CONGRES S O F TH E UNITE D STATE S CONGRESSIONA L BUDGE T OFFIC E



# STUD Y

# S

U M M A R

CONGRESSIONAL BUDGET OFFICE Second and D Streets, S. W. \ Washington, D.C. 20515I January 199 4
TH E TOTA L COST S O F CLEANIN G U P NONFEDERA L SUPERFUN D SITE S Th e effor t to clea n up th e nation' s hazardou s waste site s ha s prove dto b e mor e costly an d time-consumin g than expectedi n 1980, whe n th e Congres s create dth e Superfun dprogram . Accordin g to ane w Congressiona

l Budge t Offic e (CBO ) study , Th e Total Costs o f Cleaning U

p Nonfederal

Superfund

Sites, futur e Superfun dcosts couldreach $7 5 billion or mor e an d coul dcontinu e throug h th e yea r 2075
. Thes e costs includ e al l publi c an d private Superfun dexpenditure s excep t thos e associate dwit

h cleanin g up federal facilitie s (suc h a s militar

y base s or

weapon s productio n facilities ) an d ar e i n discounte ddollars- ameasur e that take s into account

th e time valu e o f

money . Futur e Superfun dcost s are highl y uncertain , mainl y becaus e o f uncertaint

y abou t th e numbe r

o f additiona l contaminate dsite s that

wil l b e discovere dan dplace do n th e National Prioritie s Lis t (NPL ) fo r cleanup
. Accordingly , CB O analyze dthre e scenario s chosen to represent th e rang e o f

plausibl e assumption s abou t

th e number

o f site s an dth e cost s o f

cleanup
. I n th e absenc e o f change s i n polic y o r breakthrough s i n technology , whic h th e scenario s d o no t consider , th e stud y find s tha t Superfund' s remainin g costs ar

e larg e unde r

al l circumstances
. CBO' s bas e cas e assume s that atota l o f 4,50 0 nonfedera

l site s ar e ultimatel y place do n th e NPL , roughl y fou r

time s th e curren t

number , an destimate s that Superfun dwil l cos t

th e publi c an dprivat e sector s abou t $7 5 billio n fro mfiscal yea r 199 3 onward , i n discounte ddollar s (usin g a7 percent annual discoun t rate)
. Partie s liabl e fo r

cleanup a

t individual site s an dstat

e government s directl y pa y more tha n hal f

o f th e total ; th e federa

l government , whic h ca

n see k to recove r it s cost s fro mliabl e parties , initiall y pay s fo r 3 8 percent , o

r clos e t o $3 0 billion
. Th e lo w cas e differ s fro mth e bas e cas e mos t significantl y i n assumin g tha t th e Environmenta l Protectio n Agenc y (EPA ) ultimatel y place s 2,30 0 nonfedera

l site s o n the NPL ; estimate dlow-cas e cost s fro m199 3 o n ar

e roughl y $4 0 billio n i n discounte ddollars
. The hig h cas e assume s atotal o f 7,800 nonfedera l NP L site s an d yield s a

n estimat e o f $12 0 billion
. Th e study' s estimate s impl y that mos t Superfun dcosts ar

e still to come . Combine dpubli c an d privat e spendin g commitment s made between 198 1 and 199 2 tota l les s than $3 0 billio n in discounte dterms . Thi s represent s roughl y 2 0 percen t to 4 0 percen

t o f th e economi c valu e o f

th e program' s tota

l costs . In rea

l dollar s (adjuste dfo r

inflatio n bu t

no t discounted) , commitment s throug h 1992 constitute onl y 5 percent to 1 7 percent o f the ultimate total
. Under CBO' s base-cas e an dhigh-cas e assumptions , Superfun dwil l needlarg e increase s i n it s budge t to avoi dagrowin g backlo g o f site s awaitin g stud y an dcleanup
. Annual Superfun dspendin g b y th e federa l government , whic h reache d$1. 7 billio n i n 1992 , i s estimate dt o doubl e b y the yea

r 200 3 i n the bas e case , i n th e absenc e o f

constraint s o n funding , an d to tripl e b y 200 3 i n th e hig h case . Cost s to liabl e partie s ris e even mor e sharpl y ove

r th e sam e period
. In al l thre e case s that CB O analyzed , require dcontribution s b y th e state s ris e dramatically fro mcurren t levels , althoug h the y remai n arelativel y small shar e o f tota l costs . CBO' s estimate s o f

futur e Superfun dcosts ar e mor e comprehensiv e than earlie r estimate s develope d b y EPA an dacademi c researchers
. Measure di n undiscounte d dollar s fo r comparability , th e CB O base-cas e estimat e i s large r tha n it s predecessors
. CBO' s analysi s estimate s lower averag e cleanu p cost s per site , however , i n par

t becaus e i t

assume s that

fewe r o f th e mos t expensiv e waste site s remai n to b e foun dan d tha t cleanup s conducte db y liabl e privat e partie s cos t les s than the y woul di f

conducte db y EPA
. Question s about

th e stud y shoul db e directe dto Perr y Beide r o f CBO' s Natura l Resource s an d Commerc e Divisio n a

t (202 ) 226-2946
. Th e Offic e o f Intergovernmental Relation s i s CBO' s Congressiona l liaiso n offic e an d ca

n b e reache da

t 226-2600
. For

additiona

l copie s o f

th e study , pleas e cal

l th e CB O Publication s Offic e a

t 226-2809
.

## THE TOTA L COST S O F CLEANIN G UP NONFEDERA L SUPERFUND SITE S

Th e Congres s o f

th e Unite d State s Congressiona

l Budge t Offic e

Fo r sal e b y th e U.S
. Governmen t Printin g Offic e Superintenden t

o f Documents , Mai l Stop : SSOP , Washington , D C 20402-932 8 ISB N 0-16-043071- 2

### NOTE S Number s i n th e tex t

an dtable s o f

thi s stud y may no t

ad dt o total s becaus e o f rounding
. Excep t fo r reference s t o legislation , al l o f th e year s referre dt o i n thi s stud y are federal fisca l years . Cove r phot o show s drum s at

an abandone dwast e site i n Ne w Jerse y tha t ranke d hig h o n Superfund' s National Prioritie s List
. (Phot o b y S.C
. Delaney , Environmen

tal Protectio n Agency. )

# Prefac e 

# T h e federal Superfun dprogra mt o clea n u p th e nation' s wors t

hazardou s waste site s ha s bee n controversial sinc e it s creatio n i n 1980
. A s th e Congres s begin s t o consider

reauthorizin g Superfund , whic h i s du e t o expire o n September 30 , 1994 , i t i s givin g increase dscrutin y t o several aspect s o f th e program , includin g th e cost . Thi s study , writte n at

th e reques t

o f th e rankin g Membe r

o f th e Hous e Committe e o n th e Budget , analyze s th e futur e cost s t o th e publi c an dprivat e sector s tha t can b e expecte d unde r Superfund' s curren t

policies
. I n keepin g with th e mandat e o f th e Congressional Budge t Offic e (CBO ) t o provid e objectiv e analysis , th e stud y make s n o recommendations
. Perr y Beide r o f CBO' s Natura l Resource s an dCommerc e Divisio n wrot e th e study , unde r th e supervisio n o f

Jan Pau l Acto n an dRoger Hitchner
. Davi dCooper , Dav e Evans , Bruc e Pumphrey , an dman y other staf f member s a

t th e Environmental Protectio n Agenc y gav e th e autho r

extensiv e cooperatio n with hi s research
. Man y valuabl e comment s wer e mad e b y Ki mCawley , Elizabet h Pinkston , Lind aRadey , an dChristopher William s withi n CBO , an db y Willia

mColglazier , Dav e Evans , Charle s Openchowski , Kat e Probst , an d Bruc e Pumphre y outsid e th e agency . Christia n Hewlet t Spoor edite dth e manuscript
. Gwe n Colema n an dDonn aWoo d type dth e tables
. Kathry n Quattrone , with th e assistanc e o f Martin aWojak-Piotrow , prepare dth e stud y fo r

publication
. Rober t D
. Reischaue r Directo r
Januar y 1994

# Content s

ONE

TW O



### THRE E

APPENDIXE S A
B 

### SUMMARY

TH E SUPERFUN D PROGRA M AN D IT S TYPE S O F COST S Superfun di n Brie f

1 Type s o f Cost s an dExpenditure s t o Dat e 7 Othe r Groups ' Estimate s o f

Superfun dCost s I X



### 11 ESTIMATE S O F FUTUR E SUPERFUND COST S Overvie w o f

th e Method s fo r

Estimatin g Cost s 1 3 Th e Cos t Estimate s 1 4 Assumption s Abou t

Number s o f

Site s 1 8 Assumption s About

Direc t Respons e Cost s 2 5 Assumption s Abou t

Transactio n an d Enforcemen t

Cost s 3 0 Assumption s Abou t

Federa l ProgramCost s 3 1 Assumption s Abou t

th e Discoun t

Rat e 3 2 COMPARISON S WITH OTHE RESTIMATE S AN D IMPLICATION S FO RPOLIC Y Wh y d o th e 

### CBO , EPA , an d 

### Tennesse e Estimate s Differ ? 3 5 Implication s fo r

Federa l Cleanu p Polic y 3 7 Superfun dCost s Unde r

Alternativ e Policie s 4 0

A Summary o f

th e Differen t

Assumption s Use di n th e Thre e Scenario s 4 3 A Glossar y o f Superfun dTerm s 4 5 1 3

3 5v i THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUND SITE S Januar y 1994
TABLE S 

### 1
. 2
. 3
. 4
. 5
. 6
. Federa l Superfun dOutlay s an dObligations , Fisca l Year s 1981-199 2 Superfun dObligation s i n Fisca l Yea r 199 2 Future Superfun dCosts , b y Initial Payer Futur e Superfun dCosts , b y Categor y Assume dDistributio n o f NPL Sites , b y Cos t

Categor y Averag e Present

- Wort

h Cost s pe r

Site fo r Fund-Lea d 

### 8

9 1 6 1 7 2 3

7
. 8

. 9
. 10
. A-l
. Remedial Action , b y Sit e Typ e Sensitivit y o f Present-Wort

h Cos t Estimate s to Assumption s Abou t

Remedia l Actio n Cost s Scenario-Specifi c Assumption s Abou t Remedial Actio n Cost s Assume dUni t

Enforcemen t

Costs , b y Sourc e Present-Wort

h Cost s a t Alternativ e Discoun t

Rate s Assumption s o f

th e Thre e Case s 2 6
2 7
2 8 3 1 3 3 44

FIGURE S 1
. 2
. 3
. 4
. 5
. Cumulativ e Trus t Fun dResources , Fisca l Year s 1981-199 2 Tota l Superfun dExpenditures , Fisca l Year s 1993-207 5 Actua l an dAssume dAddition s t o th e Superfun dScreenin g Inventory Require dStat

e Contribution s t o Superfund , Fisca l Year s 1993-207 5 Federa l Superfun dExpenditures , Fisca l Year s 1993-207 5 

### 1 5
1 9
3 8
3 9CONTENT S vi i
BOXE S 

### 1
. Other

Federa l Law s Governin g Cleanu p 3 2
. Example s o f Mega- , Major , an dMino r Site s 2 2

# Summar y



# T h e cos t

o f cleanin g u p th e nation' s hazardou s wast e site s i s fa

r greate r tha n th e Congres s expecte di n 198 0 whe n i t passe dth e federal law governin g suc h cleanup
. Th e magnitud e o f remainin g cost s i s a

n importan t

issu e a s th e Congres s review s th e progres s an dprospect s o f th e federa l Superfun dprogram , se t

t o expire o n Octobe

r 1,1994
. Thi s stud y seek s t o infor mth e Congressional an d publi c reauthorizatio n debat e b y estimatin g Super

fund' s futur e cost s unde r existin g policies
. Unlik e mos t

federa l environmenta l laws , whic h focu s o n reducin g ne w emission s o f hazardou s substances , Superfun dfocuse s o n cleanin g u p site s tha t are alread y contaminated
. Th e Environmental Protectio n Agenc y (EPA ) ha s evaluate dthousand s o f contaminatio n problem s an dplace dnearl y 1,30 0 o f th e wors t site s o n th e Nationa l Prioritie s Lis t (NPL ) fo r intensiv e cleanup
. Th e difference s i n typ e an d exten t o f contaminatio n at

NP L site s lea dt o arang e o f cleanu p cost s pe r

site fro mth e million s o f dollar s t o th e hundred s o f

millions
. Unde r

th e Superfun d law , certai n "responsibl e parties " ar e liabl e fo r a site' s costs ; EP A can enforc e thi s liabilit y either b y havin g th e responsibl e partie s perfor mth e cleanu p unde r it s oversigh t

o r b y conductin g it s ow n cleanu p (with th e governmen t

o f th e state i n whic h th e sit e i s locate dpayin g arequire dshare ) an drecoverin g th e cost s afterward
. Dat againe dfro mth e firs t 1 2 year s o f

Super

fund' s operatio n underpi n th e estimate s reporte di n thi s study
. Ye t

muc h remain s uncertain-particularl y th e numbe r

o f site s tha t

wil l ultimatel y b e identi

fie da s needin g cleanup
. Lesse r source s o f

uncertain

t y i n th e estimate s are th e cost s o f evaluatin g an d cleanin g u p eac h sit

e an dth e publi c an dprivat e cost s o f administerin g th e program , includin g th e cost s o f establishin g o r

contestin g liabilit

y fo r cleanup
. Th e Congressional Budge t

Office' s (CBO's ) analysi s reflect s thes e uncertaintie s b y reportin g estimate s fo r thre e scenario s base do n differin g assumptions
. Non e o f th e scenarios , however , incorporat e majo r change s i n polic y o r

breakthrough s i n cleanu p tech

nologies
. 

# Estimate s of

Future Cost

s CBO' s base-cas e estimate i s tha t Superfun dcleanup s wil l cos t th e publi c an dprivat e sector s abou t $7 5 billio n fro mfisca l year

199 3 onward
. Thi s figur e include s al l Superfund-relate dexpenditure s excep t thos e associate dwith cleanin g u p federa l facilitie s an di s i n discounted , present-wort h dollars— amea sure tha t i s usefu l i n summarizin g cost s incurre dover man y year s becaus e i t

take s int o accoun t

th e tim e valu e o f money . (Fo

r comparison , th e estimate d presen t worth o f

spendin g obligation s fro mth e beginnin g o f

Superfun dthroug h 199 2 i s les s tha n $3 0 billion. ) Estimate ddirec t cost s t o th e variou s payers , no t

includin g subsequen t

cos t recoveries , ar e $4 3 billio n (5 8 percent ) to responsibl e parties , $2 8 billio n (3 8 percent ) t o th e federa l government , an d $ 3 billio n ( 4 percent ) t o th e state s fo r require d contribution s t o cleanup s conducte db y EPA
. Statex THE TOTA L COST S O F CLEANIN G U P NONFEDERA L SUPERFUND SITE S Januar y 1994


### an dloca l government s tha t

are liabl e a

t specifi c site s wil l als o pa

y some shar e o f

th e responsible-part

y costs . Th e present-wort

h estimate o f

abou t $7 5 billio n assume s area

l discoun t rat e o f 7 percen t pe r year ; th e correspondin g figur e i n real dollar s (adjuste dfo r inflatio n bu t

no t discounted ) i s roughl y $23 0 billion
. Thes e cost s are incurre dthroug h th e yea r 2070 ; hence , annua l cost s ove r

th e entire 78-yea

r perio d averag e $2. 9 billion , whic h closel y matche s curren t combine dpubli c an dprivat e spendin g fo r Superfund
. Thi s simpl e averag e can b e misleading , however , becaus e some expenditure s mus t preced e others
. Averag e cost s befor e 2047 , th e yea r i n whic h th e las t cleanu p projec t

i s assume dt o mov e int o th e opera tion s an dmaintenanc e phase , are estimate dt o b e $4. 2 billio n per

year . Moreover , assumin g n o constraint s o n funding , annua l spendin g coul dris e ove r th e nex t decad e t o apeak

o f $9. 1 billio n i n 2003
. Estimate s othe r

tha n th e base-cas e figure s wer e develope dusin g alternativ e assumptions—th e mos t importan t concernin g th e numbe r o f site s t o b e discovere dan dcleane dup . Th e bas e cas e assume s that EPA ultimatel y place s 4,50 0 nonfederal site s o n th e NPL , afourfol dincreas e over th e 1,14 9 suc h site s include db y th e en do f 1992
. Thi s assumptio n come s fro man extrapolatio n o f th e numbe r

o f site s screene dfo r

th e NP L s o fa

r an daroug h estimate b y EP A staf f o f th e percentag e o f

screenin g site s tha t may b e place do n th e NPL
. Plausibl e variation s i n th e assumption s abou t

futur e screenin g site s an dth e placemen t rat e lea dt o atotal o f

2,30 0 NP L site s i n th e lo w cas e an d7,80 0 site s i n th e hig h case . Tota l estimate dcost s i n th e lo w cas e are $4 2 billio n i n present-worth terms , o f

whic h th e federa l govern ment' s shar e i s $1 7 billion
. I n th e hig h case , th e estimate dtota l i s $12 0 billion , includin g $4 3 billio n spen t b y th e federa l government . Sit e investigatio n an dcleanu p accoun t fo r abou t 6 5 percen t

o f futur e Superfun dcost s i n al l thre e scenarios
. Cost s fo r

litigation , negotiation , an dother activitie s associate dwith th e liability syste mrepre sen t abou t 2 4 percen t

o f th e total
. Thi s share i s consisten t wit h CBO' s analysi s o f expenditure s throug h 1992 , whic h doe s no t support th e commo n perceptio n tha t

mos t Superfun dmone y ha s bee n spen t o n attorneys ' fees
. Th e remainin g 1 0 percen t to 1 2 percen t

o f estimate dfutur e cost s reflec t federa l cost s fo r management , support , an dresearch
. 

# Ho w Doe s Thi s Stud y Diffe r fro m Previou s Analyse s o f Superfun d Costs ? Th e Environmenta l Protectio n Agenc y an dagrou p o f researcher s a

t th e University o f

Tennesse e hav e bot h publishe dpartial estimate s o f Superfund' s futur e costs . Th e CB O estimate s diffe r fro mthes e prede

cessor s i n fou r

ways . o CBO' s estimate s ar e mor e comprehensive , in

cludin g publi c an dprivat e administrativ e an d legal cost s an dcleanu p cost s fo r site s no t ye t discovered
. o CBO' s analysi s separate s NP L site s int o thre e cos t groups . Th e Superfun dexperienc e to date show s that

some site s are hundred s o f time s mor e expensiv e tha n others ; th e base-cas e esti

mate o f th e averag e cos t

fo r asmal l minorit

y o f "mega-sites " i s $16 9 millio n i n cleanup s con ducte db y EPA , compare dwith a$2 4 millio n averag e fo r

al l other sites
. Evidenc e suggest s tha t relativel y fewe r

mega-site s hav e bee n dis

covere dsinc e th e earl y year s o f th e program , whic h lead s CB O t o expec t adownwar dtren di n averag e cleanu p cost s a s tim e passes . o Th e estimate s conside r th e time path o f

Super

fun dexpenditure s i n orde r t o calculat e thei r discounte dpresen t

worth
. o Th e analysi s o f

cleanu p cost s incorporate s recen t EP A dat ao n th e difference s betwee n initia l estimate s an dfina l costs . I t als o allow s fo r

th e possibility tha t

private-secto r

cleanup s may cos t les s tha n thos e performe db y th e government . Th e wide r

coverag e an dth e us e o f discounte d dollar s i n CBO' s analysi s yiel dvery differen t cost s tha n th e EP A an dTennesse e estimate s o f $1 6 billio n an d$15 1 billion , respectively
. Th e EP A figur e i s restricte dt o cost s incurre db y th e federa l governmen tSUMMAR Y X I

durin g cleanu p o f

th e firs t 1,23 6 NPL sites ; th e Tennesse e figur e give s pas t an d futur e cost s o f cleanin g up 3,000 nonfedera l NPL site s i n undis

counte ddollars , omittin g administrativ e an d lega l costs . I n term s o f

averag e cleanu p cost s per site , th e CB O estimate s ar

e lower tha n comparabl e EPA an d Tennesse e figures , primaril y becaus e o f th e assump tion s abou t

th e futur e incidenc e o f

mega-site s an dth e cost s save di n private-secto r cleanups
. 

# Implication s fo r Federal Cleanup Policy CBO' s analysi s o f

futur e Superfun dcost s ha s severa l importan t implication s fo r

th e federa l government' s cleanu p policy
. o Estimates of

total Superfund costs depend

strongly on the ultimate number of sites to be cleaned up—a number

that remains highly uncertain. Th e CB O scenario s assum e that th e tota l numbe r o f nonfedera l NPL site s coul db e a s lo w a s 2,300 o r a s hig h a s 7,800 ; largel y a s aresult , present
worth cost s vary b y afacto r o f almos t thre e betwee n th e lo w cas e an d th e hig h case . Mor e extreme number s o f

NP L site s ar

e les s likely tha n thos e assume dhere , bu t the y canno t

b e rule dou t fro mth e dat ano w available
. o Under

any plausible assumptions, Superfund expenditures are not

even halfway complete; thus, the Congress may be justified in considering policy changes that

involve short-term transition costs bu t

long-term benefits. CBO' s analy

si s implie s that

th e fund s obligate dthroug h fiscal yea r 199 2 represen t

betwee n 1 9 percen t

an d4 0 percen t o f th e economi c valu e o f Superfund' s total costs , measure di n present-worth dollars
. I n undiscounte ddollars , thes e obligation s constitute onl y a n estimate d5 percen t

to 1 7 percen t

o f th e ultimat e total
. o Required

contributions by the states mil remain a relatively small

share of total costs, but

they will rise dramatically from current levels. Th e estimate dstate share o f

futur e cost s i s 4 percen t t o 5 percen t i n present-wort

h term s ( 8 percen t

t o 9 percent i n undiscounte ddollars)
. Th e observe d share t o dat e i s muc h lower—les s tha n 1 percent

— becaus e state contribution s are concentrate da t th e en do f

th e cleanu p process . EP A dat aan d studie s indicat

e that thes e contribution s totale d abou t $0. 1 billio n throug h 1992 , wherea s th e base-cas e estimate o f

futur e state cost s i s $3. 3 billio n i n present-wort

h terms , o r

$1 9 billio n i n undiscounte ddollars
. o Under

CBO's base-case and

high-case assumptions, but not its low-case assumptions, EPA will need large increases in funding to avoid a growing backlog of

sites awaiting study and cleanup. Th e bas e cas e assume s tha t roughl y 90 0 sites—1 4 percen t

o f thos e i n th e final , "deci

sion-pending " stag e o f

EPA' s screenin g process were awaitin g placement o n th e NPL a

t th e en d o f 1992
. Addin g thes e site s t o th e lis t over a10

- yea r perio dwhil e expeditiousl y cleanin g u p curren t NP L site s an dprocessin g ne w site s brough t t o EPA' s attentio n woul drequir e federa l Superfun dspendin g t o doubl e b y th e yea r 2003
. (Tota l publi c an dprivat e spendin g woul dtriple. ) Keepin g pac e with th e sit e work loa di n th e hig h cas e woul drequire federa l spendin g t o tripl e (an dtota l spendin g t o increas e almos t fivefold)
. Whe n th e curren t

Superfun dla w wa s enacted , littl e informatio n wa s availabl e abou t th e ultimat e cost s t o th e taxpaye r

an dth e economy . No w tha t th e genera l orde r o f magnitud e o f

publi c an dprivat e Superfun dobligation s i s becomin g clearer , th e program' s balanc e o f

benefit s an dcost s may warran t asecon dlook
. Th e estimate s describe di n thi s stud y d o no t evaluate polic y alternative s tha t migh t b e les s costl y tha n curren t

law , bu t the y d o provid e abaselin e agains t whic h alternative s coul db e evaluated
. Alternative s that

hav e bee n discusse dinclud e narrow in g th e rang e o f

site s handle db y th e federa l pro gram , revisin g cleanu p standards , reorderin g priori

tie s amon g site s o r

withi n sites , givin g loca

l commu nitie s more say i n decision s abou t cleanup , narrowin g o r eliminatin g th e law' s liabilit y provisions , an d encouragin g o r

requirin g EP A t o mak e greater us e o f settlemen t

tool s availabl e i n th e curren t law
.

