I UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
ff
' -7
WASHINGTON, DC. 20460
JAN 3 0 1990
THE INSPECTOR GENERAL
SUBJECT*
TO:
Special Review of EPA Handling of the Bunker Hill
Superfund Site, Report Number E6PGGO-13-2005-0400t)06
P. Henry Habicht II
Deputy Administrator
Enclosed is a copy of the Special Review conducted on the
Bunker Hill Superfund Site. Our work in Region 10 developed
additional information about the enforcement and permitting
activities in this Region's water and air programs. Therefore,
we are expanding our initial effort to cover these additional
areas. A second report will be provided to you when this work is
completed.
Of primary concern to us is the fact that nearly every
Region 10 employee who we interviewed about the Bunker Hill site
expressed fear of retaliation from the Region 10 Administrator
because of their cooperation with this office. Such retaliation,
should it occur, would be an extremely serious violation of
several federal statutes which provide protection to employees
who furnish information in matters of this kind. It is therefore
vital that you take whatever action is necessary to ensure that
no retaliatory action is taken against EPA employees because of
their cooperation during this inquiry. We intend to monitor this
situation closely as we continue our work in this Region.
As discussed in the attached report, we found that the
Regional Administrator took extraordinary steps to prevent formal
enforcement actions from being initiated against the owners of
the Bunker Kill Superfund site. As a result, the smelter complex
was allows* to deteriorate to the point that it was declared a
public hewth hasard by the Agency for Toxic Substances and
Disease s*sJMtry; prompt action was not taken to protect the
public frosl contamination resulting from salvage operations; and
partner* in the Bunker Limited Partnership moved company assets
to other corporations through stock and property transfers which
is expected to complicate attempts to recover cleanup costs.
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In view of the serious nature of these ongoing problems at
Bunker Hill, we recommend you ask senior EPA management at
Headquarters to provide oversight to ensure the site is being
cleaned up with all due speed and that all necessary safeguards
are employed to protect BPA's and the public's interest at the
Bunker Hill site.
During our review, we were approached by numerous regional
employees who expressed high levels of mistrust and frustration
about the handling of issues in the air and water programs
similar to those we saw in the handling of the Bunker Hill site.
Since our work in this area is not complete, we are in no
position to make overall recommendations regarding what further
actions might be needed in Region 10. However, we will provide
you with such recommendations when our followup work is
completed.
If members of your staff have questions or wish to discuss
the report or our conclusions further, please have them contact
Kenneth A. Ronz, Acting Assistant Inspector General for Audit, on
382-4106.
(Vohn C.
Martin
Attachment
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON. D.C. 204*0
JAN 3 0 1990
Of
THE INSPECTOR QCNEMAL
SUBJECT: Special Review of EPA'a Handling of the Bunker Hill
Superfund Site, Report Number E6FGGO-13-2005-0400006
FROM: /Kenneth A. Konz
^X^Acting Assistant/Inspector General for Audit
7)
TO: (s F. Henry Habicht/IX
Deputy Administrator
PURPOSE AND SCOPE
-" we performed this review in response to a confidential
/complaint against the Regional Administrator, Region 10. The
complainant alleged that the Regional Administrator (RA) blocked
or delayed the normally routine actions of the Hazardous Waste
Division (HWD) to enforce the Superfund requirements against the
Bunker Limited Partnership (BLP), the owners of the Bunker Hill
Superfund Site. The specific allegations were the following:
— The RA would not allow HWD staff to order BLP to respond
to various concerns of EPA regarding the company's
salvage activities, site maintenance, site security, and
the containment of hazardous materials.
— The RA refused to allow HMD to notify BLP that they were
a Potentially Responsible Party (PRP) for financing the
eventual cleanup of the site. He refused to notify the
company even after mounting evidence that its action, or
lack of action, was contributing to the further pollution
of the site.
\ — flsa RA discussed the negative impact that EPA enforcement
\ action would have on the value of the company's stock
offaring. This meeting was held in Region 10 in January
1988. Both HWD staff and BLP officials ware present.
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We performed this review in EPA Headquarters; Region 10,
Seattle, Washington; Idaho Operations Office, Boise, Idaho; and
the BunJcer Hill Superfund Site, Kellogg Idaho. We met with and
discussed the events relating to the allegations with the CERCLA
Enforcement Division Director in Headquarters, the Region 10
Administrator, and officials in the Office of Regional Counsel
and the Hazardous Waste Division in Region 10. These individuals
were responsible for managing the cleanup process and had
knowledge of the history and the sequence of events at the Bunker
Hill Superfund Site.
