COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION &
LIABILITY ACT (CERCLA) OF 1980
(SUPERFUND)

In December 1980, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, which is commonly called "Superfund." Superfund was passed in response to public concern about chemical contamination such as that revealed in connection with the Love Canal disaster in the state of New York, where health effects—including unusually high rates of cancer, miscarriages, and birth defects—were traced to chemical wastes from an abandoned chemical dumpsite. The 1980 Superfund law created a $1.6 billion fund to be used to identify and clean up hazardous waste sites over a period of five years. The program is administered by the federal Environmental Protection Agency (EPA), which often acts in cooperation with its state counterparts. Major amendments to Superfund were passed in 1986 in the Superfund Amendments and Reauthorization Act (SARA). Pursuant to SARA, the Superfund program was extended for five years and additional funding of $8.5 billion was provided for the period from 1986 to 1991. With the passage of SARA, the Superfund program and provisions for taxes supporting it were extended for four more years but there were no significant changes made in the program. Funding for the program and liability for those parties who have been required to pay for cleanup actions have been sources of great controversy throughout Superfund's history.

IMPETUS FOR CREATION OF SUPERFUND

The Love Canal disaster near Niagara Falls, New York, and similar crises in Times Beach, Missouri, and Woburn, Massachussetts, were brought to the attention of U.S. citizens through extensive news media coverage during the late 1970s. At Love Canal, an emergency declaration by the federal government condemned a school and two hundred houses. In the wake of that action, Congress passed CERCLA as a means of identifying and cleaning up such hazardous waste dumps. CERCLA was signed into law in December 1980 by President Jimmy Carter.

STRUCTURE OF CERCLA AND
ADMINISTRATION OF SUPERFUND

CERCLA has four parts. First, it establishes a system to identify chemical dump sites and develop priorities for cleanup actions. Second, it grants authority to the EPA to engage in "removal" actions to respond to emergency situations involving hazardous substances and to engage in "remedial" actions to clean up hazardous waste sites. Third, CERCLA creates a Hazardous Substances Trust Fund to pay for removal of hazardous wastes and for remediation actions at hazardous waste sites. Fourth, the act places liability for cleanup costs upon "responsible parties" who contributed wastes to the site being cleaned up.

Removal actions include clean up of hazardous materials in emergency situations such as chemical spills resulting from a train wreck or collision of motor vehicles or where polluted waters threaten to overflow. Removal actions are usually handled by state or local officials, but the EPA assists in particularly difficult situations. Removal actions in which the EPA participates are limited by statute to one year and $2 million in costs.

Remediation actions, in contrast, are long-term and involve such activities as groundwater treatment, removal or incineration of wastes, and treatment or removal of soil. State governments work with the federal EPA's remedial action division of the EPA's Superfund Office to identify the most dangerous hazardous waste sites throughout the United States. After a state "nominates" a site for consideration, a "paper" analysis is done to select sites to be visited. When a site is visited by EPA inspectors, air, soil, and water samples are taken to assess the nature and degree of contamination of the site. The worst sites are placed on the EPA's National Priority List (NPL). The EPA was criticized in the 1980s and early 1990s for having nearly 40,000 sites on its Superfund inventory. In the mid- to late 1990s, the EPA removed 27,000 sites from its active inventory list. (The EPA says that those sites have been "archived.") That action has been praised by cities and financial institutions as a major step that can encourage and facilitate redevelopment of those sites.

Once a site is placed on the NPL, more intensive testing is done at the site to further assess the extent of contamination at the site, and a feasibility study is done to identify potential remedies such as incinerating the waste, recycling it, treating it, or removing it from the site for containment elsewhere. Then a design study is conducted. Finally, when a site is ready for action, the EPA relies on the Army Corps of Engineers to draw up plans and specifications and obtain competitive bids for the work to be done.

Cleanup operations at Superfund sites progressed slowly until about 1992, but then cleanup efforts increased. By the end of fiscal year 1992, only 40 of the 1,200 NPL sites had been "delisted" by the EPA. (Delisting means that remediation goals for the site have been achieved.) Another 109 of these sites had been "cleaned up" but had not been delisted because long-term treatment was continuing or the site was in the process of being delisted. By 1996, however, the EPA reported that cleanup activities had been started at 95 percent of the Superfund sites listed on its NPL.