### Chapter One



# Th e Superfun d Progra

m and It s Type s of

Cost s


# T h e federa l Superfun dprogramt o clea n u p th e nation' s wors t

hazardou s wast e site s wa s create d b y th e Congres s i n 1980 , partl y i n respons e to reporte d threat s to huma n healt h an d th e environmen t

a t th e Lov e Canal sit

e i n Niagar aFalls , Ne w York
. Th e proble mo f cleanin g up waste hazard s ha s prove d t o b e larger an d more expensiv e tha n th e Congres s originall y expected , an d th e en d i s no t ye t i n sight
. Durin g it s firs t 1 2 years , th e Superfun dprogramcomplete d clos e t o 2,50 0 removal actions , whic h includ e response s t o emergencie s suc h a s chemical spill s an dleakin g barrel s an dinteri m step s to eliminat

e th e immediate threat s pose d b y mor e comple x hazards
. Th e programals o place d 1,27 5 site s o n th e Nationa l Prioritie s Lis t (NPL ) fo r longe r an dmor e extensiv e remedia l cleanups
. Bu t despite publi c an d privat e spendin g o f more tha n $1 3 billio n throug h 1992 , onl y 14 9 o f th e 1,27 5 NP

L site s ha dcomplete d al l constructio n work relate d t o th e cleanu p remedies , an djus t 4 0 ha dbee n full y cleane d up . Furthermore , estimate s o f th e ultimate numbe r o f NPL site s rang e betwee n 2,10 0 an d 10,000. * Th e potential siz e o f

th e Superfun dprogra

m raise s important

question s abou t

it s likely cost s an d benefits
. T o she d some ligh t o n thes e questions , thi s stud y estimate s th e futur e cost s t o th e publi c an d

Se e Milto n Russell , E
. WilliamColglazier , an d Mar y R
. English , Hazardous Waste Remediation: Th e Task Ahead (Knoxville , Tenn. : University o f

Tennessee , Wast e Managemen t Researc h an d Educatio n Institute , 1991) ; an dOffic e o f Technolog y Assessment , Coming Clean: Superfund Problems Ca n B e Solved.
. . (Octobe r 1989)
. privat e sector s o f Superfun dcleanup s a

t al l site s no t owne db y th e federal government . (The cost s o f cleanin g u p federal facilitie s ar e born e no t b y th e Superfun dprogra

mbu t b y th e agencie s that

operat e th e sites—principall y th e Department s o f Energy , Defense , an dth e Interior—an dpos e some differen t polic y issues.) 2 Thi s stud y doe s no t tr y t o estimate th e benefit s o f

cleanup ; a199 1 repor

t b y th e Nation

a l Researc h Counci l suggeste d that reliabl e estimate s o f th e benefit s may no t

b e possibl e give n th e presen t state o f toxicologica

l knowledge. 3 

# Superfund i n Brief Th e Superfun d law i s th e broades t federal statut e governin g cleanu p o f

wast e hazards—or , more for

mally , site s contaminate d with hazardou s sub

3

. For example , the issu e o f

permanent

isolatio n a s a

n alternativ e t

o cleanup ha s been raise d fo r som e remote an d technically difficul t site s i n the Energ y Department' s nuclea r weapon s complex
. Conversely , th e controversie s surroundin g th e Superfun dliabilit y syste mgenerally d o no t appl y t o federal sites
. For

analyse s o f cleanup problem s a

t federal facilities , se e Congressiona l Budge t Office , Cleaning Up the Department of Energy's Nuclear

Weapons Complex (forthcoming) , "Environmenta l Cleanup Issue s Associate d with Closin g Militar

y Bases, " CB O Staf

f Memorandu m(Augus t 1992) , an dFederal

Liabilities Under

Hazardous Waste Laws (Ma y 1990) ; an dOffic e o f

Technolog y Assessment , Complex Cleanup: The Environmental

Legacy of

Nuclear

Weapons Production (Februar y 1991)
. National Researc h Council , Committe e o n Environmenta l Epidemi

ology , Environmental

Epidemiology, vol
. 1 , Public Health an d Hazardous Wastes (Washington , D.C. : National Academ y Press , 1991)
.2 THE TOTA L COSTS O F CLEANIN G UP NONFEDERAL SUPERFUND SITES January 199 4 stances. 4 Th e programi s administere db y th e Envi

ronmental Protectio n Agenc y (EPA) , whic h evaluate s th e nee dfo r

cleanu p a

t site s brough t

t o it s attention , identifie s partie s liabl e fo r th e cost s o f

cleanup , an d oversee s sit

e studie s an d cleanup s conducte deither b y it s ow n contractor s o r b y th e liabl e parties
. Fundin g fo r

thes e EP A activitie s come s primaril y fro mspecifi c busines s taxe s earmarke dfo r atrus t fund , officiall y name dth e Hazardou s Substanc e Superfund
. Superfun dwa s create db y th e Comprehensiv e Environmental Response , Compensation , an d Liabili

t y Ac t o f 198 0 (CERCLA ) to complement other federa l environmental law s tha t emphasiz e reducin g ne w emission s o f

hazardou s substance s o r cleanin g up narrowe r

categorie s o f

site s (se e Bo x 1)
. Th e Congres s amende dth e program , greatl y increasin g th e siz e o f

th e trus t fund , i n th e Superfun dAmend

ment s an dReauthorizatio n Ac t o f 198 6 (SARA)
. I n 1990 , th e Congres s renewe dSuperfun dfo r fiscal year s 199 2 throug h 1994 an dextende dit s taxatio n authority throug h calenda r year 1995
. 

## Wha tDoe s th e Superfun d Progra m Do ? Th e Superfun dprogra mfocuse s o n tw o type s o f waste-hazar dcleanups : remova l action s an dremedial actions
. Remova l action s includ e emergenc y re sponse s t o immediate threat s (fro mspill s o r leakin g barrels , fo r

example ) an dlimited , interi mstep s towar dful l cleanu p (suc h a s drainin g asurfac e lagoon)
. Unde r

SARA , removal s finance db y th e federa l governmen t

are limite dt o on e yea

r an d $ 2 millio n unles s EP A find s tha t continue dactio n i s immediatel y necessary o r i s appropriat e an dconsis

ten t with it s plan s fo r

subsequen t

remediation
. (The ceiling s o n duratio n an dcos t d o no t appl y t o remova l action s undertake n b y liabl e privat e parties. ) Fo r man y sites , removal s ar e sufficien t t o complete th e necessar y cleanup
. Site s that are more costl y t o clea

n u p an d pos e larg e enoug h threat s t o huma n healt h an d th e envi

ronmen t can b e place db y EP A o n th e Nationa l Prioritie s Lis t

fo r remedia l response . Example s o f remedia l cleanup s includ e cappin g an dmonitorin g landfills , excavatin g an ddisposin g o f river sedi

ments , pumpin g an dtreatin g groundwater , an d incineratin g o r

biologicall y treatin g soils
. A signifi

can t polic y chang e introduce di n SARA require s EP A t o giv e preferenc e t o remedial treatment s tha t permanentl y an dsignificantl y reduc e th e volume , toxicity , o r

mobilit y o f th e hazardou s substances , especiall y over

remedia l option s tha t

involv e off-sit e disposa l o f untreate dsubstances
. EP A select s site s fo r

th e NPL usin g amultistag e screenin g proces s that

culminate s i n ascor

e unde r th e Hazar dRankin g Syste m(HRS)
. Eac h sit e brough t t o EPA' s attention-typicall y b y astate o r loca l government , sit

e owner , o r

neighbor—firs t receive s apreliminar

y assessmen t

(PA) , whic h include s arevie w o f

availabl e document s an drecon naissanc e o f

th e site
. A sit

e tha t i s neithe r

elimi

nate dfro mfurthe r

consideratio n afte r

th e P A no r referre dt o anothe r

cleanu p progra mreceive s asit e inspectio n (SI) , whic h involve s collectin g an dana lyzin g sample s o f

soil an d water , a s appropriate
. In some cases , th e S I i s supplemente db y an expande d site inspection , whic h yield s mor e data
. Finally , EP A use s th e collecte ddat at o assig n th e site an HR S score ; i n general , asit e i s place do n th e NP L i f i t score s a t leas t 28.5. 5 Th e Nationa l Prioritie s Lis t i s itsel f amultistag e process , commonl y calle dapipeline
. Onc e asite i s o n th e list , i t

passe s throug h severa

l majo r phase s o r milestones
. o Th e remedial investigatio n an dfeasibility stud y (RI/FS ) map s ou t

th e natur e an dexten t

o f a site' s wast e hazard s an devaluate s alternativ e responses .

4
. Th e ter

m"hazardou s waste " i s give n aspecifi c lega l definitio n i n th e Resourc e Conservatio n an d Recover y Ac t (4 2 U.S.C
. 6903 , 9 0 Stat
. 2799)
. Superfun dcleanup s can b e triggere db y abroade r clas s o f substances , some o f

whic h can b e considere dproduct s o r feedstock s rathe r

tha n wastes . On e sit e i n each state ma

y b e place do n th e NPL , regardles s o f it s HR S score , b y bein g designate dth e to p priority o f th e state government . Also , ararel y use dmechanis mallow s asit e t o b e place do n th e NP L i f

th e Agenc y fo r

Toxi c Substance s an dDiseas e Registry issue s ahealt

h advisory recommendin g that peopl e b e remove dfro mth e site
. Some site s that woul dscor

e abov e 28. 5 are referre dt o anothe r

cleanu p program(se e Bo x 1 ) instea do f bein g place do n th e NPL
.CHAPTE

RON E THE SUPERFUND PROGRAM AND IT S TYPE S O F COST S 3


### Bo x 1 . 

### Othe r Federa

l Law s Governin g Cleanu p
Th e Resourc e Conservatio n an dRecover y Ac t o f 197 6 (RCRA) , whic h amende dth e Soli dWaste Disposa l Ac t o f 1965 , establishe di n it s Titl e C a nationa l programfo r

trackin g an dmanagin g hazard

ou s waste s an dacorrectiv e actio n programrequirin g cleanup o f

suc h waste s release dinto th e environment a t treatment , storage , or

disposa l (TSD ) facilities , whic h includ e man y industrial plants
. Th e correctiv e actio n progra

mi s define dmor

e narrowl y than th e Superfun dprogram , whic h cover s abroade r clas s o f hazardou s substance s an di s no t limite dt o release s occurrin g a

t facilities ; also , some TS D facilitie s are likel y t o en du p a s Superfun dsite s becaus e thei r owner s an doperator s ar e unabl e o r unwillin g t o compl y with th e correctiv e actio n requirements
. Nonetheless , th e larg e numbe r o f TS D facilitie s potentiall y requirin g cleanu p ma y make tota

l cleanu p cost s unde r

RCR A higher

tha n unde r

Superfund
. Th e initia l RCR A statut e di dno t direc t th e Environmenta l Protectio n Agenc y (EPA ) t o regulat e undergroun dstorag e tank s containin g chemical product s a s oppose dt o wastes ; no r di dth e 198 0 Superfun dla w authoriz e th e agenc y t o clean u p leak s o f petroleu man dpetroleu mproduct s (whic h are generall y exclude dfro mth e Superfun ddefinitio n o f hazardou s substances ) fro msuc h tanks
. Thes e gap s i n authorizatio n were fille di n 198 4 an d1986
. Amon g th e man y change s mad e t o RCRA b y th e Hazardou s an dSoli dWast e Amendment s o f 1984 wer e provision s requirin g EP A t o se t standard s fo r th e design , operation , an dcleanu p o f undergroun d tank s containin g petroleu mo r hazardou s products
. Authorizatio n fo r

EP A t o clean u p leak s fro mpetro
leu mtank s wa s include di n th e 198 6 amendment s t o Superfund , whic h als o create dasmaller Leakin g Undergroun dStorag e Tank Trus t Fun dt o financ e suc h cleanups
. Th e Clea n Wate r Act , formall y th e Federa

l Wate r Pollutio n Contro l Ac t

Amendment s o f

1972 , create d th e federa l authorit y t o regulat e cleanu p o f oi l spill s tha t pos e athreat

t o surfac e water . Th e Oi l Pollutio n Ac t o f 199 0 authorize dusin g th e existin g Oi l Spil l Liabilit y Trus t Fun dt o pay fo r

cleanup , raise d existin g limit s o n spillers ' federal liability , an d authorize dth e Coas t

Guar dt o require tha t

owner s an d operator s o f

oil-relate dfacilitie s an dvessel s hav e plan s fo r containin g an dremovin g suc h spill s i n coasta l areas . The 197 6 Toxi c Substance s Contro l Ac t (TSCA ) authorize dEPA to regulate bot h th e use , labeling , an d disposa l o f ne w an dexistin g chemical s use di n manufacturin g an dcommerc e an dth e cleanu p o f spill s o f polychlorinate dbiphenyl s (PCBs)
. Th e Asbesto s HazardEmergenc y Respons e Ac t amende d TSC A i n 1986 , addin g requirement s tha t EP A se t standard s fo r

cleanin g u p asbesto s i n schoo l buildings
. Superfun dcleanup s mus t

mee t th e TSC A standard s wher e applicabl e o r

"relevant an dappropriate. " Th e Surfac e Minin g Contro l an dReclamatio n Ac t o f 1977 establishe dapermittin g programi n th e Departmen t

o f th e Interio r

t o require activ e coal

minin g operation s t o mee t environmenta l an drecla

matio n standards
. I t

als o place datax o n curren t coa l productio n t o fun dreclamatio n o f mine s abandone d befor e 1977 o r

befor e enactmen t

o f th e regulation s implementin g th e law
. Th e ta x money , however , canno t b e use dt o clea

n u p mine s fo r

whic h arespon sibl e forme r

operato r coul dpay ; i n suc h cases , cleanu p can procee donl y unde r Superfun do r

state authorization
. Amendment s passe di n 1990 als o prohibi t thi s mone y fro mbein g use dt o clea n u p mine s liste da s NPL sites , eve n i f n o solven t

opera tor s exist
. Th e Uraniu mMill Tailing s Radiatio n Contro l Ac t o f 197 8 (UMTRCA ) directe dthe Departmen t o f Energ y t o clea

n u p sandlik

e tailing s lef

t fro murani

um-processin g operation s a t 2 4 specifi c inactiv e sites
. Thes e site s are exclude dfro mth e Superfun dprogram , a s are any release s o f

radioactiv e substance s fro m nuclear powe r plants
. Othe r

radioactiv e wastes , includin g uraniu mtailing s at millin g site s no t

in

clude di n th e UMTRC A list , can b e cleane du p unde r eithe r Superfun do r

th e Atomi c Energ y Ac t

o f 1954 , a s amended
.4 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUND SITES January 199 4
o Th e recordo f

decisio n (ROD ) document s EPA' s selectio n o f

aparticula

r remedy
. o Th e remedia

l desig n (RD ) develop s th e detaile d engineerin g plan fo r

carryin g ou t

th e selecte d remedy
. o Th e remedia

l actio n (RA) , whic h ofte n include s "construction " an d"operation s an dmaintenance " phases , i s th e actual implementatio n o f th e remedy
. Thi s descriptio n o f

th e NPL pipelin e require s tw o qualifications
. First , man y site s are divide dint o multipl e "operabl e units " that correspon dt o differen t area s o r medi at o b e cleane du p an dtha t underg o th e RI/FS-ROD-RD-RA sequenc e separately
. A site' s surfac e soi l an dgroundwate r migh t constitut e tw o operabl e units , fo r

example
. Second , asit e o r operabl e uni t

tha t ha s reache dagive n stag e i n th e pipelin e may return t o an earlier stag e a s aresul t

o f furthe r evaluatio n o r

ne w information
. Beside s thes e screening , study , an dcleanu p effort s at individua l sites-sometime s calle ddirec t respons e activities-man y technical , legal , an d mana gerial activitie s i n both th e publi c an dprivat e sector s ar e par t o f th e Superfun dprogram . Th e liabilit y system , discusse dnext , spur s searche s fo r liabl e partie s an dnegotiatio n an dlitigatio n ove r cleanu p work an dcos t allocation
. Other

activitie s includ e researc h an ddevelopment , technolog y dissemination , laboratory analysis , community relations , technical assistanc e grants , contrac t management , polic y development , an dbudge t planning
. 

## Wh o Pay s fo r Superfun d Cleanups ? CERCL A take s atwo-pronge dapproac h t o th e proble mo f

wh o shoul dpa y t o clean u p hazardou s wast e sites : i t

make s fou r

type s o f partie s liabl e fo r th e cost s o f

cleanup , an di t

establishe s th e Superfun d trus t fun dt o financ e response s a t site s fo r whic h th e liabl e partie s canno t

b e foun do r

lac k sufficien t resources . Th e fou r

type s o f "responsibl e parties " (RPs ) ar e asite' s presen t owner s an doperators , it s previou s owner s an doperator s fro mperiod s durin g whic h i t receive dhazardou s substances , th e genera tor s o f suc h substances , an dan y waste transporter s responsibl e fo r

choosin g th e site. 6 Liabilit y unde r CERCL A i s retroactive , strict , an djoin t an d several
. Stric t

liabilit y place s responsi

bilit y withou t

regar dt o care o r

negligence ; fo r example , aparty canno t

escap e Superfun dliabilit y b y showin g that

it s waste disposa

l practice s obeye dal l law s an dregulation s that wer e i n forc e at

th e time
. Joint-and-several liabilit

y mean s that

an y responsibl e party can b e assessed th e tota l cost s fo r

acontami

nate dsit e (unles s hi s o r

her contributio n ca

n b e show n t o hav e produce daseparate , divisibl e result)
. Thi s liabilit

y scheme serve s tw o goal s o f Superfund' s designers : i t

minimize s th e ultimate burde n o n federa l taxpayers , an di t

give s handler s o f

hazardou s substance s additional reaso n t o avoi dcreatin g futur e hazards
. I n administerin g th e Superfun dprogram , th e Environmenta l Protectio n Agenc y can enforc e th e liabilit y o f responsibl e partie s i n either o f tw o ways . I t can hav e the mperfor mth e necessar y cleanu p directly , unde r

governmen t

supervision ; suc h "RP

lead " o r "enforcement-lead " cleanup s can occur either throug h anegotiate dsettlemen t o r a s aresul t

o f a n administrativ e o r

judicia l order
. Alternatively , EP A can conduc t

th e cleanu p itsel f

an dthe n negotiate o r su e t o recove r

it s cost s fro mth e responsibl e partie s afte r th e fact
. Suc h cleanup s are referre dt o a s "fund-lead. " Fund-lea dcleanup s an dothe r federa l Superfun d expenditure s ar e finance dwith mone y appropriate d fro mth e trus t

fund , whic h receive s mos t o f it s revenu e fro mexcis e taxe s o n petroleu man dcertai n chemical s an d ata

x o n corporate income
. I n fiscal year 1992 , thes e taxe s brough t i n $1. 2 billion ; cumulatively , the y accoun t fo r $ 8 billio n o f

th e $1 2 billio n i n total Superfun dreceipt s throug h 1992 , o r 6 7 percen t

(se e Figur

e 1)
. Other

source s o f

mone y t o th e trus t

fun dar e general Treasur y revenue s (1 4 percen t o f th e total) , interes t

o n th e fun dbalanc e ( 8

Becaus e liabilit

y i s ofte n contested , th e ter m"potentiall y responsi

bl e parties " i s als o commonl y used
. Th e present study follow s th e EP A styl e i n referrin g t o "RP-lead " cleanup an d stud y projects ; n o confusio n i s intende dwit h th e definitio n o f

"responsibl e party " use d i n th e Oi l Pollutio n Act
.CHAPTERON E THE SUPERFUND PROGRA M AND IT S TYPE S O F COST S 5
Figur e 1 . Cumulative Trus t Fun d Resources , Fisca l Year s 1981-199 2 (I n billion s of dollars )

Chemica l Ta

x (2.4 )

Corporat e Tax (2.2 ) Recoverie s (0.5) Advance s (0.7 ) Interes t (1.0 ) Genera l Revenue s (1.7 ) 

### Tota l Receipts : 12. 0 SOURCE : Congressiona l Budget Offic e base d o n dat a fro m th e

Departmen t o f Treasury . 

### percent) , repayabl e advance s fro mth e genera l fun d ( 6 percent) , an drecoveries , fines , an dpenaltie s fro m responsibl e partie s ( 5 percent)
. On e importan t

differenc e betwee n fund-lea dan d RP-lea dcleanup s i s tha t

th e state i n whic h asit

e i s locate di s require dto share th e cos t o f afund-lea d cleanup
. State s pa

y 1 0 percent

o f cost s for

th e constructio n phas e o f

aremedia

l actio n (5 0 percent o r more fo r site s that wer e operate db y th e stat e o r a loca l governmen t

durin g th e disposa

l o f hazardou s substances ) plu s al l maintenanc e o f th e remedy
. I n carryin g ou t

thi s provisio n o f

th e law , EP A define s the firs t 1 0 year s o f

pump-and-treat

remedie s (com

monl y use di n cleanin g groundwater ) a s long-ter m remedial actions , requirin g onl y th e 1 0 percent stat e contribution , rathe r

tha n a s maintenance
. EP A ha s de-emphasize dth e fund-lea doptio n sinc e 1989 , whe n i t

adopte dit s "enforcement-first " policy
. Unde r

tha t policy , th e agenc y seeks t o maximiz e cleanup s b y responsibl e partie s (thu s minimizin g demand s o n th e trus t fun dan dth e nee d fo r cos t recovery ) b y routinel y issuin g administrativ e order s t o compe l cleanu p whe n settlement s are no t reache db y th e en do f

th e statutor

y moratoriu mfo r negotiations
. Mor

e recently , EPA ha s announce d effort s to encourag e settlement s b y increasin g it s us e o f som e o f the incentive s an dnegotiatin g tool s authorize di n SARA
. 

## Progres s of

Cleanup s t

o Date Althoug h fe w NPL site s hav e bee n completel y cleane dup i n Superfund' s firs t 1 2 years , th e pro gram' s recor

do f accomplishment

i s arguabl y better tha n it s imag e woul dsuggest . EPA ha s evaluate d clos e to 24,000 nonfederal site s fo r possibl e inclusio n o n th e NP L an dha s begu n evaluatin g anothe r 9,000 sites
. Combined , thes e case s represen t 9 4 percen t

o f th e nonfedera l site s tha t ha dbee n brough t

t o th e agency' s attentio n throug h fiscal yea r 1992
. Togeth

er wit h cooperatin g responsibl e parties , EPA ha s finishe d 2,63 9 remova

l action s a

t 2,14 2 nonfederal sites-43 1 NP

L site s an d 1,71 1 non-NPL sites
. Also , EPA ha s place d1,149 nonfederal site s o n th e pro pose do r final NPL an dha s starte don e o r mor e stage s o f th e remedial pipelin e a

t al l bu t 5 6 o f thes e sites
. (Th e NPL als o include s 12 6 federa l sites , o f whic h 11 6 hav e begu n on e o r more stage s o f

th e remedia l pipeline
. Throug h 1992 , 5 6 removal ac tion s hadbee n complete da t 2 1 federal NPL sites. ) Measurin g progres s at

site s onc e the y hav e entere dth e NP L pipelin e i s complicate db y th e commo n EPA practic e o f

dividin g site s int o operabl e units
. Agenc y statistic s typicall y repor t cleanu p statu s i n term s o f

th e progres s o f

eac h site' s mos t advance doperabl e unit
. Hence , reportin g tha t 1,09 3 nonfederal NPL site s (9 5 percent o f th e total ) were at o r beyon dth e remedial investigation/feasibility stud y stag e a

t th e en do f

199 2 reall y mean s tha t 1,09 3 site s ha dstarte d(i f

no t completed ) a

t leas t on e RI/FS , bu t

no t necessaril y al l o f

th e RI/FS s require d fo r th e site
. Other

EPA statistic s a s o f

th e en do f 199 2 sho w that

th e mos t advance doperabl e uni t
o ha dpasse dth e record-of-decisio n stag e a t 76 6 site s (6 7 percent) ;
o ha dreache do r

passe dth e remedia

l desig n stag e a t 69 8 site s (6 1 percent) ; an d6 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUND SITES January 199 4
o ha d reache do r

complete dth e remedia l actio n stag e a t 50 1 site s (44 percent). 7 Thes e statistic s d o no t

revea l ho w muc h o f

th e wor k remain s to b e don e a

t th e 1,149 sites , however , becaus e the y d o no t

indicate th e numbe r

o f operabl e unit s int o whic h th e site s wil l ultimatel y b e divided
. On e statisti c o n NPL progres s tha t encompasse s al l o f asite' s operabl e unit s i s th e number o f con structio n completions
. EP A i s stil l refinin g th e definitio n o f

thi s term ; i t

currentl y include s site s delete dfro mth e lis t

afte r th e completio n o f

al l necessar y respons e action s (other tha n routin e opera tio n an dmaintenanc e o f

th e remedy) , site s awaitin g forma l deletion , an dsite s a t whic h al l remedie s are i n plac e bu t

long-termoperation s an dmaintenanc e are ongoing
. (Pump-and-treat operation s t o clea

n groundwater , fo r

example , may requir e 3 0 year s o r mor e t o attai n th e cleanu p goals. ) A t th e en do f fisca l yea r 1992 , EPA counte d14 8 nonfedera l site s a s constructio n completions-u p sharpl y fro m6 3 th e previou s yea

r bu t stil l les s tha n 1 3 percen t o f th e nonfedera l NPL
. O f

thes e 14 8 sites , 4 0 hav e bee n delete dfro mth e list , 8 3 are awaitin g deletion , an d 2 5 are undergoin g long-termremediation. 8 

## Controversie s an d Option s Sinc e it s inception , Superfun dha s bee n subjec t t o man y criticisms , no t

al l o f the mconsistent
. Som

e o f th e mor e commo n criticisms , outline dbelow , reflec t dissatisfactio n with th e program' s overal l rati o o f benefit s t o costs ; other s primaril y involv e th e distri

7
. Thes e pipelin e statistic s includ e site s a t whic h a n operabl e uni t skippe dover

th e indicate dstag e rathe r tha n passin g throug h it
. A fe w earl y site s wen t

directl y t o remediatio n withou t goin g throug h th e RI/F S an dRO D steps . Othe r site s are counte da s bein g pas t th e remedia l desig n stag e becaus e a"no-action " RO D fo r on e o f their operabl e unit s indicate dthat n o furthe r

cleanu p (an dhenc e n o desig n work ) wa s necessary . 8
. I n addition , on e federal NPL sit e await s deletion
. A recen t revie w b y th e General Accountin g Offic e reporte dthat 2 3 o f th e 14 9 case s are site s that

receive dneithe r

removal no r

remedia l actio n becaus e EP A foun dthat

the y pose dn o threa

t t o healt h o r th e environmen t an dhad been liste d o n th e NPL i n erro r (becaus e o f

mistake s i n sampling , fo r

example)
. Anothe r

2 8 NPL site s had reache d constructio n completio n base do n remova l action s alone
. Se e General Accountin g Office , Superfund: Cleanups Nearing Completion Indicate Future Challenges (September 1993)
. butio n o f th e benefit s an dcost s amon g affecte d parties
. Slo w Pac e of Cleanup . The vie w that NP L site s ar e no t gettin g cleane du p fas t

enoug h can b e argue db y referrin g t o th e abov e figure s o n delete dsite s an d constructio n completions
. Alternatively , critic s can poin t t o th e duration s o f

averag e cleanu p projects , whic h hav e rise n steadil y i n recen t years . A t

th e en d o f 1992 , EPA estimate dthat th e averag e operabl e uni t take s nin e year s an dfou r month s fro mth e star

t o f it s remedia

l investigation/feasibilit

y stud y t o th e completio n o f

it s remedia

l action
. Thi s figure suggest s that

th e averag e tim e pe r

sit e betwee n placemen t

o n th e NPL an dcompletio n o f cleanu p constructio n at

th e las t operabl e uni t

may b e abou t 1 2 years . Unfairness . Superfund' s liabilit y syste mha s bee n criticize da s unfai r

o n variou s grounds
. Some observer s argu e tha t

th e fundamenta l concep t o f retroactiv e liabilit

y (o r retroactiv e liabilit

y fo r action s that ar e no t negligent ) i s unjust
. Other s clai mthat retroactivit

y ca n b e justifie dbu t

tha t joint-and-severa l liabilit y i s unfair
. A thir dpositio n say s tha t a basicall y fai r

liabilit y schem e i s bein g wrongl y interprete di n case s involvin g specifi c type s o f parties—particularl y loca l governments , lenders , o r contributor s o f

ver y smal l volume s o f

waste . Litigiousness . Anothe r criticis mo f

th e liabilit

y syste mfocuse s o n th e transactio n cost s incurre di n assignin g an d allocatin g liability. 9 Amon g thes e are th e cost s o f

negotiation s an dlitigatio n amon g asite' s potentiall y responsibl e parties , betwee n th e partie s an dEPA , an dbetwee n th e partie s an dthei r insurers
. EPA' s effort s t o identif y an dlocate responsibl e partie s an dt o gathe r

sit e dat asuitabl e fo r

us e i n litigatio n are als o transactio n costs ; s o are unofficia l RI/FS s conducte db y responsibl e partie s a s achec k o n EPA' s ow n wor

k an d th e additiona

l layer o f oversigh t involve dwhe n bot

h RP s an dEP A monito r th e work o f contractor s performin g RP-lead cleanups
.