We also met with officials from the Agency for Toxic
Substance and Disease Registry (ATSDR) to discuss the events
leading up to its inspection of Bunker Hill and the subsequent
report, Idaho State officials to get their views of the progress
at the site, and an Idaho Public Health official located in
Kellogg to tour the facility. We also contacted or met with the
past Assistant Administrator, OSWER and a former member of the
Regional Counsel for Region 10.
We obtained copies of supporting documents, including
official EPA reports and letters, draft documents that were
prepared by the HWD staff in anticipation of taking enforcement
action, and personal notes recording the subject and content of
various meetings and telephone conversations.
BACKGROUND
The Bunker Hill Superfund Site was listed on the National
Priorities List in September 1983, and is one of the most complex
sites in the nation. The site consists of about 21 square miles
along 1-90 in the Silver Valley of Northern Idaho. It includes
the towns of Kellogg, Page, Pinehurst, Smeltervllle and Wardner
with a total population today of about 5,000 people; the Bunker
Hill lead and zinc mine; the smelter complex; and the central
impoundment area. Lead and other heavy metals were identified as
the primary contaminants.
Mining operation* began about 1885, and the first smelter
opened in 1917. The smelters produced lead, cine, cadmium,
silver, gold, and alloy* of these heavy metals. Other plants in
the comple^produced sulfurlc acid, sine oxide, and phosphate
fertilisecmv In 1928, a dike was constructed to contain the mine
tailings (istsjfl hnj the central impoundment area, which now covers
160 acres and contains waste materials up to 70 feet deep.
Mining continues today, but the smelter operations ceased in late
1981.
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Almost 75 years of smelter operations have resulted in
substantial environmental damage in the valley. During our visit
to the valley, we observed the valley downwind of the smelter to
be generally defoliated. We were told by the local health
department official that the defoliation was due to the high
acidic level of the soil caused by smelter emissions. According
to this same official, the more critical problem is the extremely
high content of lead and other heavy metals in the soil. For
example, soil samples taken in Smelterville averaged 3,710 ppm
(parts per million) of lead with a range of 110 to 18,500 ppm.
We were told that the standard for determining lead contamination
in soil is 1,000 ppm. As our objective was not a review of the
Bunker Hill Superfund Site, we did not evaluate these numbers.
Anecdotally, we were told that in some areas the lead level in
the soil is so high that it could be mined.
One of the primary concerns of the public health officials
in the area is the ingest ion of lead by small children who, along
with pregnant women, are the group most at risk. High levels of
lead in the body can cause brain and nervous system damage in
children, birth defects and developmental impairment in fetuses,
and chronic kidney and cardiovascular system damage in adults.
However, even low levels of lead in the body may cause more
subtle health problems.
The Idaho Department of Health and Welfare has routinely
monitored air emissions from the smelter since the 1950's.- with
the passage of the Clean Air Act, the emissions standard for the
smelter was established at a maximum of 1.5 micrograms of lead
per cubic meter of air based on a 3-month average. During the
first 3 months of 1974, tests were recorded that exceeded 100
micrograms with a 3-month average of 30 to 40 micrograms per
cubic meter of air. These emissions were the result of a
decision by the Bunker Hill Company to bypass the emissions
control equipment after a September 1973 fire destroyed about a
third of the equipment's capacity. During the first 3 months of
1974, the smelter discharged approximately 20 years worth of lead
emissions into the valley.
In 1974, the local health department tested the blood-lead
levels of^Xl the children living in the area. According to the
project dttftotor, the blood-lead levels were the highest ever
recorded * jfcOi the 179 children living within one mile of the
smelter, 99 percent had a blood-level over 40 ug/dl (micrograms
of lead per deciliter of blood). At the tine, anything over 40
ug/dl was considered hasardoua. The highest level recorded was
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164 ug/dl; 41 children had a blood-lead level over 80, the level
established for lead poisoning. These tests resulted in a series
of reactions by the State, the Community, and the Company. The
blood-lead levels were so high that chelation, the clinical
protocol for lead poisoning, was performed on about 15 children;
and most, if not all, of the families living in a one-mile radius
were relocated.
Annual tests for blood-lead levels have been performed
since 1974. These tests have continued to identify a large
number of children with high blood-lead levels, in August 1989,
8 years after the smelter closed, eight children out of 275
tested had a blood-lead level over 25 ug/dl, the current
standard. The standard for blood-lead levels has been repeatedly
lowered as scientists and public health officials learn more
about the dangers of lead. The director of the blood-lead
testing project told us that in the next year it may be lowered
to 15 ug/dl.
