United States Office Of 22E-2001
Environmental Protection Enforcement October 1991
Agency (LE-133)
&EPA Superfund Enforcement
Mediation
Regional Pilot
Project Results
Printed on Recycled Paper
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Superfund Enforcement Mediation
Regional Pilot Project Results
FINAL REPORT
U. S. Environmental Protection Agency
and
RESOLVE
Washington, DC
October 1991
I Recycled paper
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ACKNOWLEDGEMENTS
This report was prepared by RESOLVE, an independent dispute
resolution program of World Wildlife Fund and The Conservation
Foundation located in Washington DC. It was funded under
contract 68-W8-0072 with the U.S. Environmental Protection
Agency, as was the entire pilot project.
The Region V Superfund Mediation Pilot Project represented a
major expansion of EPA’S efforts to use ADR approaches in
enforcement actions. The results achieved have been very
positive and represent considerable effort on the part of all of
those involved.
Appreciation and thanks are due to many individuals involved
in the pilot project’s success. Lynn Peterson, Chief of the
Solid Waste and Emergency Response Branch in the EPA Region V
Office of Regional Counsel, and David C. Batson, EPA ADR Liaison
in EPA’S Office of Enforcement were the primary sponsors for the
project and were important to its success. Thomas Geishecker,
Chief of the Technical Support Section of the Superfund
Management Branch in Region V was also instrumental in supporting
early efforts to create the pilot project.
The attorneys for both the government and private parties in
the cases described in the pilot report showed a remarkable
pioneering spirit in their willingness to try a new approach to
Superfund negotiations. Many of them helped us document the
Region V experience and continue to support the idea of mediated
negotiations for Superfund cases. The project could not have
succeeded without their positive support.
Suzanne Goulet Orenstein
Pilot Project Manager
Director, Mediation & Training
RESOLVE
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TABLE OF CONTENTS
Page
I. Introduction 1
II. Description of the Pilot Program 2
Criteria for Nominating Cases 2
Procedures for Case Initiation 4
Cases Included in the Pilot Program 5
Spectra Chem 5
Republic Hose 6
Greiners Lagoon 7
E.H. Schilling 8
Onalaska 8
Cases Nominated but not Mediated 9
III. Results of the Superfund Mediation Efforts in
Region 5 9
Table 1: Superfund Pilot Mediation Project
Case Data 10
Reasons for Acceptance of ADR by PRPs 11
Incentives to Participate by Types of Parties 11
Number of Settlements Reached 12
Time Required to Complete the Mediation Process 12
Costs of the Mediation Process 13
Benefits 14
Negative Impacts Noted by Participants 16
Reasons for Success 17
IV. Overcoming Challenges to Integrating ADR
into EPA/CERCLA 17
V. Recoitunendatiorls 20
VI. Conclusions 23
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Superfund Enforcement Pilot Mediation Project
in
U.S. Environmental Protection Agency - Region 5
I. INTRODUCTION
In 1988, the U.S. Environmental Protection Agency (EPA)
committed funds through a contract with The Conservation
Foundation (now RESOLVE) in Washington, DC to provide alternative
dispute resolution (ADR) services for selected Superfund
enforcement cases. EPA had previously endorsed the use of ADR
for enforcement cases through a 1987 guidance document 1 issued by
then Administrator Lee Thomas. Although EPA had been using ADR
methods before that date in such processes as negotiated
rulemaking, this 1987 guidance document provided the first set of
model procedures for enforcement disputes.
This report outlines the results achieved in a pilot
mediation project for Superfund cost recovery cases in Region 5.
During the course of this project, Region 5 nominated seven
cases for ADR, and five mediations occurred. Four of those
mediations resulted in settlements. In preliminary meetings with
Superfund enforcement staff in two other regions, project staff
have explored expanding the use of ADR in enforcement cases to
other parts of the country. The lessons to be learned from this
effort are significant because this project represents the first
time in EPA’S history that a concerted effort has been made
within a regiQfl to nominate a specific category of cases for ADR.
The results haVe been positive, and several lessons can be drawn
from the challenges faced by project implementors to guide future
ADR work in the enforcement arena.
ADR techniques recommended for use by EPA include mediation
(in which a neutral third party helps promote productive
negotiations), arbitration (in which a neutral third party makes
a binding or non-binding decision), neutral fact-finding (in
which a neutral third party collects and/or analyses information
to assist negotiating parties), and mini—trials (in which a
neutral presides over a presentation of the facts of the case to
senior decisioninakers in a preview of the potential trial.) The
purpose of most of these techniques is to facilitate voluntary
settlement of disputes. The method used to the greatest extent
by EPA to date has been mediation.
1 Final Guidance on the Use of Alternative Dispute
Resolution in EPA Enforcement Cases , U.S. EPA, August 1987.
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Following the promulgation of the 1987 guidance document,
EPA’S regional offices were asked to nominate cases for the use
of ADR. Nominations initially were slow in arriving, but as
cases were nominated they sparked interest in additional ADR
applications. In fiscal year 1988, EPA’s Congressional
appropriation included $500,000 earmarked for ADR in Superfund
cases. EPA’S Office of Enforcement set about finding cases that
could benefit from the use of these funds, and sought to
establish a pilot program in which the concept of a systematic
referral of cases to ADR could be tested.
