Superfund: Contractors Are Being Too Liberally Indemnified by the Government
RCED-89-160
Published: Sep 26, 1989. Publicly Released: Sep 26, 1989.
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Highlights
Pursuant to a legislative requirement, GAO reviewed the Environmental Protection Agency's (EPA) Superfund Amendments and Reauthorization Act of 1986 (SARA) Section 119 program for indemnifying Superfund program contractors and subcontractors against liabilities caused by negligence, focusing on: (1) the use of and need for indemnification agreements; (2) claims against those agreements; (3) the program's compliance with applicable laws and regulations; and (4) program management.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Environmental Protection Agency | Because SARA section 119 established specific statutory authority to indemnify Superfund response action contractors, the Administrator, EPA, should advise federal agencies to use section 119 rather than general contracting authorities if they choose to indemnify Superfund contractors. |
Closed – Implemented
In a few months, GAO will issue a report to Congress on EPA actions on the old report.
|
| Environmental Protection Agency | To limit the government's potential exposure to liabilities caused by contractor negligence and keep qualified contractors working in the Superfund program, the Administrator, EPA, should: (1) identify and test, through the procurement system, options for providing section 119 indemnification that will make it competitively unattractive for Superfund contractors and subcontractors to obtain more indemnification than is needed; and (2) incorporate the options that are most cost-beneficial to the government into the regular Superfund procurement process. |
Closed – Implemented
In a few months, GAO will report to Congress on EPA actions in response to the indemnification report.
|
| Environmental Protection Agency | To encourage the development of pollution liability insurance for response action contractors and limit dependence on federal indemnification, the Administrator, EPA, should implement management controls for the section 119 indemnification program that will ensure that: (1) the insurance requirements in SARA are strictly enforced; and (2) indemnification decisions are made on a discretionary case-by-case basis, as Congress intended. |
Closed – Implemented
In a few months, GAO will report to Congress on EPA actions responding to the indemnification report.
|
| Environmental Protection Agency | To avoid unnecessary exposure of Superfund while EPA section 119 guidance is being developed, the Administrator, EPA, should attempt to reach an immediate agreement with contractors indemnified under the interim program to place a specific limit on the amount of indemnification they are being provided and specify a limit in indemnification agreements provided under the interim program for new contracts. |
Closed – Not Implemented
EPA does not plan to implement this recommendation because it would require renegotiation of existing agreements and development of an interim policy. EPA is currently developing a policy to be promulgated with its final indemnification policy.
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Topics
Contract performanceDamages (legal)Environmental lawHazardous substancesIndemnityLiability insuranceNegligencePollution controlService contractsWaste disposal