Superfund: Litigation Has Decreased and EPA Needs Better Information on Site Cleanup and Cost Issues to Estimate Future Program Funding Requirements
Released: 2009-08-14T00:00:00

Letter

Background

CERCLA was passed in late 1980, in the wake of the discovery of toxic waste sites such as Love Canal, where housing was built upon a former landfill for toxic chemicals, and residents began developing cancer and other illnesses from the residual waste. Unlike some environmental statutes, CERCLA did not regulate activity in order to prevent contamination of the environment; rather, CERCLA created a mechanism for responding to contamination that already exists. CERCLA established a trust fund from which EPA receives annual appropriations for Superfund program activities. The Superfund trust fund has received revenue from four major sources: taxes on crude oil and certain chemicals, as well as an environmental tax assessed on corporations based upon their taxable income; appropriations from the general fund; fines, penalties, and recoveries from responsible parties; and interest accrued on the balance of the fund. In the program’s early years, dedicated taxes provided the majority of revenue to the Superfund trust fund. However, in 1995, the authority for these taxes expired and has not been reinstated. Since that time, appropriations from the general fund have constituted the largest source of revenue for the trust fund, as table 2 shows.

Since CERCLA was enacted, the Congress and EPA have made some significant changes to the program, including the following: The Superfund Amendments and Reauthorization Act of 1986 gave EPA additional enforcement authorities and statutory direction concerning settlements, and required greater state and public participation in site cleanup activities. The act also increased the potentially available funds for the program by allowing additional taxes to be collected for the trust fund, and by increasing the authorized level of funding that the Congress could appropriate from the trust fund to the Superfund program.

In the mid-1990s, EPA undertook 62 reforms—collectively known as the Superfund administrative reforms—to respond to criticism of the Superfund program. These 62 reforms were intended to cover a range of activities, such as (1) selecting more technologically advanced and cost-effective cleanup remedies, (2) providing technical assistance so that communities and tribes located near sites could better participate in cleanup decisions, and (3) reducing the costs associated with enforcing Superfund by, for example, expediting settlements with certain types of responsible parties, such as those that contributed small amounts of hazardous substances.

A 1999 amendment to CERCLA defined the term “recyclable material” and exempted certain parties who arranged for the recycling of these materials from Superfund liability, provided certain conditions are met. According to the amendment, one purpose of these exemptions was to remove impediments to recycling that were unintended consequences of the Superfund provisions.

In 2002, the Small Business Liability Relief and Brownfields Revitalization Act, among other things, limited the liability of certain types of responsible parties and established the Brownfields program— a federal grant program to assist with the redevelopment of certain sites polluted (or potentially polluted) by hazardous contaminants.

EPA’s Process for Listing Superfund Sites on the NPL and Cleaning Them Up

Potentially hazardous sites are usually reported to EPA by a state environmental agency, but sometimes local or tribal governments, other federal agencies, individuals, or community groups also identify such sites. The EPA regional office, often in conjunction with a state environmental agency, evaluates the site to verify that hazardous substances are present and to determine whether the site could be addressed by other programs, such as state hazardous waste programs or other federal authorities. Regional officials may decide not to include a site for further assessment for a number of reasons, such as if the site could be addressed by other programs, or if the officials make a determination that no further cleanup action is necessary at the site. Also, as part of the evaluation process, EPA uses its Hazard Ranking System to numerically assess the potential of sites to pose a threat to human health or the environment—sites that score at least 28.5 under the Hazard Ranking System are eligible for NPL listing. EPA regions then submit sites to EPA headquarters for possible listing on the NPL on the basis of a variety of factors, including the severity of the contamination and the urgency of the threat it poses. In 2002, EPA established a committee of regional and headquarters personnel to review regional submissions as part of the selection process. This committee primarily considers risks to human health and the environment and the urgency of the need for response; it also considers program management factors, such as projected costs to the Superfund program and the timing of funding needs. As a matter of policy, EPA also seeks concurrence from the government of the state in which a site is located. Sites that EPA decides to list on the NPL are proposed for listing in the Federal Register for a 60-day public comment period. Final listing decisions are also published in the Federal Register.

Once EPA selects a site for the NPL, it initiates a process to understand the extent of the contamination, decide on the actions that will be taken to address that contamination, and implement those actions. This process can take many years—or even decades—to complete. Figure 1 outlines the process EPA typically follows, from listing a site on the NPL through through deletion of the site from the NPL. deletion of the site from the NPL.

After a site is listed, EPA or a responsible party will conduct a two-part study of the site: (1) remedial investigation, to characterize site conditions and assess the risks to human health and the environment, among other actions; and (2) feasibility study, to evaluate various options to address the problems identified through the remedial investigation. For example, EPA may determine that the soil at a site is polluted with a hazardous chemical during the remedial investigation and decide during the feasibility study that removing the soil for off-site treatment represents the best way to clean the site. These findings and decisions are documented in a record of decision.

Next, either EPA or a responsible party may initiate the remedial action that was documented in the record of decision. Like the site study, implementation of the remedial action is divided into two parts: (1) remedial design, a further evaluation of the best way to implement the chosen remedy; and (2) remedial action, the implementation of the remedy selected. When physical construction of all remedial actions is complete and other criteria are met, EPA deems the site to be “construction complete.” Most sites then enter into the operation and maintenance phase, when the responsible party or the state maintain the remedy, while EPA conducts periodic reviews to ensure that the remedy continues to protect human health and the environment. For example, at a site with soil contamination, the remedial action could consist of building a cap over the contaminated soil, while the operation and maintenance phase would consist of monitoring and maintaining the cap. Eventually, when EPA determines, with state concurrence, that no further remedial activities at the site are appropriate, EPA may delete the site from the NPL. Although most sites progress through the cleanup process in roughly the same way, EPA may take different approaches based on site-specific conditions.

While appropriated resources from the Superfund trust fund are available for remedial actions at sites that have been listed on the NPL, EPA can also use these resources to conduct removal actions to address site contamination at any site where there is an actual or threatened release of a hazardous substance. CERCLA defines removal actions to include necessary (1) actions in the event of a release or threatened release of hazardous substances into the environment; (2) actions to monitor, assess, and evaluate the release or threatened release of hazardous substances; (3) disposal of removed material; and (4) actions to otherwise prevent, minimize, or mitigate damage to public health, welfare, or to the environment. CERCLA limits EPA removal actions paid for with appropriations from the trust fund to actions lasting 12 months or less and costing $2 million or less, although these limits can be exceeded if EPA determines that conditions for an exemption are met. Most removal actions have occurred at sites not on the NPL.

Liability Under CERCLA

Under CERCLA, liability stems from the release (or threatened release) of hazardous substances into the environment from a facility. Many of these concepts are defined broadly. For example, under CERCLA, a “facility” includes, among other things, buildings, pipelines, lagoons, ditches, storage containers, motor vehicles, or any sites where a hazardous substance has come to be located. EPA also has to establish some other facts to successfully recover costs or require cleanup actions. To recover its costs, EPA’s expenditures must not be inconsistent with the National Contingency Plan. This plan, which was revised pursuant to CERCLA, establishes the procedures and standards for responding to releases of hazardous substances. To compel cleanup, EPA must show that an “imminent and substantial endangerment” may exist at the site that requires action on the part of the responsible parties.

Parties may also be held liable under CERCLA for damages related to the loss, injury or destruction of natural resources. The National Contingency Plan designates the secretaries of several departments— as the Department of the Interior or the Department of Agriculture—who manage or hold federal lands as “natural resource trustees.” State and tribal officials are also designated as trustees. These trustees are authorized to sue, through the Attorney General, responsible parties for the costs of assessing the damages to natural resources, as well as the costs of restoration. EPA is not a natural resource trustee; rather, the agency’s role with respect to natural resource damages is generally to notify and coordinate with the trustees.

CERCLA explicitly identifies four types of parties that can be held liable at a site, as well as some exemptions for parties meeting certain characteristics. The four types of parties are (1) owners or operators of a site; (2) former owners or operators of the site at the time hazardous wastes were disposed of; (3) those who arranged for disposal of hazardous substances (often called generators); and (4) transporters of hazardous waste to the site. Exempted parties include, among others: landowners who acquire contaminated property without knowing, after appropriate research, about the hazardous substances at the site; landowners who, after appropriate research, knowingly acquire contaminated property and take reasonable steps to prevent any further release of hazardous substances and cooperate fully with any response actions; generators and transporters who contribute extremely small amounts of waste to a site, known as de micromis parties; parties involved in recycling certain materials; and parties who have obtained certain federal permits to release hazardous substances. In addition, releases comprised solely of crude oil, petroleum, pesticides, and other specifically exempted substances are not subject to liability. However, in some cases, cleanups of these substances may be taken under other authorities, such as the Oil Pollution Act of 1990. Finally, CERCLA’s liability provisions are focused on releases of hazardous substances, although EPA also has the authority to respond to releases of pollutants and contaminants which may pose an imminent and substantial danger.

Courts have held responsible party liability under CERCLA to be strict, joint and several, and retroactive. Under strict liability, a party may be liable for cleanup even though its actions were not considered negligent. Because liability is joint and several, when the harm done is indivisible, one party can be held responsible for the full cost of the remedy even though other parties may have contributed to the release of hazardous substances at the site. Retroactive liability means that liability applies to actions that took place before CERCLA was enacted.

Parties held responsible by EPA or sued by other parties can challenge their CERCLA liability. Specifically, CERCLA provides responsible parties with three statutory defenses to Superfund liability when hazardous substances are released solely because of (1) an act of God; (2) an act of war; and (3) the actions of a third party (other than an agency or a party in a contractual relationship with the responsible party), although the responsible party must have taken due care and reasonable steps to prevent a release. Responsible parties may also claim that too much time has passed for EPA to bring an enforcement action against them. CERCLA establishes specific statutes of limitations—that is, time limits—for filing actions against responsible parties. Liable parties may also seek to reduce their costs by arguing that they are not subject to joint and several liability when the site contamination is divisible among responsible parties, or that EPA’s costs were inconsistent with the regulations in the National Contingency Plan.

EPA’s Enforcement Process

EPA enforcement begins with the identification of potentially responsible parties, usually early in the cleanup process; continues throughout site cleanup; and often does not conclude until after the site is declared construction complete, such as when the agency pursues parties to recover its costs for implementing the site cleanup. Although the process varies from site to site, the typical stages of enforcement for an NPL site are shown in figure 2.

Search for responsible parties. EPA identifies responsible parties by, among other actions, reviewing documentation related to the site; conducting interviews with government officials or other knowledgeable parties; performing historical research on the site, such as searching for previous owners of the property; sampling soil or groundwater at the site; and requesting additional information from relevant parties. In addition to identifying the names of potentially responsible parties, EPA attempts to obtain information on the type and amount of hazardous substances shipped to a site by each party and any financial constraints faced by the identified parties. These details help EPA establish whether any parties should qualify for special types of settlements, such as a de minimis settlement for a party who contributed small amounts of waste, or an “ability to pay” settlement for parties facing financial difficulties. The search should also provide EPA with the evidence to establish the potential liability of each party. Although the search typically begins no later than EPA’s efforts to list a site on the NPL, the discovery of new parties at a site can occur at any point during, and even after, the cleanup process is completed.

Negotiations. As with the search for responsible parties, negotiations typically take place early in the site cleanup process, but can resume at various points during the enforcement process. Formal negotiations begin when EPA sends a “special notice letter” to parties. This letter typically includes information about the site, the work necessary to study or clean up the site, other responsible parties, and also provides a draft settlement document to be used as a basis for negotiations. The special notice letter also initiates a “negotiation moratorium,” or a period of time during which EPA is prohibited from starting the site study or remedial action. EPA and the responsible parties may use this time to reach agreement about how the necessary site work will be conducted.

If negotiations are successful and parties settle with EPA to conduct site work or reimburse agency costs, CERCLA authorizes EPA to provide several benefits to the settling parties. EPA has the discretion to provide parties with a “covenant not to sue,” in which the federal government promises not to pursue additional enforcement actions against the parties for matters addressed by the settlement. In most cases, settlements also include “reopeners,” which allow EPA to take new enforcement actions if it discovers new evidence of liability or contamination after the initial settlement. CERCLA also provides “contribution protection” to parties that settle with EPA. That is, other parties cannot sue the settling parties for the costs affiliated with the matters addressed by the settlement.

In cases involving the performance of site work, where EPA and the responsible parties are unable to reach agreement, EPA may order the parties to conduct the cleanup action. If the parties do not comply with such orders, or for enforcement actions related to matters other than site work, EPA may refer the case to DOJ for litigation. DOJ officials then renew efforts to negotiate with responsible parties. These efforts are known as “pre-filing negotiations” and are required prior to all civil litigation the federal government brings. Negotiations continue after DOJ files a CERCLA case, even during a trial.

Litigation Under CERCLA

The federal government can litigate against responsible parties for many reasons, including the following: Some parties may refuse to allow EPA access to a contaminated site or may not provide EPA with information to assist in identifying responsible parties or site hazards. CERCLA requires parties affiliated with a site (whether responsible for contamination or not) to provide EPA with access to the site and site information.

EPA can litigate when parties refuse to comply with EPA administrative orders, such as orders directing responsible parties to conduct site work.

EPA may use litigation to recover its costs, including those associated with site work and program administration, as well as the interest that has accrued on agency costs.