Several other recent developments have also sought to
increase the use of ADR in enforcement cases. Among those
activities were endorsement of the use of ADR as a “standard
component of the enforcement program,” by EPA Deputy
Administrator F. Henry Habicht, (Memo, June 19, 1990), and
passage by Congz ess of a bill authorizing the use of ADR by all
federal agencies (Administrative Dispute Resolution Act, 101—552,
November 15, 1990). EPA’s Assistant Administrator for
Enforcement has also provided strong guidance to enforcement
staff for using ADR in all types of enforcement cases.
II. DESCRIPTION OF TH PILOT PROGRM(
Criteria for Nominating Cases
CF/RESOLVE and Region 5 program and enforcement staff
developed a list of criteria for selecting cases to enter the
pilot project. These criteria were:
o The case involved less than $500,000, which is the
point at which the Department of Justice (DOJ) becomes
involved in settlements, and thus represents the limits
of EPA’s authority to settle without direct DOJ
involvement in the negotiation. 2
o There were fewer than eight potentially responsible
parties (PRPs) involved, to focus on small, manageable
cases during the pilot.
o Region 5’s Office of Regional Council (ORC) was willing
to refer the case to DOJ if it did not settle, to build
in incentives for the parties to settle since most
wish to avoid filing of the case.
2 DOJ staff did participate in several of the pilot
mediations with good results.
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o There were at least six months available for the
mediation and possible DOJ referral before the statute
of limitations deadline to ensure sufficient time to
both conduct the negotiation 3 and to prepare the DOJ
referral if the negotiation was not successful.
o EPA desired a productive negotiation and a settlement.
In some cases, like those involving cities and towns,
EPA preferred a negotiated settlement, to protracted
public litigation.
o The PPPs were willing to negotiate. To preserve the
voluntary nature of the mediation process, any party
could refuse to participate in ADR. This was designed
to avoid “going through the motions” kinds of
negotiations that have very little chance of succeeding
and to reassure parties that they were maintaining
control in their cases.
o The PRPs were solvent and could comply with EPA’S
requirement for co-funding of the mediation.
The EPA Guidance Document on ADR included additional, more
general, criteria for when ADR might be useful. These criteria,
listed below, were eventually added to the criteria developed
with Region 5.
o Cases in which attorneys foresee impasses developing
because of conflicting interests among the PRPs,
technical complexity or uncertainty, political
visibility, poor communication, or other complicating
factors.
o Cases in which the settlement achievable may be
improved by the mediator’s ability to conduct frank,
private discussions among the parties.
o Cases which are not precedent setting.
o Cases in which non—parties to the legal action may be
necessary to a good settlement.
This assumes a small cost recovery case. Other types of
cases could require additional time.
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Procedures for Case Initiation
In addition to criteria, procedures for nominating a case
for ADR and obtaining the agreement of other parties to
participate were also developed. The list of procedures
follows:
1. Region identifies potential cases (ORC and Program
Office) based on criteria outlined above.
2. Region provides ADR contractor with a summary of the
case.
3. ADR contractor reviews cases for appropriateness of
mediation.
4. EPA sends letter to PRP5, with cc to ADR contractor,
stating:
—— case nominated for pilot mediation project;
-- mediator will contact PRPs within two weeks.
5. ADR contractor contacts PRPs by phone to:
—— obtain more information on case regarding
appropriateness for ADR;
—— obtain agreement to participate in mediation and
share costs of mediation.
6. EPA region nominates case for ADR, per EPA Guidance
Document.
7. ADR contractor sends agreement to mediate to all
parties.
8. ADR contractor identifies mediator for case and
establishes timetable.
9. Mediator conducts mediation.
—— may include fact-finding or non—binding
arbitration.
10. Settlement is drafted and mediator assists with final
negotiations.
11. Settlement is finalized.
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Important to note among the procedures was the provision
that the ADR pilot project manager (an independent mediator
employed by CF/RESOLVE) contacted each of the PRPs in each case
in order to obtain their agreement to mediate. This provision
was designed to prevent or facilitate the resolution of disputes
among the parties about whether or not to engage in ADR. The
regional attorney spoke to the parties initially about the case
nomination for ADR, listened to their initial reactions, and told
them that they would be hearing from the ADR contact at
CF/RESOLVE. This step allowed the PRPs to express their
individual concerns about the process to a neutral and served as
a feasibility assessment for the mediation effort.
Cases were identified in quarterly meetings that
CF/RESOLVE’s ADR project manager conducted in Region 5. Usually
these meetings were brown bag lunch meetings in which the pilot
project was explained and the results of previous mediations were
discussed.
In the end, this method of identifying cases proved very
effective and served to expand the scope of the effort beyond
cost recovery cases under $500,000. The most important factor in
this expansion was that it became clear to EPA staff through
these discussions that cases were benefitting from mediation.
The $500,000 limit was exceeded in the third case nominated, and
subsequently two negotiations over remedial action and remedial
design (RD/RA) among groups of PRPs were nominated and mediated.
In summary, the establishment of procedures and criteria
that met the needs of the referring agency were critical to
getting the pilot project started. Once results were obvious,
the number of cases nominated increased accordingly.
Cases Included in the Pilot Program 4
Seven cases were nominated for ADR in Region 5 over the
course of the pilot, between September 1988 and November 1990.
Five of these resulted in mediated negotiations; two additional
feasibility assessments were conducted but the parties never
agreed to go forward with mediation. The mediated cases were:
Spectra Chem. This was the first case mediated under the
pilot, although it was the second to be nominated. The mediation
was conducted over the telephone by Suzanne Orenstein, who was
both the ADR project manager and a co-mediator in all pilot
cases.
