Office of
                    Inspector General
Ag.ncy                Washington, O.C.  20460
Report of Audit
          CONSOLIDATED REPORT ON
    ERA'S COST RECOVERY ACTIONS AGAINST
      POTENTIAL RESPONSIBLE PARTIES
          E5EH4-11-0066-61534

           September Z4, 1986

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                       AUDIT REPORT E5EH4-11-0066-615.34

            CONSOLIDATED REPORT ON EPA'S COST RECOVERY ACTIONS
                  AGAINST POTENTIAL RESPONSIBLE PARTIES


                            TABLE OF CONTENTS                 PAGE

                             j

SCOPE AND OBJECTIVES 	    1

SUMMARY OF FINDINGS 	    2

ACTION REQUIRED 	    4

BACKGROUND 	    5

FINDINGS AND RECOMMENDATIONS 	    6

1.  EPA NEEDS TO ACTIVELY PURSUE SITES UNDER $200,000 	    6

2.  BANKRUPT POTENTIAL RESPONSIBLE PARTIES IMPACT ON EPA'S
    ABILITY TO RECOVER CLEANUP COSTS UNDER CERCLA 	   13

3.  EPA NEEDS TO COMPLETE NEGOTIATIONS WITH RESPONSIBLE
    PARTIES IN A MORE TIMELY MANNER 	   19

4.  EPA NEEDS TO IDENTIFY AND TRACK STATUTE OF LIMITATIONS
    (SOL) DATES	   25

5.  EPA NEEDS TO IMPLEMENT A COMPREHENSIVE MANAGEMENT
    INFORMATION SYSTEM (MIS) TO TRACK ENFORCEMENT
    ACTIVITIES 	,	   31

EXHIBITS

  EXHIBIT A - COMPLETED NON-NATIONAL PRIORITY LIST REMOVAL
              SITES WITH CLEANUP COSTS UNDER $200,000 	   35

  EXHIBIT B - SCHEDULE OF COMPLETED REMOVAL ACTIONS ON CLEAN-
              UP COSTS UNDER $200,000 THROUGH SEPTEMBER 30,
              1985 	   36

  EXHIBIT C - COMPLETED NON-NATIONAL PRIORITY LIST REMOVAL
              SITES WITH CLEANUP COSTS BETWEEN $200,000 AND
              UNDER $500,000 IN VALUE THAT MAY NOT BE
              RECOVERED 	   42

  EXHIBIT D - SCHEDULE OF SUPERFUND SITES THAT THERE  IS A
              BANKRUPTCY CASE AGAINST POTENTIAL RESPONSIBLE
              PARTIES 	  43

  EXHIBIT E - NEGOTIATIONS AS OF SEPTEMBER 30, 1985  	  45

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                            TABLE OF CONTENTS                 PAGE
                                (CONT'D)
APPENDIX 1 — SEPTEMBER 10, 1986 RESPONSE TO DRAFT AUDIT
              REPORT FROM THE ASSISTANT ADMINISTRATOR, OFFICE
              OF SOLID WASTE AND EMERGENCY RESPONSE 	  56

APPENDIX 2 -- ADDITIONAL OIG COMMENTS TO OSWER's RESPONSE
              DATED SEPTEMBER 10, 1986 	  61

APPENDIX 3 -- DISTRIBUTION OF AUDIT REPORT 	  64

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   8     UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

  f                    WASHINGTON, O.C. 20460
                                                               OFFICE OP
                                                          THE .NSPECTOR GENERAL
MEMORANDUM

SUBJECT:  Audit Report No. E5EH4-11-0066-61534
          Consolidated Report On EPA's Cost Recovery
          Actions Against Potential  Responsible Parties
FROM:     Ernest E. Bradley III _
          Assistant Inspector General  for Audit (A-f09)

TO:       J. Winston Porter
          Assistant Administrator for Solid Waste and
            Emergency Response (WH-562A)
SCOPE AND OBJECTIVES

We have completed a review of the Environmental  Protection Agency's  (EPA)
efforts to have potential responsible parties clean up hazardous waste
sites or pay for the cleanup performed by the Federal  government under
the Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA) of 1980.  CERCLA provides that the  parties responsible  for
the hazardous waste conditions at disposal sites should either perform
cleanups themselves or reimburse the Government  for cleaning up the  sites.
The objectives of our review were to:  (1) identify the problems associated
with obtaining reimbursement for removal  actions that  were funded by the
Hazardous Substance Response Trust Fund (Trust Fund);  and (2) determine
whether internal controls were adequate to ensure that EPA was pursuing
all enforcement actions necessary to achieve cost recovery.

We conducted our review at EPA Headquarters and  EPA Regions 3 and 4.
Our review covered EPA's cost recovery actions from December 11, 1980
(inception of CERCLA) through September 30, 1985; and  Agency policies,
procedures and new initiatives through May 30, 1986.  Our scope included:

     1.  Reviewing CERCLA policies, procedures,  guidance documents and
         other Information related to the enforcement  of CERCLA;

     2.  Interviewing senior EPA Headquarters and Regional officials, key
         contractor officials, and attorneys from the Department of Justice
         to obtain their views on EPA's hazardous waste site cleanup programs;

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      3.  Reviewing monthly financial management reports, quarterly manage-
         ment accountability reports, the legal enforcement docket system,
         and quarterly enforcement accomplishments to determine how effec-
         tive EPA efforts were in having potential responsible parties
         clean up hazardous waste sites or recover cleanup costs; and

      4.  Examining selected case files to determine delays affecting sites
         from progressing towards settlement or cost recovery.

 Our  review was performed in accordance with the Standards for Audit of
 Governmental Organizations, Programs. Activities, and Functions (1981
 Revision), as promulgated by the Comptroller General of the United States.
 Accordingly, our examination included tests of accounting records and
 other auditing procedures we considered necessary in the circumstances.
 Deficiencies disclosed as a result of our review are included in the
 Findings and Recommendations section of this report.  We have no indica-
 tion  that items not tested would disclose further weaknesses beyond those
 described in the Findings and Recommendations section.

 This  report consolidates the results of our reviews at EPA Headquarters,
 Region 3, and Region 4 conducted by the Internal, Mid-Atlantic and Southern
 Audit Divisions of the Office of Inspector General.  We issued individual
 reports to each of the two Regional Administrators.  The findings and
 recommendations developed during our audits of Regions 3 and 4 were previously
 discussed with and provided to the appropriate Regional Administrator for
 comment.  In addition, the findings and recommendations developed in our
 Regional reports and at Headquarters were discussed with appropriate Head-
 quarters officials.  Also, we issued a flash report, on September 5, 1984,
 alerting the Agency to problems with its enforcement activities.

 SUMMARY OF FINDINGS

 As of September 30, 1985, EPA had obligated $1.3 billion in Trust Fund
 monies.  During this same time period, the Agency had negotiated 84 cost
 recovery cases, totaling $26 million, which resulted in the Trust Fund
 being reimbursed $14 million from 72 cases.  This represents a cost
 recovery ratio of 1.1 percent of total Trust Fund obligations.  This
 does  not include the Agency efforts in negotiating clean up actions to be
 performed by responsible parties, or responsible parties who were not
 technically capable of performing a cleanup who paid Into the Trust Fund
 to finance the work ("cash out").  Unless EPA becomes more aggressive in
 pursuing cost recovery actions, Its ability to clean up the nation's
worst hazardous waste sites could be Impeded because the Trust Fund will
 not be sufficiently replenished.

Cost recovery activities are becoming Increasingly more Important 1n the
 cleanup process.  According to a General Accounting Office (GAO) report
dated May 6, 1986, EPA may need to spend as much 'as $80 billion to clean
up 4,000 of the worst hazardous waste sites over the next 30 years.  EPA
estimates that about half of these sites will be cleaned up or financed
by responsible parties, while the remaining sites will be cleaned up by
using Trust Fund monies.  EPA can replenish the Trust Fund by obtaining
 reimbursement for work it has completed at hazardous waste sites.  The

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funds  recovered will allow EPA to increase the number of sites that will
receive attention.  By increasing the number of sites to be cleaned up,
EPA will alleviate the ever increasing hazardous waste threats to the
public and environment.

We found EPA had encountered various problems 'in replenishing the Trust
Fund,  because it was not taking aggressive cost recovery actions.  However,
some of the problems encountered were outside EPA's immediate control.
The issues outside of EPA's control may eventually need to be resolved by
Congress and the courts.  We also found EPA's recovery activities were
hampered because it did not have a coordinated comprehensive systematic
structure for overseeing cost recovery actions.

We found EPA was not aggressively pursuing cost recovery actions against
potential responsible parties where funds expended for cleanup were under
$200,000.  Based on Agency records, we identified 182 completed removal
actions under $200,000, totaling $6,130,209, where cost recovery actions
were not being pursued by EPA.  In addition, we calculated that EPA could
potentially lose over $60 million in the next 20 years if cost recoveries
for removal actions are not pursued.  EPA officials attributed the overall
lack of cost recovery action primarily on resource constraints, and the
fact that the expenditures required to recover costs may approach the
costs  of the cleanup itself.  The expenditures incurred by the Agency in
preparing and pursuing a cost recovery action are potentially recoverable
from the responsible parties.  We recognize resource constraints may
limit  the number of cost recovery actions.  However, failure to undertake
minimal cost recovery activities or explore alternative methods for recover-
ing costs on sites under $200,000 would adversely affect the Congressional
goal  of cleaning up hazardous waste sites.

An issue which was somewhat outside the control of the Agency was potential
responsible parties filing for bankruptcy.  As of September 30, 1985, bank-
ruptcy claims totaled over $65 million.  Of the $65 million, EPA actually
recovered $27,165.  We found that the Agency was not taking aggressive
and timely action in filing for cost recovery when the potential reponsible
party  filed for bankruptcy.  This could jeopardize the Agency's ability
to preserve its right as a creditor.  Also, it is especially Important for
EPA to establish itself as a creditor, since the courts have been leaning
towards giving Government units first priority after secured creditors.
EPA,  by increasing Us efforts, may stand in a better position to recover
funds  and be recognized as a first priority creditor.

Even though the Agency had a policy prescribing a 60-day cut-off period
for negotiations, we found 67 percent (276 of 411) of the negotiations
lasted an average of 279 days.  Fifteen of the site negotiations over 60
days,  amounting to $3,598,700 in clean-up costs, were concluded without a
settlement or cost recovery reached with potential responsible parties.
Agency officials Informed us that the 60-day cut-off period was not
realistic and negotiations are usually lengthy when several responsible
parties were Involved.  EPA can improve its monitoring of negotiations
with  responsible parties by requiring regional' offices to maintain
documentation supporting the continuation of a negotiation and tracking

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milestone dates In an information system.  Also, to ensure that established
milestones are met, EPA needs to inform the responsible parties of the
negotiation timeframes.  Thus, if a reasonable settlement did not appear
feasible, negotiations can be broken off and cost recovery pursued through
civil  action after EPA cleans up the site.

Historically, there has been considerable confusion over whether a statute
of limitations (SOL) will apply to CERCLA cases.  The Congress may resolve
this  issue in the CERCLA reauthorization bill.  However, until this issue
is resolved by Congress or the Federal  courts, EPA is at risk.  We identified
65 completed removal actions, totaling $2,917,200, which may violate "tort
law"  if not filed on or before December 31, 1986.  EPA officials believe
that  this area presents a low risk to the Agency.

Overall, EPA could have a better managed CERCLA enforcement program if it
had a  comprehensive management information system (MIS) which would consoli-
date  the data now contained in other Agency MISs.  In addition, the new
system should include information on SOL dates, and negotiation milestone
dates  which currently are not being collected.  As the number of enforce-
ment  actions increase in the future, this system will be crucial to
monitor enforcement activities and ensure all significant milestones are
being  met.  EPA will not have the resources or time to manually search
through individual regional project site files or review various MIS
reports to determine the status of enforcement activities.  Realizing the
need  for a comprehensive MIS to improve monitoring of CERCLA enforcement
activities, EPA is in the process of developing such a system.

The above audit results are discussed in detail in the "Findings and
Recommendations" section of the report.

The Assistant Administrator (AA) for Solid Waste and Emergency Response
provided formal written comments on our draft audit report in a memorandum
dated  September 10, 1986.  The AA generally agreed with our recommendations
and indicated that over the next several months the Agency will be reviewing
and revising its Superfund policies and procedures.  We have summarized the
AA's position to appropriate locations in the report and included the complete
response as Appendix 1.  We also discussed the results of our audit with
senior officials of the Office of Solid Waste and Emergency Response and the
Office of Enforcement and Compliance Monitoring on July 10, 1986.

We realize that the proposed Superfund bill will bring about some changes
regarding the issues discussed in the report.  However, EPA would continue
to have responsibility to clean up hazardous waste sites.  Therefore, we
believe that EPA will continue to need a sound enforcement program.  We
made this review to determine how the Agency could more effectively
manage its CERCLA enforcement program.

ACTION REQUIRED

In accordance with EPA Directive 2750, the action official is required to
provide this office a written response to the audit report within 90 days
of the audit report date.  The Action Official's response should  Include
an action plan with specific milestone dates for each corrective  action
that was not fully implemented.

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BACKGROUND

On December 11, 1980, Congress enacted the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 (Public Law 96-510).   This
Act, commonly known as Superfund, provides for liability, compensation,
cleanup, and emergency response for hazardous substances released into  the
environment and uncontrolled and abandoned hazardous waste sites.  Superfund
broadly defines two types of response actions:  removal and remedial.
The former term represents relatively short-term responses, while the latter
represents actions of longer duration leading to permanent resolution.

To fund removal and remedial actions, title II, subtitle B, established a
$1.6 billion Trust Fund to help clean up these sites.  The Trust Fund was
to be collected over a 5-year period from taxes on petroleum and certain
chemicals and from Federal appropriations.  Further, CERCLA requires that
parties responsible for the hazardous conditions at the sites either perform
the cleanups themselves or reimburse the Government for cleaning up the
sites.

EPA's enforcement authority to recover the costs of cleanup activities
performed by the Government comes from sections 106 and 107 of CERCLA.
Section 106(a) of CERCLA authorizes the issuance of ". . . such orders  as
may be necessary to protect public health and welfare and the environment."
Section 107 provides that, "past and present owners and operators of a
site, and generators and transporters who contributed hazardous substance
to a site, shall be liable for all costs incurred by the U.S. Government,
a state, or any other person, and for damages to or loss of natural
resources."
The Office of Waste Programs Enforcement (OWPE) and the Office of
Enforcement and Compliance Monitoring (OECM) are the Headquarters offices
responsible for overall management of the CERCLA enforcement programs.  OWPE
provides policy direction to the regions for waste enforcement activities.
In addition, OWPE develops objectives, strategy, programs, and evaluation
criteria for regional enforcement programs.  OECM is responsible for:  (1)
developing national policies and procedures for uniform, fair and appropriate
enforcement of the environmental statutes and regulations; (2) monitoring
implementation of national policy by the regional offices; and (3) reviewing
for quality the legal and factual development of those cases which, because
of national or precedential significance, are referred to Headquarters from
the regions prior to referral to the Department of Justice.  Because EPA
is decentralized, the majority of EPA CERCLA actions are the responsibility
of the regions.  Thus, Headquarters plays more of an oversight role while
the regions actually carry out the program objectives.

CERCLA enforcement actions can occur at different points in the cleanup
process and involve both regional and Headquarters program offices.  This
creates difficulty in identifying and tracking milestones of CERCLA enforce-
ment activities.  In general, the following actions occur once a responsible
party is identified:  (1) EPA attempts to negotiate with the responsible
party(1es) in order to reach a settlement for cleaning up the site; and (2)
1f a settlement was not reached, EPA can cleanup the site with Federal funds
funds and seek to recover the cost of cleanup later.

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 FINDINGS  AND  RECOMMENDATIONS

 1.   EPA NEEDS TO  ACTIVELY  PURSUE SITES UNDER $200,000

 The Agency  was not  aggressively pursuing cost'recovery actions against
 potential  responsible  parties where funds expended for cleanup were under
 $200,000.   Despite  a recent policy authorizing the regions to negotiate
 with potential  responsible parties for settlements, the extent of EPA's
 pursuing  these cases was questionable due to the higher priority given to
 large dollar  sites.  As of September 30, 1985, we identified 182 non-National
 Priority  List (NPL) completed removal actions, totaling $6,130,209, where
 funds may never be  recovered if cost recovery actions are not pursued.  EPA
 officials believe that the costs associated with these site costs may never
 be  recovered  because the Agency resources needed to recover the expenditures
 may outweigh  the  actual costs recovered.  We understand that resource con-
 straints  may  limit  EPA's pursuit of all hazardous waste sites.  However,
 EPA's failure to  pursue sites under $200,000 would ultimately impact on
 EPA's replenishing  the Trust Fund and would send a signal to potential
 responsible parties that the Agency was not serious about recovering
 site cleanup  costs.  We calculated that EPA could potentially lose over
 $60 million in  the  next 20 years if cost recoveries for removal
 actions are not pursued.   In addition, projected increases in hazardous
 waste sites may only increase the likelihood of cost recovery efforts not
 being taken on  sites under $200,000.  EPA's policy could adversely
 affect  the Congressional goal of cleaning up hazardous waste sites.

 EPA Needs To  Take Aggressive Action To Recover Over $6.1 Million In Trust
 Fund  Expenditures"

 We  identified  the total number of completed Superfund sites with expendi-
 tures  under $200,000, from the inception of CERCLA through September 30,
 1985.  Also, we reviewed EPA's efforts to pursue cost recovery actions
 for these sites.  We limited our analysis to removal sites since these
 sites  are generally intended for shorter-term responses to releases of
 hazardous substances and are generally limited by CERCLA section 104 to
 six months in duration and $1 million.  We requested and received from
 the Emergency Response Division (ERD) and the Office of Program Management
 (0PM) the names of all  sites with completed removal actions on or before
 September 30,  1985.  We found that EPA had completed 376 non-NPL removal
 actions, totaling $76,534,439 in obligations, through September 30, 1985.
 Of  the 376 removal actions, we found 248 removal actions (66 percent),
 totaling $11,474,856, which were under $200,000 in cleanup costs (refer
 to  Exhibit A).  Our review further disclosed that 182 of the 248 sites
were not being  pursued by  EPA for cost recovery.

 Section 107 of  CERCLA provides that past and present owners and operators
of a site, and  generators  and transporters who contributed hazardous
substances to a site, may  be held liable for all costs of removal and
 remedial actions undertaken by the United States, a state or any other
person.  The Federal government can attempt to recover cleanup costs 1n
a lawsuit or, 1f the circumstances favor 1t, can agree to a settlement
with the responsible parties.  The settlement would normally require the
responsible parties to voluntarily reimburse the Trust Fund (and possibly
others) for cleanup costs  Incurred.

