of the
industry. In recognition of this, contingency plan standards were put
forward that are basically applicable to all sites," while flexible
enough to permit major site variations to be incorporated into the
implementation of the standards at each site. Contingency plan standards
are discussed in the following section.
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C. Contingency Plan Standards
Introduction
The material in Sections A and B describes the reasoning used to
develop the facility/event/waste matrix. This matrix is displayed in
Figure 5. Once the applicability or nonapplicability of each facility/
event/waste intersection was determined, contingency plan standards were
developed which could be applied to one or more of the applicable matrix
intersections.
Several approaches were used to develop the contingency plan
standards. First, a thorough literature search of federal agency guidelines
and industrial guidelines in the private sector was undertaken. Only the
Nuclear Regulatory Commission (NRC) guidelines presented detailed contin-
gency plan standards. Other general standards were identified. In this
manner independent sources of standards were used to adopt contingency
plan standards where applicable. These standards were helpful in develop-
ing organizational and communication standards, as well as some assessment
standards.
Secondly, random groupings of potential contingency plan stan-
dards were found in literature for certain industries which more or less
applied to specific accidents (events) such as fires, oil spills and
releases of noxious gas. Wherever an association between these varied
standards and the matrix could be seen, specific standards were incor-
porated or modified to fit the given situation. For example, it is very
likely that a standard regarding actions in case of fire at an industrial
plant may apply in the event of a fire created by release of a specific
hazardous waste at a particular facility. Standards of this type found
through the literature search were very helpful in determining assessment
and response/recovery standards.
The third approach used in developing contingency plan standards
was directly dependent on and related to specific matrix intersections.
Individual intersections or similar groups of intersections were chosen
that might be associated with certain general contingency plan standards.
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Separately a listing of general contingency plan standards was developed
which encompassed several of the more obvious events and hazardous waste
types. For example, when dealing with flammable or explosive wastes
certain standards would apply regardless of the facility type. In addi-
tion, the more unusual types of events or hazardous waste types found at
certain facilities were addressed on an individual basis. The standards
in these cases were written keeping in mind a specific intersection being
evaluated. For example, the accidental release of bioconcentratives while
buried at depth might necessitate separate contingency actions which do
not apply to any surface releases. These specific standards were generally
associated with the assessment and response/recovery standards.
Finally, the three approaches were combined, thereby producing
a comprehensive set of standards that could be used in any facility/
event/waste situation. Furthermore, subsets of standards could be derived
from these contingency plan standards that could apply to any specific
intersection.
Assumptions Made in Writing Contingency Plan Standards
In devising standards for contingency plans, certain assumptions
have been made based primarily upon discussions with EPA project monitoring
staff. It is assumed that contingency plans go into effect when the
release of hazardous materials has occurred, may be imminent, or is sus-
pected to have occurred. Presumptive evidence that one or more of these
conditions are present include: fires in the vicinity of hazardous waste
containers; explosive gas conditions which could disperse hazardous
particles, gases, or aerosols if denotation should occur; and, any employee
illness or incapacitation displaying toxicological characteristics.
It is further assumed that operating standards, which are
presently being developed by EPA, will require certain items to be on-site,
or actions to be taken, which would provide the basis for some of the
contingency plan standards that follow. For instance, protective clothing,
evaluation of environmental baseline conditions, communications equipment,
to name a few, are expected to be required under operational standards.
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Contingency actions, then, go one or more steps beyond those required
under operating standards. The costs of contingency plans have been calcu-
lated accordingly.
Precautionary measures to be taken in the event of warnings of
natural hazards are expected to be covered by operational standards.
Thus, it is assumed that responses to hurricane, tornado or flood alerts,
such as protective shut-down of the facility, would be applied under
operating rules established for the facility. Actions relating to any
releases caused by these natural events would be covered by the contingency
plan standards.
Divisions of Contingency Plan Standards
The standards are written in four main groups. The first two
groups (Organization and Communication) essentially involve actions that
must precede any emergency. The remaining groups (Assessment and Response/
Recovery) would be put into effect at the time of the emergency.
Response Times and Distances
In a number of the standards that follow, numerical values
are used to define distances and periods of time in which certain require-
ments must be met or response action undertaken. The numerical values
assigned reflect the generalized distance or time periods judged responsible,
prudent and safe with respect to a particular standard.
ORGANIZATIONAL STANDARDS
Organizational standards are aimed at insuring a well-defined,
effective and coordinated emergency effort, and deal primarily with
authority and responsibility in maintaining, implementing and activating
a contingency plan.
1. Standard for Requiring an Approved Contingency Plan:
Every operator of a facility engeged in, or permitted to
engage in, treatment or storage for a period of more than 90 days,
or disposal of any materials defined as hazardous wastes under
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the provisions of the Act shall be required to formulate a
contingency plan to minimize unanticipated damage in the event
of discharge of aforesaid hazardous materials to the surrounding
air, surface and subsurface environment. This plan must be
submitted to and approved by the permitting agency.
2. Filing the Contingency Plan:
The contingency plan must be filed with the responsible
permitting authority and EPA and all local public and private
entities which may be called upon to provide services in the
event of emergency. All revisions to the plan must be promptly
reported, in writing, to all parties in possession of copies of
the contingency plan.
Note: The requirement that the contingency plan be filed with EPA
could be modified to require the plan to be submitted to the state
administrator of solid waste planning. However, until the roles of
federal* and state agencies in regulating hazardous waste management
facilities is resolved the appropriate agency cannot be determined.
3. Defining Civil Authority:
The contingency plan must define the extent of interaction
between facility personnel and local public and private organiza-
tions in the event an accidental release threatens the general
public and/or the local environment.
Note: The authority of an operator of a waste facility to make emergency
declarations would end at his property boundary. Beyond that boundary,
he has a responsibility to communicate emergency declarations to civil
authority. No part of the Act changes the authority or responsibility
of local -civil authorities to act initially within this basic charter -
the protection and preservation of life and property. The lines of
authority include police (control of persons and securing of areas),
fire, and medical authorities. Because emergency situations are related
to dispersion of hazardous materials, multiple geonraphic jurisdictions
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of each type of authority may be involved. Furthermore, authorities in
some areas may be limited in the responsibilities delegated to them, or
which they are willing to accept: fire departments would be expected to
deal with smokes, gases, and flammable materials, but some fire departments
also provide all first-aid and ambulance medical services. Some localities
provide for coordinated emergency functions; others do not.
4. Defining Internal Authority:
The contingency plan must include the names of the persons
given primary responsibility for coordinating emergency response
measures at all times. The names of alternate emergency response
coordinators must also be listed.
Note: For contingency purposes, it is assumed that a responsible owner/
operator is defined for each hazardous waste facility, and an operator,
directly responsible as the agent of the owner, is on the site at all
times during the operating life of the facility, unless a variance is
granted by EPA.
5. Response to Emergency Inquiry:
Every operator of a hazardous waste facility shall be capable
of providing information at all times in the event of emergency
inquiry. The name and phone number of a person qualified and
authorized to act as responsible agent shall be maintained on file
with all local authorities, to include, but not be limited to:
a. the nearest police agency with round the clock personnal and
preferably with the policy agency of every jurisdiction within
three miles of the facility
b. the nearest fire agency with round the clock personnel and
preferably with the fire gaency of every jurisdiction within
three miles of the facility
c. the medical doctor, clinic or hospital named by the operator
as providing services to employees of the facility.
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The responsible agent shall be thoroughly familiar with the
substances handled at the facility, the location of the manifests
within the facility, and the locations and characteristics of the
different wastes stored on-site.
6. Facility Contingency Equipment Standards:
The contingency plan will list and describe all equipment to
be utilized in emergency situations for worker safety, emergency
communications, alarms, and spill recovery (equipment, chemicals,
foam, water, etc.).
7. Information on Exposure Symptoms and Treatment:
The operator will maintain information regarding the symptoms
and required treatment for exposure to all hazardous materials
handled at the facility, as well as their expectable by-products.
Such information will be provided to appropriate medical agencies
in the event of employee exposure, or a large scale release.
8. Inactive Sites:
Any administrator (person), upon nomination as the custodian
of an inactive waste disposal facility shall, before assuming those
duties formulate a contingency plan to minimize unanticipated
damage in the event of discharge of hazardous waste materials
to the surrounding air, surface, or subsurface environment.
Note: After the capacity of a landfill/burial site has been exhausted,
the site will become inactive. Attendant receiving, treatment, handling,
etc., will cease (although treatment of hazardous materials unrelated to
disposal at the site might not be precluded). Under Section 3004 (6),
which outlines requirements for maintenance of operation of the facility,
it is assumed that a custodian, either a private or public entity, will
maintain surveillance and control of the site for a period determined
pertinent by regulatory agencies and consistent with the nature of the
hazardous materials disposed.
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9. Training and Drills:
The contingency plan shall include specification of operator
training requirements and the type, number, and frequency of drills
required to maintain a state of awareness and preparedness.
COMMUNICATION STANDARDS
Communication standards are intended to insure positive and
pre-planned notification to emergency authorities in the event of
accidents or hazardous discharges. In preparing the standards, it has
been considered that: all fires, including short-lived ignition of
unexplained free gases; any detonation except one controlled entirely
within the operating limits of an incinerator chamber; any situation
requiring employee evacuation; any employee injury due to spontaneous
rupture of a container; or any release of hazardous gases, fumes, or
dusts, outside the regulated area of the facility may require automatic
alert to a detached fire department. With a direct fire alarm signal
available, it has been estimated that ordinary telephone service should
be adequate for emergency communications for ambulance service, requests
for police assistance, etc.
1. Pre-Contingency Notification of Nature of Hazards:
The operator of any hazardous waste management facility engaged in
treatment storage, or disposal of materials specified under this
Act shall communicate the following to all local agencies which may
provide emergency services to the facility:
a. the nature of the materials
b. maximum amounts received during an
operating cycle
c. known deleterious effects of the material(s)
d. modes by which this material might be released
to the environment
e. areas which could reasonably be expected to suffer
exposure during any accidental release.
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2. Emergency Communication Equipment:
Any facility engaged in the treatment, storage, or disposal of
hazardous waste materials specified under the Act shall be equipped
at a minimum with:
a. regular single-party telephone service
b. an alarm system capable of summoning emergency assistance
external to the facility, and/or simultaneously notifying
civil authorities responsible for emergency services
c. an internal communications system capable of providing
immediate instruction to all employees.
Note: Two way radios should be considered at least for waste facilities
because there may be some damage to telephone wires due to fire or
explosion.
3. Internal Alarms:
The operator should insure that when hazardous wastes are being
poured, mixed, spread or otherwise handled, at least one employee
involved in the operation has immediate access to an alarm device,
which can be activated by a single motion, capable of summoning aid
or warning of unsafe or unknown conditions. The employee with
immediate access to the alarm should be in clear visual and aural
contact with all other employees involved in the operation who do
not themselves have access to alarms or who are not in contact with
another employee who has access to an alarm. If at any time during
operation of the facility, there shall be a sole employee on the
premises, the alarm should be capable of directly summoning aid and
providing emergency warning to an emergency response authority
external to the facility.
4. Notification of Required Agencies:
A contingency plan shall list the EPA office and other agencies
and local authorities responsible for environmental quality or public
health and safety to be notified in the event of an accidental
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release at the facility. The plan shall list such agencies separately
for each of these major classifications;
a. suspected hazardous airborne release;
b. confirmed hazardous airborne release;
c. surface liquid release escaping the facility
confinement;
d. detection of materials in leachate exceeding
the established acceptable limits for the facility;
e. structural damage to the facility caused by
any accidental event;
f. discharge of hazardous materials into navigable
water as defined by Public Law 92-500.
ASSESSMENT STANDARDS
Assessment standards are aimed at 1) providing prompt
appraisa-1 of the extent and severity of dispersion and contamination
from the accidental release of hazardous wastes to the environment,and 2)
assisting in selecting an appropriate response to mitigate potential
adverse effects from the release of any contaminants.
Assessment standards are distinguished here from response
standards in that the former are aimed primarily at providing immediate
guidance on the nature, concentration, volume, extent of dispersion,
and areas threatened or affected by contaminants. Often the area affected
must be delineated by a physical or mathematical model.
1. Airborne Dispersion Model:
The operator of any facility that may be deemed capable of
generating an airborne contaminant shall prepare an atmospheric
dispersion model for the site, using meteorological records, and
maintain at all times current data on ambient meteorological con-
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ditions. The results must be detailed enough to provide precise (acceptable)
plume boundary and concentration information. The model should consider
variables including: meteorological conditions, temperature of the
airborne release, density of the released material, diffusivity of the
released material, concentration of the released material, duration of
the release, elapsed time since release ended, features of the local v
terrain, and teh degree of hazard associated with the material. In addi-
tion, the following requirement must also be met:
a. the model should be capable of completing its output
within a reasonable period of time depending on the
type of facility, hazard, etc.
b. the model must be approved by the EPA, or other governing
authority under a state implementation plan;
c. airborne hazard maps (or overlays showing anticipated
affected areas) must be prepared in advance and be
accessible for use within 5 minutes (X minutes) by a
trained person.
d. the maps or overlays shall be prepared using an appropriate
model (see, for example, those detailed in the Nuclear
Regulatory Commission (NRC) regulatory guide):
e. a copy of the maps or overlays shall be on file with
local emergency authorities within the radius of possible
effect,
2. Waterborne Dispersion Model:
The facility operator shall determine, where practicable,
the concentrations, directions and rates of movement of the hazardous
waste by use of site-specific hydrologic and water quality models
designed to predict the area, in either the surface or subsurface
environments, affected by the release. The models should be approved
by EPA or other governing authorities, and should consider such
factors as runoff rates, local topography, permeability, porosity,
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infiltration rates, local ground water velocities, chemical characteris-
tics, viscosity and density of wastes, and the background chemical
characteristics of water environments affected.
3. Identification of Material:
The facility operator shall identify to these public and
private bodies which may provide emergency services to the facility the
character and concentration of the spilled or released material. This could
be accomplished by review of facility manifests and/or chemical analysis.
4. Source and Extent of Release:
The facility operator shall determine, where possible, or
estimate the exact source, volume and extent of the spill or release
and report this to the predetermined public and private agencies who will
be providing emergency services to the facility. This shall be done in a
timely manner.
5. Atmospheric Release Assessment:
In the event of a gas leakage, fire, explosion or liquid
release, which produces or releases gases, vapors, dusts, or mists,
an operator should be prepared to predict the dispersion patterns of
a hazardous material which is released into the atmosphere by
applying pertinent meteorological data to the approved model; and
the degree of hazard associated with the dispersing material.
6. Waterborne Release Assessment:
The facility operator should apply all pertinent geohydrologic,
water quality and climatological data, including the most recent
data obtained from monitoring systems, to the available site-
specific model, as noted above, to assess the potential effects of
releases of contaminants to the surface and subsurface environments.
Where practical, the model should be used in advance to prepare
approximating maps (or overlays) which may be quickly accessible
during an emergency.
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7. Fire Assessment:
An operator must be prepared to assess the degree of hazard
associated with a fire or threatened fire at a facility and determine
the actions which should be taken to mitigate damage or injury.
The determination should indicate whether:
a. evacuation should be initiated because of certain imminent
dangers such as toxic combustion products, flammable or
explosive vapors, threatened explosion caused by fire,
etc.; or
b. members of the local community may be exposed to
hazardous substance.
The assessment of the degree of hazard should consider
indirect effects such as toxic, irritating, or asphyxiating combustion
products; hazardous surface runoff due to water or other chemical
agents used to control fire; and heat induced explosions. Obviously
any actual evacuation notice and/or the actual task of evacuation
will have to be initiated and executed by the proper local*authorities.
RESPONSE AND RECOVERY STANDARDS
Response to an emergency situation must follow immediately
after assessment. The line between response and assessment is of its
nature indistinct, but for organizational purposes it will be assumed
that once the assessment phase indicates the magnitude of the event
(e.g. concentration of contaminant, area affected etc.) all following
actions are a response to it. The response phase culminates in recovery
from the effects of the event.
The contingency standards for response to emergencies apply
whether air, water or the ground surface is contaminated. They, furthermore,
apply to all the facilities, events, and waste types as described in
other sections of this report. Consequently, response and recovery standards
will be addressed under the following subcategories: notification;
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shut-down of facility; evacuation; delineation of affected area (including
monitoring and modeling); collection and/or containment of released
wastes; the continuing assessment of affected areas; personnel availability;
medical treatment; alternate water supply; and fire fighting and prevention.
Notification of Release
1. The facility operator shall activiate on-site alarm
systems to notify all personnel that a release is imminent or has
occurred.
2. The facility operator shall notify appropriate agencies with designated
response roles immediately if said release threatens contiguous
populated areas or the local environment.
3. The facility operator shall record the time, date, quantity and
nature of the release, and convey a preliminary report with this and
any other pertinent information on the incident to the appropriate
regional office of the EPA within 24 hours.
4. The facility operator shall, at*a later time not to exceed 15 days,
submit a final report of the incident to the EPA including information
regarding damage, personal injury, corrective actions taken and
plans for preventing recurrence.
Sh-ut-Down
5. The facility operator shall provide adequate switching mechanisms
for cessation of processes; and for the shielding or containment of
unprocessed hazardous materials.
6. The facility operator shall designate those personnel who will
control any shut-down procedures and shall insure that said personnel
are available within a specified period of time after a release.
7. The facility operator shall monitor for the possibility of releases
subsequent to shutdown including leaks, pressure buildup, gas
generation or ruptures in valves, pipes or other devices or equipment.
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Evacuation
8. The facility operator shall notify the appropriate responsible
agencies as soon as his assessment has indicated that public evalu-
ation is necessary.
9. The facility operator shall begin evacuation of all personnel on
the site immediately if the release poses an immediate threat to
the health and safety of the personnel by virtue of either the
amount, concentration or unusual characteristics (i.e. combustion,
toxicity, etc.) of the release.
10. The facility operator shall assist, as advised by responsible
agencies or parties, in any evacuation procedures deemed appropriate
by those agencies.
Monitor and Delimit Affected Area
11. The facility operator shall secure against entry of unauthorized
personnel those areas which are under his jurisdiction, (i.e.,
within the facility boundaries). He shall also notify appropriate
agencies or parties regarding those areas which should be secured
which are outside of his jurisdiction when such actions are necessary
to prevent public exposure.
12. The facility operator shall continue the modeling and monitoring
of air, surface or subsurface waters initiated in the
assessment phase to determine the concentration, direction, rate of
movement and extent of contamination.
13. The facility operator shall have all water and air samples analyzed
for those chemical, physical and biological parameters deemed
appropriate by the authorized regulatory agencies. The analysis will
be by a laboratory approved by the responsible agency.
Collection and/or Containment of Waste
14. The facility operator shall secure the immediate area where a
release has occurred with impermeable cover materials, dikes,
channels or trenches so as to contain the wastes and preclude
precipitation and runoff water from contacting the wastes.
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15. The facility operator shall immediately initiate containment
and/or collection of wastes where said material poses an imminent
threat to human health and safety. Plans for cleanup shall be
developed as part of the contingency plan.
16. The facility operator shall provide for placement of recovered
wastes and contaminated soils in a designated emergency storage
area. Furthermore, he must provide a means for ultimate treatment,
storage or disposal of such materials.
17. The facility operator shall continue to assist in the collection
and containment of any material which has escaped from the boundaries
of his facility until such time as the affected area is declared safe by
the EPA or other regulatory authority.
18. The facility operator shall avoid the receiving or handling of any
wastes which may be reactive or incompatible with the released
material or which may result in the possible generation of secondary
contaminants such as dusts, mists, vapors or liquids until clean-up
procedures are completed.
19. The facility operator shall clean up and restore all emergency
equipment including vehicles, sumps, temporary storage containers,
etc. to pre-release conditions in a timely manner.
20. The facility operator shall determine, or contract for the determination
of, any failures or loss of integrity of containment equipment to
insure that the structures, devices or barriers have not been damaged
or altered and meet all permit requirements under Section 3004 (4)
of the Act.
Continued Assessment of Affected Areas
21. The facility operator shall continue to monitor and assess any
damage to the environment from the release of the contaminants
until such time that the affected areas are restored and normal
operations have resumed.
22. The facility operator shall file with the appropriate authorities
monthly reports that record additional environmental, health and
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other pertinent information until the affected areas are restored
and normal operations have resumed.
Personnel Availability
23. The facility operator shall insure that sufficient qualified personnel
are available on site, or have been notified and can reach the site
within a specified period of time to initiate appropriate emergency
response measures and/or assessment operations.
24. The facility operator shall insure that qualified personnel assigned
to utilize appropriate-models are available, or on call, and can
begin to incorporate any new data, adjust programs and update
parameters input in modeling the release.
Medical Assistance and Treatment
25. The facility operator shall provide that a physician and medical
equipment including ambulances and emergency treatment be available
from nearby hospitals or clinics for the emergency first aid of
injured personnel that have been exposed to hazardous waste materials.
26. The facility operator shall provide emergency assistance, as directed
by appropriate authorities, which will aid in treatment of any
persons in contiguous population areas who have been exposed to
or adversely affected by the release.
27. The facility operator shall furnish information to appropriate
medical agencies regarding the symptoms and necessary treatments
for exposure to all hazardous materials which are handled and any
by-products of the materials.
28. The facility operator shall make available, or have access to,
adequate decontamination equipment including showers, chemical agents
and disinfectants, etc., to safeguard the health of all employed
personnel.
29. The facility operator shall, in the event of fire, activate all
necessary alarm systems including required on-site direct communication
systems to local fire authorities.
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30. The facility operator shall issue fire fighting equipment to designated
emergency response personnel as a initial response measure to
contain or reduce any local fire.
31. The facility operator shall, in the event of fire, ascertain the
location of any explosive materials in the immediate vicinity and
employ appropriate measures, including removing containers, cooling
to reduce pressure buildup, or isolating containers either physically
or with chemical substances, to minimize the risk of subsequent
explosion.
D. STRATEGY ISSUES FOR THE IMPLEMENTATION OF CONTINGENCY PLAN STANDARDS
This section addresses the issues inherent in five different
strategies in terms of the advantages and disadvantages of the regulatory
options offered by each strategy, as well as the degree of human health
and environmental protection afforded. Each strategy issue can be
discussed in general terms of its effect on all standards.
STRATEGY ISSUE I - STANDARDS BY FACILITY TYPE VERSUS UNIFORM STANDARDS
FOR ALL FACILITIES
With respect to facility type, two options are available for
writing contingency plan standards. Either a single set of standards
may be written which applied uniformly to all types of facilities, or
separate sets of standards may be written for each major facility type.
The appeal of separate sets of standards is based on the premise that
the various facility types are clearly distinct in character. This
premise is not entirely correct, however. While it is true that there
are unique features which distinguish various facilities, it is also
true that a great deal of commonality exists. Most facilities handle
wastes with the same basic accident potentials. The primary differences
between facilities are physical design and methods of operation. Design
and operation are not within the scope of contingency standards-. Though
the specific response to an accident will vary according to the peculiari-
ties of a site, facility specific standards will not take this into account
unless they are coupled with site specific, case by case regulations. If
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site specific regulations were promulgated, the myriad of location and
environmental conditions which might be encountered would make the
standards unduly complex and lengthy. Because of the length and complexity,
the cost of developing such standards would be much greater than uniform
standards.
The motivation for uniform standards applied to all facilities
is based on the opposite premise from facility-specific standards, i.e.,
it is based on the commonality of various facilities. The major advantages
are lower cost for development, implementation, and uniformity of adminis-
tration. Since there is much in common between facility types with respect
to accident potential, uniform standards have the same options for being
specific as facility-specific standards. The major disadvantage of uniform
standards is that they could in some cases discriminate against certain
waste handlers by setting requirements which may not be warranted because
of physical circumstances, volume of waste handled, and the like. A
system of waivers could be used to mitigate such cases.
STRATEGY ISSUE II - FEDERAL REGULATION VS. STATE REGULATION
Contingency plan requirements can be promulgated under three
regulatory strategies: federal regulations only, state regulations
only, or combined federal/state regulations. These three options will
be discussed with the relative advantages and disadvantages inherent in
each.
- Federal contingency plan requirements would presumably take
the form of guidelines issued by EPA for the preparation of contingency
plans, including a number of mandatory requirements to be contained in
such plans. The advantages of national standards include uniformity of
administration and enforcement of regulations, elimination of certain
states as "havens" for facilities because of their inadequate regulations,
relieving states of the burden of regulating specialized, and often
sophisticated, operations (particularly the states with only a small
number of facilities), and elimination of the duplication of effort in
the research behind preparation of the regulations. Furthermore, federal
regulation could make it administratively more feasible for participation
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by a federal "response team" in assessment of, response and recovery from,
hazardous waste releases. The concept of a response team in terms of
assessment and cleanup has been successfully demonstrated on a regional
basis. To a lesser degree, such teams have also been established in
some states. Major disadvantages of this regulatory strategy include
the costs and administrative burdens of federal monitoring and enforce-
ment, and the negative incentive for innovative state programs for dealing
with hazardous management programs.
Under a state-only regulatory strategy, the federal government
would provide guidelines for state regulatory programs, and technical
support to those states requesting it. The program suggested would then
be modified in response to local needs or interest groups. The major
advantages of this option include the ability of states to adopt regula-
tory schemes to review proposed contingency plans on a case-by-case basis,
enabling consideration of local characteristics at each site (i.e.,
proximity of population centers, local fire fighting capabilities,
hydrology, geology and climate of the area) and the low overall cost to
the federal government. The major disadvantage is the burden placed on
each state to acquire additional personnel having the necessary technical
expertise to judge the adequacy of plans submitted.
The most attractive regulatory option with regard to federal
vs. state regulation of contingency plan requirements may be the combi-
nation of federal and state controls contemplated by RCRA. The federal
EPA, using the technical resources available to it, may publish guide-
lines for state regulatory programs. In addition, minimum contingency
plan requirements would be promulgated as federal regulations. Authority
to grant permits would be delegated to the states, enabling adequate
consideration of site-specifics. This approach would eliminate most of
the disadvantages and provide most of the advantages for the alternative
listed above.
STRATEGY ISSUE III - EXACT AND SPECIFIC REQUIREMENTS VS. AD HOC FLEXIBLE
REQUIREMENTS
The issue to be addressed here concerns the level of detail to
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be contained in the uniform contingency plan standards. The greatest
degree of public safety and environmental protection would be provided
with specific requirements. However, due to the wide variety in facility
designs and sizes, site characteristics, and local emergency services
available at each location, a very extensive and cumbersome administrative
program would be involved. Additionally, considering the relatively
brief experience of the hazardous waste management industry, many innova-
tions in techniques of treatment, storage and disposal, as well as
emergency response are expected. These developments would require
constant revision of specific standards governing contingency plans.
Flexible, or ad hoc, requirements could state the objective of
the standard without specifying the technique to be employed. These
requirements enable the tailoring of contingency plans to individual
facilities and encourage innovation. However, evaluation of the adequacy
of contingency plans becomes quite difficult, requiring extensive review
by qualified regulatory authorities.
On balance, the exact and specific requirements appear to be
preferable because regulation would tend to be more uniform and objective.
STRATEGY ISSUE IV - ENFORCEMENT OF CONTINGENCY PLAN REQUIREMENTS BY
SELF MONITORING OR PERMIT AGENCY INSPECTION
There are usually two regulatory strategies related to enforce-
ment of contingency plan requirements. In both approaches, it is assumed
that the contingency plan would be reviewed by the permit granting authority
to determine if it adequately addressed the regulations in affect. Under
the first strategy, the EPA and the permitting agency would rely on the
permittee to monitor and provide information to them concerning the
adequacy of the plan. The second approach would require periodic inspection
of the facilities by EPA and/or the permitting agency to confirm that the
measures described in. the plan were in force.
The determination of the feasibility of inspection for contin-
gency plan compliance is dependent on the decision whether or not to
require an inspection program to determine compliance with design and
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operating standards. If such an inspection program is instituted, the
additional annual costs associated with determining compliance with con-
tingency plan standards would be minimal. If such a program for design
and operating standards is not instituted the costs of instituting an
inspection program solely for contingency plans would be very expensive.