9
. Economist s defin e transactio n cost s a s thos e cost s incurre di n order to engag e i n atransactio n (suc h a s th e cost s o f searc h time , bidding , an d contracting ) i n contras t to th e cost s o f

th e good s o r service s actuall y exchanged
. Th e Superfun dcas e stretche s th e term abit : i n thi s context , th e "transactions " are no t trade s i n th e marketplac e bu t

lega l assignment s an dallocation s o f liability
.CHAPTE

RON E THE SUPERFUND PROGRAM AND IT S TYPE S O F COSTS 7 

### Selectio n of

Inappropriat

e Remedies . Severa

l competin g criticism s alleg e that to o man y o f

EPA' s Superfun dremedie s ar

e inappropriate
. Som

e peopl e faul t th e remedie s primaril y fo r insufficien t

thorough

nes s an dpermanence . Other s argu e that man y remedie s are excessivel y thoroug h an dhenc e to o expensive , sometime s becaus e EPA' s assumption s abou t huma n exposure t o asite' s hazardou s sub

stance s ar e base do n unrealisti c scenario s fo r futur e lan duse . A thirdperspectiv e focuse s les s o n th e result s o f th e remed y selection s tha n o n th e process , arguin g tha t

EPA' s decision s shoul dtake mor e accoun t o f th e desire s o f

affecte dloca

l communities
. Lo w Environmental Priority . Th e abov e criticism s regardin g slo w cleanups , litigiousness , an dinappro

priate remedie s ca

n b e interprete da s argument s that Superfund' s benefit s are lower tha n the y coul db e o r tha t it s cost s are higher

tha n necessary . Another criticis mhold s that

eve n i f th e abov e issue s were resolved , amore fundamenta l cost-benefi t proble m woul dremain
. I n thi s view , hazardou s waste s represen t arelativel y lo w ris k

t o human s an dth e environmen t

(compare dwith othe r

threat s suc h a s indoo r rado n exposure , pesticid e residue s o n foods , non-point-sourc e wate r

pollution , an dtropical defor

estation ) an dshoul dfal l muc h lowe r o n th e nation' s lis t o f budge t priorities
. Thes e criticism s hav e le dt o awid e variety o f proposal s fo r

reformin g Superfund
. Amon g th e option s unde r

discussio n are th e following :
o narrowin g th e rang e o f site s handle db y th e federal program , leavin g more site s t o th e discre

tio n o f th e states ;
o revisin g th e cleanu p standards , perhap s t o take explici t accoun t o f futur e lan duse ;
o makin g greater

us e o f priority-settin g system s t o defe r work at some site s o r

operabl e unit s wher e cleanu p i s les s urgent , thu s reducin g curren t fundin g needs ; 

### o givin g local communitie s mor e say i n cleanu p decisions ;
o beefin g u p th e trus t

fun dan ddroppin g retro
activ e liability ; o reducin g th e emphasi s o n joint-and-several liability , wit

h increase dgovernment

fundin g t o pa y th e share s o f

liabl e partie s wh o are bankrup t o r canno t b e identified ; an d
o cappin g liabilit

y fo r municipalitie s o r

eliminatin g liabilit y fo r contributor s o f

very smal l volume s o f waste . Th e estimate s give n i n thi s stud y d o no t evaluat e Superfun dcost s unde r

an y o f thes e alternativ e policies , bu t

the y d o provid e abaselin e agains t whic h th e change s coul db e compared
. Th e baselin e itsel f can hel p t o indicate whethe r th e remainin g Superfun d proble mi s larg e enoug h t o justif y th e near-ter

mcost s o f disruptio n involve di n changin g to ane w polic y regime
. 

# Type s of Cost s and Expenditure s to Date Th e Superfun dcost s include di n thi s stud y ar e thos e incurre db y th e privat e secto r an dfedera l an dstate government s fo r

bot h sit e cleanu p wor

k an dancillar

y activities
. Th e Congressional Budge t Offic e (CBO ) estimate s that

nominal-dolla

r outlay s (tha

t is , actua l spending ) b y privat e partie s an dstat e government s over Superfund' s firs t

doze n year s were roughl y $6. 3 billio n an d$0. 1 billion , respectively
. Firme r figure s indicate that

th e federal governmen t spent $7. 0 billion , excludin g cost s fronte do r reimburse db y liabl e parties
. Cumulativ e obligations-immediat e o r multiyea r spendin g commitments—may b e o n th e orde r o f $2 0 billio n fo r

al l payer s combined
. A s note dearlier , th e figure s considere dher e d o no t includ e th e cost s o f

cleanin g u p federa l facilities
. (I n 1992 , th e environmenta l restoratio n program s o f th e Department s o f

Defens e an dEnerg y obligate do n th e orde r o f $ 3 billion , roughl y equalin g th e com bine dpubli c an dprivat e Superfun dobligations. ) Tw o othe r

type s o f cost s that

migh t b e attribute dt o th e progra mar e als o no t

covered : Superfund-induce d spendin g o n hazar dpreventio n i s exclude dfo r lac k o f data , a s ar

e th e economi c cost s o f

loan s no t mad e an dpropertie s no t

resol do r

reuse dbecaus e o f concern s abou t

potentia l Superfun dliability
.8 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUND SITES January 199 4 

## Federa l Expenditure s Tota l federal Superfun doutlay s over th e program' s firs t 1 2 year s were $7. 7 billio n i n nominal terms , or $8. 6 billio n i n constan t

199 2 dollar s (se e Tabl e 1)
. Thes e total s includ e $0. 5 billio n (nominal ) subse

quentl y recovere d fro mresponsibl e partie s an d $0. 2 billio n funde db y cash-ou t settlements , i n whic h RP s settl e their

liabilit y b y payin g i n advanc e fo r cleanu p work t o b e don e b y EPA. 1 0 Cumulativ e obligation s wer e $10. 5 billio n an d $11. 9 billio n i n nominal an d 199 2 dollars , respectively
. Bot h measure s o f

cost s gre w sharpl y i n th e initia l year s afte r

SARA , whe n th e Congres s authorize d afivefol dincreas e i n th e siz e o f th e trus t fund
. I n 1992 , annua l outlay s an d obligation s reache d ne w high s o f $1. 5 billio n an d $1. 7 billion. 1 1 Th e $1. 7 billio n i n 199 2 Superfun dobligation s represent s roughl y one-quarte r o f EPA' s total budget
. EP A addresse s mos t

othe r environmenta l problem s throug h regulatio n rathe r tha n direc t

governmen t action ; accordingly , Superfun dobligation s greatl y excee d th e amount s spen t b y th e agenc y o n other problems
. A n EPA analysi s o f it s 199 2 budge t reques t foun d$45 0 millio n targete d fo r ai r pollution , fo r example , $10 9 millio n fo r pesticid e problems , an d$2 8 millio n fo r

indoo r rado n exposure . Th e Superfun dbudge t

wa s secon d onl y t o th e $2. 1 billio n fo r treatmen t

o f point-sourc e wate r

problems , mos t

o f whic h constitute d grant s t o th e state s fo r constructin g municipa l wastewate r

treatmen t

plants. 1 2 I f 199 2 Superfun dobligation s are classifie d accordin g t o th e categorie s use d i n thi s stud y fo r estimate s o f

futur e costs , direc t

respons e cost s accoun t fo r 5 2 percen t

o f th e program' s budge t

(se e Tabl e 1 .

Federa l Superfun d Outlay s an d Obligations , Fisca l Year s 1981-199 2 (I n thousand s of 199 3 dollars ) Outlay s Obligations 8
198 1 198 2 198 3 198 4 198 5 198 6 198 7 198 8 198 9 199 0 199 1 199 2 8,03 9

79,57 6 150,21 4 285,47 1 363,02 3 442,35 2 544,89 0 832,87 0 964,97 8 1,160,459

b ' c 1,431,608

bl C 1.466.507

b ' ° 40,28 3

180,11 4 227,19 9 453,81 8 455,48 5 359,92 7 1,039,45 1 1,456,35 0 1,522,68 1 1,484,947

b ' d 1,589,557

b ' d 1.737.340

b

d Tota l Approximat e Tota l i n 199 2 Dollar s 7,729,98 7

8,610,00 0 10,547,15 2

11,875,00 0
SOURCE : Congressiona l Budge t Offic e base d o n dat a fro m th e

President' s budget , variou s years . NOTE : Figure s wer e derive d b y subtractin g fro m tota l outlay s an d obligation s thos e relate d t o contaminate d federa l facilitie s fo rwhic h th e Environmenta l Protectio n Agency wa s reimburse d by othe ragencies

. a . Ne t o f recoverie s o f prior-yea robligation s no t spent
. b

. Th e reimbursement s fro m othe rfedera l agencie s tha t wer e subtracte d i n thi s cas e are CB O estimates

. c . Include s outlay s fo rth e Offic e o f Inspecto rGenera l fro m Treasur y Departmen t report s o n th e Superfun d trus t fund

. d

. include s obligation s fo rth e Offic e o f Inspecto rGenera l fro m th e President' s budget

.

10
. Th e total s exclud e a n estimate d $0. 1 billio n i n Superfun doutlay s reimburse d b y othe r

federa l agencie s fo r

suc h activitie s a s assis

tanc e i n settin g u p dat asystem s fo r hazardou s waste sites
. Th e figur e o f $7. 0 billio n i n nomina l federa l outlay s avoid s double

countin g b y als o excludin g R P payments . 11
. Tabl e 1 show s 199 2 obligation s o f $1.73 7 billion , wel l abov e the 199 2 appropriatio n o f

$1.61 5 billion
. Thi s high-wate r mar k wa s reache d with th e ai do f

ahig h leve l o f

cash-ou t settlements , whic h appea r a s offsettin g collection s i n th e budge t an dare no t

subjec t t o th e appropriatio n process . 12
. Environmenta l Protectio n Agency , Offic e o f Policy , Planning , an d Evaluation , "Environmental Proble mAre aProfiles " (Jul y 20,1991)
. Tabl e 2). 1 3 Tota l site-base d cost s are arguabl y a s hig h a s 5 9 percen t

whe n laboratory analysis , sit e mapping , compensatio n o f EP A worker s wh o overse e sit e cleanups , an d service s o f th e Arm y Corp s o f Engineer s an d Bureau o f Reclamatio n are included
.

13
. Th e dat ai n Tabl e 2 , base d o n a n internal EPA managemen t report , yiel dhigher

tota l obligation s tha n thos e show n i n Tabl e 1 , primaril y becaus e the y d o no t

subtrac t fund s recovere d b y cancelin g previou s obligations
.CHAPTE

RON E THE SUPERFUND PROGRA M AND IT S TYPE S O F COST S 9 Tabl e 2 . Superfun d Obligation s i n Fisca l Yea r 199 2
Typ e o f Cos t Direc t Respons e Screenin g Removal s Remedia l investigations/feasibilit y studie s Remedia l designs 8 Remedia l actions * Subtota l Respons e Suppor

t OSWE R salaries , excludin g enforcement 6 Remedia l support b> c Remova l support5

- 0 1 Laborator

y analysi s Othe rEP A support 6 Supportin g federa l agencies 9 Subtota l Enforcemen t Oversigh t o f RP-lea d RD s an d RAs a Offic e o f Wast e Program s Enforcemen t EP A Office s o f Enforcement , Genera l Counse l Departmen t o f Justice ' Subtota l Researc h an d Developmen t EP A researc h an d developmen t Nationa l Institut e o f Environmenta l Healt h Sciences 5 Subtota l Managemen t an d Administratio n OSWE R management 5 ' 1 Genera l administration 1 " Offic e o f Inspecto rGeneral 1 Subtota l Tota l Million s of Dollar s
81. 9 199. 8 70. 5 62. 8 515. 0 930. 0 68. 0 75. 2 54. 1 44. 8 9. 5 65. 3 317. 0 36. 7 124. 7 77. 4 32. 3 271. 1 68. 0 51. 1 119. 1 43. 1 100. 8 13. 2 157. 1 1,794. 3 Percentag e o f Superfun d Budge t

5 1 1 4 3 2 9 5 2 4 4 3 2 f 4 1 8 2 7 4 2 1 5 4 3 7 2 6 1 9 10 0
SOURCE : Congressiona l Budge t Offic e usin g dat a fro m th e Environmenta l Protectio n Agency' s (EPA's ) fina l 199 2 Superfun d budget , excep t

wher e noted

. NOTE : OSWE R = EP A Offic e o f Soli d Wast e an d Emergenc y Response ; R P = responsibl e party ; R D = remedia l design ; R A = remedia l action

. a . Obligation s fo roversigh t o f RP-lea d project s wer e estimate d b y applyin g percentag e share s fro m EPA' s 199 3 budge t justificatio n t o th e 199 2 totals

. b

. Estimate d by combinin g fina l 199 2 figure s wit h percentag e share s fro m th e earlie r199 2 operatin g plan

. c . Include s administrativ e cost s o f cleanu p contractors , service s fro m th e Arm y Corp s o f Engineer s an d Burea u o f Reclamation , technica l assistanc e grant s t o loca l communities , stat e grants , contracto rservice s fo rmappin g an d fo rsuppor t o f polic y development , an d s o on . d

. Include s contracto rservice s fo rtechnica l assistance , suppor t of polic y developmen t an d waive rrequests , an d s o on . e . Include s th e EP A Office s o f Water , Air , an d Radiation ; Policy , Planning , an d Evaluation ; an d th e Administrator

. f

. Les s tha n 0. 5 percent
. g . Include s th e Agency fo rToxi c Substance s an d Diseas e Registry , Coas t Guard , Nationa l Oceani c an d Atmospheri c Administration , Federa l Emergenc

y Managemen t Agency , Departmen t o f th e Interior , an d Occupationa l Safet y an d Healt h Administration

. h

. Include s a n estimate d $3 3 millio n ( 2 percent ) fo rth e EP A Offic e o f Federa l Facilitie s Enforcement , i

. Take n fro m th e 199 2 operatin g pla n i n EPA' s 199 3 budge t justification

. j

. Include s contracto rservices , compute rtime , an d equipmen t purchase s fo rtraining , budgeting , planning , disseminatio n o f ne w technologies , emergency preparedness , an d s o on . k

. Include s rent , utilities , financia l management , contract management , compute rservices , an d s o on . I

. Actua l 199 2 obligation s fro m th e President' s 199 4 budge t request
.1 0 TH E TOTA L COST S O F CLEANIN G U P NONFEDERAL SUPERFUND SITE S January 1994 Enforcemen t

cost s accoun t

fo r 1 5 percen t

o f th e total , includin g 2 percen t fo r oversigh t

o f RP-lead remedial design s an d remedial actions
. A s note d before , th e additiona

l level o f oversight involve di n RP-leadproject s i s on e sourc e o f transactio n cost s resultin g fro mth e enforcemen t system . Mos t o f th e Superfun dbudge t

i s spent outsid e EPA ; th e agenc y relie s extensivel y o n external contractor s t o supplemen t it s ow n work

force
. Al l o f th e cost s show n i n Tabl e 2 fo r direc t response , remedia l support , removal support , laboratory analy

sis , oversigh t

o f RP-leadRD s an dRAs , an dOffic e o f Soli dWast e an dEmergenc y Respons e (OSWER ) managemen t

are dollar s spen t

o n external service s an dpurchases , a s ar e th e majorit y o f fund s fo r

th e OSWEROffic e o f

Wast e Program s Enforcement
. Thes e external cost s accoun t fo r an estimate d$1. 3 billion , o r 9 1 percen t

o f th e OSWERSuperfun dtota l o f $1. 4 billion
. Takin g EPA' s Superfun dbudge t a s awhol e (includin g th e non-OSWE Rcost s fo r general administration , researc h an ddevelopment , enforce

ment , an dsupport) , th e 199 2 appropriatio n guaran tee dtha t externa l cost s woul db e a t leas t 8 4 percen t o f th e total b y cappin g interna l cost s a t roughl y 1 6 percent . 

## State an d Privat e Expenditure s Stat e an dprivate-secto r

Superfun dspendin g i s easier t o classif y tha n federa l spendin g bu t harde r t o estimate
. State cost s relate dt o th e federa l program ar e largel y th e require dcontribution s fo r remed y constructio n an doperation s an dmaintenanc e (O&M ) at fund-lea dsites , an dEP A doe s no t directl y monito r th e O& M costs . Th e estimate o f $0. 1 billio n i n state cost s t o dat e come s fro ma199 1 EP A estimate o f $4 0 millio n (i n 199 0 dollars ) fo r cumulativ e O& M cost s throug h 199 2 plu s th e observe d$7 6 millio n (i n nomina l dollars ) pai dt o th e agenc y a s matchin g share s o f constructio n costs . (Man y state s als o hav e thei r ow n cleanu p programs , whic h incu r aful l rang e o f legal an dadministrativ e expenses . Th e cost s o f thes e program s ar e no t

include dhere. ) EP A spen t $2. 6 billio n o n remedial action s over th e same period , accordin g t o agenc y data , includin g roughl y $0. 1 billio n to $0. 2 billio n fo r oversight

o f RP-lead actions ; th e $7 6 millio n i n state matchin g contribu

tion s therefor e represent s onl y 3 percen t o f total publi c spendin g o n constructio n o f fund-lea dRAs
. Th e ga p betwee n thi s 3 percen t

an d th e statutory 1 0 percen t requiremen t

i s explaine db y EPA' s willing

nes s t o negotiate multiyea r o r deferre dpaymen t

plan s with th e states . Tota l Superfun dcost s t o th e privat e sector includ e thre e components :
o payment s mad e t o th e governmen t fo r fines , penalties , cash-ou t

settlements , an drecoverie s o f fund-lea dexpenditures ;
o cost s o f

RP-lea dcleanu p studie s an dactions ; an d
o transactio n cost s incurre db y responsibl e partie s an dthei r insurer s i n effort s t o minimiz e thei r individua l liability
. EPA doe s no t

directl y observ e th e secon dan d third type s o f costs . Th e agenc y estimate s th e valu e o f RP cleanu p commitment s bu t doe s no t

require RP s t o repor t ho w closel y actual spendin g matche s it s estimates ; no r

doe s i t trac k privat e transactio n costs . Th e directl y observe dcost s fo r fines , penalties , cash

ou t settlements , an dcos t

recoverie s represen t

onl y th e ti p o f th e iceberg o f

tota l privat e Superfun dcosts . Moreover , thes e cost s are mere "transfe r payments 11

- - i n tha t the y d o no t

reflec t additional cost s t o th e economy a s awhol e bu t onl y ashif

t o f fund s fro m th e privat e sector

t o th e government—an dthu s ar e irrelevan t t o a n analysi s o f

tota l Superfun dcosts . Th e roug h figur e o f

$6. 3 billio n i n private-secto r cost s t o dat e come s fro man observe d$0. 5 billio n i n cos t recoverie s an destimate s o f approximatel y $3. 7 billio n i n RP-leadcleanu p project s an d$2. 0 billio n i n transactio n costs . Th e $3. 7 billio n figur e fo r cleanu p cost s wa s derive db y assumin g tha t EPA' s estimate dvalu e o f

almos t $7. 5 billio n i n responsible

part y work

commitment s accuratel y predict s dolla r outlays—i n effect , assumin g that an y cos t

saving s fro mprivate-secto r

efficiencie s balanc e an y increase s fro munderestimatin g th e scop e o f th e cleanu pCHAPTE

RON E TH E SUPERFUND PROGRA M AN D IT S TYPE S O F COST S 1 1 

### problems—an dthat

hal f o f th e commitment s remai n t o b e spen t

ove r th e nex t fiv e years. 1 4 

### Th e estimate o f

$2. 0 billio n i n transactio n cost s wa s extrapolate dfro mdat ai n arecen t RAN D stud y o f fiv e larg e industria l RP s an dfou r property / casualt y insurers. 1 5 

### Th e RAN D stud y foun dthat 1 7 percent o f th e dollar s spent

throug h 198 9 b y th e responsibl e partie s a

t site s wit h tota l expenditure s over $100,000 were transactio n costs . CB O assume d that thi s rati o applie s to expenditure s b y al l RP s throug h 1992 ; with estimate dRP spendin g o n non transactio n cost s totalin g $4. 1 billio n (includin g payment s t o EP A bu t

excludin g cleanu p wor

k funde d b y RPs ' insurers) , thei r

estimate dtransactio n cost s ar e $4.1*0.177( 1 - 0.17 ) = $0. 8 billion. 1 6 

### Th e RAN D stud y als o estimate dthat th e insur

anc e industry a s awhol e spen t $41 0 millio n i n 198 9 o n transactio n cost s a

t al l hazardou s wast e sites
. O f thi s total , an estimate d4 0 percen t wa s sparke db y NP L site s an d6 0 percen t

b y non-NP L sites , includ

in g Superfun dremova l sites
. Also , 2 1 percen t o f cost s resulte dfro mclaim s fo r bodil y injur y an d property damag e rathe r

tha n claim s fo r

cleanu p cost s unde r CERCLA
. CB O assume dtha t 198 9 cost s represente done-seventh o f th e tota l betwee n 198 1 an d199 2 (becaus e cost s i n th e earl y year s wer e relativel y low ) an dtha t

NP L an dSuperfun dremoval site s togethe r

accounte dfo r

$21 0 millio n i n 198 9 insure r transactio n costs-roughl y hal f o f th e total
. Subtractin g th e cost s relate dt o injur y an ddamag e claims , thi s yield s $0.21*7*( 1 - 0.21 ) = $1. 2 billion
. 

# Othe r Groups ' Estimate s of Superfun d Cost

s Th e EP A an dagrou p o f

researcher s a

t th e Universi

t y o f Tennesse e hav e als o produce destimate s o f futur e Superfun dcosts . Thes e estimate s ar e no t comparabl e with eac h other , however , no r are the y a s comprehensiv e a s th e one s presente dhere
. I n it s annua l repor

t t o th e Congres s o n Superfun d fo r 1990 (th e mos t

recent available) , EPA projecte d fundin g requirement s o f

$16. 4 billio n i n fisca l year s 199 3 an dbeyon dan dacumulativ e tota l sinc e 198 1 o f $27. 2 billion
. Thes e estimate s ar e restricte dto cost s incurre db y th e federal Superfun dbudge t an d exclud e cost s fo r

cleanin g u p futur e NP L site s (that is , site s no t

liste da t th e en do f

fisca l yea

r 1990)
. Th e Universit

y o f Tennesse e researcher s release d report s i n Decembe

r 199 1 that

containe da"best

guess " estimate o f

$15 1 billio n fo r

cumulativ e cost s t o clean u p 3,000 nonfedera l NP L sites. 1 7 

### Th e Ten

nesse e studie s examine dth e implication s o f alterna

tiv e cleanu p policies , estimatin g tha t greate r us e o f containmen t

method s coul dreduc e futur e cost s t o $9 0 billion , an dtha t

greater relianc e o n treatmen t method s coul drais e the mt o $35 2 billion
. Thes e figure s cover

adifferen t

se t o f cost s tha n doe s th e smaller EP A estimate : the y includ e state an dprivat e remediatio n cost s fo r

NP L site s a s wel l a s federa l costs , bu t

the y omi t

expenditure s o n non-NP L remova l site s an dEPA' s enforcemen t an dmanage men t activities
.

14
. Give n th e time require dfo r engineerin g desig n befor e aremed y ca n b e carrie dout , th e followin g five-year spendou t pattern wa s assumed : zer o th e firs t

year , 2 0 percen t

eac h i n th e secondan d thir dyears , an d3 0 percen t eac h i n th e fourt h an dfift h years . 15
. Ja n Pau l Acto n an dLloy dS
. Dixon , Superfund an d Transaction Costs (Sant aMonica , Calif. : RAND , 1992)
. 16
. A follow-u p study restricte dt o 1 8 NP L site s suggest s that

smalle r firm s migh t

hav e highe r

share s o f transactio n cost s an dtha t th e nationa l averag e migh t

b e 3 2 percent . Se e Lloy dS
. Dixon , Debora h S
. Drezner , an dJame s K
. Hammitt , Private-Sector Cleanup Expenditures and

Transaction Costs at

18Superfund

Sites (Sant aMonica , Calif. : RAND , 1993)
. 

### Th e presen t CB O stud y seek s t o improv e o n it s EP A an dTennesse e predecessor s i n fou r ways . First , i t cover s abroader

rang e o f costs , includin g state an d private-secto r

cleanu p expenditure s an dth e cost s associate dwit

h futur e NP L site s (exclude dfro mth e EPA estimate) , federal implementatio n cost s (no t

17
. Se e Russell , Colglazier , an dEnglish , Hazardous Waste Remediation]an dE
. W , Colglazier , T
. Cox , an dK
. Davis , Estimatin g Resource Requirements fo r NP L Sites (Knoxville , Tenn. : University o f

Tennessee , Waste Managemen t Researc h an d Educatio n Institute , 1991)
.1 2 TH E TOTA L COST S O F CLEANIN G U P NONFEDERAL SUPERFUN D SITE S Januar y 1994


### covere di n th e Tennesse e study) , an dprivat e trans
actio n cost s (omitte dfro mboth)
. Second , becaus e a relativel y fe w "mega-sites " hav e ha damajo r impac t o n Superfun dcost s to date , CBO' s estimat e incorpo

rate s possibl e trend s i n th e averag e characteristic s o f futur e NPL sites
. Third , cumulativ e futur e expendi

ture s are reporte di n discounted , present-wort h dollars , whic h take int o accoun t th e tim e valu e o f mone y an dthereb y provid e amore usefu l measur e o f th e expenditures ' cos t

t o th e economy . Fourth , CBO' s analysi s o f

averag e cleanu p cost s incorporate s recent EP A dat ao n th e difference s betwee n initial estimate s an dfina l cost s an dallow s fo r th e possibili

t y that private-secto r

cleanup s may cos t

les s tha n thos e performe db y th e government .

### Chapter Two 

# Estimate s of

Future Superfun d Cost s



# T h e Congressiona l Budge t Offic e analyze d thre e scenario s fo r

Superfun dcost s afte r 1992 , reflectin g presen t

level s o f uncertainty abou t th e siz e o f

th e remainin g cleanu p problem
. Th e base-cas e estimat e i s $7 4 billio n i n discounted , present-worth dollars ; th e low-cas e an dhigh-cas e estimate s ar

e $4 2 billio n an d $120 billion , respec tively
. Annua l undiscounte dcost s i n th e bas e cas e pea k a t $9. 1 billio n i n 200 3 an d averag e $2. 9 billio n per yea r throug h 2070
. A majo r facto r i n thes e estimate s i s th e assume d numbe r o f site s o n th e Nationa l Prioritie s List ; th e assumption s o f

2,30 0 nonfedera l NPL site s i n th e lo w case , 4,50 0 i n th e bas e case , an d 7,80 0 i n th e hig h cas e explai n mos t

o f th e difference s i n esti

mate dcosts . Othe r

assumption s tha t

hav e amajo r impac t o n cost s are thos e regardin g th e averag e cleanu p cost s pe r

NP L site an dth e discoun t rate . Th e cos t estimate s are les s sensitiv e t o assumption s abou t remova l actions , sit

e studies , administrativ e activities , an d lega

l costs . 