4 Detailed case studies for the mediated cases are
available as a companion report.
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The Spectra Chem company was a small business that
specialized in pooi cleaning supplies and other small volume
chemical products. A fire had occurred at the company, which
required an emergency response team to stabilize rocketing
barrels of chemicals and fire fighting run—off. EPA had incurred
approximately $80,000 in emergency costs, for which the owner of
the company, the only PRP, was liable. The statute of
limitations on EPA’s cost recovery case was six months away.
Through mediation it became clear that the resources
available to the owner to reimburse EPA were extremely limited.
An agreement was reached after several months of convincing the
owner that he was in fact liable and, therefore, needed to
engage in a negotiation with EPA and settle. The owner agreed to
sell the property on which the now defunct business was located,
and to turn the proceeds over to EPA. This agreement was
implemented within the year specified in the agreement. However,
the value of the property was significantly less than the amount
owed, and the final settlement was approximately $1,000. EPA was
convinced that this was the best price the owner could get for
the property, and they accepted this payment.
In this case, important information about the PRP’s
resources did not become available until late in the negotiation.
The mediation was conducted over the telephone because the
owner/PRP could not afford to co—fund the mediation process.
The benefits of the mediation as outlined by EPA and the PRP
were:
— — EPA attorneys were saved the time—consuming task of
conv,incing a pro defendant to negotiate with them in
a situation in which they would have gained little
reimbursement for their time;
-- the owner of the property, who had felt that EPA put
him out of business by their emergency response
methods, was able to be responsible within his limits
and could put the lawsuit behind him.
Republic Hose. The second case completed, and the first to
be nominated, involved an abandoned industrial facility in the
city of Youngstown, Ohio. EPA had conducted $450,000 worth of
emergency removal of PCB contaminated property and soil, and was
seeking cost recovery for that amount. This case had been
referred to DOJ, so both EPA and DOJ participated in the
negotiation on the government side. On the PR? side was the city
of Youngstown (current owner of the property) and two former
owners of the property that were not named as PRPs at the time of
the ADR.
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Linda Singer (with the Center for Dispute Settlement in
Washington, D.C.) was the co-mediator on this case with Suzanne
Orenstein. The mediators conducted individual meetings with all
parties, and one joint meeting was held in which an agreement
began to take shape. The mediators succeeded in helping
Youngstown and two former owners to continue the negotiation
among themselves. This resulted in a contribution to the
settlement from one of the former owners, a company that
continued to do business in Youngstown. As a result of this
contribution, a final agreement was reached that provided EPA
with $300,000 in cost recovery over a three year period.
Youngstown had limited resources available to cover its
liability, and public support for the expenditure was important.
The mediation included members of the city council, as well as
the mayor, the town counsel, and the finance director, in an
effort to build in broad municipal support for the outcome.
EPA and DOJ attorneys expressed satisfaction with the
mediation because it not only avoided the time consuming
litigation process, but because it allowed them to establish a
cooperative posture with a local government. The local
government parties expressed appreciation that others were
brought into the negotiation and for the structured settlement
option that allowed them to pay over time.
Greiners Lagoon. The third case nominated for the pilot
involved a cost recovery action against four companies that had
contributed waste to a waste “lagoon” in southern Ohio. EPA had
expended more than $700,000 in stabilizing the site, and was
seeking reimbursement as one stage of what would be a long—term
negotiation about the future of the site. The four companies had
negotiated one previous settlement for the site and all,
including EPA, agreed that the previous negotiation had not gone
as smoothly as they would have liked. EPA proposed that a
mediator be brought into the case to prevent past history from
interfering with this negotiation.
All of the parties agreed to the mediation and to have
Sandra Rennie (then of ICF, Inc., now with Clean Sites, Inc.) co—
mediate with Suzanne Orenstein. The parties met once as a group,
and several meetings between EPA and the primary PRP were
conducted. The negotiation quickly moved beyond the cost
recovery case to include issues of future cleanup, and Sandra
Rennie became the sole mediator as extensive shuttle diplomacy by
telephone became necessary. After 2]. months of negotiations, a
consent order was signed in spring, 1991.
In this case, mediation was important in assisting the four
PRPs to negotiate among themselves, and in helping EPA and the
PRPs to make significant progress by agreeing on how the future
of the site would be addressed. The mediator’s role as a bridge
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between three major groups —- one primary PRP, three secondary
PRPs, and EPA —— prevented and/or alleviated several impasses.
E.H. Schilling. This case involved only negotiations among
the PRPs. EPA had issued a Record of Decision (ROD) on a site in
southeastern Ohio which required four PRPs to conduct a $11
million cleanup. Disagreements among the PRPs threatened to keep
the PRPs from complying with EPA’s 60-day time limit for
submitting a good faith offer to conduct the cleanup. If the
parties could agree on a good faith offer, they had an additional
60 days to sign a consent decree indicating how they would
conduct the cleanup. Because EPA wanted to support the PRP5 in
developing these agreements among themselves, they proposed that
a mediator be used by the PRPs to assist with the negotiations.
Co—mediators John McGlennon of ERN—New England and Suzanne
Orenstein conducted a round of individual meetings with the PRPs
and developed a proposed allocation formula for discussion
purposes. The proposal was discussed in the one joint meeting of
the PRPs during the mediation. After additional one-on-one
meetings between companies and the mediators and much telephone
mediation, the parties could not agree on an offer to EPA that
would cover 100% of the costs of the remedy. At the last minute
in the 120 day time period, EPA agreed to accept slightly less
than 100% of the costs of the remedy, and the parties increased
their offer slightly to reach agreement with EPA.