In addition, the EPA reported that it had completed cleanup at over 400 of the NPL sites (29 percent of the sites) and that at least one phase of cleanup had been started at 95 percent of the sites on the NPL.

One of the most controversial aspects of Superfund has been and continues to be the question of who pays. Industry argues that a company should not be liable for the cleanup of hazardous wastes dumped in the past if no laws were violated at the time the wastes were dumped. Congress has, thus far, however, not accepted that argument and has relied on the principle of "polluter pays" with respect to at least part of the funding for cleanup actions.

Pursuant to CERCLA, companies identified as responsible parties for the dumping at a site can be compelled by the federal EPA to clean it up, or, in the alternative, the EPA can clean up the site with Superfund money and then seek reimbursement from the responsible party (or parties) through court action. There are four broad categories of responsible parties: (1) present owners or operators of the site; (2) those who owned or operated the site at the time hazardous substances were disposed of on the site; (3) generators of the waste that ended up at the site; and (4) those who transported the waste to the site. The categories have created a great deal of controversy because they have been interpreted broadly by the courts. For example, in U.S. v. Fleet Factors Corp, a 1990 opinion of the Eleventh Circuit U.S. Court of Appeals, it was held that a secured creditor may be held liable as a responsible party if it participates in financial management of a facility in a way that shows that it could influence the facility's decisions regarding handling of hazardous waste.

The EPA can use an "enforcement first" action and seek an administrative order to force one or more potentially responsible parties (PRPs) to clean up a site. A court order can be pursued if a party contests the administrative order. Failure to comply with an administrative order or court order for such cleanup can result in fines of $25,000 per day against a party.

In the alternative, the EPA itself may pursue remediation of the NPL site and later try to recover all or part of the costs from PRPs. The EPA is particularly likely to pursue this route when there are many PRPs, where it is difficult to identify PRPs, or where PRPs are "judgment proof because they are out of business or are in a precarious financial condition. Such cleanups are financed through the Hazardous Substances Trust Fund, except the cleanup of land used by the U.S. Department of Defense and the U.S. Department of Energy is paid for through separate, direct federal budget appropriations for that purpose. It should also be noted that states are required by federal law to pay for a portion (usually 10 percent to 50 percent) of cleanup costs for any site within their boundaries. In addition, the EPA has the authority to delegate the responsibility for leading clean up of a specific site to the state in which that site is located. Thus, businesses often find themselves dealing with a state counterpart to the EPA rather than the EPA itself.

Pursuant to the 1980 Superfund law, the Hazardous Substances Trust Fund received monies from taxes on certain basic chemicals referred to as "feedstock" chemicals, taxes on crude oil and imported petroleum products, and general federal tax revenues. Pursuant to the 1986 amendments to Superfund, those sources of monies were renewed, and a surtax was imposed on all U.S. businesses with an annual income of more than $2 million as an additional source of revenues. At the end of 1995, however, Congress allowed the "Superfund tax" to expire, thus cutting off nearly $4 million per day that was generated for Superfund cleanups. Without reinstatement of that tax, the Superfund Trust Fund will not be able to cover as many cleanups.

NEW PROGRAMS ADDED PURSUANT TO
SARA IN 1986

In addition to reauthorizing and providing additional funding for the Hazardous Substances Trust Fund, the 1986 Superfund Amendments and Reauthorization Act (SARA) included the Emergency Planning and Community Right-to-Know Act (EPCRA), also known as Title III. EPCRA established important new programs designed to extend "right-to-know" protections to communities and to plan for dealing with emergencies created by chemical leaks or spills. EPCRA was enacted in response to public concerns arising from a disaster in Bhopal, India, in 1986. In Bhopal, an accidental release of methyl isocyanate, a poisonous gas, from a Union Carbide plant killed more than 2,000 people. Most people residing near the plant had not known that toxic chemicals were used there. Further, there were no advanced plans for dealing with such a chemical emergency. U.S. citizens were concerned that similar accidents could occur here.