# Overvie w o f

th e Method s fo r Estimatin g Cost

s CBO' s estimate s o f

futur e Superfun dcost s includ e site-base dcost s fo r

stud y an dinvestigation , cleanup , an denforcemen t

combine dwith federa l nonsit e cost s fo r progra madministratio n an dprivat e transactio n costs . T o reflec t

th e tim e valu e o f

mone y an d importan t uncertaintie s abou t

th e determinant s o f futur e costs , th e estimate s are give n i n discounted , present-wort

h dollar s an d fo r

thre e scenario s base d o n alternativ e set s o f

assumptions
. Th e basi c ide aunderlyin g th e estimate s can b e expresse di n asimpl e formula : Tota l cost s = [(numbe

r o f sites ) x (averag e cleanu p cos t

+ averag e investiga

tio n an dstud y cos t

+ averag e enforcemen t

cost) ] + privat e transactio n cost s + federa l pro gramcosts. 1 Becaus e differen t

type s o f site s hav e vastl y differen t averag e costs , however , i t i s usefu l to exten dthi s formul ab y distinguishin g betwee n NP L sites , non NPL removal sites , an dsite s evaluate dfo r possibl e inclusio n o n th e NPL
. Thi s extensio n avoid s th e us e o f asingle , overal l per-sit e cos t tha t coul db e unreli

abl e a s abasi s fo r

extrapolatin g int o th e future
. A s discusse dlater

i n thi s chapter , vastl y differen t cost s ca n als o b e foun dwithi n th e se t o f NPL sites ; accordingly , CB O furthe r distinguishe s thre e cos t categorie s o f

NPL sites—"mega-, " "major, " an d "minor " sites—t o explore possibl e change s i n th e mi x o f site s an dthei r

implication s fo r

averag e cleanu p costs .

Privat e transactio n cost s an d federal programcost s coul dals o b e analyze di n term s o f

averag e cost s per

site
. A s explaine dlater i n th e chapter , however , th e CB O analysi s treat s transactio n cost s a s amarku p o n othe

r responsible-part

y costs rather

tha n a s afixe d cos t per site , an d i t

model s programcost s a s amixtur e o f per-site costs , annua l costs , an d marku p rates .1 4 TH E TOTA L COSTS OF CLEANIN G U P NONFEDERA

L SUPERFUND SITE S Januar y 1994 

### Th e CB O analysi s als o goe s beyon dth e simpl e formul ai n takin g accoun

t o f th e yea r i n whic h acos t i s incurred , s o a s to permi t th e calculatio n o f

dis

counted , present-wort

h costs . I n measurin g th e overal l impac t

o f amultiyea

r strea mo f benefit s o r costs , economist s vie w dollar s spen t o r gaine di n th e futur e a s les s valuabl e tha n presen t dollars , fo r

tw o reason s that

correspon dto suppl y an ddeman d factors
. First , later

dollar s are easie

r to supply , i n tha t on e dolla r can b e investe dno w t o return mor e tha n on e dolla

r i n th e future
. Second , present dollar s are i n greater

demand , i n that

individual s generall y prefe r no t t o dela y gratification , al l othe r thing s bein g equal
. Accordingly , th e estimate s reporte d her e us e an annua l discoun t rat e t o rol l bac k

th e entire strea

mo f futur e cost s int o a

n equivalen t

199 3 presen t worth. 2 

### Th e CB O estimate s reflec t ami x o f

dat aan d informe dopinion
. Wher e possible , CB O base dit s assumption s o n regularitie s an dtrend s identifie di n th e Superfun dprogra mt o dat e tha t seemlikel y t o appl y t o th e future
. Becaus e dat ao n th e man y categorie s o f

site-specifi c an dnon-site-specifi c cost s are ofte n scarc e o r

unreliable , however , man y as sumption s coul donl y b e base do n subjectiv e judg

ment s reache di n consultatio n with informe dsources . Th e necessit

y o f subjectiv e judgment s prompte d CB O t o develo p alternativ e scenario s i n whic h i t coul dvary ke y assumptions
. Th e lo w an dhig h case s ar e intende dt o represen t plausibl y optimisti c an d pessimisti c scenario s o f

Superfun dcosts , capturin g betwee n the mmos t

o f th e relevan t

rang e o f uncer tainty
. Althoug h th e resultin g estimate s d o no t provid e astatistical 9 0 percen t confidenc e interval , CB O believe s that

futur e cost s are unlikel y t o li e fa r outsid e thei r

span . 

# Th e Cos tEstimate s Th e CB O estimate s o f

futur e Superfun dcost s ar e $4 2 billio n i n th e lo w case , $7 4 billio n i n th e bas e case , an d$12 0 billio n i n th e hig h case. 3 

### Thes e present
worth estimate s ar e calculate dusin g a7 percen t annual discount

rate , an dthe y exclud e th e cost s associate dwith cleanin g u p federa l facilities
. The y als o assum e n o majo r

change s i n polic y o r

break

through s i n technology ; estimate s that reflecte dthos e additional source s o f

uncertainty woul dspan awide r range . Th e present-wort

h estimate s depen dno t

onl y o n th e total dollar s spen t

bu t als o o n th e pattern o f spendin g over

time
. I n th e absenc e o f fundin g constraints , th e bas e an dhig h case s projec t tha t annua l cost s wil l ris e severalfol dthroug h th e year 200 3 an dthe n decline more gradually
. Th e shar p increase s reflec t

both timel y progres s o f existin g NPL site s throug h th e cleanu p proces s an datriplin g o r quadruplin g o f

th e siz e o f

th e NPL , partl y drive n b y an assume dbacklo g o f site s i n th e las t

stag e o f th e Environmenta l Protectio n Agency' s screenin g process . Estimate dspendin g increase s i n th e lo w cas e ar e muc h more moderat e an dshort-lived
. Responsibl e partie s pay mor e tha n hal f o f tota l cost s i n al l thre e scenarios ; th e federa l government' s share i s betwee n 3 6 percen t an d4 0 percen t

o f th e total , an dth e state shar e doe s no t excee d5 percent . B y spendin g category , sit e studie s an dcleanu p accoun t fo r mos t o f th e costs , with remedial action s at NP L site s alon e accountin g fo r hal f o f th e total
. Enforcemen t

an dtransactio n cost s togethe r represen t jus t unde r one-quarter

o f tota l costs . 

## Nationwid e Cost

s i n Tota l an d Ove r Tim e Th e base-cas e estimate o f

$7 4 billio n i s closer

to th e low-cas e figur e o f

$4 2 billio n tha n t o th e hig h case' s $12 0 billion
. Thi s reflect s acomparabl e asymmetry i n th e assume dnumber s o f ultimat e NP L sites—4,50 0 i n th e bas e cas e compare dwith 2,30 0 i n th e lo w cas e an d7,80 0 i n th e hig h case . (Se e Appendi x A fo r a summary o f

th e differen t

assumption s underlyin g th e cases. ) A s discusse dlate r i n th e sectio n abou t

site

Fo r amore detaile ddiscussio n o f discounting , se e Rober

t C
. Lind , " A Primer o n th e Majo r

Issue s Relatin g t o th e Discount Rate fo r Evaluatin g Nationa l Energ y Options, " i n Rober t C
. Lind , ed. , Discounting fo r

Time an d Risk i n Energy Policy (Washington , D.C. : Resource s fo r

th e Future , 1982)
. 3
. A s use di n thi s study , futur e "costs " (o r "spending " o r

"expendi

tures" ) generally refe r

to obligations—tha

t is , fundin g commitment s mad e a t th e beginnin g o f

aone-yea r o r multiyear project
. Th e onl y ongoin g outlay s resultin g fro mobligation s befor e 199 3 tha t ar e include di n th e estimate s o f futur e cost s are thos e fo r operation s an dmaintenanc e o f

sit e cleanup projects
. Becaus e o f their 24-yea r duration , O& M cost s ar e tracke da s outlay s i n CBO' s analysis
.CHAPTE

RTW O ESTIMATE S OF FUTUR E SUPERFUND COST S 1 5 

### assumptions , th e rang e o f

plausibl e number s o f

NPL site s i s les s clearl y define da t th e hig h en dtha n a

t th e lo w end ; thi s greate

r uncertaint

y warrant s a

n asymmetricall y hig h numbe r o f NPL site s i n th e hig h case . Annua l spendin g i n real (that is , inflation-adjust

ed ) bu t undiscounte ddollar s peak s i n th e yea r 200 3 i n al l thre e scenarios , a s show n i n Figure 2
. Th e heigh t o f th e pea k varie s dramatically , however

fro m$4. 4 billio n i n th e lo w cas e to $9. 1 billio n i n th e bas e cas e an d$14. 4 billio n i n th e hig h case . (For comparison , 199 2 obligation s wer e roughl y $ 3 billion. ) Th e path s show n i n Figur e 2 assume that fundin g i s no t

constrained ; th e consequence s o f constraint s o n th e growt

h o f Superfun dare consid

ere di n Chapte r

3
. Th e rapi dgrowth i n estimate dspendin g i n th e bas e an dhig h case s i s largel y fuele db y rapi dgrowt h i n th e Nationa l Prioritie s List , whic h add s 2,18 1 ne w nonfedera l site s b y th e yea r 200 3 i n th e bas e cas e
Figure 2 . Tota l Superfun d Expenditures , Fisca l Year s 1993-207 5 Billion s o f Real , Undiscounte d Dollar s

199 3 200 3 201 3 202 3 203 3 2043 205 3 2063 2073 SOURCE : Congressiona l Budge t Office

. NOTE : Se e Appendi x A fo rth e difference s i n assumption s under lyin g th e thre e cases . 

### an d3,37 8 ne w site s i n th e hig h case . Roughl y one thirdo f th e addition s represen t

site s brough t

t o EPA' s attentio n fo r

screenin g afte r

1992 ; th e other two-third s are draw n fro mth e 11,00 0 site s tha t

began bu t di dno t finis h th e screenin g proces s b y th e en do f 1992 , o f whic h 6,40 0 wer e i n th e final , "decision

pending " stage . Th e assumption s o f th e bas e an d hig h case s impl y tha t

th e decision-pendin g grou p include s substantial backlog s o f sites-roughl y 90 0 an d1,400 , respectively-awaitin g placemen t o n th e NPL. 4 

### Give n adequat e fundin g fo r cleanu p work

at bot h ne w an dexistin g sites , th e numbe r o f project s rise s sharply
. Th e averag e numbe r o f remedial investigations/feasibilit

y studie s starte dannuall y fro m 199 3 throug h 200 3 i s estimate dto b e 33 9 i n th e bas e cas e an d49 0 i n th e hig h case , wherea s th e actual averag e betwee n 199 0 an d199 2 wa s 115
. Over th e same period , th e averag e numbe r o f ne w remedial action s reache s 24 3 ayea r i n th e bas e cas e an d29 1 i n th e hig h case , compare dwith 10 9 i n th e 1990

- 199 2 period
. Cumulatively , th e cost s show n i n Figur e 2 tota l $10 6 billio n i n undiscounte ddollar s i n th e lo w case , $22 8 billio n i n th e bas e case , an d$46 3 billio n i n th e hig h case . Cost s are incurre dthroug h 2062 , 2070 , an d2075 , respectively ; hence , averag e annua l cost s i n undiscounte ddollar s are $1. 5 billion , $2. 9 billion , an d$5. 6 billion
. Thes e average s hav e onl y limite d significance : becaus e o f

th e necessar

y sequencin g o f cleanu p activities , total futur e cost s canno t b e pai d ou t i n equa l yearl y installments
. Average s excludin g th e fina l 2 4 year s o f

spendin g (durin g whic h al l remainin g cleanup project s are assume dto b e i n th e operation s an dmaintenanc e phase ) ar e roughl y 4 0 percen t to 5 0 percent

higher-$2. 3 billion , $4. 2 billion , an d$7. 7 billion , respectively
. 

## Cost s b y Paye r an d Categor y CB O estimate s tha t

responsibl e partie s wil l pay 5 8 percen t o f tota l present-wort

h cost s i n th e bas e cas e (roughl y $4 3 billio n ou t

o f $7 4 billion) , with th e governmen t

payin g 3 8 percen t

($2 8 billion ) an dth e

4
. N o significan t

backlo g exist s i n th e lo w case ; a s discusse di n th e nex t section , thi s cas e assume s alower valu e fo r

th e percentag e o f screenin g site s ultimatel y place d o n th e NPL
.1 6 TH

E TOTA L COST S OF CLEANIN G U P NONFEDERAL SUPERFUND SITE S January 199 4 

### state s payin g 4 percen t

($ 3 billion) , a s show n i n Tabl e 3
. Thes e figure s reflec t cost s a s initiall y paid ; subsequen t

cos t recoverie s tha t

woul dincreas e th e R P share furthe r

an ddecreas e th e federa l share are no t estimate dhere
. Also , th e estimate dcost s t o state government s cover

onl y thei r

require dcontribution s t o "fund-lead " cleanu p project s (thos e performe db y EPA) ; stat

e o r loca l governmen t

contribution s to "enforcement-lead " cleanup s (thos e performe db y responsibl e parties ) resultin g fro mliabilit y fo r individua l Superfun dsite s are include di n th e esti

mate fo r cost s to liabl e parties
. Thes e share s vary onl y afe w percentag e point s i n th e othe r

scenarios
. I n th e hig h case , tw o factor s increas e th e share pai db y responsibl e partie s t o 6 0 percen t an ddecreas e th e federa l shar e t o 3 6 percent . First , th e large r

numbe r o f NP L site s make s cleanu p cost s alarger fractio n o f

overal l spending , an dthes e cleanu p cost s are concentrate damon g th e responsibl e parties
. Second , a s discusse dlater i n th e chapter , CBO' s analysi s assume s that privat e cleanup s cos t les s tha n thos e conducte db y th e government , bu t th e assume dadvantag e i s smaller i n th e hig h cas e tha n i n th e bas e case . Conversely , th e same tw o factor s als o explai n why th e RP share fall s to 5 5 percent i n th e lo w case . Whe n base-cas e cost s are measure di n undis

counte ddollars , th e responsibl e partie s pa y 6 1 percen t o f th e total , th e federa l governmen t 3 1 percent , an dth e state s 8 percent . Th e state share o f total cost s i n undiscounte ddollar s i s twic e th e present-wort

h figur e becaus e discountin g ha s alarger impac t o n cost s tha t

ar e mor e distan t

i n tim e an d state cost s ar e primaril y fo r operation s an dmainte

Tabl e 3 . Futur e Superfun d Costs , b y Initia l Paye r (I n present-wort h an d undiscounte d dollars )

Paye r Bas e Cas e Lo w Cas e Billion s o f Dollars Percen t Billion s o f Dollars Percen t Hig h Cas e Billion s o f Dollars Percen t

Responsibl e Partie s Federa l Governmen t Stat e Governments 8 Tota l Presen t Worth , Discounte d a t 7 Percen t 42. 5 5 8 23. 2 5 5 28. 1 3 8 16. 9 4 0 3. 3

_ 4 2. 1

_ 5 73. 9 10 0 42. 2 10 0 72. 4 42. 8 5. 0 120. 1 6 0

3 6

_ 4 100 Undiscounte d Responsibl e Partie s Federa l Governmen t Stat e Governments 5 1 Tota l 139. 1 69. 9 19. 2 228. 3 6 1

3 1 8 10 0 61. 2

35. 0 9. 8 106. 0 5 8

3 3 9 10 0 295. 8

130. 2 36. 8 462. 9 6 4

2 8 8 10 0 SOURCE : Congressiona l Budge t Office

. NOTE : Se e Appendi x A fo rth e difference s i n assumption s underlyin g th e thre e cases . a . Stat e contribution s t o fund-lea d cleanup s only

. Contribution s t o RP-lea d cleanup s a t site s wher e stat e o rloca l government s shar e direct liabilit y ar e include d i n th e figure s fo rresponsibl e parties

.CHAPTE

RTW O ESTIMATE S OF FUTUR E SUPERFUND COST S 1 7


### nance , whic h occur

a t th e en do f

th e cleanu p process . R P expenditure s are similarl y back-loaded , althoug h no t to th e sam

e extent , an dtherefore als o represent alarger share o f th e total i n undiscounte ddollars
. B y expenditure category , base-cas e cost s o f remova l an dremedial cleanu p plu s site investigatio n an dstud y represen t abou t 6 4 percen t

o f futur e Superfun dcost s i n present-wort h dollar s (wit

h remedia l actio n alon e accountin g fo r 5 3 percent) ; enforcemen t

an dtransactio n cost s accoun t fo r 2 4 percent ; an dfederal cost s fo r suppor t activities , research , an dgeneral managemen t mak e u p th e remainin g 1 1 percen t

(se e Tabl e 4)
. Th e shar e
Tabl e 4

. Futur e Superfun d Costs , by Categor y (I n present-wort h an d undiscounte d dollars )
Bas e Cas e Categor y

Sit e Studie s an d Cleanup s Remedia l action s Othe r Subtota l Enforcemen t Transactio n Cost s Suppor t Activitie s Researc h an d Genera l Managemen t

Tota l Billion s

o f Dollars

39. 1 8. 5 47. 6 4. 5 13. 4 3. 7
4. 7 73. 9 Percen t Presen t Worth ,

5 3 1 1 6 4 6 1 8 5
6 100 Lo w

Billion s o f Dollars Cas e

Percen t Hia h

Billion s o f Dollars Cas e

Percen t Discounte d a t 7 Percen t
22. 4 4. 4 26. 8 2. 5 7. 7 2. 6
2. 6 42. 2 5 3

1 1 6 4 6 1 8 6
6 10 0 65. 6

13. 8 79. 4 6. 6 21. 6 4. 9
7. 7 120. 1 5 4

1 2 6 6 5 1 8 4
6 10 0 Undiscounte d Sit e Studie s an d Cleanup s Remedia l action s Othe r Subtota l Enforcemen t Transactio n Cost s Suppor t Activitie s Researc h an d Genera l Managemen t

Tota l 134. 0 17. 9 151. 9 10. 7 43. 8 10. 4
11. 4 228. 3 5 9

8 6 7 5 1 9 5
5 100 61. 1

7. 8 68. 9 4. 9 20. 2 6. 7
5. 3 106. 0 5 8

7 6 5 5 1 9 6
5 100 281. 3

35. 3 316. 6 19. 5 88. 3 15. 8
22. 7 462. 9 6 1 7 6 8 4 1 9 3
5 10 0
SOURCE : Congressiona l Budge t Office

. NOTE : Se e Appendi x A fo rth e difference s i n assumption s underlyin g th e thre e cases .1 8 TH E TOTA L COST S O F CLEANIN G U P NONFEDERAL SUPERFUND SITE S Januar y 1994 accounte dfo r

b y enforcemen t

an dtransactio n cost s doe s no t suppor t th e belie f

tha t mos t Superfun d mone y i s bein g devote dt o negotiatio n an d litigation , bu t i s consistent

with CBO' s analysi s o f spendin g throug h 1992. 5 Th e share o f

cost s goin g t o stud y an dcleanu p i s slightl y greater

i n th e hig h case—again , becaus e th e numbe r o f site s i s large r

an daverag e cleanu p cost s per sit e are higher—o r

whe n measure di n undis

counte ddollars , whic h giv e greater weigh t t o O& M costs . Th e shar e o f

stud y an dcleanu p cost s i s lowe r i n th e lo w cas e tha n i n th e bas e cas e whe n cost s ar e measure di n undiscounte ddollars , bu t th e tw o ar e essentiall y equal i n present-worth dollars , despite th e smaller numbe r o f NPL site s i n th e lo w case . Thes e fact s reflec t

th e timin g o f

th e variou s expenditures
. Becaus e fewe r

site s ar e adde di n th e future , th e existin g NPL sites—man y o f whic h hav e alread

y passe dth e stud y an dinvestigatio n stages—tak e o n greate r relativ e importance
. O n average , therefore , cleanu p cost s occu r

earlier i n th e streamo f

overal l cost s i n th e lo w cas e tha n i n th e bas e case . 

# Assumption s Abou t Numbers o f

Site s Th e ultimat e number s o f

NP L sites , non-NP L remov al sites , an dscreenin g site s are highl y uncertain
. Th e significanc e o f

thi s uncertaint y lie s i n th e fac t tha t th e numbe r

o f NP L site s i s ake y determinan t o f Superfund' s long-ru n costs . Accordingly , thi s stud y report s estimate s base dno t onl y o n abas e cas e o f 4,50 0 nonfederal NP L sites-almos t fou r time s th e curren t leve l o f 1,149 sites-bu t

als o o n alternativ e scenario s o f

2,30 0 site s an d7,80 0 site s (twic e an d roughl y seve n time s th e curren t level)
.

5
. EP A dat asugges t

tha t enforcemen t

spendin g accounte dfo r

roughl y $0. 9 billio n throug h 1992
. A s note di n Chapte r 1 , CB O estimate s that private-secto r

transactio n cost s ove r

th e same perio d were $2. 0 billion
. Hence , tota

l enforcemen t

an d transactio n cost s wer e o n th e order o f $2. 9 billion , or

2 2 percen t

o f th e estimate d$13. 4 billio n spent b y th e publi c an d privat e sectors . Th e enforcemen t

an d transactio n cost s considere dhere includ e mos t bu t no t al l o f th e out-of-pocke t

cost s resultin g fro mSuperfund * s liabilit y system . No t

include dare certai n o f

EPA' s nonenforcemen t expenses , suc h a s th e extr acost s i t incur s t o obtai n litigation

quality dat ai n it s sit

e studies
. CB O derive dthes e figure s b y combinin g esti

mate s o f th e numbe r

o f screenin g site s brough t t o EPA' s attentio n a s candidate s fo r cleanu p with estimate s o f

th e fractio n o f

thes e site s accepte db y th e NP L screenin g process . I n eac h scenario , a secon drat e wa s applie dt o th e same poo l o f candi

date site s t o estimate th e numbe r whos e contamina

tio n problem s wil l b e foun dno t t o warran t

placemen t o n th e NP L bu t

t o b e seriou s enoug h t o requir e remova l action
. Othe r assumption s determine dth e incidenc e o f futur e NP L mega-site s (define dher e a s thos e fo r whic h th e record s o f

decisio n estimate cleanu p cost s o f $5 0 millio n o r

more ) an ddistribute dsite s betwee n th e fund-lea dan dRP-lead categories
. Thes e assump tion s influenc e th e estimate s o f averag e cleanu p cost s pe r site-i n th e latte r

case , becaus e th e analysi s als o assume s that

th e privat e sector

ha s some efficienc y advantag e ove r

th e governmen t

i n performin g clean

ups . 

## Numbe r of

Screenin g Site s CBO' s bas e cas e assume s tha t 25,39 4 ne w site s wil l b e brough t

t o EPA' s attentio n fo r screening , i n additio n t o th e 36,81 4 site s alread y know n t o th e agenc y a t th e en do f

fisca l year

1992
. Th e lo w an d hig h scenario s assum e 15,15 1 an d50,00 0 additiona l screenin g sites , respectively
. Thes e assumption s are base do n alternativ e interpretation s o f

th e Superfun dexperienc e t o date
. Annua l addition s t o th e screenin g inventory betwee n 198 1 an d199 2 range dfro mahig h o f 3,73 7 i n 198 5 to alo w o f

1,04 3 i n 199 1 (se e Figure 3). 6 Th e evidenc e suggest s an overal l downwar dtrend

particularl y whe n th e 1981-198 6 addition s ar e compare dwith thos e fro m198 7 t o 1992-but it s strengt h canno t b e reliabl y determine dfro mth e handfu l o f

dat apoints
.

6
. EPA als o had 8,00 0 site s i n it s screenin g inventory a t th e en d o f fisca l yea

r 1980
. CB O doe s no t kno w wh y addition s t o th e inventory wer e s o hig h i n 198 5 or s o lo w i n 1991 ; explanation s woul dhav e t o b e sough t a t th e leve l o f

th e state governments , th e primary channel s throug h whic h EP A become s awar e o f ne w sites
.CHAPTE

RTW O ESTIMATE S OF FUTUR E SUPERFUND COST S 1 9
Figure 3 . Actua l an d Assume d Addition s t o th e Superfun d Screenin g Inventor y Thousand s o f Site s Actua l Projecte d

Lo w Cas e
198 0 199 0 200 0 201 0 202 0 203 0 204 0 SOURCE : Congressiona l Budget Office

. NOTE : Se e Appendi x A fo rth e difference s i n assumption s underlyin g th e thre e cases .
The base-cas e estimate o f 25,39 4 additiona

l screenin g site s wa s derive db y fittin g acurv e t o th e 1981-199 2 dat aan dextrapolatin g i t t o th e yea

r 2027. 7 Th e cutof

f poin t i n 2027 wa s chosen a s a subjectiv e correctio n fo r

th e indefinitel y lon g "tail " o f th e curve ; i t

can als o b e interprete da s ayea r b y whic h th e flo w o f

ne w site s wil l b e smal l enoug h t o b e handle db y somethin g othe r tha n th e presen t Superfun dprogram . Th e low-cas e figur e o f 15,15 1 site s resulte dfro mfittin g asimila r curv e t o th e dat a fro mth e lates t

si x year s (198 7 t o 1992 ) an dextrapo
latin g i t t o th e year

2022
. Th e rational e behin dthi s alternativ e i s that

th e more recen t

dat amay better

7
. Wit h th e dat asmoothe dusin g athree-yea r movin g average , th e resultin g exponential-deca y curv e wa s l,714*exp(-0.056593 * [ t - 1992]) , where t

indicate s th e year . Th e resul t i n th e lo w scenario , discusse dnext , wa s l,497*exp(-0.087737*[ f -1992]) ; data smoothin g wa s no t

require dfo r

agoo dfi t

i n thi s case . indicate th e program' s likely futur e course . Finally , th e hig h cas e assume s aslowe r decline i n screenin g site s (i n astepwis e patter n chose n fo r

simplicity) , wit h 50,000 ne w site s adde dt o th e inventory b y th e yea r 2032
. Thi s cas e implie s atota l o f 86,81 4 sites , countin g thos e already identified , whic h i s roughl y consisten t with adraf

t EP A analysi s that

estimate da tota l o f 91,00 0 site s mos t

likely t o nee devaluation. 8 Th e numbe r

o f screenin g site s i s importan t to th e estimat e o f tota l Superfun dcost s primaril y becaus e o f it s impac t

o n th e assume dnumber s o f NPL an d removal sites
. A s discusse di n th e sectio n abou t cos t assumptions , screening cost s themselve s ar e assume d t o b e relativel y mino r

i n thi s analysis , averagin g les s tha n $46,00 0 per

site
. Consequently , a1 0 percen t increas e i n th e numbe r o f futur e screenin g site s alone , holdin g constan t

th e NP L an dremova l sites , woul dad dles s tha n 0. 1 percen t t o total present
wort h cost s i n any o f

th e thre e scenarios
. 