Because certain agreements related to remedial actions, among others, must be confirmed by the court, EPA must initiate a case in court to file these agreements.

Parties other than the federal government—states, local governments, private citizens, businesses, and others—can also initiate CERCLA litigation. Many of these cases are known as “contribution claims,” where a responsible party sues other identified parties to recover some of the money it has spent to reimburse EPA for cleaning up a site. In addition to these contribution claims, responsible parties incurring cleanup costs may sue other responsible parties to recover some of those costs. Because these suing parties are responsible, in part, for the contamination, they cannot usually recover all of their costs, but may recover an amount determined by the courts to be equitable. In some instances, state governments, private parties, and others may also initiate litigation under CERCLA against federal agencies, and DOJ defends the federal agencies in such cases.

Litigation can take place over a considerable period of time, and during any phase of the process, the parties to the litigation can decide to reach a settlement. For example, during the discovery phase of litigation, when parties to a lawsuit request and obtain information from each other, such as the evidence that supports their claims or defenses, parties may decide that, given the evidence and the potential costs and risks of trial, it would be financially preferable to reach a settlement rather than to proceed to a trial. A case may be broken into several phases, including: (1) liability, or whether parties meet the legal standard of having contributed to the release of hazardous waste; (2) selection of a remedy, such as whether actions were consistent with the National Contingency Plan; and (3) allocation of costs among parties for contribution claims.

Documenting EPA Enforcement Actions

Completed EPA enforcement actions can be documented in one of four ways: Administrative orders on consent document the agreements EPA and responsible parties reached to pay for cleanup actions or conduct site work, such as site study and removal actions. These can contain penalties for noncompliance and may be enforced by a judge.

Consent decrees also document agreements between EPA and responsible parties, but must be approved by the court. CERCLA requires that agreements on conducting a remedial action take the form of a consent decree.

Unilateral administrative orders may require responsible parties to conduct site work, among other things. These documents describe the liability of the parties, the actions that must be taken, and the penalties for noncompliance. CERCLA authorizes fines for each day of noncompliance with a unilateral administrative order, as well as damages of up to three times any funds spent by EPA as a result of the parties’ noncompliance, in addition to the costs of cleanup.

Judgments result from cases filed in court, when a judge or a jury determines the liability of a responsible party.

We have categorized enforcement actions as having consensual or nonconsensual outcomes—that is, whether or not EPA was able to settle with the responsible party. In addition, some outcomes are achieved through either an administrative or judicial process. While courts are involved in judicial actions, EPA can take administrative actions on its own. Table 3 describes these categories.

EPA Resolves Most Enforcement Actions through Settlements with Responsible Parties, and Site- Specific Conditions Influence the Negotiation Process

Most of EPA’s enforcement actions are resolved through a settlement between the agency and responsible parties. In reaching these settlements, EPA’s and responsible parties’ decisions are influenced by site-specific characteristics and other key considerations, such as the expected cost of site cleanup, the strength of EPA’s evidence of responsible party liability, and the number and type of other responsible parties identified.

Most EPA Enforcement Actions Result in Agreements with Responsible Parties for Conducting Site Work or Reimbursing the Agency’s Costs

Over the life of the Superfund program, according to EPA data, the agency has completed at least one enforcement action at 1,160 sites, or 71 percent of all proposed, final, or deleted NPL sites. At many sites, EPA has taken multiple enforcement actions. While the median number of enforcement actions per site is 3, EPA has taken as many as 68 enforcement actions at one site. At one site we reviewed—an abandoned recycling facility—EPA files show that the agency used multiple enforcement tools. According to agency documentation, EPA issued a unilateral administrative order for a removal action to maintain a stormwater treatment plant; an administrative order on consent for site study work; two additional administrative orders on consent to recover past and anticipated future site costs from parties that contributed small amounts of waste to the site; a consent decree for the performance of the remedial action; and three additional enforcement actions for other aspects of site work or cost recovery. EPA had identified 528 parties responsible for contamination at this site.

From fiscal years 1979 through 2007, EPA completed 4,642 enforcement actions at NPL sites, of which 3,682, or 80 percent, were consensual. Moreover, EPA resolved negotiations with responsible parties through administrative—rather than judicial—actions more than 60 percent of the time. See figure 3.

CERCLA explicitly encourages the government to settle with responsible parties, “whenever practicable and in the public’s interest.” EPA and DOJ officials, as well as attorneys we spoke with, agreed that reaching a settlement is the preferred approach for resolving liability. For example, some attorneys said that their clients tend to settle with EPA because responsible parties are unlikely to succeed in avoiding liability in litigation against the federal government.

As table 4 shows, administrative orders on consent are the most frequently used enforcement action at NPL sites, accounting for 43 percent of actions completed over the period, followed by consent decrees at 37 percent.

As the table shows, EPA and the responsible party were often able to reach agreement prior to a final judgment, with only one percent of enforcement actions resulting in a final judgment since 1979. However, EPA may have to go to court in many more instances, and the agency and responsible parties may litigate for extended periods of time before reaching a settlement. For example, according to EPA documentation, the agency and two responsible parties were engaged in litigation over liability for over 7 years at one site we reviewed. After the judge issued an interim ruling in EPA’s favor, the responsible parties decided to settle with EPA, and the settlement was documented as a consent decree.

Enforcement Actions Often Result in the Performance of Site Work or Recovery of Agency Costs

As figure 4 shows, a majority of EPA’s enforcement actions at NPL sites resulted in commitments from responsible parties either to reimburse agency costs or to conduct site work, with only 22 percent related to both.

Both (1,005)

Site work (1,473)

As the figure shows, 10 percent of enforcement actions did not result in cost recovery or the responsible party’s agreement to conduct site work. Rather, EPA took these actions for other objectives, such as to ensure access to a site or obtain requested information about a facility to assist in the search for responsible parties. However, a few of these actions—7 out of 469—did result in penalties levied against the responsible party.

The likelihood of reaching a consensual enforcement action may be influenced by whether EPA is seeking to recover its costs or to require responsible parties to conduct site work. As table 5 shows, enforcement actions seeking the recovery of EPA’s costs were almost always consensual. In part, the consensual nature of EPA’s enforcement actions for cost recovery may stem from EPA’s policy toward de minimis parties, those who contributed small amounts of waste to a site. EPA policy indicates that agency officials focus their negotiations with de minimis parties on obtaining past or anticipated future site costs from these parties, rather than requiring site work. Of the 1,695 cost recovery actions completed over the course of the Superfund program at NPL sites, at least 438 were with de minimis parties, and all 438 were consensual. Additionally, EPA noted that it may not be prudent and cost-effective to attempt to recover costs when the evidence of responsible party liability is tenuous. Thus, the outcomes of the enforcement actions that EPA does take are more likely to be consensual because experts told us that when EPA’s evidence of liability is strong, parties may be more likely to settle their liability.

While almost all enforcement actions requiring both site work and cost recovery resulted in consensual outcomes, only about one-half of the enforcement actions requiring only site work were achieved through consensual outcomes. If EPA is unable to reach an agreement with a responsible party to both conduct site work and recover its costs, the agency may issue a unilateral administrative order, which typically only requires site work. Only 16 of EPA’s 901 unilateral administrative orders issued at NPL sites—less than 2 percent—included requirements related to recovering agency costs. EPA may then attempt to recover any costs through a separate enforcement action.

Finally, about one-half of the enforcement actions that required neither site work nor reimbursement of agency costs were consensual. These enforcement actions are more likely to be nonconsensual than some other types of actions because of the types of issues these actions address. For example, according to EPA policy and processes, the agency should try to obtain initial oral or written consent for site access or site information prior to taking enforcement actions. Consequently, EPA may take enforcement action only when the party refuses EPA’s request. Approximately 75 percent of the 218 enforcement actions taken at NPL sites that involved only site access or information requests were nonconsensual. When parties deny access or information, it may be less likely that EPA can resolve issues through consensual agreements. For example, according to EPA documentation for one site we reviewed, EPA had to sue two responsible parties for access to the site and information about the facility. The parties refused to settle with EPA prior to a trial. On appeal, the court eventually ruled that EPA should be granted access to the site. However, this decision came nearly 5 years after EPA had proposed the site for the NPL. Agency documentation indicated that, in the meantime, EPA’s ability to clean up the site and identify other responsible parties was delayed.

The type of site work to be performed and/or funded as a result of an enforcement action may also affect the likelihood of achieving a consensual outcome, as table 6 shows. Of the different enforcement outcomes related to site work, those related to site study were consensual more often than those related to other types of site work. EPA officials indicated that they did not want to force reluctant parties to conduct site studies because their work can influence the selection of an appropriate remedial action. Therefore, when EPA cannot reach agreement with responsible parties to conduct site study work, the agency may choose to do the work itself, rather than issue a unilateral administrative order. Over the life of the Superfund program, only 3 percent of enforcement actions related to site study were unilateral administrative orders.

As table 7 shows, according to EPA estimates, the agency’s enforcement actions at NPL sites have returned benefits valued at an estimated $29.9 billion to the Superfund program. Although only 53 percent of enforcement actions required responsible parties to conduct site work, these enforcement actions resulted in commitments to conduct site work worth an estimated $22.5 billion, or 75 percent of the value of EPA’s enforcement actions. Furthermore, EPA’s recoveries of past costs, as well as penalties assessed, help to replenish the Superfund trust fund. Since the authority to collect dedicated taxes for the trust fund expired in 1995, fines, penalties, and recoveries have provided the second largest source of income for the trust fund—about 19 percent of trust fund revenues—after appropriations from the general fund. Moreover, according to EPA’s estimates, the agency has recovered approximately 36 percent of its site- specific costs over the life of the Superfund program. Responsible parties’ payments for future site costs have also, in some cases, meant that EPA could use its appropriation for work at other sites.

Site-Specific Characteristics and Key Considerations Influence EPA and Responsible Parties’ Decisions about How to Resolve Superfund Liability

According to agency officials and Superfund experts, site-specific characteristics affect decisions about how to resolve Superfund liability. For example, significant public concern over the cleanup of one site we reviewed limited EPA’s ability to recover a majority of its past costs, according to agency documentation. Local communities strongly advocated that the responsible party meet more stringent standards in cleaning up the site than were originally proposed by EPA. As a result, in its negotiations with the responsible party, EPA placed more emphasis on meeting these standards than on recovering its past costs. At another site, according to EPA documentation, responsible parties manufactured munitions and explosives, packaged and distributed chemicals, recycled waste solvents, and disposed of asbestos at various times during the 40 years before the site was placed on the NPL. This complex history, with several different sources of contamination, made it difficult for EPA to negotiate with responsible parties, according to agency documents. Although some of these parties agreed to conduct the site cleanup, they did not agree to clean up the site’s asbestos contamination; other parties reimbursed only a portion of EPA’s past costs at the site, arguing that they were not responsible for this contaminant. Finally, at a third site, according to EPA documentation, some of the responsible parties challenged EPA’s decision to list the site on the NPL. This led to additional litigation by these parties, and a judge’s order compelling EPA to expedite its negotiations with other responsible parties.

While site-specific characteristics generally influence how Superfund liability is resolved, we identified some key considerations that the parties routinely take into account: (1) site cleanup costs, (2) the strength of EPA’s evidence, (3) the number and type of other responsible parties, and (4) other considerations that agency officials and Superfund experts cited less frequently as affecting negotiations.

Cost of Site Cleanup

In 7 of the 12 interviews we conducted with Superfund experts, the experts identified anticipated site costs as an important consideration during negotiations over Superfund liability. Some said high site costs could lead to more difficult negotiations because both EPA and the responsible parties have a lot at stake in the negotiations. EPA places a higher priority on cases in which it hopes to recover more than $200,000. However, at one site we reviewed, EPA was ultimately willing to forgo suing a party for approximately $13 million of its past costs, in part, because the responsible party was conducting a related cleanup action anticipated to cost several hundred million dollars.

Several experts also noted that uncertainty about the costs or scope of the cleanup could lead to more difficult negotiations. According to attorneys at one law firm, sites with long-term operation and maintenance requirements create “open-ended” liability for their clients. Additionally, these attorneys said that disagreements about the level of cleanup necessary—such as whether the site will be used as an industrial park or a residential neighborhood, which can affect the cleanup standards—create uncertainty. One state official we spoke with agreed that responsible parties are less likely to litigate over Superfund liability when they are certain about the costs of cleanup at a site. As a result, state officials said that many states have developed different approaches for identifying site cleanup requirements, such as creating a list of standard approaches for a variety of site contamination problems. In their view, these approaches have helped reduce uncertainty about the scope of cleanup and the associated costs.

Finally, EPA policy directs agency officials to evaluate the value of a proposed settlement and determine how, if at all, the agency plans to recoup any unreimbursed costs that remain after settlement. Attorneys who represent responsible parties explained that, in deciding whether to settle with EPA, these parties also evaluate whether they will be able to recover some of their costs from parties not settling with the agency.

Strength of EPA’s Evidence Regarding Liability

According to the attorneys we spoke with, the strength of EPA’s evidence is important to consider in negotiations over site liability. For example, two attorneys told us a responsible party may choose not to engage in early negotiations with EPA if the agency’s evidence is inconclusive; instead, the party may decide to wait for EPA to find additional evidence. One attorney said that he typically advises clients to resolve their liability with EPA as quickly as possible, but pointed out that it could be worthwhile for responsible parties with tenuous connections to Superfund sites to fight liability.