EPCRA has two sets of provisions. First, communities are required to establish plans for dealing with chemical leaks or spills. Second, businesses must convey to the public the same kinds of information about chemical hazards that they have been required to convey to their workers pursuant to the right-to-know provisions of the Occupational Safety and Health Administration's Hazard Communication Standard. EPCRA is viewed as an important step away from crisis-by-crisis kinds of environmental protection and toward a proactive, preventive approach. Pursuant to EPCRA, the governor of each state has established a State Emergency Planning Response Commission. In turn, each state commission has established various emergency planning districts and has appointed a local emergency planning committee (LEPC) for each. Each LEPC is required to prepare plans for potential chemical emergencies within its communities. Plans must include the identities of business facilities with hazardous chemicals on their premises, the procedures to be followed in the event of a chemical release, the identities of community emergency coordinators, and the identity of a facility coordinator for each business facility covered by EPCRA.

A business facility is covered by EPCRA if it has a substance in a quantity meeting or exceeding a quantity specified on a list of about 400 extremely hazardous substances published by the EPA. In addition, after public notice and comment, the State Emergency Planning Response Commission or the governor of the state may designate additional facilities to be covered.

In the event of an accidental release of a hazardous substance, the covered facility must report that release immediately and provide follow-up notices and information to the community coordinator of its LEPC. Hazardous substances that trigger such a report include those on the EPA's extremely hazardous substance list and those that are so classified under CERCLA.

The second major set of EPCRA's provisions provides for a community right-to-know program. The program requires businesses to prepare two sets of annual reports: the Hazardous Chemical Inventory and Toxic Chemicals Release Inventory (TRI), also known as Chemical Release Forms.

For the Hazardous Chemical Inventory, each covered business facility must obtain or prepare a material safety data sheet (MSDS) for each chemical on its premises meeting or exceeding the threshold quantity. These forms are submitted to the LEPC, the local fire department, and the State Emergency Planning Response Commission. In addition, for each chemical in the inventory, the business must file a chemical inventory report each year.

The TRI is a second set of reports that must be filed annually. In the TRI, releases made by the facility into air or water or onto land during the preceding 12 months are listed and totaled. Those releases reported on the form must include even those made legally pursuant to permits issued by the EPA or its state counterparts. The TRI must be filed by any company with ten or more employees if that company manufactures, imports, stores, or otherwise uses designated toxic chemicals at or above threshold levels.

Information submitted pursuant to both the emergency planning and the community right-to-know provisions of EPCRA is available to the general public upon request to the LEPC. In addition, health professionals may obtain access to specific chemical identities in order to treat or protect individuals who may have been exposed to the chemicals. Such access by health professionals is available even if the information is claimed to be a trade secret by the business facility.

Congress has provided stiff penalties for noncompliance with EPCRA. A business failing to comply with reporting requirements may be assessed up to $25,000 per day for a first violation and up to $75,000 per day for a second violation. Private citizens have the right to sue companies that fail to report. Enforcement by the government can include criminal prosecution and can result in imprisonment of managers of businesses that fail to report.

PUBLIC REACTION TO EPCRA AND
SUPERFUND

Studies reveal that EPCRA has had far-reaching effects on businesses, prompting many to implement new waste reduction programs or adapt their existing programs. Other companies have developed safety audit procedures, reduced their chemical inventories, and changed their operations to substitute less hazardous chemicals for those they were using previously. In addition, various industry groups, such as the Chemical Manufacturers Association, have conducted workshops and prepared educational materials to assist their members in communicating risk EPCRA information and risk information in general to their communities. EPCRA is not an unqualified success, however. It is criticized for being less effective in conveying information to the public than it should be. One problem is lack of funding for the program. For example, LEPCs depend on unpaid, volunteer members. Also, information conveyed in an MSDS is not in a language or a format that is easily understood by most laypeople.

In its administration of the Superfund program, the EPA has received extensive criticism. During the first six years of Superfund, not only did the EPA fail to act aggressively to implement and enforce the program, but there were charges of mishandling of funds, illegal favorable treatment of industries identified as PRPs, and manipulation of the Superfund for political purposes. A scandal dubbed "Sewergate" by the news media ensued. As a result of a Congressional investigation, Anne Burford (later Gorsuch), chief administrator of the EPA, and 20 other EPA officials resigned from their positions. Among those resigning was Rita LaVelle, head of the Superfund program, who went to prison after being convicted of perjury in her testimony on the affair before Congress.