This was the first of two RD/RA negotiations that were part
of the pilot project. Among the challenges were working within
the time limits which, while compressed, proved useful in
providing clear deadlines for the mediation.
Several factors fostered agreement in this case. The
parties were customers and suppliers for each other and had long-
standing business relationships that they wanted to maintain.
Their agreement was also made possible by EPA’s intervention at
the last minute. While EPA had maintained that it was not a
party to this mediation, it did play a significant role in
promoting agreement with its adherence to deadlines and by
agreeing to pursue two ininimus parties for the final 2% of the
settlement.
Onalaska. The fifth mediated case was also an RD/RA case,
involving a town government in Wisconsin and several successor
companies of local businesses that had contributed hazardous
waste to the town landfill. EPA issued a ROD and the 60 plus 60
additional day negotiation clock began running. Most of the
parties had objected to the remedy proposed in the ROD, and
there had been a public meeting in the town questioning the need
for the remedy before the ROD was issued. The cost of the
proposed remedy was $7 million. One local company, one successor
company, a state agency and several former shareholders of the
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companies were named as PRPs and participated in the
negotiations.
Howard Bellman (RESOLVE Senior Fellow) and Suzanne Orenstein
co—mediated this case, and conducted two meetings with the
parties -- one that included EPA and one among the PRPs. Some of
the PRPs felt they had very strong legal defenses and, thus, were
willing to settle,. but not at a very high cost. The town was
unable to fund the remedy itself, given an annual revenue of
only $500,000, though it was the owner of the site and the PR?
with the principal liability. The PRPs eventually constructed an
offer to EPA which was not accepted. Because the negotiation
deadline expired, mediation was discontinued. EPA will proceed
with its own remedial design and action for which they can
recover costs from the PRPs in the future.
The PRPs in this case expressed appreciation to EPA for
suggesting mediation for what they viewed as a difficult
situation, and to the mediators for their assistance, which they
described as helpful.
Cases nominated but not mediated. There were two cases
nominated for ADR in the Region 5 pilot, which were not mediated
because the parties did not agree to go forward. Both involved
local governments. One involved two state agencies, EPA, and a
town; the other involved a major city and EPA. In both of these
cases, government entities could not get institutional
commitments to pursue mediation, in spite of the mediator’s
direct involvement in that process. When these cases are added
to the five above, it can be noted that EPA selected
intergovernmental Superfund cases as candidates for ADR more than
other kinds of cases, a factor that will be discussed in greater
detail in the following sections of this report.
III • RESULTS OF i ws SUPERFUND MEDIATION EFFORTS IN REGION 5
Table 1 summarizes the results of the pilot project across a
number of variables. This section will analyze case outcomes
using the following measures:
—- Reasons for Acceptance of ADR by PR?;
-- Incentives to Participate by Types of Parties;
—- Number of Settlements Reached;
-- Time Required to Complete the Mediation Process;
— — Costs of the Mediation Process;
—- Benefits;
-- Negative Impacts Noted by Participants;
—— Reasons for Success.
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Table 1: Su erfund Pilot Mediation Project Case Data
MEDIATED CASES
Case State NPL Legal Parties Duration Claim Settlement % of Mediation
Name Status 1 Amount Amount Claim Costs 2
Spectra WI No 1 EPA, one 7 months $75,000 Value of NA $1,106
Chem sm.business subject 100% EPA
property
Republic OH No 1 EPA, City 7 months $450,000 $300,000 66% $75ó0
Hose of Youngstown 50% EPA
50% PRP
Greiners OH No 1 EPA, 4 PRPs 21 months $700,000 $587,000 83% $12,938
Lagoon 50% EPA
50% PRPs
Schilling OH Yes 2 4 PRPs 4 months $10—lim $lOm 98% $10,038
Landf ill 80% PRPs
20% EPA
Onalaska WI No 2 4 corp. PRPS 4 months $7m No agree- NA $3,531
Landfill 5 individuals ment 50% EPA
50% PRPs
CASES NOMINATED BUT NOT MEDIATED
Ottawa IL NO 3 EPA, 2 state 7 months $40m NA NA $3,570
agencies, 1 100% EPA
local govt.
Revere MI No 1 EPA, Detroit, 16 months $75,000 NA NA $1,280
Copper 1 corp PRP 100 % EPA
& Brass
1 Code: 1 — Cost Recovery; 2 = RD/RA; 3 = Proposed removal
2 costs were apportioned among parties as specified.
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Reasons for Acceptance of ADR by PRPs
In five of the seven cases nominated, the PRPs agreed to try
a mediated approach to their negotiation. Several PRPs stated
that if EPA was offering this approach, they took that to be a
sign of cooperation and good faith from the Agency. Even in the
RD/RA cases, where the negotiations involved mostly PRPs, the
role of EPA in suggesting the mediation and in paying a portion
of the costs, was looked upon positively.
The reasons for PRPs rejecting the mediation option are also
instructive. One of the two cases in which ADR was not accepted
involved a highly controversial radioactive waste issue in which
cleanup expenses were going to be enormous, creating significant
incentives to delay rather than resolve the issue. After the
mediation attempt failed, the case was nominated for placement on
the National Priorities List (NPL), which made it eligible for
significant federal funding. Until that time, the state was
reluctant to engage in a process that could leave it open to
responsibility for cleanup funds it did not have or expect to
have.