Similarly, EPA officials consider the strength of the agency’s evidence when negotiating with responsible parties. In EPA’s key internal enforcement documentation, officials must provide information about the evidence the agency has tying each party to the site; the risks EPA could face in litigation; and whether the agency’s evidence could withstand the scrutiny of a trial. EPA’s documentation for some sites stated a preference for settling with responsible parties—rather than pursuing litigation against them in the hope of obtaining additional site work commitments or recovering costs—because the evidence against the parties was questionable or there were other risks to litigation. For example, at one site, EPA documentation explained that there was evidence of a particular contaminant; however, some parties identified as associated with this site produced a similar, but distinctively colored, contaminant that had not yet been found at the site. EPA believed this distinction could be a risk in litigation. At another site, EPA documentation noted that a contractor performing work at the site stopped and re-started the work several times. Because of CERCLA’s provisions limiting the time EPA has to file cases against responsible parties, responsible parties could try to use the first date at which site work stopped in order to raise questions about EPA’s claim for all site costs. In both of these instances, EPA was able to reach agreements with the responsible parties and avoid the risks of litigation. EPA documentation for other sites showed the agency’s confidence in the strength of its evidence. For example, at one site, EPA documents noted that the hazardous substances sent to the site were well-documented in records maintained by site owners, which ensured that EPA had strong evidence against the responsible parties contributing these substances. According to agency documentation, this evidence limited litigation risks and likely strengthened EPA’s negotiating position. In the responsible parties’ settlement with EPA, the parties committed to conducting one remedial action and reimbursing EPA’s costs for another remedial action at the site, as well as other related costs.

Number and Type of Other Responsible Parties

DOJ officials and attorneys we spoke with both identified the number and type of responsible parties implicated at a site as important considerations in how they approach negotiations on Superfund site liability. For example, one attorney explained that the number of parties identified is important because, at sites with few responsible parties, each party will be responsible for a greater share of site cleanup costs and higher expected costs could make it more difficult to resolve liability. On the other hand, DOJ officials noted that it can be difficult for a large number of responsible parties to organize themselves to reach agreement with EPA. To assist in organization, EPA encourages responsible parties to form steering committees to expedite negotiations. In some instances, responsible parties will form multiple groups of similar parties, such as those who contributed large amounts of waste to a site and those who contributed only a small amount.

The involvement of certain types of responsible parties at a site can also make a difference in negotiations with EPA. For example, some experts noted that de minimis parties may have little experience with Superfund, and early settlements to remove such parties from the discussions can simplify future negotiations. In addition, DOJ officials said parties facing bankruptcy may complicate negotiations because it may be harder to negotiate with the remaining parties. For example, bankrupt owners of one site were largely responsible for site contamination, but could contribute only a minimal amount toward a cleanup action expected to cost tens of millions of dollars. According to agency documentation, some of the other responsible parties proposed a settlement in which they were only responsible for a small percentage of site costs, given the actions of the site owner and other identified parties. Agency documents showed EPA rejected this proposal, but identified the bankruptcy of the site owners as a significant inequity at the site.

Finally, having local governments as responsible parties may affect negotiations. According to one attorney, these governments can own landfills or contribute to the contamination of rivers. In light of local governments’ unique responsibilities to provide sanitation services, and the challenges they face in funding a cleanup action, EPA policy establishes that, at certain types of sites, the regions may seek between 20 and 35 percent of estimated site costs from local governments; although, under joint and several liability, local governments who are responsible parties could be held liable for all site costs. One attorney criticized EPA’s approach for holding these parties liable because it may lead to confrontation with other responsible parties, who may believe that the local government also bears responsibility for site contamination.

Other Considerations May Affect Liability Negotiations

Experts—as well as our review of site documentation—identified four other considerations that may less frequently affect EPA’s and the responsible parties’ approaches to negotiations over Superfund site liability. Specifically: The potential for the settlement to set a precedent for future negotiations. EPA explicitly considers precedent in its enforcement actions. With regard to a few of the sites we reviewed, EPA documentation noted that collecting all past site costs or all anticipated future costs for oversight of site cleanup set a positive precedent. Additionally, at one site, EPA documentation indicated that responsible parties’ agreements to implement a remedial action earlier than required were important for their impact on EPA’s future negotiations with other responsible parties. Responsible parties can also be concerned about the precedent of a settlement. For example, at one site we reviewed, EPA documentation indicated that both the responsible party identified at the site and the broader industry to which that party belonged were interested in seeing how liability was resolved, as an indication of how such cases were likely to be resolved across the country.

Public perception of a responsible party. Experts said responsible parties may be concerned about their reputation in the local community. In particular, experts from one professional organization noted if a company plans to continue business in the area, it may not want to appear recalcitrant; therefore, it would be more likely to enter into an agreement to settle its liability. Also, these experts said litigation over site liability adds additional stigma that parties might be interested in avoiding. Finally, one attorney explained that some responsible parties want to appear as “good corporate citizens,” and may be more likely to settle with EPA.

Enforcement under other federal laws. Federal laws other than CERCLA were important for understanding how site liability was resolved at many of the sites we reviewed. For example, according to EPA documentation at one site, a responsible party filed for bankruptcy and EPA was one of the claimants for penalties stemming from a violation of a federal law other than CERCLA. This party had also negotiated a consent decree for groundwater monitoring with EPA under a different law. According to EPA documentation, agency officials believed that, in litigation, the responsible party would challenge EPA’s ability to pursue liability under CERCLA because of these situations, though the documentation indicated that the EPA officials disagreed with the party’s potential argument. As a result of these complicating factors, the agency took several additional enforcement actions and, ultimately, settled for a reduced amount of its past costs under CERCLA. At another site, EPA documentation noted that negotiations were complicated by pending legislation that would forgive a portion of the site costs for the site’s largest responsible party. Finally, at a third site, a party resolved its liability under CERCLA at the same time that it conducted work for related violations not under CERCLA.

Likelihood that EPA will take on site work itself. Experts said responsible parties have less incentive to settle if they believe that they will not incur any costs by refusing. They will not incur costs if EPA does not issue a unilateral administrative order or does not proceed to conduct the site work itself. However, if EPA does issue an order and a responsible party refuses to comply with it, the responsible party may be subject to penalties of up to three times EPA’s costs to conduct site work. If the agency conducts the site work itself, experts said the costs may be higher than if the responsible parties had conducted the work. The parties in this instance would likely be responsible for reimbursing EPA’s costs. Some experts explained that as the level of the Superfund trust fund has fallen in recent years, EPA has lost some leverage in negotiations with responsible parties. Without a healthy trust fund from which the Congress may appropriate funds to EPA to conduct site work itself, experts said, parties may have less incentive to take on the needed site work. In recognition of this perceived leverage, EPA officials noted that the agency allocates a portion of its appropriation each year to be used in instances where responsible parties are recalcitrant in order to induce such parties to settle.

Superfund Litigation Decreased Due to a Number of Factors, According to Experts

Superfund litigation—as measured by the number, duration, and complexity of CERCLA cases—decreased from fiscal years 1994 through 2007, the period for which reliable data were available. These decreases in litigation may have led to a decrease in associated costs. According to experts, litigation decreased because fewer sites had cleanups underway, EPA changed its enforcement process to further encourage settlements, and court decisions clarified several initial legal uncertainties, making parties less inclined to litigate. However, some experts indicated that recent or upcoming court decisions may raise issues that could affect the likelihood of litigation in the future.

The Number, Duration, and Complexity of Superfund Cases Decreased

According to our analysis of CERCLA cases, the number of cases filed decreased by 48 percent, from 214 cases filed in fiscal year 1994 to 111 cases filed in fiscal year 2007. While the number of cases filed by the federal and state governments remained relatively constant over the period, the number of cases filed by other types of plaintiffs, such as businesses or private individuals, decreased by 69 percent—from 142 to 44 cases. These cases accounted for the majority of cases we reviewed. Attorneys and EPA officials we spoke with confirmed this decreasing trend. Figure 5 shows trends in the number of cases filed during this period, and table 8 shows the percentage of cases filed by different types of plaintiffs.

Regardless of the type of party filing a case, the majority of cases were filed against private parties: 96 percent of cases brought by the federal government and 93 percent of cases brought by state governments had private parties as defendants. The remaining cases were filed against parties such as local governments, nonprofit organizations, and state and federal agencies.

The duration of cases also decreased, in part, because a growing proportion of the cases the federal government filed involved only minimal litigation—and, therefore, less time—according to agency officials, experts, and our analysis of the data. Court approval is required for certain types of settlements, but to improve the efficiency of Superfund enforcement and litigation, EPA and DOJ will often negotiate settlements with responsible parties prior to filing such cases in court. These cases increased from 51 percent of cases filed by the federal government in fiscal year 1994 to 77 percent in fiscal year 2007. Figure 6 shows the percentage of federal cases filed with previously negotiated settlements over this period. Cases with previously negotiated settlements typically required less time in court. The median length of time cases with previously negotiated settlements were before the court was approximately 3 months, compared with nearly 16 months for cases in which settlements were not reached prior to filing.

Finally, the complexity of CERCLA cases, represented by the number of defendants in cases and the number of cases in which defendants pursued additional parties, decreased from fiscal years 1994 through 2007. The average number of defendants per case decreased from approximately 23 defendants to 6, as shown in figure 7. In addition, the percentage of cases in which one or more defendants pursued additional parties to bring them into the case decreased from approximately 18 percent to less than 5 percent, as shown in figure 8.

One factor in the decrease in the complexity of cases—based on the number of cases where defendants bring additional defendants into the case—is the growing proportion of cases filed with previously negotiated settlements. From fiscal years 1994 through 2007, only 1 percent of such cases had defendants pursuing additional parties, compared with 15 percent of cases that were not filed with such settlements. Cases with previously negotiated settlements also rarely result in outcomes other than the previously negotiated settlement, such as a court dismissal or nonconsensual judgment, that could have extended the length of litigation; less than 10 percent of cases filed with a previously negotiated settlement resulted in such outcomes. See appendix II for more detailed information on the outcomes of CERCLA cases we analyzed.

These decreases in the amount, duration, and complexity of CERCLA litigation suggest that the costs associated with such litigation—which can be substantial, according to both DOJ officials and responsible party attorneys—have decreased. However, comprehensive data on CERCLA litigation costs are not available, particularly for costs incurred by responsible parties and, therefore, we cannot directly quantify changes in the costs associated with this litigation. Nevertheless, attorneys with two firms noted that because responsible parties are increasingly likely to settle out of court, a decline in the number of cases filed by these parties has contributed to the decrease in the number of new CERCLA cases. This decrease may have resulted in lower overall CERCLA litigation costs. Furthermore, the decreasing duration of cases as a result of previously negotiated settlements has probably contributed to a decrease in costs. The time spent in out-of-court negotiations, either among responsible parties or with EPA, is typically less costly than the time spent in court, according to attorneys we spoke with. For example, EPA and DOJ officials and private attorneys said that the costs of the discovery phase of litigation—when parties to a lawsuit may request and obtain information from each other, such as evidence that supports their claims or defenses— are particularly high. Finally, the decreasing complexity of CERCLA cases—in particular, the decreasing number of parties involved—has likely contributed to a decrease in total litigation costs. EPA’s expenditures for litigation, which decreased by 50 percent, from more than $50 million in fiscal year 1999 to $25 million in fiscal year 2007, provide further evidence of this trend.

Superfund Litigation Has Decreased for Several Reasons

According to agency officials and attorneys we interviewed, the number, duration, and complexity of CERCLA cases decreased because of: (1) fewer site cleanups and fewer enforcement actions over time, (2) changes to EPA’s enforcement process that promoted settlement with responsible parties, and (3) court rulings that have clarified uncertainties about how the law should be interpreted and applied.

Fewer Site Cleanups and Fewer Enforcement Actions Led to Less Litigation

From fiscal years 1994 through 2007, litigation decreased, in part, because the government and private parties had fewer reasons to go to court, according to experts. For example, some attorneys noted that fewer sites were progressing through the Superfund cleanup process as the number of new sites added to the NPL declined. Between fiscal years 1994 and 2007, 320 sites were listed on the NPL, compared with 1,244 sites for fiscal years 1983 through 1993. Furthermore, as cleanups continued at sites, the number of active NPL sites—those sites that had yet to reach construction complete—decreased by about one-half from fiscal years 1994 through 2007.

In addition, the number of Superfund enforcement actions EPA completed decreased by 44 percent between fiscal years 1994 and 2007. According to EPA officials, with fewer sites being cleaned up, there were fewer sites where EPA needed to take an enforcement action. The officials also cited a slow but steady decline in the agency’s enforcement budget as a factor that may have contributed to fewer enforcement actions. Furthermore, they noted that the agency was more likely to take certain types of actions, such as enforcement actions against parties that contributed small amounts of waste, earlier in the program. Additionally, over time, some types of parties have received exemptions to liability through amendments to CERCLA, which could reduce the number of enforcement actions taken. EPA officials specifically cited the exemptions included in the Superfund recycling equity amendments of 1999 as contributing to the decrease in CERCLA litigation.