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 Based  on  the data  reflected in the Agency's information systems, we
 reviewed  the extent of  EPA's pursuit of cost recovery on sites under
 $200,000.  During  our review of Region 3, we identified 63 sites (as of
 September 30,  1984), totaling $2,240,134, where cleanup costs were under
 $200,000.  In  determining whether EPA was actively pursuing cost recovery
 for  these sites, we found that 18 of the 63 sites were completed non-NPL
 removal actions costing under $200,000.
                               t
 Our  review of  the  18 completed removal actions disclosed that Region 3 had
 taken  action to recover cleanup costs from responsible parties in four
 instances.  For two of  these four actions, Agency expenditures totaled
 $71,340 while  the  settlements resulted in recoveries of $58,504.  The
 Region referred to Headquarters for action the remaining two removal
 sites, totaling $255,756.  Regional personnel informed us that no actions
 were currently planned  to recover any costs from responsible parties for
 the  remaining  14 completed sites, totaling $728,822.

 Region 3,  in its response to our Regional report, indicated that the
 remaining  removals were not referred for cost recovery because there were
 no viable  responsible parties associated with the removals.  We requested
 Region 3 to provide us with documentation that no viable responsible parties
 existed.   On July  28, 1986, the Regional Administrator (RA) responded to
 our  Region 3 report with a follow-up memorandum.  In his response the
 RA indicated that  action is still ongoing at approximately half of the
 sites which originally had no viable parties.

 In Region  4, we identified 37 removal sites (as of September 30, 1984),
 totaling $1,726,888, where site expenditures would not exceed $200,000.
 We reviewed the Agency's records and found that 24 of 37 sites, totaling
 $958,288, were completed removal actions under $200,000.  Cleanup activity
 at the 24  sites had been completed for several months.  However, negotia-
 tions with the responsible parties for cost recovery were not scheduled.
 For  example, removal activity was completed at J4L Drum, TN in October 1982
 at a cost of $44,015.  Removal  work at Caldwell County, NC was completed
 in July 1983 at a  cost of $39,990.  However, cost recovery action had not
 been initiated or  planned at these sites at the time our fieldwork was
 completed.

 Regional  officials attributed the overall lack of cost recovery action on
 sites under $200,000 primarily to resource constraints and existing policy
 guidance which discouraged cost recovery action on sites under $200,000.
 Regional  officials further explained that other factors such as strength
 of evidence, financial  viability of the responsible party, risk of litigation
 and  amount of  funds involved also influenced their decisions regarding
 pursuit of cost recovery actions.

We reviewed the Office of Waste Programs Enforcement (OWPE) and the
 Office of Enforcement and Compliance Monitoring (OECM) management reports
to determine whether the Agency was pursuing cost recovery actions on the
248  removal actions we  identified as of September 30, 1985.  Our review
of the OECM's  Docket System, OWPE's Case Management System, Superfund
Comprehensive Accomplishment Plan (SCAP) and the Removal Tracking System
disclosed that the Agency was not pursuing cost recovery actions on 182
 removal sites  EPA-wide, amounting to $6,130,209.  (Refer to Exhibit B.)

                                    7

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Confusion Exists Over How to Handle Small  Cost Recovery Cleanup Actions

To provide more cost effective methods of settling cost recovery claims,
EPA issued a policy entitled "Interim CERCLA Settlement Policy," dated
December 5, 1984, which stated, in part that: •

     "The Regions are authorized to conclude settlements in certain
     types of hazardous waste cases on their own, without prior review by
     Headquarters or DOJ.  Cases selected for this treatment would normally
     have lower priority for litigation.  Categories of cases not subject
     to Headquarters review include negotiation for cost recovery cases
     under $200,000, and negotiation of claims filed in bankruptcy.  In
     cost recovery cases, the Regions should pay particular attention to
     weighing the resources necessary to conduct negotiations and litigation
     against the amounts that may be recovered, and the prospects for
     recovery. . ."

     "Specific details concerning these authorizations will be addressed
     in delegations that will be forwarded to the Regions under separate
     cover.  Headquarters is conducting an evaluation of the effectiveness
     of existing delegations and is assessing the possibility of additional
     delegations."

Prior to issuing the Settlement Policy, the Agency generally pursued
cost recovery actions only on sites where total  cleanup costs exceeded
$200,000.  While the December 5, 1984, Settlement Policy authorized the
regions to negotiate settlements with potential  responsible parties where
total cleanup costs did not exceed $200,000, Headquarters never delegated
authority to the regions to actually approve and sign settlement agreements.
We also noted that the Settlement Policy stated that priority should be
given to sites where cleanup costs exceed $200,000.

In our review of Region 3, CERCLA Removal Enforcement Section personnel
stated there was a target on case referrals sent to Headquarters annually
for cost recovery, and these referrals were limited to sites over $200,000.
This target was established in the Agency's Strategic Planning and Manage-
ment System (SPMS).  As a result, the Enforcement Section's priority was
to refer sites over $200,000 to Regional Counsel for review and subsequent
referral to Headquarters.  Furthermore, Region 3 personnel stated that
sites under $200,000 were not referred to Regional Counsel because the
OECM and the Department of Justice (DOJ) normally will not pursue cost
recovery actions on any site under that amount.  However, OECM personnel
told us that SPMS does not limit case referrals to sites over $200,000
and they had never refused to pursue a case for cost recovery, although
they admitted that higher priority is placed on sites over $200,000.

The EPA Administrator, in a February 13, 1985, speech indicated that  EPA
must pursue cost recovery actions.  The following indicated the direction
he planned:

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      "Let's  remember that EPA's mission is progress in achieving
      environmental improvement.  We achieve that progress by setting
      sound standards and enforcing them.  The regulated community must
      know that we are committed to assuring this progress.  We encourage
      them to help us move forward on a voluntary basis.  But where they
      are unwilling, we will vigorously enforce our laws and our standards.
      ...   It will be our policy to take action to recover all costs
      incurred by government in-Superfund response actions."

On July 12,  1985, OECM and the Office of Solid Waste and Emergency Response
(OSWER) jointly issued a memo to the regions addressing small cost recovery
referrals.  The memo stated:

      "Based on discussions among our staff and Regional enforcement
      personnel, it appears that confusion exists regarding Agency policy
      on referring CERCLA cost recovery cases valued at less than $200,000.
      . . .  Although the Agency has placed a higher priority on referring
      cost recovery cases with expenditures in excess of $200,000, there are
      situations where referring small cost recovery actions is entirely
      appropriate.  For example, where we have initiated settlement discus-
      sions which have failed to produce a settlement because of the
      recalcitrance of the responsible parties, referral would generally
      be appropriate to demonstrate the Agency's commitment toward enforce-
      ment as a vehicle to compel private party response at CERCLA sites.
      In addition, where a region has no case for more than $200,000, where
      an enforcement presence would serve a deterrent effect, where a
      Region's other enforcement priorities allow for the expenditure of
      resources to support a small cost recovery case, or where the circum-
      stances are ripe for testing some important aspect of law, referral
      of such as case would be appropriate."

While this memo showed that Headquarters intended the regions to pursue
small cost recovery cases under $200,000, at the time of our review the
regions had not received formal delegation from Headquarters to implement
this  guidance.  In addition, Region 4 stated in its response to our April 18,
1986  audit report:

      "As, OIG is aware, the Headquarters policy has been and continues to
      be that, generally cost recovery referrals are a low priority at
      sites where "minor" costs have been incurred (previously $200,000,
      now proposed as $500,000 under the October 4, 1985 draft CERCLA
      settlement policy).  The basis for this policy, Including resource
      constraints and cost-effectiveness has been articulated in several
      Headquarters policy documents."

Apparently, from these comments confusion still exists as to how to
handle sites under $200,000.  EPA plans to raise the dollar limit to
$500,000 for small case recovery cleanups.  In our opinion, this would
further compound the problem since the number of completed sites and the
resulting dollar values would increase.  For example, as of September 30,
1985, the number of completed removals between $200,000 and $500,000
totaled 19, with a dollar value of $5,761,002, that may not be  recovered
(Refer to Exhibit C.)

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A major obstacle faced by EPA was that it could not compromise Section  107
cost recovery actions if they exceed $20,000 or if the settlement resulted
in the Agency recovering less than 100 percent of incurred costs.  CERCLA
does not authorize EPA to compromise cost recovery claims.  The only other
statutory authority under which EPA may compromise claims of the United
States is the Federal Claims Collection Act of 1966.  According to the
law, if EPA wants to settle a claim for less than 100 percent, or that  is
over $20,000, the settlement must be referred to DOJ for final approval.
For this type of recovery action the regions must refer the settlement
package to EPA Headquarters for concurrence and then Headquarters will
refer the package to the DOJ.  In discussions with an OECM official  he
stated that this procedure was causing an added burden to the Headquarters
staff.

As previously mentioned, EPA was not actively pursuing sites where costs
expended from the Trust Fund were under $200,000.  We discussed this issue
with both Regional and Headquarters senior management.  Region 3 officials
emphasized that OSWER personnel had verbally instructed them not to pursue
sites under $200,000.  OWPE informed us that some sites either do not
have a viable responsible party or a potential responsible party can not
always be found.  In addition, senior Headquarters representatives from
both OWPE and OECM informed us that these costs were not actively pursued
since resource constraints often limited EPA's cleanup efforts to higher
priority or large dollar (over $200,000) sites.  In the early years of
the Superfund program, EPA was faced with a huge number of existing and
threatening hazardous substance releases and the need to conserve and use
Trust Fund resources most efficiently.  As a result, EPA targeted its
enforcement resources on those sites where there was a greater likelihood
of successful action.  We recognize that EPA's pursuit of all hazardous
waste sites may not be a prudent decision in light of limited resources.
However, in our opinion, failure to even undertake minimal cost recovery
activities in pursuing cost recovery for these sites increases the potential
of responsible parties avoiding their liability and this will consequently
impact on the amount of funds available for cleanup of hazardous waste  sites.

Future Impact On The Trust Fund

In December 1984, as required by Section 301 (a)(b)(c) of CERCLA, EPA
submitted a report to Congress projecting the size and focus  of the
Superfund program and future funding needs.  According to the study, EPA
assumed that:  (1) there were about 25,000 hazardous waste sites; (2)  2,500
of these 25,000 would be NPL sites; and (3) cost recovery from responsible
parties would be at a rate of 47 percent for removals.  We estimated the
future dollar impact of the Agency's policy on the Trust Fund by  identifying
the Agency's projections for the future number of removals and the average
dollar amount Involved for removals under $200,000.  The following informa-
tion and assumptions used in the calculation came from EPA's  Section 301
study.

EPA's Section 301 study predicted that  190 removals will be  performed  each
year.  One hundred and fifteen of these removals will be at  non-NPL  sites
and will average less than $200,000 per site.  Based on historical data
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we calculated that potentially over $60 million will  be lost to the  Trust
Fund in the next 20 years if cost recoveries for removal  actions under
$200,000 continue to be ignored.  Presented below is  our calculation.

     0 190 removals per year - 30 NPL removals = 160  non-NPL removals
                                              f
     0 160 non-NPL removals x 72 percent (removals under $200,000)  =
       115 removals under $200,000
                               i
     0 115 removals per year under $200,000 x $49,532 average cost  of a
       removal = $5,696,180 per year

     0 $5,696,180 per year x 20 years of removal activities = $113,923,600

     0 $113,923,600 x 53 percent nonrecovery rate = $60,379,508

This calculation did not take into account any increased cost for inflation
over the 20 year period.  Further, the recovery rate  of 47 percent  assumed
by EPA may be too high.  For example, GAO in a March  29, 1985, report stated
that the figure of 47 percent for cost recovery for removals was an  optimistic
assumption based on what EPA hopes to accomplish rather than the actual  21
percent rate experienced for removals to date.  We discussed this calculation
with OERR's Chief, Office of Program Management and he stated that  the  calcula-
tion was reasonable.

Alternative Methods of Pursuing For Cost Recovery Would Permit Recovery
While Saving Resources

Given the number of incidents or sites at which EPA had spent Trust Fund
monies, cost recovery cases have the potential to severely drain Agency
and DOJ enforcement resources.  While the Agency is authorized to seek
recovery of all  Trust Fund monies, the costs associated with case referral,
case preparation and litigation for cases involving removal or small remedial
actions in some cases may approach the cost of the cleanup itself.   In  order
to use Agency resources effectively the Agency needs  to explore alternative
methods for pursuing cost recovery actions.

In a March 1986 article entitled:  The Need for Innovative Environmental
Enforcement, the Acting Assistant Administrator for OECM indicated that
alternative approaches are available for EPA to pursue cost recovery
claims.  In the article he stated the following:

     "EPA can make more effective and efficient use of Its existing
     resources by exploring other means of bringing and resolving
     enforcement actions, and making the present system more efficient.
     . . . Some of these cases could be handled by arbitration.  An
     example of this type of case, 1n which the need for arbitration is
     more apparent, are cost recovery cases under Section 107 of the
     CERCLA ....  EPA and the regulated community must be willing to
     depart from the traditional judicial and administrative enforcement
     procedures in some cases - especially those under CERCLA - in favor
     of generally - accepted alternative procedures which promise economies
     of time, money and other resources.  Arbitration, both binding and
     non-binding, and mediation would seem to be highly suitable
     alternatives."
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We discussed with EPA officials the use of arbitration as one alternative
to pursuing cost recovery actions in court.  Regional  Counsel in Region 3
informed us that filing a cost recovery action in court is a more viable
option, since arbitration has no precedential value.  Furthermore, they
would not like to see the resolution of cases'put into the hands of an
arbitration board.  Region 4 officials, while reacting favorably to the
concept of an arbitration board, expressed reservations about the ability
of an arbitration board to negotiate settlements if there were several
responsible parties involved or if the responsible parties deny liability.
Some Headquarters legal officials believe that, while arbitration eliminates
the need to go to court and reduces litigation costs, the process is still
time consuming for the region and settlements are generally reduced.  However,
we believe that arbitration should be pursued in the absence of any other
action being taken.

In addition, we discussed the possibility of giving these cases to private
attorneys outside the Agency on a contingency basis for fees.  OECM
officials told us this may be a viable solution to reducing the impact on
EPA attorney resources.

Conclusion

We recognize that all hazardous waste sites may not be actively pursued
where cost recovery from responsible parties is required.  While resource
constraints and pursuit of high dollar sites may be conserving the Trust
Fund, we believe that the Agency should take a more active role in pursuing
sites under $200,000.  EPA should make every effort to negotiate with
responsible parties to recover cleanup costs.  We believe that a reasonable
effort should be made to recover costs on all sites.  Agency management needs
to evaluate the cost of pursuing cost recovery actions 1n court against the
prospect of actually recovering costs.  Agency management also needs to
include in its evaluations the fact that costs incurred for cost recovery
actions are potentially recoverable.  As the number of hazardous waste
sites increases, EPA must aggressively pursue cost recovery to ensure
replenishment of the Trust Fund.

OSWER Comments And PIG Evaluation

The Assistant Administrator for OSWER will take our recommendations into
consideration when updating Agency policies and procedures.  The Assistant
Administrator further stated that the new Superfund bill expressly allows
for alternative dispute resolution procedures.  In addition, the AA stated
that the new bill would give EPA administrative authority to pursue cost
recovery actions under $500,000, and 1t should not be necessary to hire
outside attorneys.  We believe if the proposed new law gives Superfund
the authority to handle cases under $500,000 through administrative
means, the Agency will be in a better position to pursue cost  recovery
actions.  However, since the Agency has limited personnel resources and
priority may still be given to high dollar cases, we still believe that
outside attorneys on a contingent basis will be of benefit to  the Agency.
                                    12

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Recommendations

We recommend that the Assistant Administrator for the Office of Solid
Waste and Emergency Response:

     1.  Require that minimal cost recovery actions (e.g., notification,
         demand letters) be pursued for sites where funds expended are
         under $200,000.  Also, Headquarters should weigh the costs to be
         incurred for litigation versus the costs to be recovered before
         pursuing a cost recovery action.

     2.  Develop and issue specific policies, procedures and negotiating
         strategies for settling cases under $200,000 ($500,000)  to the
         regions to ensure a consistent Agency approach.

     3.  Examine the possibility of using an arbitration board or some
         similar mechanism as an alternative to filing cost recovery
         actions in court.

     4.  Pursue the possibility of giving cost recovery actions under
         $200,000 to outside attorneys on a contingency basis for fees.

2.  BANKRUPT POTENTIAL RESPONSIBLE PARTIES IMPACT ON EPA'S ABILITY TO
    RECOVER CLEANUP COSTS UNDER CERtU

EPA may not recover millions of dollars spent for cleanup activities at
hazardous waste sites because some potential responsible parties (PRPs)
file for bankruptcy.  During our review, we identified 22 ongoing sites
with cleanup costs in excess of $65.2 million, from the inception of CERCLA
through September 30, 1985, where costs may not be recovered because of
potential responsible parties filing for bankruptcy.  Of the $65 million,
EPA had actually filed claims against bankrupt parties for over $57 million.
Of this, EPA was awarded $47,859, of which $27,165 was received on 2 of the
22 bankruptcy cases.  The Agency needs to make improvements in two areas:
filing for cost recovery actions against bankrupt parties and establishing
a system to identify bankrupt parties.  Improvements in these two areas
would enhance EPA's cost recovery efforts.  Due to the uncertainty which
surrounds the bankruptcy issue, as well as the potential of PRPs to avoid
their responsibilities, the Agency must take aggressive action during the
early stages of the bankruptcy proceedings.  This will place the Agency
in a better position since Its claims conceivably could be classified as
a first priority claim (i.e., administrative expenses) under bankruptcy
rules.

The OECM is responsible for pursuing legal enforcement actions against
bankrupt parties.  EPA regional offices are responsible for developing and
referring bankruptcy cases to OECM.  To assist the regions in developing
CERCLA enforcement actions against bankrupt parties, OECM Issued,  "Guidance
Regarding CERCLA Enforcement Against Bankrupt Parties," on May 24,  1984.
This policy encourages consistency 1n current and future bankruptcy cases
brought by EPA.  The guidance provides, 1n part:  (1) a discussion  of
enforcement theories available to the Agency to pursue bankrupt parties
under CERCLA; and (2) an overview of the  relationship between cost  recovery
under CERCLA and bankruptcy law.  Currently, a new procedure  is being
circulated for review.
                                    13

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The Bankruptcy Reform Act of 1978, commonly referred to as the Bankruptcy
Code, states that a claim may be based on a right to payment as a  result
of work completed and cost incurred.  There are two types of bankruptcies,
(Chapter 7 and Chapter 11) that a corporation can seek.  Chapter 7 bank-
ruptcy is when a corporation actually "walks out" and quits its business.
This usually happens because liabilities outweigh the assets and the
corporation does not plan to reorganize.  The corporation can accomplish
this by placing itself in a Chapter 7 bankruptcy with the approval  of  the
court, or it can be forced into it by its creditors with court approval.
Thus, the assets are used to pay off creditors.  In a Chapter 11 bankruptcy
the corporation plans to continue its business and have debts previous to
its bankruptcy request worked out with its creditors during the reorganiza-
tion phase.  The corporation will actually be paying current business  costs
during the period as an ongoing business while it is in negotiation for
payment of previous debts.  In both types of bankruptcies the court is
involved as well as the creditors.