## Numbe r of

NPL Site s Convertin g th e siz e o f

th e screenin g inventory t o th e siz e o f th e Nationa l Prioritie s Lis t require s estimatin g th e fractio n o f

screenin g site s tha t

wil l ultimatel y b e place do n th e NPL
. Accordin g t o aroug h estimat e fro mknowledgeabl e Superfun dstaff, th e futur e placemen t

rat e wil l b e i n th e neighborhoo do f 5 percent t o 1 0 percent . Unfortunately , existin g dat a are no t usefu l i n refinin g thi s estimate
. EP A revise d it s screenin g criteri ai n Marc h 1991 , an dto o fe w dat ahav e accumulate dsinc e the n to allo w th e estimate t o b e confirme do r narrowed
. Th e result s unde r

th e origina

l screenin g criteri a ar e no t usefu l either
. First , th e revise dcriteri amay no t yiel dth e same overal l acceptanc e rat e a s thei r predecessors
. Second , th e dat ao n th e performanc e

Environmental Protectio n Agency , Offic e o f Emergenc y an d Remedia l Response , Hazardou s Sit e Evaluatio n Division , "The Superfun dUnivers e Study : Interi mReport " (September 30 , 1991)
. Th e estimat

e include s 58,00

0 site s i n th e "Focused Screenin g Universe, " define da s thos e site s i n categorie s representin g "th e highes t priority fo r

possibl e sit

e discover

y an d screenin g efforts, " an droughl y 33,00

0 site s alread

y i n th e inventory a s o f Februar y 1991
. An additional 9,00 0 site s though t

to b e o f

lo w hazar d potentia l brin g amore general "Superfun dEvaluatio n Universe " t o a n estimate dtota

l o f 100,00 0 curren t an dfutur e sites
.2 0 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUND SITE S January 199 4
o f th e origina

l criteri aar

e distorte dbecaus e EPA deferre dfina l decision s o n thousand s o f site s durin g th e transitio n to th e ne w system . A s o f th e en d o f 1992 , 3. 5 percent

o f al l site s tha t

had entere dth e inventor y wer e liste d o n th e NPL , but another 1 8 percent were i n th e decision-pendin g stage , havin g survive dth e earlie

r preliminar

y assessmen t

an d sit e inspectio n phases , an d1 5 percen t awaite deither

th e PA o r SI
. I n th e absenc e o f

firme r information , CB O chos e placemen t

rate s o f 8 percen t

i n th e bas e case , 5 percen t i n th e lo w case , an d1 0 percen t i n th e hig h case . Al l thre e scenario s assume that federal facili

ties , whos e cost s ar e exclude dfro mth e analysis , continu e t

o represent

1 0 percent

o f all NP L sites
. Multiplyin g thes e placemen t rate s b y th e abov e projection s o f

tota l screenin g sites , subtractin g 1 0 percen t fo r federa l facilities , an droundin g t o th e neares t hundre dsite s yield s th e estimate s o f 4,50 0 nonfedera l NP L site s i n th e bas e case , 2,30 0 i n th e lo w case , an d7,80 0 i n th e hig h case. 9 Th e differenc e i n assume dNP L siz e betwee n th e lo w cas e an d bas e cas e (2,20 0 sites ) i s notabl y smaller tha n th e differenc e betwee n th e hig h cas e an d bas e cas e (3,30 0 sites) , reflectin g th e fac t that th e rang e o f possibl e size s i s mor e clearl y define dat th e lo w en dtha n at

th e uppe r

end
. I t i s relativel y eas y t o argu e tha t

th e ultimat e numbe r

o f nonfedera l NP L site s i s unlikel y to b e muc h belo w 2,300
. Observe d acceptanc e rate s sugges t tha t eve n i f n o more site s wer e adde dt o th e screenin g inventory , th e Nationa l Prioritie s Lis t

woul dreac h 2,40 0 site s jus t o n th e basi s o f th e 11,00

0 incomplet e site s i n th e inventory a t th e en do f

1992. 1 0

9
. Th e base-cas e calculatio n yield s (36,81 4 + 25,394)*0.08*0.9 0 = 4,47 9 « 4,500 ; th e lo w scenari o give s (36,81 4 + 15,151)*0.05*0.9 0
= 2,33 8 « 2,300 ; an d th e hig h scenari o give s (36,81 4 + 50,000)*0.10*0.9 0 = 7,81 3 - 7,800
. 10
. Focusin g o n nonfedera l sites , 8,90 3 site s had reache dth e sit e inspectio n stag e an dcomplete dth e screenin g proces s b y th e en do f 1992 , o f whic h 1,149 , or

12. 9 percent , wer e place do n th e NPL
. Applyin g thi s percentag e to th e 9,04 0 site s awaitin g th e S I an d thos e in the post-S i decision-pendin g stag e yield s 1,16 7 new NP

L sites
. Countin g th e site s tha t neve r receive dasit

e inspectio n becaus e the y wer e screene dou t at th e preliminary assessment stage , th e overal l acceptanc e rat e throug h 199 2 wa s 4. 8 percen t (1,14 9 NP L site s ou t

o f 24,11 9 fina l decisions) ; applyin g thi s rate t o th e 2,06 4 site s awaitin g th e PA yield s a n additional 9 8 NPL sites
. Th e estimate s o f tota l present-wort

h cost s ar

e highl y sensitive , thoug h no t strictl y proportional , t o the number s o f

NP L sites ; a1 0 percent

increas e i n th e assume dleve l implie s cos t increase s o f

roughl y 7 percent i n al l thre e scenarios
. Th e mai n reaso n tha t estimate dcost s ris e les s tha n 1 0 percen t i s a n issu e o f timing : th e increas e i n ultimat e NPL site s shift s th e "center

o f gravity " o f

Superfun dexpendi

ture s farthe r

int o th e futur e (sinc e near-ter mcost s includ e thos e fo r

site s already o n th e NPL) , thu s reducin g th e impac t

o n present-wort

h costs. 1 1 Th e variatio n i n assume dsiz e o f th e NPL i s th e mai n caus e o f

th e difference s i n th e scenarios ' estimate dcosts . Modifyin g th e bas e cas e b y adopt

in g th e NP L siz e assumption s fro mth e lo w cas e woul dreduc e it s estimate dpresent-worth cost s b y $2 5 billion—8 0 percen t

o f th e differenc e betwee n th e tw o scenarios
. Similarly , substitutin g th e high-cas e NPL woul drais e base-cas e cost s b y $3 8 billion , eliminatin g 8 1 percen t

o f th e differenc e i n presen t worth
. Th e assume ddifference s i n averag e cleanu p cost s an dancillar

y activitie s accoun t

fo r th e remain

in g difference s i n estimate dcosts . 

## NPL Site s b y Cos tCategor y T o varyin g degrees , eac h o f th e thre e scenario s assume s tha t

th e averag e costlines s o f remedial cleanup s fall s a s mor e site s are adde dt o th e NPL
. Th e rational e fo r

thi s downwar dtren di s th e theory tha t adisproportionat e numbe r o f th e wors t problem s wer e discovere dan dliste di n th e earl y year s becaus e o f thei r obviousnes s an dtha t

th e progra mwil l increasingl y b e "scrapin g th e botto mo f th e barrel " a s additiona l site s are listed. 1 2

11
. I n undiscounte ddollars , whic h are unaffecte db y timing , th e increas e range s fro m9. 2 percen t t o 9. 4 percen t

i n th e thre e scenarios
. Th e other

factor s contributin g to th e divergenc e fro m stric t proportionalit

y are tha t

th e cost s o f

screenin g an dremoval s at non-NP L site s are unaffecte db y th e chang e i n NP L size ; tha t som e EP A suppor

t cost s ris e les s tha n proportionately ; an d tha t th e adde dsite s hav e lowe r

averag e cleanu p cost s tha n thei r predeces

sor s a s aconsequenc e o f th e "barrel-scrapin g effect " discusse di n th e nex t section
. 12
. An extensio n o f

thi s argumen t

woul dsugges t

that al l NPL-calibe

r contaminatio n problems , no t jus t th e wors t

o f th e worst , shoul dge t scarcer ove r time , an dthu s tha t

th e rat e at

whic h screenin g site s ar eCHAPTE

RTW O ESTIMATE S O F FUTUR E SUPERFUN D COST S 2 1 

### Assumption s abou t

th e strengt

h o f thi s barrel

scrapin g effec t

can hav e asignifican t

impac t o n estimate s o f

long-ru n costs . I f

th e bas e cas e had assume dafixe ddistributio n o f NPL site s b y cos t category , it s present-wort

h estimate woul dhav e bee n $8 4 billion ; hence , th e arguabl y conservativ e leve l o f barre l scrapin g actuall y use di n th e scenari o lower s cost s b y 1 2 percent . Plausibl e steepe r trend s i n the distributio n o f

site s woul dhav e larger

impacts
. Th e ke y fac t

that make s th e barrel-scrapin g effec t an importan t

issu e i s tha t

som e Superfun dNP L site s can b e hundred s o f

time s mor e "super " tha n other s i n term s o f their cleanu p cost s (se e Bo x 2)
. Indeed , evidenc e suggest s tha t

th e mos t expensiv e 1 0 percen t o f site s hav e accounte dfo r

5 0 percen t

o f al l cleanu p costs , an dth e leas t

expensiv e hal f

o f site s hav e represente donl y 1 0 percen t o f total costs. 1 3 

### I f

thi s wid e distributio n o f

NPL cleanu p cost s i s likel y t o continu e relativel y unchanged , the n estimate s o f futur e cost s nee donl y extrapolat e fro mth e averag e per-sit e cos t

observe ds o far
. I f

not , however , the n change s i n th e compositio n o f th e NP L als o mus t

b e take n int o account . Th e availabl e dat asugges t tha t th e distributio n o f NP L site s i s changing
. I n particular , th e incidenc e o f so-calle dmega-site s appear s t o b e declining
. Defin

in g amega-sit e a s on e with cleanu p cost s o f $5 0 millio n o r

mor e (a s estimate di n th e record s o f decision) , EPA staf

f kno w o r expec t 4 4 o f th e 71 1 nonfedera l site s propose dfo r th e NP L throug h Octobe r 198 4 t o b e mega-sites , arati o o f 6. 2 percent . Th e same ca

n b e sai do f

onl y 0. 9 percen t

( 4 o f 438 ) o f th e nonfedera l site s propose dsinc e 1984
. place do n th e NP L shoul dfall
. I f ther e exist s alarg e poo l o f "lesser " potential NP L site s tha t are n o more obviou s tha n th e averag e sit

e wit h less-than-NPL-caliber

contamination , however , the n an y suc h reductio n i n th e placemen t rate migh t

b e delaye dfo r man y year s o r

b e o f limite d magnitude
. 13
. Thi s patter

n i s observe d i n tw o partl y overlappin g sample s o f NP L sites : on e sample , develope db y EPA , mixe s partial an dcomplete estimate s o f

constructio n cost s a

t 25 3 nonfederal sites ; th e other , develope db y researcher s at Resource s fo r

th e Future , include s complete estimate s o f

inflation-adjuste dcleanu p cost s (includin g operation s an dmaintenanc e costs ) a t 16 8 sites
. Outsid e th e Superfun dcontext , EP A als o foun d1 0 percen t o f site s accountin g fo r one-hal f o f total cost s i n an analysi s o f 7 9 wast e treatmen t

an d disposal facilitie s subjec t t o correctiv e actio n cleanup s unde r th e Resourc e Conservatio n an dRecovery Act ; se e Environmental Protectio n Agency , "Draf t Regulator y Impac t

Analysi s fo r

th e Final Rulemakin g o n Correctiv e Actio n fo r Soli dWast e Managemen t Units " (Marc h 1993) , p . ES-12
. 

### Th e significanc e o f th e apparen t

dro p i n th e incidenc e o f

mega-site s i s har dt o determin e now , fo r thre e reasons . First , part

o f th e fal l coul db e illusory , i f some recent

site s hav e no t

ye t receive denoug h attentio n fo r

EP A staf f t o kno w o f

their tru e costli

ness , o r i f change s i n EPA policie s hav e divide d some potential mega-site s int o multipl e piece s fo r listin g purposes . Second , th e ne t impac t o n futur e cleanu p cost s o f

an y barrel-scrapin g tren dcoul db e reduce db y apossibl e secon deffec t actin g i n th e opposit e direction
. Thi s secon deffec t assume s tha t earl y "false-positive " mistake s i n th e screenin g proces s le dt o th e listin g o f acomparativel y hig h numbe r o f inexpensiv e site s no t

containin g NPL

caliber problem s an dthu s artificiall y lowere dth e averag e cost s observe dt o date
. Third , acurren t barrel-scrapin g effec t

coul dconceivabl y b e reverse d i n th e futur e i f

acategor

y o f mega-site s i s newl y discovere do r

get s increase dattention
. Larg e area s contaminate dwith minin g waste s may prov e t o b e suc h acategory. 1 4 

### Althoug h conclusiv e dat aar e no t available , CB O consider s i t

likel y tha t

asignifican t

barrel-scrapin g effec t i s reducin g averag e cleanu p cost s an dwil l continu e t o d o so . I n ligh t o f th e curren t

uncertainty , th e thre e scenario s analyze dher e emplo y differen t assumption s abou t

th e strengt

h o f th e effect , wit

h al l thre e errin g o n th e conservativ e sid e b y assumin g les s barre l scrapin g tha n th e limite ddat asuggest . Th e analysi s distinguishe s thre e cos t categorie s o f site s o n th e NPL : mega- , major , an dmino r sites , define da s thos e with estimate dpresent-worth cost s o f $5 0 millio n or

more , betwee n $2 0 millio n an d$5 0 million , an dles s tha n $2 0 million , respectively
. Th e assume ddecline i n mega-site s an dmajo r site s occur s mos t

rapidl y i n th e lo w cas e an dmos t

14
. A recent

Congressiona

l repor t indicate d that

th e Departmen t

o f th e Interio r ha s jus t begu n surveyin g it s land s fo r minin g site s needin g cleanu p o r

reclamation ; se e Hous e Committe e o n Natural Re

sources , Subcommitte e o n Oversigh t an dInvestigations , "Dee p Pockets : Taxpayer

Liabilit y fo r Environmental Contamination, " Majorit y Staf

f Report (Jul y 1993)
. Th e report

sai dtha t th e numbe r o f abandone d min e site s o n Interio r land s ma

y b e i n th e hundred s o f thousands , bu t

i t di dno t estimate th e numbe r

needin g significan t cleanu p o r

th e averag e cos t

per site
. Suc h site s contribut e t o th e tota l nationa l bil l fo r

cleanu p bu t

no t th e Superfun dbill , sinc e thei r cost s ar e born e b y th e Interio r Departmen t

an dresponsibl e privat e parties
.2 2 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUN D SITE S January 199 4


### Bo x 2 . Example s o f

Mega- , Major , an d Mino r Site s Mega-site : Th e 22-acre Whitmoye r Laboratorie s sit

e i n Jackso n Township , Pennsylvania , i s i n alargel y agricultural area . Portion s o f th e sit e ar e i n th e 100

- yea r floodplai n o f

th e Tulpehocke n Creek , an d an estimate d 2 0 residence s i n th e vicinity us e th e under

lyin g aquife r

fo r drinkin g water . Whitmoyer

produce d organi c compound s contain

in g arseni c o n th e site betwee n 195 7 an d 1964
. In 1964 , widesprea d groundwate r contaminatio n wa s discovered , leadin g th e owner s t o plac e concentrate d waste s i n aconcret e vaul t an d star t apump-and-trea t operatio n t o clean th e groundwater
. Sludg e fro mth e groundwate r

treatmen t

wa s place d i n on-site lagoon s i n 1977
. I n 1986 , th e Environmenta l Protectio n Agenc y (EPA ) discovere d arseni c contaminatio n i n nearb y well s an d bega n providin g resident s with bottle d water . Th e las t

owner s abandone d th e sit e i n 1987
. EP A divide d th e cleanu p work at th e site int o thre e operabl e units
. Th e firs t deal t with 69,000 gallon s o f

concentrate d liqui d waste s i n tank s an d pipe s nea

r th e creek ; th e secon d addresse d roughl y 29,00 0 cubi c yard s o f

vaul t an d lagoo n waste s an d miscellaneou s chemical s remainin g o n th e site , plu s contaminate d building s an d equipment ; an d th e thir d focuse do n 116,00

0 cubi c yard s o f

contaminate d soi l an dsedimen t

an d th e contaminate d groundwater
. Th e remedie s selecte d b y EP A involve d demolition , excavation , off-sit e therma l o r biological treatment , on-sit e incineratio n an d fixation , groundwate r treat
men t (physical , chemical , an d possibl y biological) , capping , an d off-sit e an d on-sit e disposal
. Estimate d present-worth cost s fo r th e thre e operabl e unit s totale d $124 million , whic h qualifie s th e site a s a mega-sit e fo r

purpose s o f

th e Congressiona l Budget Office' s (CBO's ) analysis
. Majo r site : Th e Northsid e Landfil l occupie s 34 5 acre s i n amixe d residentia l an d agricultura l are ao f Spokane , Washington
. One-third o f th e site lie s ove r alarg e aquife r

tha t serve s th e Spokane-Coeu r d ' Alen e area . Th e landfil l began acceptin g residentia l an d ligh t commercial refus e fro mth e cit y o f Spokan e an dothe r publi c an d privat e hauler s i n th e 1930s , an d i t wa s stil l i n us e whe n EPA complete d it s record o f deci

sio n in 1989
. Investigation s in 198 1 and 198 3 reveale d th e presenc e o f volatil e organi c compound s beneat h th e sit e an d i n residential well s northwes t o f it
. Th e cit

y responde d b y supplyin g th e 1 9 affecte d residence s with bottle d wate r an d the n extendin g municipal wate r

line s t o th e area . Th e remedy EP A selecte d fo r th e sit e include d closin g an d cappin g th e landfill' s fou r disposal areas , pumpin g an d treatin g th e groundwate r unti l closure o f th e landfil l reduce s contaminatio n belo w targe t levels , an dimplementin g institutiona l control s t o restric t acces s t o th e site an d preven t constructio n o f

well s tha t woul d dra w o n contaminate d water . Th e cos t estimate fo r

thi s remed y wa s $3 0 million , placin g th e sit e i n CBO' s "major " cos t category . Mino r site : Th e Voge l Pain t

an d Wax sit

e i s atwo
acr e disposa l area , part

o f a n 80-acr e trac t outsid e Maurice , Iowa
. Adjacen t lan d us e i s primaril y agricultural
. A n aquife r beneath th e sit

e supplie s privat e well s an d th e Southern Siou x Count y Rura l Wate r System
. Pain t sludge , resins , solvents , an d othe r waste s fro mpain t

manufacturin g wer e dispose d o f at th e site betwee n 197 1 an d 1979
. Record s indicat e that roughl y 43,00 0 gallon s o f organi c chemical s an d 6,000 pound s o f

meta l waste s wer e burie d i n trenche s durin g thi s period
. Th e owne r covere d th e disposal are awith aclay ca

p i n 1984
. EPA' s chose n remed y fo r thi s site include d either biological o r

thermal treatmen t

o f 3,000 cubi c yard s o f contaminate d soil ; off-sit e incineration , recycling , o r disposal o f

th e waste s themselves ; groundwate r pumpin g an d treatmen t usin g ai r

stripping ; an d monitorin g o f

th e ai r an d groundwater
. With an estimate d cleanu p cos t

o f les s than $1. 9 million , thi s site i s amino r

site i n CBO' s classification
.
SOURCE : Adapte d fro mEnvironmental Protectio n

Agency , RO D Annual

Report, variou s years .CHAPTE

RTW O ESTIMATE S OF FUTUR E SUPERFUND COST S 2 3 

### graduall y i n th e hig h cas e (se e Tabl e 5)
. Nonethe

less , th e lo w cas e ha s th e highes t overal l proportio n o f mega-site s becaus e th e smaller numbe r o f NPL site s i n that

scenari o give s th e barrel-scrapin g effec t les s o f a n opportunit

y to tak e hold
. Th e thre e scenario s als o diffe r i n th e proportion s o f majo r an dmino r

site s amon g th e firs t

71 1 nonfed

era

l NPL sites
. Cos t

estimate s fo r

man y o f thes e site s remai n incomplete , makin g i t impossibl e to kno w exactl y ho w man y wil l en du p i n eac h cate
gory . (Estimate s fo r

man y earl y mega-site s are als o incomplete , bu t

th e greater

notoriet y o f thes e site s allow s their

numbe r to b e specifie dmor

e precisely
. Al l scenario s assume that

mega-site s constitut e 6. 5 percent o f th e firs t 71 1 sites , o r

4 6 site s i n all ,

Tabl e 5 . Assume d Distributio n of NP L Sites , by Cos t Categor y (I n percent) Mega-Sit e Majo rSit e Mino rSit e

Firs t 71 1 Site s Nex t 98 9 Site s Nex t 1,20 0 Site s Nex t 1,60 0 Site s Al l 4,50 0 Site s Tota l Numbe ro f Site s Bas e Cas e 6. 5 4. 0 2. 0 2. 0 3. 1 

### 14 1 

### 18. 7 13. 0 8. 0 6. 0 

### 10. 1 45 4 74. 8 83. 0 90. 0 92. 0 86. 8 3,90 5 LowCas e Firs t 71 1 Site s Nex t 78 9 Site s Nex t 80 0 Site s Al l 2,30 0 Site s Tota l Numbe ro f Site s 6. 5 4. 0 2. 0 4. 1 

### 9 4 

### 14. 0 10. 0 6. 0 9. 9 22 7 79. 5 86. 0 92. 0 86. 0 1,97 9 Hig h Cas e Firs t 71 1 Site s Nex t 1,18 9 Site s Nex t 1,60 0 Site s Nex t 4,30 0 Site s Al l 7,80 0 Site s Tota l Numbe ro f Site s 6. 5 5. 0 3. 5 2. 0 3. 2 24 7 23. 3 20. 0 16. 5 12. 0 15. 2 1,18 4 70. 2 75. 0 80. 0 86. 0 81. 7 6,36 9
SOURCE : Congressiona l Budget Office

. NOTES : Sit e type s are define d b y cleanu p cost s a s estimate d i n th e record s o f decision

. Estimate d present-wort h cost s fo rmega-site s are $5 0 millio n o rmore ; fo rmajo rsites , betwee n $2 0 millio n an d $5 0 million ; an d fo rmino rsites , les s tha n $2 0 million

. Se e Appendi x A fo rth e difference s i n assumption s underlyin g th e thre e cases . NP L = Nationa l Prioritie s List

.24 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUN D SITE S January 199 4 thereb y buildin g i n asmal l cushio n o f tw o additional case s o n to p o f

th e 4 4 already identified. ) Base do n dat ao n 27 3 cleanup project s a t 25 3 nonfederal sites , th e bas e cas e here assume s that 2 0 percent

o f th e non-mega-site s (or

18. 7 percen t

o f all sites ) i n thes e earl y cohort s wil l b e majo r sites ; th e lo w an d hig h case s us e 1 5 percen t

an d 2 5 percent

for thi s ratio , respectively
. 

## Non-NP L Removal Site s Al l thre e scenario s assum e tha t 7 percen t o f th e site s i n th e screenin g inventory ultimatel y become nonfed

era l non-NP L removal site s (thos e requirin g limite d o r emergency , bu t

no t long-term , cleanup)
. Thi s assumptio n i s an extrapolatio n o f experienc e t o date
. O f al l site s that

ha d begu n th e screenin g process , th e fractio n tha t

wer e nonfedera l non-NP L site s with on e o r more removal s starte dwa s 5. 8 percen t i n 1992 , up fro m5. 4 percent

i n 199 1 an d 4. 8 percent i n 1990. 1 5 Th e upwar dtren di n recen t year s suggest s that

th e ultimat e percentag e o f

non-NP L remova l site s may excee d7 percent ; however , man y o f th e site s includ

e di n th e curren t

5. 8 percen t

may late r

b e reclassifie d a s NPL sites
. Th e reaso n fo r

usin g th e same assumptio n i n al l scenario s i s no t

tha t thi s percentag e i s know n with precision , bu t

tha t th e uncertainty i s relativel y unim

portan t to th e estimate s o f

tota l costs . A 1 0 percen t increas e i n th e numbe r

o f futur e non-NP L remova l site s woul dad dn o mor e tha n 0. 3 percen t t o project

e dpresent-worth cost s i n an y o f thes e scenarios
. Th e us e o f

NP L placemen t

rate s o f 5 percen t

t o 1 0 percent , compare dwith a n assumptio n o f

7 percen t fo r non-NP L remova l sites , doe s no t impl y tha t th e nationa l total o f

"modest " wast e problem s tha t coul db e handle dthroug h EPA' s removal author

itie s i s simila

r to , o r eve n les s than , th e numbe r o f NPL-calibe r

problems
. Man y o f

th e simple r

prob

lem s ar e resolve db y privat e voluntary actio n o r b y state agencie s rathe r tha n throug h th e federa l Super

fun dprogram . 

## Site s b y Lead Part

y i n Cleanup Thi s analysi s als o classifie s cleanu p project s a t NPL an dnon-NP L site s a s R P lead s o r fun dleads—tha t

is , a s performe d(an dpai dfor ) b y th e responsibl e partie s unde r EP A supervision , o r

directl y b y EPA
. Th e divisio n o f

project s b y leadparty obviousl y affect s th e distributio n o f

cost s betwee n th e publi c an d privat e sectors ; i t

may als o affec t

th e cos t tota l if , a s man y observer s believe , th e privat e secto r can performth e same wor

k les s expensivel y tha n EPA. 1 6 Th e distribution s o f

leadpartie s assume di n thi s analysi s vary b y typ e o f

cleanup o r

stud y project , bu t the y d o no t

vary b y scenario
. Base do n th e result s observe di n th e firs t

thre e year s o f

EPA' s enforce

ment-firs t policy , CBO' s analysi s assume s that responsibl e partie s wil l take th e leadi n 2 5 percen t o f futur e removal project s at non-NP L sites , 4 0 percen t o f removal s a

t NPL sites , 5 0 percen t

o f remedial investigations/feasibility studies , an d7 0 percen t o f remedial design s an d remedia l actions
. Tota

l cost s i n th e thre e scenario s are no t strongl y sensitiv e t o thes e percentages . Raisin g th e RP-lead share fo r RD s an dRA s fro m7 0 percen t t o 7 5 percen t

reduce s cost s b y 1. 5 percen t

i n th e lo w case , wher e th e assume dprivate-secto r

cos t advantag e i s th e largest , an dles s i n th e other

cases—provide dthat

privat e transactio n cost s d o no t chang e a s aresul t

o f th e increas e i n RP leads
. Dependin g o n th e relativ e contentiousnes s o f

RP-lea dcleanup s an do f cost
is
. More precisely , 2,03 1 non-NP L site s other tha n federal facilitie s hadstarte don e o r

more removal s b y th e en d o f 1992 , an d 34,79 3 federal an d nonfedera l site s ha d receive d a t leas t apreliminar

y assessment

(th e firs t

stag e o f

th e screenin g process ) o r apre screenin g removal
. 16
. A repor t release dafte r

CB O complete dit s analysi s provide s some suppor t fo r thi s belief

. Th e report , commissione db y th e Depart

men t o f Energy , compare d5 8 "environmental restoration " (ER ) cleanup s conducte db y th e departmen t with 23 3 other

publi c an d privat e cleanu p projects
. Statistica l analysi s correctin g fo r

differ

ence s i n suc h factor s a s volum e o f waste , contaminate dmedia , an d cleanu p technolog y indicate dthat th e ERproject s cos t

1 5 percen t more tha n th e other

governmen t

cleanup s (includin g fund-lea d Superfun dcleanups ) an d3 2 percen t mor e tha n th e privat e cleanups
. Thes e finding s impl y that private-secto r

cost s ar e 1 3 percent

lowe r tha n thos e i n th e (non-ER ) publi c sector , withi n th e rang e o f th e CB O assumption s give n i n Tabl e 8
. Se e Departmen t o f Energy , Offic e o f Environmental Restoratio n an dWast e Management , "Projec t Performanc e Study " (prepare db y Independen t Projec t Analysis , Inc. , Reston , Va. , November 1993) , pp . iii-v
.CHAPTE

RTWO ESTIMATE S OF FUTUR E SUPERFUND COSTS 2 5
recover y effort s afte r

fund-lea dcleanups , change s i n transactio n cost s coul dsupplement , reduce , o r eve n revers e th e direc t

savings
. Th e share o f

remedial action s undertake n b y EP A i s ake y determinan t o f futur e cost s t o th e states . A s note di n Chapter 1 , state government s provid e 1 0 percent

o f the capita

l cost s o f

all fund

lea dRA s an d bea

r al l th e associate dcost s fo r operation s an dmaintenanc e (excep t th e firs t 1 0 year s o f cost s fo r apump-and-treat

remed y fo r

ground

water). 1 7 CBO' s assumption s abou t th e types , costs , an dduration s o f

O& M project s impl y that state s pa y 5 4 percen t

o f th e publi c sector' s present-wort h cost s fo r O& M (usin g a7 percen t discoun t rate) , o r 7 2 percen t o f th e cost s measure di n undiscounte d dollars
. Th e present-worth shar e i s lowe r becaus e discountin g give s greater weigh t t o th e front-loade d federa l contributions
. 