The second refusal was also caused by insufficient
incentives to settle, but for exactly the opposite reason. The
case involved less than $100,000 for cost recovery, and the
major city named as a PRP did not place a high priority on
resolving this relatively small case. Thus, although the city
wanted the mediator’s help in dealing with EPA, they could not
get municipal endorsement for the idea of going forward and
paying a mediator.
Incentives to Participate by Types of Parties
Four of the seven cases nominated involved towns or cities.
These intergovernmental disputes may have characteristics that
make ADR attractive to EPA. Among the reasons to use mediation
mentioned by EPA and the state and local government parties in
the pilot cases were:
(1) the desire to avoid negative local publicity both for
EPA and for the local government,
(2) the need to provide the flexibility of settlements that
publicly funded entities need, such as payments over
time,
(3) the need to bring in all possible contributing parties
to share the burden with the local governments, and
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(4) the need for a forum in which governmental groups from
various levels, federal, state and local, can work
together to solve specific Superfund site problems.
Among the non-public PRPs in the pilot cases, there are also
some common characteristics. In two cases, the parties knew they
would be negotiating in the future either about the site or in
their future business relationships. The EPA attorneys who
identified these cases for the pilot were correct in their
assessment that these parties had good incentives to settle.
Number of Settlements Reached
In four of the five cases mediated, settlements were
reached. This 80% success rate is consistent with research on
environmental mediation that shows settlements occur in about 78%
of site—specific environmental mediation processes. 5
Time Required to Coinrlete the Mediation Process
The shortest mediation took four months, and was bound by
the 120 days allowed for negotiation after a ROD is published.
One other case took four months, and two took seven months. The
longest mediation was the 21 months required for the Greiners
Lagoon case.
The shorter negotiations were those that were most focused
on specific issues, had clear objectives, and had deadlines from
either the statute of limitations for the case or RD/RA
guidelines. In the Greiners Lagoon case, extensions on the
statute of limitations were arranged through “tolling agreements”
at least three times.
Causes of delay in the cases were several. In some cases,
parties did not have the information they needed about costs or
other site activities and obtaining that information took
additional time. In other cases, delays occurred in trying to
accommodate the calendars of all involved in scheduling meetings.
In all cases, a great deal of the negotiation occurred close to
the deadlines that existed, because parties could no longer delay
action without negative consequences. The threats of a referral
to DOJ or a unilateral administrative order by EPA played a large
role in promoting timely agreement.
Bingham, Gail, Resolving Environmental Disputes: A Decade
of ExDerience , The Conservation Foundation, Washington, DC, 1986.
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Greiners Lagoon, the longest case, was also the most complex
and far reaching case. Much of the negotiation conducted during
its 21 months concerned future cleanup at the site, which would
have been needed sooner or later. Thus, expanding the scope of
issues beyond cost recovery and extending the negotiations now
was a strategy that may provide those involved with additional
benefits at a later date. The length of time required for such
careful negotiations should not be underestimated, but is not
necessarily a disincentive to use these processes. A balance
needs to be drawn between the need to have cases move quickly
through the enforcement system, and the value of conducting
efficient and effective negotiations by “doing it right the first
time” and preventing future disputes.
Costs of the Mediation Process
Costs of the mediation process include both the costs for
the mediator’s fees and the costs to the parties (including EPA)
of participating in the process. The costs for the mediator’s
fees are included in Table 1. Costs to the parties for
participating in the process are less clearly definable.
One way to calculate costs to the parties is to compare
transaction costs for settling in mediation to costs of disposing
of the case in an alternative forum. The alternative disposition
for these cases was probably negotiated settlements after further
legal processing, since 95% of all cases filed settle.
If the pilot case settles in mediation, then mediation costs
can be compared favorably to the costs of settling after
discovery, etc. If the case does not settle, then the costs of
participating in mediation are less clear. They may be additive
to the costs of settling in another forum, but they may in fact
reduce the time spent in subsequent negotiations and the cost of
that process.
EPA attorneys in the Spectra Chem and Republic Hose cases,
both of which settled, estimated the cost savings to them of
settling through mediation. The Spectra Chem attorney estimated
that EPA would have expended at least as many, if not more than,
the fourteen hours that the mediator spent talking with the owner
of the property. EPA would probably have spent considerable
effort countering the PRP’s resistance before learning that the
financial resources they thought he had were not in fact
available. EPA was also saved the time of preparing the DOJ
referral on this case, but that may have been avoided in any case
once the insolvency of the owner became known.
The attorney on the Republic Hose case estimated that she
spent one—third as much time on the negotiation as she would have
had to spend to pursue the case in the normal manner. She also
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indicated that her time working on the mediation would have been
shorter except for the fact that her case was the first one in
the region to be nominated for ADR, and the precedential nature
of the nomination caused regional approvals for the nomination
and settlement to take additional time.
Both of the P.D/RA negotiations would have occurred with or
without the mediators, so the savings from mediation depend on
whether the mediated negotiations were more efficient than they
would have been otherwise. Even the costs of participating in a
negotiation in the failed Onalaska case would probably have been
incurred, whether a settlement was reached or not.
Benefits
The number of cases in this pilot is small enough and varied
enough that quantifying benefits is not an easy measurement to
make. Costs and benefits were most easily compared with other
similar cases through interviews with the parties involved.