In 1968, Gulf Resources and Chemical Corporation (Gulf)
purchased the mine, the smelter complex and the central
impoundment area. The HWD staff told us that, throughout the
1970's, the Bunker Hill Company, wholly owned by Gulf, had a
history of noncompliance and obstructionism toward HMD's efforts
to enforce air emissions regulations. The company's typical
response was to ask for more specifics, agree to comply and fail
to execute action, or simply refuse. With regard to compliance
orders, they would require advance notice of inspections and
would then ensure that the individuals involved were absent and
that the equipment would be shut down at the tine of inspection.
Gulf continued operations until late 1981, at which time its
smelter and mining operations were terminated. On November 1,
1982, the Bunker Limited Partnership (BLP) purchased the smelter
complex, the Bunker Hill Mine, and the related real property.
The HMD staff devoted most of their efforts during 1983 and
1984 to defining the problems at the site. Early on the staff
saw a need to divide the project into two parts—the populated
area and the unpopulated area. Dividing the project into two
parts allowed the cleanup to progress faster in the populated
areas, wheve more was known about the contamination problems.
Therefor»v~l«»« investigation was required before cleanup could
begin. In 1986, six inches of lead-contaminated soil were
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removed and replaced with clean soil and sod or gravel on 16
public properties. In 1989, lead-contaminated soils were removed
from approximately 80 residential properties with children under
three years old.
The lack of information about the unpopulated area,
including the smelter complex, resulted in considerable
uncertainty regarding the pollution problems and their solution.
A detailed study of the area had to be completed before any
cleanup could commence. HWD staff had the difficult task of
defining the study and identifying PRPs.
Any study performed in the area was dependent on the
cooperation of the community. However, during their early visits
to the area, HWD staff encountered an extremely hostile attitude
from the community. This attitude was the result of about 50
percent unemployment caused by the smelter closure. The
community believed that Gulf closed the smelter because of the
high cost of compliance with EPA regulations. The community also
believed that BLP wanted to reopen the smelter, and these sane
regulations were preventing them from doing so. The community
thought EPA was the cause of their unemployment, and therefore,
wanted EPA to stay out of their affairs. In the community's
view, jobs were more important than lead contamination.
Primarily in reaction to the attitudes and beliefs of the
community, HWD staff determined that Gulf, as the major
contributor of the pollution in the area, would be identified as
the sole PRP. BLP had purchased the facility after the smelter
had closed, and had not contributed to the pollution. Therefore,
BLP was not identified as a PRP. The staff believed that any
additional PRPs could be named later as conditions at the site
changed and/or other companies were identified. The HWD staff
discussed this case with the previous Regional Administrator, and
they all agreed that this was a reasonable way to proceed. In
October 1984, EPA notified Gulf that it was a PRP and entered
into negotiations for Gulf to perform the remedial investigation
of the unpopulated areas. It was not until May 1987, that Gulf
and EPA Region 10 finally reached agreement for the study.
In July 1985, HWD staff learned through a newspaper
advertisemmnt that BLP was in the process of disposing of various
material amd equipment located in and around the smelter. HWD
officials were concerned that the lack of proper decontamination
procedures could result in a serious health hazard to the
recipients of the material. They requested a meeting to
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determine the extent of the salvage operations. In an
August 1985, letter, BLP officials did not agree to a meeting,
but assured HWD that they were not engaged in an extensive
salvage operation. They were only trying to sell sone excess
equipment, primarily rolling stock. Continued effort by HHD
staff finally resulted in a meeting on January 9, 1986. in this
meeting, EPA raised several issues in addition to the salvage
activities—public access, to the> site, fire prevention, and the
identification and containment of various hazardous materials on
the site. According to HWD staff, BLP officials were cooperative
and agreed to address each of the various issues discussed. BLP
officials again assured HWD staff that the salvage operation was
very limited, and that they would notify EPA if it continued or
expanded.
HWD staff told us that they knew in January 1986, that the
president of BLF was the same person as the president of the old
Bunker Hill Company and they were familiar with the obstructive
and delaying tactics used in the past. However, at that time,
HWD staff did not anticipate a continuation of these tactics, it
had been over 4 years since the smelter was closed, and it would
be prohibitively expensive to reopen it. HMD staff thought the
cleanup of the site was the common goal. Subsequent events
clearly revealed their expectations to be in error.
THE REGIONAL ADMINISTRATOR'S INVOLVEMENT
We were told by both Headquarters and Region 10 officials
that the review and approval of PRP notice letters and
administrative orders issued to companies related to a Superfund
site are routine procedures that are delegated to the Division
Director level in the Regions. The HWD Director stated that it
was routine to inform the RA of the status of each Superfund
site, but it was not normal for the RA to require that he approve
these documents. According to HWD officials, the RA took an
unusual interest in the activities at the Bunker Hill Superfund
Site, and gave verbal orders that no document could be issued or
action taken relative to this site without his prior approval.