Since 1986, the credibility of the EPA has been rebuilt, in part, because EPA administrators following Burford have been chosen carefully by the U.S. presidents to ensure that each has demonstrated an appreciation for the cause of environmental protection. Criticism of the Superfund program, however, continues to come from diverse sources including businesses, the financial community, environmental groups, practicing attorneys, and legal scholars. Studies criticizing Superfund have come from a variety of organizations including, but not limited to, Congressional committees, the General Accounting Office, the Center for the Study of American Business, and the Rand Institute for Civil Justice.

Such groups have issued reports evaluating the implementation and effectiveness of the Superfund program, and they have been highly critical for a variety of reasons. Those reasons include those already described in this essay, such as the EPA's lack of progress in cleaning up and delisting sites; the enormous compliance costs imposed on companies identified as responsible parties; the broad sweep of Superfund's definitions of "responsible parties," which has extended liability even to financial institutions that have acquired the ability to engage in management decisions; and at least four other major sets of criticisms, which are described below.

First, Superfund's liability scheme is criticized, because it has resulted in a plethora of lawsuits. The EPA sues polluters to recover costs; polluters sue their insurance companies and each other. Litigation with respect to a site in Glenwood Landing, New York, presents an extreme example of this phenomenon. There, the EPA identified 257 PRPs who hired over 130 law firms to represent them; 442 insurance companies were sued, and the insurance companies hired 72 law firms for their defense. In response to this, the EPA has used policy and settlements to cut down on contribution litigation and to provide protection to de minimus parties, de mirocmis parties, and parties with a limited ability to pay. Contributors of extremely small amounts of hazardous materials are removed from the liability scheme early in the process.

Second, Superfund's retroactivity is harshly criticized. Companies pay for cleanup of wastes placed at sites before Superfund's passage in 1980 regardless of whether the practices were legal at the time of disposal and even if disposal methods followed what was common industrial practice at the time.

Third, U.S. businesses allege that Superfund places them at a competitive disadvantage in the developing global economy. They say that Superfund imposes more stringent regulations on them than those placed on manufacturing firms operating in other countries.

Fourth, it is alleged that the EPA has pursued levels of cleanup that are unrealistic and not cost-effective. Critics of Superfund say that individual communities insist on "gold-plated" cleanups even where such a level is not warranted. "How clean is clean?" continues to be a major, complicated issue facing the EPA.

THE EFFECTS AND THE FUTURE OF
SUPERFUND

Superfund has changed the way business is done in the United States. EPCRA, added to Superfund in 1986, requires record keeping and reporting that affect businesses in their everyday operations and in their dealings with the public. Since its initial implementation in 1980, Superfund has changed the way land and facilities are bought and sold in the United States. Environmental audits have become a standard step of the process of buying and selling commercial or industrial real property in this country, and most lending institutions require such audits as a precondition to issuance of any kind of mortgage on business property.

One unfortunate result of Superfund is that it appears to encourage businesses to purchase and develop previously unused property rather than risk potential Superfund liability arising with respect to land previously used for industrial purposes. Such lands are called "brownfields." According to a report from the U.S. Conference of Mayors, there are an estimated 450,000 brownfields (contaminated commercial and industrial sites) across the United States. The Conference of Mayors is encouraging the U.S. government to support the cleanup and redevelopment of brownfields. In response, the EPA has instituted a Brownfield's Economic Redevelopment Initiative. Under that initiative, through a program called Brownfield Pilots, 76 sites were funded up to $200,000 in 1995 and 1996 with the objective of promoting their redevelopment. Brownfield Pilots is designed to generate interest in brownfields and to promote cooperation between and among private parties, and federal, state, and local governments.

As we enter the 21st century, U.S. citizens, the U.S. Congress, and the EPA face tough questions regarding the future of Superfund. About 70 percent of Superfund cleanups up to the end of 1995 were funded by taxes on petroleum and on a variety of chemicals; these taxes expired at the end of 1995. As a consequence, lack of funding put off cleanup at some Superfund sites in the late 1990s. By 1998, it was said that Congressional inaction was delaying cleanup at at least 171 sites around the United States. In the meantime, EPA officials continue to urge Congress to reinstate those taxes. In 1996, 1997, and 1998, Congress failed to pass proposed legislation designed to revamp the Superfund program. Congress will again consider proposals for reform of Superfund in 1999 and, if it does not act in 1999, again as we begin the 21st century.