Many parties on all sides mentioned benefits of the
mediation. Among those mentioned were:
o Benefits From EPA’S Point of View
* Mediators got the parties to the negotiating table
quickly and effectively. By making early personal
contact with all sides and negotiating an ADR
agreement, the mediator was able to get the parties
engaged in negotiation and problem solving in a
constructive manner.
* ADR helped everyone get beyond posturing and focusing
on interests and options for settlement. The private
contacts that mediators had with parties usually
resulted in the mediator’s knowing what the obstacles
to agreement were and why they existed. Mediators then
helped structure the discussions to address those
issues.
* The mediator took care of logistics for scheduling
meetings and making sure that all necessary parties
were present when decisions needed to be made. This
added efficiency to the negotiation process.
* Mediators were able to move the negotiation along with
frank discussions and followed through after meetings
to insure that next steps (like document exchange or
checking with decision makers about options) occurred.
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* Mediators helped prevent stalemates from delaying
action on the case. When parties were unable to agree,
they worked with the mediator to address their
disagreement. For example, additional information
could be obtained to answer questions, allocation
formulas could be kept confidential when that was an
obstacle, and time could be scheduled as needed to
discuss the disagreement in enough detail to identify
options for moving forward.
* When ADR occurred and cases settled, the costs of
preparing the case for referral to DOJ and other legal
steps like discovery and motions were eliminated. This
is clearly a cost—saving benefit.
* Settlements reached through ADR also prevented the
issuance of unilateral orders that would have been
argued at substantial costs over the following years.
This was a particular benefit in the RD/PA
negotiations.
* Mediation provided additional resources to negotiations
that could substitute for attorney time on the case.
In the Spectra Chem case, the mediator clearly
substituted for EPA staff in dealing with an
unsophisticated pro se party. The mediator’s
impartiality lessened the party’s resistance to
negotiating with EPA in this case, so the time needed
to reach settlement was also shortened.
* ADR enabled the parties to develop a constructive
working relationship. This was particularly true in
the Republic Hose case, in which DOJ, the City of
Youngstown and EPA all wanted to work together
productively on this case and in the future. All
parties in this case have noted this benefit, in
addition to the benefit of reaching a workable
settlement.
* ADR allowed the broadening of the pool of contributors
beyond those strictly liable to address equity as well
as liability issues. Again, the Republic Hose case is
the example because of the voluntary contribution by
one involved but not yet named PRP.
* Mediation can promote follow through on agreements.
All of the agreements reached were implemented without
further enforcement action.
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o Benefits From PRPs Points of View
The PRPs in the ADR cases reported many of the same benefits
as did the EPA attorneys. In addition, they mentioned:
* Mediators added flexibility and creativity to the
negotiation. Bringing in additional parties, providing
confidentiality between parties (even for funding
allocation formulas), and structuring settlements to
fit PRP needs were examples of this flexible approach.
* The use of ADR allowed parties to preserve their
corporate relationships in spite of their differences.
Mediators shuttling between and among corporate parties
deflected some of the negative dynamics that would have
harmed the parties ongoing business relationships if
expressed directly.
* Mediation helped build positive communication between
EPA and PRPs. Many PRP5 commented that EPA’s support
for mediated negotiations was a good faith gesture that
they welcomed. They in turn could respond with a
willingness to cooperate that they might not otherwise
have exhibited.
* Mediation allowed PRP views to be considered by EPA.
PRPS felt that EPA listened to them and was willing to
structure settlements to take into account local
political dynamics and corporate precedent and
strategies in the settlements that were reached.
* One PRP described the mediators as advocates for
cooperation and professionalism in the negotiation.
Negative Impacts Noted bY Participants
Participants in two cases noted frustration with parts of
the mediation processes involving them. In one case, one of the
participants expressed the desire to negotiate more directly,
rather than through the mediator in a shuttling process. This
occurred in the case that was mediated over the telephone. Trust
building between the parties in this case took considerable
effort, but after the agreement in principle was reached, the
parties did conduct their own direct negotiation. In other
cases, direct communication occurred in parallel to the mediated
negotiations, and was not usually counterproductive.
In the second example of frustration with the mediation
process, the negotiating PRPs had decided, shortly before the
mediation nomination, that they would have to elevate their
conflicts to upper management in their companies. This
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involvement of upper management was delayed until the ADR process
was completed, and was used to a lesser extent to eventually
settle the case. Several parties would have preferred to use
this escalation strategy earlier, and felt that the mediation
prevented it.
Reasons for Success
The Superfund Enforcement Pilot Mediation Project in Region
5 had the following necessary ingredients, and thus it succeeded
in testing the usefulness of mediation in Superfund cases.
o Clear procedures for using the systea were developed,
refined and used.
o Cases were identified in which EPA and the PRPs had
sufficient incentives to resolve the dispute.
o Skills needed to conduct the ADR processes were
available through contractors.
o Resources to provide the services were available
through Headquarters funding.
Region 5 succeeded in making ADR work in the enforcement
context where no other regional or Headquarters group has been
able to do so. The Region 5 pilot is a model for how EPA can use
ADR successfully in enforcement cases and should be drawn on by
other regions and agencies in the coming push to integrate ADR
into federal agency operations.