# Assumption s Abou t Direc tRespons e Cost

s Estimate dcost s fo r

direc t response—tha t

is , fo r site

specifi c screening , study , an dremova l an dremedial action—constitut e th e lion' s share o f total Superfun d cost s i n al l scenarios , wit h th e share rangin g fro m6 4 percen t i n th e lo w cas e t o 6 6 percen t i n th e hig h case . I n turn , cost s fo r remedial actio n (majo r cleanup ) a

t NPL site s represen t

th e larg e majorit y o f al l direc t respons e costs-8 2 percent o r more i n th e thre e cases . Consequently , assumption s abou t aver ag e R A cost s are secon di n importanc e onl y t o thos e abou t th e numbe r

o f NP L site s i n term s o f thei r impac t o n total estimate dcosts . Th e analysi s describe dbelo w le d CB O to assum e tha t cost s fo r fund-lea dremedial action s i n th e bas e cas e are $16 9 millio n fo r

eac h mega-site , $5 0 millio n fo r eac h majo r

site , an d$2 1 millio n fo r eac h mino r site , with RP-lead cleanup s costin g 2 0 percen t les s for al l thre e type s o f

site s (see Tabl e 6). 1 8 Thes e assumption s yiel da

n averag e cos t

o f $2 5 millio n for th e 4,50 0 NPL site s (o r

roughl y $2 8 million , befor e th e 2 0 percen t

RP-leadsavings)
. Severa l factor s make thes e estimate s uncertain
. I n recognitio n o f thi s uncer-tainty , th e lo w an d hig h scenario s make alternativ e assumption s that , whe n couple dwit h th e distribution s o f

sit e type s show n i n Tabl e 5 , resul t i n averag e cost s per

sit e o f $2 3 millio n i n th e lo w cas e an d$2 9 millio n i n th e hig h case . Th e estimate s o f

tota l Superfun dcost s ar

e sensitiv e t o th e assumption s abou t averag e RA costs . Fo r example , a1 0 percen t

increas e i n th e assume d R A cost s fo r

majo r NP L site s woul drais e total cost s b y 1. 4 percent

i n th e bas e case , a s show n i n Tabl e 7 , an da n increas e i n th e private-secto r efficienc y advantag e fro m2 0 percen t to 2 5 percen t

o f EPA cost s woul dreduc e tota

l expenditure s b y 3. 6 percent . Th e averag e cost s per

sit e fo r non-R A cleanu p an dstud y are bot

h les s uncertai n (becaus e th e dat a are mor e plentifu l an d les s variable ) an d les s impor

tan t t o an estimate o f

overal l Superfun dcost s (be

caus e non-R A cost s are smal l relativ e t o RA costs)
. Consequently , CBO' s analysi s use dth e same cos t assumption s fo r

non-R A respons e activitie s i n al l thre e scenarios : Sit e Screenin g Preliminar

y assessment s Sit e inspection s $10,000 pe r sit e $65,000 pe

r sit e Removal s $600,000 eac h Remedia l Investigations / Feasibilit y Studie s Remedial Design s $1. 2 millio n eac h $ 1 millio n eac h

17
. Base do n dat afro mEP A an dresearcher s a t Resource s fo r

th e Future , CB O assume dthat 4 7 percent

o f remedia l action s involv e contaminate dgroundwater ; that present-wort

h O& M cost s fo r groundwate r

remedie s averag e 4. 7 time s thos e fo r other cleanup s (a

t th e 1 0 percen

t discount rate commonl y use di n EPA' s record s o f decision) ; an dthat

O& M continue s fo r

3 0 year s i n groundwate r case s an d 2 0 year s i n al l others
. 18
. Thes e averag e cost s appea r inconsistent

wit h th e cos t range s use d to defin e majo r

site s (betwee n $2 0 millio n an d $5 0 million ) an d mino r site s (below $2 0 million)
. The definition s ar e basedo n cleanu p costs a s estimate din EPA' s record s o f decision ; the average s use di n thi s analysi s incorporat e informatio n o n cos t growt h afte r th e RO D estimates
.2 6 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUN D SITES January 199 4 Thes e cost s appl y t o fund-lea dactivities ; enforce

ment-lead removals , RI/FSs , an d remedia l design s cos t less , sharin g th e same private-secto r efficienc y advantag e assume d i n eac h scenari o fo r remedia l actions
. 

## Estimatin g th e Cost

s of Remedial Actio n Cleanu p ha s bee n complete d a t to o fe w NPL site s fo r observe d cost s to provid e agoo d indicatio n o f averag e remedia

l actio n costs . Accordingly , CBO' s analysi s began instea d with th e estimate d cost s give n i n th e record s o f decisio n tha t

EP A issue s fo r

it s remedia l cleanups
. I n usin g th e ROD s to explore averag e cost s a

t NPL sites , thre e problem s had to b e addressed
. o Th e RO D estimate s are no t alway s calculate d o n aconsisten t

basi s an dofte n understat e th e actual cost s that

are ultimatel y incurred
. o Man y ROD s onl y discus s cleanu p o f an opera bl e uni t (subsite) , leavin g th e cos t pictur e incomplete fo r

th e sit e a s awhole
. o Th e RO D estimate s d o no t attemp t t o incorpo

rat e an y private-secto r

efficiencie s that

woul d

Tabl e 6 . Averag e Present-Wort h Cost s pe r Sit e fo r Fund-Lea d Remedia l Action , b y Sit e Typ e (I n million s o f dollars )
Bas e Cas e Lo w Cas e Hig h Cas e Mega-Site s Capita l Operation s an d maintenance 8 Tota l Majo rSite s Capita l Operation s an d maintenance 8 Tota l Mino rSite s Capita l Operation s an d maintenance 8 Tota l Memorandum : Averag e Tota l Cos t fo rAl l NP L Sites , Befor e Private-Secto rEfficienc y Advantag e NP L Averag e Afte rPrivate-Secto rAdvantag e 107. 6 61. 6 169. 2
33. 0 16. 9 49. 9
14. 0 6. 9 20. 9

28. 5 24. 7 102. 6

58. 9 161. 5
28. 9 14. 8 43. 7
14. 0 6. 9 20. 9

28. 9 23. 3 112. 7 65. 0 177. 7
37. 0 19. 0 56. 0
14. 0 6. 9 20. 9

31. 2 29. 1
SOURCE : Congressiona l Budge t Office

. NOTES : Sit e type s ar e define d b y cleanu p cost s a s estimate d i n th e record s o f decision

. Estimate d present-wort h cost s fo rmega-site s ar e $5 0

millio n o rmore ; fo rmajo rsites , betwee n $2 0 millio n an d $5 0 million ; an d fo rmino rsites , les s tha n $2 0 million

. Se e Appendi x A fo rth e difference s i n assumption s underlyin g th e thre e cases . NP L = Nationa l Prioritie s List , a . Operation s an d maintenanc e cost s ar e discounte d a t 7 percent
.CHAPTE

RTWO ESTIMATE S OF FUTUR E SUPERFUND COSTS 27 Tabl e 7 . Sensitivit

y o f Present-Wort h Cos t Estimate s t o Assumption s Abou t Remedia l Actio n Cost s (I n percent ) Bas e Cas e Low Cas e Hig h Cas e Effec t o f a 1 0 Percen t Increas e i n Remedia l Actio n Cost s Mega-sit e Majo rsit e Mino rsit e Al l site s Effect o f a 5-Percentage-Poin t Increas e i n th e Private-Secto rCos t Advantage * 1. 4 1. 4 42 7. 0 -3. 6 1. 7 1. 2 M 7. 2 

### -3. 9 1. 5

2. 2 3 7 7. 4 -3. 3
SOURCE : Congressiona l Budge t Office

. NOTES : Sit e type s ar e define d b y cleanu p cost s a s estimate d i n th e record s o f decision

. Estimate d present-wort h cost s fo rmega-site s ar e $5 0

millio n o rmore ; fo rmajo rsites , betwee n $2 0 millio n an d $5 0 million ; an d fo rmino rsites , les s tha n $2 0 miilion

. Se e Appendi x A fo rth e difference s i n assumption s underlyin g th e thre e cases , a . Thi s chang e affect s th e cos t o f enforcement-lea d removal s an d studies , a s wel l a s remedia l actions

. 

### lowe r th e cost s o f

cleanup s le db y th e respon sibl e parties
. Th e startin g poin t

fo r CBO' s analysi s wa s th e dat ase t EPA use s to underpi n it s projection s o f futur e cost s t o Superfund
. Thi s dat ase t contain s estimate s o f

capital cost s fro m27 3 ROD s (no t countin g duplicat e entrie s o r thos e fo r federa l facili

ties)
. However , problem s o f reliability an dcompre hensivenes s limite dth e usefulnes s o f th e entrie s o n mega - an dmajo r

sites. 1 9 

### Fo r

thes e sites , CB O relie d instea do n arevie w o f

individua l ROD s fo r

al l know n o r suspecte dmega-site s an dase t o f 3 4 majo r sites , update dwith informatio n fro mknowledgeabl e EPA staff
. Wheneve r possible , CB O obtaine doperation s an d maintenanc e cost s fo r

majo r an dmega-site s fro m individua l RODs
. Wher e informatio n o n O& M cost s wa s lacking , averag e share s o f O& M cost s i n tota

l costs , obtaine dfro mthos e ROD s with complete detail , wer e applie da s defaul t values
. Thes e defaul t share s wer e calculate dfo r differen t cos t categorie s an drange dfro m1 4 percen t (fo r ROD s with esti

mate dcapita

l cost s abov e $3 0 million ) to 3 5 percent (fo r thos e with capita

l cost s belo w $2 0 million)
. Fo r mino r sites , afourth rati o wa s derive dfro madat a se t develope db y researcher s at Resource s fo r

th e Future ; thi s rati o wa s base do n th e 18 4 ROD s with capital cost s belo w $1 5 million
. I n al l cases , O& M spendin g wa s assume dt o occur i n equal installment s over 2 4 years , th e averag e duratio n seen amon g al l 21 4 ROD s i n th e dat aset . Becaus e actua l cleanu p cost s commonl y excee d thos e estimate di n aROD , CB O analyze dprelimi

nary dat afro man EP A surve y o f post-RO D change s i n capital cost s an dgathere dsite-specifi c informatio n fro mEP A staff
. Th e surve y o f 22 6 case s foun dtha t th e larges t

percentag e increase s i n cost s tende dt o occur at cleanu p project s with th e leas t expensiv e RODs : wherea s th e dollar-weighte daverag e increas e fo r th e whol e sampl e wa s 4 4 percent , ROD s with estimate dcapita

l cost s unde r

$1 3 millio n showe da

n

19
. Whe n CB O began it s revie w i n th e summe r o f 1992 , th e dat ase t include d duplicat

e entries , entrie s that

double-counte d th e costs o f ROD s coverin g tw o sites , entrie s tha t include dth e cost s o f operatin g an dmaintainin g th e remed y a s wel l a s th e capital costs , an dman y entrie s obtaine dfro munreliabl e preliminary sources . (EP A ha s sinc e take n step s to correc t thes e problems. ) Moreover , th e limite dsampl e di dno t provid e complete dat ao n th e mega-sites , whos e cost s are particularl y importan t t o th e overal l average .2 8 THE TOTA L COST S O FCLEANIN G UP NONFEDERAL SUPERFUND SITE S January 199 4 Tabl e 8 . Scenario-Specifi c Assumption s Abou t Remedia l Actio n Cost s (I n percent ) Bas e Cas e Lo w Cas e Hig h Cas e Defaul t Scalin g Assumption s Use d fo rSite s wit h Cleanu p Project s No t Ye t Estimate d Mega-site s ove r$15 0 millio n Al l othe rmega-site s Majo rsite s Efficiency Advantag e o f Privat e Secto r 12 0 13 5 16 0 2 0 11 0

11 0 12 0 3 0 13 0

16 0 20 0 1 0
SOURCE : Congressiona l Budge t Office

. NOTES : Sit e type s ar e define d b y cleanu p cost s a s estimate d i n th e record s o f decision

. Fo rmega-sites , th e estimate d present-wort h cleanu p cost s ar e $5 0 millio n o rmore ; fo rmajo rsites , betwee n $2 0 millio n an d $5 0 million

. Se e Appendi x A fo rth e difference s i n assumption s underlyin g th e thre e cases .
averag e increas e o f

8 0 percent. 2 0 Thi s latte r rate wa s assume d t o appl y t o al l ROD s fo r mino r sites
. Wher e specifi c informatio n wa s no t availabl e at

th e mor e costl y sites , defaul t value s o f

2 6 percent , 3 4 percent , an d 1 2 percent wer e derive d fo r

project s with estimate d capita l cost s abov e $4 4 million , betwee n $2 0 millio n an d $4 4 million , an d belo w $2 0 million , respectively. 2 1 I n al l cases , post-RO D growth o f

O& M cost s wa s assume d t o b e hal f that o f capital costs . A s note d earlier , site s ma y b e divide d int o operabl e unit s tha t

receiv e separate RODs ; i n fact , EP A estimate s tha t

th e averag e site receive s 1. 8

20
. Becaus e o f

th e invers e correlatio n betwee n aROD' s initia l cos t estimat e an dit s subsequen t percentag e cos t

growth , th e simpl e case-by-cas e averag e fo r

th e whol e sampl e i s 15 7 percent , muc h higher tha n th e dollar-weighte d averag e o f 4 4 percent . Thes e figure s mus t

b e considere d preliminary ; at present , fo r

example , th e dat acontai n bot

h intermediate update s o f

estimate d cost s an dactual observe dcosts . Note that post-RO D cos t

growt h i s o f interes t here onl y i n calcula

tion s o f averag e actual cleanu p costs . Additional experienc e migh t lea dEP A t o rais e it s RO D estimate s i n th e futur e an dthu s reduc e averag e cos t

growth , bu t

tha t woul dhav e n o effec t

o n actual clean

up cost s per

site
. 21
. Th e apparen t

invers e relationshi p betwee n RO D estimate s an dpost
RO D cos t

growt h i s violate d b y th e 1 2 percen t averag e growt

h observe dfo r

ROD s wit h estimate d capital cost s betwee n $1 3 millio n an d$2 0 million
. Thi s deviatio n fro mth e pattern may resul t fro msmal l sampl e size : th e dat aset o f 22 6 case s include d onl y 1 7 i n th e $1 3 millio n to $2 0 millio n range . RODs
. CBO' s analysi s use s thi s rati o t o conver t fro mcost s per

RO D t o cost s per

sit e a t mino r NP L sites
. A t th e more expensiv e sites , however , evi

denc e suggest s that

cost s are no t

distribute d evenl y amon g asite' s ROD s an d thu s that smalle r scalin g factor s shoul d b e applie d t o incomplet e site s tha t already hav e avery expensiv e ROD
. (Amon g 1 9 mega-site s with complete set s o f RODs , th e firs t RO D wit h cost s i n th e mega-site range-o r i f none , th e mos t expensiv e ROD—account s fo r an averag e o f 7 0 percen t

o f total estimate d capital costs. ) Th e defaul t scalin g assumption s vary widel y amon g scenarios , reflectin g th e grea t uncertainty surroundin g thi s facto r

(se e Tabl e 8)
. Nonetheless , sinc e th e assumption s ar e use d onl y wher e site-specifi c infor

matio n i s no t

available , the y d o no t

resul t i n larg e difference s i n averag e R A cost s o r tota l Superfun d expenditures. 2 2 Eac h scenari o als o assume s acos t advantag e fo r private-secto r

studie s an d cleanup s (se e Tabl e 8)
. Suc h advantage s ar e widel y though t t o exist ; variou s observer s argu e that

responsibl e partie s emplo y more

22
. Defaul t

value s wer e use d fo r

1 2 o f 4 6 mega-site s an d9 o f

3 4 majo r sites
. Adoptin g th e high-cas e assumption s i n th e bas e cas e woul d rais e averag e present-wort h cost s fro m$24. 7 millio n to $25. 4 millio n pe

r sit e an d increas e tota

l discounte d Superfun dcost s b y 2. 5 percent .CHAPTE

RTW O ESTIMATE S O F FUTUR E SUPERFUND COST S 2 9 experience dprojec t

manager s wh o can respon dmore creativel y t o situation s encountere ddurin g cleanup , tha t governmen t

procuremen t

regulation s leadt o costl y delay s o r

awar djob s t o lo w bidder s wh o may b e les s efficient , an dthat certai n efficien t

contractor s choos e no t

t o bi d o n governmen t

projects
. Althoug h individual case s can b e identifie di n whic h aprivate

secto r cleanu p cos t

a s littl e a s hal f

th e amoun t

o f a simila r fund-lea dproject , n o significan t dat aare availabl e o n th e overal l impac t o f thes e advantages
. I n th e absenc e o f

usabl e data , CB O identifie dsaving s rate s o f 1 0 percent

t o 3 0 percen t

a s plausibl e esti

mate s afte r

consultin g with experience dcleanu p contractors , R P representatives , an dEP A staff
. A s note di n Tabl e 7 , raisin g th e assume dsaving s rate s b y 5 percentag e point s woul dreduc e estimate d present-worth cost s fo r

th e progra mb y 3. 3 percen t t o 3. 9 percent . Conversely , eliminatin g th e 2 0 percen t advantag e assume di n th e bas e cas e woul dincreas e tota l estimate dcost s b y 1 4 percent . 

## Othe r DirectRespons e Cost s Direc t cost s fo r

screening , removals , studies , an d engineerin g design s accoun t for 1 1 percen t

to 1 2 percen t o f discounte dSuperfun dcost s i n th e thre e scenarios
. A 1 0 percen t increas e i n any o f

th e assume duni t

cost s woul dad dn o more tha n 0. 6 percen t t o total cost s i n th e bas e case . Screenin g Costs . A s note dearlier , CBO' s analysi s assume s a

n averag e o f

roughl y $46,00 0 per

sit e i n screenin g costs . Thi s averag e ha s tw o components : eac h sit e place di n th e inventory incur s $10,000 i n cost s fo r apreliminary assessment , whic h i s primari

l y arevie w o f

availabl e document s concernin g th e site' s history ; an d5 5 percen t o f th e site s are assume d t o g o o n t o receiv e asite inspection , involvin g collectio n an danalysi s o f samples , at

an averag e cos t o f $65,000

. Thank s t o th e larg e number s o f site s EP A ha s already screened , thes e uni t cost s are subjec t t o les s uncertaint y tha n other s i n thi s study
. Removal Costs . Fund-lea dremova l action s a t NPL an dnon-NP L site s ar e both assume dt o cos t $600,00 0 each
. Althoug h thi s estimat e i s highe r tha n EPA' s budget-plannin g figur e o f $525,000 , EP A staf

f regar di t a s areasonabl e estimat e o f futur e costs , give n tha t averag e cost s hav e rise n over tim e a s mor e ambitiou s project s hav e bee n handle da s removal s

rathe r tha n remedial actions
. (EPA dat asho w tha t th e averag e fund-lea dremoval over th e 1987-199 2 perio dcos t

$440,000 , bu t

that th e averag e cos t

fo r 199 2 alon e wa s $700,000. ) Base do n roug h extrapo
lation s o f

th e evidenc e t o date , CBO' s analysi s assume s that

4 5 percen t

o f NPL site s receiv e a

t leas t on e removal actio n an dthat 8 5 percen t

o f thes e site s eventuall y ge t

two . Also , 2 0 percen t o f non-NP L remova l site s are assume dt o ge t asecon dremova l action
. Study Costs . Th e uni t

cos t use di n CBO' s analysi s fo r eac h fund-lea dremedial investigation/feasibility stud y i s $1. 2 million
. Thi s figur e wa s derive db y assumin g that

th e typical RI/F S cost s $ 1 millio n an d tha t 5 percen t

o f case s (i n al l scenarios ) are "mega

RI/FSs " tha t

cos t $ 5 million
. Th e EPA budget

plannin g estimat e fo r

astandar dRI/F S i s $750,000 ; EP A staf f note , however , tha t

actua l cost s ofte n excee dthi s target . Th e averag e NP L site i s assume d to ge t 1. 8 RI/FSs ; thi s i s essentiall y arestatemen t o f the EP A estimat e o f 1. 8 ROD s pe

r site , sinc e ever

y RO D excep t

an amende don e mark s th e completio n o f a n RI/FS
. Remedial Desig n Costs . Th e uni t cos t use dher e i s $ 1 millio n per

fund-lea dremedial design-again , somewhat highe r tha n EPA' s budget-plannin g esti

mat e o f $800,000 , i n recognitio n o f increase s i n actual cost s sinc e th e passag e o f th e Superfun d Amendment s an dReauthorizatio n Ac t i n 1986
. Majo r an dmino r

site s receiv e an averag e o f 1. 8 design s pe r

site ; mega-sites , however , ar e assume dt o receiv e 2.6 7 design s (an dsubsequen t remedial actions ) o n average , base do n an analysi s o f project s starte do r expecte da

t 4 3 existin g mega-sites
. Th e latte r assumptio n introduce s amino r inconsistency : i n principle , mega-site s shoul daverag e 2.6 7 RI/FS s i f the y receiv e tha t

numbe r o f designs. 2 3 Resolvin g th e inconsistenc y woul drequir e trackin g th e mega site s separatel y at

th e RI/F S stage . Give n th e rela

tivel y smal l numbe r

o f suc h site s an dth e relativel y

23
. Anothe r

consequenc e o f

th e assumptio n o f

2.6 7 remedial project s per mega-site i s that

th e NPL a s awhol e average s slightl y more tha n 1. 8 per

site
. Th e numbe r

o f project s per

majo r an dmino r

sit e coul db e marginall y reduce dto attai n a n averag e o f

exactl y 1. 8 fo r th e curren t

NP L a s awhole , bu t

there i s n o reaso n t o treat th e roug h EP A estimate with tha t leve l o f precision
.3 0 TH

E TOTA L COST S O F CLEANIN G U P NONFEDERAL SUPERFUND SITES January 199 4 mino r cos t o f each RI/FS , th e increas e i n complexit y woul dhav e n o noticeabl e impac t o n th e results
. 