Flexible, or ad hoc, requirements could state the objective of
the standard without specifying the technique to be employed. These
requirements enable the tailoring of contingency plans to individual
facilities and encourage innovation. However, evaluation of the adequacy
of contingency plans becomes quite difficult, requiring extensive review
by qualified regulatory authorities.
On balance, the exact and specific requirements appear to be
preferable because regulation would tend to be more uniform and objective.
STRATEGY ISSUE V - HANDLING VOLUME LIMITATION
By establishing limits on the handling capacity of individual
facilities, the overall threat to human safety and the environment might
be reduced for two reasons. By limiting the amount of hazardous wastes
in temporary storage at a given facility, the magnitude of the maximum
possible accidental release would be reduced-, and handling limitations
would force an increase in the number of facilities, possibly resulting
in an overall reduction in transport of the wastes, and therefore the
number of transportation-related accidental releases. A disadvantage
of such action would be the increased risk of accidental releases
resulting from the greater number of facilities. A policy of requiring
small facilities would also increase the problem of finding enough suitable
sites. Geological and hydrological constraints will limit the potential
number of suitable sites. Popular opinion may be a factor also in that
it may be more difficult, in terms of citizen resistance, to establish
many small sites than a few large ones.
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E. COMPATIBILITY OF CONTINGENCY PLAN STANDARDS WITH EXISTING FEDERAL
LAWS AND REGULATIONS
INTRODUCTION
Section 1006 of the Resource Conservation and Recovery Act of 1976
requires that the provisions of the Act be integrated with the appropriate
provisions of the Clean Air Act, the Federal Water Pollution Control Act,
the Federal Insecticide, Fungicide and Rodenticide Act, the Safe Drinking
Water Act, the Marine Protection Research and Sanctuaries Act of 1972 and
other such acts which grant authority to the EPA administrator, to avoid
duplication among the acts and enable their efficient administration and
enforcement. The purpose of this section is to review the provisions of the
above laws which deal with areas related to emergency response requirements
or plans in order to establish the extent of existing laws with regard to
contingency plan requirements.
CLEAN AIR ACT
Section 112 of the Clean Air Act authorizes the Administrator of
EPA to set standards for hazardous air pollutants at any level "which in his
judgment provide an ample margin of safety to protect the public health".
Specifically, asbestos, beryllium and mercury are three hazardous pollutants
for which emission limits have been promulgated. However, emergency response
requirements for the accidental release of hazardous pollutants above these
levels are not addressed in the act. Hazardous waste facilities which handle
substances for which emission standards have been set under this act must
meet these emission standards. However, any contingency plan standards pro-
mulgated under RCRA would be outside the scope of the Clean Air Act, and
would thus be compatible.
THE FEDERAL WATER POLLUTION CONTROL ACT
In response to the President's request for the Council on Environ-
mental Quality to carry out subsection (c) (2) of section 311 of the Federal
Water Pollution Control Act, as amended, (33 U.S.C.1251,et seq.), the Council
developed the National Oil and Hazardous Substances Pollution Contingency
Plan. The objectives of the Plan are "to provide for efficient, coordinated
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and effective action to minimize damage from oil and hazardous substance dis-
charges, including containment, dispersal and removal." The Plan is effective
"for the navigable waters of the United States and adjoining shorelines and
for the contiguous zone and the high seas where a threat to the United States
waters, shoreface, or shelfbottom exists."
The most significant provision put forth under the Plan potentially
related to hazardous waste management facilities is the requirement that any
person in charge of an onshore facility shall, as soon as he has knowledge of
any discharge of oil or a hazardous substance into navigable waters, immediate-
ly notify the nearest EPA or United States Coast Guard office of such dis-
charge. In the event the responsible party is unable to eliminate the threat
to the U. S. waters, shoreface, or shelfbottom,the federal government is
assigned the task of undertaking response activities to minimize damages from
such discharge. The federal government is then authorized to bring suit
against the party responsible for the discharge for costs incurred in the
response effort.
In summary, the National Oil and Hazardous Substances Pollution
Contingency Plan imposes two requirements on hazardous waste facilities if
an accidental release from such facilities threatens navigable waters:
notification of EPA or the Coast Guard, and recovery of the release. Since
both these requirements are included in the contingency plan standards
discussed earlier, there would be no incompatibility between the contingency
plan standards promulgated under RCRA and the National Oil and Hazardous
Substances Pollution Contingency Plan. Moreover, most hazardous waste
management facilities will probably be located far from navigable
waters.
Through the Federal Water Pollution Control Act Amendments of 1972,
the federal government was granted some authority over deep well injection,
since the legislation requires state regulation of the disposal of pollutants
in wells as a prerequisite for qualification for federal funding of area-wide
waste-treatment management. Using this authority, the EPA Administrator,
through the Administrator's Decision Statement No. 5, has recommended the
requirement that contingency plans that will aid in preventing any environ-
mental degradation must be prepared to cope with all well shut-ins or any
well failures prior to issuance of permits by state authorities. Therefore,
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the only requirement issued under this authority for facilities employing deep
well injection is that a contingency plan be prepared which concurs with the
requirement which could be promulgated under RCRA.
THE FEDERAL INSECTICIDE, FUNGICIDE AND RODENTICIDE ACT
Under the authority of the Federal Insecticide, Fungicide and
Rodenticide Act, as amended by the Federal Environmental Pesticide Control
Act of 1972, the EPA promulgated "Regulations for the Acceptance of Certain
Pesticides and Recommended Procedures for the Disposal and Storage of Pesti-
cides and Pesticide Containers" (40 C.F.R. 165). The following guidelines
pertinent to accidents at hazardous waste management facilities were
published:
1. "All accidents are incidents involving the storage or disposal
of pesticides, pesticide containers or pesticide related wastes should be
reported to the appropriate Regional Administrator."
2. "Containers should be checked regularly for corrosion and
leaks. If such is found, the container should be transferred to a sound,
suitable, larger container and properly labeled. Materials such as
adsorptive clay, hydrated lime and sodium hypochlorite should be kept
on hand for use as appropriate for the emergency treatment or detoxification
of spills or leaks."
3. A number of accident prevention measures are suggested.
4. The use of protective clothing and respirators is recommended
for all employees handling pesticides.
5. "Where large quantities of pesticides are stored, or where
conditions may otherwise warrant, the owner of stored pesticides should inform
the local fire department, hospitals, public health officials and police
department in writing of the hazards that such pesticides may present in the
event of a fire."
In all likelihood, most pesticide-s related wastes will fall into
the category of "hazardous wastes"in the classification to be promulgated
under RCRA. However, all of the above requirements are included in the
contingency plan standards discussed earlier. Therefore, no conflictir._
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requirements would be introduced through adoption of the contingency plan
standards proposed in this report.
THE OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970
This Act authorizes the Secretary of Labor to set mandatory stand-
ards to protect the occupational safety and health of all employers and
employees of businesses engaged in interstate commerce. Section 6 (b) (5)
deals specifically with toxic materials and other harmful agents requiring
the Secretary to "set the standard which most adequately assures that no em-
ployee will suffer material impairment of health or financial capacity" from
regular exposure to such hazards.
Specific requirements issued under this Act pertinent to contin-
gency plan standards include:
1. Emergency response requirements have been issued for any
facility which handles, processes, releases, or stores 4-nitrobiphenyl, alpa-
Naphthylamine, 4,4'Methylene bis(2-chloroaniline), Methyl chloromethyl ether,
3,3'-Dichlorobenzidine (and its salts), bis-Chloromethyl ether, beta-Naph-
thylamine, Benzidine, 4-Aminodiphenyl, Ethyleneimine, beta-Propiolactone,
2-Acetylaminofluorene, 4-Dimethylaminoazobenzene, or N-Nitrosodimethylamine.
In the event of an accidental release which may result in exposure to or con-
tact with any of the above substances:
a. The potentially affected area shall be evacuated as soon as the
emergency has been determined.
b. Hazardous conditions created by the emergency shall be .-limin-
ated and the potentially affected area shall be decontaminated
prior to the resumption of normal operations.
c. Special medical surveillance by a physician shall be instituted
within 24 hours for employees present in the potentially affect-
ed area at the time of the emergency.
d. An incident report on the emergency shall be made within 24
hours to the nearest OSHA Area Director.
e. A written report shall be filed with the nearest OSHA Area
Director within 15 calendar days of the event and shall include:
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i. A specification of the amount of material released,
the amount of time involved and an explanation of the
procedure used in determining this figure;
ii. A description of the area involved and the extent of
known and possible employee exposure and area contamina-
tion;
iii. A report of any medical treatment of affected employees
and any medical surveillance program implemented; and
iv. An analysis of the circumstances of the incident and
measures taken or to be taken, with specific completion
dates, to avoid further similar release.
2. Similar emergency response requirements have been issued for
facilities handling vinyl chloride.
The contingency requirements issued by OSHA for facilities handling
the aforementioned carcinogens concur with those presented earlier for all
hazardous waste facilities, with the additional requirement of filing reports
with the OSHA Area Director. There are no incompatible provisions between
the existing OSHA regulations and those proposed under RCRA.
OTHER REGULATIONS
In addition to the laws described above, the following acts which
deal either directly or indirectly with hazardous wastes were reviewed to
determine if they contained provisions related to contingency plans for
hazardous waste management facilities:
-Safe Drinking Water Act (P.L. 93-523)
-Marine Protection, Research and Sanctuaries Act of 1972 (P.L. 92-
532)
-Atomic Energy Act of 1954 (42 USC 2011)
-Toxic Substances Control Act (P.L. 94-469)
-Transportation of Explosives Act (18 USC 39)
-Hazardous Materials Transportation Act of 1970 (P.L. 91-458)
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None of the preceeding acts were found to have applicability
regarding contingency plan standards for the hazardous waste facilities to
be regulated by EPA under the Resource Conservation and Recovery Act.
Specifically, RCRA does not mandate regulations concerning transportation
related accidents (as do the Transport of Explosives Act, the Hazardous
Materials Transportation Act of 1970 and the Marine Protection, Research
and Sanctuaries Act of 1972) or accidents involving the release of radio-
active wastes regulated under the authority of the Atomic Energy Act of 1954.
Neither the Safe Drinking Water Act nor the Toxic Substances Control Act
grant authority to EPA to promulgate regulations concerning contingency plan
standards.
CONCLUSION
In conclusion, none of the contingency plan standards proposed
for implementation under RCRA were found to be incompatible with existing
regulations, or in conflict with the authorities granted under other acts.
However, facility operators may find that contingency plans must meet
supplementary requirements of other governmental regulations, such as
OSHA safety standards requiring supplementary fire equipment other than
mentioned in the Contingency Plan Standards.
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F. RELATIVE COSTS OF CONTINGENCY PLAN STANDARDS
Under the Section 3004 specifications, the design of the facility
must include the goal of reducing the possibility of material dispersion to
the environment. This reduces potential contingency plan costs, in that
protective structures such as dikes, sumps, paving to minimize or eliminate
inflow of spills into ground water, etc., must be considered regular
facility costs, rather than "emergency devices". The facility costs to
implement contingency plan standards are then for (the group of standards to
which each type of cost is related is indicated in parenthesis):
1. Fire control and suppression systems (Response).
2. Employee protective equipment donned during emergency periods
(as contrasted to protective equipment worn during material
loading or handling) ( Assessment and Response).
3. Emergency communication equipment (Communication).
4. Assessment model costs ( Assessment).
5. Neutralizing, sorbing, or barrier materials used after or
during spills (Response).
6. Contingency response costs (Response).
7. Facility diseconomies resulting from contingency
considerations, such as inventory limitations (An indirect cost
not related to specific groups of standards).
8. Governmental emergency services for fire, medical, and police
actions (An indirect cost).
The subdivisions listed above are used as the basis for the contin-
gency item costs given in the following section, under "Contingency Plan
Costs."
Disposal costs at landfill sites in the 100 ton per day (tpd)
range were estimated at $10+ per ton based on 1969-1972 costs. Because
of escalating land values and construction costs, these disposal costs on
at 1977 basis would be estimated at $20 per ton for new sites, and about
$15 ton for existing fills.
1 QQ
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Using an economist's rule of thumb that capital investment in
landfill operations should be able to return 15 to 20 percent per year
return towards profit and amortization in addition to covering operating
expenses, a TOO tpd operation, 250 days per year, would need to charge $1
per ton for each $100,000 of investment in safety or environmental protection
equipment.
Incinerators in the one-half to one tpd range (100 Ibs/hour) were
estimated to incur disposal costs of about $6.50 per ton based on 1969-1972
data. Current costs for low BTU content materials requiring pyrolysis and
stack scrubber protection would be estimated at about $15-20 per ton, decreas-
ing to about $10 per ton as the fuel quality of the material improves.
Scrubber safety systems have to be tested frequently if they are to provide
reliable service, and consequently, are likely to incur high labor costs.
CONTINGENCY PLAN COSTS
Relative cost estimates for the contingency items listed are given
relative to 100 tpd landfills and/or a 1 tpd pyrolyzer:
1. Fire control and suppression systems, type A. As supplied by
a municipal system, 10,000 gallons per minute (gpm) capacity,
no annual usage, $150 to 600 per month, higher if exclusive main
is installed:
7 to 30<Ł/ton, landfill
1500 gpm capacity, $30/mo. U/ton, landfill
7<Ł/cwt, incinerator
Type B, pressurized or small portable systems,
$800 to $30,000 (several cylinders, to truck mounted
pumper: 3
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$20,000 to 35,000
$ 8,000
$ 25,000
Emergency communication:
Telephone -- zero allocated to contingency
Internal Alarms, $100 per year
Direct signal alarms: $1500 per year
higher for remote locations 6<Ł/ton, or 32<Ł/cwt
Assessment model costs
Computer model assembly
Meteorological
Surface Water Hydrology
Ground Water Hydrology
Computer standby and data update
(update user monitoring results,
but lab costs not allocated on
routine readings)
Met. data input, standby service
(costs assumes data prepared
routinely for other uses,
charged at margin for standby)
Cost Recovery:
$63,000 X 20% --$13,600
plus mo. 300 X 12% -- $3,600
$17,200
$ 200 per month
$ 100 per month
over 25,000 tons gives 69<Ł/
ton, landfill
over 5,000 cwt gives $3.44/
cwt, incinerators
Non-computer model
Meteorological $1200
Surface water $1800
(no contour survey)
Ground water $1200
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5.
Cost recovery:
$200 X 20% --$840
Meteorologist standby $250 per mo.
Surface hydro!ogist $150 per mo.
Ground water model update $300 per mo.
$9240 gives 37i/ton
$1.85/cwt.
Computer service response
aimed at 10 min. max. Non-
computer service aimed at
30 min. maximum.
Consumable supplies:.
Sorbents, neutralizers, etc.
estimated at $400 to 3000 per
annum:
2* to 12
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Facility diseconomies:
A landfill of 100 tpd should have no scale loss for inventory
limitations of one day capacity or greater. For one-half day, 10
percent can be estimated, although it could be lower. For one-
quarter day limit, at least 10 percent diseconomy should be expected.
For a batch incinerator, no facility diseconomy can be charged
for inventory limitation as no operating time is lost waiting for
batch handling. However, the operating costs of a separate storage
facility may be incurred, plus transportation inefficiency losses.
Governmental emergency/services costs:
Local governmental costs vary widely and depend on the extra
costs incurred by government because of the facility- Fire costs
decrease per hour with increased usage on the department. Using
a rule of thumb of $120,000 actual costs per service person, fire
costs for a 25 man crew with 15 percent on-line duty per year
would be $2300 per hour, or $8-10,000 per usual fire. Police costs,
at 90 percent on-line duty, would be figured at one-sixth of fireman
cost. Equipment charges can be estimated as an additional 25 per-
cent of manpower.
Administrative and regulatory services of government can be
estimated at $40,000 per man year. The allocation of that time to
a particular hazardous waste facility would be expected to be a
small fraction of the man-year. However, startup costs for all
types of governmental administrative services could be high if
new facilities and equipment would be required at close proximity
to the disposal facility.
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Total Costs of Contingency Items
This estimate excludes items 7 and 8, but includes all other
contingency cost items as relevant to the type of facility. The low
estimate of costs uses the lowest cost options under any relevant cost
item, and the high estimate uses the highest cost option under any rele-
vant cost item.
Incinerators: $15,600 to $55,600 per year; $3.00 to $11.00
per cwt. As a percentage of costs for a 1 ton per day operation, contin-
gency items for a low of triple current disposal costs to a high which
would represent a major multiple of such costs. For a 100 ton per day
facility, such as might be used in a medium sized contract hazardous
waste disposal facility, these items would represent from 6 percent to
22 percent of current disposal costs.
Landfills: $21,400 to $84,160 per year; $.85 to $3.40 per
ton. These costs represent from 4.2 to 23 percent of the costs per ton
of disposal for a 100 ton per day land fill, with the variation in the
percentage depending upon both the range in the costs of contingency
items and upon the range in costs of disposal for different types of
facilities.
CONTINGENCY COSTS AT DETACHED WASTE FACILITIES
The waste treatment facility which is detached from the ultimate
disposal point often fulfills a processing function, particularly by-product
recovery, which is additional to the waste aspects of operation. Allocating
contingency standards costs to such a facility is difficult because, ideally,
the capital investment and operating costs committed to the waste stream may
be small. As a general approach, it can be assumed that, however, a
detached facility will have the same contingency costs per site as any
other.
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G. CONTINGENCY PLAN STANDARD SETS
In this section, three "sets" of contingency plan standards are
presented. Each set lists a different group of standards that could be
used to promulgate rules and regulations. These sample groupings are
three of an infinite number of groupings that might be developed from
the lists of standards in Part C. It should also be remembered that
different strategies may also be applied to the listed standards in a
group.
The purpose of developing the following three sets is to
present three logical and rational lists of standards from which the
EPA may choose for implementation. Realistically, these three sets
may be supplemented and/or modified by the EPA in their developing the
"best" or final set of standards.
CONTINGENCY PLAN STANDARD - SET NUMBER 1
This set of standards applies the strategy of uniform contingency
plan requirements for all facilities. In the most general terms, this
set reflects a lenient regulatory stance, providing much latitude in
the preparation of the contingency plans by the individual facility
operator. The regulatory agency would presumably provide additional
guidelines to these standards for the preparation of contingency plans
for specific facility types. These guidelines would serve solely as
suggestions to assist the facility operator in meeting requirements at
his site and dealing with particular hazardous waste(s).
Organization Standards
These standards are concerned with formalizing lines of
responsibility for contingency actions. The major costs arising in
organizational standards are those from any safety-related equipment,
such as fire protection, breathing equipment etc., specified in
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CONTINGENCY PLAN STANDARD
SET #1
ORGANIZATIONAL STANDARDS
1. Standard for Requiring a Contingency Plan
3. Defining Civil Authority
4. Defining Internal Authority
6. Facility Contingency Equipment Standards
9. Training and Drills
COMMUNICATION STANDARDS
2. Emergency Communication Equipment
ASSESSMENT STANDARDS
3. Identification of Material
4. Source and Extent of Release
7. Fire Assessment
RESPONSE AND RECOVERY
Notification of Release
1. (Activate Alarms)
2. (Notify Agencies immediately)
8. (Notify Agencies)
15. (Initiate Containment)
28. (Decontamination Equipment)
29. (Fire Alarm)
30. (Initial Response)
31. (Explosive Materials)
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organizational standards. Since such specifications could as well
be set under competing standards - facility design, NIOSH regulations,
and local permitting, it is felt that no significant costs are generated
which would be a disadvantage.
Several questions, however, covering overlaping and competing
authorities arise in the organizational standards. These questions are
central to the functioning and permitting of waste facilities under the
Act. These conflicts between local regulation on the use of land, and
regional regulation based on the authority to control water and air quality
extend to the contingency planning activities as well.
The suggested format in the planning standard used the words
"file with", without saying "approved by". Thus approval of the
contingency plan has been left to implicit approval through the issuance
of a permit. On the one hand, for a bu-ilding, construction or land-use
permit granted by local authority, there would seldom, if ever, be a
procedural, review of the contingency plan complete with comment or
endorsement by the concerned local emergency entities. On the other
hand, a state or regional permit granted under authority of the Act
could certainly embody such review. The permit process may, therefore,
provide for comment and agreement by the local authorities.
The standard for an inactive site or for post closure of a
site has been touched upon in this section. The subject of post closure
contingency plans is tied very closely to the contingency plan at a
facility used when the facility was in an operating mode. It is assumed
and logical that closure plans for a facility which are part of the operating
plans, would include provisions to identify the level of effort required
to be maintained after the operation mode has ceased. It is apparent that
post closure contingency plans will vary dramatically with such variance
dependent on (1) hazardous waste type at the facility, (2) the mode of
storage, (3) the exposure of the facility to the environment and the site
location/characteristics. Although post closure contingency plans would
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be developed as part of closure plans (Operations), the Standard in this
report may be utilized to develop the necessary plan. Implicit in the
standards given are assumptions about the nature of hazards, especially
the limited nature of hazards, that may arise from a properly sited and
operated facility. In this report, guideline longevity for the hazards
was assumed to be 50 years (range 1-100 years) for most organic residues,
200 years (range 100-500 years) for certain persistent organics, and
5000 years (range 500-10,000 years) for metal element hazards. The
ultimate fate of the organics is considered to be microbial breakdown
and oxidations while metal elements are considered to disperse during
ground water migration at tolerable concentration, even in impermeable
sites (based upon a defined impermeability of 10~ cm/sec). Concentrated
radiologicals, however, are not considered in the longevity. Small
amounts of them would be assumed to disperse to below background levels
of activity in the same manner as metal elements, even if their radio-
activity had a much greater longevity.
For help in preparing a list of appropriate standards for
post closure, a list similiar to this Set Number 1 should be utilized
with the realization that costs for equipment and manpower monitoring
would need to be borne solely by the plan. Although the organizational
standards, the communication standards, the assessment standards as
well as the response and recovery standards would easily carry over
from active operations, general post closure costs could run from $1,000
per year to $10,000 per year at a disposal facility. It is not envisioned
that security costs would be extensive at a closed facility if adequate
and effective closure techniques are utilized at a site. If security
guards are required, such costs could be as high as $40,000 to $60,000.
The advantages of defining the organization standards allow
for execution of response and recovery in an orderly fashion. Such
establishment is imperative to protecting public health minimizing harmful
exposure of hazardous waste releases on the environment.
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Communication Standards
The standards considered for communication require that facility
operators be able to summon external aid and that employees be able to
summon aid internally. The standards require that the knowledge of complete
inventory and storage be available and that notifications required under
the Act be formally established and identified in the contingency plans.
These standards seem to be minimumly different from those that a prudent
operator would not ordinarily undertake on his own. The list is adequate
but not exhaustive.
Additional standards, such as predetermination of language
communication between all employees and supervision, or between operators
of the facility and persons transiently engaged in transportation activites
at the facility, may also be formulated if potential problems in this area
might occur. Precedent for such standards can be found in oil spill
contingency plan standards, and in the Port Safety Act. However, it was
concluded that the international nature of the oil spill problems and
Port traffic would not be expected at a hazardous waste facility. Any
certification training requirements, internal alarms, and the proper
supervision or transient personnel, would more than likely provide adequate
safeguards in preventing communication problems.
Automatic warning system requirements have been generally concluded
to be of little application in waste facilities, Nevertheless, incinerators
generally incorporate high and low temperature control sensors. And in
this case, safety equipment has been both required and important.
The question has also been raised that a central agency, such as
a state or regional alarm center should receive instant automatic alerts
when an accident occurs at a particular facility. The advantage of
such an alert would be quick response of the state or regional facility
to the accident. However, with the basic premise of facility operator
preliminary assessment is considered to be most important to protection of
health and the environment, little advantage would be associated with the
instant alert alarm. With little advantage, any communication costs in this
regard are not justifiable.
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The advantages of reliable and effective communication in the
event of an accident at a facility is most important in minimizing the
impact of a hazardous waste accident. Costs for implementation of
communication standards would be on the order of only several thousand
dollars at a facility.
Assessment Standards
The costs imposed on a small facility by assessment standards
are considerable. Assessment standards, are linked to siting studies,
requiring provision of a considerable exploration of the natural dispersive
qualities of a site before a facility is permitted to be established.
Particularly important are airborne and waterborne dispersion vectors.
Dispersion profile capabilities need to be established at the facility
and the precedent for providing such assessments is well established with
nuclear power plant facilities. The value of such information is also
clearly pointed out by looking at the recent contamination problems in
storm arid sewage discharges from kepone wastes and the dioxine waste
releases at Seveso, Italy.
Several policy considerations arise in conjunction with
assessment of a non-routine release at a facility and the facility siting
criteria. The problems involve transport of hazardous materials, and the
treatment location of industrial hazards, in general. For example, if
the standards for siting hazardous waste facilities should follow the U.S
nuclear regulations example of partial isolation of risk, i.e., limiting
siting to zones of low population exposure potential, then the hazard
exposures in transport to such isolated sites may well be increased. The
sites would also become a concentration focus for such hazards. The
exposure is acceptable for organic materials to be pyrolyzed, but may be
counter-productive for metal elements. In the latter case, dispersion
of metal elements into the natural environment may be the preferable
ultimate fate of the disposal, instead of perpetual concentrated storage.
Policy decisions need to be made on whether isolated distant sites are
preferable to closer more exposable locations.
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The alternative approach of allocating the risk to small incin-
erators, smaller disposal sites, and limitation of inventory could reduce
total risk of public exposure and risk at any one time. However, off-
setting the risk reduction at a specific site is the fact that populations
are exposed. Contingency plans for small local areas also might not
require sophisticated atmospheric models since the exposures could be too
rapid for them to be useful. More important would be informing the local
population of preset evacuation plans and providing them with quick
knowledge of wind conditions at the time of an accident. It is assumed
that the policy questions raised in this area will be resolved under the
permit granting process. The effect of the decision will certainly impact
dramatically on event assessment costs associated with and required at the
facilities. The closer a potential hazardous waste contaminant is to
human population centers, the greater the committment must be to monitoring
equipment and assessment standards.
In general, the question of cost effectiveness of sophisticated
assessment models is closely linked to siting considerations, and
contingency planning will have to reflect the siting policy. Assessment
model costs on facilities including the basic data collection at a site
may be on the order of $50,000 to $100,000 which emphasizes the importance
of size to distribute such costs. The disadvantages of not having an
adequate assessment procedure would be a serious compromise to protecting
the environment and public health.
Response and Recovery
The area of greatest advantage for response standards will
probably lie in providing a firm, prescriptive methodology for cleanup
of spills, leaks, which are internal to the facility. Such expenditures
will result in expeditious cost effective cleanup operations. Without
good responses, i.e., very careful attention to housekeeping, the potential
is great for the later damages of reactive residues in the surface layers
of soil around handling points in the facility. Improper response could
also lead to fugitive dusts, puddles of corrosive and reactive materials,
and difficult control of contaminated runoff.
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Training and maintenance of training in hazardous waste handling
may be instrumental in improving the lack of attention of personal safety
often demonstrated by the workers themselves.
The external response standards in this section are likely to
be the least effective in promoting contingency actions. The standards
recognize this implicitly in requiring the operator to cooperate with
emergency authorities and to assist in emergency response. The open
ended nature of an operator's liability with regard to external exposures,
and also the need for objectivity in assessments, such as in water quality
analysis, have a predictably inhibiting effect on external action. The
phenomenon of inhibited reaction is a well known result of legal
liability proceedings. Such reluctance has led some states to pass
"good Samaritan" laws in order to compensate for any reluctance of action
in this area. Thus, those standards for external action which are expected
to be more effective are those where the ability of the operator to assist
external actions (provide extra breathing equipment, pump and collect
leachate, etc.) can be enhanced by pre-planning.
External response standards for facilities may in several cases
be effectively combined with those for transportation, although this
combination has not been considered in the standards. An operator has
no requirement to mitigate spill of materials carried by an independent
transporter, even though the incident might be outside his gate - thirty
feet away. Nevertheless, the advantage in mutual agreements for
assistance between operators is apparent. Agreements in the petroleum
industry are common and have been executed to avoid just such a problem.
By enabling those providing assistance to have expectation of financial
recovery, and to be held harmless from liability for situations for
which another operator is legally responsible, make mutual external
response agreements viable. This pattern should also be workable in
the hazardous waste disposal industry as it has been in the petroleum
industry.