Changes to EPA’s Enforcement Process Have Led to Less Litigation

Litigation also decreased because, through its Superfund administrative reforms and other changes to its enforcement process, EPA further promoted settlements with responsible parties, especially settlements negotiated prior to filing a case in court. Before EPA initiated its reforms in fiscal year 1993, 74 percent of its enforcement actions were resolved consensually. In comparison, after fiscal year 1997, when EPA’s implementation of many of these reforms peaked, 84 percent of enforcement actions were consensual. In particular, unilateral administrative orders, which were the most common nonconsensual action EPA took against parties, decreased from about 25 percent of EPA’s enforcement actions prior to fiscal year 1993 to approximately 14 percent after fiscal year 1997.

Agency officials said that changes in EPA’s enforcement of the Superfund program, such as those made through its administrative reforms, encouraged parties to settle more often and earlier in the enforcement process. According to agency documentation, EPA instituted the following reforms, among others, to make the Superfund program work faster, more fairly, and more efficiently: Orphan share compensation. When a responsible party cannot be found or is insolvent, that share of the site cost is known as an orphan share. In some instances, EPA offers settling parties compensation for a portion of this share, which the parties would otherwise have to pay, so that they are more willing to settle.

De minimis settlements. These settlements provide protection from additional liability for small waste contributors. EPA promoted the early use of these settlements so that such parties could quickly resolve their liability and avoid further involvement in site cleanup or litigation. Eliminating these parties facilitates settlements among the remaining parties at the site, according to EPA guidance and attorneys representing responsible parties.

Ability to pay settlements. EPA promoted the early use of these settlements, which resolve the financial liability of responsible parties at a reduced amount for those who demonstrate that they cannot pay their full share of cleanup costs.

Equitable issuance of unilateral administrative orders. Through this reform, EPA expected to increase the likelihood of settlement and reduce litigation by ensuring that unilateral orders were issued equitably. EPA attempted to ensure this by requiring regions to document that unilateral administrative orders had been issued to all appropriate parties after considering their liability and financial viability, as well as the extent to which they contributed to the contamination at the site.

Responsible party search pilots. EPA tested several techniques to expedite and improve the process of searching for responsible parties.

Several of EPA’s reforms, such as the promotion of de minimis settlements, encouraged the increased use of tools that the agency was already equipped with; while others, such as orphan share offers, were new tools for EPA to use to encourage settlements.

According to attorneys we spoke with, EPA’s Superfund enforcement is fairer because of the administrative reforms. As a result, several attorneys said that responsible parties were more likely to settle with EPA to conduct or fund site cleanup. However, two attorneys said that the amount of compensation EPA offers to cover orphan shares is too small to be effective in many cases. That is, the agency provides compensation to settling parties for only a percentage of the costs it has already spent cleaning up the site, or the total past and future oversight costs (whichever is less). Therefore, whatever portion of the orphan share is left to be cleaned up must be paid for by the settling parties. One attorney noted that, because the amount EPA spends cleaning up a site is likely to increase over time, its policy of only offering compensation for past costs can actually discourage early settlements since responsible parties may want to wait for the amount of the offer to increase as EPA spends more money on cleanup.

In addition, through reforms, such as the equitable issuance of unilateral administrative orders and the responsible party search pilot, as well as efforts to share information regarding site contamination among all responsible parties at a site, EPA encouraged identification of and enforcement against all responsible parties. Attorneys from two firms and DOJ officials said such changes in EPA’s enforcement process promoted less complex cases. According to attorneys we spoke with, EPA’s responsible party search process has become more thorough, and the process is fairer now than in the program’s earlier years, when EPA was more likely to pursue only a few large responsible parties. When EPA targets more of the potentially responsible parties at a site, the parties may be less resistant to settling because they are less likely to be held responsible for cleaning up waste contributed by parties not included in the settlement.

While changes to EPA’s enforcement process promoted more frequent settlements, DOJ officials we spoke with also attributed the increase in settlements negotiated prior to going to court to an executive order issued in 1991. This order requires all federal agencies and their counsel to make reasonable efforts to achieve a settlement with parties before fil complaint in civil court. DOJ officials said that they send letters to all parties in CERCLA cases offering them the opportunity to participate in negotiations prior to filing a case, and that parties who take advantage of this offer can have significantly lower costs associated with negotiation and litigation than those who do not. In addition, they noted that when a party waits to settle, the department has more time to build a case against it, which can result in less favorable outcomes for the party.

Court Decisions Clarifying the Application of CERCLA Have Led to Less Litigation

Court decisions that clarified initial issues concerning the application of CERCLA created more certainty among responsible parties about the extent of their liability and led to fewer lawsuits, according to experts. EPA and DOJ officials, as well as several attorneys, told us that parties are less likely to enter into protracted litigation when they are more certain of the probable outcomes, and that the courts have reduced uncertainty by deciding on some disputed aspects of Superfund liability. In particular, DOJ officials and attorneys representing responsible parties noted that the government’s ability to recover all of its cleanup costs at a site from one responsible party when the harm from contamination is indivisible— known as joint and several liability—was established by federal courts in the early years of the Superfund program. Consequently, parties can assess with some certainty whether they could be held liable for all cleanup costs at a site and, according to attorneys and agency officials, they often decide to settle because of the threat of joint and several liability. Similarly, courts have ruled that CERCLA liability is strict, that is, the government and private parties can hold responsible parties liable for the contamination they caused, regardless of whether their conduct was negligent. Finally, courts have consistently upheld the retroactive nature of CERCLA liability, which means that parties can be held liable for the cleanup of contamination from actions that occurred prior to the enactment of CERCLA. DOJ officials attributed the success of the Superfund program to the principles of joint and several, strict, and retroactive liability.

However, several of the experts we spoke with indicated that recent or upcoming court decisions may affect the certainty regarding some issues and, thus, could affect future litigation trends. In particular, some attorneys noted several unresolved issues concerning the circumstances under which one responsible party can sue another for contribution or cost recovery. They said that if parties believe their ability to sue other parties for contribution or cost recovery is in question, parties may be more reluctant to voluntarily clean up contamination or be less willing to settle with the government. A few attorneys also raised concerns about the scope of contribution protection under CERCLA, and the extent to which CERCLA settlements protect parties from liability under certain CERCLA provisions, as well as other laws. While EPA settlements establish contribution protection as a way to encourage parties to settle, parties may have less incentive to settle if they have doubts about the effectiveness of the protection. EPA officials stated that their key concern with decisions in cases involving these issues is whether these decisions maintain the benefits of settling with the government for responsible parties. In addition, following a recent Supreme Court decision regarding the conditions under which site contamination is divisible under CERCLA—and, therefore, the liability is capable of being apportioned among different parties, rather than each party being held jointly and severally liable—parties may reassess their willingness to litigate over divisibility issues, which could affect future trends in Superfund litigation. Furthermore, DOJ officials expressed concern about the potential implications of a challenge to EPA’s use of unilateral administrative orders.

Finally, successor and parent company liability are also unsettled issues. According to a few experts, the circumstances under which successor companies—companies that legally acquire or merge with another company—can be held liable for contamination created by the companies they succeed is still being debated in the courts. The liability of parent companies, or companies that own and control another company, is similarly unresolved, according to DOJ officials and a few attorneys. The DOJ officials and one of the attorneys noted that the requirements for establishing a parent company’s liability for the contamination caused by a company that it owns are challenging.

Differences in the Types of Sites on the NPL and Other Factors Make It Difficult to Assess the Status of Superfund Site Cleanups and Program Costs

While the number of sites added to the NPL each year has declined significantly since the Superfund program’s early years, the types of sites added in recent years are more costly to clean up, and may not have viable responsible parties to perform or pay for the work. Furthermore, even though remedial actions at most sites are completed or underway, the amount of work remaining is unclear; and, given the nature of sites that are not yet construction complete, the remaining work may be more complex or costly. These changes have occurred even as Superfund appropriations and expenditures have declined. However, EPA does not provide the Congress with sufficient information to make decisions about future funding needs of the Superfund program.

The Number and Types of Sites Added to the NPL Have Changed Over Time, but Trends in Sites without Viable Responsible Parties Are Unclear

We identified three factors that could affect EPA’s ability to fund and conduct site cleanups: (1) the number of sites on the NPL has declined over time; (2) the types of sites added to the NPL may require greater EPA expenditures for cleanup; and (3) fewer sites may have responsible parties who can contribute to cleanup, although EPA data do not clearly indicate the number of sites without viable responsible parties or the value of the orphan shares at sites.

The Number of Sites Added to the NPL Has Declined Due to Several Factors

As figure 9 shows, the number of nonfederal sites added to the NPL has declined over time. In 1983, the first year of the NPL, EPA added over 400 sites, but EPA added only an average of 20 new sites annually for fiscal years 1998 through 2007.

The decrease in the number of sites added to the NPL has occurred for the following reasons: Legal requirements have changed. When the Superfund program began, EPA was required under CERCLA to list, to the extent practicable, at least 400 individual sites. However, the Superfund Amendments and Reauthorization Act of 1986 struck that requirement. Later, appropriations laws for fiscal years 1995 and 1996 effectively prohibited EPA from proposing or listing a site on the NPL unless the governor of the applicable state concurred. As a matter of policy, EPA continues to request state support for listing sites on the NPL.

Other cleanup programs have been used to clean up sites. According to EPA officials and Superfund experts representing responsible parties, state programs or other federal programs have been developed to clean up sites. In the early years of Superfund, few other means were available to address hazardous waste sites, particularly abandoned sites. In 2003, we reported that EPA regional and state officials considered the NPL a “last resort” for sites that cannot be addressed through other programs. Most states have established programs to help address hazardous waste sites, and EPA’s policy is to defer NPL listing for sites that can be effectively cleaned up under these programs. Federal programs that assist with cleaning up hazardous waste sites and that potentially reduce the need for sites to be listed on the NPL include the Superfund Alternative Approach, the Resource Conservation and Recovery Act (RCRA) Corrective Action program, and the Brownfields program, according to EPA officials.

Removal actions may have helped clean up sites. According to a responsible party attorney and a representative of a public interest group, removal actions may address contamination issues at some sites without listing the sites on the NPL. As of the end of fiscal year 2007, the agency or responsible parties had started over 10,000 removal actions at sites, and 72 percent of these actions were at sites that had not been listed on the NPL, according to EPA data.

Waste handling practices may have helped prevent new sites from being created. One Superfund legal expert and several responsible party attorneys suggested that the number of sites listed on the NPL may have declined because fewer new contaminated sites have been created. The attorneys attributed this decline in the number of new sites, at least partly, to improvements in waste handling practices.

Funding constraints may have restrained EPA from listing sites. Experts representing public interest groups, an association of state agencies, and responsible parties stated that funding constraints may have affected EPA’s willingness to list a larger number of sites in recent years. In particular, state agency representatives indicated that, after EPA formed a headquarters group to review regional recommendations for new NPL site listings, the number of sites listed on the NPL each year decreased. The state agency representatives attributed this decrease to the group’s consideration of whether funds would be available to clean up a proposed site. EPA officials, however, told us that the cost of a site’s cleanup has not played a role in deciding whether to list a site on the NPL.

Types of Sites Now Added to the NPL May Require Greater EPA Cleanup Expenditures Than in the Past

The types of sites added to the NPL have changed. EPA places sites into the following six broad categories: Manufacturing sites. Wood preservation and treatment, metal finishing and coating, electronic equipment, and other types of manufacturing facilities.

Mining sites. Mining operations for metals or other substances. “Multiple” sites. Sites with operations that fall into more than one of EPA’s categories. “Other” sites. Sites that often have contaminated sediments or groundwater plumes with no identifiable source.

Recycling sites. Battery, chemical, used oil recovery, or other types of recycling operations.

Waste management sites. Landfills and other types of waste disposal facilities.

From fiscal years 1983 through 2007, more than 70 percent of the nonfederal sites added to the NPL were either manufacturing or waste management sites. In addition, about 11 percent of the sites added to the NPL were megasites—sites at which actual or expected total cleanup costs, including removal and remedial action costs, are expected to amount to $50 million or more. Mining and “multiple” sites represented the smallest categories of sites on the NPL, but were also the categories of sites with the highest percentage of megasites. Table 9 shows the number and percentage of sites, as well as the number and percentage of sites designated as megasites, in each of EPA’s six categories.

While recycling and “multiple” sites have represented a relatively consistent percentage of sites added to the NPL over time, other types of sites have fluctuated as a percentage of the sites added to the NPL. For example, during the 1980s, 47 percent of the sites added to the NPL were waste management sites, but the percentage of such sites added to the NPL decreased to 23 percent of all sites added in the 1990s and 11 percent of all sites added since fiscal year 2000. Conversely, mining and “other” sites, which totaled 14 and 12 percent of sites added in the 1980s and 1990s, respectively, together grew to 44 percent of the sites added to the NPL since fiscal year 2000. Figure 10 shows the changes in the percentages of the different types of sites added to the NPL between fiscal years 1983 and 2007, while table 10 provides information on the number of sites in each site type included in these percentages.

The changes in the types of sites added to the NPL since fiscal year 2000 were most significant for mining sites, as well as for certain subcategories of sites included in EPA’s “other” site type. Over 60 percent of the NPL mining sites were added between fiscal years 2000 and 2007. In addition, the number of sites listed on the NPL in EPA’s “other” category increased since fiscal year 2000. Within this category, two types of sites were listed in greater numbers. Specifically, groundwater plume and contaminated sediment sites with no identifiable source together increased from 51 percent of the “other” sites added to the NPL from fiscal years 1990 through 1999, to 57 percent of the “other” sites added between fiscal years 2000 and 2007.