# Assumption s Abou t Transactio n and EnforcementCost

s CB O estimate s that

th e share o f

transactio n an d enforcemen t

cost s i n tota

l futur e spendin g wil l b e 2 3 percen t t o 2 4 percen t

i n th e thre e scenarios , with private transactio n cost s (pai db y responsibl e partie s an dthei r insurers ) representin g 1 8 percen t (see Tabl e 4 o n pag e 17)
. Thes e estimate s assum e that transac
tio n an denforcemen t

cost s continu e t o maintai n their curren t relationship s t o respons e costs ; argument s coul dals o b e mad e fo r

awid e variet

y o f alternativ e assumptions
. Fo r th e privat e sector , CB O assume s tha t transac
tio n cost s ad d 2 3 percen t to responsibl e parties ' direc t cost s fo r studie s an dcleanups , an dtha t insur

ers ' transactio n cost s nationwid e are tie d to thos e o f th e RP s i n fixe dproportions- 1 t o 1 i n th e bas e case , 1.1 5 to 1 i n th e lo w case , an d 0.8 5 to 1 i n th e hig h case . Th e figure s use di n thes e assumption s come fro mth e RAN D dat ao n fiv e very larg e industrial firm s an dfou r

insuranc e companies. 24 A s note di n Chapte r 1 , th e RAN D stud y estimate dthat transac
tio n cost s represente d1 7 percen t o f th e dollar s spen t b y th e fiv e RP s at

site s with cost s exceedin g $100,000 ; subtractin g th e 8 percen t o f RP cost s estimate dt o b e repayment s o f governmen t

expendi

tures , th e rati o o f

transactio n cost s to RP-lead clean

up s an dstudie s i s 177(10 0 - 1 7 - 8) , o r

2 3 percent . CB O calculate dth e proportionality factor s that relate insurer

an d RP transactio n cost s b y dividin g a n estimate d$16 3 millio n i n insure r transactio n cost s relate dto Superfun dcleanup s i n 198 9 (base do n th e RAN D data ) b y estimate dR P transactio n cost s i n 1989
. I n turn , th e RP transactio n cost s wer e calcu

late dusin g th e uni t cost s o f th e thre e scenario s fo r RP-leadcleanup s an dstudie s an da n assumptio n that th e 2 3 percent

rati o o f transactio n cost s to respons e cost s i s th e nationwid e averag e fo r al l responsibl e parties
. 25 Alternativ e assumption s ar e certainly possible , thoug h difficul t

t o quantif

y wit h curren t data
. Fo r example , ahighe

r rate o f RP transactio n cost s coul d b e chose n o n th e theor y that smalle r firm s no t represente di n th e RAN D stud y hav e relativel y higher lega l costs . Th e theory suggest s tha t lega l expense s hav e ahig h fixe dcomponen t an dthu s tha t th e transactio n cost s incurre db y asmaller firm whos e cleanu p liabilit

y i s $200,000 may no t

b e muc h les s tha n thos e o f

alarge r firmfacin g aliabilit

y o f $ 2 million
. Conversely , lower rate s coul db e chose n o n th e ground s that

th e RP dat ato date are biase d becaus e transactio n cost s occur earlier i n th e cleanu p process . Th e assumption s abou t insurer transactio n cost s use dhere migh t

tur n ou t t o b e to o lo w i f

ne w categorie s o f

litigatio n (suc h a s insurer-versus-insure r o r insurer-versus-reinsurer ) become important ; the y migh t als o b e to o high , i f

th e court s graduall y clarif y th e applicabilit

y o f insuranc e policie s t o Superfun d liabilities
. CBO' s analysi s modele dfedera l enforcemen t cost s i n more detail , assignin g uni t cost s to site-level activitie s fo r

R P searche s an dcost-recover y effort s an dto project-leve l activitie s fo r negotiation s an d oversight
. Site-leve l cost s were estimate dseparatel y fo r fund-lea dan dRP-lea

dNPL site s an dremoval

onl y sites , an dspecifi c project-leve l cost s wer e calculate dfo r

fund-lea dan dRP-leadremovals , RI/FSs , an d RA s (se e Tabl e 9)
. (Fund-lea dproject s d o no t incu r enforcemen t

cost s fo r

oversight , bu t man y o f the mare precede db y negotiation s betwee n EP A an d responsibl e partie s over possibl e RP-lea d

24
. Jan Pau l Acto n an dLloy dS
. Dixon , Superfund an d Transaction Costs (Sant aMonica , Calif. : RAND , 1992)
. 25
. Th e RAN D estimat

e o f 198 9 insure r transactio n costs relate dt o waste-hazardsite s i s $41 0 million
. The $16 3 millio n use dhere subtract s 2 1 percent

o f th e tota l fo r cost s relate dto claim s fo r bodil y injur y an dpropert y damag e rathe r

tha n cleanu p an dassume s that hal f o f th e remainder

reflect s cost s fo r

site s bein g addresse d under stat e o r federa l program s othe

r than CERCLA , o r

voluntarily
. Takin g into account

th e private-secto r

advantage s i n efficiency , th e assumption s o f

th e low , base , an d hig h case s impl y RP respons e cost s in 198 9 o f

$62 3 million , $73 4 million , and $85 3 million , respectively-whic h i n tur n yiel destimate dRP transactio n cost s o f $14 3 million , $16

9 million , an

d $19 6 million
.CHAPTE

RTW O ESTIMATE S O F FUTUR E SUPERFUND COST S 3 1 responses. ) EP A enforcemen t activitie s no t

include d i n thes e categories , suc h a s developin g polic y an d maintainin g dat abases , wer e viewe d a s indirec t cost s an dmodele d a s fixe d markup s o n th e direc t costs . CBO' s analysi s broke dow n enforcemen t cost s b y federa l office , includin g both headquarter s an d regional costs . Th e uni t cost s fo r

th e Offic e o f Wast e Program s Enforcement , th e larges t o f th e fou r sources , are base d o n EPA' s budget-plannin g esti

mates , a s ar

e th e RD/RA oversight cost s o f

th e Offic e o f Emergenc y an d Remedial Response
. Cost s fo r th e Offic e o f

Enforcemen t

were derive d fro m expecte d outputs , work

years , an d subaccoun t

budge t total s i n th e 199 3 operatin g plan
. Th e Departmen t o f Justic e cost s ar e base d o n roug h estimate s obtaine d fro mdepartmen t

staff
. Non e o f

thes e figures ar e know n wit h grea t precision ; however , their relativel y smal l contributio n t o tota l Superfun dcost s make s th e uncertaintie s o f

secondar y importance
. Fo r

th e same reason , moderate gain s i n efficienc y resultin g fro m th e recentl y announce d reorganizatio n o f EPA' s enforcemen t

activitie s woul d no t

hav e amajo r

impac t o n tota l costs . 

# Assumption s Abou tFedera l Progra m Cost s

V Federa l programcosts-thos e fo r activitie s other

tha n direc t respons e an d enforcement—constitut e th e remainin g 1 1 percent

o f estimate d futur e cost s i n th e

Tabl e 9 . Assume d Uni t Enforcemen t Costs , b y Sourc e (I n thousand s o f dollars )

Sit e o rActivity Categor y Remova l Sit e Fund-lea d RP-lea d Nationa l Priortie s List Sit e Fund-lea d RP-lea d Remova l Actio n Fund-lea d RP-lea d EP A Offic e o f Wast e Program s Enforcemen t

5 6 1 8
50 3 32 7
2 7 4 EP A Offic e

o f Emergenc

y an d Remedia l Respons e

n.a . n.a .
n.a . n.a .
n.a . n.a . EP A

Offic e o f Enforcemen t

3 3 5 23 5 9 7
4 1 7 Departmen t

o f Justic e

1 5 n.a . 15 0 6 0

n.a . n.a . Tota l

10 5 2 4
88 8 48 4
7 9 1 Remedia l Investigation / Feasibilit y Stud y Fund-lea d RP-lea d Remedia l Design/ Remedia l Actio n Fund-lea d RP-lea d 5 3 60 4

6 4 134 n.a .

n.a .

n.a . 50 0 1 8

2 8

5 6 10 9 n.a .

n.a .
1 0 24 0 72

63 2

13 1 98 3
SOURCE : Congressiona l Budge t Office

. NOTE : EP A = Environmenta l Protectio n Agency ; n.a . = no t applicable ; R P = responsibl e party
.3 2 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUND SITE S January 199 4 bas e case , 1 2 percent

in the lo w scenario , an d 1 0 percen t i n th e hig h scenari o (se e Tabl e 4 o n pag e 17)
. Thes e cost s cover

awid e spectru mo f

support , research , an d managemen t activities : som

e are closel y relate dto site-leve l cleanup , an d other s are highl y centralize dan d administrativ e i n nature . Althoug h dat ao n curren t spendin g fo r

program cost s are readil y available , assumption s abou t their futur e evolutio n ar e unavoidabl y speculativ e becaus e th e connectio n betwee n suc h cost s an dth e flo w o f site s throug h th e Superfun dpipelin e i s indirect
. I n some cases , CBO' s analysi s assume s tha t thes e cost s ris e o r fal l i n stric t

proportio n to certai n measure s o f programactivity
. Th e remainin g cost s are assume d t o b e totall y independen t o f other programactivity

— tha t is , the y ar e fixed , real-dolla r amount s over

th e lif e o f th e program. 2 6 Thes e assumption s o f ful l o r zer o proportionality ar e no t intende dt o b e individu

all y accurat e bu t

merel y simpl e rule s o f

thumb whos e biase s partiall y compensate fo r eac h other
. Usin g uni t

cost s base do n EPA' s budget-plannin g estimate s o r

o n extension s o f

recent experience , CB O make s several assumption s abou t progra mcosts . o Annua l personne l cost s fo r EPA' s nonenforce

men t staf f are assume dt o equal $68,00 0 pe r NP L site , excludin g site s at whic h remedial constructio n i s complete
. (Wit h 1,50 0 "active " NP L site s i n agive n year , fo r example , tota

l salar y cost s woul db e $10 2 million. )
o Removal support

costs , includin g contract s fo r technical assistanc e an dsupport o f polic y devel

opment , ar e assume dt o b e $250,00 0 pe r fund

lea dremova l action
. o Annua l remedial suppor t cost s ar e assume dt o equal $750,00 0 pe r

fund-lea dR A starte di n tha t year plu s afixe dcomponen t o f $4 0 million
. Suc h cost s includ e administrativ e cost s o f clean

u p contractors , technical assistanc e grant s t o loca l communities , state grants , contract s fo r mappin g an dsuppor t o f polic y development , an d service s o f

th e Arm y Corp s o f

Engineer s an dth e Bureau o f

Reclamation
. o Respons e managemen t i s assume dto cos t

$4 4 millio n per

yea r fo r service s an dequipmen t relate dt o training , budgeting , planning , dat a management , polic y development , disseminatio n o f informatio n o n ne w technologies , an demer genc y preparedness
. o General administratio n (includin g financia l man agement , rent , an dutilities) , researc h an ddevel

opment , an dinteragenc y cost s (primaril y fo r th e Agenc y fo r

Toxi c Substance s an d Diseas e Regis

tr y an dth e Nationa l Institut e o f Environmental Healt h Sciences ) are assume dt o b e afixe d marku p o n al l other

federal cost s excep t

opera tion s an dmaintenanc e costs . (O& M cost s wer e exclude da s amatte r

o f convenienc e t o avoi dth e nee dfo r separat e spreadsheet

column s fo r

federal an dstat e costs. ) Genera

l administratio n expense s ar e bot h larger an dharde r

t o predic t

tha n th e other type s o f programcosts . Consequently , th e marku p facto r

varie s amon g scenarios , fro m2 0 percen t i n th e lo w cas e t o 2 2 percen t i n th e bas e cas e an d 2 4 percent

i n th e hig h case . 

# Assumption s Abou tth e Discoun tRat e

Becaus e th e Superfun dprogramcan b e expecte d unde r presen t policie s t o continu e fo r

man y decades , th e presen t

value s o f

it s cost s an dbenefit s are sensitiv e t o th e assume dannua l discoun t rate. 2 7 Fo r

26
. Fo r thi s purpose , th e en do f th e programi s define da s th e poin t a t whic h remedial constructio n i s complet e a t al l NPL sites
. Cost s fo r operation s an d maintenanc e woul dcontinu e to b e incurre dfo r anothe r 2 4 years . 27
. A s note dearlier , CBO' s analysi s assume s that site s ar e adde dto th e screenin g inventor

y fo r another 3 0 year s i n th e lo w scenario , 3 5 year s i n th e bas e case , an d 4 0 year s i n th e hig h scenario , an d tha t operation s an dmaintenanc e o f eac h remedy las t

fo r 2 4 years . Th e time betwee n asite' s inclusio n i n th e screenin g inventory an d it s propose dlistin g o n th e NPL i s assume dto b e fou r years , an d th e tim e i t spend s o n th e NPL befor e beginnin g it s las t O& M projec t i s assume dt

o b e 9 , 12 , or

1 5 years , dependin g o n whethe r it receive s one , two , o r

thre e remedia

l actions
. Consequently , Superfun dexpense s continu e fo r a s man y a s 8 3 year s (throug h 2075 ) i n thi s analysis
.CHAPTE

RTWO ESTIMATES OF FUTUR E SUPERFUN

D COST S 3 3

Tabl e 10 . Present-Wort h Cost s a t Alternativ e Discoun t Rate s (I n billion s o f dollars )
Discoun t Rat e 1 0 Percen t 7 Percen t 4 Percen t 2 Percen t 0 Percen t Bas e

Cas e 5 2 7 4 11 2 15 6 22 8 Lo

w Cas e 3 2 4 2 5 9 7 8 10 6 Hig h

Cas e 8 0 12 0 19 7 29 2 46 3
SOURCE : Congressiona l Budge t Office

. NOTE : Se e Appendi x A fo rth e difference s i n assumption s under lyin g th e thre e cases . example , a

t adiscoun t

rate o f 1 0 percent , th e present wort h o f estimate dcost s i n th e bas e cas e woul db e $5 2 billio n rathe r

tha n th e $7 4 billio n obtaine dat 7 percent ; i n contrast , a2 percen t discoun t rat e woul d impl y present-worth cost s o f $15 6 billio n (se e Tabl e 10)
. Althoug h economist s agre e tha t futur e effect s shoul db e discounte di n polic y analyses , ther e i s les s agreemen t

abou t th e prope r

discoun t rat e t o us e i n a give n case . Muc h o f th e ambiguity surroundin g th e choic e o f adiscoun t

rat e arise s becaus e incom e fro mcapital i s taxed , whic h implie s tha t private-secto r

investment s mus t provid e abefore-tax rat e o f return higher

tha n th e rat e a

t whic h investor s ar e willin g t o trad e presen t an dfutur e gratificatio n i n thei r consumptio n pattern s (calle dth e pur e rat e o f time preference)
. Becaus e o f

thi s tax wedge , th e discoun t rat e use dt o analyz e aparticula

r polic y shoul dideall y b e highe r th e mor e th e polic y i s finance dat th e expens e o f private-secto r

investmen t

rathe r tha n househol d consumption
. I n practice , however , th e ultimat e incidenc e o f

th e policy' s cost s i s generall y unknown , an dasimple r

rul e o f thum b mus t

b e used
. Th e 7 percen t

real discoun t

rat e chose n her e i s th e standardrate use db y executiv e branc h agencie s i n analyzin g regulation s an dpubli c investments
. I n suppor t o f thi s policy , th e Offic e o f Management

an d Budget (OMB ) argue s tha

t 7 percen t "approximate s th e margina

l preta x rate o f return o n a

n averag e investmen t i n the private secto

r i n recen t years." 2 8 Th e argument

mos t commonly made agains t th e OM B policy i s that

som e shar e o f th e fund s use dfor apubli c policy i s likel

y t o com e out o f consumptio n rather tha n investment

an d thu s that

th e 7 percen

t rat e i s to o high
. CB O analyze dth e sensitivit y o f present-wort

h cost s i n th e base , low , an d hig h case s to alternativ e discount rate s betwee n zer

o an d 1 0 percent- arang e chosen t o spa n th e set o f plausibl e value s (se

e Tabl e 10). 2 9 Base-cas e costs vary from$5 2 billio n a t 1 0 percent to $22 8 billio n a

t zer o percen t (tha t is , withou t discounting) ; similarly , th e low-cas e esti

mate s vary fro m$3 2 billio n to $10 6 billion , an d th e high-cas e cost s rang e fro m$8 0 billio n to $46 3 billion
. Althoug h usin g a7 percen t discoun t rat e result s i n amuc h lower

estimat e o f present-valu e cost s tha n woul db e obtaine dat

zero o r 2 percent , i t

doe s no t sugges t that Superfun di s abette r "bargain 11 —i f anything , th e argumen t

cut s th e opposit

e way . A thoroug h cost-benefi t

analysi s o f

th e programre 28
. Offic e o f

Managemen t

an dBudget , "Guideline s an dDiscount Rate s for Benefit-Cos t

Analysi s o f

Federa l Programs, " Circula

r A-94 , revise d(Octobe

r 29 , 1992) , p . 9
. 29
. The 1 0 percen t

rat e wa s the OMB standardbefore Octobe r 1992
. At th e othe r en do f th e range , th e zer

o rate provide s ausefu l benchmar k i n undiscounte ddollar s an dca n b e defende d a s a plausibl e estimat

e o f th e consume

r rate o f time preference , give n th e rea l interes t rate s no w bein g pai do n saving s accounts . Th e 2 percent rat e i s base do n th e rea

l interes t rat e o n Treasur

y securi

ties ; i n recent

years , CBO' s analyse s o f publi c investment s have use dthi s rate , o n th e basi s o f macroeconomi c evidenc e tha t government

spendin g wa s crowdin g ou t neither consumptio n no r investmen t

i n th e shor

t term , bu t

rathe r leadin g t o increase d borrowin g abroad
. Finally , th e 4 percen t rate i s include d simply a s apoint betwee n 2 percen t

an d7 percent , equall y fa r belo w th e primary assumptio n o f

7 percen t

a s 1 0 percen t

i s abov e i t Th e present

stud y follow s OMB' s rul e o f

thumb rather

than CBO' s o n th e ground s that

i n th e incidenc e o f

it s costs , Superfun di s mor e lik e apur e regulatio n tha n astandardpubli c investment
. Over hal f o f th e estimate dcost s (befor e discounting ) ar

e incurre ddirectl y b y th e privat e sector . Moreover , mos t o f th e federa

l costs ar e funde d fro mdedicate dtaxe s o n busines s that migh t no t b e retaine d i f

th e Congres s were to cance l th e progra man dwhos e incidence , again , i s probabl y close

r t o that o f typica l regulator

y costs than that

o f the averag e federa l dollar
.3 4 THE TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUND SITES January 199 4 quire s that

it s benefit s als o b e discounted , afte r the y are converte d t o dolla

r equivalents. 3 0 T o th e exten t that th e benefit s o f

cleanup are spread ove

r alonge r perio d o f time tha n th e cost s are , ahigher monetar y discount rate tend s to reduc e th e present valu e o f benefit s more sharply , leadin g t o alower rati o o f benefit s t o costs . I n general , higher discount rate s favo r

les s investment , whether publi c o r private , an d more consumption
.
30
. Suc h a

n analysi s might

assum e that th e dolla

r equivalent s o f

th e benefit s increas e ove

r time , o n th e theor

y tha t continue d economi c growt h will rais e th e monetar

y valu e that

individual s plac e o n goo d healt h an d aclea

n environment , bu t

th e assume d rate o f

increas e woul db e th e sam

e fo r an y discount

rate .

### Chapte r Thre e 

# Comparisons with Othe r Estimate s an d Implication s fo r Policy



# E stimate s b y th e Congressiona l Budge t Offic e o f futur e Superfun dcost s ar e very differen t fro mearlier

estimate s develope db y th e Environmenta l Protectio n Agenc y an dth e University o f Tennessee
. Th e mai n factor s tha t explai n th e difference s are CBO' s broade r coverag e o f

cost s an d us e o f discounte ddollars , differen t averag e cleanu p cost s per site , an ddifferen t

number s o f

site s o n th e Nationa l Prioritie s List
. Th e CB O estimate s o f averag e cleanu p cost s ar e lowe r tha n th e EP A an d Tennesse e figures , primaril y becaus e o f th e assume d private-secto r

cos t advantag e an dbarrel-scrapin g effect
. Th e estimate s presente dher e hav e fou r mai n implication s fo r

Superfun dpolicy
. First , futur e cost s wil l remai n highl y uncertai n unti l th e ultimat e numbe r o f site s to b e cleane dup i s know n more precisely
. Second , th e cleanu p jo b i s far fro mover . Third , cost s t o th e state s wil l ris e dramaticall y fro m curren t levels , thoug h the y wil l remai n arelativel y smal l shar e o f

tota l Superfun dcosts . Fourth , unde r th e assumption s o f

th e bas e cas e an dhig h case , larg e increase s i n federa l an dprivat e spendin g wil l b e require dove r

th e nex t decad e t o avoi dagrowin g backlo g o f

site s awaitin g cleanup
. CBO' s analysi s provide s abaselin e estimate that assume s n o significan t

polic y changes
. Tw o admin

istrativ e change s tha t

ar e bein g carrie dou t

o r dis

cusse db y EP A no w ar e unlikel y t o hav e majo r effect s o n total costs . Man y othe r polic y change s hav e bee n proposed , som e o f whic h woul dhav e large r cos t implications
. Give n adequat e data , th e cost s o f thes e alternative s coul db e estimate dusin g th e same method s employe di n Chapte r 2
. 

# Wh y D o 

# th e CBO , EPA , 

# an d Tennessee Estimate s Differ ? Th e CBO , EPA , an dUniversity o f Tennesse e esti

mate s o f Superfun dcosts-$7 4 billion , $1 6 billion , an d$15 1 billion , respectively-ar e no t directl y comparabl e an drel y o n man y differen t assumption s an danalyses. 1 

### A handfu l o f ke y factor s explai n mos t o f th e differences , however
. Tw o factor s mak e direc t comparison s o f

th e estimate s inappropriate
. On e i s th e differen t cover ag e o f type s o f costs . Th e CB O figur e include s al l futur e publi c an dprivat e Superfun dexpenditure s (includin g privat e transactio n costs) , bu t th e EP A figur e cover s onl y cost s t o th e federa l government , an dth e Tennesse e estimate cover s publi c an dprivat e cost s fo r stud y an dcleanu p at

NPL sites-includin g cost s befor e 1993—omittin g administrativ e an dlegal expense s an dth e cost s o f

screenin g an dremoval s a t non-NP L sites
. Th e othe r

comparability issu e i s tha t

Se e Environmenta l Protectio n Agency , Offic e o f Emergenc y an d Remedial Response , Progress Toward Implementing Superfund: Fiscal Year 1990(Februar

y 1992) , pp . 33-38 ; an dE
. W
. Colglazier , T
. Cox , an dK
. Davis , Estimating Resource Requirements fo r NP L Sites (Knoxville , Term. : Universit y o f Tennessee , Wast

e Manage

men t Researc h an d Educatio n Institute , 1991)
.3 6 TH

E TOTA L COST S O F CLEANIN G UP NONFEDERAL SUPERFUND SITE S January 1994 th e CB O estimat

e i s i n present-wort

h dollars , bu t

th e EP A an dTennesse e figure s are i n undiscounte d dollars
. Th e estimate s als o diffe r

i n their assumption s an d analyse s o f

th e numbe r

o f site s to b e cleane d up , th e averag e cleanup costs , an d th e cost s o f activitie s other tha n cleanup
. Fo r

example , th e CB O bas e cas e assume s 4,500 nonfederal NPL sites , th e EPA figur e cover s onl y th e 1,12

0 site s liste d throug h 1990 , an d th e Tennesse e estimate assume s 3,000 sites
. Averag e cleanu p cost s per

NP L site , measure d usin g acom mo n 1 0 percen t

discoun t rat e fo r operation s an d maintenanc e costs , are $2 1 millio n i n th e CB O bas e case , $2 9 millio n i n th e EPA estimate , an d $3 2 millio n i n th e Tennesse e analysis. 2 Th e Tennesse e stud y als o assume s $ 1 millio n pe r sit e i n "pre

remedia l costs" ; th e comparabl e figur e i n th e CB O analysis , coverin g removal actions , remedia l investi

gations/feasibilit

y studies , an d remedia

l designs , i s roughl y $ 4 million
. Th e importanc e o f

eac h o f thes e factor s ca

n b e see n i n acloser

compariso n o f

th e CB O an dTennes

se e cos t estimates
. I n undiscounted dollars , CBO' s estimate i s no t

$7 4 billio n bu t

$22 8 billion , reversin g th e apparen t

differenc e fro mTennessee' s figur e o f $15 1 million
. Scalin g up th e Tennesse e estimat e fro m3,000 to 4,50 0 nonfedera l NPL site s yield s a cos t o f $22 6 billion , almos t

entirel y closin g th e gap . Th e stor y doe s no t

en d there , however
. Th e CB O estimat e fo r onl y th e site-specifi c costs , pas t an d future , o f studie s an dcleanu p a

t NPL site s i s $16 1 billio n (o f

whic h $1 2 billio n i s cost s befor e 1993)
. Th e differenc e betwee n $16 1 billio n an d$22 6 billio n i s th e resul t

o f th e Tennesse e study' s highe r remedial actio n cost s an dlowe r

preremedia l costs . I n percent
ag e terms , th e discountin g facto r account s fo r

20 0 percen t o f th e origina l ga

p betwee n th e CB O an d Tennesse e estimates , th e assumption s abou t NP L siz e fo r negativ e 9 7 percent , th e cost-coverag e facto r fo r negativ e 8 7 percent , an dth e differenc e i n averag e sit e costs—mostl y remedia l actio n costs—fo r

8 4 percent . Thi s examinatio n o f th e ga p betwee n th e CB O an dTennesse e estimate s raise s th e questio n o f why CBO' s cleanu p cost s are lower
. Assumption s abou t tw o factors—th e efficienc y o f private-secto r

cleanup s an dfutur e trend s i n th e costlines s o f sites—explai n mos t o f th e difference
. Eliminatin g th e 2 0 percent efficienc y advantag e assume d fo r private-secto r cleanup s woul d rais e CBO' s estimat e o f averag e cost s pe r site , measure d a

t a1 0 percent

discoun t rate , fro m$2 1 millio n to $2 4 million
. Als o eliminatin g th e assume d downwar d tren d i n sit e costlines s (th e barrel-scrapin g effect ) woul d brin g th e CB O estimate a s hig h a s $3 1 million—betwee n th e EPA an dTen

nesse e figure s o f

$2 9 millio n an d$3 2 millio n per site. 3 Th e remainin g gap s are attributabl e t o differ

ence s i n dat ao n th e cost s o f individual cleanu p projects : al l thre e studie s combin e cos t estimate s fro mrecord s o f

decisio n wit

h dat ao n post-RO D cos t overruns , bu t

th e set s o f

project s sample d i n th e thre e analyses , thoug h overlapping , are no t identical
. Th e ke y CB O assumptio n o f adownwar d tren d i n sit e costlines s receive s some support fro mth e fac t that EP A ha s recentl y reduce d it s ow n estimat e o f averag e cleanu p cost s per site
. Th e additio n o f

dat a o n recen t

cleanups , couple d with correction s t o flawe dolder

data , ha s le dEP A t o lowe r it s estimat e o f averag e remedial actio n cost s fro m$2 9 millio n per site , th e figur e use d i n it s projectio n o f futur e federal costs , to $2 6 million. 4 Thi s revise d estimat e i s clos e to th e $2 4 millio n averag e estimate d b y CB O i n th e absenc e o f

private-secto r

cos t savings-o r equivalently , fo r

cleanup s funde db y th e federal government .

2
. Se e Federal

Register, Jun e 23 , 1992 , p . 34022 ; an d Colglazier , Cox , an d Davis , Estimating Resource Requirements, Figur e 4.13
. Th e $2 5 millio n figure fo r th e CB O bas e cas e give n i n Chapter 2 discounte d O& M cost s a t 7 percent . 4

. CBO' s highes t figure , $30. 6 million , i s obtaine d unde r th e strictes t interpretatio n o f

"eliminating th e downward trend. " In thi s version , al l site s are assume d to b e distribute d amon g th e mega , major , an d mino r categorie s i n th e sam

e proportion s a s were th e firs t 71 1 site s propose d fo r

th e NPL
. Alternatively , averag e costs fo r futur e cleanup s coul d b e assume d to equa l thos e observe d throug h 1992
. Thi s interpretatio n woul d yiel d asomewhat lower estimate , becaus e the averag e throug h 199

2 i s alread

y reduce d b y the lowe

r incidenc e o f mega-site s amon g site s liste d i n late r cohorts
. Environmenta

l Protectio n Agency , Offic e o f Emergenc y an d Remedia l Response , "Overvie w o f th e Outyea

r Liabilit y Model, " fac t sheet (Decembe

r 1993)
.CHAPTE

RTHRE E COMPARISON S WITH OTHE RESTIMATE S AN

D IMPLICATION S FO RPOLIC Y 3 7 

# Implication s fo r Federa

l Cleanup Policy Four mai n polic y implication s can b e derive dfro m CBO' s estimate s o f

futur e Superfun dcost s despit e th e significant

uncertaint

y represente db y th e differ

enc e betwee n th e lo w an dhig h scenarios
. Tha t un certaint y itsel f i s th e focu s o f

th e firs t implication
. 