Under section 507 of the Bankruptcy Code, the claims of secured
creditors (i.e., repayment of loans) are satisfied fully before assets
are distributed to any unsecured creditors.  Section 507 also sets up  the
priority structure for the satisfaction of unsecured claims.  The priority
order for such claims are:

     1.  Administrative expenses .  . . and any fees and charges assessed
         against the estate . . . ;

     2.  Unsecured claims allowed under section 502(b) of the Bankruptcy
         Code (certain claims arising in involuntary cases);

     3.  Allowed unsecured claims for wages, salaries, or commissions,
         including vacations, severance and sick leave pay;

     4.  Allowed unsecured claims for contributions to employee benefit
         plans;

     5.  Allowed unsecured claims of individuals, to the extent of $900
         . . . ; and

     6.  Allowed (certain) unsecured (tax or penalty fee) claims of
         Governmental units.

Under the Bankruptcy Code it appears that an EPA claim would be classified
as a sixth priority claim.  However, in a recent bankruptcy case, T.P.
Long Chemical, Inc. (Case No. 581-906), the Ohio Federal District Court
classified cleanup costs as administrative expenses or a first priority
claim under the bankruptcy rules.  Thus, this ruling has placed the
Agency in a better position to recover cleanup costs.  Region  5 Regional
Counsel's response to this opinion states that:
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      "This  ruling  is  significant in that it is the first time to my
      knowledge that a Bankruptcy Court has held that expenses of an
      environmental cleanup under CERCLA are administrative expenses of
      the  bankruptcy's estate.  While the court did not allow the Agency
      to stand ahead of perfected secured interest holder, the classifi-
      cation  of Government cleanup costs as administrative expenses places
      the  claim of  the Agency well ahead of most creditors."

 Current Status Of  Agency Bankrupt Actions

 We  requested from  the Acting Associate Enforcement Counsel for Hazardous
 Waste Enforcement  at  Headquarters, a status report on CERCLA bankruptcy
 actions.  We wanted to determine (1) the number and dollar value of
 bankruptcy cases being pursued by the regions, and (2) the amount of
 funds that had been recovered from bankrupt parties.  OECM provided us
 with  a status report  of CERCLA bankruptcy actions as of September 30,
 1985.  We also used a Financial Management System report to determine
 the recovered amount  (refer to Exhibit D).  These reports disclosed the
 following:

      1.  The Agency identified 22 bankruptcy cases, totaling $65,150,841;

      2.  The Agency had actually filed claims against the above bankrupt
         parties for  $57,245,705; and

      3.  The Agency,  while awarded $47,859, had actually recovered
         $27,165 in cleanup costs from 2 of the 22 bankrupt cases,
         as of September 30, 1985.

As shown above, the Agency had filed 22 bankrupt cases; yet, the Agency
had not been very  successful in recovering costs.  We discussed the
results with OECM  personnel who told us that the Agency would rather use
its resources against a PRP with adequate resources.  However, we believe
that  the Agency must  be able to balance its actions against PRPs among
viable and less viable parties so that industry will note that EPA will
pursue all cost recovery actions to the fullest extent possible.

Management Of Bankruptcy Cases

The Agency was not taking aggressive and timely action in filing for cost
recovery when the  PRP had filed for bankruptcy.  This can result in the
Agency not being able to preserve its right as a creditor.  In addition,
EPA did not have an effective monitoring system to determine if and when
a PRP goes bankrupt.  This is critical since EPA would only have a limited
time  in which to present its claim.

      Filing For Cost Recovery

The primary objective of cost recovery 1s to provide reimbursement of
expenditures to the Trust Fund.  A second objective 1s to encourage
voluntary actions by  responsible parties.  EPA's cost recovery strategy
generally calls for the initiation of cost recovery efforts as soon as
total  costs are known.
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The Agency must establish itself as a creditor.  If this is done,  the
Agency will legally put the responsible party on notice that it expects
payment and if the PRP goes bankrupt, EPA would be on file as a creditor.
Thus, EPA would receive notice of bankruptcy (order of relief) and other
creditor's notices which are important so that it will know the status of
the proceedings.

In a January 30, 1985, memorandum entitled " Procedures for Documenting
Costs for CERCLA Section 107 Actions" the Director, OWPE stated that,  "It
is the Agency's intention that some type of action be taken to recover
expenses for every site where Federal money was expended.  The Agency
plans to have all cases dealt with in a timely and efficient manner."   To
accomplish this Headquarters should refer the bankruptcy claim to  the
Department of Justice for filing by a specific due date or a special
exception must be requested.  Prompt referral of bankruptcy cases  is
necessary to preserve the Agency's claim as a creditor.  The Agency has
to file a "proof of claim" to be assured of preserving its rights  as  a
creditor.  The proof of claim under a bankruptcy may be the only remedy
left for the Agency to recover funds from a bankrupt PRP.

An April 7, 1986, article in the Legal Times entitled "DOJ Gets More
Aggressive in Chapter 11 Cases" contained a comment made by Associate
Deputy Attorney General Jay B. Stephens.  He stated:

     "... that the Justice Department finally has awakened to the
     realization that "there are great potential dollars our there: for
     the government to collect.  Previously, he said, "competing interests"
     and priorities have kept the department and its prosecuters from
     focusing on bankruptcy matters."

With this in mind, EPA should be aggressive in seeking reimbursement for
cleaning up sites, especially in the early stages when the PRP is  filing
for bankruptcy.  We believe that if the case is pursued early, a more
favorable outcome may result since the Agency would have established the
priority of its claim in relation to other creditors.

EPA recognizes the need to pursue judicial actions against bankrupt parties
However, even if EPA finds a responsible party to be financially sound at
the time identified, there is no guarantee that the PRP will not file for
bankruptcy at a later date.  Consequently, an OECM attorney believes that
while a cost recovery action can be initiated before completion of a
remedial investigation/feasibility study, this would not preclude a
responsible party from declaring bankruptcy to avoid liability.

     The Need For Aggressive Action Against Bankrupt Parties

EPA needs to file claims against PRPs as soon as possible  in order for
the Agency to reserve its right to recover claims on costs associated
with site cleanup of bankrupt parties.   If EPA does not  file a claim and
the bankrupt party does not place EPA on its creditors 11st, the  Agency
may lose its creditor status.  This would occur because  the court would
not know that EPA is a creditor.  Thus,  no distribution  of any available
                                    16

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 funds could be made to EPA.  Also, if EPA does not file or files  in  later
 stages of bankruptcy, there is the possibility of:  (1) abandonment  of  the
 site; (2) other administration costs "eating up" the assets;  (3)  and the
 sale of assets at "fire sale" prices, or other methods to dilute  the assets
 prior to and during the bankruptcy.  This coul'd be done without EPA  having
 a  say in the matter.  In addition, an aggressive stand against bankrupt
 parties may bring out more PRPs that will absorb the cost of  cleanups or
 catch fraudulent schemes.  For-example, in a recent bankruptcy declaration,
 (Thomas Solvent Co. (TSC)), the U.S. has filed a CERCLA section 107
 complaint to recover cost associated with site cleanup.  Part of  the new
 case will be against Richard Thomas, individually, and four corporations
 which were "spun-off" from TSC prior to TSC's bankruptcy.

 A  major obstacle faced by EPA was when does it become a creditor. We
 discussed this issue of EPA's rights to claim as a creditor with  an
 attorney from OECM.  We asked when is EPA "officially" a creditor so that
 it will  be necessary for the bankrupt party to list the Agency as a  creditor.
 The OECM attorney stated that some PRPs interpret it to be at the time  of
 a  demand letter, while others do not.  Further, when EPA sends out a demand
 letter, the letter should state that EPA is an official creditor. The
 attorney also stated that EPA is supposed to be notified when a PRP  goes
 bankrupt.  However, if a responsible party does not "interpret" EPA  to  be
 a  creditor, EPA may not be notified.  If EPA is not notified  of a PRP's
 bankruptcy filing, it will not be able to file a claim in sufficient time
 to preserve its right of claim.  Further, a PRP could go bankrupt and EPA
 could have no knowledge of this.  We were also told that to develop  a
 system that EPA would know if PRP goes bankrupt would be difficult since
 a  party could be bankrupt in many different states and districts.

 Under a Chapter 7 bankruptcy, as explained in the June 30, 1985,  memorandum
 entitled, "Procedures for Documenting Costs for CERCLA § 107  Actions,"  a
 claim must be filed within 90 days from the first meeting of  the creditors
 unless an extension is moved for or granted.  Under Chapter 11 a  claim must
 be filed by the date set by the court.  However, to file a claim timely,
 EPA must know the date that a proof of claim has to be filed.  It 1s
 important that EPA becomes aware of any PRP bankruptcies and  acts in a
 timely manner.  As previously stated, EPA needs to be aware of a  bankruptcy
 at the earliest stage so that it can attend creditors meeting and thus be
 able to support its position effectively.  If the Agency does not become
 aware of bankruptcies early or does not act 1n a timely manner, the  poten-
 tial for recovering costs lessens.

EPA Does Not Have An Adequate System To Determine
When A PRP Goes Bankrupt

We found that there was no list of all PRPs.  Thus, when EPA is notified
 of a PRP filing for bankruptcy, 1t had no listing to refer to.   It  1s
 important that the Agency place more emphasis on these bankrupt parties
 since it may be the last chance 1n which the Agency can preserve Us
 rights.   This is the only way the Agency can establish Its priority on
the distribution of the debtor's estate.
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 EPA did not have a system in place to determine if a PRP files for
 bankruptcy.  The court will only notify EPA when a PRP files for bank-
 ruptcy if EPA is listed as a creditor by the bankrupt party.  In those
 cases where the court notified EPA that the PRP was filing for bankruptcy,
 EPA did not have adequate policies and procedures to take the necessary
 action to establish the priority of its claim in relation to other
 creditors.  As a result, when a notice came in, EPA did not know to who
 it should go.  OGC is developing new procedures to ensure that the Agency
 can respond in a timely manner.  It is necessary that the Agency's
 attorneys:  (1) receive notification of all PRP bankruptcy claims, and
 (2) be notified when a PRP sends bankruptcy notices to creditors.  The
 Agency needs to be on record as a creditor in sufficient time so that it
 can attend the meeting of creditors (usually not less than 20 or more
 than 40 days after the order of relief).  Also, the Agency's attorney
 handling a bankruptcy case must be able to receive any notices sent to a
 creditor on a timely basis so that he/she can respond within the time
 stated on the notice.

 CONCLUSION

 The intent of the enforcement program is to compel responsible party clean-
 up of hazardous waste sites or to have them pay for cleanups performed by
 the Government.  In our opinion, responsible parties declaring bankruptcy
 impacts on funds available for cleanup of other sites.  We believe that
 EPA should be more aggressive in filing early claims against responsible
 parties.  By increasing its effort, EPA may stand in a better position to
 recover funds earlier, and potentially prevent the PRP from declaring
 fraudulent bankruptcy.  In addition, failure to aggressively recover cost
 expended from the Trust Fund will not only reduce the number of hazardous
 waste sites that EPA could clean up, but also demonstrate to PRPs that they
 can avoid reponsibilities by filing for bankruptcy.

 QSWER Comments And PIG Evaluation

 In response to the draft audit report, the Assistant Administrator
 indicated that OSWER will review and revise the Bankruptcy guidance
 regarding timeliness of actions and procedures for establishing EPA
 claims.  In addition, OSWER will consider revising the demand letters to
 include appropriate official creditor language.  OSWER did not comment on
 our recommendation concerning priority of claims.

 RECOMMENDATIONS

We recommend that the Assistant Administrator for Solid Waste and
 Emergency Response:

     1.  Use more explicit language in the demand letter Identifying EPA
 as an "official  creditor", thus no Interpretation of the demand  letter
will  be required by the PRP;

     2.  Establish procedures on how to take the necessary act1on(s) to
establish EPA's priority claim in relation to other creditors;
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      3.  Coordinate with the Office of General Counsel on developing new
 procedures  and a  system that will permit EPA to take timely action, once
 it  is notified of a PRP's bankruptcy filing; and

      4.  Coordinate with OECM to try and balance Agency actions against
 both  viable and nonviable PRPs especially in light of the courts'  recent
 leaning towards giving Governmental units first priority on hazardous
 waste cases after secured credftors.

 3.  EPA NEEDS TO COMPLETE NEGOTIATIONS WITH RESPONSIBLE PARTIES
    IN A MORE TIMELY MANNER
Negotiations with responsible parties were not always fully successful  and
often extend well beyond established Agency timeframes for conducting nego-
tiations.  Even though the Agency has a policy prescribing a 60-day cut-off
period for negotiations, we found that EPA did not have a coordinated or
systematic structure for tracking negotiations to ensure timely completion.
We estimated that 276 (67 percent) of 411 negotiations were either (1)
ongoing from fiscal 1984 or (2) initiated in fiscal 1985 and had exceeded
60 days, with negotiations, lasting an average of 279 days.  Fifteen of
the site negotiations over 60 days, amounting to $3,598,700 in clean-up
costs, were concluded without a settlement or cost recovery reached with
responsible parties. In addition, even though they did not exceed 60 days
in length, we found 31 negotiations in the amount of $6,733,000 which were
considered unsuccessful  since they did not result in a settlement.  Also,
we found 43 additional negotiations that had outcomes that were fund
financed actions for which we were unable to obtain dollar amounts from
either SCAP or CMS.  EPA officials informed us that cutting off negotiations
is a judgment call based on the progress made and usually negotiations were
not concluded by the 60-day cut off period.  Even though various systems
were supposed to track enforcement progress, we were unable to determine
the current status or results of all negotiations.  Untimely negotiations
delay sites from progressing toward cost recovery through litigation and
ultimately may weaken the Agency's position to reach a settlement with
responsible parties to clean up sites.

Superfund enforcement actions can occur at different points 1n the cleanup
process and can involve both regional and Headquarters personnel.  In
general, these actions Include:  (1) Identification of the responsible
parties; (2)  notification of the responsible parties by letters showing
their potential liability for cleaning up the site; and (3) negotiations
between EPA and the responsible parties to determine whether a mutually
agreeable settlement is possible.  EPA may also negotiate with responsible
parties to determine whether they will perform various phases of site
cleanup, such as the remedial  Investigation/feasibility study (RI/FS),
cleanup of surface problems at the site, or cleanup of groundwater
contaminated  at the site.  EPA may negotiate for one phase at a time or
for several phases at once.
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If negotiations are successful, the terms of the agreement between  EPA
and the responsible parties are Incorporated into an administrative
consent order or consent decree.  The financial  settlement alternative  is
similar to costs recovered for the Trust Fund, because the responsible
parties contribute money while EPA arranges for the cleanup.   If negotia-
tions prove unsuccessful, EPA can (1) clean up the site itself with Trust
Fund money or (2) issue a unilateral  administrative order or  obtain a
court order forcing the responsible parties to clean up the site.  When
EPA cleans up the site, it attempts to recover the cleanup costs from
the responsible parties at a later date.  In issuing a unilateral admini-
strative order or obtaining a court order, the reponsible party must
comply with the terms of the.order or pay fines or treble damages.

Since the beginning of the Superfund program, the goal of negotiations
was to secure privately managed or financed cleanup of hazardous substance
releases.  The timeframes for completing negotiations have generally
remained the same throughout the history of CERCLA.  For example, on
February 23, 1982, a memorandum entitled, "Hazardous Waste Compliance
and Enforcement Program Guidance" was issued by the Office of Solid Waste
and Emergency Response.  The memorandum mentioned that if substantive
negotiations, which are believed to lead to a satisfactory resolution
within a short period of time (normally 60 days or less), have not been
entered into within 30 days of the date of response required  by the notice
letters, Regional program offices should proceed with administrative action
or litigation.  In addition, on August 26, 1983, EPA Issued a policy docu-
ment entitled, "Guidance on Pursuing Cost Recovery Actions Under CERCLA,"
which indicates that a reasonable period of time for most negotiations  is
60 to 90 days.  This policy also maintains that the negotiation timeframes
be disclosed to the responsible parties as a deadline to reach an agreement,

The most recent EPA policy which discusses the timing of negotiations 1s
contained in the "Interim CERCLA Settlement Policy," dated December 5,
1984.  This guidance mentions that a Negotiations Decision Document (NDD),
which follows completion of the RI/FS, makes the preliminary identification
of the appropriate remedy for the site.  Prel1t1gation negotiations between
the government and the responsible parties should normally not extend for
more than 60 days after approval of the NDD.  If significant progress is
not made within a reasonable amount of time, the Agency will  not hesitate
to abandon negotiations and proceed immediately with administrative action
to litigation.  While the type of negotiation undertaken by the Agency
may vary, the general timeframe for conducting negotiations with respon-
sible parties was 60 days.

The basic working document used by EPA to plan and manage CERCLA enforce-
ment activities 1s the Superfund Comprehensive Accomplishment Plan  (SCAP).
The SCAP provides information on each region's plans for enforcement
activities on a quarterly basis and records whether those activities were
accomplished within the expected quarter.  One Item which SCA? tracks 1s
negotiations with responsible parties.  We reviewed SCAP to determine the
results of negotiations that were ongoing in fiscal 1985.  Also, we wanted
to determine the length of negotiations.  By reviewing the SCAP  we  found
that 411 negotiations were ongoing with responsible parties.  However,
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the SCAP was updated every fiscal  quarter to only include any  additional
negotiations which were started.  There was no detailed information  provided
on the status of the ongoing negotiations or how long they were in progress.
Furthermore, we were unable to identify exact start dates for  the 411  negotia-
tions.  Headquarters officials from the Office of Waste Programs Enforcement
(OWPE) informed us that the SCAP is a Superfund management tool to monitor
regional progress of various site activities.  The SCAP does not provide
detailed information on these activities.  For monitoring purposes,  OWPE
officials believe that tracking progress by fiscal quarters is adequate,
and that reporting details, such as specific dates for each site was not
warranted.  However, OWPE referred us to the Case Management System  (CMS)
which contains specific dates on various enforcement actions.

We obtained a copy of a CMS report to determine whether the negotiations
were completed, what the results were, and the length of time  that EPA
spent negotiating with responsible parties.  We found that the CMS,  in
general, provides critical milestone dates for such enforcement actions
as administrative/unilateral orders, case referrals to the Department  of
Justice, cases filed, and settlements with responsible parties.  The CMS
does not monitor or track negotiations per se but only the end result,
(e.g., if the case was referred to Headquarters).  In addition, EPA  did
not have a system that pointed out that a negotiation was taking longer
than 60 days and may need to be cut off.

Using the SCAP and CMS reports, we extracted pertinent information to
estimate the length of the 276 negotiations we reviewed.  Also, we found
another 16 actions for which we could not determine the length of negotia-
tions (refer to Exhibit E).