Because EPA’s costs differ depending on the type of site, changes in the types of sites listed on the NPL since fiscal year 2000 could affect Superfund program costs. For example, the amount EPA spent at individual nonmegasites through fiscal year 2007 averaged over $5.3 million. However, the amount EPA spent at individual megasites through fiscal year 2007 averaged around $48.1 million. Mining sites, which are among the types of sites added to the NPL more frequently in recent years, are also more likely to be megasites. Through fiscal year 2007, EPA had spent, on average, more than three times the amount per site at mining sites as at the next most expensive type of site—manufacturing sites. In addition, while the number of sites involving contaminated sediments with no identifiable source is a small portion of sites on the NPL (eight sites), four of these sites were megasites, and four of the eight sites were listed on the NPL during or after fiscal year 2000. Table 11 shows EPA’s average expenditures per site for different types of sites, as well as overall for nonmegasites and megasites through fiscal year 2007.

According to EPA’s data on responsible parties, the agency has identified responsible parties at most sites. However, 13 percent—or 183 of the 1,397 nonfederal NPL sites—did not have any responsible parties identified in EPA’s data as of fiscal year 2007. Table 12 provides information on the extent to which EPA has identified responsible parties at sites. Specifically, recycling and “multiple” sites had the highest average number of responsible parties—201 and 123 parties per site, respectively; while manufacturing and mining sites had the lowest average number of responsible parties—10 and 13 parties per site, respectively. Alternatively, “other” sites and mining sites most often had no responsible parties identified—25 and 18 percent, respectively.

Moreover, we found some evidence that the number of sites without responsible parties may be increasing. Specifically, for fiscal years 1983 through 1989, 1990 through 1999, and 2000 through 2007, the percentage of sites without responsible parties identified in EPA’s enforcement data increased from 10 to 14, and then 27 percent, respectively. However, the usefulness of these data is limited, in part, because the extent to which the data represent the actual number of sites without viable responsible parties is unclear. For example, EPA’s data identifying individual sites without responsible parties do not indicate whether the agency has not been able to identify parties at these sites despite significant search efforts, or whether EPA’s search efforts are still in their early stages. This distinction is important because the absence of responsible parties in EPA’s data may not indicate that the agency will never identify responsible parties for a site. EPA may take longer to identify and take enforcement action against responsible parties at one site than at another. If EPA knows that a responsible party might be liable for a site’s cleanup, but the agency has not taken certain actions against that party, the responsible party would not be identified in EPA’s database. Furthermore, recent advances in forensic auditing of insurance claims and chemical fingerprinting analyses may help to link responsible parties to sites where previously it was not possible to do so. As a result, EPA may eventually identify responsible parties at some of the sites where they are not currently identified. At the same time, however, EPA typically starts its search for responsible parties no later than when a site is listed on the NPL. Moreover, some of the changes EPA made to its enforcement process as part of its administrative reforms were designed to identify responsible parties earlier in the search process. Therefore, the longer a site has been on the NPL without identifying any responsible parties, the less likely it may be that EPA will identify parties for the site in the future.

In addition, we identified other problems with the comprehensiveness and reliability of EPA’s data on the responsible parties associated with sites.

Although EPA’s data showed that the agency has identified responsible parties at most sites, it does not have complete data on how many sites have parties that were ultimately not viable or were unable to pay for some of their cleanup costs. For example, EPA has collected some data on the extent to which individual parties are not viable or had limited ability to pay for their Superfund site liability, but these data are incomplete. For some of these data, EPA only collected the information to evaluate the implementation of its administrative reforms, and according to the agency, the data are not reliable prior to fiscal year 1996 or after fiscal year 2004. EPA collects other data that provide information on the extent to which there are not viable responsible parties at sites, but these data are only reliable for sites that had a remedial action started since fiscal year 2004, according to the agency. Furthermore, at 27 sites, EPA’s data did not identify any responsible parties, although the data showed that EPA had taken enforcement actions. These sites represent an additional 15 percent of sites for which EPA’s data did not identify any responsible parties. According to an OECA official, EPA headquarters has been working with the regions to improve the quality of the responsible party data.

Finally, whether or not EPA identifies responsible parties at sites, its data cannot be used to determine the total value of the orphan share at sites. For example, even when a responsible party declares bankruptcy, EPA and DOJ officials noted, the federal government may still be able to recover some of the money the party owes. However, EPA does not record the balance this bankrupt party owes. For example, EPA noted that it records the amount the bankrupt party owes as determined by the bankruptcy court, rather than the difference between the amount sought by the agency in the “proof of claim” it files with the bankruptcy court and the amount allowed by the court. In addition, EPA places a cap on the value of the orphan share it records at sites. According to EPA officials, the total orphan share at a site is all the orphan shares of individual nonviable parties. However, because EPA’s policy is to limit offers to compensate for orphan shares to a maximum value of 25 percent of the future costs at a site, the orphan share value that EPA records in its data is capped at this 25 percent maximum value. As a result, if the site’s total orphan share exceeds 25 percent of future site costs, EPA’s data would not account for the full value of this share.

The extent to which EPA’s ability to identify viable responsible parties to help fund or conduct site cleanups changes over time could significantly affect the program. As noted earlier, EPA’s cost recoveries from responsible parties have provided the second largest source of funding for the Superfund trust fund, in addition to providing billions of dollars in estimated commitments for site work. If EPA cannot identify responsible parties for an increasing number of sites, or if an increasing number of parties identified at sites are not financially viable, a greater proportion of cleanup activities may need to be funded by EPA using its Superfund appropriation. Also, if the trust fund receives less in reimbursements from cost recovery actions against responsible parties, appropriations from the general fund would need to increase in order to sustain the same level of cleanup activity. According to both DOJ and EPA officials, as well as a number of other Superfund experts we spoke with, the number of sites without viable responsible parties or where parties cannot pay for all of their cleanup costs is likely to increase, particularly as a result of poor economic conditions. They pointed to a recent growth in the number of cases filed in bankruptcy courts as evidence of this trend. The DOJ officials also noted an increase in the number of settlement agreements in which responsible parties state that financial issues limit their ability to pay for all of their cleanup costs. In addition, DOJ officials said that NPL sites are more likely to include sites without viable responsible parties because states with active cleanup programs often take on sites with responsible parties that are willing to conduct cleanup efforts. Other experts also noted that the longer a site remains on the NPL, the more likely it is that EPA will not be able to identify viable responsible parties.

NPL Site Cleanups Are Progressing, but the Amount of Work Remaining Is Unclear and May Be More Complex or Costly

Although cleanup actions have been initiated at many sites, some sites require additional efforts to address contamination, and the amount of work remaining at sites where actions to construct a remedy have not been completed is unclear. Furthermore, the sites that are not construction complete may require more complex or costly cleanup activities.

Remedial Actions Have Been Implemented or Are Underway at Most NPL Sites, but the Amount of Work Remaining Is Unclear

Remedial actions to address site contamination have been completed or begun at most of the sites listed on the NPL since the beginning of the Superfund program, according to EPA’s data. As of fiscal year 2007, approximately 70 percent of the 1,397 nonfederal NPL sites had reached EPA’s construction complete milestone. In addition, about one-half of the 422 sites that were not construction complete had some remedial action underway at the end of fiscal year 2007.

However, data on the construction complete status of sites do not provide a clear picture of the amount of work remaining at sites. For example, according to one Superfund expert, sites with groundwater contamination can take a long time to clean up when the remedy is to pump and treat the water or to simply allow contaminants to degrade over time. Once a site reaches construction complete, decades may still be required until remedial actions clean up groundwater contamination to the selected standards, and continued federal funding may be necessary to implement these actions. At sites where the federal government, rather than a responsible party, implemented the groundwater remedial action, and where continued operation of the remedy is necessary to complete cleanup of ground or surface water, sites may receive federal funding for up to 10 years after the groundwater remedy is determined to be operational and functional. In such situations, after 10 years of remedy operation or upon completion of the remedial action (whichever is earlier), responsibility for the site and any additional implementation costs, are transferred to the state.

The progress of cleanup is even less clear for sites that are not construction complete. Sites are often divided into smaller units (operable units), by geography, pathways of the contamination (e.g., groundwater), or type of remedy. These operable units may move through the Superfund cleanup process at different speeds, depending upon the scope of work or type of remedy selected for each operable unit. In addition, operable units may encompass significantly different scopes of work even within the same site. For example, an operable unit might be defined to account for certain activities not directly related to site cleanup, such as community outreach or providing alternative drinking water supplies in instances where a community’s drinking water has been contaminated. Alternatively, one Superfund expert noted that an operable unit might be a large stretch of river or a small parcel of land.

As a result of differences in the potential scope of work and remedies selected at operable units, it is difficult to aggregate data on the status of cleanups at individual operable units at sites to provide information on the status of cleanups at NPL sites overall. For example, one way that EPA records the progress of cleanup at sites is according to the least and most advanced cleanup stages of sites’ operable units. Of the 422 nonfederal sites that were not construction complete at the end of fiscal year 2007, 184 had 1 operable unit, while 238 had multiple operable units, ranging in number from 2 to 23. However, even at sites with only 1 operable unit, it is difficult to use EPA’s data on the least and most advanced stages of cleanup to determine the amount of work remaining at the site. According to EPA’s data, of the 184 sites with 1 operable unit, the agency had not begun remedial assessment at 10 sites, study was underway at 80 sites, a remedy had been selected or design was underway at 38 sites, and remedial construction was underway at 28 sites. While these data provide some information on the status of cleanup actions at these sites, they provide limited information on the amount of work remaining. In addition, multiple cleanup actions may occur at a single operable unit and, therefore, the least and most advanced stages of cleanup might be different. In fact, at least 28 of the 184 sites with only 1 operable unit had multiple actions ongoing at their operable units as of the end of fiscal year 2007. These differences make it difficult to use information on the least and most advanced stages of cleanup to provide overall information on the status of cleanups at these sites. Table 13 shows the status of the least and most advanced stages of cleanup at the nonfederal NPL sites with one operable unit, as of fiscal year 2007.

Similarly, for the 238 sites that were not construction complete but had multiple operable units, it is difficult to aggregate EPA’s data on the least and most advanced stages of cleanup at sites to provide information on the overall status of cleanups at sites. Table 14 provides information on the least and most advanced stages of cleanup at nonfederal NPL sites with multiple operable units, as of fiscal year 2007. As shown in the table, many of the sites whose most advanced operable unit was in the construction underway stage had operable units at earlier stages in the cleanup process. For example, at 26 sites, the status of cleanup at the most advanced operable unit was construction underway, but the status of cleanup at the least advanced operable unit was remedial assessment not begun. Additionally, at 65 sites, the status of cleanup at the most advanced operable unit was construction underway, but the status of cleanup at the least advanced operable unit was study underway. As the table shows, there were only 18 of the 238 sites where the least and most advanced stages of cleanup of the operable units at these sites was construction underway.

Furthermore, according to EPA officials, the agency is likely to complete cleanup actions at the easiest operable units at a site first. As a result, sites with operable units at early stages in the cleanup process (or operable units with individual cleanup actions at early stages in the cleanup process) could represent sites with more difficult operable units or actions. These operable units or actions could require relatively greater amounts of cleanup work in the future. As a result of these differences, the data on the status of cleanup at operable units, without details on the scope of the operable units and the remedies selected, provide only limited information about the work remaining at sites.

Sites That Are Not Construction Complete May Be More Complex and Costly Than Sites That Are Construction Complete

According to past EPA testimony, in the earlier years of the Superfund program, the agency focused resources on sites that needed less construction work and that were farther along in the cleanup process. Consequently, the sites that have been on the NPL the longest without reaching construction complete are likely to be more complex and costly. About one-half of the 422 sites that were not construction complete—219 sites—were listed on the NPL prior to 1994; and 108 of these were added in fiscal years 1983 and 1984. Figure 11 shows the number of sites that had not yet reached construction complete, as of fiscal year 2007, according to cal year 2007, according to the year in which the sites were listed. the year in which the sites were listed.

By the end of fiscal year 2007, fewer mining, sediment, and groundwater sites—those sites that EPA and other experts indicated are among the most complex and costly to address—had reached construction complete than other types of sites. For example, mining sites had the lowest percentage of sites reaching construction complete, about 21 percent, although many of these sites were listed more recently. Among contaminated sediment and groundwater plume sites with no identifiable source, only about 55 percent had reached construction complete. For sediment sites in particular, one Superfund legal expert stated, the scope of a site’s cleanup makes a significant difference in the length of time it takes to address contamination at the site because it is often difficult to understand the link between the contamination and the environmental damage at such sites. As a result, the scope of the cleanup at these sites often expands to address a variety of issues, which increases the length of the cleanup effort.

Moreover, megasites reached construction complete less often than nonmegasites. Approximately 74 percent of nonmegasites had reached construction complete while only 37 percent of megasites had reached construction complete through 2007. In addition, the median length of time for nonmegasites to progress from site listing to construction complete was 10 years, compared with a median of about 15 years for megasites. As a result of these differences, the percentage of NPL sites that were not construction complete and that were megasites increased over time, from 12 percent of sites active at the end of fiscal year 1989 to 23 percent of sites active at the end of fiscal year 2007. Table 15 shows the number, percentage, and median length of time it took for individual types of sites, nonmegasites, and megasites to reach construction complete.