IV. OVERCOMING CHALLENGES TO INTEGRATING ADR INTO EPA/CERCLA
CASES
ADR processes are new and unfamiliar steps in the EPA
enforcement attorney’s superfund negotiation repertoire. Adding
a mediator to what is already a very complicated negotiation
process is not yet a predictable and routine part of the
enforcement system. Thus, the challenges involved in
integrating this tool are many and need to be well understood in
order to make maximum use of what could be a productive addition
to Superfund enforcement work.
There are several reasons for the low number of nominations
for the Region 5 pilot (though seven cases is remarkable given
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past EPA experience). Observations from the pilot about the
barriers to getting enforcement cases to ADR follow. 6
ADR is an unfamiliar, and in most cases untried, negotiation tool
in EPA regions
ADR is a new approach in EPA enforcement cases, and the
mechanics and implications of using it were largely unknown to
assistant regional counsels. Many attorneys were uncertain about
the differences between mediation and arbitration, and were
unsure about the impact ADR would have on their management of
their cases. There were many misperceptions expressed by
attorneys about how much ADR meant “compromise,” and about the
role of the mediator.
Building a track record for mediation in the Region 5 cases
proved to be instrumental in promoting the use of ADR. One of
the best catalysts for nominations to the Region 5 pilot
appeared to be the on—going reports to their peers from those who
were using mediation. Another catalyst was the regular presence
in the region of the ADR project manager. As experiences with
ADR were discussed in brown bags and in the individual
consultations that usually followed the lunches, additional cases
were nominated. When the ADR project manager did not visit the
region to elicit case nominations, few nominations arose. These
informal mechanisms for considering the appropriateness of ADR
for particular cases were important to case nominations.
Expansion of these hoc mechanisms to more
institutionally routine mechanisms could be one method of
improving the rate of ADR nominations. For example, Region 5
established a regional contact for ADR who has been instrumental
in steering cases to the ADR pilot. Other methods of routinely
screening enforcement cases for the appropriateness of ADR are
being developed.
Incentives to refer cases to ADR must be created
One problem EPA faces in increasing the use of ADR in cost
recovery cases is the limited institutional credit given to EPA
staff for small settlements. Attorneys who settled small cost
6 Many articles have been written offering explanations of
the barriers to using ADR lfl EPA’S enforcement system. Richard
Mays offered an analysis of EPA’s reluctance, ( Environmental Law
Reporter , Vol. 18, March 1988); and Scott Cassell ( Peiperdine Law
Review , Vol. 16, No. S5, 1989), has provided a good overview of
what has been accomplished regarding ADR and Superfund to date.
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recovery cases got little credit in their caseload management and
tracking system for these settlements.
Thus, it was very helpful to the Region 5 pilot project that
several attorneys who referred the earliest pilot cases received
cash awards and performance credit for their use of this
innovative tool. Continued reinforcement and incentives will be
necessary to encourage attorneys to take the out—of—the—
ordinary step needed to make ADR successful on a more
institutional basis.
Another incentive that existed in the Region 5 pilot and
that should be replicated in other regions is the high level of
support within the Office of the Regional Counsel for using ADR.
Once it is clear that managers value employees who use ADR, more
employees will try to use it for their cases. Lynn Peterson, who
was the acting deputy regional counsel in Region 5 for over a
year, played an important role in supporting the pilot and those
staff who have used it.
Finally, incentives to use ADR ultimately will grow out of a
successful track record, i.e., when regional attorneys are
convinced that mediators add value to the negotiation process.
The examples in this report show that mediators can provide
needed extra resources to organize negotiations, provide bridges
between stalemated parties and within subgroups of parties, and
increase the range of alternatives available for settlement (like
obtaining contributions from parties relevant to the case but not
named as PRPs). These gains, though hard to measure, were
easily recognized by the parties in the pilot cases.
Enforcement procedures on Superfund cases reflect,
appropriately, the demands of the legal system. Thus normal case
processing is governed by that culture. Increasing the use of
ADR may require some shift in that culture away from the
litigation—oriented dynamic to a process that recognizes when
settlement is likely, preferred, and needed. ADR is one of many
tools that can increase the likelihood of success for appropriate
settlements.
CERCLA creates disincentives to negotiation for EPA
CERCLA gives EPA attorneys significant power in all the
negotiations that it requires. EPA has weighty unilateral
authority and EPA’s CERCLA enforcement practice is shaped by the
availability of that authority. Thus, negotiation is often “one
sided.” EPA can expect that other parties will comply with its
wishes. Because attorneys can achieve good results with minimal
negotiation, the acceptance of mediation as a negotiation tool in
CERCLA disputes may be more limited than it is for enforcement
cases under other statutes.
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It is clear from the experience in Region 5, however, that
there are important circumstances in which EPA prefers not to
exercise its unilateral CERCLA authority in the usual way. The
most obvious of these circumstances is in intergovernmental
disputes, particularly those involving municipalities, for the
reasons mentioned earlier.
Another category in which EPA may not get the results
desired by direct use of its authority may be in cases where EPA
realizes that a settlement is more likely if EPA is not a major
player. Examples include RD/RA negotiations in which multiple
PRPs may try to negotiate individual settlements with EPA, which
can affect their negotiation with each other. In these cases,
ADR may foster settlement through improved PRP negotiations, and
should be recommended on a more routine basis.
Case Readiness for ADR is Necessa
Enforcement cases need to reach a certain stage in the
enforcement process for a case to be ready for ADR. If the PRPs
do not have the facts about how EPA is calculating its costs in a
cost recovery case and that information is not available, ADR can
not help the case move along until the information is available.