Our review of SCAP and CMS results for the 292 negotiations disclosed  the
following:

     0 104 sites did not appear to have been completed by September  30, 1985.
       Based on the Agency's records, these negotiations are still  ongoing.

     0 100 sites appear to have concluded with settlements with responsible
       parties.  We believe these negotiations were successful.

     0 43 sites appear to have been transferred to the Trust Fund (fund
       financed action) for potential EPA cleanup.  Since these negotia-
       tions did not result in a private party clean up, we consider these
       negotiations to be unsuccessful.

     0 11 sites appear to have concluded with EPA Issuing unilateral
       administrative orders.  We believe these negotiations were
       unsuccessful.

     0 6 sites were either (1) transferred to another EPA program for
       action, (2) transferred to a state for action, (3) Involved bank-
       rupt parties, or  (4) had no action listed.
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     0 4 sites appear to have concluded with referrals to the Department
       of Justice.  We consider these site negotiations unsuccessful  since
       they did not result in a settlement with responsible parties.

     0 2 sites appear to have concluded with cost recovery actions.  We
       consider these negotiations successful.

     0 22 sites had outcomes that could not be determined from the system.

We concentrated on identifying negotiations which lasted over the 60-day
cut-off period as stated in Agency guidance.  Our review of the 411 site
negotiations disclosed that 276 (67 percent) exceeded the 60-day Agency
policy, with the average negotiation taking 279 days.  Of these 276 negotia-
tions, it appeared 15, totaling $3,598,700, concluded with no settlement
being reached with the responsible parties (i.e., fund financed, issuance
of unilateral administrative order or subsequent referral/filing to the
Department of Justice).  We were not able to determine the dollar amounts
for the 43 fund financed actions.

The Superfund program is generally implemented in the regions.  Headquarters
officials informed us that detailed site negotiation documentation should
be available in the regional  offices.  However, in Region 3 our review
was hampered because many of these pertinent documents (notice and demand
letters, responsible party correspondence, minutes of negotiations, etc.)
could not be located.  For example, in 5 of 25 site files (20 percent)
reviewed, we could not determine the duration of the negotiations which took
place between the Region and the responsible parties.  This was due to the
fact that the Regional site files were generally not organized.  Furthermore,
our review of Superfund enforcement information maintained by Region 3 dis-
closed that there was no system that provided comprehensive information on
all enforcement actions.

Region 3 could provide information on dates such as when (1) notice letters
were sent to responsible parties; (2) administrative orders and consent
decrees were issued; and (3)  judicial enforcement actions were referred to
EPA Headquarters and the Department of Justice.  However, at the time of
our review, the Region did not have any report or system that showed the
dates when (1) responsible party searches began and ended; (2) response to
notice letters and subsequent correspondence were received; (3) negotiations
with responsible parties began and ended; (4) settlements with responsible
parties were reached; and (5) responsible parties performed cleanup actions
at a site in compliance with administrative orders and consent decrees.  Our
review of the Superfund enforcement action information maintained by Region 3
disclosed that most of this information was maintained in individual site
files.

In Region 4, we could not review and evaluate the status of negotiations
of the Region's 151 Superfund sites because the information could not be
obtained without a detailed review of the individual project files.  The
status of negotiations was not monitored and controlled on an ongoing
basis at all sites.  While the Region had been moderately successful in
negotiating settlements for certain phases of site cleanup, the Agency
                                    22

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 guidelines for conducting negotiations within 60 days had not been con-
 sistently met.   In addition from information available, it was sometimes
 difficult to determine precisely when negotiations were initiated and
 concluded.  Of the 29 sites reviewed, 9 different negotiations lasted
 from 6 months to 30 months.  In response to our Region 4 report, the
 Region had taken steps to limit negotiations following the completion of
 a workplan to 60 days or less.  Also, the Region had earlier implemented
 procedures for tracking the milestones of remedial and enforcement processes
 of each site which should help.

 While many of the above regional and Headquarters systems and reports track
 and monitor various enforcement actions, they did not record critical mile-
 stone dates for enforcement activities occurring at all sites.  Consequently,
 EPA did not have a mechanism to track all critical enforcement milestone
 dates (i.e., length of negotiations) in any systematic manner from initia-
 tion through completion.

 The General Accounting Office (GAO) in a May 1986 report "Responsible
 Party Clean Up Efforts Required Improved Oversight" stated that, "Experience
 with EPA's settlement process has shown that it may take 2 years or more
 to complete a remedial investigation and feasibility study.  Subsequent
 negotiations and settlements to establish remedy selection, design, and
 implementation may add yet another year, even before cleanup begins."

 In addition, an EPA contractor in a March 14, 1986, study showed the
 following on negotiations:

     -- Pre-RI/FS negotiations should not last for more than 60-90 days
        actually lasted for an average period of 195 days.

     -- Study findings for both elapsed time and workdays required indicate
        that more effort is being expended on (Pre-RI/FS) negotiations
        than had been assumed by Headquarters.

     -- Remedial design/remedial action (RD/RA) negotiations which should
        last about 60-90 days based on current policy, actually lasted
        about 250 days.

     — Although data is limited, the study results indicate that the
        elapsed time required for (RD/RA) negotiations 1s significantly
        longer than either prior budget assumptions or the OWPE policy on
        the conduct of settlement discussions anticipated.

We discussed with both legal and Superfund officials at Headquarters and
the Regions the reasons why negotiations with responsible parties are so
time consuming.  For example, negotiations were lengthy at the Delaware
City PVC Plant (15 months) in Region 3 because the 106 administrative
orders for the feasibility study and remedial cleanup was the first of its
kind, and there were disagreements over the consent order's wording.  Also,
Headquarters policy changes had to be reflected in the consent order and
this delayed Us Issuance.
                                    23

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At Headquarters, in a discussion with a senior attorney from OECM, we
were told that the 60-day cut off period for negotiations is not realistic
and that negotiations are usually lengthy when they involve several
responsible parties.  In addition, if an agreement cannot be reached with
all RPs involved, then the negotiations tend to drag on.  Furthermore,
in Region 3, we found only a few instances where the Region had informed
the responsible parties that the negotiation period would be only 60
days.  In our opinion, if the responsible parties were told there was a
time limit on negotiations, site cleanup and fund reimbursement may be
expedited.

However, EPA officials argue that negotiations have resulted in favorable
settlements to compel responsible party cleanup of hazardous waste sites.
Senior OWPE management believe that the success of the negotiation process
should be measured against the settlement reached with responsible parties.
Furthermore, Superfund and legal enforcement representatives stated that
they may negotiate at length because, in their opinion, the likelihood  of
reaching a settlement with responsible parties is greater than pursuing the
case through litigation.

CONCLUSION

While we recognize EPA's recent success to compel responsible party clean-
ups through negotiations, we believe the negotiation process needs to be
made more timely.  While we agree with EPA that the current 60-day cut-off
to complete negotiations may be unrealistic in some instances, we believe
that some cut-off period must be established in conducting negotiations
with responsible parties.  As we stated earlier, 276 of the 411 negotia-
tions exceeded the 60-day Agency policy.  These 276 negotiations averaged
279 days.  EPA must re-evaluate its December 5, 1984, guidance and establish
a more realistic timeframe to complete negotiations with responsible parties.
Furthermore, EPA should improve its monitoring of all negotiations by
requiring regional offices to maintain information on meeting this goal
in any enforcement management system.  To ensure that these timeframes
are met, EPA should inform all responsible parties prior to beginning
negotiations of the cut-off period.  If negotiations approach the cut-off
period without a reasonable settlement, then they should be broken off by
EPA, and cost recovery pursued through civil action.  Negotiations with
responsible parties are an essential  part of the enforcement process.
Failure to conduct timely negotiations would, in our opinion, Increase the
likelihood of responsible parties delaying or potentially avoiding their
liability (I.e., declaring bankruptcy) which may ultimately weaken EPA's
efforts to recover cleanup costs on future hazardous sites.

OSWER Comments And PIG Evaluation

The Assistant Administrator for OSWER Indicated that OSWER will re-evaluate
their present policy, procedures and negotiation timeframes under the  new
Superfund bill  and will  take our recommendations Into consideration.   We
agree with this action.   However, to evaluate how OSWER has acted on our
recommendations, we need to be advised on the new revised policy and
procedures.
                                    24

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 Recommendations

 We  recommend that the Assistant Administrator for Solid Waste and
 Emergency  Response:

      1.  Re-evaluate the Agency's present policy and procedures to ensure
 that  timeframes  set for negotiations are reasonable.  Also, timeframes
 should not be exceeded unless H can be documented in the files that
 significant progress is being made.

      2.  Require that specific steps in the negotiation and settlement
 process  are planned, scheduled, and initiated in a systematic and orderly
 manner in  order  to minimize delays in the settlement process.

      3.  Require Agency negotiators to notify responsible parties that
 the negotiations must be concluded within the Agency's established timeframe.

      4.  Require the regional offices to maintain information on the
 length of  negotiations and whether this conforms to the goal established
 by EPA.

 4.  EPA  NEEDS TO IDENTIFY AND TRACK STATUTE OF LIMITATIONS (SOL) DATES

 EPA could  potentially fail to recover millions of dollars in cleanup
 costs by not filing cost recovery actions within the "statute of limita-
 tions" (SOL) period.  Although Agency policy states that court actions
 should be brought timely, there was no formal system to identify and track
 SOL dates.  During our audit, we Identified 65 non-NPL completed removals
 sites, totaling $2,917,200, which may be lost if cost recovery actions
 are not  filed on or before December 31, 1986.  While some of these sites
 may ultimately be referred to the Department of Justice, EPA may eventually
 violate  the SOL unless agreement can be reached on what is the SOL period.
 Consequently, responsible parties could completely avoid any financial
 liability  for the cleanup of hazardous waste sites if appropriate cost
 recovery actions are not filed in court within the SOL period.  Despite
 confusion as to when the SOL period should start, this issue will become
 more  significant 1n the next few years as an Increasing number of sites
 progress toward cleanup.  Although EPA 1s aware of the situation, formal
 procedures and a system need to be developed to ensure that:  (1) all
 cost  recovery actions are filed timely regardless of the SOL; and (2) SOL
 dates are identified for all cleanup sites on a current and ongoing basis.

 EPA Needs To Improve Its Timing of Cost Recovery Actions

 Historically, there has been considerable confusion over whether a SOL
 will apply to CERCLA cases and, if so, when it would start.  Since CERCLA
 did not mention an SOL time period in which an enforcement action must be
 filed, EPA over the past years Issued conflicting guidance 1n order to '
minimize the risk in recovering expended funds.  Both the August 1983
 Agency policy (when dollars are first expended) and the February 1984
 internal  OWPE policy (upon completion of a response action) adopted a 3-year
 SOL period.  OWPE believed it would be extremely cumbersome and make  for
 "piecemeal  litigation" to file cases when funds are first expended because
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expenditures for a site frequently extend over a period of several  years.
The House of Representatives CERCLA reauthorization bill proposes a 3-year
SOL period from when a response action is completed.  In our flash  audit
report, we recognized that the CERCLA reauthorization legislation may
resolve this issue for future sites but may not "grandfather" cases prior
to its passage.

The Comprehensive Environmental Response, Compensation, and Liability Act
of 1980 (CERCLA) did not mention a time period in which a cost recovery
action must be filed to avoid violation of the SOL.  EPA officials  at
Headquarters and in the regions told us that CERCLA cases could fall
either under Federal law (six years), or tort law (three years).

To help clarify the issue, EPA issued a document entitled "Guidance on
Pursuing Cost Recovery Action Under CERCLA" on August 26, 1983.  This
guidance stated:

     "There is some doubt at this time as to precisely which limitation
     period will be applied to a cost recovery action . . . since it is
     possible that a court may see CERCLA actions arising out of the
     tortious conduct of others, cost recovery actions should be brought
     within three years. ...  In order to avoid argument on this  point
     and to eliminate a potential bar to recovery, the Agency should
     attempt to commence all cost recovery action within three years of
     the date dollars are first expended."

The OUPE issued supplemental guidance in the form of a memorandum on
February 15, 1984, stating that EPA should observe a three year SOL
period that begins on the completion date of a response action.  However,
this guidance was never officially issued to the regional offices for
implementation.

On September 5, 1984, we issued a flash report expressing our concern
that a number of potential cost recovery actions under CERCLA might be in
jeopardy due to the uncertainty surrounding a CERCLA SOL.  On March 26,
1985, the Agency issued a response to our flash report.  In addressing our
concern over the uncertainty surrounding the SOL for cost recovery actions,
the Agency response stated, in part, that:

     "We need to differentiate between a legal definition of the SOL under
     CERCLA and the establishment of timeliness for referrals of CERCLA cost
     recovery actions.  The Agency must strike an appropriate balance between
     the need to minimize any risks to the government's ability to  recover
     expended funds and the operational realities of the CERCLA program
     and the cost recovery process."

     Legal  Definition

The position of the Government (EPA and Department of Justice) 1s that
there is no SOL under CERCLA, but 1f there was, 1t would be  six years from
completion of a response action.  There are cases now in the courts which
may provide some case law on whether no SOL applies, a  six-year SOL
applies, or whether three years 1s the appropriate limitation period.
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On March 26, 1985, EPA issued a discussion paper on a New Hampshire court
ruling concerning the SOL on CERCLA cases.  The case involved a responsible
party attempting to block a New Hampshire claim for cost recovery under
CERCLA by  Implying that the SOL had expired.  The judicial decision was
that the State claim should not be dismissed since the three-year SOL
(under Section 112 of CERCLA) does not apply to judicial actions for cost
recovery.  EPA, in its discussion paper, concluded that:
                               j

     "It is important to note that this is the first definitive ruling
     concerning the SOLs for cost recovery actions under CERCLA.  Although
     the opinion concerns a claim brought by a state under Section 107 of
     CERCLA, we would expect a similar ruling on claims by the United States.
     The decision is strong support for the proposition that Congress
     intended to allow Federal and state governments to undertake judicial
     actions for reimbursement of removal, remedial, and response costs
     expended under CERCLA at any time."

While we recognize the significance of the decision, we believe there
still is uncertainty surrounding the SOL.  For example, EPA mentions in
its response to our flash report that there is a risk that the courts
may take a contrary review, such as selecting the start date rather than
the completion date as the SOL time period or holding to a three-year SOL.
An OECM attorney re-emphasized that the above case is the first decision
concerning the SOL, and that several other cases may have to be decided
to clarify this issue.  In addition, EPA in Its response indicated that
the Congress and the courts will be making the definitive determination
on the SOL.

The CERCLA reauthorizatlon bills specifically address the SOL for cost
recovery.  The Senate version, dated September 26, 1985, provides that a
claim must be presented or action commenced within six years after the
date of completion of the response action (Statute of Limitations,
SE142(a), Section 113).  However, the House of Representatives version
provides that an initial action for recovery of costs must be commenced
within three years after completion of the removal action or within six
years after initiation of physical on-site construction of a remedial
action (Section 113, Litigation, Jurisdiction, and Venue, (g) Statute of
Limitations, (2) Action for Recovery of Costs).  If the House's version
takes precedence, the SOL for removal actions will be three years from
completion of the action.

Until  such time that this Issue is satisfactorily resolved by either the
Congress or the Federal courts, we believe EPA should utilize a conserva-
tive date for SOL:  three years from the completion of the removal action.

For long-term remedial projects the Agency also needs to take action to
ensure that the necessary documentation will be available to support the
Agency's cost recovery actions.  The Chief, Superfund/RCRA Procurement
Branch, Procurement and Contracts Division (PCMD) has already Initiated
some action by requesting a class deviation from the Federal Acquisition
Regulations (FAR).  On March 21, 1986, the Chief requested a FAR deviation
be processed that will require contractors to retain records for a period
                                    27

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of 10 years in lieu of 3 years after final payment.  This deviation would
apply to all Superfund contracts.  However, a recent audit by the U.S.
Army Audit Agency, "Superfund Management U.S. Army Corps of Engineers,
Washington, D.C.," dated 24 April 1986, revealed that the Army's current
documentation requirements were not adequate, 'in that accounting documents
are to be kept 6 years, 3 months from payment.  As such, the required
documentation from the Corps of Engineers may be destroyed before litiga-
tion is begun.  The Agency in its August 1, 1986, response indicated that
it is currently negotiating with the Corps of Engineers to ensure that
Corps contracts contain the same records retention requirements as EPA
contracts.  This would help minimize the likelihood of the Corps contractors
destroying necessary documentation before EPA files a case for cost recovery.

     Timely Filing

In their response to our flash report concerning the SOL, the Assistant
Administrator for OSWER and Assistant Administrator for OECM stated that:

     "... for reasons of good management, it is appropriate to establish
     an earlier date for filing cost recovery actions regardless of the
     statute of limitations.  Evidence is fresher, knowledgeable personnel
     are more likely to be available and the Fund can more likely be
     replenished if actions are brought as soon as possible."

Subsequently, on October 7, 1985, the Assistant Administrator for OSWER
and the Assistant Administrator for OECM issued a joint memorandum to the
regions on the "Timing of CERCLA Cost Recovery Actions."  The purpose of
the memorandum was to provide guidance on when cost recovery actions
should be initiated under § 107 of CERCLA.  The memo also noted that the
above policy guidance was not intended to limit any actions, but was
intended to assist EPA regional offices in the management of cost recovery
actions.  Specifically:

     (1)  Cost recovery action should be initiated within one year of
completion of a removal action at a non-National Priorities List Site.

     (2)  Cost Recovery action should be Initiated as soon as practicable
after signing the Record of Decision, usually within 18 months of that
time for remedial  actions.  However, cost recovery actions should not
begin until  the Remedial Design Phase is completed.

The above policy was further included in the Agency's Operating Guidance
FY 1987 (page 12).

In order for EPA to have an effective and efficient cost recovery program,
it must establish "early" tlmeframes and plans for initiating and filing
cost recovery actions.  Without such plans and tlmeframes, EPA will
experience great difficulty in handling the hundreds of CERCLA cost  recovery
cases over the next several years.  In addition, with an established  plan
EPA will  be able to properly allocate resources to ensure timely settlements.
Thus, EPA would be able to accomplish the ultimate goal, early replenishment
of the Trust Fund, which would allow the Agency to clean up additional
hazardous waste sites at an earlier time.
                                    28

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 EPA Needs To Track SOL Dates

 Despite confusion over the SOL time period, EPA needs to develop a manage-
 ment  information system to identify and track SOL dates for initiating
 cost  recovery actions against responsible parties.  On September 5, 1984,
 we issued a flash audit report to bring this significant issue to the
 immediate attention of management.  We reported that there was no formal
 system or procedures in place to provide management an overview of cost
 recovery actions in regard to the SOL.  In addition, we found while
 Superfund personnel were generally aware of the status of their own
 individual cases, there was no comprehensive record of the status of all
 cases.  We recommended that:  (1) EPA develop a comprehensive listing of
 all cleanup actions to date; and (2) implement a system and procedures to
 identify and track cost recovery actions in regard to SOL dates.