EPA has recognized the challenges posed by certain types of sites and has taken a number of steps to address them. For example, EPA implemented special procedures to track certain large sediment sites because of the significant challenge these sites can pose during the cleanup process. Of the 48 nonfederal sediment sites EPA was tracking using these procedures, almost one-half were megasites. Through the end of fiscal year 2007, EPA had spent an average of $31.3 million at each of these sites; however, only 9 of these sites had reached construction complete. In addition, because of the challenges mining sites pose to the Superfund program, EPA established the Abandoned Mine Lands Team to identify and coordinate alternative approaches to cleaning up these sites. However, the extent to which EPA is unable to identify viable responsible parties to assist with the cleanup of these and other NPL sites that are not construction complete could affect the agency’s ability to maintain continued cleanup progress.

Program Funding Has Decreased, While EPA’s Site Costs Have Increased; and Agency Reporting on Key Cost Indicators Is Insufficient

Overall, both EPA’s Superfund appropriation and program expenditures have declined. As we reported in July 2008, since fiscal year 1981, the annual appropriation to EPA’s Superfund program has averaged approximately $1.2 billion in nominal dollars. In recent years, however, congressional appropriations for the Superfund program have declined when adjusted for inflation. Figure 12 shows appropriation levels in on. Figure 12 shows appropriation levels in nominal and constant dollars since fiscal year 1981. nominal and constant dollars since fiscal year 1981.

Similarly, EPA’s expenditures on Superfund program activities declined by 29 percent, or $1.8 billion to $1.3 billion, between fiscal years 1999 and 2007. During this period, EPA used approximately 77 percent of its Superfund expenditures for remedial and removal activities. Most of the remainder of EPA’s Superfund expenditures was spent for enforcement and administration-related activities. However, EPA’s expenditures on its remedial program declined by 37 percent from fiscal year 1999 through 2007, and accounted for the majority of the decline in Superfund program expenditures during this period. Figure 13 shows EPA’s Superfund expenditures for fiscal years 1999 through 2007.

While EPA’s Superfund appropriation and expenditures have declined over time, the average amount EPA spent for individual sites has increased in recent years. For example, EPA spent an average of approximately $7.5 million at sites that reached EPA’s construction complete mileston fiscal year 1999. EPA’s expenditures increased to an average of about $10.2 million in total expenditures per site at sites reaching construction complete in fiscal year 2007. Although the average amount EPA spent at sites reaching construction complete between fiscal years 1999 and 2007 increased in some years and decreased in others, overall, EPA’s site expenditure data showed an average annual increase of 13 percent per year during the period.

In addition to increases in the amount EPA spends at individual sites that have reached construction complete in recent years, reports by EPA and its Inspector General indicate that the agency has consistently spent a relatively large percentage of its funds for site cleanup work at a relatively small number of sites since fiscal year 2003. For example, in 2004, the Inspector General reported that approximately one-half of EPA’s fiscal year 2003 funding for remedial actions, non-time critical removals, and long-term response actions went to 8 sites out of a total of 94 sites receiving funding. Similarly, according to EPA annual reports for fiscal years 2004 through 2008, the agency spent about one-half of its Superfund obligations for construction and post-construction activities at roughly 12 to 13 sites per year. It should be noted that not all sites require funding for remedial action construction in any particular year, and EPA may still be taking enforcement actions at a site to try to obtain a responsible party commitment to conduct the remedial action. Nevertheless, these data show that individual sites may require a significant commitment of agency resources on an annual basis.

In addition to the greater complexity of cleanup for sites that have not reached construction complete or were added more recently to the NPL, Superfund experts cited a number of factors that have contributed to EPA’s increased site expenditures. For example: With scientific advances, EPA may be able to conduct more thorough remedial investigation efforts, which could lead to more thorough remedial actions and potentially higher costs.

New contaminant issues or remedial technologies could lead to increased site costs. For example, the intrusion of vapors into buildings from contaminants is a new issue that could increase costs at some sites.

Rising construction costs have contributed to higher EPA expenditures. In particular, according to an OSWER study, Superfund site construction costs escalated by 37 percent in recent years.

The number of sites for which EPA cannot identify viable responsible parties to help pay for site cleanup activities has increased, according to DOJ officials.

Because of these trends, EPA may be hampered in its efforts to start new remedial actions at some sites or maintain the progress of cleanup at others, according to EPA’s Inspector General, the National Advisory Council for Environmental Policy and Technology (NACEPT), and EPA’s own annual Superfund accomplishment reports. In 2004, the Inspector General estimated that the Superfund program had a funding shortfall of $174.9 million in fiscal year 2003. Furthermore, according to the Inspector General’s report, while EPA regions indicated they had funding for the majority of sites for fiscal year 2003, they did not have sufficient funding for some sites. For example, two regions were only able to initially fence sites rather than complete the removal of contaminated material, and construction activities did not begin at 11 sites. According to the Inspector General, when funding is insufficient, construction at NPL sites cannot begin; cleanups are performed in a less than optimal manner; and/or activities are stretched over longer periods of time.

Similarly, in April 2004, NACEPT reported that some NPL sites had completed remedial designs, but that remedial actions at these sites had slowed or had not yet begun because of insufficient funding, according to information provided by EPA. For example, the New Bedford Harbor megasite in New Bedford, Massachusetts, was ready for remedy construction in April 2004, but because of funding constraints, remedial action might be stretched out over 25 years, which was not optimal in terms of achieving a cost-effective remedy or for protecting public health and the environment.

NACEPT identified four key categories of information that would help identify Superfund program trends: the (1) types of site conditions that are driving EPA remedy decisions at NPL sites; (2) impediments to cleanup progress at older sites, especially those listed on the NPL in the early 1980s; (3) number and type of potential future NPL sites; and (4) program expenditures and potential future costs. It noted that these data were particularly important for megasites because of the impact these sites could have on program funding needs and priorities. To this end, NACEPT recommended that EPA improve the information and data on the Superfund program and publish an annual report that presents key data on, among other things, program progress, expenditures, and anticipated costs. In addition, a 2004 EPA working group stated that to more completely measure program success, EPA should compare dollars actually recovered with dollars potentially recoverable at sites with viable responsible parties. According to the working group’s report, as responsible parties continually press the agency to exclude some past costs from recovery by, for example, applying the agency’s ability to pay or orphan share compensation policies, EPA needs some way of ensuring that it is not compromising too much on past cost claims.

In response, in part, to the NACEPT recommendations, EPA began publishing annual reports of its Superfund program accomplishments, starting in fiscal year 2004. In these reports, EPA partially addressed the NACEPT recommendations. Specifically, EPA reported that it was able to fund all 19 new construction projects that were ready for funding in fiscal year 2007, but it reported a lack of funding in other years since fiscal year 2005. For fiscal years 2005, 2006, and 2008, respectively, EPA reported that 9 out of 26, 6 out of 24, and 10 out of 26 new construction projects that were ready for funding each year did not receive funding due to resource constraints. These reports also provide information on program outputs, such as the number of construction projects started or continued; and program outcomes, such as the amount of responsible party commitments EPA secured for site work, cost recovery, and oversight costs; the number of sites with human exposure under control; and the number of sites that are ready to return to productive use.

While these reports provide some information on program progress and financial constraints, they do not provide information on key indicators of future program costs, or other data that would help EPA more fully respond to the NACEPT report’s recommendations. In particular, these reports do not provide information on the number and cleanup status of megasites (especially mining and sediment sites), which could help indicate the types of conditions that are driving EPA’s remedy decisions at sites that were listed more recently, as well as the impediments to cleanup progress at older sites. Additionally, these reports do not provide information on the number of sites where responsible parties are financially unable to help pay for cleanup activities, or the potential impact on EPA’s ability to carry out cleanup activities when it cannot obtain reimbursement for agency cleanup costs from responsible parties. Such information could help indicate the factors that are driving program expenditures and potential future costs.

Conclusions

EPA’s Superfund enforcement actions have generally resulted in agreements with responsible parties that provided significant value to the program, particularly in terms of responsible parties’ commitments to conduct site work. In addition, EPA’s cost recoveries—historically, amounting to roughly one-third of the agency’s site expenditures—help replenish the Superfund trust fund so that EPA has funds to clean up other sites. Since the taxes dedicated to supporting the Superfund trust fund expired, these recoveries—including fines and penalties—have provided almost 20 percent of trust fund revenues. However, EPA’s ability to continue to recover its costs may be affected by the extent to which responsible parties are able to pay for site cleanups. A robust trust fund, whether replenished through cost recoveries or other sources of funding, has helped EPA to conduct cleanup activities on its own while continuing to use enforcement actions to encourage responsible parties to settle their liability. Additionally, CERCLA-related litigation and, potentially, its associated costs have declined in recent years. In part, this downward trend resulted from EPA’s changes to the enforcement process to, among other things, encourage parties to settle by providing compensation for orphan shares at sites. However, an increasing number of sites with orphan shares, as well as potential adjustments in parties’ decision making about how to resolve liability following recent or upcoming court decisions, could make it more difficult for EPA to reach settlements with responsible parties to pay for or conduct cleanup work.

Although a strong trust fund is important for EPA’s continued ability to enforce the Superfund program and clean up sites, EPA and others have reported financial constraints on these efforts. To help assess these financial constraints, EPA needs comprehensive and reliable data that can be aggregated to provide information on key issues, such as the (1) status and cost of cleanups at sites that are not construction complete, particularly sites where cleanup is likely to be complex and expensive; (2) extent to which sites lack responsible parties capable of paying for some or all of a site’s cleanup activities; and (3) financial impacts of having EPA shoulder these sites’ cleanup costs. However, EPA’s current data on these issues are not consistently comprehensive, reliable, or capable of being aggregated to provide clear program-wide information. For example, EPA’s data on the status of individual site cleanups cannot be aggregated to provide clear information on the amount of work remaining at sites overall. In addition, because EPA does not have comprehensive and reliable data on how many individual sites lack viable responsible parties or the total value of the orphan share at sites, the agency cannot aggregate its data to provide clear information on trends in the extent to which sites lack viable responsible parties. Also, without this information, EPA cannot determine the financial impacts that the absence of viable parties could have on the agency’s future cost recovery efforts. Information on these key issues is important for EPA to effectively plan the future course of the Superfund program, and the Congress needs such data to help it make more informed decisions about program funding and policy issues.

Recommendations for Executive Action

To assist the Congress in making decisions about funding the Superfund program, we are recommending that the Administrator, EPA, assess the comprehensiveness and reliability of the data the agency collects and, where necessary, improve the data for the purpose of providing aggregated information on the following issues: the status and cost of cleanups at individual sites, particularly complex and expensive sites; the extent to which there are viable responsible parties at NPL sites; and the potential financial impacts from EPA’s inability to obtain reimbursement for agency cleanup costs from nonviable responsible parties.

We are also recommending that the Administrator, EPA, aggregate these data, as appropriate, to provide clear and complete information on these issues, and provide this information to the Congress in the agency’s annual accomplishment reports.

Agency Comments and Our Evaluation

We provided EPA, DOJ, and the Administrative Office of the U.S. Courts with a draft of this report for review and comment. DOJ and the Administrative Office of the U.S. Courts had no comments on the draft report, although the Administrative Office of the U.S. Courts provided one technical clarification which we incorporated into the report. In its written comments, EPA agreed with our recommendation to review the agency’s data on site cleanup status and costs and determine what additional aggregate information would be meaningful to provide to the Congress; however, EPA disagreed with our recommendations to provide aggregate data on the extent to which there are viable responsible parties at sites and the potential financial impacts of EPA’s inability to obtain reimbursement for agency cleanup costs from nonviable responsible parties. EPA did not specifically address our recommendation to provide any additional aggregated information to the Congress in its annual accomplishment reports.

In commenting on our recommendation to provide aggregated data on site cleanup status and costs, EPA recognized that both site-specific and aggregate information are necessary to support congressional decision making. EPA indicated that it has made significant efforts to provide information to the public on individual site cleanups through the Superfund site profile pages available on the agency’s Web site. EPA also noted that there are limitations in the extent to which site-specific data can or should be aggregated because of the complexity and diversity of individual site cleanups. We agree that EPA’s Superfund site profile pages provide valuable information about individual sites. However, this information cannot be used to evaluate programmatic trends without a labor intensive process of collecting and analyzing data from potentially over 1,000 individual sites. Moreover, certain data central to understanding the status and future cost of Superfund site cleanups (particularly EPA-led cleanups)—such as estimates of the amount of work or funding needed to reach cleanup goals—are not available on EPA’s Web site. EPA noted that some of this information may be sensitive on a site-specific basis. However, even data that is on EPA’s Web site, such as the cleanup status of sites’ operable units, cannot be easily aggregated to provide information on program trends. Therefore, to assess programmatic trends as it makes future funding decisions, it is important that EPA provide the Congress with aggregated data beyond what is available on the agency’s Web site. In this report, we recognize that there are challenges to compiling aggregated data on cleanup status, given the differences between sites and the way response actions are carried out. We also recognize that EPA has made progress in developing measures that provide information on the extent to which contamination at sites has been addressed. At the same time, additional improvement in EPA’s measures is necessary to provide the Congress with data to understand the amount and cost of remaining site work.