Zn omr discussions with the RA, he stated that he believes
more effective and efficient resolution of problems can be
achieved tfcrough Informal negotiations. He, therefore, does not
support EPA'* penchant for formal orders. As a result, he always
attempts to achieve the regulatory objectives of EPA through
informal negotiations and agreements.
L
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The RA told us that he was very interested in the Bunker
Hill Site. He said that before taking office he met with the
Governor of Idaho, who requested EPA emphasize the cleanup of
Kellogg. He, therefore, established the Bunker Hill Site as a
top priority in the Region. He used the emergency removal of
lead-contaminated soil from private yards and public areas of the
towns in the Superfund site as an example of progress at the
site. He claimed that he was unaware of the conditions at the
smelter complex. Upon learning of the conditions—through the
ATSDR report—he sent BLP and its affiliates a unilateral order
to perform specific acts to preclude the release of hazardous
material. He also sent notices to BLP and its affiliates stating
that they were designated PRPs.
The RA did not think he intervened in the routine activities
of the staff. He stated that he got Involved only when he was
called upon to make a decision. He also denied giving any orders
that would prevent the HND staff from performing their duties.
The RA stated that the HWD staff failed to keep him adequately
informed; and, until the ATSDR report was issued, he was unaware
of the deteriorating conditions at the site. Re thought the HND
officials who blame him for preventing enforcement actions
against BLP are trying to avoid their own responsibility for
consensus decisions that subsequent events have shown to be
wrong.
,_«•
Based on the events that axe described In the following
sections, we have concluded that, since his arrival In August
1986, the RA delayed or prevented the HMD staff from taking
timely enforcement action against HUP. It the enforcement action
had bran taken when It was first considered necessary, some of
the ^Pvironmental and physical ha sards that exist today at the
smelter complex would have been avoided.
delayed issuance of Administrative orders
In October 1986, a fire occurred in the lead smelter
facility. The cause was never determined, but HHD staff suspect
it may have been started by an employee using a cutting torch to
disconnec^tfquipment identified for salvage. Luckily, no serious
damage ocottared, but considerable concern was raised over the
potential sŁaards if the fire had not been controlled. The
potential release of toxic substances present in the smelter
could have required an evacuation of the area.
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In November 1986, HWD staff drafted an administrative order
that would have required BLP to take action to minimize the
potential for a fire and to ensure adequate fire fighting
capability at the facility. The RA, consistent with his stated
desire to resolve conflicts informally, suggested that the HWD
staff call BLP officials and negotiate an agreement. We were
told that there was general agreement among the HWD staff for
this approach. At this time, their contact with BLP officials
had been limited, and they did not anticipate any difficulty in
negotiating an agreement to minimize the risk of fire.
On December 2, 1986, the HWD Director formally requested a
meeting with BLF to discuss various fire prevention measures at
the smelter complex. At a December 11, 1986, meeting, BLP agreed
to implement several of EPA's suggestions. However, BLP would
not agree to allow an inspection of the smelter complex until
July 1987. During the inspection, the HWD staff observed that
BLP had taken various fire prevention measures. There were
differing opinions between BLP and HWD on the effectiveness of
the fire-fighting equipment and the availability of sufficient
water, the details of which are beyond the scope of this report.
However, HWD staff told us that during subsequent visits to the
area they observed that most of the equipment had been
dismantled.
During the same time that HWD staff were discussing the fire
prevention issues, they were also trying to meet with BLP
officials to discuss the continuing salvage activities and other
issues of concern—such as access to the property, future use of
the smelter complex, fugitive dust control, and the containment
of various hazardous materials. In a series of telephone calls,
letters and meetings, BLP officials continually stated jtnat they
wanted to cooperate, and that they were not trying to tjpbeive
EPA. BLP officials also assured HWD staff that they did not plan
an extensive salvage operation. With the exception of fugitive
dust control, little progress was made on any of these issues.
Toward the end of 1987, an HWD staff member observed a
salvage company removing large quantities of railroad ties and
rails from the smelter complex. At EPA's request, a local lab
performed •wipe tests (passing a filter paper across a specified
area) on three railroad ties. Analysis of the results revealed
extremely hloh levels of lead. We were told that no standard
directly applies in this case; however, as stated before the
standard set for determining lead contamination of soil is 1,000
ppm. The swipe tests, listed below, showed the amount of lead on
the surface of the ties.