Contingency plan actions resulting in facility shutdown raise
some concern for public hazard exposure at the generator site. At present,
a generator may not be covered by the provisions of the Act, if his normal
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storage inventory of waste does not exceed the limits to be specified.
If the generator's waste disposer is shut-in, there is no mechanism to
prevent build-up of the inventory to abnormal or dangerous levels.
Widespread exposure in the event of accident at the generator's facility
may certainly be possible.
The costs from the Response and Recovery standards are the
most variable of any of the four groups. The primary reason for such
variance is the magnitude and type of non-routine spill will control
the overall magnitude of control/cleanup costs. Spills into the
subsurface, for example, will be both more costly and time consuming
as compared to surface spills. The advantages of a quick and organized
response to an event will be measured primarily in terms of basic
protection to public health and environment. Costs for the most basic
response and recovery contingency plan will be greater than $0.25/ton
Evaluation
This first set of contingency plan standards contains a minimal
number of standard requirements. As such, it closely resembles regula-
tions in effect or under consideration in several states. The effectiveness
of this type of regulatory approach relies primarily on the competence
of permit granting authority in evaluating the effectiveness of proposed
plans. The most important advantage in the set of standards would be
the ability of the standards to cover a wide range of facility types and
sizes. In addition, administrative and other costs are kept at a minimum.
The major disadvantage of the approach may be the lack of guidance provided
to the facility operators in preparing specific contingency plans for
their facility.
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CONTINGENCY SET #2
The 2nd set of standards is addressed primarily to facilities with
incinerators. It specifically includes requirements for airborne dispersion
modeling. Specific requirements in all four standards areas (organization,
communication, assessment, and response and recovery) have been detailed to
a greater degree. This approach reflects a facility oriented regulatory
strategy, and addresses a number of specific contingency plan operational
requirements.
The advantages and disadvantages for the areas of organization,
communication, assessment and response/recovery have been discussed in Set #1
along with general costs. Costs outlined in Set #1 would be applicable in
addition to costs incurred by supplemental standards. The greatest number of
these standards are in the area of response and recovery. A 10% increase in
overall costs for this area is expected which may be on the order of $0.30 to
$0.50/ton. A listing of Standards follows on the next page and includes
applicable strategies.
Evaluation
The standards in this set are markedly more specific and stringent
that those presented in Set #1. The additional standards may increase the
effectiveness of public health protection and environmental protection. An
additional advantage of the specific contingency plan standard requirements
is the relative ease of determining compliance of submitted plans based on
the regulation standards. The major disadvantage of this regulatory approach
is a lack of flexibility. Unless provisions were made to enable the granting
of variances to certain facilities from full compliance with the regulations,
the requirements might prove to be excessive for many facilities, particularly
the smaller operations. Such possible over-regulation presents the threat
of suits claiming that the regulations may be "arbitrary and capricious".
In summary, the more detailed regulations presented in Set #2 result in
minimal cost increases but may provide a greater protection potential for
public health and the environment.
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CONTINGENCY PLAN STANDARDS
SET #2
ORGANIZATIONAL STANDARDS
1. Standard for Requiring a Contingency Plan
2. Filing the Contingency Plan
3. Defining Civil Authority
4. Defining Internal Authority
5. Response to Emergency Inquiry
6. Facility Contingency Equipment Standards
7. Information on Exposure Symptoms and Treatment
9. Training and Drills
COMMUNICATION STANDARDS
1. Pre-Contingency Notification of Nature of Hazards
2. Emergency Communication Equipment
3. Internal Alarms
4. Notification of Required Agencies
ASSESSMENT STANDARDS
1. Airborne Dispersion Model
3. Identification of Material
4. Source and Extent of Release
5. Atmospheric Release Assessment
7. Fire Assessment
RESPONSE AND RECOVERY
Notification of Release
1. (Activate Alarms)
2. (Notify Agencies immediately)
3. (Initial Report)
4. (Final Report)
Shut-Down
5. (Switching Mechanisms)
6. (Personnel Designated)
7. (Monitor Releases)
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Evacuation
8, (Notify Agencies)
9. (Begin Evacuation)
10. (Evacuation Procedures)
Monitor and Delimit Affected Area
11. (Secure Entry)
12. (Monitoring Program)
13. (Sample Analysis)
Collection and/or Containment of Waste
14. (Secure Area)
15. (Initiate Containment)
16. (Emergency Storage Area)
17. (Collection and Containment)
18. (Handling of Wastes)
19. (Clean-up Emergency Equipment)
20. (Integrity of Containment Equipment)
Continued Assessment of Affected Area
21. (Monitoring)
22. (Monthly Reports)
Personnel Availability
23. (Qualified Personnel on Site)
24. (Qualified Personnel Availability)
Medical Assistance and Treatment
25. (Physician and Medical Equipment)
26. (Emergency Assistance)
27. (Treatments for Exposure)
28. (Decontamination Equipment)
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Fire-Fighting and Prevention
29. (Fire Alarm)
30. (Initial Response)
31. (Explosive Materials)
206
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CONTINGENCY SET #3
This 3rd set of standards is directed toward contingency plan
standards for facilities which primarily utilize land burial and/or
lagooning. The set resembles Set #2 with respect to the level of stringency
associated with the standards. While the response and recovery standards
are for the most part flexible, a modeling requirement for assessing water-
born movement of accidentally released wastes is addressed. Again, a
facility-type regulatory strategy is employed; both specific and flexible
standards are included in the Set on the following page.
Costs for Set #3 would be very similar to those associated with
Set #2 and, therefore, about 10% greater than Set #1. Advantages of this
set also mirror the advantages of Set #2.
Evaluation
This set represents a thorough treatment of standards to ensure
greater protection of human safety and the environment from accidents
occurring at facilities employing land burial*or lagooning. Most hazardous
waste facilities will likely be of this type. A combination of specific
and flexible requirements are included in the Set. As with the standards
presented in Set #2, some provision must be made to enable granting of
variances to certain facilities deemed exempt from certain requirements,
particularly small facilities. Nevertheless, the inclusion of specific
standards enables an easier measure of compliance during review of
contingency plans by the permit granting authority.
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CONTINGENCY PLAN STANDARDS
SET #3
ORGANIZATIONAL STANDARDS
1. Standard for Requiring a Contingency Plan
2. Filing the Contingency Plan
3. Defining Civil Authority
4. Defining Internal Authority
5. Response to Emergency Inquiry
6. Facility Contingency Equipment Standards
7. Information on Exposure Symptoms and Treatment
8. Inactive Sites
9. Training and Drills
COMMUNICATION STANDARDS
1. Pre-Contingency Notification of Nature of Hazards
2. Emergency Communication Equipment
3. Internal Alarms
4. Notification "of Required Agencies
ASSESSMENT STANDARDS
2. Waterborne Dispersion Model
3. Identification of Material
4. Source and Extent of Release
6. Waterborne Release Assessment
7. Fire Assessment
RESPONSE AND RECOVERY
Notification of Release
1. (Activate Alarms)
2. (Notify Agencies immediately)
3. (Initial Report)
4. (Final Report)
Evacuation
8. (Notify Agencies)
9. (Begin Evacuation)
10. (Evacuation Procedures)
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Monitor and Delimit Affected Area
11. (Secure Entry)
12. (Monitoring Program)
13. (Sample Analysis)
Collection and/or Containment of Waste
14. (Secure Area)
15. (Initiate Containment)
16. (Emergency Storage Area)
17. (Collection and Containment)
18. (Handling of Wastes)
19. (Clean-up Emergency Equipment)
20. (Integrity of Containment Equipment)
Continued Assessment of Affected Areas
21. (Monitoring)
22. (Monthly Reports)
Personnel Availability
23. (Qualified Personnel on Site)
24. (Qualified Personnel Availability)
Medical Assistance and Treatment
25. (Physician and Medical Equipment)
26. (Emergency Assistance)
27. (Treatments for Exposure)
28. (Decontamination Equipment)
Fire-Fighting and Prevention
29. ( Fire Alarm)
30. ( Initial Response)
31. ( Explosive Materials)
209
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H. REFERENCES
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1976, Assessment of Industrial Hazardous
Waste Practices - Textile Industry
U. S. Environmental Protection Agency, SW-125c.
Allan, D. S., and others,
1975, Chemical Hazards Response Information
System for Multimodal Accidents (CHRISMA) .
Department of Transportation, U. S. Coast Guard
CG-D-148,75.
1976, Development of
Chemical Hazards Response Information System
(CHRIS)., Department of Transportation,
U. S. Coast Guard, CG-D-117,76.
Arthur D. Little, Inc., 1972a, CHRIS APPENDICES
I-VI. Department of Transportation,
U. S. Coast Guard, DOT-CG-03,223-A.
, 1972b, CHRIS APPENDIX VII
Supporting Information. Department of Transportation,
U. S. Coast Guard, DOT-CG-03,223-A.
, 1973, Alternatives to the
Management of Hazardous Wastes at National
Disposal Sites, Appendices. A.D.L., Cambridge,
Massachusetts, C-74861.
, 1974, Chemical Hazard Response
Information System - Response Methods Handbook
(Appendices). Department of Transportation,
U. S. Coast Guard, CG-446-4.
Bahme, C. W., 1976, Fire Officer's Guide to Emergency
Action. National Fire Protection Assocation, Boston,
Mass., 3rd Ed.
Battelle Memorial Institute, Pacific
Northwest Laboratories, 1973. Program for the
Management of Hazardous Wastes, 2 volumes. U. S.
Environmental Protection Agency.
Booz-Allen Applied Research, Incorporated, 1973, A Study
of Hazardous Waste Materials, Hazardous Effects and
Disposal Methods, 3 volumes. U. S. Environmental
Protection Agency, EPA-670/2-73-14.
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Braunstein, J. (ed) ? 1973, Underground Waste
Management and Artificial Recharge, Vol. 2.
The American Association of Petroleum Geologists,
Incorporated.
Calspan Corporation, 1977a, Assessment of Industrial
Hazardous Waste Practices in the Metal Smelting
and Refining Industry - Appendices. U. S.
Environmental Protection Agency.
, 1977b, Assessment of Industrial
Hazardous Waste Practices in the Metal Smelting
and Refining Industry, Vol. I, USEPA.
, 1977c, Assessment of Industrial
Hazardous Waste Practices in the Metal Smelting
and Refining Industry, Vol. Ill, USEPA.
Cartwright, Keros and Lindorff, David E., 1976,
Land Pollution: Strategies for Emergency Action.
State of Illinois Institute for Environmental
Quality, Document No. 76120.
Christensen, H. E., and others (ed), 1976,
Registry of Toxic Effects of Chemical Substances.
U. S. Department of Health, Education, and Welfare,
Public Health Service, National Institute for
Occupational Safety and Health.
Conrad, E. T. , Mitchell, Gary L., and Bauer, David H.,
1976, Assessment of Industrial Hazardous Waste
Practices - Leather Tanning and Finishing Industry.
United States Environmental Protection Agency, SW-131c.
Grumpier, E. P., Jr., 1977, Management of Metal Finishing
Sludge. U. S. Environmental Protection Agency, SW-561,
Day, H. R., 1976, Disposal of Dilute Pesticide Solutions.
U. S. Environmental Protection Agency, SW-519.
Department of Transportation, U. S. Coast Guard, 1970,
Control of Hazardous Polluting Substances.
DOT-USCG, USCG-HPS-2.
1975,
Preceedings of the Fourth International Symposium
on Transport of Hazardous Cargoes by Sea and Inland
^Waterways. U.S.DOT, CG-D-24-76.
Department of Transportation, National Highway Traffic
Safety Administration, 1976, Hazardous Materials -
Emergency Action Guide. U.S. DOT.
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Environmental Studies Board, National Academy of
Sciences/ National Academy of Engineering, 1972,
Water Quality Criteria 1972, U. S. Environmental
Protection Agency, R3-73-033.
Fields, T., Jr., Lindsey, A.W., 1975, Landfill Disposal
of Hazardous Wastes: A Review of Literature and Known
Approaches. U. S. Environmental Protection Agency,
SW-165.
Foster D. Snell, Incorporated, 1976, Potential for
Capacity Creation in the Hazardous Waste Management
Service Industry. U. S. Environmental Protection
Agency, SW-127c.
Fuller, W. H. (ed), 1976, Residual Management by Land
Disposal - Proceedings of the Hazardous Waste
Research Symposium. U. S. Environmental Protection
Agency, EPA-600/9-76-015.
Ghassemi, M., 1977, Analysis of an Emergency Incident
Involving Hazardous Wastes, Anniston, Alabama. U. S.
Environmental Protection Agency, Contract Number 68-01-2956
4
Hallowell, J. B., and others, 1976, Assessment of
Industrial Hazardous Waste Practices - Electroplating
and Metal Finishing Industries - Job Shops.
United States Environmental Protection Agency,
SW-136c.
Harmon, M. , and King, J., 1974, A Re.view of Violent
Manomer Polymerizations, A Selected Literature
Survey. Department of Transportation, United States
Coast Guard, CG-D-159-75.
Levin, J., Berland, G., Greenberg, J., and Peters, C.,
1977, Assessment of Industrial Hazardous Waste
Practices - Special Machinery Manufacturing
Industries. U. S. Environmental Protection Agency,
SW-141C.
Manufacturing Chemists Association, 1974, Technical
Guide SW-1: A Guide for Landfill Disposal of
Solid Waste. MCA, Washington, D.C.
Martino, P.A., 1976, Qualification Standards for
Personnel Responsible for Hazardous or Noxious
Chemicals in Bulk, Appendix K. U. S. Department
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Mason & Hanger - Silas Mason Co., Inc., 1976,
Progress Report: Disposal of Waste or Excess High
Explosives. U. S. Energy Research and Development
Administration, Albuquerque Operations Office.
McKinnon, G. P., (ed), 1976, Fire Protection Handbook,
National Fire Protection Assocation, Boston, Mass.,
14th ed.
Midwest Research Institute, 1972, Pesticide Study
Series - 5: The Pollution Potential in Pesticide
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National Fire Protection Association, 1975, Fire
Protection Guide on Hazardous Materials.
NFPA, Boston, Mass., 6th ed.
National Solid Waste Management Association, 1976,
Working Draft: A Legislative Guide for a
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NSWMA, Washington, D.C.
Ohio Environmental Protection Agency, 1974,
Emergency Response Annual Report. OEPA.
Ottinger, R. S., and others, 1973, Recommended
Methods of Reduction, Neutralization, Recovery,
or Disposal of Hazardous Waste, 16 volumes.
U. S. Environmental Protection Agency,
EPA-670/2-73-053C.
Perry, Robert H.(ed), 1973, Chemical Engineers
Handbook. McGraw-Hill Book Company, 5th ed.
Peters, Gerald 0., Levin, James, and Thomas, Peter,
1977, Assessment of Industrial Hazardous Waste
Practices - Electronic Components Manufacturing
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Pilie, R. J., and others, 1975, Methods to Treat, Control
and Monitor Spilled Hazardous Materials. U. S.
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Resources Research, Incorporated, 1972, Accident Episode
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Hazardous Waste Practices. In the Petroleum
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_, 1975h,
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Chapter IV
TRAINING AND CERTIFICATION
This chapter deals with the separate but related issues of
training and certification of hazardous waste management site operators
or employees. Training is designed to assure that the appropriate
personnel will possess the specific skills and knowledge required to
carry out their responsibilities effectively and safely, including
contingency plan implementation and record keeping. Certification
provides the authorities with assurance that the requisite skill and
knowledge levels are held by the employees on a continuing basis. A
key issue, if both the training and certification functions are to be
included in the EPA Resource Conservation and Recovery Act regulatory
program, is the degree to which the certification program should be
linked to the training program. An independent certification program
will have, for example, an examination schedule of its own. Certification
linked to a training program might require only that a certificate be
filed with the regulatory authority attesting that an employee successfully
completed the training course.
A second key issue is whether all hazardous waste management
operators will have to undergo training and be certified, or whether
experienced operators will be exempted from either or both requirements
through "grandfather clause" provisions. This is a stipulation that
personnel who have been carrying out the responsibilities for a specified
number of years may continue to do so without having to meet the new
formal training and certification requirements which are to apply to new
entrants to the field.
The first section of this chapter summarizes the background
of the problem. Unlike the other questions examined in this study,
recommendations are made in this chapter, in the second section for
training and in the third for certification. The fourth section examines
the costs of the training and certification schemes recommended. The
fifth section discusses alternative certification agencies.
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A. Statement of the Problem
Section 3004(6) of the Resource Conservation and Recovery Act
of 1976 requires that standards be implemented regarding training for
hazardous waste facility personnel, as may be necessary or desirable to
protect human health and the environment. Personnel in the hazardous
waste mana cement industry must perform their tasks in a consistently
competent manner in order to assure public health and safety and to pro-
tect the environment. Many of the jobs associated with hazardous waste
management require high skill levels. Clearly, training in these jobs
is essential, whether it is acquired on the job and through experience,
or through a formal course of instruction.
Certification is a common method used to document the amount
and type of training that individuals have received and the skills they
possess, and can be used in a regulatory program to ensure that individuals
charged with specific responsibilities have this requisite training and
competence. Because certification requires an assessment of the training
acquired and skills possessed by an individual, it is easy to link
certification to training where training is provided through formal, channels,
scuh as a classroom, or a training workshop. But where training has been
informal, gained on-the-job, or through experience, or where training
will provide only some of the required skills, certification linked to
training course completion may be quite inadequate.
Where formal training requirements are implemented certification
is effectively a concommitant requirement, if the training is to be
verified and enforced. Course-work and training certification may be
included in a larger certification program, also requiring separate
examination and periodic updates, for example.
A motivated, knowledgeable work force is needed to meet
hazardous waste management permit conditions. This is especially true
at a landfill site where hazardous materials are disposed of under a
covering of earth. The performance of such facilities is difficult to
judge. There may be no product stream as in a liquid waste treatment
218
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plant or incineration facility by which performance can be measured.
Thus, the personnel at such facilities must perform their jobs with
certain minimum levels of competence, knowing that their actions can
affect their own personal health and the welfare of the community for
decades.
The subject of certification has elicited many responses from
the hazardous waste management industry. The proposal that facility
operators would be obliged to qualify under a mandatory certification
program received overwhelmingly negative comments. The recurring theme of
these comments was that meeting the performance standards to be established
by EPA was an adequate measure of training, obviating the need for a
certification program. An additional objection centered on the feasibility
of a certification program given the many types of wastes involved, the
variations in methods and systems of disposal, and the greater role of pri-
vate enterprise in hazardous waste management as contrasted with waste water
treatment (this last factor making proposed certification much different
than the situation facing the PL 92-500 Grant Program). It seems clear
that a mandatory certification program for facility operators would have
to overcome strong objections from the hazardous waste management industry.
A major question concerning the usefulness of a certification
program is the extent to which it brings additional assurance of safety
to the hazardous waste management programs other mechanisms in the
program work toward the same goal: 1) training programs are designed
to provide a competent, knowledgeable work force; 2) performance standards
are designed to provide environmentally sound operation; 3) operator's
permit conditions provide an overall framework; and 4) contingency plans
provide for proper response to emergencies and/or accidents. It can be
argued that requirements in these areas may eliminate the need for
certification.
Competition for reduced insurance premiums provides another
incentive for accomplishing the same goals as certification, .-the inter-
action between the hazardous waste manager trying to demonstrate competent
operation in order to lower its premium rate and an insurer attempting to
219
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evaluate the risks of an operation, could lead.to a review framework
similar to a certification program.
The main arguments for a training and independent certification
program focus on the inherent hazardousness of the material being handled
and on the current status of the industry. Though an independent certifi-
cation program may only present a minor incremental margin of safety,
given the operational requirements, inspections, monitoring, and
contingency plans that will also be required, it is one that may orove
cost-effective given the possible damage that an unintended release could
cause. The industry is in an embryonic form: its personnel are often new
to the business and new requirements are being made of the operators in
the areas that they may have no experience in. The current range of
capabilities found in the industry vary widely, from well managed,
sophisticated, responsible companies to antiquated land fills, to fly-by-
night illegal dumpers. A strong training and certification program will
help raise and unify standards and help eliminate the incompetent from
what is likely to prove an increasingly demanding and sophisticated
industry.
The RCRA regulations will result in better planning, design,
and operation of hazardous waste facilities. This should go a long way
toward reducing risk and raising the level of owner and operator competence.
Nevertheless, a well planned and designed facility, which will be required
by strict permit requirements, does not insure the facility will be
operated and maintained to function in the manner for which it was planned
and designed. It is important to build in the same safeguards and level
of competence in the operators of the facility as in the basic physical
facility itself.
A training and an independent certification program is recommended
for the hazardous waste management industry. The costs of the program are
likely to prove small compared to the increase in safety and industry
responsibility that should result from the program. A grandfather clause
should be included for the training program, but all operators should have
to meet the same certification requirements.
220
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B. A Training Program for the Hazardous Waste Industry
The industry is new and lacks established procedures and
practices which could provide an effective means to provide formal
training for new personnel. It lacks industrial structure, i.e., relation-
ships between generators of raw materials, equipment suppliers, management,
workers, professional organizations, regulators, etc., which would
provide a context for new personnel training. Because of this, it is
necessary to have a more deliberate approach in developing training
programs.
While the newness of the industry is a handicap in one sense,
it is an opportunity in another. Effective training programs can be
implemented more readily at this beginning stage than at later stages
when routines and behavior patterns are established.
Factors Relevant to Training Program Development
Because of the opportunity for development of a completely
new hazardous waste training program, special attention is warranted
toward factors usually given less consideration. Some of these factors
are enumerated below. They include:
(1) Program Development. A program is an organized effort to
promote some end. It is not a single act. Training is a long-term commit-
ment and must be developed and carried forth as a program. It cannot be
successful if it is only a limited effort. As a program becomes insti-
tutionalized, it acquires its own momentum. In the beginning stages,
however, considerable effort will be required to keep it going.
(2) Institutionalization. For a training program, the process
of institutionalization includes: the development of organizational entities
to manage the training activity; the assurance of continuing financial
support; the continuing support of management; the emergence of a body of
peers, and official sanctioning bodies; the emergence of ceremonies for
the receipt of certificates and awards and the regular occurrence of commen-
surate social functions, etc. This process may require several years or
221
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even decades to develop. While proper nurturing may let it happen at a
faster pace, it cannot be forced, and must be given time to occur.
(3) Support. The training program must be supported fully by
management and by all personnel involved (i.e., those persons who interact
on the job with the trainee, those supervising and teaching, and those
who are the trainees).
(4) Logistics. A training program requires deliberate management
with attention given to such items as budget, instructors, facilities, and
time allotment for trainee participation.
(5) Substantive Content. The specific training should be
designed carefully to relate to the tasks of the job in both curriculum
and specific course content. Further, the relationships between the
learning and job tasks should be evident to the trainee.
(6) Modes of Training and Media. Training can take place in
the classroom, on the job, by correspondence, by video tapes, etc. An
attempt should be made to match budget, training mode, and effectiveness.
This may require more attention in the hazardous wastes area since there
may exist only limited precedents for the mode of training selected.
For example, the video tape self-teaching exams mode, discussed below, may
appear to be appropriate for a hazardous wastes training program. But
the video tape technology for such use is new and so there are not many
existing situations to confirm this assessment.
The success of any training program will depend upon how well
these factors are considered. It is important not to expect too much too
fast. The institutionalization must be given a chance to develop.
Training Program
A training program may not be successful on a national basis unless
it can be implemented easily by the hazardous wastes industry. Since the
industry is new and there is no structure to support it, federal involvement
to develop the training materials would be advisable. To determine the
feasibility of the development and implementation of a training program on
222
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a national basis, a model training program was designed; the complete
design outline is presented in Appendix 7 while an overview of the overall
program is seen in Table 26.
The model training program consists of seven modules. The
modules are developed along the lines of a "need to know" theme, advocated
by the Association of Boards of Certification (ABC) group (which is
active in water and wastewater treatment training standardization, as
described below). The seven modules are intended to fit together as an
integrated, comprehensive, and complete training program.
Module 1 starts with a basic orientation about the problem of
hazardous wastes and the relevant legislation which controls their disposal.
The module has both "basic" and "in-depth" phases. The basic phase provides
essential information necessary for all personnel. The in-depth phase is
intended for the supervisory level and requires reading of the relevant
laws, regulations and other pertinent reference material.
Module 2 provides training on good practices for hazardous wastes
handling. Again, it has both basic and in-depth phases.
Module 3 has three options: treatment, storage, and disposal.
It reviews the specific procedures for handling hazardous wastes which are
unique to the respective type of facility discussed. Only the option or
options associated with the facility of employment would be required.
Module 4 is site-specific training and would be taught by the
superintendent of the facility or his assistant. It relates to specific
procedures in dealing with hazardous wastes which are unique to the
particular site.
Modules 5 provides an applied review of the relevant scientific
principles which are pertinent to the facility operation. This module
should be available to supplement other levels of training where necessary,
but would not necessarily be required for any individual.
223
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Module 6 reviews some of the topics which most personnel would
be expected to know prior to working at a hazardous wastes facility. It
is a package designed to provide the necessary information for remedial
work.
Module 7 is the continuing training module. The specific content
of this module would be determined by the superintendent of the faciUty.
It could include a variety of topics. Also, the training mode for each
topic could be designed to fit the circumstances. Contingency plan drills,
attendance at short courses, on the job instruction, etc., are examples
of training activities appropriate for this module. A minimum number of
hours of training in this module would be expected annually.
To circumvent the problem of insufficient institutionalization
to carry out a program, as proposed in Table 26 and Appendix 7, the use
of video tapes is advocated for those modules where the nature of the
training is not site-specific. There are many advantages to such a system.
The equipment involved is cheap and easy to use. Also, the tapes can be
viewed at the convenience of the trainee, obviating the need for a more
formal setting. They can be viewed as many times as desired. The self-
teaching examinations would complement the tapes and would be taken as many
times as is necessary to develop the trainee's knowledge to an adequate
level. Further, a formal classroom format could be used occasionally to
complement the video tape and self-teaching exams format. The video tape
scheme also concentrates the "front end" costs in an initial effort to
produce the tapes. Further, there can be some assurance that minimal
training standards are promulgated throughout the country.
The major conclusions of this investigation is that a training
program for hazardous wastes handling is feasible if done along the lines
outlined in Table 26 and Appendix 7. The program must be relatively
easy to implement and administer and be capable of implementation by the
industry as it develops. The module concept of training which uses the
video tape media has these characteristics.
225
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C. A Certification Program for the Hazardous Waste Management Industry
Two alternative programs of certification are presented: one
comprehensive, and one limited. The comprehensive program provides for
training and certification for all hazardous waste management employees
appropriate to the level of technical knowledge and the degree of
responsibility required of the candidate. The limited program is a
mandatory certification scheme, which applies only at the management
level.
As noted above, an independent certification program is
recommended for the hazardous waste management industry. Two program
alternatives are considered here: a comprehensive certification
program, and a limited one.
There are two existing certification programs that are analogous
to the proposed hazardous waste management, certification program. They
are the pesticide certification program and the waste water treatment
program that operates under the Association of Boards of Certification
(ABC) Program. Pesticide certification is an example of a federally
administered program. The Association of Boards of Certification is an
example of a collection of state administered programs aided by the EPA.
The following discussion explains the workings of these two programs.
The Association of Boards of Certification (ABC)
EPA involvement in certification of waste water operators stemmed
from the need to assure competent operation of waste water facilities for
the protection of public health and environment. In 1972, EPA went to
appropriate trade associations and together they developed the ABC. This
board was to certify municipal waste water treatment plant operators only.
Twenty thousand dollars was provided by EPA for a "start up" fund. The
general objectives of the ABC were: 1) improvements in operator certifi-
cation laws; 2) promotion of operator certification as a means to
accomplish #1; 3) standardization of state regulations so operators could
transfer state to state; 4) development of a uniform examination; 5)
assistance to new boards. The federal agency that was designated the
226
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focal point for operator certification functions was the Municipal Permits
and Operations Division, Office of Water Program Operations. In general
terms, this office provided technical assistance and project grant support
funds. The central theme of EPA involvement was contained in a 1975 state-
ment made at an ABC/Tri-Regional Certification Meeting in New York City:
"Through cooperative efforts with ABC, EPA goes on record in support of a
nationally recognized authority for assisting state certification programs
in program upgrade and development and for the adoption of mandatory
certification programs by individual states."