In disagreeing with our recommendations to provide aggregated data on the extent to which there are viable responsible parties and the potential financial impacts of nonviable responsible parties, EPA stated that such data would likely be of limited value because they are subject to change throughout the cleanup and enforcement process, and that information on compromises made pursuant to the agency’s orphan share policy alone does not allow it to make accurate predictions of future cost recoveries. We disagree with EPA’s comment that this information would be of limited value. The Congress needs a more comprehensive understanding of EPA’s future funding liabilities for site cleanups as it considers various proposals, such as whether to reinstate taxes to support the Superfund program. Key determinants of EPA’s future funding liabilities include both the amount of work remaining at sites and estimates of how much of this work EPA will likely need to pay for using its Superfund appropriation. Furthermore, the private sector and other federal agencies have taken steps to estimate their environmental liabilities; we believe that a better understanding of EPA’s future Superfund funding needs is essential as well.

In this regard, data on the extent to which sites that lack viable responsible parties and the potential financial impacts to EPA when responsible parties cannot pay for some or all of their cleanup obligations are critical elements for estimating EPA’s future funding needs. We recognize in this report that the Superfund enforcement process is a complex, lengthy, and iterative process. However, this does not preclude efforts to collect and aggregate these data, as many of the data elements EPA currently collects and reports on other aspects of the Superfund program also change and must be updated regularly. In addition, while future economic conditions and enforcement outcomes are uncertain, EPA already has or could develop certain information that would form the basis of such a data collection effort. For example, at some sites, cleanup actions have been completed and the statute of limitations on cost recovery and other enforcement efforts may have passed. Data on the number of nonviable responsible parties and unrecovered costs at these sites could form the basis of an historical trend analysis. Also, as part of the enforcement process, EPA collects information from responsible parties about whether they claim to have a limited ability to pay for cleanup costs. This information, among other data, such as better data on the value of compromises made pursuant to EPA’s orphan share policy and the outcome of actions pursued against parties in bankruptcy courts, could help the agency estimate future potentially unrecoverable costs. We recognize that these data would be sensitive at the site-specific level and, therefore, we recommend that they be published only on an aggregated basis. We also recognize that aggregated data on the issues would—at best—be estimates and would likely need to be presented in terms of ranges to account for the uncertainties associated in the underlying data and methodological assumptions. However, we believe that on an aggregated level, these data would serve as important indicators of EPA’s potential funding needs to continue to ensure cleanup at nonfederal NPL sites.

EPA stated that it agreed with our findings with respect to trends in Superfund enforcement and litigation. However, EPA suggested that we clarify language in the report discussing the number of enforcement actions that result in responsible party work commitments or cost recovery, as compared to the estimated monetary value of these outcomes. EPA noted that the estimated value of responsible parties’ work commitments substantially exceeds that of the agency’s cost recoveries. We agree with EPA’s comment, and while our methodology was focused on evaluating the frequency with which different outcomes were achieved, we made a number of changes to reflect that the value of responsible parties’ work commitments was greater than EPA’s recovered costs.

EPA also stated that the report inaccurately describes the relationship between the Superfund trust fund and the level of annual appropriations for Superfund program activities. We agree with EPA that the balance of the trust fund has not significantly affected appropriations to the Superfund program. However, we disagree with EPA’s comment that we have mischaracterized the relationship between the trust fund and appropriations to the Superfund program. When we refer to the balance of the trust fund in this report, we refer to the dedicated amount potentially available to be appropriated to the Superfund program. Since the balance of the trust fund has diminished to almost zero, it would be difficult for the Congress to increase the level of funding for the Superfund program because any additional appropriations must compete with other programs or uses of the general fund. Conversely, if the trust fund balance was substantial, the Congress could increase the Superfund program appropriation without increasing use of the general fund. The lack of a substantial trust fund balance may also present challenges in negotiations with recalcitrant responsible parties because of a perception that, due to competition for funds, the Congress is unlikely to substantially increase the level of the Superfund appropriation, which would allow EPA to take on additional cleanup work.

In addition, EPA suggested that we clarify references to the experts from which we gathered information for this report. In this report, we sometimes refer to these individuals collectively as Superfund experts, while in other instances, we refer to the experts more specifically, depending upon their positions and backgrounds if we determined that these might have significant bearing on the information they provided. We believe this approach is appropriate, given that all of the individuals we spoke with were, in various ways, experts on the Superfund program and/or CERCLA enforcement, and many were attorneys. Also, because of the variety of experts that we contacted, if we referred to the specific background of each individual for each statement he or she made, we believe the report would be unnecessarily cumbersome to read.

Finally, EPA provided a number of other technical comments and clarifications, which we incorporated, as appropriate. EPA’s written comments are presented in appendix III.

As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution of it until 30 days from the date of this report. At that time, we will send copies of this report to the Administrator of EPA, the Attorney General of the United States, the Director of the Administrative Office of the U.S. Courts, and appropriate congressional committees. In addition, the report will be available at no charge on our Web site at http://www.gao.gov.

If you or your staffs have any questions about this report, please contact me at (202) 512-3841 or stephensonj@gao.gov. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix IV.

Appendix I: Objectives, Scope, and Methodology

This appendix provides information on the scope of work and the methodology used to examine the (1) outcomes of the Environmental Protection Agency’s (EPA) enforcement actions, and the factors considered by federal and private parties in reaching these outcomes; (2) trends, if any, in litigation to resolve Superfund liability; and (3) status and implementation costs of the Superfund program. As requested, we also provided detailed information on the costs of Superfund enforcement and administration activities in July 2008.

To identify the outcomes of EPA’s enforcement actions, we first reviewed EPA’s process for enforcing the Superfund program, including applicable statutes, regulations, and EPA guidance. We also interviewed officials responsible for implementing and enforcing the Superfund program, including officials in EPA’s Office of Solid Waste and Emergency Response (OSWER), and Office of Enforcement and Compliance Assurance (OECA); as well as officials with the Department of Justice’s (DOJ) Environment and Natural Resources Division.

We obtained and analyzed data for fiscal years 1979 through 2007 on the outcomes of EPA’s enforcement actions from EPA’s Comprehensive Environmental Response, Compensation, and Liability Information System (CERCLIS). We generally limited our analyses to the results of completed actions taken at sites proposed for, listed on, or deleted from the National Priorities List (NPL), as of the end of fiscal year 2007. We collected data starting from fiscal year 1979 because the earliest Superfund enforcement action with a monetary value was achieved in that year. An EPA official told us that, although this outcome occurred before the Superfund program began, it was included among EPA’s Superfund enforcement outcomes because it concerned a site that was later listed on the NPL. Key variables for which we collected these data included the site at which the enforcement action was taken; the type of action taken, such as whether EPA settled with or issued an order to a responsible party; the date when the action was completed; the type of outcome that resulted from the action, such as whether the action included cost recovery or site work (and what type of site work); EPA’s estimated value of the action, such as the amount of costs to be recovered or the estimated value of site work to be performed; and the responsible parties identified for individual sites.

To analyze these data, we worked with OECA officials to determine whether the processes used to take different types of actions should be considered administrative or judicial processes, and whether the outcomes of different types of actions should be considered consensual or nonconsensual. On the basis of this classification, we developed information on the extent to which EPA has used different types of processes and actions and achieved different types of outcomes concerning parties’ liability for Superfund site cleanups. Additionally, we used EPA data on the estimated value of its enforcement actions at NPL sites to calculate the value of EPA’s enforcement outcomes for fiscal years 1979 through 2007. These data included the values of past costs recovered, future costs obtained, responsible parties’ work commitments, and penalties that resulted from individual enforcement actions, although we did not evaluate the accuracy of EPA’s estimates. During the course of our review, EPA told us that it continually corrects and updates its Superfund enforcement outcome data. The version of the data that we analyzed for this report was updated through June 2008. However, because of EPA’s ongoing effort to update the data, future analysis of this database may not match our results.

To obtain information on the factors that parties consider in resolving liability, we conducted 12 interviews with a variety of Superfund experts. We selected these experts on the basis of a number of factors, such as referrals from other interviewees, the past efforts of the individuals (or the organizations they represent) related to the Superfund program or Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) enforcement, and representation of a variety of perspectives. In addition to EPA and DOJ officials, the Superfund experts we interviewed included representatives of two professional organizations with knowledge of Superfund litigation and practice—the American Bar Association and the Environmental Law Institute; three law firms that represent responsible parties in Superfund litigation; three public interest groups—Earthjustice, the Natural Resources Defense Council, and Resources for the Future; one industry group—the Superfund Settlements Project; and an organization of state waste officials—the Association of State and Territorial Solid Waste Management Officials.

To obtain additional information on the types of actions EPA has taken to enforce the Superfund program, as well as to gain greater insight into the factors that influence EPA’s and other parties’ decisions on how to resolve CERCLA liability, we reviewed key documents detailing the decision- making process behind enforcement actions, as well as parties’ responses to these actions, from a nonprobability sample of 10 Superfund sites. To select these sites, we identified a pool of sites (1) that were not federal facilities, (2) where EPA had identified one or more responsible parties, and (3) which had reached construction complete during or after 1995. From this pool, we selected sites on the basis of the highest, average, and lowest values in terms of the number of responsible parties identified and the ratio of the monetary value of the enforcement outcome to enforcement expenditures. We then requested enforcement documentation for our sample of sites based on the number and type of enforcement actions taken at the sites; the extent to which the sites represented a variety of site types (e.g., recycling, manufacturing, or mining); site location (by EPA region); date the site reached construction complete; and total EPA spending at the site.

To examine trends in litigation to resolve Superfund liability, we created a database of litigation related to CERCLA, using data collected from the Public Access to Court Electronic Records (PACER) system. We conducted this effort because one of the congressional requesters’ original interests was in the amount of funds, including legal fees, spent by EPA and the private sector related to enforcing CERCLA. However, comprehensive data on the costs of litigation would be difficult to obtain, particularly because data for the private sector would be proprietary. Therefore, we determined that data on trends in the extent of CERCLA litigation would be the best information we could obtain for indicating the overall direction of trends in the cost of such litigation. We determined that the PACER system provided access to the most comprehensive set of cases that we could use to identify trends.

We searched the PACER system for civil cases filed in U.S. district courts under a CERCLA cause of action. We collected data for 88 of the 94 U.S. district courts, which represented nearly all of the courts for the 50 states and the District of Columbia. We searched district court records on a monthly basis, from the beginning of fiscal year 1994 through fiscal year 2007. We confined our data collection effort to this period because, after analyzing the date ranges for each court’s PACER-accessible data, we determined that fiscal year 1994 was the first full fiscal year for which almost all district courts’ records were searchable through the PACER system.

As a result of our monthly searches of the PACER system, as well as data provided by the Administrative Office of the U.S. Courts and district court officials, we compiled a database of 2,281 cases filed under a CERCLA cause of action in U.S. district courts from fiscal years 1994 through 2007. We then analyzed the docket—or record of activity—for each of these cases to obtain basic information about the cases, as well as data on their duration, complexity, and outcome. The case information we collected included (1) data on the docket number and case title, the district court in which the case was filed, and the cause of action and nature of suit under which the case was filed; (2) the dates when the case was filed and then closed or terminated; (3) the number of parties involved in the case as plaintiffs and defendants, and whether the parties were federal, state, local government, private, other, or unknown entities; (4) whether parties in the case filed a third party complaint against other parties; and (5) whether parties in the case appealed an issue to a U.S. Court of Appeals. Table 16 provides examples of how we categorized parties listed in the case dockets we analyzed.

Information we collected on the outcomes of cases included whether the case docket contained evidence of any of the following types of outcomes: settlement (concurrent)—parties reached a settlement and the docket included evidence of the settlement concurrently with (or within a week of) the case filing; settlement (nonconcurrent)—parties reached a settlement and the docket included evidence of the settlement more than a week after the case filing; dismissal (court)—the court dismissed parties or claims, not as a result of a settlement, such as when a court granted a defendant’s motion to dismiss claims against it; dismissal (voluntary)—a plaintiff dismissed parties or claims voluntarily and not as a result of a settlement; nonconsensual judgment—the court or jury made a judgment on liability (not accompanied by a settlement), or the court granted a motion for summary judgment or declared a party to be in default; and remand—the court remanded a case or individual claims to a state or local court.

Furthermore, we collected other information on case outcomes, such as whether (1) evidence indicated that parties may have reached a settlemen on issues of liability but evidence was unclear about a final settlement the case docket (possibly indicating an out-of-court settlement) or (2) there was minimal evidence of litigation activity prior to a nonco settlement. We then analyzed the data we collected to develop information on trends in CERCLA litigation. See below for a discussio the limita tions in the collection and analysis of data from the PACER system.

To help identify contributing factors for the trends in litigation, we discussed our preliminary findings with Superfund experts, focusing on why the number, duration, and complexity of CERCLA cases decreased from fiscal years 1994 through 2007. In particular, we obtained informatio n on how certain factors, such as EPA efforts to promote settlements with responsible parties before filing a case in court, as well as court rulings o CERCLA liability issues, affected CERCLA litigation. We also discussed how trends in the amount, duration, and complexity of CERCLA litigation relate to the costs of such litigation. Finally, we discussed how certain k court decisions have affected CERCLA litigation, as well as how some ongoing cases could affect CERCLA litigation in the future.