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Tie No. 1 - 589,286 ppm lead
Tie No. 2 = 204,321 ppm lead
Tie No. 3 - 14,967 ppm lead
Upon notification of the contaminated condition of this material,
a salvage company official told the EPA representative that they
had a contract to salvage about nine miles of track. The salvage
company had already removed and sold about half the rails and 10
percent of the ties. The remaining rails and approximately 1,000
ties were stacked and ready for removal from the site. The
salvage company agreed to wash the remaining rails before
removing them from the site. However, an adequate cleaning
method did not exist for the ties, so the salvage company agreed
to stop removing them.
HWD staff never learned who received the ties that were
removed from the site. However, they heard rumors that the ties
were sold to a landscape company in the Spokane, Washington area.
They also told us that during the next several months the stack
of 1,000 ties disappeared. They did not know who took them or
where they went.
During their visits to the area, Region 10 staff observed
big holes in the sides of the smelter complex where equipment had
literally been ripped from the building apparently to be
salvaged. This action resulted in the disturbance of large
quantities of asbestos-containing material. During their
observations, HWD staff could see no indication of any attempt to
contain the material. They observed loose material hanging from
the building and lying on the ground. They told us that, even
after repeated requests, BLP officials did little, if anything,
to contain the material.
As a result of BLP'a lack of cooperation—and despite the
verbal orders of the RA—the HWD Director, with the support of
the staff, decided it was time to take action. In a November 12,
1987, letter, he informed BLP about EPA's concern over salvaged
material being removed from the Bunker Hill site without
notifying IPA and without proper decontamination procedures.
Therefore, may future activity would be governed by an
administrative) order to ensure proper handling of contaminated
material, ffce letter concluded that the terms of the order could
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be negotiated; however, a unilateral administrative order would
be issued if acceptable agreement could not be reached. The HWD
Director took this action without notifying the RA because he did
not believe the RA would approve.
HWD management officials believe that BLP officials called
the RA and complained about to* letter. This belief is based on
the fact, that the RA scheduled a meeting in January 1988, and
then called the HWD Director to tell him to attend. The subject
of the meeting was the HWD Director's November 12, 1987, letter.
The RA told us that he did not remember anyone from BLP
calling him to request a meeting. He said that he hardly knows
the BLP officials, so it would be unlikely that they would call
him. He remembered attending a meeting with BLP to discuss
salvage operations at the site. He told us that he viewed the
HWD Director's action as another attempt by HWD staff to take
formal action when, in his opinion, informal negotiation would
suffice. The RA said that prior to meeting with BLP, he met with
the HWD Director and the Superfund Branch Chief to discuss the
need to issue an administrative order, and they reached a mutual
agreement that an order was not necessary.
In any case, the meeting in January 1988, took place. The
HWD staff present at the meeting stated that the RA belittled the
issues identified in the November 12, 1987, letter which he
indicated were not significant and could easily be resolved. The
RA then stated that reasonable people could discuss these issues
and reach an agreement that would satisfy everyone. There would
then be no need to issue an administrative order. BLP, again,
promised to ensure that any salvaged material would be properly
decontaminated and they would notify HWD of any new or revised
salvage plans. The administrative order was never completed.
According to HWD staff, 1988 was spent trying to negotiate
with BLP officials. BLP officials continued to deny they were
doing anything wrong, and they continued to deny access to their
facilities. The HWD staff told us that the level of frustration
was extremely high during this period because of the RA's refusal
to allow then to take enforcement action against BLP. The HWD
staff beliovsjd the situation at the smelter complex was critical
because It WM becoming a potential health hazard to the
community. Ifeey said that the RA was repeatedly Informed,
through informal discussions and formal briefings, about the
hazardous condition* at the site. Despite these efforts, the RA
would not change his decision.
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In the middle of 1989, EPA staff secretly contacted the
resident staff of ATSDR to discuss the possibility of performing
a public health review at the site. ATSDR staff agreed, and in
July 1989, inspected the smelter complex. They determined that
the presence of chemical and physical hazards at the smelter
complex presented a significant risk to public health. On
October 5, 1989, ATSDR issued a Public Health Advisory for the
Bunker Hill smelter complex. Public Health Advisories axe issued
only under extraordinary conditions where the release or
threatened release of hazardous substances may pose a serious
threat to human health and the environment. ATSDR staff told us
that fewer than a half dozen advisories have been issued
nationwide since inception of the Superfund program.
The public health advisory was based on (1) the threat to
human health and life from the significant concentrations of
lead, cadmium, arsenic and asbestos in the smelter complex; and
(2) the risk of physical injury due to the unrestricted access to
the area and to physical hazards, such as the deteriorated and
unsound structures, salvage debris, and open shafts in the
smelter area.