In 1977, the ABC program is in 47 states, the Department of
Defense, and the Park Service and has affiliations with several foreign
countries. Two states have mandatory programs while the others have a
voluntary program. ABC outputs include: 1) design of a model law;
2) classification of facilities and operators; 3} creation of a program
guide and training manual; 4) establishment of examination criteria. While
the program is still focused on municipal operators, there is a trend to-
ward certification of industrial operators as well. Formerly, many indus-
trial operations cooperated with the ABC particularly in the area of
exchange of professional information. Now many states are involved in
certifying industrial operators. The State of Michigan is the most
advanced in this. Their proposed legislation requiring industrial cer-
tification is designed to license and regulate persons engaged in removing
and disposing of liquid waste; to provide for the inspection and licensing
of equipment; and to provide for the control over the disposal of liquid
waste. As such, it is very similar to the procedure for certifying muni-
cipal operators.
Three major problems have inhibited the effectiveness of the ABC:
1) inability or unwillingness of many states to revise or enact new legis-
lation or requirements to conform to ABC guidance; 2) inability or unwilling-
ness of many states to effectively administer and enforce current certi-
fication programs; 3) inability or unwillingness of state certification
227
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examinations to meet legal questions of job relevance and validity,
predicated on criteria established by the Equal Employment Opportunity
Commission and the Department of Justice, Division of Civil Rights.
The ABC is an example of a certification program funded but
not administered by EPA. At the inception, EPA did not want to administer
a national exam or a certification program, but wanted rather to endorse
an independent entity to manage mandatory programs.
Cooperation with trade associations in the establishment of
the ABC has largely accomplished these goals. EPA has presented recommen-
dations and relied upon the tool of persuasion, resulting in voluntary
cooperation in dealing with the ABC. A key reason for the success of
the program has been the continuity of EPA personnel who have dealt with
the ABC. This has allowed a growth in confidence and mutual respect
between EPA and the ABC. An additional advantage occurred because the
ABC certification approach has resulted in the avoidance of criticism
and opposition which might have occurred if EPA had directly administered
the program. However, since EPA only provided a service, the certifica-
tion process may have taken longer to develop than otherwise might have
been the case.
Certification of Pesticide Applicators
Applicator certification is required by the Federal Insecticide,
Fungicide and Rodenticide Act of 1947 as amended in 1972. Section 4a of
this law describes the certification procedure: "the Administrator
shall prescribe standards for the certification of applicators of
pesticides. Such standards shall provide that to be certified, an
individual must be determined to be competent with respect to the use
and handling of pesticides, provided that the certification standard for
a private applicator shall, under a State plan submitted for approval,
be deemed fulfilled by his completing a certification form." Since 1976,
most pesticides classified for restricted use may be applied only by or
under the direct supervision of certified applicators.
228
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Within the 1974 amended law two types of applicators were
designated, commercial and private. Ten occupational categories for
commercial applicators were established. In developing their plans,
states may adopt, delete or alter these categories as needed. States
may also request the EPA administrator's approval to add major categories
to meet local conditions. Written examinations and, as appropriate,
performance testing is used to determine the competence of commercial
applicators. Testing is based on examples of problems and situations
pertaining to the particular category of the applicator's certification
and includes the following areas: 1) label and labeling comprehension;
2) safety; 3) environmental factors and the consequence of use and
misuse of pesticides; 4) knowledge of pests; 5) knowledge of pesticides
and types of formulation including hazards associated with residues;
6) equipment use; 7) application techniques; 8) applicable State and
Federal laws and regulations.
The certification requirements for private applicators have a
different emphasis. A private applicator must show that he possesses a
practical knowledge of pest problems associated with his agricultural
operation, plus the proper storage, use, handling and disposal procedures.
This practical knowledge includes the ability to: 1) recognize common
pests and pest damage; 2) read and understand labels and labeling infor-
mation; 3) apply pesticides in accordance with label instructions;
4) recognize local environmental situations; 5) recognize poisoning
situations and know what to do in case of an accident. Competence of
private applicators is verified by the responsible state agency using
a system to ensure that such persons are qualified to use restricted
pesticide products.
Although EPA was given the responsibility for developing and
publishing standards of competence, the amended law reflects Congressional
intent that States assume primary responsibility for certification of
applicators. State certification plans must be reviewed and approved by
EPA.
229
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The Pesticide Applicators Certification Program is an example
of a Congressionally mandated EPA administered program. EPA works in
cooperation with the trade associations, primarily the National Pesticide
Control Association. Difficulties have arisen in convincing states
that trade associations can make valuable contributions to the certifica-
tion procedure. Another problem has involved establishing reciprocity
among the state certification programs. Intragovernmental cooperation
exists in that the U.S. Department of Agriculture is given EPA funds to
run training programs. The regulatory officers involved with certification
have received moderate cooperation from the private and commercial sector.
Most of the opposition to the program has focused on the enforcement
agencies.
Hazardous Haste Certification Needs and the Pesticide and Waste Water
Certification Programs
The preceeding discussion of existing certification programs
presented some variables that differ from the hazardous waste management
«
program proposed below, and some that are similar. The hazardous waste
management law does not specifically require certification; the pesticide
law does. As in the hazardous waste area, a classification scheme was
necessary to distinguish types of operators in pesticide application. The
ten class system for commercial applicators was based on different types
of application needs (e.g. forest pest control crop pest control). A
hazardous waste certification program would need an analogous classifica-
tion scheme based on facility types (e.g. incineration, landfill). The
problems of reciprocity among states, differences in state laws and
enforcement procedures and opposition from the private sector can be
expected to occur in any certification procedure.
The ABC had to deal with a wide variety of facility types and
is thus analogous in this respect to hazardous waste certification. But
waste water engineering practices are much older than hazardous waste
230
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practices and thus certification procedures had a much deeper experience
base to draw on. Another dissimilarity is the contribution to the success
of the ABC made by the continuity of EPA personnel associated with the
ABC Program. This fortunate circumstance cannot be planned on in designing
a hazardous waste certification program.
Comprehensive Certification Program
The proposed comprehensive program for certification has four
basic elements: education, training, examination, and experience.
Further, the program requires certification at all levels, from laborer
to superintendent. The certification requirements covering these four
basic areas and each of the levels of personnel working in the facility
are summarized in Table 27. The training and examination elements of
the Comprehensive Program utilize the modular training program outlined in
Table 26 and Appendix 7. Table 28 defines the tasks associated with
each of the positions referenced in Table 27.
The education requirements shown in Table 27 are suggested
entry level requirements. Personnel could be expected to upgrade from
one certification class to a higher class without attaining the entry
level education requirements for that class. Also, experience could be
substituted for education.
Laborers would be required to become certified at the Class D
level soon after they are hired. The certificate would be valid only for
a specific facility. If the place of employment were changed, recerti-
fication would be required. As is illustrated in Table 28, Class C and
D certification does not entail an examination upon completion of training.
The required training could be administered by any Class A operator,
either on site or in a formal classroom situation.
Personnel certified at Classes A, and B would be required to
pass an examination appropriate to that level. Candidates for these
classes would be eligible for certification after they had worked six
months in a position requiring such a certification level. Certification
would be required within eighteen months of assuming that position. Class
231
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Table 28
Tasks Associated With Various Positions
or a Hazardous Wastes Processing Facility
Job Title
Tasks
Responsible Person
in Charge
Superintendent
Supervisor/Foreman
Has legal responsibility for operation of facility.
Qualified to start up, manage, and supervise the
operation of a facility
Qualified to supervise a particular unit of opera-
tion of set of unit operations of a facility.
Operator
Laborer
Qualified to operate machinery, equipment, and
processes of a facility.
Qualified to perform tasks as directed but not to
operate.
233
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A, B, and C certificates should be renewed periodically, e.g. every three
or five years. The requirement for certificate renewal could be satisfied
by a specified number of hours of training in Module 7.
One unique feature of this certification scheme is that those
in the professional levels of planning and design be required to take
certain familiarization training to make them fully aware of the hazardous
waste industry and its facilities. This is advantageous because of the
diversity of backgrounds of various professional engineers, who, while
they may possess the basic knowledge required, may lack specific instruc-
tion in the design and operation of hazardous waste facilities. This
instruction is important because of possible risk to public health and
welfare. The training specified in Modules 1 through 4 would be
particularly appropriate for site designers and engineers. While there
would not be an examination requirement for those professionals, a training
program should be strongly encouraged. Of course, professional engineers
would have to continue to be licensed in their engineering specialties
as they now are.
The certification scheme of the Comprehensive Program is
designed for flexibility in fitting the present variety of treatment and
disposal site management practices. It is intended that job titles and
appropriate certification requirements be stated in the site permit
application and approved by the permitting authority. There should be at
least one Class B certified person on each site, even if it is a one
person operation. Certification of at least one on-site person at the
Class A level should be encouraged.
The position of responsible person in charge (RFC) has been
adopted from similar designations in the water and wastewater industry.
The RFC would have legal responsibility for the operation and maintenance
of the site. This person should be designated in the facility permit.
The RPC may serve as Superintendent when the position exists, or may be
the manager or owner to whom the Superintendent would report.
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The advantages of this comprehensive scheme are:
1. Competent operation of a facility by personnel who possess
the necessary qualifications, (i.e. education, training,
and experience,) would ensure the consistently effective
performance of the facility.
2. A career pattern for operating personnel is formalized,
which helps to foster a professional attitude and reduce
personnel turnover.
3. Documentation of training and experience levels commensurate
with insurance requirements is simplified.
4. The existence of uniform standards for personnel qualifica-
tions greatly simplifies enforcement.
The disadvantages, relative to the Limited Program, outlined
below, are:
1. The program wo*uld be administratively more cumbersome.
2. The costs would be greater.
3. The program would be large for the relatively small number
of facilities and personnel involved in the industry
nationwide.
Limited Certification Program
The Limited Certification Program is intended to be a minimum
recommended certification scheme. Under this scheme an RPC would be
designated, who would be required to complete all the requirements for a
Class A certification under the Comprehensive Program. While certifica-
tion would be limited, the training program should be developed for
general distribution as outlined in Table 26 and Appendix A. Voluntary
participation in the training program should be encouraged and a program of
voluntary certification at other levels below Class A could be established.
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The advantages of this program are:
1. It assures ease of implementation due to reduced training and
administrative efforts and logistic requirements.
2. The program would be less costly to implement.
3. It provides the possibility for the implementation of a more
comprehensive program which could follow at a later date.
The disadvantages are:
1. A career pattern is not established, which may result in
rather high turnover rates of personnel.
2. There would be less assurance of consistent facility
performance at a level which meets the requirements estab-
lished by regulatory agencies, for the protection of public
health and welfare.
Grandfather Clause Certification
Grandfather clauses have been part of many state water and
wastewater certification programs in order to make them more palatable
to the work force which would be regulated. For the same reason, there
is a strong temptation to include the recommendation of such blanket
clauses in this permit program. To do so, however, may sacrifice public
health and safety and could impair the effectiveness of the certification
program for as long as any "grandfathered" certificate holders remain in
the work force. As a compromise, it is suggested that employees already
in the industry be required to complete the above referenced formal
examination requirements, but that training modules appropriate to the
level of certification could be waived.
Summary
To ascertain the feasibility of training and certification of
personnel in the hazardous wastes management industry model, programs for
accomplishing these purposes were conceived. The model training program
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design was based upon the "need to know" theme advocated for water and
wastewater treatment operators.
The model training program designed has the following elements:
(1) The training program would be administered by the industry.
(2) The training consists of seven modules. Each module has
a special function. Together, the modules comprise a
comprehensive training program.
(3) The use of video tape cassettes, together with self
teaching examinations, is advocated as the medium for
instruction for five of the seven modules.
Two alternative certification programs were outlined. They
were: (1) a comprehensive program, and (2) a limited program. A
comprehensive certification program is prepared with a limited program
presented as a recommended absolute minimum certification. The latter
would require certification of the responsible person in charge of the
facility only. Some of the special features of the comprehensive certi-
fication program include:
(1) As a working premise, certification has four elements.
They are: education, experience, training, and examination,
(2) All personnel associated with management and operation of
hazardous wastes processing facilities would be certified.
Certification would have five levels which would correspond
to respective job requirements.
(3) The training requirements for the different levels of
certification are integrated with the training program
proposed.
(4) Certifying authority for some of the training modules may
be conferred by the state to the "responsible person in
charge" of the facility.
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Special note should be given to the fact that the form of any
training and certification programs must have an appropriate fit with the
present zero-based institutional context of the industry. A strict copy
of the present water and wastewater operators training and certification
programs probably would not work for this reason, i.e., these programs
have a well developed base of institutionalization. The video tape self-
teaching examination and strong industry role and responsibility in
training and certification is felt to be a form appropriate to the
hazardous waste monitoring industry.
D. Costs of Training and Certification Programs
Costs of Training
Any estimates of the costs of training personnel are dependent
upon the assumptions made about the nature of the training program, its
extent, and the plan for its implementation. Estimates may be based
upon comparisons with existing similar programs, or they may consist of
hypothetical budgets. The manner of implementation of the program is
another consideration, e.g. whether the training is held annually in
classrooms with outside instructors, in-house sessions, on-the-job, etc.
Further, a system of uniform accounting rules must be devised if costs
of alternative plans are assessed, e.g. if the training is in-house the
real costs of the training may be difficult to break out from other
activities.
The estimate of training costs made below is based upon the
video tape program outlined in Appendix 7. The estimate is limited to
the cost of production and delivery of the tapes for this program.
Administration of the instructional system at each facility and the
investment of employee time are on-going operating costs and are not
included.
An estimate of the costs associated with the production of a
taped lesson may be determined from identification of the tasks required,
an assignment of time in manhours for completion of the task, and the
hourly rate. Table 29 is a preliminary identification of tasks.
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Table 29
Phases and Tasks of Video Tape Lesson Production
Design of the Instruction:
Conceptualization
Detailed Lesson Plan
Graphics Design
Preparation:
Drawing, Lettering, etc.
Site Visits
Script Writing
Tape Production:
Narration
Taping
Editing
Distribution:
Tape Reproduction
Use of Tapes:
Purchase of Equipment
Self-Teaching Examination Package
Preparation of Examinations
Editing, Typing, Printing, etc.
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Table 30 provides an estimate of the studio costs of producing
a tape; the amount is $1,800. These are the "taping" and "editing" lines
in Table 29. It is probably the only cost that is constant for each
lesson. The costs associated with the complete set of tasks of Table
29 are summarized in Table 31. The total cost for a tape is $152,000,
including content design and execution and production. Using th'is cost
per tape, the total cost for 30 tapes in Modules 1, 2, 3, 5, and 6 would
amount to $4,560,000, or nearly $5 million in round numbers.
If a series of tapes are envisaged, a pilot tape should be
developed. The pilot tape not only provides a feedback but it could give
a better, i.e., more empirical, idea of costs. Some economies of scale
could also be achieved by a series of tapes.
It should be noted too that "adequate" tapes could be produced
probably for about $30,000 to $50,000 each. The $150,000 tapes would
be for "highly effective" tapes. The argument for the more expensive
effort is rather compelling if one examines the costs of not being
effective. This would be in terms of trainee manhours which may not be
utilized effectively and in terms of operation problems which would occur.
So the more expensive version would probably be more "cost-effective."
The cost per facility for the video tape approach would depend
upon the number of facilities. If 1,000 facilities existed in five years,
the cost for the tapes per installation would be $5,000. The video tape
equipment might run $2,000, giving an investment cost of $7,000. This
is not a great amount in terms of costs of other capital equipment for
these facilities. Also in terms of equivalent instructor tine and
associated efforts, the $7,000 is a rather modest investment.
Costs of Certification
A recently completed ABC staff report provides sorre basis for
estimate of the costs of administering a water ard wastewater plant
operator certification program (ABC, 1977). According ID the report,
which was based on a recent survey of existing certification programs,
the number of equivalent full time staff ranged from 0.2 to 1.5 per 1,000
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Table 30
Costs and Use of Video Tape Production Facilities
Studio Time:
Master Tape Cost:
Cost of Production of a 30
Minute Master Tape:
Cost of Duplicate Tapes:
$200/hour which includes studio and staff;
about six hours are required to produce a
30 minute tape which includes two hours
for editing.
$150/hour
Six hours @ $200/hour plus four hours @
$150/hour, or $1,800.
About $50 per cassette.
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Table 31
Cost to Produce a Typical 30 Minute Video Taped Lesson
Design of the Instruction: $ 25,000
500 hours @ $50/hour
Preparation: 100,000
2,000 hours @ $50/hour
Self-Teaching Examination Package: '
500 hours @ $50/hour
Tape Production:
$1,800 + $200 for Narration 2.000
TOTAL $152,000
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certified operators or active certificates whichever was higher. The
mean and median response was 0.7 personnel/1,000 operators. There was
a trend toward greater manpower requirements as the size of the certifi-
cation program decreased. There were 0.9 equivalent personnel/1,000
operators currently employed in programs which certify up to 1,000
operators. Only 0.6 personnel/1,000 operators were employed in programs
certifying over 3,000 operators.
There was almost universal agreement as to the need for more
staff, on the order of approximately 2-1/2 times the current level. On
the average, those responding suggested at least one full time staff per
1,000 operators for the largest programs, up to two or three per 1,000
for the smaller programs.
Because of the relatively small size of the proposed hazardous
waste certification programs, it can be assumed from the above that
approximately three full time staff personnel per 1,000 certificates
would be required to effectively administer the program. At an approximate
cost of $25,000/staff person, the total cost for the program would be
$75,000/1,000 certificates. This estimate includes costs for salary,
fringe benefits aad overhead, and assumes a mix of clerical and
professional personnel.
The above estimate is applicable to the comprehensive certi-
fication program previously proposed. Costs could be reduced
if the limited certification program were instituted. Costs per
1,000 certificates, however, would probably be greater.
E. Alternative Certifying Agencies
The foregoing discussion examines two existing certification
programs currently being used to enhance the effectiveness of environ-
mental protection legislation. This study has considered a variety of
other alternatives, most of which have characteristics that might benefit
a hazardous waste operators certification program.
In reviewing certification alternatives it has been necessary to
distinguish two separate functions that are present in most such programs:
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training and verification of competence. In some programs these are
carried out by a single organization, in some by separate organizations.
The study considered the following categories of organizations for per-
formance of one or the other, or both, of these functions:
1. The Federal Government
2. State or local government agencies
3. A trade organization or professional society
4. Academic or vocational schools
5. Employers
6. Trade unions.
The earlier discussion covered examples of two of these alter-
natives. The pesticide program is carried out directly by the Federal
Government. The ABC waste water treatment program is an affiliation of
trade organizations acting as professional societies.
The remaining categories are discussed below. In most cases
the functions described are carried out by separate organizations. For
this reason, groupings of these organizations are discussed.
State Governments/Academic and Vocational Schools
Teacher certification is an example of a widely accepted
practice in which the two functions are often separate. A typical
state certification program is based on a set of basic course require-
ments coupled with opportunities to use continuing education to establish
eligibility for higher pay status. Most states accept transcripts of
specified academic course work as proof of accomplishment. In them,
the certification process is carried out by a state agency and consists
of verifying that the course content and academic standards in the
training institution relied upon were appropriate to provide the desired
skills. Some local governments conduct examinations to establish,
independently, that the required standards have been achieved.
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Trade Unions/Local Government/Federal Government/Employer
Apprentices in craft unions take part in a variety of training
programs provided in large part by the unions under supervision of the
Federal Department of Labor Bureau of Apprenticeship Training (BAT).
Training consists of a combination of on-the-job experience that might
be considered as supplied by the employer, and formal training provided
by the union. For some skills, such as typesetters, proof of competence
is established through examinations administered by the unions under BAT
supervision and establishes the apprentice's right to the status and pay
of a journeyman. For others, particularly such building trades as plumbing
and electrical work, proof of competence also requires examination by
state or local governmental agencies to determine not only that the worker
has the requisite manual skills, but also that he is familiar with appli-
cable requirements of the building code.
Because of the uniqueness of the hazardous waste management
industry, the analysis of certification alternatives did not concentrate
on assessing the comparative success of one or another existing certifi-
cation program or the degree of similarity between waste management
certifications and existing certification programs. Instead, the eval-
uation effort sought to develop a combination of elements from existing
programs that would take into account the selective merits of uniform
interpretation of standards, the importance of ensuring interchange
between current practitioners and the certification process, and the avail-
ability and location of existing facilities and personnel for administering
the certification program.
The staff analysis resulted in the construction of a composite
of the alternatives described above. The composite certification
process would utilize course credits as partial proof of accomplishment.
The course requirements would be set by the Federal EPA or, in states
that had opted to carry out their own hazardous waste control program,
by the state agency filling a comparable regulatory role. Once the
course content had been adequately defined by the regulatory body, state
university extension services would be enlisted to undertake the proposed
series of courses. Such extension services may utilize either instructors
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drawn from state academic institutions, or may contract for the service
of individuals or organizations not connected with such institutions.
In an appropriate case, the instructor might be the director of opera-
tions for one or another of the hazardous waste management firms, and those
courses could be given on the premises.
The individual seeking certification would be required to enroll
in, attend, and pass examinations for the assigned course. The cogni-
zant regulatory agency would verify the applicant's accomplishment both
by reviewing the course content and by obtaining satisfactory documentary
proof of satisfactory course work.
The procedure outlined would give a partial national standard
to allow some mobility of workers, but be subject to the equal standard
option for individual states. It would use existing facilities and
provide an opportunity, if not a requirement, for current practitioners
to play a leading role in course formulation and instruction.
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APPENDIX 1
EXAMPLES OF INSTITUTIONS THAT PROVIDE FINANCIAL RESPONSIBILITY
AND CONTINUITY OF OPERATIONS
In examining the alternatives for the maintenance of financial
responsibility and continuity of operations by hazardous waste disposers,
we investigated potentially analogous mechanisms employed by a variety
of institutions and several pieces of federal legislation. The results
of the research were reviewed with attention focused on the basic struc-
ture rather than on the operational details. The following are:
(1) The Oil Pollution Liability and Compensation Act: An
Example of a Group Liability Fund.
(2) The Federal Deposit Insurance Corporation: An Example
of a Group Insurance Group.
(3) The Federal Savings and Loan Insurance Corporation: An
Example of a Group Insurance Fund.
(4) The Maryland Savings Share Insurance Corporation: An
Example of a Group Insurance Fund.
(5) The Mutual Central Savings Fund: An Example of a Group
Insurance Fund.
(6) The Ohio Workmen's Compensation Program: An Example of
a State Insurance Fund.
(7) The Nuclear Energy Liability - Property Insurance
Association: An Example of an Insurance Pool.
(8) The Swine Flu Program: An Example of a Type of Federal
Insurance.
(9) Federal and State Strip Mine Legislation: An Example
of Provisions for Continuity of Operations.
(10) Cemetery A: An Example of Provisions for Continuity of
Operations.
(11) Cemetery B: An Examole of Provisions for Continuity of
Operations.
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1. The Oil Pollution Liability and Compensation Act: An Example of a Group
Liability Fund
The potential for enormous damage and cleanup expenses in the
event of an oil spill from either a vessel or an on-shore facility has
prompted the search for liability protection. The Oil Pollution Liability
and Compensation Act contains elaborate provisions for establishing a fund
as well as defining the limits of liability. The proposed House Act
mandates the Secretary of Transportation and the Secretary of the Treasury
to form and administer a $200 million Comprehensive Oil Spill Liability
Fund. This fund will be made up of fees from refineries and terminals,
monies from liable parties and all monies from civil or criminal penalties
and fines. The fund is designed to pay damages and claimants in four
areas: 1) removal costs; 2) injury of property; 3) injury of natural
resources; and 4) loss of profits or impairment of earning capacity.
In addition to this funds the Secretary shall establish limits
of liability. These limits take two forms, a maximum figure for
certain facilities and a sliding scale based on type and size of vessels.
Fifty million dollars is the top figure for on shore facilities in the
former case. An example of the latter arrangement occurs with small,
inland barges where liability is set at $150 per ton of vessel.
The owner or operator of a vessel or facility must demonstrate
evidence of financial responsibility sufficient to sa'tisfy the maximum
amount of liability. Such evidence is insurance, a guarantee surety bond
or qualifications as a self-insurer.
In the event of a spill, the owner or operator of the vessel or
facility is made,in the words of the act," strictly liable for all claims
up to reasonable limits, while the owner of the oil carries the burden for
claims exceeding those limits, contributing his share through his con-
tribution to the fund."
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2. The Federal Deposit Insurance Corporation: An Example of a Group Insurance
Fund
The Federal Deposit Insurance Corporation (F.D.I.C.) was created
under the Banking Act of 1933. The deposit insurance program was intended
to restore confidence in the banking system, eliminate "runs" on banks and
protect individual depositors as well as the nation's money supply.
The Deposit Insurance Fund is supported by annual assessments
of member banks. Banks are required to file condition reports four times
per year from which F.D.I.C. averages out total yearly deposits. The
banks must pay 1/12 of 1% of these averaged total deposits. This is es-
timated for the 15,000 F.D.I.C. member banks and from this sum is deducted
administrative costs and reserves set aside for bank failures. One-third
of the remaining sum is credited to the Deposit Insurance Fund and the
other two-thirds goes to the banks as credit against next years assessment
(on a pro rata basis). The total cost of Federal Deposit Insurance, then,
to a member bank is 1/27 of 1% per year's averaged deposits.
In the event that the Fund reserves are inadequate to meet its
obligations, F.D.I.C. has a three billion dollar drawing authority from
the U.S. Treasury. In order to reimburse the fund, F.D.I.C. may liquidate
some assets or reduce (or eliminate) the amount of credit going to the
banks. F.D.I.C. does not provide minimum or maximum amount requirements
for the Fund, however studies made several years ago (when F.D.I.C. in-
creased its insurance maximum) reported that the Fund, through the years,
was "adequate" because it had kept pace with bank failures and other ex-
penses. In 1934, when F.D.I.C. was established, the ratio of insurance
fund to insured deposits was 1.61 -- today the ratio is 1.18.
If a bank fails, it is closed by the chartering agency (e.g. the
state bank agency) which names the F.D.I.C. as receiver. The F.D.I.C.
then either arranges for the purchase of the deposit liabilities (by
another bank), or arranges to pay off the depositors. This is determined
by which costs F.D.I.C. less.
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The greatest loss sustained by the F.D.I.C. deposit insurance
fund was upon the collapse of the U.S. National Bank in San Diego in
1974. After liquidation of all the assets (which the Crocker National
Bank did not want), F.D.I.C. lost 150 million dollars. The F.D.I.C. net
losses from all the bank failures from 1934 to 1974 totalled less than
150 million dollars.
The F.D.I.C. has six factors which they use in determining the
suitability of an applying bank. They are the following: 1) financial
history of the bank; 2) adequacy of the capital structure; 3) future
earning prospects; 4) character of the management; 5) convenience and
needs of the community to be served; and 6) consistency of the corporate
powers with the powers of the bank — i.e., it must be a corporation and
it must be a bank of deposit. The banks which have been refused member-
ship were refused largely due to management character and/or lack of
capital. The F.D.I.C. has little control over changes in management,
although there has been a bill on the Hill for several months, which
would allow the F.D.I.C. a voice in management changes.
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3. The Federal Savings and Loan Insurance Corporation: An Example of a Grr ,
Insurance Fund
The Federal Savings and Loan Insurance Corporation is the
insurance arm of the Federal Home Loan Bank Board. It was created as part
of the New Deal Legislation in 1934, under the National Housing Act,
Section 402A. F.S.L.I.C. is a government agency (all civil service),
however, it is self-supporting and receives no government appropriations.
The F.S.L.I.C. Insurance Reserve Fund (I.R.F.) now total approximately
4-1/2 billion dollars. When the corporation was established, there was
a stock issue to set up the corporation, and a percentage of that was
used to create the fund. F.S.L.I.C. requires an entrance fee of 3/10 of
1% of all insurable assets of an entering savings and loan association.
There is a yearly assessment of 1/12 of 1% of averaged deposits per
association. Neither the initial fee nor the yearly assessemnt is refund-
able. The Act creating F.S.L.I.C. specified no_ minimum or maximum for
the fund. F.S.L.I.C. has a line of credit with the U.S. Treasury if
their reserves are not enough to meet their obligations.