If the PRPS are not yet completely identified and notified that
they are PRPs in a particular case, negotiation, with or without
ADR, will not progress.
In Region 5, Waste Program technical staff strongly desired
to use the ADR pilot project to help them with the multitudes of
cases they were dealing with prior to the initiation of
enforcement actions. However, most of those cases were in the
very initial stages of information gathering and PRP
identification, and a complete picture of the negotiation was not
yet available. For these reasons, it was decided that referrals
to the ADR pilot would come primarily from the attorneys in ORC.
nnaaW TI mrafln
V.
Given the results of the Region 5 test of the usefulness of
ADR in Superfund cases, the following recommendations are made to
address the dual tasks of continuing the use of ADR in Region 5
and of further institutionalizing the
use of ADR in Region 5 and other regions.
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Recommendations Regarding the Continuation of Region 5 Prolect
1. The Superfund Pilot Mediation project in Region 5
should continue, using the procedures developed and
drawing on the Headquarters resources that are
available for ADR in CERCLA enforcement.
2. Efforts should be made to increase the number of
referrals to the Region 5 project. This might be
accomplished with the following actions:
—— Routine screening of cases by enforcement
attorneys early in the case processing should be
emphasized. This screening should occur for every
case before litigation is started, and for other
cases like failed RI/FS negotiations and cost
recovery close—outs. In addition, cases involving
municipalities and other parties with ongoing
relationships should be considered carefully for
ADR referral. The criteria developed for the
pilot should be used for this screening and
refined to highlight when ADR might be useful.
-- Training should be provided to all litigation
managers, section chiefs, branch chiefs, etc. to
highlight the kinds of cases that should be
routinely referred to ADR.
—- Other mechanisms for flagging the cases in which
ADR could be useful should be sought, for example,
an ADR question could be added to any initial case
review that occurs in ORC, and on the DOJ pre-
referral form.
-- In-house ADR contacts should be provided with
management support and training to help promote
them as sources of information on negotiations in
general and on ADR in particular.
Recommendations Regarding Institutionalizing Superfund Mediation
in EPA Regions
3. Incentives for using ADR should be created for other
regions. Among the incentives that have worked are:
—— management attention within ORC to attorneys who
used ADR,
—— financial resources from Headquarters,
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—— cash awards and medals to “pioneers,”
—— institutional credit for settlements (no matter
how small), and
—— peer recognition of how ADR has added value to
their colleague’s cases.
4. The Offices of Regional Counsels should be identified
as the sources of ADR cases, and extensive outreach to
those officials should be provided.
—— Efforts to expand this pilot to other regions
have been undertaken and hampered by the lack of
support for the effort from ORC managers. Program
staff and individual attorneys have been
interested in ADR, but litigation managers have
not been as supportive as they were in Region 5.
Dissemination of this report and regional visits
by ADR experts (at least two visits per region to
allow follow up on case identification) should be
targeted towards assistant regional counsel in
several more regions in the near future.
5. The following questions about how ADR should be
institutionalized should be addressed by Headquarters
and regional enforcement managers.
a. What is the best method for getting prospective
cases to mediators?
In the Region 5 project, the ADR project
manager was an external neutral mediator who
provided “intake” services for each case in
addition to co-mediating some of them. Steps
involved in this intake process included obtaining
agreement from the non-EPA parties to participate
in ADR, negotiating an ADR agreement, helping the
parties to agree on a neutral to conduct the ADR
process, tailoring the ADR process to the case,
and arranging initial meetings. If EPA chooses
to continue with this use of an external intake
system in other regions, expanding its
availability will be important.
It may be possible for internal EPA staff to
conduct this process of linking the cases with the
mediators, but several obstacles would need to be
overcome in order for that model to succeed. 1)
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EPA regions would need access to a list of
qualified neutrals who are acceptable to all
involved in these cases. 2) Resources would be
necessary to support staffing of the case intake
and convening process. 3) Training of internal
staff in case selection and dispute resolution
would be necessary.
b. Are the types of cases that benefitted from
mediation in Region 5 strong candidates for ADR
nominations throughout the country and should
these cases be looked at carefully for ADR use on
a routine basis? Specifically, are
intergovernmental cases and cases in which the
parties have strong ongoing relationships ones in
which ADR might become a strategy of first choice
or otherwise early choice once EPA and the parties
begin to confront the negotiation challenges that
these cases pose?
c. How should ADR conducted by EPA Regional Offices
be funded?
The availability of Headquarters funding for
management of the pilot project and for EPA’s
share of mediator fees was critical to its
success. Whether or not this funding will be
available on an ongoing basis should be made known
to regional offices.
VI. ON LUSIONS
The Superfund Enforcen ent Pilot ! ediation Project wa a
successful test of the usefulness of ADR in selected CERCLA
enforcement cases. The pilot program also highlights some
important considerations that need to be addressed in order to
increase the use of ADR in EPA regions.
Steps that EPA can take to increase the use of ADR in EPA
enforcement cases include:
—— provide resources for case finding and outreach in EPA
Offices of Regional Counsel;
-— identify categories of cases that may be particularly
appropriate for ADR;
—— insure that qualified neutrals are available and
accessible to provide ADR services; and
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—— clarify the incentives for enforcement staff for
settling cases through ADR methods.
Parties on all sides of the pilot cases recognized and
reported the value mediators brought to their negotiations. The
Region 5 experience and this report can guide additional efforts
to improve the application of ADR strategies in enforcement cases.
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