Shortly before the ATSDR report was issued, HWD management
scheduled a meeting to inform the RA of the reports findings. We
were told the RA asked who the ATSDR was and why were they doing
a study. He went on to say that.nobody died out there, so what
was the problem. He then asked if the Region should try to block
it. The HWD staff present at this meeting told us they informed
the RA that ATSDR is part of the Center for Disease Control and
was established by the Superfund legislation to do these kinds of
studies. It could not be stopped.
The RA told us that he was aware of the study. He did not
elaborate, however, on when he became aware of it. He also
stated that he supported the study and did not try to block it.
In October 1989, Region 10 officials conducted an inspection
and assessment of the smelter complex and confirmed all of
ATSDR's findings. Additional threats requiring immediate actions
were observed including approximately 250 drums containing
mercury-laden sludge in varying degrees of deterioration and
decay. BF&. inspectors also observed eight open tanks containing
various asjsjuts of sulfuric acid and mercury sludge and a ninth
tank containing an estimated 56,000 gallons of 80 percent
sulfuric acid and mercury sludge. This tank was extensively
corroded. Tests revealed that the thickness of the tank wall had
been reduced in places by as much as 68 percent.
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As a result of the conditions noted and ATSDR's public
health advisory, EPA, on October 24, 1989, finally issued a
unilateral administrative order to BLP, Gulf, Mineral Corporation
of Idaho, and Bunker Hill Mining Company (U.S.)/ Inc. for the
performance of necessary response actions at the smelter complex.
This was about 3 years after the HWD staff first attempted
enforcement: action against BLP.
RA delayed notification that BLP is a PRP
In 1984, the previous RA and the HWD staff decided to name
Gulf as the sole PRP for the Bunker Bill Superfund Site. As
mentioned earlier this decision was based on the HWD staff's
belief that Gulf was the primary cause of the pollution in the
area and the community's resistance to EPA. They planned to name
additional PRPs as conditions changed and other companies were
identified.
Shortly after assuming his position in August 1986, the RA
was briefed on the reasons for the decision to name Gulf as the
sole PRP. The RA concurred with this decision and referred to it
during our discussions as an established policy.
Almost immediately after being named a PRP, Gulf began to
lobby EPA to name other PRPs. In December 1987, Gulf presented a
fairly detailed argument for EPA to name more PRPs. Gulf claimed
that it was unjust to place all the financial burden on them.
There were many other companies that operated in the area, and
these other companies should be required to pay their fair share.
Gulf also pointed out that the failure to name additional PRPs
could delay site remediation if the cost apportionment issues
were not resolved. Gulf then provided a listing of over 25
companies that, in their opinion, should have been identified as
PRPs. At the end of the meeting Gulf asked that Region 10
respond to this request by January 1988, or they would take their
case to Headquarters.
On January 11, 1988, the HWD Director signed two internal
memos addressed to the RA. The nemos, a background paper and an
option papsjr, described the changing conditions at the site, in
of equity considerations, the background paper
f as the operator of the site was responsible for
Ity of the pollution problems at Bunker Hill.
a discuss
stated
a great
However, BLP, through various action* or inaction*, had
contributed to many of these problem. The paper also
established a link between the upstream mining companies and the
12
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site contamination. The option paper discussed timing of the PRP
notices and then presented options for notifying additional PRPs.
According to HWD management, the paper recommended that BLP be
immediately named a PRP, and that other companies be named as
they were identified.
We were told that the RA refused to accept the
recommendation in the paper, and called a meeting to discuss the
options. The attendees included the HWD Director, the Superfund
Branch Chief, the Site Management Section Chief, and a
representative from Regional Counsel. According to the
attendees, the RA adamantly opposed sending BLP a PRP notice
letter. During the meeting, the RA asked each member for
concurrence on his decision not to name BLP. The HMD staff
present at the meeting told us they believed that BLP should be
named a PRP, and the paper submitted to the RA clearly supported
this belief. However, they all indicated they were intimidated
by the RA, and, therefore, they concurred with his position.
At the end of the meeting the RA directed that the
recommendation be dropped from the option paper. The two memos
were to then be declared confidential and exempt from a Freedom
of Information Act request. He then ordered that only four
copies be produced and numbered for control purposes.
The RA stated that he was unaware of the HWD staff's
changing opinion regarding naming BLP a PRP. He met regularly
with the HWD Director and occasionally the Superfund Branch
Chief, and they would generally agree on a course of action. He
stated that if the Branch Chief had a change of mind, he never
stated it directly. He thought that he and the Director were in
basic agreement. Re admitted, however, that sometime before the
fall of 1988, the Director may have changed his mind. We showed
him copies of the January 11, 1988, memos addressed to him which
presented background and options for naming other PRPs. Re
denied ever seeing them. He claimed that prior to the March
1988, meeting with Gulf officials, the staff and he met and
mutually agreed that the policy would not change. If the HWD
staff had changed their collective minds, he was not informed.