In the 1960's, the Secondary Reserve Fund (S.R.F.) was established
as a result of an unusually large number of "pay-outs", thus stimulating
concern about the adequacy of the I.R.F. The member S&L associations
were charged a second yearly assessment which went into this fund.
Recently, it was decided that the S.R.F. was no longer necessary. It is
being "phased out" and the member S&L's are being refunded their money
from the S.R.F. The S.R.F. could be reopened if the F.S.L.I.C. board of
directors felt that the additional funds were needed.
Each member S&L must establish a Federal Insurance Reserve
Account and F.S.L.I.C. may assess members to draw on this special account.
The balance must represent a certain percentage of the total savings held
by the association:
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After 4 years the balance must be 1% of savings.
After 10 years the balance must be 2.5% of savings.
After 16 years the balance must be 4% of savings.
After 20 years the balance must be 5% of savings.
The maximum balance required is 5% of the total savings.
The Federal Home Loan Bank Board requires that all member S&L's
undergo a detailed examination once a year.
The pay-out is, of course, only made if nothing else works.
F.S.L.I.C. is permitted to do any number of things to maintain the stability
and safety of a member S&L, including: making loans, contributions, pur-
chasing assets, setting up mergers and drawing up "rehabilitation agreements"
in which F.S.L.I.C. temporarily assumes management of the troubled
association. When an association does go into default, F.S.L.I.C. pays
off the savers in cash up to the limit (e.g., $40,000 on an individual
account). The last pay-out was in 1971 to a S&L in Seattle. The largest
pay-out ever made was approximately 90 million dollars on the closure of a
Chicago S&L in the 1960's.
The general factors determining membership qualifications are
similar to those of the F D.I.C., including: the financial stability of
the S&L, the competence of the management, and the needs of the community
to be served. A S&L eligible for charter, will be granted it conditional
to acceptance into F.S.L.I.C.
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4. The Maryland Savings Share Insurance Corporation: An Example of a
Group Insurance Fund
The Maryland Savings Share Insurance Corporation (M.S.S.I.C.)
was created by statute June 1, 1962 (Article 23, Chapter 131, Sections
161 MM-161XX of the Maryland Code). It is a non-stock, non-profit
corporation owned by 136 member savings and loan associations. Since
Maryland requires that all S&L's be fully insured, M.S.S.I.C. serves to
cover those S&L's which: 1) are too small to fulfill the F.S.L.I.C.
regulations ; or 2) prefer the flexibility permitted by M.S.S.I.C.
When M.S.S.I.C. was established, the Governor appointed a
Blue Ribbon Commission which reviewed the assessment procedures of such
similar organizations as F.D.I.C., F.S.L.I.C., the Massachusetts Central
Savings Fund, and the Ohio Guarantee Fund. They decided that 2% was a
sound percentage. This means of assesseent is unusual. Upon becoming a
member of M.S.S.I.C. each S&L association must post 2% of its free share
accounts. One-half of this capital deposit must be paid upon acceptance,
one-quarter is paid six months after, and the final quarter is paid twelve
months after acceptance.
The capital deposit is semi-annually adjusted according to the
increase or decrease of a member association's total savings. If they
increase, the S&L must pay the difference and if they decrease, the S&L
receives a cash refund. There is no annual premium. The capital deposits
are refundable to a member upon withdrawal fom M.S.S.I.C. M.S.S.I.C. is
required, by law, to retain all net earnings.
The Deposit Insurance Fund totals 32 million dollars. When
M.S.S.I.C. was created, it was required to have at least 25 member
S&L's with an aggregate total of free share accounts of at least 25
million dollars. The initial capital deposits and the semi-annual adjust-
ments support this Fund. M.S.S.I.C. has lines of credit (45 million
dollars) with commercial banks. Their investments are in hign-grade
corporate and government obligations, with no more than 10% in common stock,
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The Central Reserve Fund (CRF) was set up to provide for
emergency lending to member S&L's. As of September 30, 1977, the CRF will
have approximately $12,500,000 in assets. The capital derives from the
sale of "capital notes" of $100.00 each. The assessment per association
varies: 1) 1/2 of 1% of member's assets of S&L's with less than 75
million dollars in assets; and 2) 1-1/2 of 1% of member's assets of S&L's
with 75 million or more in assets. Payments for the capital notes are
due quarterly. In the event that the CRF is liquidated, members will be
refunded their shore.
M.S.S.I.C. must accept all applicants providing they meet the
requirements set forth in the Maryland Code and in M.S.S.I.C.'s rules and
regulations. These include certification by the state commissioner of
the applicant's fiscal affairs, solvency and management. Each member must
maintain a liquidity fund equal to 6% of its total free share accounts.
They must all enter with a "Reserve for Losses" of 6%, which may go only
as low as 3%. The largest pay-out ever made by M.S.S.I.C. was $300,000
in 1963. It was fully recovered upon liquidation of assets.
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5. The Mutual Central Savings Fund: An Example of A Group Insurance Fund
The Mutual Central Savings Fund (F.C.S.F.) is a tax-exempt, non-
profit deposit insurance corporation for mutual savings banks in
Massachusetts. It was established in 1932 by Chapter 44 of the Massachusetts
Code. Savings banks are required by Massachusetts law to be mutual -- they
have no shareholders and their main objective is to accept deposits with a
greater part of their business involved in home mortgages.
The M.C.S.F. insures deposits in full up to the legal limit which
varies according to the type of account. There are four types of accounts:
1) individual accounts - $45,000; 2) term or contracted accounts - $100,000;
3) corporation accounts - $150,000; and 4) non-profit, tax-exempt organiza-
tion accounts - are insured in full to an unlimited amount. The insurance
also covers any interest which might accumulate.
Each year the member bank is charged an assessment of l/16th of
1% based on the deposits of the last fiscal year. This percentage was
established by statute, although there is a provision in it that the Board
of Directors may ask the Commissioner of Banks for a reduction in the
percentage.
The decision to change the assessment is usually determined by
the ratio of the insurance fund to insured deposits and also by comparison
of this ratio to similar institutions. For example, in the last fiscal
year, the M.C.S.F. ratio was 1.419 which comapres favorably to the F.D.I.C.
ratio of 1.18. There are no other fines or charges.
In Massachusetts, mutual savings banks, by law, must be a member
of either the M.C.S.F. or F.D.I.C. If they are a member of both, F.D.I.C.
insures the first $40,000 (their limit) and the M.C.S.F. insures anything
above that to $45,000 (their limit). There have been no new applicants
since the late 1940's. Since new applications are so rare, the M.C.S.F.
has no established format for charter applicants (all mutual savings banks
must be state chartered).
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The Deposit Insurance Fund (DIP) was established by statute in
1934 and as of October 31, 1976, totalled approximately 180 million dollars.
Although there have been no failures in the history of the Fund, they do
have lines of credit with commercial banks and the assets of the failed
bank as reserves in case the fund is not adequate. The M.C.S.F. is
empowered to do "anything necessary" to prevent bank failure, e.g. extend
loans, arrange mergers, etc. As of the last fiscal year, the DIF has $1.44
of deposit insurance for every $100.00 of insured deposits.
While the DIF is to protect the depositors, the Liquidity Fund
(established in 1932) generates extra money for emergencies (e.g. unusual
deposit withdrawals) and totals 11 million dollars. This fund is stable
and takes in no assessment money. In the event that the Liquidity Fund
needs more money, the M.C.S.F. may charge a second assessment to the
members. M.C.S.F. may also sell commercial paper on the open market to
generate more funds. This commercial paper would normally mature in 60-
90 days. The investments for both the DIF and the Liquidity Fund are
restricted to "highly liquid short-term" U.S. government securities.
In the event of a merger, the full assets and liabilities of
the merging bank are determined. There should be a surplus, normally
between 8-9%, as a reserve which is still available to the depositors.
If the surplus is not adequate, the M.C.S.F. will cover the balance.
If a bank is in serious trouble and is considered unsafe and
unsound by the Commissioner, she may certify it to the M.C.S.F., and they
must do whatever necessary in order to insure the safety of the depositors.
This has only occurred 4-5 times in the history of the M.C.S.F. The
most recent one occurred in 1971 as a result of mismanagement. When the
M.C.S.F. steps in to prevent closure or facilitate a merger, etc., the
yearly assessment fee is not refundable.
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6. Workmen's Compensation: An Example of a State Insurance Fund
The state of Ohio requires that any employer with one or more
employees have worker's compensation insurance. This includes domestic
help who earn more than $160/quarter. Ohio has an exclusive state
insurance fund. Employers may self-insure if they meet the prescribed
standards.
Insurance by this fund is not effective until both an applica-
tion and a premium have been submitted. An advance deposit is required
based on 8 months estimated payroll at a rate based on the employer's
classification. There is a $10.00 minimum deposit for new coverage. The
premium changes with each biannual reporting period according to payroll
changes. There is a fee charged each reporting period to cover administra-
tive costs -- 9.5 cents for every $100.00 of payroll with a minimum of
$3.00.
The rates change every July 1 according to the classifications
and claims for that year. In the past several years, the rates have
steadily risen with an increase of 30% last year. The increase is due
primarily to the increase in the cost of disability benefits. A rate
change is decided upon by the Acturial Agency, with approval coming from
a three member Industrial Commission.
Another fee, created by the Ohio legislature is the Disabled
Worker's Relief Fund Excise Tax which is $.05 per $100.00 of payroll.
The fund has 1-1/2 billion dollars in reserves, with their investments
restricted to Blue Chip stocks. No speculation is permitted.
The State Fund insures approximately 250,000 employers.
Each reporting period between 25-30,000 accounts are allowed
to lapse. During this time, the accounts are not covered. In the event
that a company goes bankrupt, the Fund obtains the final payroll as of
the last operating day. They apply the advance deposit towards what is
due. If there is a credit, then the comapny receives a refund; if money
is due, the Fund turns the case over to the Attorney General's Office who
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deals with it through the bankruptcy courts.
The advantages of an exclusive state worker's compensation fund,
as listed by a fund administrator are: 1) The rates of the state fund,
though high, are "significantly less" than those of private insurers;
2) There are definite advantages for the employees, especially ff their
employer has not complied with the regulations. They may either bring
a civil suit against the employer or they may file a claim with the state.
In the latter case, the Fund will service the claim and then bill the
employer for all costs; 3) Since a state-administered fund is not a profit
making organization, it is more likely to look out for its clients interests.
The operating expenses are substantially lower as well; 4) More and more
private insurers are giving up worker's compensation insurance.
In order to qualify as a self-insurer, a company must fulfill
ten requirements: 1) have a minimum of 500 employees; 2) have a minimum
annual premium of $50,000; 3) have been in operation in Ohio for a minimum
of 2 years; 4) be able to prove financial solvency; 5) have a separate
Ohio bank account for worker's compensation insurance, or if it is an out-of
state comapny, it must be sponsored by an Ohio bank; 6) give a thorough
description of its safety provisions; 7) outline how it would execute claims;
8) post a performance bond based on the state fund premium; 9) provide the
same benefits as the state fund; 10) have a minimum of $100,000 and a
maximum of 1 million dollars in the insurance account.
The bond required is either in a surety bond or is with the
treasurer of the state. Self-insurer's financial statements are required
once a year and all lost time claims are filed with the Bureau of Worker's
Compensation. Special examinations are only performed when a complaint is
filed against an employer.
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7. The Nuclear Energy Liability-Property Insurance Association: An Example
of an Insurance Pool
There are three insurance pools which provide insurance for the
nuclear industry. The Nuclear Energy Liability - Property Insurance
Association (NEL-PIA) is one of these. It provides two types of insurance,
liability and property insurance coverage. The operators of nuclear
facilities and their suppliers are covered for any liability they may incur
as a result of bodily injury or property damage resulting from a nuclear
accident. This coverage provides financial protection for the public.
The property insurance covers damage to the property of nuclear facility
owners.
Since nuclear liability insurance's inception in 1957, the total
insurance available has steadily risen, totaling $140 million in January
of 1977. This total is reached by the combination of NEL-PIA's pool and
the other pools through reinsurance agreements. Property insurance in
1977 totaled $220 million.
Beginning in August of 1977, $30 million of contingent liability
capacity will become available. This 'Retrospective Premium Plan1
incorporates the most recent legislation renewing the Price-Anderson Act.
It provides that power reactor operators be assessed a retrospective
premium up to a maximum of $5 million per reactor by the pools, should a
nuclear incident result in liability losses which exceed the pool's
primary $140 million protection. Thus, a buffer is formed should any
operator be unable to meet this assessment at the time of loss. At a
later date the pools would seek repayment of any such defalut from these
operators.
By the end of 1975, the accumulation of the premium income
earmarked for losses amounted to $54 million. Should losses exceed this
sum, the pools wuld make up the difference based on their degree of
participation in the pool up to the $140 million limit of the liability
policy.
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The liability insurance rates charged by the pools are established
by the Insurance Services Office. Among the factors involved in liability
ratings are the size, type and location of the facility. An average
nuclear power plant would pay about $262,000 annually for liability pro-
tection with the lowest rated reactor paying $197,000 and the highest rated
paying $c"4,000.
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8. The Swine Flu Program: An Example of a Type of Federal Insurance
The "National Swine Flu Immunization Program" of 1976 contained
a provision that provided insurance in case of an injury or death
death that resulted from the program. The pertinent text reads:
"The Attorney General shall defend any civil action
or proceeding brought in any court against any employee
of the government or program participant (or any
liability insurer thereof)."
Furthermore, the government would cover the expense of both in and out of
court settlements. If however, a participant in the program was clearly
negligent and their negligence resulted in damages, then the government
can try to recover costs from that participant. In effect, this approach
represents insurance for the public and any participant in the program
who faces liability not caused by his own negligence.
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9. Federal and State Strip Mine Legislation: An Example of Provision for
Continuity of Operations
The Mineral Leasing Act of 1920, and its subsequent amendments,
specifies the reclamation requirements of Federal strip mined lands.
The operator's liability shall extend for at least five years after the
first planting of new vegetation. The maximum liability shall not exceed
ten years after the first planting. Bonds shall be furnished in sufficient
amounts to ensure reclamation in accordance with reclamation standards, and
the terms and conditions of the lease.
The mining plan shall be enforced by a combination of a per-
formance bond, reports and inspects for compliance. The performance
bond shall be at least $2000, and shall be an amount determined by the cost
of reclamation.
State regulations tend to require either a bond based on a dollar
figure per acre or a bond based on the total cost of reclamation. There-
fore, amounts of these bonds vary considerably. At the low end of
the scale are the states of Virginia, Missouri, Kansas and Arkansas which
require between $500 and $1000 per acre. Oklahoma, Maryland, Illinois,
Indiana, West Virginia and Kentucky require higher levels of bonding ranging
from $600-%5000 per acre. Often they specify either a fixed sum or a
charge per acre whichever is higher. A number of states set bond levels
at the cost of total reclamation. Frequently these states establish a
board to establish the bond to insure performance of duties. Such states
include Ohio, New Mexico, Colorado, Texas, Washington, Wyoming, Iowa and
Montana.
Alabama requires that the amount of the bond shall be $1200 per acre
but not less than $10,000 per permit. Sixty percent of the bond shall be
released when the first stages of reclamation are completed. Tennessee
has a similar conditional release clause. The amount of the bond shall
not be less than $1000 per acre. After initial planting of vegetation
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cover in accordance with the approved revegetation plan, the bond may be
reduced to $500 per acre. This amount shall remain in force until
safisfactory revegetation survival has been accomplished.
P
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10. Cemetery A: An Example of Provisions for Continuity- of Ooerations
Cemetery A was established within the last year, when the
cemetery bought out a neighboring one. The burial plots range in price
from $250 - $700, depending on location.
In creating a perpetual endowment fund, the state of Virginia
requires that the cemetery corporation start with a minimum initial
deposit of $25,000. With the sale of each lot, a minimum of 10% of the
sale must go into this trust fund. The principle is never touched, and
the interest provides for maintenance, security, and perpetual monitoring.
The trust fund is managed by a trustee. In the case of one of the
cemeteries (before the merger), the trustee was the National Bank of
Fairfax.
Regulations concerning use of the cemetery land are set out in
the cemetery's charter. This charter states that the land may only be
used as a cemetery. Purchasers of burial plots are buying only the burial
rights, not the land; therefore, they are not required to pay any taxes.
The cemetery corporation pays taxes on the land to Fairfax County. The
burial rights may be sold to anyone, at any time, for any amount of
money; or they may be donated to a church or a charity.
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11. Cemetery B: An Example of Provisions for Continuity of Operations
Cemetery B is a profit-making organization established in 1917.
It occupies 40 acres (the size of the original site), and has not been
completely developed. The price of the plots vary according to size and
are only raised on the basis of the tax structure in Arlington County.
According to the law of Virginia, an initial deposit is required
in order to establish a perpetual care trust fund. The cemetery
corporation uses a percentage of the cost of the grave site ( the percentage
varies according to the cost of the site) to establish a trust account.
The trust accounts are pooled, and this pool is administered by the chair-
man of the corporation, acting as trustee. In the event that the chairman
cannot act as trustee, the trusteeship is assumed by the board of
directors. Six to seven years ago, Virginia passed a law establishing the
conditions for payment into this fund. It may only be on a percentage
basis, no annual payments may be required. The state is the only regula-
tory agency.
In purchasing a burial plot, the customer is buying the land,
not just the burial rights to that land. The deed given to the buyer of
a site states only that the corporation conforms with the covenants
specified in the company charter.
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APPENDIX 2
STATE HAZARDOUS WASTE REGULATIONS
Research into state hazardous waste programs was performed in order
to gather data concerning state positions on the options involved in pro-
viding for financial responsibility and continuity of operations for hazardous
waste disposal firms. These alternatives are summarized in fact sheets on
the follwoing states: California, Idaho, Kansas, Maryland, Ohio, Oklahoma,
Oregon, Texas, Washington, and Wisconsin.
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FACT SHEET: California
1. State of the Legislation: California's present hazardous waste
management law and regulations represent a pioneer effort in the area of
hazardous waste identification. The proposed regulations (due for public
hearing August 16, 1977) primarily concern changes in permitting proce-
dures and in the fee structure.
2. Insurance: no requirements
3. Bonds: no requirements
4. Fees: The proposed regulations require that off-site and on-site
operators pay a fee to the state of $1.00/ton. There is a $2500 maximum
per facility. The fees cover Department of Health Administrative costs
since California is the only state with mandatory cost recovery for a
state-administered program.
5. Land Deeding: no requirements
6. Land Covenants: no requirements
7. Access/Easements: no requirements
8. Other: The California Department of Health is working with disposers
and manufacturers on long term care plans. Nothing has been resolved at
this time, however, they expect something within the year.
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FACT SHEET: Idaho
1. State of the Legislation: The Idaho Solid Waste Management Regulations
and Standards were adopted by the Board of Environemntal and Community
Services and termed effective on June 28, 1973. In Idaho, hazardous waste
management is regulated through the Conditional Use Permit provisions of
the regulations and is worked out on a case-by-case basis.
2. Insurance: no requirements
3. Bonds: At present, only one hazardous waste site exists in Idaho,
it is privately owned and operated and is located in an abandoned Titan
missle silo complex. Due to the unusual site qualities, a bond was not
required upon initial permit approval. Recently it was decided to
require a surety bond (amount undecided) to cover and provide for
permanent closure of an artesian well on the site.
4. Fees: no requirements
5. Land Deeding: There is a possibility of establishing deeding provi-
sions, however nothing has been resolved.
6. Land Covenants: no requirements
7. Access/Easements: no requirements
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FACT SHEET: Kansas
1. State of the Legislation: The Kansas Solid Waste Act was amended in
1977 to provide for complete control of hazardous wastes. The Department
of Health and Environment is in the process of promulgating rules and
regulations.
2- Insurance: The Amended Act requires "the permittee to provide
surety bond, cash bond or liability insurance, including coverage against
non-sudden occurrences-, or any combination thereof." The liability
insurance for disposers will be determined by the state and will vary
depending on the site. Only 1 site has been permitted so far and they
were required to have $300,000 liability insurance.
3. Bonds: "Within 30 days following the effective date of the permit,
the permittee shall establish an escrow account with a bank with conditions
and instructions suitable to the Department. At this time, the permittee
shall place a $50,000 surety bond in such account. In lieu of a surety bond,
the permittee may post cash or eligible securities deemed equivalent to cash..
The permittee shall have the options, at anytime, of replacing a surety
*
bond with cash or eligible securities deemed equivalent to cash."
"Until the initial $50,000 escrow account plus annual cash pay-
ments equals $100,000...the permittee shall make an annual payment of
$5,000 to the escrow account within 30 days after the anniversary of the
effective permit date."
The amount is determined per site and should be adequate to
provide for maintenance, monitoring and closure fees in the event that
the state is forced to close the site.
"Five years following the certification date that proper closure
is complete the $50,000 bond or equivalent case established in the escrow
account shall be returned to the permittee. After ten years has expired,
all remaining monies in this account shall then be returned to the permittee."
*
All quotes from: State of Kansas, Special Conditions to Permit, Department
of Health and Environment, Topeka, Kansas.
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(Kansas cont'd)
4. Other Accounts: "The permittee shall also establish a separate escrow
account...which shall provide the Department with monitoring funds for
perpeutuity or until the account is terminated at which time all remaining
monies shall be deposited in the state of Kansas general fund. Annual
payments of $1,000 shall be made to this account...until total cash pay-
ments total $10,000 at which time this annual payment shall be cancelled."
5. Fees: No requirements.
6. Land Deeding: No specific requirements, although after site closure
the state retains the right to approve all future uses of the land.
7. Land Covenants: A restrictive covenant must be issued by the
permittee which specified post-closure use of the site.
8. Easements: An easement must be executed by the permittee which
authorizes Department representatives to: 1) complete unfinished work
on site closure plan; 2) perform work for which surety is provided;
3) sample, repair or reconstruct monitoring facilities; 4) require operator
to preserve and protect monitoring facilities.
*•
All quotes from: State of Kansas, Special Conditions to Permit, Department
of Health and Environment, Topeka, Kansas.
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FACT SHEET: Maryland
1. State of the Legislation: The Maryland Safe Disposal of Hazardous
Substances Act was passed in 1976 and the regulations are expected to be
promulgated soon.
2. Insurance: The permit requires that a facility maintain "adequate
liability insurance." No further information was available.
3. Bonds: The state requires that an applicant either: 1) prove
financial ability to operate and maintain a facility or; 2) provide a
surety bond; or 3-) a transfer ownership or operation to the State. The
bond should be a minimum of $10,000. It provides for monitoring, maintain-
ing, closing the facility, and for security after the closure.
4. Funds: The state established a Hazardous Substance Control Fund to
provide for monitoring and controlling the "proper disposal of designated
*
hazardous substances." All permit fees, renewal fees and other charges
are credited to this fund.
5. Fees: There is an initial application fee of $50.00. The permit fee
is scaled, must be renewed yearly and is determined by: 1) the threat to
the environment; 2) the cost of monitoring and regulating the site;
3) the cost of removing and disposing of hazardous substances which escape
from the site; and 4) the amount of acreage of the site.
6. Land Deeding: no requirements
7. Land Covenants: no requirements
8. Access/Easement: no requirements
State of Maryland, Senate Bill No. 977, The Maryland Safe Disposal
of Hazardous Substances Act, Section 1; Baltimore, Md., 1976.
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FACT SHEET: New York
1. State of the Legislation: New York has no law which specifically
addresses hazardous waste management. At this time it is incorporated
into their Solid Waste Management Law and their regulations concerning
waste haulers. The Solid Waste Management Division is aware that the
existing laws are far too broad and a bill addressing Hazardous Waste
Management is "in the works". It is unclear when it will be passed.
2. Insurance: no requirements
3. Bonds: Bonds are only required upon receipt of a court order, and
this is infrequent.
4. Fees: There is only a nominal registration fee.
5. Land Deeding: no requirements
6. Land Covenants: no requirements
7. Access/Easements: no requirements
An amendment to New York's Insurance Law prohibits issuance of non-
accidental insurance to cover liability arising from pollution or contam-
ination. (McKinney's Consolidated Laws of New York, Title 27 Insurance
Law, §46.)
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FACT SHEET: Ohio
1. State of Legislation: At this time, all hazardous waste management
problems are regulated through the state's current Solid Waste Law and Reg-
ulations, enacted in 1976. The Ohio EPA has specific hazardous waste
legislation due to be presented to the State Assembly in the 1977-78 session,
2. Insurance: no requirements
3. Bonds: Ohio EPA's proposed legislation requires a surety bond, the
amount of which is determined per site. In considering the amount Ohio
EPA considers: 1) size and type of facility; 2) quantity and composition
of wastes to be stored or disposed of; and 3) "Assurances of continuity of
operation consistent with the degree and duration of risk associated with
*
the type of wastes received."
4. Other Accounts: All fees associated with hazardous wastes, including
penalties, permit, license and disposer fees, go into a rotary fund called
the Hazardous Waste Collection Account. The account is administered by
the Director of Ohio EPA and covers the cost of enforcing and administering
the Act. It does not cover post-closure operations.
5. Fees: no information available other than the above.
6. Land Deeding: no requirements
7. Land Covenants: no requirements
8. Access/Easement: no requirements
*
State of Ohio, Propose Legislation, Section 3734.03, Ohio Environmental
Protection Agency, Columbus, Ohio, 1977.
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FACT SHEET: Oklahoma
1. StatP of the Legislation: The Oklahoma controlled Industrial Waste
Disposal Act was enacted in 1976. The state Department of Health was
designated as the administering agency.
2. Insurance: The state requires that the disposer have liability
coverage equal to two times the value of all real property within one mile
of the site (excluding the site property). This should be not less than
$100,000 and not more than $500,000. Additional coverage may be required
for damage to underground resources.
3. Bonds: A bond is required guaranteeing the performance of maintenance,
and monitoring, and proper closure. The amount has not yet been set.
4. Fees: no requirements
5. Land Deeding: no requirements
6. Land Covenants: no requirements
7. Access/Easements: no requirements
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FACT SHEET: Oregon
1. State of the Legislation: A bill concerned with hazardous waste
disposal practices was passed in 1971 and revised in 1973.
2. Insurance: The Oregon law requires "adequate" liability insurance.
They now require a $1 million minimum.
3. Bonds: A bond is required upon receiving a license. It begins as
a surety bond of $75,000 and is gradually transformed into a cash bond
by means of annual cash payments of $18,750 for the first year and
$5,625/year for the next ten years. Interest credited to licensees,
except for inflation deductions. The non-refundable principal and the
interest covers closure, post-closure monitoring and maintenance.
4- Fee: The annual license fee of $4,324 is to cover pre-closure
monitoring costs.
5. Land Deeding: All land used in hazardous waste disposal is deeded
to Oregon State within 30 days of licensing.
6. Land Covenants: no requirements
7. Access/Easements: no requirements
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FACT SHEET: Texas
1. State of the Legislation: The Texas Solid Waste Act of 1969 was
amended in 1971 and again in 1977 to "bring it in line with Public Law
94-580."
2. Insurance: no requirements
3. Bonds: The regulations authorize the Texas Water Quality Board
(the hazardous waste administering agency) to set a closure bond for a
permitted site. In determining the amount, the Board receives a site's
closure plans and cost estimates, and sets the bond accordingly.
4. Fees: no requirements
5. Land Deeding: no requirements
6. Land Covenants: no requirements
7. Access/Easements: no requirements
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FACT SHEET: Washington
1. State of the Legislation: Washington's Hazardous Waste Disposal Law
was passed in 1976, however the regulations are still in draft form.
2. Insurance: The proposed regulations require a minimum of $1,200,000
in liability insurance.
3. Bond: The proposed regulations further require that the operator post
a performance bond of at least $50,000, which is refundable upon contract
expiration.
4. Fees: The fee schedules will be established by the operator, subject
to approval by the department. "The department shall use the following
criteria to review such disposal fees: a) their relationship to other fees
charged for similar services; b) reasonable return on investment and
profit for the operator; and c) the cost of administration, development,
operation, maintenance, and perpetual management of the disposal site."
5. Land Deeding: The state is purchasing the land which will contain
the only extremely hazardous waste facility in Washington. The operation
of the site will then go out to private bid. Upon proper closure by the
operator, the state immediately assumes responsibility for all subsequent
monitoring and maintenance.