 In November 1984, OWPE developed a process to review completed removal
 actions and completed units of remedial actions to assure that cost
 recovery cases were filed before the SOL expired.  This process used
 three years from the completion of the removal/remedial action as the
 ending date for SOL purposes.  OWPE informed the regions that this report
 was to be reviewed for accuracy and possible action on a quarterly basis.

 In our review of Region 3, we found that on November 27, 1984, Headquarters
 sent the first of these quarterly reports to the region.  It showed the SOL
 period for actions that were completed for three years or were approaching
 three years from completion in fiscal  1985.  This report identified four
 removal actions and Region 3 confirmed that cost recovery had been initiated
 on three of these sites.  The fourth site had no financially viable respon-
 sible parties.  Our review disclosed that there were an additional three
 removal actions that the OWPE report did not identify.  Although these
 three cases were filed with the Department of Justice, the fact that neither
 Headquarters or Region 3 identified these sites indicates that the OWPE SOL
 review process alone was not sufficient to assure that cost recovery actions
 were filed before the SOL expires.

 In Region 4 our review disclosed that the Region could encounter signifi-
 cant problems with cost recovery actions that are ongoing at two major
 sites.  On one site, the Regional Superfund Comprehensive Accomplishment
 Plan (SCAP) indicates negotiations were scheduled for the third quarter of
 fiscal 1985.  However, under the most conservative assumption, the SOL
would have expired in September 1984.  The Regional SCAP also shows that
 for the second site a responsible party search was scheduled for the third
quarter of fiscal 1985.  However, the SOL would have potentially expired
 in the second quarter of fiscal 1985.

Throughout the audit, we briefed senior OWPE and OECM management on the
status of our review.  When asked about their response to our September 5,
 1984, flash audit report on the SOL, they provided us a memorandum from
the Director, OWPE to the acting Assistant Administrator for OSWER on the
status of that response.  The memorandum states, in part, that:
                                    29

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      "We are presently compiling information, including completion dates
      on all removal actions.  We are in the process of developing a
      computer tracking system for cost recovery to identify and track
      cost  recovery actions.  The current docket system in OECM allows us
      to track cost recovery referrals to Headquarters, referrals to the
      Department of Justice, and filings of complaints and certain
      additional information.  Our new system will  also be able to track
      the activities associated'with CERCLA 107 cases, which include dates
      of expenditures, SOL, issuance of demand letters, and actual
      expenditures associated with site response actions."

On March 26, 1985, EPA issued a response to our flash report.^. EPA
agreed with our recommendations to establish a system to identify and
track response actions and key dates for cost recovery and is currently
developing such a system.  In the interim period, the Agency established
a manual system to track significant dates on site specific basis.
However, the OWPE did not address our recommendation of developing a
comprehensive listing of potential  SOL dates even after informing the
Assistant Administrator for OSWER (in a February 1985 memorandum) that
this  was being compiled.  OWPE did indicate that information on potential
SOL dates were available.  However, the dates were not monitored since
the Agency had agreed on a 6-year SOL period and no sites were in danger
of violating the SOL period.

Subsequent to the Agency's response to our flash report, we wanted to
identify at Headquarters all completed non-NPL removals which may violate
the SOL if not filed on or before December 31, 1986.  We requested a
listing from OERR identifying all removal actions completed on or before
December 31, 1983.  This listing provided us information on sites that
would reach the 3-year SOL period on or before December 31, 1986.  We
elected to use the more conservative timeframe of three years after
completion for a removal action.  We found that there were 106 removal
actions, amounting to $14,609,558.   Subsequently, we attempted to deter-
mine whether these sites had been filed for cost recovery actions.  Due
to the lack of a centralized management information system to monitor
site status, we were forced to rely on several Superfund and legal
enforcement management documents to determine whether cost recovery
action was initiated.  Our review of the legal docket system and the case
management system disclosed that 65 removal actions, totaling $2,917,200,
may be lost if cost recovery actions are not filed by December 31, 1986.

Discussions with Headquarters officials revealed they did not view the
SOL as a serious problem.  As discussed in EPA's response to the OIG
flash audit report, Headquarters officials discussed their position that
the 6-year statute of limitations applied as well as recent progress in
developing a tracking system as steps taken to minimize a potential SOL
violation.  Consequently, EPA believes that this area 1s a low risk.
While we recognize and commend the Agency's progress, we believe that
inadequate identification and tracking of SOL dates is still a serious
problem.
                                    30

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 As  discussed  above, we identified 65 non-NPL completed removal sites,
 totaling  $2,917,200, which may violate the SOL if not filed on or before
 December  31,  1986.  We believe the SOL is a potential risk to cost recovery
 since  a final  decision was not made on the issue by either Congress or
 the Federal courts.  Until this issue is resolved, EPA is still at risk
 in  recovering costs expended  from CERCLA.  The Agency can minimize the
 risk by aggressively pursuing cost recoveries in accordance with revised
 guidance.

 OSWER  Comments and PIG Evaluation

 In  the September  10, 1986 memorandum, the Assistant Administrator for
 OSWER  indicated that work was initiated on a tracking system that will
 identify  all  removal actions and pinpoint significant enforcement-related
 dates, including  the statute of limitations dates.  In addition, OSWER
 and OECM  have  requested that the Regions review the universe of removal
 actions for purposes of potential cost recovery actions.

 The response  states that the new Superfund bill directly addresses the
 issue  of  the  statute of limitations.  However, as we stated in our report,
 depending on  which version of the Superfund bill may be passed, the SOL
 period can vary.

 RECOMMENDATIONS

 We  recommend that the Assistant Administrator for Solid Waste and Emergency
 Response:

     1.   Proceed under the more conservative tort law tlmeframe (three
         years after completion of a removal) until such time the issue
          is resolved by Congress or the courts.

     2.   Include  and track in the comprehensive listing of all removal
          actions the SOL date.

     3.  For those sites where the SOL is about to expire, take immediate
          action to initiate negotiations or referrals to DOJ.

     4.  Ensure that cost recovery actions are being Initiated within one
         year of completion of a removal action at non-NPL sites.

 5.  EPA NEEDS TO IMPLEMENT A COMPREHENSIVE MANAGEMENT INFORMATION SYSTEM
     (MIS) TO TRACK ENFORCEMENT ACTIVITIES

 EPA would have a better managed CERCLA enforcement operation with a
 comprehensive management Information system which would consolidate the
 information now contained in various Agency Information systems.  At the
 time of our review, the Agency used several Information systems to collect
 and maintain site-specific enforcement Information.  Each of these systems
 served a useful but particular management Information need.  However,
 currently no one system provides all Agency managers with all the timely
 and consistent data needed to effectively manage and/or evaluate Us
 Superfund enforcement program.  Even though EPA enforcement program
managers have indicated that a system providing comprehensive  Information
 for tracking enforcement actions is beneficial, EPA has not developed
such a system.
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OSWER has  recognized that its current information system needs improvement.
In  December  1984, an EPA contractor completed an internal study for OSWER
which recommended that a comprehensive information system be developed.
The Agency is now developing such a system.  If properly developed and
implemented, the new system could:  (1) reduce or in some instances
eliminate  the conditions noted in this report on the problems with the
Agency's cost recovery effort; and (2) improve the overall Agency manage-
ment of CERCLA enforcement activities.

We  found that CERCLA enforcement information was contained in various
management and financial information systems:  Superfund Comprehensive
Accomplishments Plan (SCAP); the Case Management System (CMS); Enforcement
Docket System; CERCLA Information System (CERCLIS); and Financial Manage-
ment System.  While we noted that each of these systems served a particular
useful management need, none of the systems was designed to serve as a
integrated system which would contain specific milestones and financial
information  to adequately monitor CERCLA enforcement activities.  Agency
officials  were required to use outputs from multi systems and manually
search through individual regional project site files to determine
the enforcement status of any given hazardous waste site.

In  our audits of Regions 3 and 4, we experienced difficulty in determining:
(1) site status and (2) cost recovery activities from the various automated
information  systems.  As a result, we had to manually generate pertinent
site and program information such as:  (1) information on bankruptcy cases;
(2) the length of time taken for the negotiation process; (3) progress in
pursuing enforcement actions against potential responsible parties; and
(4) the statute of limitations dates.  OWPE, which 1s the responsible office
for managing the CERCLA enforcement program, was unable to provide us with
detailed statistical Information in such areas as length of negotiation,
and the number of sites where the statute of limitations was expiring or
had expired.  As a result, we were required to extract the information
from several reports.  In addition, our request for information on the
number and amount of bankruptcy claims had to be referred to the regions.
Regional  personnel manually generated this data from the project files
since the  systems did not contain this information.

In a February 6, 1985 memo, the Director, OWPE agreed that the information,
we requested, would be of benefit and could assist in a better management
of the CERCLA enforcement program.  Additionally, both Regions 3 and 4
agreed that a comprehensive automated management Information system was
needed.  Region 4, in fact, had developed an automated regional site
tracking system to Improve control over the status of Its enforcement
actions.    However, at the time of our review, we were unable to review
the status of negotiations and the cost recovery actions at all of the
Regions'  Superfund sites due to the voluminous correspondence and data
in the individual project files.  This information could not be obtained
without doing a detailed review of the Individual project files.

Our audit  findings Indicate a need to collect additional Information  in a
automated  format.  Our review of Region 3 showed that the Region did  not
have any reports or system that reported the dates when:  (1) responsible

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 party  searches began and ended; (2) responses to notice letters and sub-
 sequent correspondence were received; (3) negotiations with responsible
 parties began and ended; (4) settlement with responsible parties were
 reached;  and  (5) responsible parties performed cleanup at a site in
 compliance with administrative orders and consent decrees.

 In  addition, our review of the regions were hampered because many of the
 pertinent documents (notice and demand letters, responsible party
 correspondence, minutes of negotiations) could not be located because the
 site files were generally not well organized.  Even though Region 3
 agreed with the findings and implemented a central filing system for
 enforcement data, the need and benefits of an automated MIS are still
 apparent  and valid.

 As  previously mentioned, enforcement actions may be taken by both regional
 and Headquarters offices and by both EPA and DOJ.  As a result, we believe
 there  is  a need to be able to quickly determine the current status of a
 site and  the responsible Agency office.  Currently, the Agency has no
 system which would provide this type of information, and there is a
 potential for sites to be lost or for site activities not to be taken.

 CONCLUSION

 Despite these shortcomings, we recognize the Agency's efforts to improve
 its reporting capabilities for enforcement actions.  However, we believe
 improvements are still  needed in order for Agency officials to effectively
 manage the CERCLA enforcement program.  In our opinion, as the number of
 enforcement actions increase in the future, 1t will become Increasingly
 necessary to maintain comprehensive Superfund enforcement.tracking
 information.

 We believe a comprehensive management information system offers
 many benefits.  First, the information will allow managers to determine
 how long different steps in the enforcement process are taking so that
 reasonable time frames for completing these steps can be set.  Second, it
 will provide an easy way to determine whether the time frames set for the
 enforcement process are being met.  Third, the Information will help
managers in workload planning by providing data on upcoming steps.
 Fourth, the Information will help management to more easily respond to
 information requests from Congress and other sources.

OSWER Comments And PIG Evaluation

The Assistant Administrator for OSWER in the September 10, 1986 memorandum
made no specific comments with regard to our recommendations for this
 finding.  As stated in our report, we believe Agency officials need to
make improvements to effectively manage the CERCLA enforcement program.
                                    33

-------
RECOMMENDATIONS

We recommend that the Assistant Administrator for Solid Waste and Emergency
Response:

     1.  Designate the development of the CERCLA enforcement system as
         a high priority item; and
                               j
     2.  Require that pertinent site-specific enforcement information
         on bankrupt cases, statute of limitations, negotiation milestone
         dates, etc. be included as data elements in the new MIS.
                                    34

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                                                       EXHIBIT A
               COMPLETED NON-NATIONAL PRIORITY LIST
Region

  1

  2

  3

  4

  5

  6

  7

  8

  9

 10
Totals
iL SITES WITH CLEANUP COSTS UNDER
Total Number of
Compl eted
Removal Sites
Under $200,000
as of 09/30/85
16
15
32
65
40
18
11
7
35
9
"215
SS3
$200,000

Total Obligations
of Removal Sites
Under $200,000
as of 09/30/85
$ 997,475
644,237
1,792,501
2,768,504
1,902,972
608,703
589,519
169,320
1,473,392
528,233
$11,474,856
S3S3=SS=S3
                                35

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                                                               EXHIBIT B
                                                               Page 1 of 6
                  SCHEDULE OF COMPLETED REMOVAL ACTIONS ON
                        CLEANUP COSTS UNDER $200,000
                        "THROUGH SEPTEMBER 30,'
REGION
NAME OF SITE
  1        Bourdeaudhui
  1        Bursey Asbestos
  1        Castle Hill
  1        Cyanide Incident
  1        Dean Street
  1        Gonic Sites
  1        Great Diamond Island
  1        Hougels Neck
  1        Keswick Road
  1        Lake Sunapee
  1        Matarazzo
  1        Pointer Asbestos

  1        Total Sites  - 12

  2        Abandoned Drum
  2        Abandoned Drums Erie Canal
  2        Blue Poly Drum
  2        Blue Spruce  International
  2        Fort Totten
  2        Horseshoe Road Dump
  2        Kearny Drum  Dump II & #5
  2        Kearny Drum  Dump $2
  2        Long Island  Beach
  2        Signo Trading
  2        Wall kill  Well

  2        Total Sites  - 11
 COMPLETION
   DATE

 6/14/1985
 5/28/1985
  5/9/1984
 1/23/1983
  8/3/1983
 3/13/1985
 4/18/1983
 3/19/1985
11/10/1983
  6/9/1984
 5/28/1985
  7/1/1985
                                  2/19/1982
                                  7/16/1982
                                  2/24/1984
                                 11/15/1983
                                  4/21/1983
                                  7/12/1985
                                   5/3/1985
                                  4/13/1985
                                  8/13/1982
                                   7/3/1984
                                  3/16/1984
   TOTAL
OBLIGATIONS

   $145,120
     22,000
        190
      1,528
    180,000
    150,000
        829
      5,000
        194
     31,732
     10,000
     25,000
   $571,593"
                      $  1,146
                           675
                           777
                         3,291
                             O]./
                        60,000
                        92,131
                        42,000
                         1,095
                       134,325 21
                        18,315
                      $353,755
                                     36

-------
                                                               EXHIBIT  B
                                                               Page  2 of  6
REGION
 NAME OF  SITE
  3        Baltimore Iron & Metals
  3        Biedler Road
  3        Boyertown Scrap Metal
  3        Caustic Midnight Dump
  3        Columbia Park  Drum
  3        Coons Run
  3        East Cumberland Street
  3        Evans Trail
  3        Eweing Road  Drum Site
  3        Fennel Road
  3        Interstate 70  Acid Spill
  3        Locomotive Junkyard
  3        Mt.  Pocono
  3        Old  Garage
  3        Patrick Diehl
  3        Piney Creek  Drum
  3        Pottstown Abandoned Trailer
  3        Richardson Property
  3        Security Boulevard
  3        Semco PCB Site
  3        Springer Septic Services
  3        Stoneman Property
  3        Tinicum Marsh
  3        Vulcanized Rubber & Plastics
  3        Wheeling Hill
  3        Yokum Chlordane Contamination

  3        Total  Sites  -  26
 COMPLETION
    DATE

  2/1/1984
  6/8/1983
 5/19/1983
 3/24/1983
 1/25/1985
  9/6/1983
 9/28/1984
  8/8/1984
10/24/1984
 7/11/1985
 5/31/1984
 3/15/1984
 1/24/1984
  2/8/1985
  1/8/1985
  7/6/1985
  5/2/1985
  2/5/1985
  3/4/1985
10/31/1984
 2/13/1984
 6/19/1985
 9/23/1983
  7/6/1983
12/28/1983
 3/20/1984
   TOTAL
OBLIGATIONS
                                                     $
     73
      4
     35
      1
    151
    109

    169
     25
     11
     16
      1
     45
      6
     50
     15
    180
     43
    115
    142
     55
      5
    154
     42
      4
     18
,656
,707
,181
,409
,238
,279
 797
,372
,000
,163
,657
,228
,729
,699
,678
,452
,583 2/
,038
,830
,490
,412
,113
,968
,696
,570
,387
                                                     $1,481,332
 4
 4
 4
 4
 4
 4
 4
 4
 4
 4
 4
 4
 4
 4
Abandoned Drum                    7/28/1984
Abandoned Drum                    8/11/1983
Abandoned Drum/Hillsborough       9/17/1982
Abandoned Drum/Hillsborough       9/17/1982
Abandoned Drum/Marathon            1/1/1985
Ahoskle Midnight Dump             3/29/1985
Buckhorn Pesticide Fire           3/28/1985
Buford Highway                   11/20/1984
Bush Brothers Plating             8/31/1985
C. D. Buff                        3/21/1985
Caldwell County                   7/15/1983
Callahan Drum                    10/28/1983
Canton Plating & Bumper Works    12/19/1984
Cape Fear Wood Preserving         3/19/1985
                     $
     1,812
     1,821
     6,996
     3,976
     4,187
     3,000
    15,000
     5,000
   120,000
    20,000
    39,976
     7,963
   200,000
   150,000
                                     37

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                                                               EXHIBIT  B
                                                               Page  3 of  6
REGION
NAME OF SITE
  4        Catoosa County Labpack
  4        Caustic Chemical
  4        Coal  Branch Hollow <
  4        Creosote Tanks Release
  4        Davenport Creosote Spill
  4        Everhart Lumber Site
  4        Ft Oglethorpe Drum
  4        GA Highway 138
  4        Gall  Foster Property
  4        Hadaway Road
  4        Head  PCB Spill
  4        Horry Co. Fireworks
  4        Ivy Road (Bessie Runner)
  4        J  & I Drum Site
  4        Jimmy's Truck Stop
  4        Johnson Property Site
  4        Lake  Kathy Road Spill
  4        Lake  Worth Inlet
  4        Lumrnis Island
  4        McAllister Drum Site
  4  .      Midnight Dump
  4        Midnight Dumping (KY)
  4        Midnight Dumping/Gull ford
  4        One-Hour Koretizlng
  4        Payco Pallet and Drum
  4        PCB Midnight Dump
  4        Pembroke Pines
  4        Petro Chemical
  4        Rock  Bridge Park
  4        Rome  Coal  Tar
  4        Roosevelt Highway Spill
  4        S.  Electroformlng
  4        Scotts Creek Battery
  4        Simpson Road Drum
  4        Snapper Lane
  4        St. John River
  4        Unknown Chemical  Discharge
  4        Villa R1ca-H1gh Point Rd
  4        Western Carolina  Smelting
  4        Williams Pesticide Site