To determine the status of the Superfund program, we collected and analyzed data on final and deleted nonfederal NPL sites from EPA’s CERCLIS database. These data included the dates of NPL site listings to identify trends in the number of sites that were added to the NPL from fiscal years 1983 through 2007, and data on site types to identify changes in the types of sites added to the NPL over time. Although the Superfund program began in fiscal year 1981, the first sites were not listed on the N until fiscal year 1983 and, therefore, we considered this to be the initial time frame for NPL site data we obtained and analyzed. In addition, to analyze the status of site cleanups, we used data on key milestones for operable units and sites identified in EPA’s CERCLIS database, including remedial assessment not begun, study underway, remedy selected, design underway, construction underway, and construction complete. Final ly, to gain insight into the status of the Superfund program, we compared CERCLIS enforcement data on the number of sites at which EPA identified responsible parties with CERCLIS data on NPL sites.

To analyze the costs of implementing Superfund program activities, we obtained EPA data on overall program expenditures—also referred to outlays—from the agency’s Integrated Financial Management System (IFMS) database. EPA budget staff grouped expenditures into major categories, such as remedial and removal, based on their knowledge of the program. We limited our scope to fiscal years 1999 through 2007 because EPA changed the way it accounted for certain budget items in fiscal year 1999, which made it difficult to obtain consistent data prior to that year. EPA also updated its system in fiscal year 2004 and, because of this, EPA budget officials created a crosswalk between the two time periods to ensure expenditure data were consistent.

In addition, we obtained and analyzed IFMS data on EPA’s site-specific expenditures at final and deleted nonfederal NPL sites for fiscal years 1990 through 2007. Site-specific expenditures prior to fiscal year 1990 were not readily available by fiscal year. For these expenditures, EPA incorporated data as a single amount when it went to the current IFMS system. As a result, we developed an approach to adjust pre-fisc al year 1990 expenditures for inflation, which resulted in a range of values expenditures at Superfund sites. For the minimum value, we assumed that all pre-fiscal year 1990 expenditures were made in fiscal year 1989. For the maximum value, we assumed that all pre-fiscal year 1990 expenditures were made in the year the site was proposed for the NPL. these values to present information on site expenditures in this report.

To determine the sources of funding that support the Superfund trust fund, we reviewed the President’s Budget Appendices for fiscal years 1983 through 2009. These documents contain actual budget information from fiscal year 1981—the first year of the Superfund program—through fiscal year 2007. We reviewed these data with EPA budget experts to confirm their accuracy. We use nominal dollars when we refer to appropriated amounts. It is our policy to present what has actually been enacted or proposed at the time, what is reported in budget documents, or both. In contrast, for our analyses of the value of outcomes from EPA’s enforcement activities, as well as EPA’s Superfund program and site-specific expenditures, we converted all dollar figures into constant 2007 dollars.

There were some NPL sites that were not proposed for listing prior to fiscal year 1990, but had expenditures during this earlier period. At these sites, we assumed expenditures prior to fiscal year 1990 were made in fiscal year 1989. information related to recent legal decisions and ongoing cases identified by experts; and interviewed agency officials in the Office of the Chief Financial Officer (OCFO).

To ensure the reliability of the data we used for this report, we reviewed the two relevant EPA databases: (1) CERCLIS, from which enforcement outcome and NPL site data were drawn, and (2) IFMS, from which expenditure data were drawn. For both data sources, we interviewed EPA officials about the methods the agency uses to ensure data reliability, manually and electronically reviewed the data, and compared the data with other published sources. For example, we compared expenditure data provided by EPA with agency obligation data and found that the data were somewhat similar for the years in which we had both sets of data— obligations ranged from 5 percent higher than expenditures to 16 percent lower than expenditures during fiscal years 2004 through 2007. We also followed up with EPA officials from OSWER, OECA, and OCFO with specific questions resulting from this review.

To understand the reliability and completeness of the data we collected from the PACER system, we interviewed officials with the Administrative Office of the U.S. Courts, as well as officials with seven federal district courts that collectively accounted for more than 25 percent of the cases identified during our review. We asked these officials about the collection, processing, and maintenance of case file data available through the PACER system. On the basis of these interviews, we determined that the information in case dockets would provide a complete and accurate record of the proceedings in a case, and we did not evaluate the accuracy of the entries to the individual dockets we collected and analyzed.

While the district court officials agreed that the PACER system provides complete, reliable access to case data, some officials also thought it possible that searching for cases by cause of action could miss certain cases if a CERCLA-related case was labeled with a non-CERCLA cause of action. To evaluate the extent to which this might occur, we tested our PACER search methodology by searching for all cases filed under an “Environmental Matters” nature of suit, and then examining non-CERCLA cases to determine if the words “CERCLA” or “Superfund” appeared in the text of the case docket. Using this methodology, we searched a nonrandom sample of 14 months out of the study period, from fiscal years 1994 through 2007 (or 8.3 percent of the 168-month study period). On the basis of this test, we estimate that our search methodology may undercount the number of CERCLA cases by about 15 percent because the cases were not listed in PACER as having a CERCLA cause of action. However, we did not evaluate whether these other cases, in which the words “CERCLA” or “Superfund” appeared, actually were CERCLA cases.

DOJ officials indicated that while the trends we identified through our review of CERCLA litigation represented their understanding of the trends in litigation based on their professional experience, the number of federal cases we identified in recent years was lower than was represented in data maintained by the department. As a result, we performed an additional test of the reliability of our PACER search methodology. We collected data from DOJ on federal CERCLA cases filed from fiscal years 1998 through 2007 and found that our database did not include approximately 30 percent of the cases in DOJ’s data. To determine why these cases were not listed with a CERCLA cause of action in the PACER system, we reviewed case documents for cases filed from fiscal years 2005 through 2007. The average percentage difference in the number of cases in DOJ’s data, compared with our data, was slightly higher over this 3-year period, at about 32 percent. However, through our review of case documents and additional information DOJ officials provided, we found that almost one-half of the cases that were in DOJ’s data but not in ours for fiscal years 2005 through 2007 should not have been identified as a result of our search of the PACER system because they (1) were filed in district courts for the U.S. territories, (2) were filed in bankruptcy court, or (3) involved other differences in the way DOJ collects its data compared with our methodology for identifying CERCLA cases. For the remaining cases that were in DOJ’s data but not in ours for the 3-year period, it appeared as though either the court or the attorney filing the case had made an error in labeling the cause of action, based on information in case documents. From these tests, we determined that it is likely that our search methodology did not identify all of the cases related to CERCLA that were filed in U.S. district courts for fiscal years 1994 through 2007.

Furthermore, while the courts or attorneys may have made errors that caused CERCLA cases to be listed in PACER without a CERCLA cause of action, courts or attorneys may also have made errors that resulted in cases being listed under a CERCLA cause of action that were not actually related to CERCLA. To evaluate the likelihood that this occurred, we assessed the number of cases that were filed by “pro se” plaintiffs— individuals not represented by an attorney—which we believed might be an indicator of errors because individuals representing themselves might have less knowledge about how to file cases than an attorney. We found that 3 percent of the cases listed under a CERCLA cause of action in PACER were filed by “pro se” plaintiffs. We did not review court documents for these cases to determine if the cases were, in fact, related to CERCLA. Despite the potential that the CERCLA cases we identified might not represent the exact number of cases related to CERCLA from fiscal years 1994 through 2007 because of court errors or other factors, we believe that our methodology likely identified a large majority of the CERCLA cases filed in U.S. district courts during this period. Therefore, we determined that these data represent a reliable basis from which to analyze overall trends in CERCLA litigation during this period.

Finally, to further assess the reliability of the data we collected and analyzed, we discussed our preliminary findings during the interviews we conducted with Superfund experts. The experts generally indicated that the results of our analyses of enforcement outcomes, CERCLA litigation, and program status reflected their experience, or they provided explanations for the trends we observed. As a result of these efforts, we concluded that the data we collected and analyzed were sufficiently reliable for the purposes of this report. Where necessary in the report, we note potential limitations of these data.

We conducted this performance audit from August 2007 to July 2009, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

Appendix II: Detailed Information on the Number, Duration, Complexity, and Outcomes of CERCLA Cases

Information on the Number of Cases Filed

Tables 17, 18, and 19 provide detailed information on the number of cases filed under a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) cause of action, in fiscal years 1994 through 2007, by the U.S. district court and geographic area—the Environmental Protection Agency (EPA) region—in which they were filed, and by the type of plaintiff that filed them. All three tables show a decline in the total number of CERCLA cases filed over the period. See appendix I for more information on how we developed these data and the potential limitations in our methodology for identifying and analyzing cases.

Information on Case Duration

Table 20 and figures 14 and 15 provide information on the duration of CERCLA cases filed in fiscal years 1994 through 2007, by the type of plaintiff and by the number of defendants in the case. Cases with federal and state plaintiffs were typically shorter in duration than cases filed by other plaintiffs, while cases with more defendants were typically longer in duration. The following information on case duration is based on our analysis of both open and closed cases. Approximately 92 percent of cases filed from fiscal years 1994 through 2007 were closed as of the end of fiscal year 2007. Analysis of only closed cases revealed no substantial differences in case duration.

Information on Case Complexity

Figures 16 and 17 provide information on the complexity of CERCLA cases filed in fiscal years 1994 through 2007, by the type of plaintiff. Complexity is measured by the number of defendants and the percentage of cases in which defendants pursue additional parties. While the average number of defendants varied somewhat between different plaintiff types, the percentage of cases in which defendants pursued additional parties was higher in cases filed by other plaintiffs than it was for federal or state plaintiff cases.

Information on Case Outcomes

Figure 18 provides information on the outcomes of CERCLA cases filed from fiscal years 1994 through 2007. Previously negotiated settlements were more common among federal plaintiff cases, while voluntary and court dismissals were more common among cases filed by other plaintiffs. Some of the following information on case outcomes is based on analyses of both open and closed cases. In some instances, analysis of only closed cases was more appropriate, such as when analyses looked at whether cases only had certain outcomes. However, overall, our analyses of only closed cases revealed no substantial differences with the outcomes of all cases, including those that were still open as of the end of fiscal year 2007.

Figure 19 provides information on the extent to which cases reached consensual or nonconsensual outcomes. Most cases filed by the federal or state governments resulted in only consensual outcomes, while cases filed by other plaintiffs more often resulted in nonconsensual or both outcome types when compared to the cases filed by the federal or state deral or state governments. governments.

Figure 20 provides information on the duration of cases by the outcomes reached in the cases. Cases that included previously negotiated settlements were substantially shorter, on average, than other cases. The longest cases were those that included nonconsensual judgments.

Figure 21 provides information on the percentage of closed cases with minimal litigation. Cases with minimal litigation are those whose only outcomes were either (1) previously negotiated settlements or (2) settlements in cases in which there was no evidence of adversarial actions, such as counterclaims or discovery activity recorded in the docket. While 65 percent of closed federal plaintiff cases and 59 percent of closed state plaintiff cases were classified as having minimal litigation, only 4 percent ly 4 percent of cases filed by other plaintiffs fell into this category. of cases filed by other plaintiffs fell into this category.

Figure 22 provides information on the percentage of closed cases resulting Figure 22 provides information on the percentage of closed cases resulting in only voluntary or court-ordered dismissals. Although our analysis did in only voluntary or court-ordered dismissals. Although our analysis did not track outcomes according to individual parties or claims, these cases not track outcomes according to individual parties or claims, these cases may represent instances where the plaintiff was unable to get the relief it may represent instances where the plaintiff was unable to get the relief it sought in filing the case and either dismissed the case voluntarily or the sought in filing the case and either dismissed the case voluntarily or the case was dismissed by the court. Cases filed by federal or state case was dismissed by the court. Cases filed by federal or state governments resulted in dismissals with no other outcomes much less governments resulted in dismissals with no other outcomes much less often than those filed by other plaintiffs. often than those filed by other plaintiffs.

Figure 23 provides information on the percentage of closed cases with dismissals in which there was some evidence of a settlement that was not clearly recorded in the docket. Because plaintiffs other than the government are not subject to CERCLA’s requirement that certain settlements (e.g., consent decrees) be approved by a court, this analysis provides some indication of the extent to which cases with voluntary or court dismissals may have also had out-of-court settlements that resolved liability issues between parties.

Figure 24 provides information on the percentage of closed cases whose only outcomes were nonconsensual judgments, by type of plaintiff. The percentage of cases with such outcomes did not substantially vary among the different types of plaintiffs.

Figure 25 provides information on the percentage of closed cases with appeals by whether the outcomes in the case were consensual or nonconsensual. Cases with only nonconsensual outcomes were much more likely to have appeals than those with only consensual outcomes.

Appendix III: Comments from the Environmental Protection Agency

Appendix IV: GAO Contact and Staff Acknowledgments

Staff Acknowledgments

In addition to the individual named above, Vincent P. Price, Assistant Director; Tim Bazzle; Miles Ingram; Krista Loose; Christopher Murray; Ira Nichols-Barrer; and Kathleen Padulchick made key contributions to this report. Elizabeth Beardsley, Michele Fejfar, Richard Johnson, and Carol Herrnstadt Shulman also made important contributions.