6. Land Covenenats: no requirements
7. Access/Easements: no requirements
te
State of Washington, Draft Regulations, July, 1977, Olympia, Washington,
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FACT SHEET: Wisconsin
1. State of the Legislation: The legislation specifically concerned
with hazardous waste management is still in draft form. The proposed
Act is in compliance with RCRA and is expected to be enacted by next
spring's session of the Assembly.
2. Insurance: no requirements
3. Bonds: no requirements
4. Funds: A Waste Management Fund will be administered by the Depart-
ment of Natural Resources and supported by user fees. The general pur-
pose of the fund is to provide for long term care. More specifically,
it will provide funds for costs and expenses not anticipated in the
approved plans of operation; and for the "acquisition and maintenance
of facilities which the public is forced to acquire because the owner
or operator either does not wish to continue being responsible for the
facility, or voluntarily or involuntarily abandons the facility.' The
fund will also be used to provide monies to repair facilities, to repair
environmental damage caused by facilities, and to pay damages to persons
or properties harmed by a facility.
5. Limit on Liability: The total amount of awards for any one occur-
rence shall not exceed $500,000.
6. Fees: The fees which represent the Fund's income will be collected
quarterly on all wastes entering disposal facilities. The fees will be
scaled according to the relative degree of hazard represented by each
waste.
7. Land Deeding: The site operator must monitor and care for the site
up to ten years after closure. At this time the state reviews the site,
if "nothing is left" the state may terminate the site. If further long
]State of Wisconsin, Assembly Bill 880, Prefatory Note, July 13, 1977,
Madison, Wisconsin.
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term care is required the site operator has two options: 1) he/she may
continue to provide the necessary care and monitoring; or 2) he/she may
sell the site to the state, which will then assume responsibility. In
the event that the site is sold to the state, each party obtains an
appraisal for the "fair market value".
8. Land Covenants: no requirements
9. Access/Easements: no requirements
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APPENDIX 3
HAZARDOUS WASTE FACILITIES
INTRODUCTION
In order to assure consideration of possible contingencies which
could occur in the management of hazardous wastes, a detailed review of the
pertinent literature was undertaken to identify all types of hazardous waste
treatment storage, and disposal facility types, all conceivable events
that could occur at such facilities, and all hazardous waste types likely
to be handled. After lists of facility, event, and waste types were
developed, they were combined through the use of matrices to obtain all
applicable facility/event/waste (FEW's) to be considered in the development
of contingency plan standards. A complete discussion of the facility
classification used for this analysis is presented in this Appendix.
A wide variety of facility types and disposal methods are
employed by a broad spectrum of industries in the United States for the
treatment, storage and disposal of waste products that are generated.
Many of these wastes are considered to be "hazardous", and large quantities
are generated each year.
Hazardous wastes have been defined under federal and state
legislation, including the Federal Water Pollution Control Act Amendments
of 1972 (Public Law 92-500); Florida Resource Recovery and Management
Regulations; State of California Water Resources'Control Board, (subchapter
15); Illinois Pollution Control Board Rules and Regulations, (chapter
7); New York State Environmental Conservation Law (Part 360); and several
other state policies, regulations or laws. An all-inclusive, comprehensive
definition and classification of the term "hazardous waste" is presently
being formulated and will be adopted in 1977 by EPA under RCRA (Public
Law 94-580). For the preparation of this report, a general working
definition of "hazardous wastes" has been defined as follows: "hazardous
wastes" are wastes that are believed to potentially affect individual
health or safety over the near- or long-term. Appendix 5 of this report
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(Wastes) presents in detail the classification scheme adopted for this study
A general listing of major industries which generate hazardous
wastes and treat, store or dispose of these wastes on-site or through
private waste management contractors includes, but is not limited to:
- organic chemicals and pesticides industries
- textiles industry
- inorganic chemicals industry
- pharmaceutical industry
- special machinery manufacturing industry
- paint and allied products industry
- leather tanning and finishing industry
- storage and primary batteries industries
- metal smelting and refining industry
- electronic components manufacturing industry
- electroplating and metal finishing industries
- petroleum refining industry
- food industry
- nuclear industry
- ordnance industry
- rubber and plastics industries
A compendium of waste management facilities owned and operated
by waste generators and by private contractors was gathered through a
literature search of available publications and pertinent reports and
information from cognizant state and federal agencies. Several of
these hazardous waste facilities have the capability of providing for
effective treatment, storage or disposal of hazardous wastes, without
having adverse or detrimental effects on either the natural or human
environment. Only those facilities or treatment methods which would
most likely be deemed suitable for the treatment, storage and disposal of
hazardous wastes, as adopted pursuant to Public Law 94-580, are discussed
in this report. Present disposal facilities, treatment methods, or
combinations which show the most promise include but are not necessarily
nmited to:
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Facilities:
1) landfills
2) incinerators
3) waste lagoons or ponds
4) land burial at depth
5) deep well injection
6) near-surface land burial
Final Treatment Processes:
1) oxidation/reduction
2) neutralization
3) chemical degradation
4) detoxification
5) open burning/detonation
6) hydrolysis
7) biological degradation
8) resource recovery
Preparatory Treatment Processes:
1) flocculation-sedimentation and filtration
2) precipitation
3) ammonia stripping
4) evaporation
5) centrifugation
6) carbon sorption
7) solidification/fixation
8) solvent extraction
9) vacuum distillation
Some of the aforementioned methods of treatment, particularly
the preparatory treatment processes, require additional treatment and/or
eventual disposal. In general, these preparatory treatment processes
are utilized to reduce waste volumes or remove particular hazardous wastes
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(i.e., heavy metals, etc.) from the waste stream generated, and should
not be considered as viable alternatives for final disposal. Therefore,
only the disposal facilities and the "final" treatment processes previously
listed will be discussed in detail. Alternate methods of treatment,
storage or disposal will have to be evaluated on an individual basis in
complying with the hazardous waste management standards to be adopted under
Section 3004 of Public Law 94-580.
LANDFILLS
Standard definitions of three major types of landfills were
developed by Shaver et. al. (1975), under contract by EPA which cover
the types of landfill sites suitable for the disposal of hazardous
wastes. The definitions of general, approved and secured landfills are
as follows:
General Landfill: A site which is limited to disposal of inert
solid wastes which should not pose a threat to water quality.
The site may contain water (for example, marshy areas, gravel
pits, or periodically flooded areas) with no threat to water
quality from the wastes.
Approved Landfill: A site which is suitable for the disposal of
inert solid wastes and decomposable organic materials. The site
must provide separation of the wastes from underlying or adjacent
usable water because of leachate possibilities.
Secured Landfill: A site suitable for the disposal of all wastes,
including liquid and/or solid hazardous wastes. The site must
allow no discharge of these materials or their by-products to
usable ground or surface waters by leaching, percolation or any
other means. Another feature which may be included is inventory
control on the wastes buried in the secured landfill. The prime
requisite for such disposal is that the hazardous contents of the
landfill be isolated from the surrounding environment. Water
quality of surface and ground water must not be compromised. Air
quality must also be maintained.
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Typically, general landfills are not adequate for the disposal
of hazardous wastes and afford no protection against leachate generation
and the potential contamination of usable water resources. In addition,
the potential for the generation of hazardous gases and vapors exists,
which could result in fires or explosions. Although, in some instances,
good site selection, design and operation could minimize these adverse
effects, a general landfill should not be considered a proper facility
for the disposal of hazardous wastes.
An approved landfill, where specific site conditions prevail,
may be adequate for the disposal of certain hazardous waste types. In
many cases, hazardous wastes could be disposed of without any additional
precautions, such as steel tanks or containers. Approved landfills
should have to meet the following criteria (Powers, 1976):
1) the type and quantity of each hazardous waste is known and
approved for disposal by pertinent regulatory agencies;
2) the site should be environmentally suitable for hazardous
wastes; and
3) provision is made for monitoring wells and leachate
control and treatment if required. The necessary design
standards for the disposal of hazardous wastes, which will
determine if the above criteria are sufficient for the disposal
of hazardous wastes, are being adopted concurrently under
Public Law 94-580.
Placement in secured landfills would be the safest and most
effective method for the disposal of hazardous wastes. Usually, small
volumes of highly toxic inorganic and organic chemicals and other extremely
hazardous wastes are disposed of in this manner. Because of the hazard
potential of these wastes, additional criteria to those required for an
approved landfill are necessary to safeguard the environment. Examples
of these criteria include: accurate recording of burial coordinates to
avoid any interactions between incompatible chemicals; a water table at
least 10 feet below the lowest level of the landfill; adequate provisions
for the diversion and control of surface water; a vertical permeability
of the natural or synthetic liner (plastic, rubber, concrete, etc.) not
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to exceed 10~7 cm/sec; and registration of the landfill site for a
permanent record of its location once filled.
Although criteria for the disposal of hazardous wastes in an
approved and secured landfill will vary, depending on the existing
hydrologic and geologic environment, the possibilities of any damage to
the environment due to toxic gas generation, leachate generation, or
interactions between hazardous wastes should be minimized. Furthermore,
the most environmentally favorable landfill sites should be selected for
any particular hazardous waste to mitigate any possibility of adverse
effects to the environment.
INCINERATORS
Incineration is a controlled process that utilizes some type
of combustion/burning process to convert a waste to less bulky, less
toxic, or innocuous gases, liquids and solids. Incinerators can be used
to dispose of combustible solids, semi-solids and concentrated liquid
wastes. In general, carbon dioxide, water and ash (of various compositions)
are the major by-products of incinerator processes. When the combustion
product contains undesirable compounds such as toxic hazardous waste
gases (i.e. hydrogen cyanide), additional treatment such as afterburning,
scrubbing, or filtration is necessary. Subsequently, the solid and
liquid effluents, for example toxic inorganic oxides, if hazardous, are
either treated further or disposed of at a hazardous waste facility,
such as a secured landfill. In some instances, by-products, such as
hydrogen chloride or lead slag, are recovered during the incineration
process and recycled.
Several types of incinerators handle wastes in a more efficient
manner, depending on whether the waste is in the liquid, solid or gaseous
form. Some incinerators are capable of handling all three types of
wastes. Examples of these incinerators, given by Powers (1976), include
the fluidized bed and rotary kiln incinerators. Other incinerators that
are more effective with solids and liquids are the open pit multiple
chamber and multiple hearth incinerators. Liquid combustors specifically
handle liquid wastes, whereas catalytic combustors, gas combustors,
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flares and afterburners are more suited for gaseous waste disposal. In
certain cases, where the hazardous wastes themselves are not adequate as
fuels to maintain combustion, additional fuels must be fed into the
incinerator to support combustion.
All incineration processes create some type of secondary
waste, which may be hazardous. These wastes may contain toxic gases,
heavy metal sludges or organic residues. If these wastes are hazardous
they must be treated, stored or disposed of at a hazardous waste facility
or recycled. In general, solid and semi-solid hazardous wastes are
disposed of in landfills certified to accept hazardous wastes or they
are buried, sometimes in containers or tanks,by the generator in properly
designed trenches or pits or transported to other hazardous waste facilities.
The major source of pollution from incinerators is the release
of gaseous emmissions to the atmosphere. Depending on the type of
pollutant, whether particulates or airborne gases from wastes containing
halogens, sulfur or phosphorous compounds, various devices can be effectively
used for pollution abatement, including cyclones, bag filters, electrostatic
precipitators and scrubbers. The release of toxic gases from incinerators
must be controlled by these devices to safeguard the environment.
DEEP WELL INJECTION
Several states, including Alabama, Colorado, Illinois, Indiana
Kansas, Michigan, Missouri, New York, Ohio, Texas and West Virginia,
have developed specific laws, regulations or policies concerning the
subsurface disposal of industrial wastes. Deep well injection of hazardous
wastes has become more attractive to the various process industries
because of the recent enactment of federal legislation, such as the
Federal Water Pollution Control Act Amendment of 1972 and the Marine
Protection, Research and Sanctuaries Act of 1972, regarding the discharge
of pollutants into the waters of the United States. In general, these
laws focus on the potential pollution of surface waters and only -indirectly
address the problem of ground-water pollution. Therefore, because of the
limited legal constraints presently imposed on industry, more and more
hazardous wastes are being disposed of by deep well injection. Warner
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and Orcutt (1973) show that the number of deep injection wells in the
United States has increased by a rate of 30 wells per year since 1967.
In the past, many operators minimized costs from surface
discharge permits and treatment by injection of hazardous wastes into
subsurface aquifers. Recent policy statements, specifically the EPA
policy on subsurface emplacement of fluids by well injection, Decision
Statement No. 5, are aimed at discouraging the disposal of various
wastes, including hazardous wastes, to the subsurface for the purpose of
avoiding discharge permits. Decision Statement No. 5 addresses, in
detail, the policy requirements and guidelines that should be adhered to
in order to insure protection of the subsurface environment from the
emplacement of fluid wastes. EPA recognizes that deep well injection is
a viable waste disposal technique provided adequate regulations and
controlled conditions exist.
Subsurface disposal of liquid wastes has been practiced for
many years. The mining and oil industries have used deep wells for the
disposal of oil field and chemical brines. Today the major industries
that dispose of hazardous wastes by deep well injection include the
chemical, petrochemical and pharmeceutical industries. These industries
inject solvents, corrosives, heavy metals, pesticides and other hazardous
wastes, usually pretreated prior to disposal, into subsurface formations.
Injection wells in the United States generally range in depth from 1,000
to over 12,000 feet (Warner 1973). Treated liquid wastes are injected
by gravity flow or under pressure into subsurface strata that contain
non-potable brackish or briny waters. Receiving strata must be bounded
above and below by confining strata, such as clays and shales, to preclude
any migration to and eventual contamination of potable water supplies.
The composition of the hazardous waste is usually altered by pretreatment
processes to insure that the wastes are compatible with the existing
waters and subsurface environment. This process also minimizes the
possibility of clogging the injection zone.
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WASTE LAGOON AND PONDS
Waste lagoons and ponds have been utilized by industry for the
containment and disposal of liquid wastes. The organic chemical, pesticide
and tannery industries are some of the major industries that dispose of
hazardous wastes in various sizes and types of lagoons and ponds (EPA,
1976f; 1976k). Depending on the volume of hazardous wastes, lagoons and
ponds can consist of small concrete tanks or large excavated basins
several acres in area. Typical pond sizes in the textile industry vary
from one to two acres (EPA, 1976). If a natural impervious material is
absent at the base of the excavation, the larger facilities must be
lined with relatively impermeable natural or synthetic liners such as
clay, asphalt, concrete, or plastic to prevent migration of hazardous
wastes to the subsurface environment. Also, routine monitoring and
detection systems usually need to be installed along with diversion
structures (trenches, berms, etc.) which intercept surface water runoff
from surrounding areas.
The hazardous wastes stored or disposed of in lagoons and
ponds may be treated in-situ as a final disposal process and discharged;
may be treated partially and disposed of at another hazardous waste
disposal facility; or may be accumulated by evaporation until the volume
warrants disposal at a hazardous waste disposal facility. Any combination
of these methods may be employed. Some typical treatment processes
include sedimentation, biochemical oxidation, and precipitation. Many
times, mechanical surface aerators or sprayers are used to increase the
rate of evaporation.
Ideally, lagoons and ponds should be located in geographical
areas where favorable climatic conditions prevail. Such areas include
those where evaporation rates are high and precipitation is minimal.
Because of overflow or flooding problems in wet climates, lagoons or
ponds are usually feasible only in the Western United States. In some
instances, off-site disposal contractors that handle various types of
hazardous wastes may find it necessary to segregate incompatible waste
types or may require appropriate pret^eatment by the waste generator.
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Lagoons and ponds that are utilized for the temporary storage
or permanent disposal of hazardous wastes should be designed and constructed
to minimize any adverse environmental effects. These effects might
include ground-water contamination from leachates or air pollution from
the generation of toxic gases such as hydrogen cyanide.
NEAR-SURFACE LAND BURIAL
Another facility or form of hazardous waste disposal is near-
surface land burial. In near-surface burial, the hazardous waste is
placed directly into the ground or is deposited in stainless steel
tanks, concrete lined pits or a combination of these devices (Powers,
1976). Although the hazardous wastes can be in a liquid or solid form prior
to burial, the wastes are usually converted to a solid form (i.e.
by cementation, solidification, etc.) to reduce the mobility of the
hazardous wastes in the subsurface environment in the event of an accidental
release.
Presently, near surface burial of radioactive wastes from the
nuclear industry is being regulated by the Nuclear Regulatory Commission
(NRC) at several sites. Hazardous chemical wastes are similarly buried
in unlined trenches, up to 20 feet in depth. Morton (1968) indicates
that some of these trenches are from 25 to 60 feet in width and vary
from 300 to 700 feet in length. After emplacement of the hazardous
wastes is completed, the trenches are backfilled to the surface with
materials, such as asphalt, to reduce infiltration and leaching. Radioactive
wastes are typically stored as solids or liquids in steel tanks or bins
enclosed in concrete. The capacity of these tanks can exceed one million
gallons.
Various types of monitoring devices are installed to detect
any leaks or leaching to the subsurface environment, depending on the
type of hazardous waste. Trenches are usually equipped with drains and
sumps to capture any potential leakage. More stringent precautions must
be taken for radioactive wastes, including instrumentation for measuring
temperatures, liquid levels and possible leaks from the tanks or bins.
Because of the long half-lives of several radioactive wastes, these
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tanks can only be considered as interim storage facilities and must be
replaced or repaired if accidental releases to the subsurface environment
occur.
LAND BURIAL AT DEPTH
Only limited studies have been conducted to determine the
feasibility of burial of hazardous wastes, especially radioactive wastes,
at depth. Bradshaw et. al. (1969) and Dunn et. al. (1971) have discussed
active waste disposal in impervious salt formations. Hazardous wastes
would be buried/stored at depths up to 1500 feet in unlined tunnels.
After the waste disposal operation is complete, the area is sealed from
the surface environment by backfilling with salt. Studies have also
been performed to determine the feasibility of radioactive waste disposal
in vaults excavated in deep-seated crystalline rock. These vaults can
be designed to accept both liquid and solid wastes. After the vault is
filled it is completely sealed off from the surface environment. Necessarily,
comprehensive waste retrieval plans and monitoring systems must be
devised to insure protection of the subsurface environment.
No technically acceptable concept for the ultimate disposal of
radioactive wastes exists to date. Additional studies will have to be
made to assess more fully the benefits and possible long-term adverse
environmental effects that might result from the disposal of hazardous
radioactive waste at depth. Nevertheless, non-radioactive hazardous
wastes could conceivably be handled in this fashion with proper pre-
cautions.
ABOVE-SURFACE STORAGE
In some instances, hazardous waste generators might find it
convenient to store extremely hazardous wastes in tanks, vaults or other
containment devices on or above land surface until the wastes are collected
by off-site contractors and transported to another type of hazardous
waste disposal facility. Generally, the types of hazardous wastes
stored in this manner are produced in small quantities. These wastes
might include radioactive wastes, highly toxic organic chemicals and
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pesticides, or lethal gases, which may eventually be disposed of at
other hazardous waste facilities, such as landfills or incinerators.
Certain industries, such as the pesticides-formulating industries, use
activated carbon adsorption for the removal of hazardous organic materials.
The spent carbon is then stored in above surface containers until sufficient
quantities are accumulated for disposal, although in some cases the carbon
is regenerated by thermal methods (EPA, 1976f). Interim storage facilities
of this type should provide adequate safeguards, including monitoring or
leak detection systems, to prevent any accidental release of hazardous
wastes to the surrounding environment. In addition, the hazardous waste
storage containers should be placed in an isolated area to minimize
possible detrimental effects on industrial workers.
FINAL TREATMENT PROCESSES
In this report, a "final treatment" process is defined as one
which alters or destroys hazardous wastes completely, leaving only
innocuous substances as by-products. Several hazardous waste generators
and private contractors that dispose of hazardous wastes employ various
physical and/or chemical treatment processes, in addition to storage
at the aforementioned hazardous waste facilities, to effectively alter
or destroy hazardous wastes. The innocuous substances that result from
these processes do not, in general, have adverse effects on the environment.
The wide variety of treatment processes provides a broad range of treatment
capabilities for the numerous hazardous waste types generated by industry.
For the most part, these processes are performed by the hazardous waste
generator and often are incorporated directly into the processing plant
system.
Several of the major "final treatment" processes which
eliminate hazardous wastes include oxidation, reduction, neutralization,
detoxification, open burning, detonation, chemical/biological degradation,
hydrolysis, dechlorination, chlorination and resource recovery. Specifically,
certain types of hazardous wastes (e.g., hexavalent chromium, DDT,
cyanide, etc.) can be effectively destroyed or altered to a harmless
state by one or more of these treatment processes.
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Because hazardous wastes are generated by virtually all
industries, it is advisable that the generator facilities be designed in
accordance with hazardous waste disposal standards to mitigate the
potential for a release to the environment. Portions of these processing
areas can be considered as temporary treatment and/or storage facilities
and should conform to standards promulgated under Public Law 94-580.
Usually, these facilities isolate the hazardous wastes from the environment
by virtue of the physical or chemical processes involved, thereby
minimizing the possibility of contamination. Therefore, it is unlikely
that these hazardous wastes could enter the surrounding environment,
except under unusual circumstances (i.e. explosion, pipe rupture, etc.).
PREPARATORY TREATMENT PROCESSES
The preparatory treatment processes (e.g., sedimentation,
flocculation, etc.) should not be construed as adequate processes for
the treatment, storage or disposal of hazardous wastes. Although these
processes do partially alter, accumulate or concentrate hazardous wastes,
they do not, in themselves, constitute a viable means of hazardous waste
treatment, storage or disposal in accordance with Public Law 94-580.
In each of these processes, additional treatment, storage or
disposal at a hazardous waste facility is necessary. Therefore, these
preparatory treatment processes, as well as similar processes, are not
being considered as hazardous waste disposal facilities in this report.
Note: References cited in this Appendix are listed at the end of
Chapter III.
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APPENDIX 4
HAZARDOUS WASTE RELEASE EVENTS
The purpose of this section is to describe a classification of
accidents or events whose occurrence at hazardous waste treatment, storage or
disposal facilities might require emergency response measures to be undertaken.
In this report, the words "accidents" and "events" are considered
synonymous. Only events which relate directly to confirmed releases are
considered. We have confirmed with EPA that natural disaster warnings,(e.g.
for tornados and hurricanes, etc.)will be covered under operating plan
requirements, to be discussed in another report.
Table 32 shows the general classes of events considered in this report.
The procedure for classifying events relied primarily on a review of past
incidents or releases involving hazardous wastes. In addition, a number of
hypothetical events were considered to have the potential of creating
emergency situations at various types of hazardous waste facilities. The
In reviewing EPA files on accidents involving hazardous wastes
(EPA, 1975a; and open file materials), it is evident that in the past the
majority of hazardous waste related incidents or releases resulted from the
improper burial of the wastes, very often simply from depositing the wastes
tnto open dumps, abandoned mines and pits. These improper disposal practices
often resulted in ground water and surface water contamination and other
serious environmental consequences (Shuster, 1976a, 19765, 1976c). While it is
assumed that the regulations to be promulgated under the provisions of RCRA
will greatly reduce the incidence of improper disposal of hazardous wastes,
it is felt the occurrence of any of the following events (see Table 1) at
hazardous waste facilities may pose the threat of serious environmental damages
unless responded to promptly and effectively:
1) Non-routine Liquid Release: Although this class covers a wide
variety of situations when identified with specific facility types, rather
well defined events can be related to certain facilities. At first an attempt
was made to break down this class into categories according to the quantity of
wastes released. However, due to the wide range of toxicity, flammability,
and other characteristics among the various hazardous wastes, no such breakdown
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TABLE 32
CLASSIFICATION OF EVENTS
1. Non-routine Liquid Release: seepage - surface
subsurface
failure - surface
subsurface
personnel error - surface
subsurface
2. Non-routine Solid Release: wind erosion
personnel error
3. Non-routine Gas Emission: surface
subsurface
4. Fire (N.F.P.A. Standard No. 10)1: Class A
Class B
Class C
Class D
5. Explosion: surface
subsurface
6. Dike Failure
7. Direct Human Contact
Direct Animal Contact
N.F.P.A. Standard No. 10 is described in Table 2.
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can easily be obtained. Therefore, the releases were divided according to
cause of release (i.e., event subcategories): seepage, failure, or personnel
error. These three groups were then further broken down into surface and sub-
surface groups since detection and response for these two types of release
will differ significantly. Documented cases of non-routine liquid releases
include:
a) Contamination of ground water beneath the Rocky Mountain Arsenal
and surrounding area (EPA, 1975b): This accident involved the contamination
of a shallow water table aquifer. A complex mixture of chemical by-products
was stored in a holding pond. Eventually, leachates from the pond reached
the aquifer and forced the abandonment of 64 domestic, stock and irrigational
wells. This event would thus be classed as a non-routine surface release as
seepage.
b) Emergency Incident Involving Hazardous Wastes, Anniston,
Alabama (Ghassemi, 1977): In this case, industrial wastes containing high
concentrations of sulfuric acid were being stored in steel drums prior to
treatment and disposal. A large number of the drums corroded during storage,
and the spillage eventually contaminated both ground water and surface water.
Here, the release was due to a failure at the surface.
In addition to the examples of non-routine liquid releases cited
above, a large number of other non-routine liquid releases are possible at
hazardous waste facilities (e.g., seepage through retention dikes, etc.).
Subsurface releases can result from failure or improper installation of
injection well casing, landfill liners or subsurface storage containers.
2) Non-routine Solid Release: Non-routine solid releases can occur
at any hazardous waste facility that treats, stores or disposes of wastes
in a solid phase, such as "dried" chemicals, explosives, sludges, etc.
Typically, these releases would result from improper handling or breakage of
containers used in the transport of these waste types within facility bound-
aries. These types of personnel errors occur frequently at hazardous waste
facilities; however, the effects are generally minimized because solid wastes,
unless directly introduced in surface or ground waters, tend to remain in
place and do not migrate rapidly like liquid and gaseous releases. On the
other hand, solid hazardous wastes can be spread over extensive areas by wind
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erosion unless the waste is properly covered.
3) Non-routine Gas Emission: This class of events includes non-
routine emissions from incinerators, reaction products from the improper mixing
of reactive wastes (EPA, 1976a), failure of gas storage vessels, and other
accidental gas releases. Non-routine gas emissions can occur in both the sur-
face and subsurface environments depending on the facility type.
4) Fire: Fires can best be classified along the guidelines estab-
lished by the National Fire Protection Association Standard Number 10
(N.F.P.A., 1976), described in Table 33 . The Standard classifies fire accord-
ing to type of material burning (Class A: "ordinary combustibles"; Class B:
flammable liquids; Class C: electrical equipment; and Class D: combustible
metals). This classification scheme enables the immediate determination of
the type of fire fighting agent to be used. An attempt was made to find a
standard classification by magnitude of fire, but a review of National Fire
Protection Association publication (N.F.P.A., 1976; Bahme, 1976; N.F.P.A., 1975)
and interviews with local fire protection officials (Hortzell, 1977) suggest
that no such classification exists.
5) Explosion: A number of explosions have been reported at hazard-
ous waste disposal facilities, generally the result of the improper handling of
wastes (EPA 1975c; 1976b; 1975d). Due to the explosive characteristics of
certain wastes handled at hazardous waste facilities, there are numerous ways
in which explosions can be accidentally triggered. The most convenient
distinction among explosion events appears to be between surface and subsur-
face explosions, since the response to each type of explosion would differ
significantly.
6) Dike Failure: While the class of events described by the term
dike failure can likely be included in the category of non-routine liquid
releases, dike failures represent a common accident of potentially serious
magnitude and, therefore, merit separate consideration. Dike failure can
result from either natural causes (EPA, 1975e), or improper design and con-
struction practices (EPA, 19755).
7) Direct Human & Animal Contact: Reports of accidental direct
human and animal contact with hazardous wastes have been documented for a
number of hazardous waste facilities (EPA, 1975a; 1975b; 1975c). Such
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TABLE 33
N.F.P.A. STANDARD NO. 10
Class A: Fires involving ordinary combustible materials (such as wood, cloth,
paper, rubber, and many plastics) requiring the heat-absorbing (cooling)
effects of water, water solutions, or the coating effects of certain dry
chemicals which retard combustion.