  4        Total  Sites - 54
 COMPLETION
    DATE

 4/30/1985
 7/20/1983
 6/24/1985
 9/28/1984
 8/19/1983
 5/23/1984
 2/28/1985
 4/12/1984
 7/13/1984
 4/29/1985
  2/7/1985
 2/18/1985
10/30/1984
10/26/1982
  5/1/1985
 4/16/1984
 1/18/1985
  6/4/1985
 4/10/1984
 1/13/1984
 8/24/1984
 7/28/1984
 7/17/1981
 7/30/1984
 4/10/1984
 2/15/1983
12/19/1982
10/28/1983
 1/25/1984
 5/19/1985
12/15/1983
 8/30/1984
 1/25/1985
 4/15/1985
10/14/1983
 10/3/1984
 12/3/1982
 5/17/1984
 12/5/1984
  4/9/1983
   TOTAL
OBLIGATIONS

 $    4,000
      9,930
     32,000
     50,000
     54,533
     10,500
      6,000
      5,544
      3,000
      3,000
     20,000
     90,000
     15,000
     40,782
     12.00U
     50,000
     13,000
      2,158
     25,000
     87,025
     50,000
      9,529
      1,954
     14,000
     25,464
     36,019
     19,765
    175,858
     25,000
    100,000
     34,937
     28,000
     87,000
     27,000
      3,225
     11,284
      4,289
     16,612
     81,000
     10,616
 $1,874,75?
                                    38

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                                                             EXHIBIT B
                                                             Page 4 of 6
5        Abandoned Chemicals
5        Abandoned Drum
5        Abandoned Drum
5        Abandoned Drums-Ecorse
5        Bloomington Capacitor Site
5        C-Way
5        Chemical Drum
5        Chicago Drum
5        Cyanide Incident
5        Drums on Beach
5        Elkhart Site
5        Floyd Hutter
5        Fort & Scotten Streets
5        GP & K, Inc.
5        1-69
5        Midnight Dump, W. 58th Street
5        Midnight Dumping
5        Millpoint (Spring Lake)
5        Miles Township
5        Oak Creek
5        R. J. Trucking
5        Seaway Warehouse
5        Sorrento Site
5        St. Louis River

5        Total Sites - 24
                                  COMPLETION
                                     DATE

                                  4/18/1983
                                   7/3/1983
                                  7/16/1982
                                  6/27/1984
                                   2/1/1985
                                 11/26/1984
                                   7/1/1982
                                  7/22/1984
                                  8/17/1984
                                   7/2/1982
                                  3/25/1985
                                  6/10/1984
                                  4/16/1984
                                  6/10/1985
                                   3/6/1985
                                  4/28/1983
                                  10/1/1981
                                   7/6/1984
                                  3/20/1985
                                  1/31/1985
                                   7/9/1985
                                  7/17/1984
                                  3/31/1984
                                  8/27/1984
   TOTAL
OBLIGATIONS

   $ 46,402
      1,569
      1,142
      6,095
     53,559
     21,749
      3,487
     22,317
        494
      2,628
     93,122
      1,424
      8,713
      9,428
     16,049
        456
     23,970
      2,501
     16,236
      5,000
     18,695
     28,443
      3,239
      1,103
   $387,82T
6
6
6
6
6
6
6
6
6
6
6
6
6
Acrylonitril Spill                 4/3/1984
Amoco Dock 31                      3/8/1982
Chemical Drums-Padres Island     10/17/1984
Haddock Airport                    2/5/1985
Houston Ship Channel               1/4/1984
Jack Dennis Pesticide Burnsite    3/18/1983
Near Wills Point                  5/14/1983
Padre & Mustang Islands I         3/27/1985
Panther Creek                     3/11/1982
South of Waco                      5/5/1983
Stonewall Drug Dump               6/13/1985
Styrene Spill                     2/22/1984
W. J. 011                          2/3/1984

Total Sites - 13
   $  2,250
      3,643
      5,119
     15,000
      5,000
     32,381
      9,652
    160,422
      3,037
      3,792
      7,000
      7,065
     54.777
   $309,138
                                   39

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                                                               EXHIBIT  B
                                                               Page 5 of  6
REGION
NAME OF SITE
  7        Blue River Flood
  7        Flood Damage
  7        Frankl1n/61mb1in St.'
  7        Holly Street Drum Site
  7        Rockwood School  District

  7        Total Sites -  5

  8        Gene Murren
  8        Green River Cyanide
  8        Montgomery Ward  Store
  8        Vaagan-Dahle Farm

  8        Total Sites - 4

  9        A.  S. Power Plant
  9        Abandoned Drum
  9        Abandoned Drum
  9        Angeles National  Forest
  9        Big Spring Ranch
  9        Bloomfield Avenue
  9        Cherokee Trucking
  9        Crystal  Cove Beach
  9        Cyanide Spill
  9        Drainage Ditch
  9        Echo Bay Station
  9        L.  Fricker Co.
  9        Laguna Beach II
  9        Long Beach Drum
  9        M/V Victoria II  Keehi  Lagoon
  9        Mystery Dump
  9        N Tulip St. - Escondido
  9        Parkside Drive
  9        PCB Transformers
           (includes 31 subsites)
  9        Riverside Pesticide
  9        Ro1c-Sun Valley
COMPLETION
   DATE

6/30/1984
2/22/1983
 5/2/1984
6/29/1984
7/23/1984
                                  3/30/1984
                                  1/23/1985
                                  5/15/1984
                                  7/20/1984
                                  7/24/1984
                                  5/27/1982
                                  8/22/1984
                                  7/23/1982
                                  4/21/1983
                                  7/13/1984
                                  2/15/1985
                                  8/22/1983
                                  5/16/1985
                                   1/4/1984
                                  4/26/1983
                                  7/19/1985
                                  4/29/1984
                                  8/20/1984
                                  9/15/1985
                                 12/14/1981
                                  3/15/1985
                                  3/21/1984
                                  9/21/1984

                                  6/10/1985
                                  6/20/1985
   TOTAL
OBLIGATIONS

     36,006
     31,323
     26,537
     29,000
     49,007
                                                       $171,873
                     $ 16,268
                        3,000
                      106,000
                       24,419
                     $149.687
                     $ 27,321
                        1,580
                        2,000
                        4,370
                        3,780
                        3,243
                      105,503
                        3,561
                        8,500
                        1.994
                        9,015
                      175,999
                        1,266
                        1,069
                       50,000
                        6,989
                       44,541
                        6,231
                        4,707

                       27,490
                      100,000 21
                                     40

-------
 9        Sacramento River
 9        Satala Power Plant
 9        South Half Moon Bay
 9        Tafuna Power Plant
 9        Tuba City Acid Tank
 9        Unknown Chemical Drums
 9        Uasho Drum

 9        Total Sites - 28

10        Abandoned Drum
10        Municipal Landfill
10        Ohlson Mountain PCB
10        PCB Contamination
10        Spokane Drum Fire

          Total Sites - 5

          Total Completions - 182
COMPLETION
   DATE

2/16/1983
7/18/1984
8/14/1985
7/19/1984
9/10/1982
5/11/1983
8/28/1985
 3/9/1984
5/20/1982
8/23/1985
6/17/1983
6/21/1985
                                                              EXHIBIT B
                                                              Page 6 of 6
   TOTAL
OBLIGATIONS

   $  2,363
     20,214
     20,000
     40,276
     34,140
      1,394
      2.500
   $710,046'
   $  1,058
      6,181
    101,399
      8,571
      3.000
   $120,209"
 $6,130,209
  333333333
If  Financial  Management Division's records shows an obligation through
    September 1985 of $675.

2J  OWPE states that these sites are targeted for action 1n the SCAP.
                                    41

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                                             EXHIBIT C
  COMPLETED NON-NATIONAL PRIORITY LIST REMOVAL SITES
         WITH CLEANUP COSTS BETWEEN $200TOOO
AND UNDER $500.000 IN VALUE THAT -MAY NOT BE RECOVERED
            Total Number of           Total Obligations
            Completed Removal         of Removal Sites
            Sites Between                  Between
            $200,000 - $500,000       $200,000 - $500,000
Region
1
2
3
4
5
6
7
8
9
10
Totals
as of 09/30/85
1
1
5
4
3
2
1
2
0
0
as of 09/30/85
$ 400,112
293,332
1,648,633
1,108,000
970,907
460,878
442,140
437,000
0
0
$5,761,002
                          42

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.p-
U)


SCHEDULE
THERE IS
OF SUPERFUND SITES THAT
EXHIBIT D
Page 1 of 2

A BANKRUPTCY CASE AGAINST
POTENTIAL RESPONSIBLE PARTIES

Reg1 on
1
2
2
3
3
3
4
5
5
5
5
5
5

Case/Site Nane
Johns Manvllle, NH
Syncon Resins, Inc.
Combe Fill
Landfills, NJ
North
South
Bruin Lagoon, PA
Drake Chemical , PA
L.A. Clarke A Sons
American Creosote, FL
A&F Materials, IL
Electric Utilities
Corp, IL
Isantl Solvent, MN
Liquid Disposal, MI
Long, T.P. OH
Peerless Plating, MI

Total EPA Claim
Against Bankruptcy
Responsible Party
$1,100,000
1,867,596
228,530
88,879
1,222,446
1,200,000
65,492
7,000,000
100,000
176,575
777,727
321,505
37,859
139,339
(Note 1)
Date of
Bankruptcy
8/26/82
10/19/81
11/13/81
02/08/77
00/00/81
03/11/83
05/21/82
Not Known
09/19/83
07/00/83
04/00/82
05/29/81
08/22/83

Date of
Claim
11/30/84
03/21/83
01/22/86
12/09/83
12/20/83
11/02/84
07/22/82
06/00/83
10/19/84
09/13/83
01/13/83
07/29/83
01/01/85

Total CERCLA
Funds Spent
Through
Sept. 30, 1985
$1,100,000
2,809,732
228,530
88,879
3,578,356
1,630,341
Not Known
1,261,724
586,694
1,000,000
995,000
2,777,247
37,859
147,650

Total Funds
Awarded Notes
$ -0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
-0-
37,859 Note 2
-0-

-------
5       Thomas Solvent, MI
5       Crystal Chemical, TX
6       Hardage Disposal Site
6       Metcoa, TX   '
6       Triangle Chemical. TX
7       Aidex Corp, IA
7       Charter, MO
9       Metate Asbestos

4,335,006
814,879
979,550
332,669
148,653
12,000
34,000,000
2,297,000
$57,245,705

04/06/84
09/24/81
01/28/85
Not Known
06/00/81
02/05/79
04/20/84
02/25/83


08/21/84
07/15/82
06/03/85
01/24/84
09/23/82
06/22/81
11/18/84
08/10/83

EXHIBIT D
Page 2 of 2
3,477,195
1,548,152
Not Known
336,798
332,669
2,214,015
34,000,000
7,000,000
$65,150,841
= = = = = = :— = — —
                                                                                             -0-
                                                                                             -0-
                                                                                             -0-
                                                                                             -0-
                                                                                             -0-
                                                                                           10,000  Note 3
                                                                                             -0-
                                                                                             -0-
                                                                                          $47,859  Note 4
Total Sites
       22
Notes
Note 1
Note 2
Note 3
Note 4
The above information is a result of OECM's generated data.  The column  "Total  CERCLA
Funds Spent Through September 30, 1985" does not represent the actual  expenditures  as  of
September 30, 1985.  They may represent estimates, funds expended through  the date  of
claim, and approximate amounts through this period.  The current FMS does  not show  all
site specific costs.  Thus, it is difficult to obtain the exact expenditures per  site.  To
obtain such amounts it would require Agency personnel to go to many different
sources.
EPA received $14,198 as payment for this case.
EPA received $12,967 as payment for this case.
EPA received $27,165 as payment for this amount.

-------
                                         NEGOTIATIONS AS OF SEPTEMBER 30, 1985
                                                        (Note 1)
                                                                                                EXHIBIT E
                                                                                                Page 1 of 11
     REG
    NAME OF SITE
Ui
Beacon Heights Landfill
Laurel Park. Inc.
Charles George
Grovel and Mel Is 1 & 2
Hocomonco Pond
Norwood PCB/Grant Gear
Plymouth Harbor
Resolve Inc
Salem Acres
Silreslm Chemical
HcK1n Co.
O'Connor Site
Ulnthrop Town Landfill
Coakley Landfill
Exxon
Flmble Door
Gonlc (Two Drum Sites)
Keefe Environmental Services (KES)
Rodgers Mobile Home
Savage
Central Landfill
Landfill & Resource Recovery
Peterson/Puritan Inc
Pldllo Farm
Stamina Mills
Western Sand and Gravel
 QUARTER
INITIATED

3rd Qtr 85
3rd Qtr 84
3rd Qtr 85
2nd Qtr 85
3rd Qtr 85
3rd Qtr 85
1st Qtr 85
3rd Qtr 85
2nd Qtr 85
3rd Qtr 84
2nd Qtr 85
2nd Qtr 85
3rd Qtr 85
2nd Qtr 85
3rd Qtr 85
3rd Qtr 85
4th Qtr 84
Not Known
3rd Qtr 85
4th Qtr 85
2nd Qtr 85
3rd Qtr 84
Not Known
3rd Qtr 85
3rd Qtr 85
2nd Qtr 84
 QUARTER
COMPLETED
                                                                  3rd Qtr 85
4th Qtr 85
4th Qtr 85

4th Qtr 85
3rd Qtr 85
1st Qtr 86

1st Qtr 85
2nd Qtr 85
                                                                  1st  Qtr  85
                                                                  1st  Qtr  85
                                                                  4th  Qtr  85
 ESTIMATED LENGTH
   OF NEGOTIATION
THRU FY 86 2nd QTR.

    315 days
    360 days
    315 days
    405 days
    315 days
    31b days
    495 days
    315 days
    405 days
    450 days
    225 days
    405 days
     90 days
     90 days
    180 days
    315 days
     90 days
    Not Known
    315 days
    225 days
    405 days
    180 days
    Not Known
    315 days
    315 days
    540 days
OUTCOME
                                   Settlement
NOTES
Settlement
Settlement

Settlement    (2)
Fund Fin. Action
Unilateral Order

Fund Fin. Action
Cost Recovery
                                   Fund  Fin. Action
                                   Fund  Fin. Action
                                   Settlement
              (2)

-------
                                                                                            EXHIBIT  E
                                                                                            Page  2 of  11
REG
NAME OF SITE
     Abestos Dump
     Chemical Leaman Tank Lines, Inc.
     D'lmpeMo Property
     Fried Industries
     GENS
     GENS
     Johnson ft Towers
     Johnson ft Towers
     KIN-BUC Landfill
     King of Prussia
     Llparl Landfill
     LIpaM Landfill
     Lone Pine Landfill
     Lone P1ne Landfill
     N ft T Dellsa
     NKY Corporation
     Price Landfill
     Quanta Resources
     Quanta Resources
     Rlngwood Nines
     Scientific Chemical Processing (Carl)
     Scientific Chemical Processing (Carl)
     Scientific Chemical Processing (Newark)
     Syncon Resins
     Tabernacle Drum Dump
     Clothier Disposal
     Fulton Terminals
     G. N. Central Foundry
     Hudson River PCB's
 QUARTER
INITIATED

3rd Qtr 84
2nd Qtr 85
2nd Qtr 85
3rd Qtr 85
3rd Qtr 85
4th Qtr 85
2nd Qtr 85
2nd Qtr 85
1st Qtr 85
1st Qtr 84
3rd Qtr 84
2nd Qtr 85
1st Qtr 84
1st Qtr 85
3rd Qtr 85
4th Qtr 85
2nd Qtr 85
3rd Qtr 85
2nd Qtr 85
2nd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
2nd Qtr 84
2nd Qtr 85
2nd Qtr 85
2nd Qtr 84
1st Qtr 84
 QUARTER
COMPLETED

3rd Qtr 85
4th Qtr 85
3rd Qtr 85
                                                    3rd Qtr 85
                                                    3rd Qtr 85
                                                    1st Qtr 86
                                                    3rd Qtr 85

                                                    3rd Qtr 85

                                                    1st Qtr 86



                                                    2nd Qtr 85
                                                    3rd Qtr 85
                                                    3rd Qtr 85
 ESTIMATED LENGTH
  OF NEGOTIATION
THRU FY 86 2nd QTR.

    360 days
    180 days
     90 days
    315 days
    315 days
    225 days
    405 days
    405 days
    180 days
    540 days
    675 days
    405 days
   Not Known
    495 days
    315 days
     90 days
     90 days
    315 days
     90 days
    405 days
    180 days
    315 days
    315 days
    315 days
    360 days
    405 days
    405 days
    450 days
    540 days
OUTCOME

Settlement
Settlement
Not Known
                                                                                                            NOTES
                                                                                                    (2)
                                   Cost Recovery
                                   Settlement
                                   Fund  Fin. Action


                                   Settlement
                                   Settlement

                                   Settlement

                                   Settlement
                                                (4)
                                   Unilateral Action
                                   Settlement
                                   Fund Fin. Action

-------
                                                                                            EXHIBIT E
                                                                                            Page 3 of  11
REG
NAME OF SITE
     Olean Wellf1eld(McGraw-Ed1 son)
     Pollution Abatement Services (PAS)
     SAG Harbor/Nabisco
     Volney Landfill
     Wide Beach
     Fibers Public Supply Wells
     Frontera Creek
     Juncos Landfill
     Puerto R1co Chemical
     Upjohn Facility

     Dover AFB
     Harvey A Knott Drum
     Tybouts Corner Landfill
     Tybouts Corner Landfill
     Limestone Road
     Mid-Atlantic Wood Preservers
     Sand Gravel  A Stone
     United Rigging
     Ambler Asbestos Site
     Amchem Dloxln
     Domino Salvage Yard
     Drake Chemical
     Fischer & Porter
     Havertown PCP Site
     Henderson Road
     Lackawanna Refuse
     Lavelle Borehole
     Letterkenny Army Depot
     McaDoo Associates
     Mill Creek
 QUARTER
INITIATED

3rd Qtr 85
3rd Qtr 85
1st Qtr 85
2nd Qtr 85
3rd Qtr 85
4th Qtr 85
3rd Qtr 85
2nd Qtr 84
4th Qtr 84
1st Qtr 84

1st Qtr 85
3rd Qtr 85
4th Qtr 84
2nd Qtr 85
3rd Qtr 84
3rd Qtr 85
4th Qtr 84
3rd Qtr 85
1st Qtr 85
2nd Qtr 84
2nd Qtr 85
1st Qtr 85
1st Qtr 84
4th Qtr 84
3rd Qtr 85
4th Qtr 85
3rd Qtr 85
1st Qtr 85
3rd Qtr 84
3rd Qtr 84
 QUARTER
COMPLETED
                                                    3rd Qtr 85
                                                    1st Qtr 86
                                                    Not known
                                                    1st Qtr 85
                                                    1st Qtr 85

                                                    Not Known

                                                    2nd Qtr 86
                                                    4th Qtr 85
                                                    3rd Qtr 85
                                                    4th Qtr 85
                                                    4th Qtr 85
                                                    2nd Qtr 85
                                                    1st Qtr 85
                                                    1st Qtr 85
                                                    1st Qtr 86

                                                    1st Qtr 86
                                                    2nd Qtr 85
                                                    1st Qtr 85
 ESTIMATED LENGTH
  OF NEGOTIATION
THRU FY 86 2nd QTR.