In MftXCh 1988, the RA and HWD staff met with Gulf
representatives to present the Region's position on naming
addition«IS>*Ps. At the meeting, the RA stated that the decision
to name only Gulf was made before his appointment in Region 10,
but he continued to support that decision. Be then turned the
meeting over to the HWD Director to explain the rationale. The
Director told us he was completely surprised by the RA's action.
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He had not expected to have to publicly defend a position which
he and his staff no longer supported. However, to avoid looking
foolish, he repeated the initial rationale for naming only Gulf.
Gulf was apparently furious, and subsequently solicited a
decision from Headquarters.
The RA stated he remembered the meeting with Gulf. He
believed that Gulf was simply trying to avoid the financial
burden of the cleanup. He stated that he believed then, and
still believes, that Gulf was primarily responsible for the
pollution and should have to pay. He agreed with the policy
established by the previous Regional Administrator and saw no
reason to change it.
In March 1988, Gulf officials requested a meeting with the
then Assistant Administrator for Solid Waste and Emergency
Response to discuss the PRP situation at the Bunker Hill site.
Between March and June of 1988, Gulf had various contacts, either
directly or through counsel, with EPA Headquarters officials. On
June 9, 1988, the Vice President and General Counsel for Gulf
summarized Gulf's position in a letter to the Director, Office of
waste Programs Enforcement. In general, Gulf believed that many
other companies contributed to the pollution problems at the
site, and that Region 10 had sufficient evidence to support
naming additional PRPs, particularly the current owner of the
facility. They also claimed that Bunker Hill was the only
significant site where only one PRP was named.
The CERCLA Enforcement Division Director told us that the
former AA supported Gulf's argument and agreed that more PRPs
should be named. The former AA asked the Director, CBRCLA
Enforcement Division to work with the Region 10 officials and
find some way to resolve the conflict between the RA and the HWD
staff. The CBRCLA Enforcement Division Director told us that his
primary goal was to develop language to modify the PRP notice
letter into a fora that the RA would accept. On July 29, 1988,
the CBRCLA Enforcement Division Director sent the revised
language to the Office of Regional Counsel in Region 10. His
intent was to soften the language so it would not appear as
harsh, but still transmit the idea that it was a PRP notice
letter. He believed this new language provided an implicit
notice ratter than the explicit notice that was normally issued.
He stated ffcet this was not the ideal approach; but, in his
opinion, an average person would read the letter and conclude
that it was a notice letter.
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e
The HWD Director told us of a conference call in September
1988, with the former AA, the then Director of the Office of
Waste Programs Enforcement, the RA and himself. The purpose of
the call was to discuss sending BLP the revised PRP notice
letter. According to the HWD Director, the discussion between
the RA and the former AA turned confrontational and no conclusion
was reached. The RA told the HWD Director that he was not going
to discuss this any more, and the HWD Director should continue to
work with Headquarters and resolve the situation. The HWD
Director and the Headquarters officials agreed to send the
revised PRP notice letter to BLP.
On October 18, 1988, the HWD Director sent the revised PRP
notice letter and an attached request for information to BLP.
The HWD staff believed that this was a PRP notice letter. In
fact, they informed Gulf and the local community that BLP had
been notified it was a PRP. Each staff member we talked to
stated that after the notice letter was issued, the RA took every
opportunity to make the point that the letter was not a notice
letter, and BLP was not a PRP.
In our meeting with the RA, he stated that he did not know
what a standard PRP notice letter looks like, so he would not be
able to tell us if one had been revised or not. We specifically
asked him if he believed the letter sent to BLP was a PRP notice
letter. He stated that since he did not see the letter before it
was sent to BLP, he did not know whether it was or not. During
our discussion, he expressed doubt that it was a notice letter;
however, he would not commit himself to an opinion one way or the
other. He also stated that this whole issue is irrelevant. In
his opinion, Gulf is the only responsible party and should have
to pay for the cleanup. BLP just bought the property and did not
contribute to the pollution. They should not have to pay.
In response to the information request attached to the
notice letter, BLP's attorneys began a year-long exchange of
letters with the Regional Counsel. BLP'm attorneys stated that
BLP would not provide the information requested unless they were
granted a specific confidentiality agreement. BLP's attorneys
were concerned that the proprietary information would be leaked
to Gulf. A Regional Counsel representative told us that this was
totally ridiculous. BLP, under current law, can protect its
records by simply declaring that they contain proprietary
information and must be kept confidential. BPA is then bound by
law to maintain confidentiality. Based on past experience with
this company, a Regional Counsel representative believed this was
just another tactic to avoid responding to BPA's information
request.