Class B: Fires involving flammable or combustible liquids, flammable gases,
greases, and similar materials where extinquishment is most readily secured
by excluding air (oxygen), inhibiting the release of combustible vapors, or
interrupting the combustion chain reaction.
Class C: Fires involving live electrical equipment where safety to the opera-
tor requires the use of electrically nonconductive extinquishing agents.
(Note: when electrical equipment is deenergized, the use of Class A or B
extinquishers may be indicated).
Class D: Fires involving certain combustible metals (such as magnesium,
titanium, zirconium, sodium, potassium, etc.) requiring a heat-absorbing
extinquishing medium not reactive with the burning metals.
Note: References cited in this Appendix are listed at the end of Chapter III.
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exposures can occur as the result of non-routine liquid and gas releases,
and also in the course of routine operations. For example, a worker might
accidentally step or fall into a disposal trench containing highly corrosive
wastes (EPA, 1975c). The potential for contact with hazardous wastes exists
at every type of facility.
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APPENDIX 5
HAZARDOUS WASTES
INTRODUCTION
This section defines the hazardous waste category system
developed for this study. The classification system has been devised so
as to comprehensively address all conceivable waste types, i.e., it is
capable of representing any type of existing or future hazardous waste
stream. In addition, the classification presents the waste categories
in a way which will relate meaningfully to contingency plan standards
after incorporation with facility/event pairings. In the paragraphs
which follow, the logic and rationale behind the development of the
hazardous waste categories is outlined.
The task of defining a hazardous waste classification system
is a complex one. Ideally, the results of the current EPA waste classification
study would have been utilized in this investigation. Unfortunately,
only preliminary thinking and effort in the classification system was
available at the time required for early input in this investigation.
Detailed discussions were, however, held with the Sec. 3001 Desk Officer
so that the latest input would be available for this study. Nevertheless,
the importance of a classification system in our study was apparent and
an "interim" definition was developed.
DEFINITION
For the purposes of this report the most relevant
definition of a hazardous waste is provided by the Resource Conservation
and Recovery Act of 1976 (P.L. 94-580). It defines a "hazardous waste"
as:
"...a solid waste, or combination of solid wastes, which because of
its quantity, concentration, or physical, chemical or infectious
characteristics may--
"(A) cause, or significantly contribute to an increase in mortality
or an increase in serious irreversible or incapacitating reversible,
illness; or
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"(B) pose a substantial present or potential hazard to human health
or the environment when improperly treated,stored, transported, or
disposed of, or otherwise managed."
The term "solid waste" is defined in the Act as:
".... any garbage, refuse, sludge from a waste treatment plant,
water supply treatment plant, or air pollution control facility and
other discarded material, including solid, liquid, semisolid, or
contained gaseous material resulting from industrial, commercial,
mining and agricultural operations and from community activities,
but does not include solid or dissolved material in domestic sewage,
or solid or dissolved materials in irrigation return flows or
industrial discharges which are point sources subject to permits
under section 402 of the Federal Water Pollution Control Act, as
amended (86 Stat. 880), or source, special nuclear, or by-product
material as defined by the Atomic Energy Act of 1954, as amended
(68 Stat. 923)."
Four hazardous waste classification systems were considered
and are shown in Table 34. After comparison, the "best" system was
selected on the basis of relative advantages and disadvantages. Table 35
summarizes the merits of each system. From Table 35 it was decided that
the fourth classification system is the most preferable system. As a
result, the categories used for this report were based on the classification
by associated hazards.
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TABLE 34
POSSIBLE CLASSIFICATION SYSTEM BASES
I CLASSIFICATION OF WASTES BY SOURCE:
Group wastes according to the type of manufacturing process of
which they were by-products. This might possibly utilize Standard
Industrial Classification (SIC) codes.
II CLASSIFICATION OF WASTES BY DISPOSAL METHOD:
Group wastes according to the specific type of process used to
dispose of or treat the waste.
Ill CLASSIFICATION OF WASTES BY CHEMICAL PROPERTIES:
Group wastes according to their specific physical or chemical
properties. Under this system some typical categories would be
ACID, ALKALINE, OXIDIZER, SOLUBLE, etc.
IV CLASSIFICATION OF WASTE BY ASSOCIATED HAZARD:
Group wastes according to the type of hazard the waste posed.
Typical categories in such a system would be FLAMMABLE, EXPLOSIVE,
CORROSIVE, etc.
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TABLE 35
ADVANTAGES AND DISADVANTAGES OF CLASSIFICATION SYSTEMS
I CLASSIFICATION BY SOURCE:
ADVANTAGES:
1. SIC codes exist for a wide range of industries
which are potential hazardous waste producers.
DISADVANTAGES:
1. There are a large number of waste sources. This
would lead to a large number of categories.
2. It would be very difficult to consolidate categories. If one
did consolidate, so many generalities would be introduced into
the classification that they would not be useful.
3. Some categories are not necessarily consistent with respect to
chemical, physical or hazard properties. In other words, it
is not possible to characterize uniquely a source. Therefore,
it would not be possible to specify standards for contingency
plans which would apply to it.
4. More specific SIC categories which relate to waste types are
not available.
II CLASSIFICATION BY DISPOSAL METHOD
ADVANTAGES:
1. These type classes relate directly with facility type (by
definition). Thus a large number of facility/event pairings
will be not-applicable. A smaller number of pairings will be
less complex when related to contingency plan standards. The
result will be easier to comprehend.
DISADVANTAGES:
1. The classifications for the most part do not relate to the
types of hazards associated with a waste. As such, it is
difficult to relate contingency plan standards to them.
302
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TABLE 35 (cont'd)
III CLASSFICATION BY CHEMICAL PROPERTIES:
ADVANTAGES:
1. A large amount of physical and chemical property data exists
for pure materials.
2. Some chemical properties relate to the hazards associated with
a substance. Thus, for these categories a relationship to
contingency standards can be made.
DISADVANTAGES:
1. Most wastes are not pure compounds. Although much
data exists on the complex wastes, it is not necessarily
applicable to waste streams.
2. Many properties do not relate to hazard categories. Therefore
even if the properties were defined for a waste, the properties
could in many cases not be related to specific contingency
plan standards.
3. Chemical properties for the most part do not relate to "events",
or "facilities".
IV CLASSIFICATION BY ASSOCIATED HAZARD:
ADVANTAGES:
1. Hazard categories, by definition, relate to the hazards associated
with a waste. Therefore, these categories relate very well to
contingency plan standards. This relationship is a primary
objective of the classification process.
2. Hazard categories correlate well with event types.
DISADVANTAGES:
1. Hazard categories do not correlate to facilities.
2. A large number of properties fall into several areas associated
with hazards. All of these must be considered simultaneously,
requiring a large number of categories.
In order to be useful, they will therefore have to be consolidated,
which may introduce some undesired generalization.
303
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CLASSIFICATION OF WASTE BY ASSOCIATED HAZARD
The hazards associated with a waste fall into five areas. For
the purpose of identification these areas are denoted as; "origin of
hazard", "mode of transmission", "environment of hazard", "mode of
attack" and "type of hazard". Each of these areas are examined in the
following paragraphs.
Origin of Hazard
The "origin of hazard" associated with a waste relates to how
it becomes hazardous. For example, certain materials release or produce
hydrogen cyanide gas upon combustion. The origin of hazard for such a
material would be combustion. This method does not result in an exclusive
classification, however. A material might also have other "origins of
hazard" associated with it since there are many ways in which a material
may become hazardous. The following list describes those ways which are
most important.
INTRINSIC: A material may be intrinsically hazardous
at standard temperature and pressure, i.e., it may not
require any transformation to become hazardous. This
would include a consideration of auto-degradation with
time or ageing. Some materials become more dangerous
with age.
REACTION WITH AIR: A material may react with air to
become hazardous. For example, a substance may give off
toxic fumes when it comes in contact with air. Another
example is a flammable gas. When it comes into contact
with air it may form a potentially explosive mixture.
REACTION WITH WATER: A material may react with water to become
hazardous. For example, water reacts with calcium
carbide to form flammable acetylene gas.
OTHER REACTIONS: A substance may react with other common materials
to form hazards.
304
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SYNERGISM: A substance's toxicity or other harmful effect may be
activated or magnified by association with another
substance. This is not a reaction but a synergistic
effect.
HIGH TEMPERATURE DEGRADATION: A substance may degrade when subjected
to temperatures substantially above ambient. The products
of degradation may be hazardous.
EVAPORATION: A substance may volitalize or evaporate into the air.
If the air mixture which results is hazardous, this
category would apply.
COMBUSTION BY-PRODUCTS: The by-products of combustion may be
hazardous. Commonly there may be suffocating carbon
monoxide gas or cyanide gas released.
EXPLOSION BY-PRODUCTS: The by-products of an explosion may be
hazardous. This situation might be due to the de-
composition reaction of a chemical explosion. It could,
however, also be due to an intrinsic property of a sub-
stance which was released by a rupture type of explosion.
BIO-DEGRADATION: A substance may be acted on by biological organisms.
The products of this interaction may be more hazardous
than the original substance.
AQUEOUS SOLUTION: A substance may be activated by going into
solution in water.
Mode of Transmission
The "mode of transmission" relates to how a hazard is conveyed
from its initial or safe position under controlled (preaccident) conditions
to where it inflicts injury or damage. There are five modes which are
important. These are explained below:
STATIONARY: A material may be hazardous in-situ. It may not
require any vehicle of transmission to be hazardous. An
example of such a situation is a solid high explosive.
305
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WATERBORNE: A material may be carried via water as a
solution, suspension, flotation, etc., to a distant location
where it may pose a hazard. This mode implies that the
material is not rendered harmless by exposure to water.
PROPELLED: A material may be carried, propelled, ejected, etc.
from its "safe" location to a distant location where it
might pose a hazard. An example of such a situation
would be the ejection of contaminated soils or liquids
from the vicinity of an explosion. Another example would
be contaminated material carried from a landfill into a
surrounding community by birds, rodents, etc.
SURFACE: A material may move via natural or man-made devices to
a distant location where it might pose a hazard. An
example would be the movement of a flammable liquid
through a dry storm drain into a community.
Environment of Hazard
The "environment of hazard" is the condition under which a material
is hazardous. For example, beryllium dust is toxic at very low concentrations
in air, but when it is dissolved in water it poses no ingestive threat
when the concentration is not too great (Battelle, 1973). Thus, an
environment of hazard (with respect to toxicity) for beryllium dust
would be air, but not water. The following environments are the most
important ones to consider:
AIR EXPOSURE
WATER EXPOSURE
INDEPENDENT
SURFACE CONTAMINATION
Mode of Attack
The "mode of attack" refers to how a hazard affects humans. The
toxic mode of attack for beryllium dust, for example, would be inhalation.
The modes of attack considered in this report are:
306
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INHALATION: A material may be hazardous if inhaled.
INGESTION: A material may be hazardous if ingested.
DERMAL PENETRATION/CONTACT: A material may be hazardous to the
touch. For example, some pesticides can penetrate through
the skin and produce toxic effects. Another example is
a strong acid. If such a corrosive agent contacts the
skin, it may produce tissue damage.
PROXIMITY: Some types of material are hazardous to humans by virtue
of proximity. An explosive is a good example. If an
explosion occurs it will effect humans who are near it.
There is no requirement that direct contact be made with
the explosive. Radioactive materials, of course, would
fall into the same category.
INDIRECT: A material may be indirectly hazardous to humans by
virtue of its damage potential to plants, crops, livestock,
fish, etc. In addition effects on non-living objects can
be considered as indirect threats to humans.
Type of Hazard
The "type of hazard" refers to the commonly recognized classes
of hazard which may be presented by a material. Included in this classification
are such categories as toxicity, flammability, genetic change potential,
etc. It is the basic attribute system for representing a hazardous
characteristic. Most of the studies which have been done in the past to
define hazardous substances have used criteria which fall into this type
of hazard category. Several of these studies are represented in Table 36
(EPA 1975f). It shows the criteria which were evaluated in determining
what materials would be classified as hazardous. Most of these systems
were developed to define hazardous substances in general; however five
are concerned directly with hazardous wastes. These include Ocean
Dumping - Title 40, CFR, Part 227; State of California List; Booz-Allen
Applied Research, Inc.; Battelle Memorial Institute; and TRW Systems
Group.
307
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TABLE 36
SUMMARY OF CRITERIA FOR
HAZARDOUS SUBSTANCE CLASSIFICATION SYSTEMS
Criteria
System
Department of the Army
Department of the Navy
FDA - Title 21, CFR, Part 191
Drinking Water Standards
FWPCA - Sec. 307 (a)
FWPCA - Sec. 311
Clean Air Act - Sec. 112
Ocean Dumping - Title 40, CFR, Part 227
DOT - Title 49, CFR, Parts 100-199
State of California List
National Academy of Sciences
Booz-Allen Applied Research, Inc.
Battelle Memorial Institute
TRW Systems Group
NIOSH - Toxic Substances List
Pesticides - Title 40, CFR, Part 162
Source: State Program Implementation Guide - Hazardous Waste
Surveys, USEPA, 1975.
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The system which seems to have gained the most widespread use
and acceptance is the 1973 Battelle Memorial Institute report Program
for the Management of Hazardous Wastes, prepared for the EPA. The
report developed a Hazardous Waste Decision Model which can be used to
determine whether or not a given waste stream should be considered
hazardous. This model is shown schematically in Figure 5-1. It provides
screening criteria for hazard categories, and may serve as a working,
quantitative definition of hazardous wastes.
The following abbreviated definitions are for the terms used
in the model and are taken from the Environmental Protection Agency
Report to Congress (EPA, 1974).
Maximum permissible radioactive concentration (MPC) levels: Levels
of radioisotopes in waste streams which if continuously maintained
would result in maximum permissible doses to occupationally exposed
workers and which may be regarded as indices of the radiotoxicity
of the different radionuclides.
Bioconcentration (bioaccumulation, biomagnification): The process
by which living organisms concentrate an element or compound to
levels in excess of those in the surrounding environment.
National Fire Protection Association (NFPA) category 4 flammable
materials: Materials including very flammable gases, very volatile
flammable liquids, and materials that in the form of dusts or mists
readily form explosive mixtures when dispersed in air.
NFPA category 4 reactive materials: Materials which in themselves
are readily capable of detonation or of explosive decomposition or
reaction at normal temperatures and pressures.
Lethal dose fifty (LD5Q): A calculated dose of a chemical substance
which is expected to kill 50 percent of a population of experimental
animals exposed through a route other than respiration. Dose
concentration is expressed in milligrams per kilogram of body
weight.
309
-------
WASTE
STREAM
DOES WASTE CONTAIN
RADIOACTIVE CONSTITUENTS
> MPC LEVELS?
"
,r NO
IS WASTE SUBJECT TO
8IOCONCENTRATION?
Y NO
IS WASTE FLAMMABILITY
IN NFPA CATEGORY 4?
| NO
IS WASTE REACTIVITY
IN NFPA CATEGORY 4?
v NO
DOES WASTE HAVE AN ORAL
LD,a < 50 mg/kg?
v NO
IS
WASTE INHALATION TOXICITY
200 ppm AS GAS OR MIST?
LC,. < 2 mg/liter AS DUST?
v NO
IS
WASTE DERMAL PENETRATION
TOXICITY LOS 0 < 200 mg/kg?
V NO
IS WASTE DERMAL IRRITATION
REACTION < GRADE 8?
1 NO
DOES WASTE HAVE AQUATIC
96-hr TLm < 1.000 mg/liter?
NO
IS WASTE PHYTOTOXICITY
IL,0 < 1.000 mg/liter?
y NO
DOES WASTE CAUSE
GENETIC CHANGES?
NO
OTHER WASTES
YES
YES
YES
YES
w
YES
YES
YES
YES
YES
YES
YES
•w
HAZARDOUS WASTES
Figure 5
DECISION MODEL FOR
SCREENING AND SELECTING HAZARDOUS COMPOUNDS
SOURCE'REPORT TO CONGRESS-DISPOSAL OF HAZARDOUS WASTES'.' USEPA.1974
-------
Lethal concentration fifty (LC5Q): A calculated concentration which
when administered by the respiratory route is expected to kill 50
percent of a population of experimental animals during an exposure
of 4 hours. Ambient concentration is expressed in milligrams per
liter.
Grade 8 dermal irritation: An indication of necrosis resulting from
skin irritation caused by application of a 1-percent chemical
solution.
Median threshold limit [96 hour TLm): That concentration of a
material at which it is lethal to 50. percent of the test population
over a 96-hour exposure period. Ambient concentration is expressed
in milligrams per liter.
Phytotoxicity: Ability to cause poisonous or toxic reactions in
plants.
Median inhibitory limit (Il_m): That concentration at which a 50-
percent reduction in the biomass, cell count, or photosynthetic
activity of the test culture occurs compared to a control culture
over a 14-day period. Ambient concentration is expressed in milligrams
per liter.
Genetic changes: Molecular alterations of the deoxyribonucleic or
ribonucleic acids of mitotic or meiotic cells resulting from chemicals
or electro-magnetic or particulate radiation.
Screening criteria in addition to those of the Battelle model
are necessary because the hazard categories used do not address all the
areas which are of concern. Other sources suggesting more possibilities
follow:
The office of Oil and Hazardous Materials (OHM) Of EPA is
responsible for handling spills and other accidents which involve oil
and other hazardous substances. Their response is based on a case by
case analysis of all the circumstances surrounding a particular incident.
Assisting them in this capacity are a team of experts and an array of
other resources. One of these important resources is a chemical information
computer data base system called the Oil and Hazardous Material - Technical
311
-------
Assistance Data System (OHM-TADS). The data base contains information
on many aspects of hazard (EPA, 1977a). Many of the concerns are with
basic physical or chemical properties of a material. A considerable
number of catergories are concerned with specific, quantifiable, hazardous
properties. The hazardous properties which are addressed by the system
are summarized below:
CORROSIVENESS: Corrosive action to materials commonly used for
packaging or equipment that might be required at a spill
site.
FLAMMABILITY: Concerns the potential for flammability at a spill
site. The NFPA 704 ranking system is utilized.
EXPLOSIVENESS: Concerns the potential for violent rupture or
vigorous reaction at a spill site.
BIOCHEMICAL OXYGEN DEMAND: Concerns the potential to lower oxygen
level in a body of water either by direction reaction with
oxygen or biological oxidation. BOD is given as Ib/lb or
percent of theoretical demand basis.
FOOD CHAIN POTENTIAL: Indicates the potential for a material to
concentrate to toxic levels while it is passed up the
food chain to humans. This potential is often called
bioconcentration, bioaccumulation, or biomultiplication.
ETIOLOGICAL POTENTIAL: Concerns the potential of a material to
initiate or accelerate diseases ar ailments by exposure.
CARCINOGENICITY: Concerns the potential of a material to produce
cancer in humans.
MUTAGENICITY: Concerns the potential of a material to produce
biological alterations in humans.
TERATOGENICITY: Concerns the potential of a material to produce
birth defects or abnormal formations.
FRESHWATER TOXICITY: Concerns the concentration levels at which
toxic effects will occur in freshwater.
312
-------
CHRONIC AQUATIC TOXICITY: Concerns the chronic long-term exposure
limits of fish for a substance.
SALT WATER TOXICITY: Concerns the toxicity levels of estuarine
or marine animals for a substance.
ANIMAL TOXICITY: Concerns the toxicity levels of various test
animals for a substance.
CHRONIC ANIMAL TOXICITY: Concerns the chronic or long-term
toxicity levels of animals for a substance.
LIVESTOCK TOXICITY: Concerns the toxicity level of a substance
toward livestock.
HAZARD TO WATERFOWL: Concerns the effects of a substance on
waterfowl. Relates to the acute exposure limits.
CHRONIC HAZARD TO WATERFOWL: Concerns the chronic or long-term
effects of a substance on waterfowl.
AQUATIC PLANT TOXICITY: Concerns the potential of a substance to
injure aquatic flora.
IRRIGABLE PLANT TOXIC: Concerns the potential of a substance to
be injurious to crops.
CHRONIC PLANT TOXIC: Concerns the potential for injury to crops
which are exposed chronically or on a long-term basis
to irrigation water contaminated with a substance.
TASTE IMPARTING CHARACTERISTICS: Concerns the potential for a
substance to impart an undesirable taste to the flesh
of fish living in affected waters.
INHALATION LIMIT: Concerns the inhalation toxicitylevels of a
substance.
IRRITATION LIMIT: Concerns the concentration levels required for
a material to cause irritation to the skin and mucous
membranes of the body.
DIRECT CONTACT: Concerns the potential of a material to be
irritating or corrosive on direct contact with the skin,
eyes or mucous membranes.
313
-------
DIRECT HUMAN INGESTION: Concerns the potential of a sub$tance
to be toxic if ingested directly.
DRINKING WATER LIMITS: Concerns the levels which are recommended
as being safe in drinking water.
BODY CONTACT EXPOSURE: Concerns itself with the acute contact
hazard of a substance in water.
PROLONGED HUMAN CONTACT: Concerns itself with the safe levels in
water which is used for prolonged bathing and swimming
activities.
INDUSTRIAL FOULING POTENTIAL: Concerns the potential for water
contaminated with the substance in question to cause
problems when used by industry. This relates to scale
forming agents as well as materials with potential rupture
hazards when included in boiler feed or cooling water.
EFFECT OF WATER TREATMENT PROCESSES: Concerns the potential
interactions with typical water and waste water treatment
facilities. This includes the effect of chlorination
an aesthetic properties of contaminated water, as well
as the effect of high concentration on sewage organisms.
The above categories can be divided into two areas of emphasis;
short-term, immediate, acute effects; and long-term, future, chronic
effects. Each category has a difference in the degree of concern which
is associated with it. In relation to accidents, the factor of environmental
persistance (non-biodegradability) plays a vital role in deciding what
should be considered as important. If a substance is chronically
toxic to fish, but is not persistent in the environment, then it
would not be an important hazard to consider. Using this rationale,
the distinction between chronic and acute in the OHM-TADS-classification
may be disregarded and categories lumped together. This procedure was
adopted in integrating and converting the OHM-TADS concern categories
into the general type of hazard categories used in thts report. The
categories which result from this summarizing are listed below:
314
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TOXIC
IRRITATING
SENSITIZING
CARCINOGENIC
TERATOGENIC
ETIOLOGIC
INFECTIOUS
RADIOLOGICAL
EXPLOSIVE
FLAMMABLE
BIOCONCENTRATING
BIOCHEMICAL OXYGEN DEMANDING
AQUATIC TOXIC
PHYTOTOXIC
IRRIGABLE PLANT TOXIC
AQUATIC PLANT TOXIC
ANIMAL TOXIC
CORROSIVE TO EQUIPMENT, ETC.
INDUSTRIAL FOULING
WATER TREATMENT FOULING
All five of the major areas which have been discussed must be
considered simultaneously to completely describe a hazardous waste in
relation to an accident situation; however, it is awkward to do this
inasmuch as a total of 25,200 possible combinations result. Obviously,
the categories need to be combined and grouped into a more workable
number. To accomplish this a systematic approach was taken. Each of the
areas; "type of hazard", "mode of attack", "mode of transmission" and
"environment of hazard" but not "origin of hazard" were integrated with
one another in successive steps. The integrations were done to show
which attributes in each area were not compatable. For example, consider
the ingetration of the "type of hazard" with the "mode of attack":
The "type of hazard" category called EXPLOSIVE is not applicable to
the "mode of attack" category INHALATION. This is because inhalation
is not a a mode of attack for an explosive material. On the other
hand the "mode of attack" categories of PROXIMITY and INDIRECT are
applicable to an explosive substance.
315
-------
Once the applicability between the categories was established,
some of them were combined into hybrid groups. For this reason the
integration processes were denoted as "hybrid integrations". The hybrid
categories which resulted from the first integrations were included in
the next integration and so on until a final set of hybrid categories
evolved.
The "origin of hazard" categories were combined with the final
hybrid categories in a different way than above. The "origin of hazard"
categories were first clustered into "event" related groups, as described
below. The reason for this will be made apparent later. The resulting
"event" groups were then integrated with the final hybrid categories to
produce the final waste categories. This integration and clustering
process is shown schematically in Figure 5-2.
A first step in this direction is taken by integrating the
"type of hazard" with the "mode of attack" categories. This integration
is shown schematically in Figure 5-3. Coning out of the process are nine
groups which are numbered one through nine in the table. For identification
purposes these groups are denoted as follows:
GROUP 1 - INHALATION HEALTH HAZARD
GROUP 2 - INGESTION HEALTH HAZARD
GROUP 3 - CONTACT HEALTH HAZARD
GROUP 4 - RADIOLOGICAL
GROUP 5 - EXPLOSIVE
GROUP 6 - FLAMMABLE
GROUP 7 - BIOCONCENTRATIVE
GROUP 8 - ENVIRONMENTAL HAZARD
GROUP 9 - CORROSIVE/FOULING
The second step toward consolidation of categories involves
integration of the "type of hazard" - "mode of attack" hybrid categories
with the "mode of transmission" category. This is shown in Figure 5-4.
There are ten groupings which result. They are numbered in the table
and identified below:
GROUP 1 - AIRBORNE HEALTH HAZARD
GROUP 2 - WATERBORNE HEALTH HAZARD
316
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Figure 8
FIRST HYBRID INTEGRATION
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318
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Figure 9
SECOND HYBRID INTEGRATION
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319
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GROUP 3 - CONTACT HEALTH HAZARD
GROUP 4 - RADIOLOGICAL
GROUP 5 - FLAMMABLE/EXPLOSIVE VAPOR
GROUP 6 - EXPLOSIVE SOLID/LIQUID/SOLUTION
GROUP 7 - FLAMMABLE SOLID/LIQUID/SOLUTION
GROUP 8 - BIOCONCENTRATIVE
GROUP 9 - ENVIRONMENTAL HAZARD
GROUP 10 - CORROSIVE/FOULING
To combine the categories still further a third hybrid
integration is performed. This one involves the categories from the
previous step and the "environment of hazard" classification. Figure 5-5
shows the results. Notice that no vertical consolidation has taken
place. Therefore, the original classification names (above) are retained
for each of the groups which are numbered one through ten in the table.
There remains one further integration which must be performed to arrive
at the final set of classification which will be used to characterize a
waste hazard. This is integration with the "origin of hazard". Examination
of the "origins of hazards" list suggests a possible way of grouping
which will relate to events. The advantage of this is that it will
eliminate a great deal of redundancy in classification. Consider the
following example: Suppose that a material had toxic combustion products.
An origin of hazard for this material's toxicity would be combustion.
Suppose also that the material were not intrinsically toxic. If the
material were classified in a fully expanded system (i.e. one which, for
example, included categories such as INTRINSICALLY TOXIC, TOXIC WHEN
COMBUSTED, TOXIC IN WATER, etc.) there would be an unnecessary redundancy
of notation. When facility/event/waste groupings are correlated the
waste column called TOXIC WHEN COMBUSTED would be non-applicable in all
those cases where the event FIRE were not present.
Several categories are listed below. Each category is composed
of one or more of the original"origin of hazard classes. Where possible,
the groups relate to facility/event types.
I. SURFACE LIQUID RELEASE
A. INTRINSIC
320
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Figure 10
THIRD HYBRID INTEGRATION
ENVIRONMENT OF HAZARD
o
u.
V)
CO
o
Q
cr
CO
X
AIRBORNE
HEALTH HAZARD
WATERBORNE
HEALTH HAZARD
CONTACT
HEALTH HAZARD
RADIOLOGICAL
FLAMMABLE /EXPLOSIVE
VAPOR
EXPLOSIVE SOLID
OR LIQUID
FLAMMABLE SOLID
OR LIQUID
BIOCONCENTRATING
ENVIRONMENTAL
HAZARD
CORROSIVE/FOULING
K
Ui
Q
Uj
0.