    315 days
    315 days
    180 days
    405 days
    315 days
     90 days
    315 days
    270 days
    585 days
    855 days
                  315 days
                   90 days
                  405 days
                  675 days
                  315 days
                  540 days
                   90 days
                  180 days
                  540 days
                  180 days
                   90 days
                  360 days
                   90 days
                  180 days
                  225 days
                  180 days
                   90 days
                  180 days
                  675 days
                                                                                                OUTCOME
NOTES
                                   Fund  Fin. Action
                                                 (2)

                                   Settlement
                                   Fund  Fin. Action
                                   Settlement
                     Transferred  to RCRA(2)

                     Settlement

                     Fund  Fin. Action  (2)

                     Settlement
                     Settlement
                     Fund  Fin. Action  (3)
                     Settlement        (2)
                     Fund  Fin. Action
                     Not Known
                     Settlement
                     Unilateral Order
                     Settlement
                     Fund  Fin. Action
                     Fund  Fin. Action
                     Not Known
    (2)

-------
                                                                                               EXHIBIT  E
                                                                                               Page 4 of  11
   REG
    NAME OF SITE
00
Moyers Landfill
Palmerton 21nc
Swissvale Auto Parts
Taylor Borough Dump
Tyson's Dump
Tyson's Dump
United Metal Traders
Uestlnghouse 12
Avtex Fibers Site
Culpepper Wood Preservers
Defense General Supply FF
East Kane Tar Pits
Fort A. P. Hill
Hampton Cylinders (Moor-F1ta)
IBM Manassas Site
B1g John's Gullet Pile
Big John's Salvage-Holt Rd
Georges Creek
Helzer Creek
Manila Creek Dloxln
Mobay Chemical
Monsanto (Plant Road)
Monsanto Landfill
Monsanto Plant
N1tro Dump
Ordnance Works Disposal
Poca Mine
Smith Douglas
South Charleston
 QUARTER
INITIATED

3rd Qtr 85
4th Qtr 84
3rd Qtr 84
3rd Qtr 85
1st Qtr 85
4th Qtr 85
Not Known
4th Qtr 84
2nd Qtr 85
3rd Qtr 85
1st Qtr 85
4th Qtr 85
1st Qtr 85
1st Qtr 85
3rd Qtr 85
4th Qtr 84
2nd Qtr 85
1st Qtr 85
1st Qtr 85
1st Qtr 85
3rd Qtr 85
1st Qtr 84
1st Qtr 85
4th Qtr 84
1st Qtr 85
4th Qtr 84
1st Qtr 85
4th Qtr 85
1st Qtr 85
 QUARTER
COMPLETED
                                                                4th Qtr 85
                                                                2nd Qtr 85

                                                                2nd Qtr 85

                                                                1st Qtr 85
2nd Qtr 85
1st Qtr 86
4th Qtr 85
1st Qtr 85

4th Qtr 85
4th Qtr 85
4th Qtr 85

3rd Qtr 85
4th Qtr 85

4th Qtr 85
1st Qtr 85
4th Qtr 85

4th Qtr 85
 ESTIMATED LENGTH
   OF NEGOTIATION
THRU FY 86 2nd QTR.

    315 days
    360 days
    270 days
    315 days
     90 days
    225 days
   Not Known
    585 days
    405 days
    315 days
    495 days
    225 days
     90 days
    360 days
     90 days
     90 days
    405 days
    270 days
    270 days
    270 days
    315 days
    540 days
    270 days
    585 days
    270 days
     90 days
    270 days
    225 days
    270 days
                                                                                                   OUTCOME
                                                                                                       NOTES
                                   Settlement
                                   Settlement

                                   Not Known

                                   Settlement
Settlement
Settlement
C1v1l Action Ref.
Unilateral Order

Not Known
Settlement
Settlement

Settlement
Settlement

Settlement
Fund Fin. Action
Settlement     (1)

Not Known

-------
                                                                                                EXHIBIT  E
                                                                                                Page  5 of  11
    REG
     NAME OF SITE
SO
Perch do Groundwater Contamination
Sara)and Apartments
City Industries
Hlpps Road Landfill
Holllngsworth Solderless Terminal Co.
Miami Drum Services
NU 58th Street
P1ckettv1lle Road Landfill
Ze11wood Ground Water Contamination
Marzone/Chevron Co
Powersvllle
A1rco
Harrison City
Flowood
Gautler 011(Seaboard)
Chemtronlcs Inc
Dockery Property
Martin-Marletta/Sodyeco
Potter Pits
Independent Nail
Medley Farms
Palmetto Wood Preserving
Palmetto Wood Preserving
Galloway Pits

Acme Solvent Reclaiming
Alburn Incinerator/HAAS
Crab Orchard/Sangamo Dump
Cross Brothers
Environmental Dynamics
KERR-MCGEE
 QUARTER
INITIATED

1st Qtr 85
3rd Qtr 85
4th Qtr 85
2nd Qtr 85
4th Qtr 85
2nd Qtr 85
2nd Qtr 85
4th Qtr 85
3rd Qtr 84
1st Qtr 85
1st Qtr 85
1st Qtr 85
4th Qtr 85
3rd Qtr 85
2nd Qtr 85
3rd Qtr 85
4th Qtr 85
3rd Qtr 84
4th Qtr 85
4th Qtr 85
4th Qtr 85
4th Qtr 85
2nd Qtr 85
4th Qtr 85

3rd Qtr 85
3rd Qtr 85
4th Qtr 84
2nd Qtr 85
2nd Qtr 84
3rd Qtr 84
 QUARTER
COMPLETED

1st Qtr 86
4th Qtr 85
2nd Qtr 85
3rd Qtr 85
1st Qtr 86
1st Qtr 86

2nd Qtr 86
3rd Qtr 85
4th Qtr 85
                                                                 3rd  Qtr  85
                                                                 2nd Qtr 86
                                                                 2nd Qtr 86
                                                                 3rd Qtr 85
                                                                 2nd Qtr 85
 ESTIMATED LENGTH
  OF NEGOTIATION
THRU FY 86 2nd QTR,

    360 days
     90 days
    225 days
    405 days
    225 days
    405 days
    405 days
    225 days
    270 days
    180 days
    360 days
    360 days
    225 days
    270 days
     90 days
     90 days
    225 days
    675 days
    225 days
    225 days
    225 days
    225 days
     90 days
    225 days

    315 days
    270 days
    540 days
     90 days
    360 days
    675 days
                                                                                                    OUTCOME

                                                                                                    Settlement
                                                                                                    Settlement
             NOTES
Fund F1n. Action
Settlement
Fund Fin. Action
Settlement

Settlement
Settlement
Settlement
                                   Not Known
                                   Unilateral
                                                                                                              Order
                                   Civil  Action Ref.
                                   Settlement
                                   Fund F1n.  Action
                                   Settlement    (2)

-------
                                                                                                EXHIBIT E
                                                                                                Page 6 of  11
    REG
    NAME OF SITE
in
O
KERR-MCGEE
KERR-MCGEE (Kress Creek/West Branch)
KERR-MCGEE(Reed-Keppler)
KERR-MCGEE(Residential Areas)
KERR-MCGEE(Sewage Treatment Plant Site)
NL IndustMes/Taracorp Lead Smelter
Pagel's Pit
Rlverdale Chemical Co
Sheffield (U. S. Ecology)
Velslcol Chemical Corp
Wauconda Sand A Gravel
American Chemical Service
Bennett Stone Quarry
D1mar Corp
Env1ro-Chem
F1sher-Calo
Fort Wayne Reduction Dump
Lemon Lane Landfill
Main Street Well Field
Main Street Well Field
Midco I
Midco I
Midco II
Midco II
Meal's Dump
Meal's Landfill
Seymour Recycling
Wayne Waste 011
Wedzeb Enterprises
Westlnghouse Sites
American Steel Works
Berlin & Farro
Berlin & Farro
Burrows Sanitation
QUARTER
INITIATED
1st Qtr 84
Not Known
Not Known
Not Known
Not Known
1st Qtr 85
4th Qtr 85
4th Qtr 84
2nd Qtr 85
1st Qtr 85
4th Qtr 84
3rd Qtr 85
Not Known
3rd Qtr 85
3rd Qtr 84
3rd Qtr 85
3rd Qtr 85
Not Known
3rd Qtr 85
3rd Qtr 85
1st Qtr 84
2nd Qtr 85
1st Qtr 85
2nd Qtr 85
Not Known
Not Known
1st Qtr 84
4th Qtr 85
2nd Qtr 84
1st Qtr 84
4th Qtr 85
1st Qtr 84
3rd Qtr 85
3rd Qtr 85
QUARTER
COMPLETED

4th Qtr 85
4th Qtr 85
4th Qtr 85
4th Qtr 85
3rd Qtr 85
1st Qtr 86
2nd Qtr 85
4th Qtr 85
4th Qtr 85

1st Qtr 86
3rd Qtr 85
4th Qtr 85
1st Qtr 86
1st Qtr 86
4th Qtr 85
3rd Qtr 85
4th Qtr 85
4th Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85

1st Qtr 86
1st Qtr 86
3rd Qtr 85
Not Known

2nd Qtr 86
4th Qtr 85
 ESTIMATED LENGTH
   OF NEGOTIATION
THRU FY 86 2nd QTR.

    855 days
   Not Known
   Not Known
   Not Known
   Not Known
    180 days
     90 days
    180 days
    180 days
    270 days
    585 days
    180 days
    Not Known
     90 days
    540 days
    180 days
     90 days
   Not Known
     90 days
     90 days
    540 days
     90 days
    180 days
     90 days
    Not Known
    Not Known
    855 days
     90 days
    630 days
    540 days
    Not Known
    855 days
    225 days
     90 days
OUTCOME
                                                                                                                NOTES
Fund F1n. Action
Fund F1n. Action
Fund F1n. Action
Fund F1n. Action
Settlement
Not Known
Settlement ,
Settlement     (2)
Fund F1n. Action

Not Known
Settlement
Settlement
Not Known
Not Known
Fund Fin. Action
Settlement
Settlement
Settlement
Settlement
Settlement
Settlement
Settlement
Settlement
Settlement

Not Known
Unilateral
Settlement
Settlement

Settlement
Fund Fin. Action

-------
                                                                                            EXHIBIT E
                                                                                            Page  7 of  11
REG
NAME OF SITE
     Dow Chemical Co (Midland)
     Ionia City Landfill
     K. L. Avenue Landfill
     K. L. Avenue Landfill
     Kareckas Farm
     Kentwood Landfill
     Hason County Landfill
     NES Co/Joe Wilds
     Metamora Landfill
     OTT/Story/Cordova Chemical
     Packaging Corp of America
     Tar Lake
     U. S. Avlex '
     Whitehall Municipal Wells
     Burlington Northern
     FMC-Northern Ordinance
     Isantl
     Joslyn Manufacturing A Supply
     New Brighton/Arden Hills
     NL/Taracorp
     Rellly Tar & Chemical Corp
     South Andover(Andover Sites)
     South Andover(Andover Sites)
     St. Louis River
     University of Minnesota
     Whlttaker Corp
     American Steel Drum
     Arcanum Iron & Metal
 QUARTER
INITIATED

3rd Qtr 84
3rd Qtr 85
3rd Qtr 85
4th Qtr 85
1st Qtr 85
3rd Qtr 85
4th Qtr 85
2nd Qtr 85
3rd Qtr 85
1st Qtr 84
2nd Qtr 84
3rd Qtr 84
3rd Qtr 85
3rd Qtr 84
1st Qtr 84
2nd Qtr 85
2nd Qtr 85
1st Qtr 84
2nd Qtr 84
4th Qtr 84
1st Qtr 84
2nd Qtr 85
4th Qtr 85
2nd Qtr 85
3rd Qtr 85
2nd Qtr 85
1st Qtr 85
4th Qtr 85
 QUARTER
COMPLETED

2nd Qtr 85
4th Qtr 85
1st Qtr 86
2nd Qtr 86
2nd Qtr 85
1st Qtr 86
1st Qtr 86
3rd Qtr 85
4th Qtr 85
2nd Qtr 86
2nd Qtr 85
1st Qtr 86
4th Qtr 85
3rd Qtr 85
2nd Qtr 85
1st Qtr 86
1st Qtr 86
Not Known

2nd Qtr 85
3rd Qtr 85
4th Qtr 85

2nd Qtr 86
                                                    2nd  Qtr 85
                                                    1st  Qtr 86
 ESTIMATED LENGTH
   OF NEGOTIATION
THRU FY 86 2nd QTR.

      270 days
       90 days
      180 days
      180 days
       90 days
      180 days
       90 days
       90 days
       90 days
      810 days
      360 days
      540 days
       90 days
      360 days
      450 days
      270 days
      270 days
      Not Known
      720 days
      180 days
      540 days
      180 days
      225 days
      360 days
      315 days
      405 days
       90 days
       90 days
                                                                                               OUTCOME
NOTES
                                                                                      Settlement
                                                                                      Settlement
                                                                                      Not Known
                                                                                      Fund Fin. Act1on(2)(3)
                                                                                      Settlement
                                                                                      Not Known
                                                                                      Not Known
                                                                                      Settlement
                                                                                      Fund F1n. Action (2)
                                                                                      Fund F1n. Action
                                                                                      Settlement
                                                                                      Not Known
                                                                                      Settlement
                                                                                      Settlement
                                                                                      Settlement
                                                                                      Not Known
                                                                                                       (4)
                                                                                     Transferred to State(2)

                                                                                      Settlement
                                                                                      Settlement
                                                                                      Fund Fin. Action
                                                                                      Fund Fin. Action
                                   Unilateral  Order
                                   Not  Known
                                                                                                       (2)

-------
                                                                                                EXHIBIT E
                                                                                                Page 8 of 11
    REG
    NAME OF SITE
Oi
K)
Cecil Undsey
Mid-South
Bayou Bonfouca
Bayou Sorrel 1
C1tgo
Cleve Reber
Cleve Reber
Homestake Mining
Lee Acres(DOI)
South Valley
South Valley
Hardage/Crlner
Okemah Drum Site
Bailey Waste Disposal
Bio-Ecology Systems
Brio Refinery
Brio Refinery
Crystal Chemical
Crystal City
Dixie 011 Processors
French Limited
Harris-Farley Street
Hastings Radio Chemical
H111 Sand Co
Industrial Transformers
Koppers
Motco
Motco
Odessa Chromium I
Odessa Chromium II
Petrochemical System
Sheridan Disposal
South Cavalcade
 QUARTER
INITIATED

4th Qtr 85
4th Qtr 85
3rd Qtr 85
2nd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
1st Qtr 84
3rd Qtr 84
2nd Qtr 85
3rd Qtr 85
2nd Qtr 85
1st Qtr 84
1st Qtr 85
1st Qtr 85
4th Qtr 84
3rd Qtr 85
4th Qtr 85
1st Qtr 85
3rd Qtr 84
4th Qtr 85
1st Qtr 85
3rd Qtr 85
1st Qtr 85
4th Qtr 84
4th Qtr 84
1st Qtr 85
1st Qtr 85
1st Qtr 85
3rd Qtr 85
1st Qtr 85
 QUARTER
COMPLETED

1st Qtr 86

4th Qtr 85

4th Qtr 85
1st Qtr 86
4th Qtr 85

4th Qtr 85
1st Qtr 85
2nd Qtr 85

4th Qtr 85
3rd Qtr 85
2nd Qtr 85
3rd Qtr 85
2nd Qtr 85

4th Qtr 85

3rd Qtr 85
4th Qtr 85
                                                                 4th Qtr 85
                                                                 2nd Qtr 85
                                                                 2nd Qtr 85
                                                                 2nd Qtr 85
                                                                 3rd Qtr 85
                                                                 3rd Qtr 85
                                                                 2nd Qtr 85

                                                                 2nd Qtr 85
 ESTIMATED LENGTH
   OF NEGOTIATION
THRU FY 86 2nd QTR.