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When the ATSDR report was issued the RA then reversed his
position to limit liability to Gulf and issued a second notice
letter and information request to BLP. This letter was sent on
October 4, 1989. In a meeting to discuss the request for
information, one of BLP's attorneys told an HWD staff member that
they were just told that BLP was a PRP, so they needed some time
to collect the information. "She staff member thought that this
was just a continuation of BLP's normally obstructive tactics.
In an October 13, 1989, memo to Regional Counsel, BLP's
attorney stated that BLP does not own any part of the Bunker Hill
complex identified in the information request. The attorney
noted in the letter that he consulted with the owners of the
complex to obtain the information requested so EPA could avoid
the inconvenience of dealing with three legally distinct
entities.
Regional Counsel provided us a copy of an investigation into
the corporate ownership of the Bunker Hill Site. The report was
completed in December 1989. The report makes two important
points. The first is that the corporate officers of the original
Bunker Hill Company (owned by Gulf), BLP, and all the newly
formed corporations (one of which is chartered in British
Columbia) that now own the complex are the same people. The
second point is that the majority of the corporate restructuring
occurred during 1987 and 1988—the same period that the conflict
over enforcement actions and naming additional PRPs was
occurring.
Based on the above report, Regional Counsel expressed
concern over EPA's ability to collect for the costs of any
cleanup of the smelter complex. The report recommended, in parti
...the ready and instant organization and reorganization of
corporate entitle* has been used to transfer assets and
responsibilities. Real property, personal property and
shareholdings have been traded among different corporate
entities for no apparent par value. The possibility exists
that once capitalization is realized, the assets will be
applied to other ventures unassociated with Bunker Hill.
The delaying tactics, both in answering EPA request letters
and I* obstructing EPA investigations, suggest that an asset
freeew or trust fund arrangement should be implemented to
protect BPA's coat recovery interests.
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We were informed by a Regional Counsel representative that they
are reviewing this case in anticipation of a possible referral to
the Environmental Enforcement Section of the Department of
Justice. They also plan to meet with attorneys from the
Securities and Exchange Commission to review BLP's disclosure of
its environmental liabilities in its application to sell stock in
this country.
Discussion of value of stock issue
As part of the more general allegations, we received a
specific allegation that the RA discussed the negative impact
that EPA's enforcement action would have on the value of the
company's stock offering underway at the time in Canada. The
alleged discussion took place in a meeting held in January 1988
with BLP officials, Region 10 officials and an assistant to the
Governor of Idaho.
We discussed the contents of this meeting with three of the
attendees at the meeting—the RA, the HWD Director, and the
Director of Region 10's Idaho Operations. The RA told us that he
did not recall the discussion. He remembers that BLP spoke
generally about getting funding, but he did not remember
specifically how they planned to do it. In any case, he stated
that a company's financing would not be considered in any
decision he may have to make regarding EPA regulations. "'
The HWD Director stated that he recalled the discussion. He
thought it was a thinly disguised threat that any enforcement
action would reduce the value of their stock offering and, thus,
impact on their ability to reopen the mine. This would have an
adverse effect on the community's opinion of BPA. The Director
of Idaho Operations remembered that there was some comment about
the value of stock, but he could not remember exactly what was
said. Both officials stated that the RA did not respond, nor did
he discuss the incident after the meeting.
CONCLUSION
We believe the evidence indicates that the RA took
extraordinary measures to prevent the HWD staff from performing
the normal and proper activities required to enforce the
Superfund regulation*. During the period from August 1986
through October 1989, the RA blocked or delayed any formal
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enforcement actions initiated against BLP despite the
recommendations of the HWD staff. As a result, EPA failed to
take timely enforcement action against BLP. This failure has had
serious consequences:
— The smelter complex within the Superfund site was allowed
to deteriorate to the point that, in October 1989, it was
declared a public health hazard by the ATSDR;
— The partners have transferred all of BLP's assets to
newly formed corporations through various stock and
property transfers. As a result, collections for the
Superfund cleanup activity is going to be substantially
more difficult.
— The company's uncontrolled salvage activities may have
resulted in highly contaminated equipment and material
being sold to, in some cases, uninformed buyers. For
example, an unknown quantity of lead-contaminated
railroad ties have disappeared from the site.
It was not until October 1989, coincident with the issuance of
the ATSDR report, that the RA finally allowed HWD staff to take
the action they considered necessary.
Within the limited scope of'our review, we found no evidence
to support the allegation that the RA discussed the impact of
EPA's enforcement action on the value of the company's stock
offering, although BLP officials raised the issue at the meeting.
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