UJ
Q
^
NA
NA
Uj
CC
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-------
B. REACTION WITH AIR
C. REACTION WITH WATER
D. AQUEOUS SOLUTION
E. BIODEGRADATION
F. EVAPORATION
II. SURFACE SOLID RELEASE
A. INTRINSIC
B. REACTION WITH AIR
C. EVAPORATION
III. FIRE
A. INTRINSIC
B. HIGH TEMPERATURE DEGRADATION
C. EVAPORATION
D. COMBUSTION BY-PRODUCTS
E. REACTION WITH WATER
F. AQUEOUS SOLUTION
G. BIODEGRADATION
IV. EXPLOSION
A. INTRINSIC
B. EXPLOSION BY-PRODUCTS
V. DIRECT CONTACT
A. INTRINSIC
VI. GASEOUS SURFACE RELEASE
A. INTRINSIC
B. REACTION WITH AIR
VII. GASEOUS/LIQUID SUBSURFACE RELEASE
A. INTRINSIC
B. REACTION WITH WATER
C. AQUEOUS SOLUTION
D. BIODEGRADATION
VIII. REACTIVITY
A. REACTION WITH WATER
B. REACTION WITH AIR
322
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C. OTHER REACTION
D. SYNERGISM
Special attention is given to the last category; REACTIVITY.
It is the only one which does not relate to specific event types. Therefore,
this category was added to the hybrid "type of hazard" - "mode of attack" -
"mode of transmission" categories. Note that it contains the"origin of
hazara" class SYNERGISM. Synergism is the joint action of two or more
agents which act together to produce an effect which is more pronounced
than the effect of any of the agents acting alone. A synergistic
interaction involving two chemicals is not a reaction per se. It is
however, consistent with the definition of Reactivity. For this reason, it
was included in the REACTIVITY grouping. One final grouping is added to
deal with the case where a material's identity or properties are not
known. This category is called UNKNOWN.
The final waste hazard categories are therefore as follows:
I. AIRBORNE HEALTH HAZARD
II. WATERBORNE HEALTH HAZARD
III. CONTACT HEALTH HAZARD
IV. RADIOLOGICAL
V. FLAMMABLE/EXPLOSIVE VAPOR
VI. EXPLOSIVE SOLID/LIQUID/SOLUTION
VII. FLAMMABLE SOLID/LIQUID/SOLUTION
VIII. BIOCONCENTRATIVE
IX. ENVIRONMENTAL HAZARD
X. CORROSIVE/FOULING
XI. REACTIVE
XII. UNKNOWN
These may be summarized as follows:
FLAMMABLE/EXPLOSIVE VAPOR:
This category is reserved for gases and vapors which are flammable
and/or explosive. In addition, it is applicable to liquids (or
solids) which are extremely volatile and give off flammable/explosive
vapors.
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FLAMMABLE SOLIDS/LIQUIDS:
This category is reserved for liquids, solids, sludges, slurries,
etc. which are flammable.
EXPLOSIVE SOLIDS/LIQUIDS:
This category is reserved for solids, liquids, sludges, slurries,
encapsuled or contained gases, liquids, etc. which may present an
explosion hazard.
BIOCONCENTRATIVES:
This category is reserved for substances which may concentrate in
a single species or through a series of species (plant or
animal) in the human food chain to a level, above the ambient
level, which are toxic or injurious to humans.
CORROSIVES:
This category is reserved for substances which are corrosive to
equipment, structure, containers, etc. which are likley to be
found in hazardous waste facilities or which may be used at such
facilities during emergencies.
REACTIVES:
This category is reserved for substances which tend to react
spontaneously in a hazardous way with common materials. Included
in this category are substances which may undergo synergistic
interactions. In this definition the term "hazardous way" means
that the substance may react so as to produce any of the following
effects:
a. violent reaction (spewing reactants)
b. rapid heat generation
c. generation of hazardous products
The term "common material" would include:
a. air
b. water
c. structural metals
d. other construction materials
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RADIOLOGICAL:
This category is reserved for materials which spontaneously
emit ionizing radiation to the environment. This includes
radionuclides and materials contaminated with radionuclides.
It does not include materials covered by NRC regulations.
ENVIRONMENTAL HAZARD:
This category is reserved for substances which pose a threat
to the environment. This would not include the hazards of
fire, explosion or radiological materials, nor would substances
producing adverse effects on humans alone be classified as
ENVIRONMENTAL hazards. The emphasis is on effects on plants,
crops, fish, shellfish, livestock, etc.
In addition, materials which might effect the structure, function,
etc., of non-living objects in such a way that it may cause harm
to plants, animals, or humans would be classified as an ENVIRONMENTAL
hazard.
AIRBORNE HEALTH HAZARD:
This category is reserved for substances which may be transported
via the air and which pose a health hazard to humans. This health
hazard would not include the normal hazards associated with fires,
explosion or radioactive materials. Hazards that would be included
are:
a. inhalation toxic
b. dermal penetration toxic
c. irritating
d. sensitizing
e. etiologic
f. carcinogenic
g. mutagenic, teratogenic, etc.
h. ingestion toxic (applies to material which might settle
on the surface of plants which are subsequently eaten).
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WATERBORNE HEALTH HAZARD:
This category is reserved for substances which may be transported
via water as a solution, suspension, or flotation and which
pose a health hazard to humans. This health hazard would not
include the normal hazards associated with fires, explosions or
radiological materials. Hazards which would be included are:
a. ingestion toxic
b. dermal penetration toxic
c. irritating
d. sensitizing
e. etiologic
f. carcinogenic
g. mutagenic, teratogenic, etc.
CONTACT HEALTH HAZARD:
This category is reserved for substances which may be transported
via direct contact and which pose a hazard to human health. The
direct contact might be via fallout from an explosion, splash from
or contact with a spill, or mishandling of materials. The normal
hazardous effect associated with fires, explosions, or radiological
materials are not considered under this category.
Hazards which would be included are:
a. dermal penetration toxic
b. irritating
c. sensitizing
d. etiologic
e. carcinogenic
f. mutagenic, teratogenic, etc.
UNKNOWN:
This category is reserved for materials whose compositions
or properties are unknown. An example of an UNKNOWN
hazard would be an unlabeled (perhaps due to corrosion
or negligence on the part of an operator) drum of
material which is in close proximity to a fire at some
type of facility.
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As previously mentioned, the EPA has not promulgated regulations
defining what the hazard categories are or what degree of danger is
necessary before a substance can be called hazardous. This contract study
is currently in progress and when it is finished, it should provide the
best basis for threshold values. Until threshold values are finalized
in that study, it is best to speak in qualitative terms only.
Note: References cited in this Appendix are listed at the end of Chapter III,
327
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APPENDIX 6
DAMAGE SCENARIOS; INTRODUCTION
These damage scenarios were designed as a conceptual aid to focus
attention on liability limits that may result from hazardous waste damage
events. To date, there is not a compilation of damages that resulted from
events at hazardous waste management facilities. Documented cases are
largely limited to accounts of accidents, spills and leaks from various
industries other than the disposal industry. Furthermore, these accounts
do not cover the full range of potential damages.
Hazardous waste incidents on the scale of the mercury poisoning
cases in Japan or the dioxin disaster in Italy have not occurred in the
United States. Thus, to accurately reflect the true nature of the problem,
these damage scenarios were designed. They are based on actual incidents
that have occurred or are extensions of such incidents. While in a few
technical areas, they may prove to be inaccurate, such inaccuracy will not
detract from their overall utility in highlighting both potential damages
and the consequences of these damages.
328
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Incinerator Malfunctions
•Operating Characteristics
-An incinerator used to dispose of hazardous wastes has the following
operating characteristics:
10 GPM Waste Tar
13,000 FT3/MIN Combustion Air
20,000 FT3/MIN TEMPERING AIR
300 GPM Fresh Water
2,300 GPM Recycled Water
•Failure Mode
-One hour undetected interruption in recycled water flow permitting
flue gas exit with insufficient scrubbing - 2:30-3:30 PM .
At that time, one-third of tar content is:
0
« M
MSMA: CH. - As - ONa
j i
OH
This compound is broken down during combustion to:
0
CH3 - AS - ONa + 302 As203 + 2C02 + 3H20 + 2NaOH
OH
Based on air flow and full release of As^O-,, the concentration at the stack
is 1,118 PPM
•Dispersion
-Assume westerly winds at 5 MPG during period of release. The area of
exposure is 2,356 SQ. MI.
329
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• Receptor Interaction
-Small town of 500 families located 40 MI. down wind. 20 families
located at closer distances 2,000 head of cattle located within
10 miles
•Ecological Impact
-In town: Skin Effects - Hyperkeratosis of palms and soles;
Edema of Eyelids - 20 people - duration 2 months
-Closer families: Central Nervous System-Mental Confusion, Defective
Control of Muscles-10 People; Skin Effects-20 People- Duration
6 Months
-Cattle: Nausea, Vomiting, Contaminated Milk-10 Cattle Die-Duration
3 Months
•Financial Impact
-Action for damages suits result in the following rewards:
Skin Effects - $50,000
Nervous System - $1,200,000
Cattle - $10,000
Total - $1,260,000
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Secure Landfill
Class I Secure Landfill Disposing Petroleum Refinery Hazardous
Materials On Site
•Operating Characteristics
-Segregation of Wastes
-Neutralization of Acids and Caustics
-Reduced Fluid Mobility Through Suitable Soil Mixture
-Daily Earth Covering of 6" Soil
•Failure Mode
-Explosion and Subsequent Fire Caused by Unknown, Unanticipated
Chemical Reaction
-Toxic Cloud Includes Oily Wastes, Phenols and Some Tetraethyl Lead
Vapors Toxic At .075 - .15 MG/M3
•Dispersion
-Explosion Radius 115' /. Contained Within Site 10 MPH Wind
-Fire Lasts 2 Hours But Evacuation Successful After 1 Hour
Area of Exposure 10 Sq. Mi.
•Receptor Interaction
-Urban Area of 500 People/Sq. Mi. ,*• Total Exposed Population = approximately
5000 People.
•Ecological Impact
-Approximately 1000 people experience irritation including skin and
lung problems. 45 people receive superficial skin burns from exposure
to airborne toxics, 17 people experience nausea and vomiting, 5
experience recurring headache and dizziness over 3 month period. One
elderly man is killed by a stroke during the evacuation procedures.
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• Financial Impact
-Since many of the exposed people are employing in the local petrochemical
industry only a small number file actions for damages against the refinery.
Eight of the 62 people who recovered within 36 hours sued for a total of
$100,000. Three of the recurring cases sue for $200,000 each and the widow
of the stroke victim sues for 2 million dollars. To avoid negative publi-
city and although they are self-insured and deny liability, the refinery
makes a guick out of court settlement for $150,000.
332
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Explosion at Secure Landfill
•Operating Characteristics
-Segregation of Hastes
-Neutralization of Acids and Caustics
-Reduced Fluid Mobility through Suitable Soil Mixture
-Daily Earth Covering of 6" Soil
•Failure Mode
-During the compacting process a small explosion occurs that ruptures a
nearby large pesticide temporary storage tank. A cloud of dioxin is
released.
•Dispersion
-Hind velocity is 3 MPH. The site is located in a bowl shaped valley
and there the cloud hovers over the valley for 36 hours.
•Receptor Interaction
-Alert to the experience in Italy evacuation procedures are triggered
immediately. 8000 people are evacuated. Livestock herds totalling
2,500 animals are left behind.
•Ecological Impact
-Dioxin is one of the most toxic chemicals known. Based on animal
studies, both the oral and dermal lethal doses are in the range of
micrograms per kilogram body weight.
•Liability Assessment
-5000 people are allowed to return to their homes. The other 3000 are
unable to return until the contamination level is reduced. The
National Guard seals off the contaminated areas. All drinking water
in the valley is contaminated and thus bottled water must be provided.
All livestock is condemned and destroyed. Because of the prompt
evacuation procedures, only 75 people in the immediate area of the site
333
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are exposed. Law suits totalling 200 million dollars are filed
against the facility by the 3000 dispossessed , the 75 people directly
affected, the owners of the livestock, and the city government. The
breakdown of this sum is as follows:
75 injured total $120 million
2000 dispossessed total 70 million
livestock total 8 million
city government 2 million
The courts award settlements totalling $38 million.
334
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Earthquake at Secure Landfill
•Operating Characteristics
-Segregation of Wastes
-Neutralization of Acids and Caustics
-Reduced Fluid Mobility Through Suitable Soil Mixture
-Daily Earth Covering of 6" Soil
•Failure Mode
-Mild earth tremor cracks liner at bottom of landfill allowing contact
with groundwater. Tremor occurs at night and is not noted by site
operators.
•Dispersion
-The slow leak of heavy metals including mercury and chromium into an
adjacent aquifer continues for fifteen years before it is detected.
58 private wells draw upon this aquifer for water supply as well as
one poultry processing plant.
•Receptor Interaction
-250 individuals are effected having consummed contaminated water for
an estimated 5-7 years. No pass on of heavy metals is thought to
have occured in the poultry plant.
•Ecological Impact
-10 individuals are found to have mild nose and throat problems, six
more severe liver damage and one severe central nervous system damage
attributed to mercury poisoning.
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'Financial Impact
-A recovery of costs damage suit for $10,000 is filed by the poultry
plant for installation of filter equipment. The 10 least affected
individuals file suit for $100,000 each, the six more severe cases,
$100,000 each, and the most severe case sues for 1 million dollars.
The municipality sues for $500,000 for cost of supplying an alternative
water supply to the area. The court awards a total of 1.1 million
dollars.
336
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Slow Leak at Secure Landfill
•Operating Characteristics
-Segregation of Wastes
-Neutralization of Acids and Caustics
-Reduced Fluid Mobility Through Suitable Soil Mixture
- Daily Earth Covering of 6" Soil
•Failure Mode
-The landfill is located above a dry aquifer. It is determined the
aquifer has been dry since a nearby large river naturally changed its
course 200 years ago. Development activities in the area including
the construction of a dam and canal, the blacktopping of natural
recharge sites,and large scale irrigation alters ground water channels
and refills the aquifer. Slow erosion underneath the landfill allows
infiltration of chemicals including potassium cyanide.
•Dispersion
-The potassium cyanide infiltrates the regional reservoir that provides
the drinking water for 120,000 people as well as into 200 private
drinking wells.
•Receptor Interaction
-Although monitors at the reservoir detect the potassium cyanide before
the water is utilized by the public, numerous private well users are
poisoned.
•Ecological Impact
-Potassium Cyanide is a very toxic chemical. 170 families are poisoned
by drinking from their private wells. 18 deaths result (primarily very
young and very old people) and 60 people are hospitalized for severe
poisoning. 27 of these patients develop permanent damage.
337
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•Liability Assessment
-17 of the 18 deaths result in law suits as do all 27 of the
permanently impaired and 120 people who were seriously exposed. Suits
totalling $134 million are filed. They include:
17 deaths total $ 34 million
27 permanently impaired 75million
120 seriously exposed 25 million
total
The courts award settlements totalling $40 million.
338
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Tornado at Solvent Reclaiming Plant
•Operating Characteristics
-A small solvent reclaiming plant operates batch reclaiming operations.
The toxic residue from the reclaiming process is stored in barrels in
an on-site warehouse until sufficient quantities are accumulated to
justify contracting an independent disposer to haul the barrels to a
secure landfill. The independent disposer arrives about twice yearly.
•Failure Mode
-A tornado sweeps through the reclaiming site destroying 70% of the
reclaiming plant and the entire storage warehouse.
•Dispersion
-Two types of hazardous wastes are dispersed into the environment;
solvents prepared for the reclaiming process such as carbon tetra
chloride and methyl chloroform, and toxic residue resulting from the
reclaiming process. Within 300 yards of the site, 186 barrels are
scattered along the path of the tornado. Most are ruptured and
leaking. Located over a 2 sq. mile path are additional barrels in
indeterminate numbers.
•Receptor Interaction
-On 3 private properties near the plant leaking barrels are located.
The occupants are evacuated. Over a weeks time, the barrels scattered
over the 2 sq. mile area are located and returned. However, 10 days
after the storm, 5 small children are playing in a wooded area and
discover one of the barrels. Attempting to role the barrel downhill
the barrel leaks and fumes overcome one of the children and temporarily
blind two others. Another individual finds one of the barrels, takes
it home and tries to fabricate a home fireplace. The fumes send this
individual to the hospital.
339
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•Ecological Impact
-The duration of the exposure is brief and then only the short range
effects of cramps, vomiting and temporary coma are experienced.
•Financial Impact
-The four individuals bring actions for damages totalling $80,000 and
receive a settlement of $5,000 each.
340
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Concrete Encapsulation of PCB Residue
•Operating Characteristics
-A chemical treatment facility disposes of large quantities of PCB
residue by encapsulating the PCB in concrete and storing the concrete
on site. These blocks are confused with a recent shipment of concrete
to be used for an on-site construction project. The on-site construction
is cancelled and the concrete sold. A highway construction firm
purchases the concrete to use as road base for a new 15 mile section of
superhighway without knowing about the PCB content. After one year
of grading and laying the highway base, the project meets local
opposition as citizens attempt to have the highway built elsewhere.
After two years of court proceedings, the project is abandoned after
sealing the road base with asphalt.
•Failure Mode
-Ten years later, a housing development is built amidst the abandoned
highway. The broken up road bed rubble is hauled 3/4 of a mile away and
used to fill a wetland area and flood plain. Over a fifteen year period
the PCB's slowly leach into a tidal river.
•Dispersion
-The PCB percipitates into the bottom silt over a 7 mile length of
river.
•Receptor Interaction
-No humans are directly affected but fish in the area start showing
large quantities Qf PCB's in their tissue forcing the shutdown of a
small, thriving fishing industry.
•Ecological Impact
-Fish and benthic organisms absorb the PCB's and pass them along the food
chain.
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'Financial Impact
-The original disposer, a large and financially secure organization,
is still in business. They are sued for damages resulting in loss of
revenue by the local fisherman for 8 million dollars and in an out of
court settlement pay 1.5 million dollars.
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Land Spreading on Contract Basis
of Industrial Wastes
•Operating Characteristics
-small land spreading and landfill company operating 4 trucks on
contract basis servicing industries in 50 mile area
-oily wastes are land spread on cropland and sprayed on roads as dust
control agent
-included in customer list is a chemical company that also produces
insecticides and weed killers
•Failure Mode
-barrels containing arsenic residue (A$203) from the insecticide plant
are accidently included with the oily waste barrels and instead of
landfilled are used for landspreading
•Dispersion
-the arsenic is sprayed as a dust control agent at a local fairground's
horse arena
•Receptor Interaction
-15 people, including seven children and four fairground employees,
are adversely affected by exposure to the dust
•Ecological Impact
-severe skin, central nervous system and gastro-intestinal effects of
3 days to 9 months duration
•Financial Impact
-various actions for damages totalling 1.5 million dollars are filed
against to disposer who is unab.le to pay the damage suits and is
forced to sell its assets and declare bankruptcy.
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APPENDIX 7
CONTENTS OF TRAINING MODULES
344
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TRAINING MODULE 1
Title:
The Problem of Hazardous Wastes and Their Control
Objective: To provide a general orientation and understanding of the
world of hazardous wastes.
Theme:
Time:
Format:
Hazardous wastes are a new problem area. If not controlled
they are a threat to the public health and welfare. Their
control must be by the mechanism of regulation (which inter-
nalizes the problem to the producing industry).
5-20 minutes per subject
Video tape with self teaching exams. In-depth supplement
for Professional and Class A certifications require reading
of selected references, including PL 94-580; self teaching
examinations are included. Completion of self teaching
examinations may satisfy Module 1 certification requirement.
Subject
Definition of Hazardous Wastes
Legal Mandates
Extent of the Hazardous
Waste Problem
Importance of Proper Handling
and Disposal
References
Content
EPA definition hazardous wastes
Categories of hazardous wastes
PL 94-580, objectives and key
provisions
Permit Program
EPA Guidelines
Other related federal legislation
State legislation
Sources
Current transport and disposal
Practices
Incidents
Consequences of lack of proper
control
Worker health and safety
OSHA requirements
Community health and safety
Environmental hazards
PL 94-580
Other laws
Regulations
Reports and manuals
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TRAINING MODULE 2
Title:
Objective:
Theme:
Time:
Format:
Practices Required in Processing Hazardous Wastes
To provide an understanding of the elements of practice
for a hazardous waste processing facility.
Hazardous wastes may be explosive, flammable, toxic, etc.
Handling these substances requires special procedures and
caution, to insure both the health and safety of the workers
and the community and to minimize potential harm to the
environment.
15-40 minutes per subject
Video tape with self teaching exams. In-depth supplements
for Professional and Class A certifications require reading
of selected references on subjects of this module; self
teaching exams relate to reading. Completion of self teach-
ing examinations will not satisfy Module 2 certification
requirement. An additional formal written examination would
be required for certification.
Subject
Varieties of Hazardous Wastes
and Their Characteristics
Safe Operating Procedures for
Hazardous Wastes
Facility Plan of Operation
Contingency Planning
Content
Categories of hazardous wastes
(eg explosive, noxious, toxic,
ecological hazard, etc.)
Health and safety hazards in
handling each category of
hazardous waste
Community health and safety
hazards
Environmental effects of hazardous
wastes by category
Explosives
Flammable materials
Toxic materials
Elements of a plan
Examples of plans
The role of the permit
Definition of a contingency
Examples of a contingency
Elements of a plan
Discussion of drills
346
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Subj ec t
Emergency Procedures
Facility Monitoring
Reporting and Record Keeping
Content
. First aid and rescue
. Fire fighting
. Rationale for monitoring (i.e., for
plant operation and for compliance
with permit)
. Log of wastes coming in-type and
quantity
. Accounting for the disposition of
the wastes
. Monitoring the ambient environment
. Forms for facility record keeping
. Comptuer vis a vis manual processing
of data
. Filing and storing records
. Legal requirements: data required
and forms
. Legal requirements: frequency of
reporting
347
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TRAINING MODULE 3
Title:
Hazardous Waste Treatment, Storage$ and Disposal Site Operation
Objective: To provide operating procedures for the major classes of
hazardous waste treatment and disposal sites.
Options: (a) Land disposal (b) Incineration (c) Final treatment
(d) Above ground storage
Theme: Final disposal and treatment techniques may be very special-
ized for the type of facility and wastes involved. Strict
adherence to the plan of operation and congnizance of the
hazards are required.
Time: 4-8 hours each training option
Format: Video tape with self teaching examinations. These can
be supplemented with classroom instruction, group discussion,
or site visits.
OPTION A: LAND DISPOSAL
Subject Content
Categories of Land Disposal
Categories of Wastes Suitable
for Land Disposal
Land Disposal Procedures
Disposal Site Maintenance
OPTION B:
Subject
Types of Incineration
. Approved Landfills
. Secure Landfills
. Near-Surface Burial
. Deep Burial
. Toxic materials
. Bioconcentrators
. Carcinogens
. Radioactive, etc.
. Burial techniques
. Recordkeeping
. Segregation of wastes
. Ground water/leachate monitoring
. Surface runoff control
. Access control
. Site restoration
INCINERATION
Content
. Multiple Hearth
. Fluidized Bed, etc.
348
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Subject
Categories of Substances Suitable
Operating Procedures
Content
Flammable compounds
Toxic Gases, etc.
Process control techniques
Hazardous waste handling
Maintenance of air pollution
Handling of residues control
equipment
Subject
OPTION C: FINAL TREATMENT
Content
Types of Final Treatment
Processes
Categories of Substances Amenable
to Final Treatment
Operating Procedures
Oxidation/reduction
Neutralization
Chemical degradation
Detoxification
Open burning/detonation
Hydrolysis
Biological degradation
Resource recovery
Strong acids/bases
Hazardous organics, etc.
Process control parameters
Handling the residues
Recordkeeping
Subject
OPTION D: ABOVE GROUND STORAGE
Content
General Precautions for Storage
of Wastes
Precautions for Specific Wastes
. Segregation of waste types
. Cleanliness of containers
. Prevention of siphoning
. Flammable liquids
. Corrosives
. Radioactive wastes
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TRAINING MODULE 4
Title: Site Specific Training
Objective: To provide supervised on the job training relative to
operating a facility for processing of hazardous wastes.
Theme: The general knowledge of Modules 1, 2, and 3 must be applied
in the context of the unique features of a particular facil-
ity; this can be achieved only by specific training on the
job which is oriented about applying such knowledge to
specific job tasks. This module is intended for new person-
nel so that they may become familiar with the facility
operation; it is not a part of continuing training.
Time: 60 minutes per week
Format: Supervised periods may be formal, i.e., in a classroom situ-
ation, or informal, i.e., on the job. The instruction is to be
done by a person who has Class A certification qualifica-
tions, or greater. Question and answer sessions are en-
couraged. Certification will consist of sign-off of com-
pletion by a Class A certified person and by the RFC.
Subject
Purpose of the Facility
Authorization for the Facility
to Operate
Plan of Operation
Record Keeping
Reporting
Plant Maintenance
Contingency Plan
Emergency Procedures
Safety Protocols
Operation of Plant Equipment
Operating Rules
Content
. Permit
. Certified operators
. Responsible ownership
. Responsible Class A or
Professional in Charge
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TRAINING MODULE 5
Title: Optional Basics
Objective: To provide a digest of some of the essential operational
concepts, or procedures, or information for a given subject
area.
Theme: The knowledge underlying a hazardous waste operatoin
is comprised of a number of subject areas. A graphic under-
standing of some of the key conceptual ideas or procedures
will aid in developing rational and knowledgeable behavior
patterns and responses to the large variety of situations
which occur both in day to day operations and in emergencies.
This module should provide access to video tapes which cover
a range of topics. The library should be thought of as
expandable, i.e., not constrained by the subject below.
Time:
Format:
Subject
30-60 minutes each subject
Video tape supplemented by self teaching examinations.
Tapes may also function as a point of departure in classroom
teaching demonstrations, drills, practices, etc.
Intuitive Physical Chemistry
(All of the ideas of this
course should be demonstrated
as laboratory experiments
and then illustrated in terms
of various field situations.)
Applications of Physical
Chemistry in Facility Operation
Content
. Reactions - what it takes to
make them happen, i.e., negative free
energy of reaction
. Heats of reaction (i.e. put a thermometer
in a beaker of water and pour in acid;
show the rise in temperature)
. Equilibrium and distribution of
species
. Precipitation reactions
. Vaporization
. Adsorption reactions
. Ion-exchange reactions
. Complexes
. Leaching from land fills as an
equilibrium phenomenon
. Ground water disposal and the
role of adsorption and ion-
exchange
. Removal of heavy metals by
precipitation
. Gas stripping
. Removal of organic by adsorption
351
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Subject
Toxicology Fundamentals
Content
Categories of toxic substances
Concentration of toxic substance
and duration of exposure to it
Concentration by the food chain
Toxic effects
Explosives and Flammable
Substances
The Contingency Business
- Parts of the Infrastructure
OSHA - its business and its
literature
Manufacturing Chemists Association
National Safety Council
State Health Departments
EPA
Local police, fire, and medical
services
352
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TRAINING MODULE 6
Title:
Objective:
Theme:
Time:
Format:
Subject
Mathematics
Chemistry
Remedial Topics
To provide a means for facility personnel to learn or review
some of the skills and knowledge required which is expected
of most plant personnel at the high school level.
The basic knowledge and skills required to function at a
hazardous waste facility at a Class C certification level is
reviewed starting at a beginning level and progressing to the
equivalent high school level, but limited in scope to the job
need to know requirement.
15-30 minutes each topic within respective subject
Video tape and self teaching examinations.
Content
. Arithmetic operations
. Calculations of volumes, rates,
loadings, capacities, etc.
. Elements and Compounds
. Reactions
. Equilibrium
353
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TRAINING MODULE 7
Title: Continuing Training
Objective: To provide a format for continuing the training.
Theme: Training may have a variety of formats. The important
requirement is that it be continuous so that new persons are
properly indoctrinated and that the existing personnel may
stay aware of new developments and maintain their awareness
of contingency procedures.
Time: Variable depending upon the specific training activity.
Format: The variety of training formats may include: teaching
short courses, individual viewing of video tapes, facility
classroom training sessions, facility drills of various
sorts, attendance at various short courses, etc. However,
despite the encouraged flexibility, continued training at
the site should be a part of the facility training program.
On-site training should include: contingency plan drills,
first aid rescue practices, safety meetings, etc. Attendance
at these sessions should be a part of the personnel record of
each employee. Also, the record of sessions should be a part
of the reporting requirements for each facility or at least
available to regulatory personnel.
ya!829
SW-183C
354
•U.S. GOVERNMENT PRINTING OFFICE : 1979 0-311-132/161*
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