## Superfun d Cost

s Depend o n th e Siz e of th e Cleanup Problem , Which Remain s Unknow n Some uncertainty i s unavoidabl e i n an y attemp t t o estimate cost s decade s int o th e future
. Give n th e unpredictability o f

change s i n technolog y an dpolicy , suc h estimate s canno t

b e regarde da s forecast s bu t at bes t a s extrapolation s base do n currentl y observabl e trends
. I n th e cas e o f

Superfund , however , s o littl e i s know n abou t

th e ultimat e siz e o f

th e proble mtha t estimate s o f

th e remainin g cost s are conditiona l no t onl y o n technolog y an dpolic y bu t als o o n th e numbe r o f site s to b e cleane dup . Th e assume d number s o f

NP L site s i n CBO' s lo w an dhig h case s rang e fro m4 9 percen t

belo w th e base-cas e assump tio n t o 7 3 percen t

abov e it-an d mor e extrem e possibilitie s canno t

b e rule dout . Thi s variatio n i n number s o f

NPL site s i s th e mai n reaso n why esti

mate dpresent-wort

h cost s rang e almos t

threefol d betwee n th e lo w an dhig h case s (an dundiscounte d cost s mor e tha n fourfold). 5 A s note di n Chapte r 2 , applyin g th e low-cas e o r

high-cas e NP L assumption s to th e bas e cas e eliminate s 8 0 percen t o f th e respec tiv e difference s i n present-worth costs . On e ke y reaso n tha t

th e ultimat e numbe r

o f NPL-caliber

cleanu p problem s i s s o uncertai n i s tha t EP A ha s no t

conducte dacomprehensiv e site

discover y effort
. Instead , i t

ha s relie d primaril y o n report s fro mstat

e an dloca

l governments , sit

e own ers , an d other

individuals
. Possibl e alternative s to thi s passiv e approac h hav e bee n discusse db y th e Offic e o f Technolog y Assessment , whic h suggeste d that historica l aeria l photograph s coul dprovid e th e cornerston e o f

a n activ e federa l site-discover y program. 6 EPA' s mai n argumen t fo r no t makin g sit

e discover y ahigher

priorit y ha s bee n that

th e passiv e approac h i s already bringin g i n enoug h cleanu p wor k t o absor b th e curren t

leve l o f funding
. Doe s th e ultimate number o f site s matter

fo r polic y purposes ? O n th e on e hand , large r number s o f site s presumabl y increas e th e benefit s o f acleanu p programa s wel l a s th e costs . Arguably , therefore , th e uncertainty abou t

ultimat e NP L site s i s les s important fo r Superfun dpolicymakin g tha n i s th e leve l o f averag e cost s per

sit e (includin g th e appro priate share o f

overheadcosts)
. O n th e other hand , th e same inefficienc y o r

inequit y seen a s regrettabl e bu t no t worth th e troubl e t o addres s i n asmal l o r short-live dprogrammay b e totall y unacceptabl e at a large r scale
. Fo r

example , settin g prioritie s s o tha t site s wit h th e wors t

healt h effect s d o no t

languis h a

t th e bac k o f th e queu e i s presumabl y more importan t whe n th e queu e i s longer
. 

## Muc h of th e Superfun d Jo b Remain s T o B e Don e Despit e th e uncertaint

y i n th e numbe r

o f site s to b e cleane dup , ther e i s goo dreaso n t o believ e that th e en do f th e Superfun dprogra

mi s b y n o mean s aroun d th e corner . Accordin g t o th e CB O bas e case , publi c an dprivat e obligation s incurre dthroug h 199 2 repre sent les s tha n 3 0 percen t

o f th e total economi c valu e o f Superfun dcosts , measure di n present-wort h dollars , an d les s than 1 0 percent o f tota l inflation

adjuste dbu t

undiscounte ddollars
. Th e federa l government' s obligation s throug h 199 2 represen t 3 5 percen t o f it s share o f

cumulativ e cost s i n present
Cos t estimate s i n th e thre e scenario s d o no t var y i n stric t

proportio n wit h th e numbe r

o f NPL site s becaus e o f

assume deconomie s o f scal e i n administrativ e costs , unit-cos t assumption s tha t

diffe r amon g scenario s (includin g assumption s abou t th e barrel-scrapin g effect) , an ddiscounting
. 6
. Offic e o f Technolog y Assessment , Coming Clean: Superfund Problems Ca n B e Solved
. . . (1989) , p . 94
. Th e EP A regio n coverin g Alaska , Idaho , Oregon , an d Washingto n ha s use d historica l busines s list s an d geographi c informatio n system s i n a n activ e site-discover

y effort ; se e Environmental Protectio n Agency , Th e Superfund

Program: Te n Years o

f Progress (Jun e 1991) , p . 11
.3 8 TH

E TOTA L COST S O F CLEANIN G U P NONFEDERAL SUPERFUN D SITES January 199 4 

### worth dollar s an d1 4 percen t i n undiscounte ddol

lars. 7 

### More optimistically , th e lo w scenari o suggest s that th e econom

y ma y b e 4 0 percen t

o f th e wa y throug h Super-fund' s present-wort h cost s (thoug h onl y 1 7 percen t

finishe di n undiscounte ddollars)
. At th e other en do f th e spectrum , th e hig h scenari o suggest s that

1 9 percen t

o f the present-wort

h cost s (an dles s tha n 5 percen t

o f th e undiscounte dcosts ) hav e s o fa

r bee n incurred
. Th e large r th e amoun t

o f cleanu p wor

k ye t to b e done , th e greater

th e potential benefit s fro mimprov

in g Superfun dpolicies , compare dwith th e disruptio n cost s tha t migh t b e incurre di n adoptin g ne w policies
. Th e CB O estimate s sugges t tha t th e en do f

th e cleanu p proble mmay b e distan t enoug h t o justif

y some polic y change s involvin g long-termbenefit s bu t short-ter mcosts . 

## Cost s to th e State s Wil l Ris e Dramaticall y Th e findin g tha t

muc h o f th e Superfun djo b lie s ahea di s eve n mor e tru e fo r th e require dstate contri

bution s t o fund-lea dcleanups , whic h ar e concentrate d at th e bac k en do f th e cleanu p process , tha n fo r total national spending
. Th e low , base , an dhig h estimate s o f $2. 1 billion , $3. 3 billion , an d$5. 0 billio n i n futur e present-worth cost s t o th e state s impl y tha t th e obli

gation s incurre dthroug h 199 2 ar e 1 5 percent , 1 0 percent , an d7 percen t

o f th e total , respectively. 8 

### Th e percentag e o f

cumulativ e state cost s tha t wer e incurre dthroug h 199 2 i s lowe r i n undiscounte d dollars-betwee n 1 percen t an d3 percent , give n

7
. Tota l obligation s betwee n 198 1 an d199 2 wer e $19. 9 billio n i n nomina l dollars , $21. 7 billio n i n rea l 199 1 dollars , an d$28. 3 billio n i n 199 1 dollar s discounte dforwar dt o the star t o f 1993
. (The us e o f 199 1 rathe r

tha n 199 2 a s th e inde x yea r fo r rea l dollar s allow s amore accurat

e compariso n betwee n pas t an dfutur e cost s becaus e th e dat aunderlyin g CBO' s estimate s o f futur e cost s reflec t

ami x o f price s fro mdifferen t

years. ) Th e federa l obligation s t o dat e o f $10. 3 billio n i n nominal dollar s (excludin g offsettin g collections ) ar e equivalen t

to $11. 4 billio n i n rea

l dollar s an d$15. 1 billio n i n discounte ddollars
. 8
. Includin g stat

e commitment s fo r

capital cost s no t

ye t pai dt o EPA , obligation s throug h 1992 ar e roughl y $0. 3 billio n in rea l 199 1 dollar s an d$0. 4 billio n i n 199 1 dollar s discounte dforwar dto th e star t o f 1993
. Figur e 4 . Require d Stat e Contribution s t o Superfund , Fisca l Year s 1993-207 5 Million s of Real , Undiscounte d Dollar s 1,00 0

80 0

60 0

40 0

20 0 Hig h Cas e

1993 2003 201 3 202 3 203 3 204 3 205 3 206 3 207 3 SOURCE : Congressiona l Budge t Office

. NOTE : Se e Appendi x A fo rth e difference s i n assumption s under lyin g th e thre e cases . 

### estimate dfutur e cost s rangin g fro m$9. 8 billio n t o $36. 8 billion
. Th e contras t betwee n th e present
worth an dundiscounte dresult s i s sharper fo r stat e cost s tha n fo r

tota l national spending , anothe r conse quenc e o f th e back-loadin g o f

th e state contributions
. Wherea s yearl y national cost s reac h thei r pea k i n 200 3 i n CBO' s analysi s (se e Figure 2 o n pag e 15) , th e stat e cost s ris e more graduall y an dd o no t pea k unti l 201 4 o r

202 2 (se e Figur

e 4)
. Th e trajectorie s o f stat e cost s show n i n Figur

e 4 shoul db e consid

ere dillustrative ; becaus e o f th e importanc e o f

opera tion s an dmaintenanc e cost s i n total state expendi

tures , amor e detaile danalysi s woul drequire bette r dat ao n th e averag e duratio n o f groundwate r

an d nongroundwate r

O& M efforts. 9

I n th e absenc e o f

adequate dat ao n th e duratio n o f O& M costs , CBO' s analysi s di dno t

directly mode l th e EP A polic y o f payin g fo r th e firs t 1 0 year s o f

agroundwate r

pump-and-treat

remedy , bu t insteadassigne dth e agenc y aconstant shar e o f eac h year' s cost s fo r al l fund-lea dO&M
. Thi s simplificatio n cause s th e state cos t trajectory t o pea

k afe w year s earlie

r than i t woul dotherwise
.CHAPTE

RTHRE E COMPARISON S WIT H OTHE RESTIMATE S AND IMPLICATION S FO RPOLIC Y 3 9 Stat e cost s fo r

contribution s t o fund-lea d clean

up s are estimate d t o remai n amodes t share o f th e nationa l total , despite thei r hig h growt

h i n relativ e terms . Thes e cost s represen t 4 percen t

t o 5 percen t o f th e present-wort

h total , an d 8 percen t

t o 9 percen t o f tota l undiscounte d costs , i n th e CB O scenarios
. 

## CurrentFundin g Level s May Constrai n th e Pac e of

Cleanu p A s note d i n Chapter

2 , th e assumption s o f

th e bas e an dhig h case s impl y tha t asubstantial backlo g o f site s awai t

placemen t

o n th e NPL
. Curren t

level s o f publi c an dprivat e Superfun dspendin g ar e to o lo w t o simultaneousl y drai n thi s backlo g over th e nex t 1 0 years , keep pac e with ne w site s brough t t o EPA' s attention , an d mov e presen t site s expeditiousl y throug h th e cleanu p pipeline
. Th e growt

h i n total spendin g necessar y t o kee p pac e with site work

load s i n th e bas e an d hig h case s i s show n i n Figur e 2 o n pag e 15 ; Figur e 5 show s a simila r patter n fo r

th e federa l componen t

o f th e total
. Federa l cost s pea

k a t $3. 4 billio n i n th e bas e cas e an d$5. 2 billio n i n th e hig h case , roughl y doubl e o r tripl e th e highes t

leve l observe d t o dat e ($1. 7 billio n i n 1992)
. Thi s growth i n federa l cost s canno t b e avoide d b y additional emphasi s o n enforcement-lea d cleanups : sinc e mos t

ne w project s are alread y bein g undertake n b y responsibl e parties , th e potential fo r furthe r cos t shiftin g o f

thi s typ e i s limited
. O f course , hig h growt

h i n spendin g ca

n alway s b e avoide d b y stretchin g th e cost s ou t ove r more years ; i n th e contex t

o f Superfund , afundin g stretchou t woul d hav e several effect s o n long-term costs . Natura l dispersio n an d decay o f hazardou s substance s woul d make some cleanup s cheaper-o r eve n unnecessary—an dother s more expensive
. Tota l cost s woul d probabl y ris e i n undiscounte d dollar s becaus e astretched-ou t progra mwoul d hav e mor e year s o f overhea d costs . Tota

l present-worth costs , however , migh t

fal l becaus e o f

th e additional year s o f discounting
. Regardles s o f

th e impac t

o n long-termcosts , stretchin g ou t

th e programunambiguousl y delay s cleanu p an d it s attendan t benefits
. On e way t o illustrat e th e magnitud e o f th e possibl e delay s i s t o contras t th e result s o f

CBO' s lo w case , i n whic h federal an d tota

l spendin g level s remai n relativel y fla t over th e nex t decade , wit

h thos e o f

th e bas e an d hig h cases . Th e averag e annua l numbe r o f remedial investigations/feasibilit

y studie s starte d fro m199 3 throug h th e pea

k cos t yea r o f 200 3 i s 15 1 i n th e lo w case , 33 9 i n th e bas e case , an d 49 0 i n th e hig h case . Ove r thos e 1 1 years , ne w remedial action s averag e 173 , 243 , an d 29 1 per

yea r i n th e low , base , an d hig h cases . Consequently , applyin g th e activit y level s funde di n th e lo w cas e to th e sit e wor k load s o f th e bas e cas e woul d allo w onl y 4 5 percen t o f th e read y RI/F S project s an d 7 1 percen t o f th e potentia l remedial cleanup s t o begi n b y 2003 , leavin g backlog s o f mor e tha n 2,000 RI/FS s an d clos e to 80 0 RAs
. Similarly , onl y 3 1 percen t o f th e RI/F S start s an d 5 9 percen t o f th e RA start s woul d occu r i f low-cas e activity level s wer e applie d t o high-cas e needs , an d backlog s o f

roughl y 3,700 RI/FS s an d 1,30 0 RA s woul d accumulate b y th e en d o f 2003
.
Figure 5 . Federa l Superfun d Expenditures , Fisca l Year s 1993-207 5 Billion s o f Real , Undiscounte d Dollar s

1993 2003 201 3 202 3 203 3 204 3 205 3 206 3 207 3 SOURCE : Congressiona l Budge t Office

. NOTE : Se e Appendi x A fo rth e difference s i n assumption s under lyin g th e thre e cases .4 0 TH E TOTA L COSTS O F CLEANIN G U P NONFEDERAL SUPERFUN D SITE S January 199 4 

# Superfun d Cost

s Unde r Alternativ e Policie s Give n that

th e CB O estimate s assum e astati c polic y environment , i t

i s usefu l t o consider

ho w change s i n Superfun dpolicie s migh t affec t futur e costs . Tw o curren t EP A initiative s are unlikel y t o hav e amajo r impac t o n tota l long-ru n cost s bu t

coul dshif

t thei r distributio n b y paye r

an dover time
. Othe

r propose d change s coul d affec t

tota l cost s a s wel l a s their distribution
. EPA' s curren t

initiative s ar e th e Superfun d Accelerate d Cleanu p Mode l (SACM ) an d stat e deferra l o f

potential NPL sites
. Th e SAC M seek s to eliminat e downtim e i n th e screenin g process , institut e presumptiv e remedie s fo r commo n contaminatio n problems , an dspee dris k reductio n (a s distinc t

fro m environmenta l restoration ) a t NPL site s a s wel l a s non-NP L remova l sites
. Th e stat e deferra l policy , no w bein g developed , woul dallo w EP A t o delegate t o qualifie dstate s th e responsibility fo r addressin g certai n "low

- o r

medium-priority NPL-calibe r sites , i.e. , site s tha t

EP A woul dno t

b e abl e t o addres s fo r several years." 1 0 Althoug h both o f

thes e initiative s may represen t significan t

chang e i n othe r

respects , thei r

impac t o n Superfund' s tota l cost s may b e minor
. Th e stream
linin g calle dfo r

i n th e SAC M coul dresul t i n som e cos t savings , bu t

th e mai n effec t

wil l b e t o shif

t some o f th e existin g cost s forwar di n tim e (an d perhap s t o defe r

others ) i n orde r

t o spee du p th e benefit s o f

reduce drisk s t o healt

h an dth e environ

ment . Similarly , state deferra l coul dconceivabl y reduc e overal l administrativ e costs-i f th e cooperatin g

10
. Environmental Protectio n Agency , "Superfun dAdministrativ e Improvements : Final Report " (Jun e 23 , 1993) , p . 34
. stat e program s are more efficien t tha n EPA's—bu t

th e primar y emphasi s o f

th e initiativ e i s o n speedin g up cleanu p b y spreadin g costs , no t o n reducin g costs . T o th e exten t

that either o f thes e polic y change s succeed s i n increasin g th e pac e o f cleanup , present
worth cost s coul dactuall y rise , sinc e earlier expendi

ture s hav e ahighe r

economi c value
. A thoroug h cost-benefi t

analysis , however , woul dals o sho w present-wort

h benefit s risin g a s aresul t o f th e earlie r cleanups
. I n th e absenc e o f enoug h dat ao n benefit s t o allo w suc h an analysis , undiscounte ddollar s may provid e amore usefu l measur e o f th e cos t effect s o f alternativ e policies
. Othe r propose dchange s i n Superfun dpolicie s coul dhav e mor e significan t cos t implications
. Fo r example , change s i n cleanu p standard s coul drais e o r lowe r averag e cleanu p cost s (fo r on e o r mor e type s o f sites) , with secondar

y effect s o n administrativ e an dtransactio n costs . A shif t fro mth e presen t liabilit y syste mt o apublic-work s financin g scheme woul deliminate enforcemen t an dtransactio n cost s a

t man y sites , bu t

i t woul dals o eliminate th e saving s fro man y private-secto r

advantag e i n efficiency
. Th e cos t effect s o f

thes e an dother

alternative s coul db e estimate dusin g th e framework employe di n Chap

te r 2 , give n adequat e dat ao n th e natur e o f th e polic y changes
. Th e nonfedera l site s addresse dunde r th e Superfun dprogram , whic h ar e th e focu s o f thi s study, are onl y on e componen t o f th e overal l nationa l effor t t o clea n u p hazardou s wastes . Th e ful l uni

vers e o f site s include s federall y owne dfacilities , site s bein g addresse dunde r

th e Resourc e Conservatio n an dRecover

y Ac t an dothe r

federa l laws , an dsite s bein g cleane du p unde r

state program s o r

voluntar y privat e efforts
. Ideally , attempt s t o maximiz e th e ne t benefit s o f

th e nation' s wast e cleanup s shoul dtake thi s broader

contex t int o account .

# Appendixe s

### Appendix A 

# A Summar

y o f th e Differen tAssumption s Used i n th e Three Scenario s



# T abl e A- l summarize s th e differin g assumption s that underli e th e thre e Congressiona l Budge t Offic e scenario s analyze di n thi s study
. Th e tabl e include s al l o f th e primar

y assumptions—thos e no t derive d fro mmore fundamental , underlyin g assumptions-an d som e o f th e ke y secondar

y (derivative ) assumptions
.4 4 THE TOTA L COST S O FCLEANIN G UP NONFEDERA L SUPERFUN D SITE S January 1994 Tabl e A-1 . Assumption s o f th e Thre e Case s Bas e Cas e Lo w Cas e Hig h Cas e Site s Adde d t o th e Screenin g Inventor y Percentag e o f Screenin g Site s Place d o n th e NP L Tota l Nonfedera l NP L Sites 8 25,37 6 8 4,50 0 15,15 1

5 2,30 0 50,00 0

1 0 7,80 0 Percentag e Distributio n o f Site s (Mega/major/minor ) Firs t 71 1 site s Next 78 9 site s Nex t 20 0 site s Next 20 0 site s Next 40 0 site s Next 60 0 site s Next 60 0 site s Next 1,00 0 site s Next 3,30 0 site s Al l site s Defaul t Cost-Scalin g Factor s Use d fo rSite s wit h Cleanu p Project s No t Ye t Estimate d (Percent ) Mega-site s greate rtha n $15 0 millio n Al l othe rmega-site s Majo rsite s Cost s pe rSit e fo rFund-Lea d Cleanup s (Million s o f dollars) b Mega-site s Capita l Operation s an d maintenanc e Tota l Majo rsite s Capita l Operation s an d maintenanc e Tota l Efficienc y Advantag e o f Privat e Secto r(Percent ) Averag e Cleanu p Cost s fo rAl l Site s (Million s o f dollars) 0 Federa l Marku p fo rGenera l Administration , Research , an d Non-EP A Cost s (Percent ) 6.5/18.7/74. 8 4.0/13.0/83. 0 4.0/13.0/83. 0 2.0/8.0/90. 0 2.0/8.0/90. 0 2.0/8.0/90. 0 2.0/6.0/92. 0 2.0/6.0/92. 0 n.a . 3.1/10.1/86. 8 6.5/14.0/79. 5

4.0/10.0/86. 0 2.0/6.0/92. 0 2.0/6.0/92. 0 2.0/6.0/92. 0 n.a . n.a . n.a . n.a . 4.1/9.9/86. 0 6.5/23.3/70. 2

5.0/20.0/75. 0 5.0/20.0/75. 0 5.0/20.0/75. 0 3.5/16.5/80. 0 3.5/16.5/80. 0 3.5/16.5/80. 0 2.0/12.0/86. 0 2.0/12.0/86. 0 3.2/15.2/81. 7

12 0 13 5 16 0

107. 6 61. 6 169. 2 

### 33. 0 16. 9 49. 9 2 0
24. 7
2 2 

### 11 0

11 0 12 0

102. 6 58. 9 161. 5 28. 9 14. 8 43. 7 3 0
23. 3
2 0 130

16 0 20 0



### 112. 7 

### 65. 0 177. 7 37. 0 19. 0 56. 0 

### 1 0

29. 1
2 4 SOURCE : Congressiona l Budge t Office

. NOTES : NP L = Nationa l Prioritie s List ; n.a . = no t applicable ; EP A = Environmenta l Protectio n Agency

. a . Secondar

y assumption , derive d fro m th e tota l screenin g inventor y (existin g site s an d assume d additions ) an d th e assume d acceptanc e rat e o f th e screenin g process . (Se e Chapte r2 fo rdetails. ) b

. Secondar

y assumption , derive d fro m site-specifi c dat a an d th e assume d cost-scalin g factor s fo rincomplet e sites

. (Operation s an d maintenanc e cost s ar e discounte d a t 7 percen t pe ryear. ) c . Secondar

y assumption , derive d fro m fund-lea d cost s b y sit e type , th e assume d distributio n o f sites , an d th e assume d private-secto refficienc y advantage

.

### Appendix B



# A Glossar

y of Superfun d Terms



# M an y o f

th e definition s give n belo w are adapte dfro mEnvironmental Protectio n Agency , Th e Superfund Program: Te n Years o

f Progress (Jun e 1991)
. cash-outsettlement : A n agreemen t i n whic h aresponsibl e party settle s it s liabilit y b y payin g th e Environmenta l Protectio n Agenc y (EPA ) acertai n amoun t towar dcleanu p wor

k t o b e don e later
. I t

differ s fro macos t

recovery , i n whic h EP A collect s mone y t o reimburs e th e Superfun dtrus t fun dfo r previou s expenditures
. enforcement-firs tpolicy : A polic y introduce di n 198 9 unde r whic h EPA attempt s to maximiz e th e numbe r o f cleanup s conducte db y responsibl e parties
. enforcement-lea d cleanup : A cleanu p conducte db y some o r al l o f asite' s responsibl e partie s with EP A oversight ; same a s RP-lea d cleanup . Compare with fund-lea d cleanup . fund-lea d cleanup : A cleanu p conducte db y EP A usin g mone y fro mth e trus t fund
. Hazar d Rankin g System (HRS) : Th e syste mEP A use s t o score potential risk s t o huma n healt h an dth e environmen t

fro mrelease s o r

threatene drelease s o f

hazardou s substances
. I n general , ahazardou s wast e sit e mus t scor e a t leas t 28. 5 o n th e HR S to b e place do n th e National Prioritie s Lis t fo r extensiv e cleanup
. joint-and-several liability : A legal rul e unde r whic h an y liabl e party may b e hel dfull y responsibl e fo r asituatio n resultin g fro mth e action s o f multipl e liabl e parties
. I n th e contex t o f Superfund , joint-and-several liabilit y mean s tha t an y subse t

o f asite' s responsibl e partie s can b e require dt o pa y fo r th e entire cleanu p o f

th e sit e (althoug h suc h partie s ar e fre e t o see k contribution s o r

reimbursemen t

fro mth e othe r

liabl e parties)
. majo r site : I n th e Congressiona l Budge t Office' s analysis , asit

e contaminate dwith hazardou s substance s whos e tota l cleanu p cost s are expecte dto b e betwee n $2 0 millio n an d$5 0 million , a s estimate di n on e o r more record s o f decision
. Compare with mega-sit e an d mino r site . mega-site : A sit

e whos e estimate dcleanu p cost s excee d$5 0 million
. mino r site : A sit

e with estimate dcleanu p cost s o f les s tha n $2 0 million
. National Prioritie s Lis t(NPL) : EPA' s lis t o f site s eligibl e fo r

long-ter mremedia

l respons e usin g mone y fro m th e trus t fund
.4 6 THE TOTA L COST S O F CLEANIN G UP NONFEDERA L SUPERFUN D SITE S Januar y 1994 

### operabl e unit : A n elemen t o f an overal l sit

e cleanup
. EP A ma

y choos e t o divid e asit

e int o multipl e operabl e unit s t o b e cleane du p separatel y o r t o treat i t a s asingl e unit
. Multipl e unit s generall y correspon dt o differen t area s o r media , suc h a s soil an dgroundwater
. preliminary assessment(PA) : Th e firs t stag e o f EPA' s screenin g proces s fo r investigatin g suspecte dwast e sites , generall y involvin g revie w o f availabl e document s an dsit e reconnaissance
. Followe db y asit e inspection , whe n necessary . record o f decisio n (ROD) : A publi c documen t i n whic h EP A identifie s th e cleanu p alternativ e t o b e use dat an operabl e uni t

o f asit e o n th e National Prioritie s List
. remedial actio n (RA) : Th e actua l constructio n o r implementatio n phas e o f cleanu p a

t an operabl e uni t

o f asite o n th e Nationa l Prioritie s List
. remedial design (RD) : Th e engineerin g work tha t follow s arecordo f

decisio n t o develo p th e technical drawing s an dspecification s tha t

wil l guid e subsequen t

remedial action
. remedial investigatio n an d feasibilit y study (RI/FS) : Relate dstudie s tha t gathe r dat at o determin e th e typ e an d exten t o f contaminatio n a

t an NPL sit

e (o r operabl e unit) , establis h cleanu p criteria , an danalyz e th e feasibility an d cos t o f alternativ e cleanu p methods
. remova l o r removal action : A n actio n o f shor t duratio n (generall y unde r on e year ) take n t o contro l immediate threat s t o peopl e o r

th e environmen t

fro mareleas e o r

threatene dreleas e o f

hazardou s substances
. Removal s may b e undertake n a

t site s no t o n th e National Prioritie s List
. responsibl e part

y (RP) : A n individual , business , o r other organizatio n legall y liabl e fo r cleanin g up asite
. Th e fou r type s o f responsibl e partie s ar e asite' s presen t owner s an doperators , it s previou s owner s an doperator s fro m period s durin g whic h i t receive dhazardou s substances , th e generator s o f suc h substances , an dan y wast e transporter s responsibl e fo r choosin g th e site
. Becaus e liability i s ofte n contested , th e ter m"potentiall y responsibl e party " i s als o commonl y used
. RP-lea d cleanup : Sam e a s enforcement-lea d cleanup . sit e inspectio n (SI) : Th e secon dstag e o f EPA' s screenin g process , whic h involve s collectin g an danalyzin g sample s o f

soi l an dwater , a s appropriate
.ISB N 0-16-043071- 2



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