       90 days
      225 days
       90 days
      405 days
       90 days
      180 days
       90 days
      315 days
       90 days
      360 days
      270 days
      405 days
       90 days
       90 days
      450 days
      180 days
       90 days
      585 days
       90 days
      225 days
      180 days
      450 days
      225 days
      495 days
       90 days
       90 days
      180 days
      180 days
      180 days
      180 days
       90 days
      315 days
       90 days
OUTCOME
                                                                                                                NOTES
Not Known

Fund F1n. Action

Settlement
Not Known
Not Known

No Action
Settlement
Fund F1n. Action

Settlement
Fund Fin. Action
Fund F1n. Action
Settlement
Settlement

Fund Fin. Action

Settlement
Settlement
                                   Fund Fin.  Action
                                   Settlement
                                   Fund Fin.  Action
                                   Civil  Action  Ref.
                                   Fund Fin.  Action
                                   Fund Fin.  Action
                                   Fund Fin.  Action

                                   Settlement

-------
                                                                                                EXHIBIT E
                                                                                                Page 9 of 11
     REG
    NAME OF SITE
Cn
      8
A1dex
Chemplex
Nason City Coal
Cherokee County
Cortland Container
John's Sludge Pond
Elliot Shooting Park
Flndett
FulbMght Landfill
Riverfront Landfill
Riverfront Landfill
St. Joseph Landfill
Union Carbide Agricultural  Prod.
Environmental Services Inc
Hastings G. W. Contamination

Anaconda Smelter
Anaconda(Mill Creek)
Burlington Northern RR
California Gulch
Denver Radium
Denver Toluene
Hill AFB
Koppers Co
Martin Marietta/Denver Aerospace
HIcronutHents International
Ogden Defense Depot
PDC Spas
Sharon Steel/M1dvale Smelter
Smuggler Mt.
Tooele Army Depot
Wasash Chem
 QUARTER
INITIATED

2nd Qtr 84
1st Qtr 85
4th Qtr 85
4th Qtr 85
3rd Qtr 84
1st Qtr 84
4th Qtr 85
2nd Qtr 85
3rd Qtr 85
2nd Qtr 85
3rd Qtr 85
4th Qtr 85
4th Qtr 85
4th Qtr 84
4th Qtr 85

3rd Qtr 84
4th Qtr 85
1st Qtr 85
4th Qtr 85
2nd Qtr 85
4th Qtr 85
3rd Qtr 85
1st Qtr 85
3rd Qtr 85
4th Qtr 85
3rd Qtr 85
1st Qtr 85
2nd Qtr 85
2nd Qtr 85
3rd Qtr 85
4th Qtr 85
 QUARTER
COMPLETED

Not Known
2nd Qtr 85
                                                                  1st  Qtr  85

                                                                  1st  Qtr  86
                                                                                ESTIMATED LENGTH
                                                                                  OF NEGOTIATION
1st Qtr 85
1st Qtr 86
1st Qtr 86

4th Qtr 85
1st Qtr 86
2nd Qtr 86

2nd Qtr 86
2nd Qtr 86

2nd Qtr 85
3rd Qtr 85
4th Qtr 85
THRU FY 86 2nd QTR.
Not Known
90 days
225 days
22b days
180 days
855 days
90 days
405 days
315 days
405 days
315 days
225 days
225 days
585 days
225 days
180 days
90 days
360 days
225 days
180 days
90 days
270 days
495 days
270 days
180 days
315 days
90 days
90 days
180 days
315 days
225 days
OUTCOME NOTES
(4)
Not Known


Unilateral Order

Settlement
i

(2)
(3)
fc



Settlement
Settlement
Settlement

Fund Fin. Action
Unilateral Order
Settlement

Settlement
Settlement

Unilateral Order
Fund Fin. Action
Settlement



-------
                                                                                                EXHIBIT E
                                                                                                Page 10 of 11
    REG
        NAME OF SITE
        NAME OF SITE
    10
in
NOTES
«•••«••

(1)
    Indian Bend Wash Area
    L1tchf1eld Airport Area
    Aerojet General
    Del Norte City Pesticide Storage Area
    Falrchlld Camera A Instrument Mt. View
    Intel Mt. View
    Montrose Chemical
    NEC Electronics
    Norwalk Dump
    Raytheon
    Slltec Corp

    Bunker H111
    Bonnevllle Power Adm
    Gould Inc
    Martin Marietta Aluminum
    Commencement Bay, S. Tacoma (12A)
    Commencement Bay/Tacoma Tar Pits
    Northslde Landfill
    Queen City Farms Inc
    Strandley
    Western Processing Co
    Williams & Son
 QUARTER
INITIATED

3rd Qtr 84
3rd Qtr 84
4th Qtr 84
4th Qtr 85
3rd Qtr 85
3rd Qtr 65
2nd Qtr 84
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85
3rd Qtr 85

2nd Qtr 85
1st Qtr 85
2nd Qtr 85
2nd Qtr 85
3rd Qtr 84
3rd Qtr 84
Not Known
4th Qtr 85
1st Qtr 85
3rd Qtr 85
2nd Qtr 85
 QUARTER
COMPLETED

2nd Qtr 85
2nd Qtr 85
2nd Qtr 86

4th Qtr 85
4th Qtr 85
2nd Qtr 85
4th Qtr 85
4th Qtr 85
4th Qtr 85
4th Qtr 85
2nd Qtr 85
4th Qtr 85
4th Qtr 85
1st Qtr 85
1st Qtr 85
1st Qtr 85
1st Qtr 86
3rd Qtr 85

4th Qtr 85
 ESTIMATED LENGTH
   OF NEGOTIATION
THRU FY 86 2nd QTR.

      270 days
      270 days
      540 days
      225 days
       90 days
       90 days
      360 days
       90 days
       90 days
       90 days
       90 days

      405 days
       90 days
      180 days
      180 days
      180 days
      180 days
      Not Known
       90 days
      180 days
      315 days
      180 days
OUTCOME
                                                                                                                 NOTES
                                                                                                    Settlement
                                                                                                    Unilateral Ord
                                                                                                    Settlement

                                                                                                    Settlement
                                                                                                    Settlement
                                                                                                    Fund F1n.  Action
                                                                                                    Settlement ,
                                                                                                    Civil  Action Ref.
                                                                                                    Settlement
                                                                                                    Settlement
Settlement
Settlement
Settlement
Settlement
Settlement
Fund Fin. Action
Settlement
Settlement

Settlement
The Information above was generated from OWPE's SCAP report on negotiations  dated  10/25/85  and
5/16/86.  These negotiations were ongoing prior to FY 85, Initiated 1n FY  85, completed  1n  FY 86
(2nd quarter), or FY 85 negotiations ongoing thru FY 86 (2nd quarter).  The  estimated  length of
negotiation was obtained by giving a value of 90 days for each full  quarter  and  giving a value
of 45 days for each Initiated and completed quarter.

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                                                                                                EXHIBIT  E
                                                                                                Page 11  of  11


(2) The Information was not shown on the FY 86 SCAP report as being transferred; thus we were unable to  determine
    the status of negotiations.  We requested the Information from the Office of Waste Program Enforcement, Compliance
    Branch (OWPE - CB) and they provided us with Information on a quarter completed basis,  status(ongo1ng/transferred)
    and Initiated date If needed.  We  did not put 1n this chart negotiations which were 1n the FY 85 SCAP  report,
    but were told that they were completed In FY84 in the review by the above mentioned office.  We also did not
    Include Information on two sites which we were told were Federal facilities and should  not be Included  in SCAP.

(3) The dates were changed since they were apparent mistakes and OWPE corrected them.

(4) The outcome was found as a bankrupt case (See Exhibit D).
01
01

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                                                         APPENDIX 1
                                                         Page 1 of 5
            UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                         WASHINGTON, D.C. 20460
                                              A
S8»IOB86                           e/>->3'
                                                                OFFICE OF
                                                     SOLID WASTE AND EMERGENCY RESPONSE
MEMORANDUM


SUBJECT:  Draft Consolidated Report  on EPA's Cost  Recovery
          wtions Agalns>t Potential  Responsible  Parties

   FROM:  JVWiWitoh Pawh
          Assistant Adminli

     TO:  Ernest E. Bradley III
          Assistant Inspector General for Audit


     Thank you for the opportunity to respond  to the subject  audit  report.
We are concerned that the findings as they are presented in the  report  do not
reflect the total acope  of  the enforcement program.  The enforcement program
has  three basic strategies.  First, we negotiate with the responsible party
or parties  to undertake  the cleanup  or to pay EPA upfront for the coats of
the  cleanup (cashout).   If  the negotiations fail, EPA then has two remaining
choices:  Either  to  take the responsible party  to court  to compel a cleanup
 action  or to  uae  the Fund and subsequently to recover the costs of cleanup
 from the responsible party.  We  feel that it  would provide balance  to  the S*e APPendix -
 report  to Include the number of  settlements we  have achieved that  require
 responsible parties to clean up  the alte. As on September 30,  1985, we had
 settlements worth approximately  $477 million  In cleanup, 175 cases filed
 worth $306 million in cleanup, and $137 million filed for cost  recovery.

      Another concern we have about the report is the cost recovery ratio  of
 1.1 percent  of Trust Fund  expenditures.  We feel that  this  is a very poor
 characterization  of our coat recovery program  for a number  of reasons.  First,
  the analysis compares total funds  obligated  with total cash received  through  See
  cost recovery as of September 30,  1985.  Using the total funds obligated  is   Appendix 2
  not indicative of the site work that is completed, the time it takes to      Note 2
  prepare a caae once work is complete, and the existence of a viable responsible
  party at those aites where work has been done.  Additionally, the scope of
  your audit  was limited to removals, yet your  analysis takes into consideration
  all Superfund costs.   Finally,  all Superfund  costs are not cost  recoverable.
  For instance, it is Agency policy  not  to recover research  and development
  coats.
                                       56

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                                                          APPENDIX 1
                                                          Page 2 of 5
     A better characterization would be to compare  the  amount  of  funds
expended at a completed site that has a viable responsible party, to the
amount of cost recovery achieved through cases filed and cases in negotiation.
It should be mentioned that in FY. 1986, we expect to double the amount of
cost recovery that we achieved in. the first five year of the fund.

     Our next concern is your statement on page 10 that,."potentially over
$60 million will be lost to the fund In the next 20 years if cost recov- See Appendix 2
eries for removal actions under $200,000 continue to be ignored."  Although Note 3
$60 million may not be recovered over the next 20 years, it will not be due
to Ignoring cases under $200K.  It will be due to not having a viable
responsible party.

      The next  concern is  your statement about "the  Congressional goal  of
establishing a self-sustaining Fund to clean  up  the hazardous waste sites".
The  Congressional goal is to clean up the nation's  worst hazardous waste
sites.   Since we  estimate that more than  half of the sites are abandoned and
have no viable responsible party against  which to  cost recover,  your inter- See
 pretation  of the  Congressional goal would not appear to be reasonable.  A   Appendix 2
 more accurate statement would be to say that it is Important that EPA maintain Note  4
 an aggressive cost recovery program because EPA will be able to clean up
 additional sites with the recovered funds.   It is also Important to note
 that Congress must appropriate these dollars to EPA, before  they can be
 used.

      Our final concern is related  to  the  199 sites  under $200,000,  that  are
 not being pursued by  EPA.   In  reviewing the  sites  listed In  exhibit A,  we   See
 have determined  that  almost  50 percent of the sites are  under $10,000.   In  Appendix  2
 weighing our  staffing resources against  the  amount  of  recoverable  dollars,  Note 5
 cases under $10,000 represent  a low  priority.

      Before addressing each  of your  specific recommendations, we want  to
 point out that the new Superfund  bill will bring some  changes.   Over  the next
  several months,  we will  be  reviewing  our  existing  policies and  procedures and
  will be revising them to incorporate the new provisions.  During this process,
  we  will also take your recommendations into consideration In updating our
  policies  and procedures.
                   .•
  QIC RecnmmOTrtation'- Small Case Policies

       1.  Require that minimal coat recovery actions (e.g., notification,
           desttnd  letters) be pursued for sites where funds expended are
           under $200,000.  Also, Headquarters should weigh the costs to
           be incurred for litigation versus the costs to be recovered,
           before  pursuing s cost recovery action.

       2.  Develop and issue specific policies, procedures, and negotiating
           strategies for settling cases under $200,000 ($500,000) to the
           Regions to ensure a consistent Agency approach.
                                     57

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                                                          APPENDIX 1
                                                          Page 3 of 5
     3.  Examine the possibility of using an arbitration board or
         some similar mechanism as an alternative to filing cost
         recovery actions in court*

     4.  Pursue the possibility of giving cost recovery actions under
         $200,000 to outside attorneys on a contingency basis for
         fees.

OSWER Response

         Under the new Superfund, cases under $500,000 now can be
         handled through admnlstratlve means.  We will be reviewing
         existing policies and requirements of the new law, and we
         take into consideration your recommendations.  The new Super-
         fund bill expressly allows for alternative dispute resolution
         procedures.  Since the new law gives us administrative author-
         ity to pursue cost recovery actions under $500,000, it should
         not be necessary to use outside attorneys.

PIG Recommendation - Bankruptcy Cases

     1.  Use more explicit language in the demand letter identifying
         EPA as an "official creditor," thus no Interpretation of the
         demand letter will be required by the PRP.

     2.  Establish procedures on how to take the necessary actlon(s) to
         establish EPA's priority claim in relation to other creditors.

     3.  Coordinate with the Office of General Counsel on developing
         new procedures and a system that will permit EPA to take
         timely action, once it is notified of a PRP's bankruptcy filing.

     4.  Coordinate with OECM to try to balance Agency actions against
         both financially viable and nonviable PRPs, especially  in light of
         the courts''recent leaning towards giving governmental  units first
         priority on hazardous waste cases  after secured creditors.

OSWER Responam

         We will consider revising our demand  letters  to Include the
         appropriate "official creditor"  language.

         The Bankruptcy Guidance issued by  OECM will  be reviewed and
         revised as appropriate In light  of  the suggestions made re-
         garding timeliness of actions and  procedures  for  establishing
         EPA's claims.
                                     58

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                                                         APPENDIX 1
                                                         Page 4 of 5
QIC Recommendation - Negotiation Policy

     1.  Re-evaluate the Agency's present policy and procedures  to
         ensure that tioefraoes .set for negotiations are  reasonable.
         Also, timeframes should not be exceeded unless it can be
         documented in the files that significant progress is being
         made.

     2.  Require that specific steps in the negotiation and settlement
         process are planned, scheduled, and initiated in a systematic
         and orderly manner in order to minimize delays in the settle-
         ment process.

     3.  Require Agency negotiators to notify responsible parties that
         the negotiations must be concluded within the Agency's estab-
         lished timefn
     4.  Require the Regional offices to maintain Information on the
         length of negotiations and whether this conforms to the goal
         established by EPA.

OSWER Comments

         We will re-evaluate our present policy and procedures and
         timeframes for negotiations under the new law, and take your
         recommendations into consideration.

QIC Recommendation - Statute of Limitation (SOL)

     1.  Proceed under the more conservative tort law tlmeframe (three
         years after completion of a removal) until such time as the
         issue is resolved by Congress or the Courts.

     2.  Include and track the SOL date In the comprehensive listing
         of all removal actions.

     3.  For those sites where the SOL is about to expire, take immediate
         action to initiate negotiations or referrals to DOJ.

OSWER  Response-

         The new Superfund bill directly addresses the  issue of the
         statute of limitations.

         OSWER has initiated work on s tracking system  that will  Identify
         all removal actions and pinpoint significant enforcement-related
         dates, including statute of limitations  dates.

         OSWER and OECM have already asked  the Regions  to  review  the  universe
         of removal actions for purposes of potential cost recovery actions.
                                     59

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                                                           APPENDIX 1
                                                           Page 5  of 5
         Current guidance ("Timing of CERCLA Cose Recovery Actions")
         requires that CERCLA actions be initiated in a manner that
         ensures compliance with any applicable statute of limitations
         and also ensures that the evidence does not become stale.

     We appreciate the opportunity to comment on the draft consolidated audit
report.  If you have any questions regarding our comments, please call Brad
Campbell on 382-4478.


cc:  Jack McGraw
     Gene Lucero
     Brad Campbell
                                       60

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                                                    APPENDIX  2
                                                    Page  1  of 3
                    ADDITIONAL 01G COMMENTS  TO  OSWER'S
                    RESPONSE DATED SEPTEMBER 10,  l98T"
The following notes present the OIG's  response  to  OSWER1s  comments which
were not addressed in the body of the  report:
Notes
         OSWER presented some dollar  figures  on  settlements  achieved with
         responsible parties (RPs).   After receiving  this  response, we
         requested further clarification  of these  figures  from OSWER.
         OSWER indicated that:  (1) the $477  million  was money received
         from RPs to actually clean up  the sites and  was not part of the
         $1.3 million Trust Fund obligations; (2)  $225  million of the
         $306 million was also included in the $477 million  figure
         mentioned above; and (3) the remaining  $81 million  of $306
         million represents the value of  cleanups  EPA is pursuing through
         the court system.  None of the above figures were part  of the
         $1.3 billion Trust Fund obligations. In  addition,  the  $137
         million is money that EPA is trying  to  recover by requesting
         the Department  of Justice to file for cost recovery. The $137
         million is a part of the $1.3  billion Trust  Fund  obligations.

         We-believe that the 1.1 percent  cost recovery  ratio is  not a
         poor characterization since  1t shows the  actual percentage of
         total  funds the Trust Fund received  through  cost  recovery.
         We are pointing out that $14 million, or  1.1 percent, of the
         $1.3 billion obligated from  the  Trust Fund for cost recovery
         efforts as of September 30,  1985 have been returned to  the Trust
         Fund by collections from responsible parties.  Obligations are
         mainly a combination of two  Important accounting  transactions:
         (1)  disbursed amounts and (2)  estimates of future expenditures
         that may occur.  Thus, obligations represent the  expenditures
         and  best estimate of expenditures the fund has or intends to
         incur.  While it would be unrealistic to  expect EPA to  recover
         all  Trust Fund  expenditures, the Agency needs  to  be more aggressive
         in pursuing Its cost recovery  actions.

         We agree that cost recovery  actions  are resource  intensive and
         may  not always  be practical.  However,  we are  concerned that
         the  current practice of selective enforcement  may deplete the
         Trust  Fund and  exempt numerous responsible parties  from financial
         liability for cleanup costs.  All  funds recovered,  regardless
         of the amount are considered Important  since they replenish the   '
         Trust  Fund and  may be utilized for future cleanups.

         In addition, the scope of our  audit  was not  limited to  just
         removals.  Three of the findings consisted of  remedial  as well
         as removal  actions.
                                    61

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                                                   APPENDIX 2
                                                   Page 2 of 3
Notes
         We believe that  the Agency  needs to  strengthen  its methods in
         pursuing cases  under $200,000.   In his  response, the Assistant
         Administrator for Solid  Waste and Emergency  Response commented,
         "Although $60 million may not be recovered over the next  20
         years, it will  not be due to ignoring cases  under $200,000.  It
         will  be due to not having a viable responsible  party."  The
         Agency stated that it uses  a priority system in pursuing  cases
         and that cases  under $200,000 have a lower priority than  larger
         dollar cases.  We realize that  some  of  the costs may not  be
         recovered due to a lack  of  viable responsible parties.  However,
         when  there is a  viable responsible party, the low priority given
         to these cases  may still  result in the  funds not being  recovered.
         In addition, we  have serious reservations about establishing a
         threshold for initiating cost recovery  actions. Should a
         threshold be established, it could encourage responsible  parties
         to establish multiple hazardous waste sites  1n  order to avoid
         financial  liability for  cleanup costs.

         While we agree with OSWER's statement that some sites may be
         abandoned and have no viable responsible party, we believe
         overall  EPA must pursue  an  aggressive cost recovery program.
         We believe EPA  should pursue cost recovery actions at all sites
         to the extent such actions  can  be pursued on a  cost effective
         basis (e.g., negotiations,  filing of lawsuit, etc.)  Such a position
         will  show that  EPA will  use strength in the  process of  recovering
         funds.

         We would like to provide clarification  in 3  areas.  First,
         OSWER's  comment  should refer to Exhibit B and not Exhibit A.
         Second,  based on a special  printout  provided by OSWER that
         showed some of  the sites were listed under entirely different
         names, the number of sites  under $200,000 was subsequently
         changed  from 199 to 182  sites.   Third,  while cases under  $10,000
         in value may not have the highest priority,  we  believe  all sites
         need  to  be evaluated for potential cost recovery action.   In his
         response to the  Region 4 audit  report,  the Regional Administrator
         stated:

              "Since the  established floor for cost recovery actions is
              $500,000,  recovery  actions costing less than $500,000 are  a
              lower priority at both EPA-HQ and  at the Department  of
              Justice (DOJ).  Therefore, cost recovery for sites under
              $200,000 1s practically nonexistent.  In HQ, the Office of
              General Counsel (OGC)  as well as Region IVs Office  of
                                    62

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                                           APPENDIX 2
                                           Page 3 of 3
     Regional-Counsel (ORC) are not prepared to pursue or
     negotiate settlements at these low dollar sites.  Until
     authority to settle these cases'administratively is delegated
     to the regions, very few of these cases will  be pursued."

In our opinion, all  sites should be examined to determine the
need for negotiations and possible filing of a case.  Thus, the
negotiation team would be able to show strength.  In addition,
we believe alternative methods such as the use of  outside attorneys
on a contingency basis for fees should still be explored.
                           63

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