Superfund:

More Settlement Authority and EPA Controls Could Increase Cost Recovery

RCED-91-144: Published: Jul 18, 1991. Publicly Released: Aug 20, 1991.

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Pursuant to a congressional request, GAO reviewed the Environmental Protection Agency's (EPA) Superfund settlement process, focusing on: (1) EPA success in obtaining cleanups of hazardous waste sites and recovering Superfund administration costs; (2) the adequacy of EPA controls over its settlement process; and (3) additional opportunities for EPA to improve its recovery of Superfund costs.

GAO found that: (1) since fiscal year (FY) 1987, the number and value of EPA settlements with responsible parties increased, but EPA lacked performance measures to show the extent to which settlements achieved program goals; (2) its survey of FY 1989 settlements indicated that EPA succeeded in getting potentially responsible parties (PRP) to perform 98 percent of the identified cleanup work valued at $494 million and to pay 59 percent of the $197 million in Superfund costs for sites covered by those settlements; (3) EPA FY 1989 settlements did not obtain or recover $89 million, or about 13 percent, of the total amount required or expended for cleanups, including related Superfund costs; (4) EPA performance measures did not provide a settlement evaluation context or an accountability basis; (5) its review of 19 settlements indicated that EPA generally failed to meet the required documentation standard, since EPA did not require its regions to document the settlement process; (6) EPA required a written postsettlement analysis to justify only some settlements and did not require those analyses to compare settlement outcomes to initial expectations or to state the EPA rationale for accepting less than it anticipated; (7) the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) restricted EPA from assessing responsible parties interest charges on its program costs; (8) EPA could increase the costs it seeks from responsible parties, and in turn, its cost recoveries if it had the authority to charge interest at commercial lending rates; and (9) EPA could have accrued an additional $25 million in interest by using a commercial lending rate on its FY 1989 expenditures.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matters for Congressional Consideration

    Matter: To enable EPA to recover the government's costs more fully, Congress should amend CERCLA to allow EPA always to: (1) accrue interest on its costs from the date funds are expended; and (2) charge an interest rate commensurate with commercial lending rates.

    Status: Closed - Not Implemented

    Comments: GAO is considering the issue raised by the recommendation in a current review.

    Matter: To link the EPA settlement accomplishments more effectively with its goals, Congress should require the Administrator, EPA, to use performance measures that show the extent to which individual and multiple settlements have, during past and previous years, implemented the EPA chosen remedy and reimbursed EPA for Superfund's costs and report those measures periodically to Congress and the public.

    Status: Closed - Not Implemented

    Comments: GAO is conducting a new review of Superfund settlements and cost recoveries that considers the issue addressed by this recommendation.

    Recommendations for Executive Action

    Recommendation: To enable EPA to pursue all potentially recoverable costs from responsible parties, the Administrator, EPA, should ensure that regions consistently request and include all other agency Superfund costs, including those of the Agency for Toxic Substances and Disease Registry and the Department of Justice, in the costs that EPA seeks to recover in settlements with PRP.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Implemented

    Comments: EPA plans to continue working with its regions and other federal agencies to ensure that all costs are pursued in cost recovery actions. GAO will follow up in its current review.

    Recommendation: To enable EPA to pursue all potentially recoverable costs from responsible parties, the Administrator, EPA, should issue guidance to the regions for calculating interest appropriate for inclusion in settlement negotiations under its existing authority.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Implemented

    Comments: EPA issued guidance for recovering interest and has completed installation of the SCORE automated data systems in its regions to aid interest calculation in cost recovery actions.

    Recommendation: The Administrator, EPA, should require a written justification, or postsettlement analysis, for all proposed administrative settlements. Moreover, until corrective actions have been implemented, the Administrator, EPA, should include the lack of adequate documentation in the Superfund settlement process as a material weakness in its Federal Managers' Financial Integrity Act report.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Not Implemented

    Comments: EPA has listed cost recovery as a material weakness but not for the reasons GAO gave.

    Recommendation: To improve internal controls in the Superfund program, the Administrator, EPA, should implement explicit procedures for documenting the settlement process. At a minimum, those procedures should require the postsettlement analysis to include a comparison of the settlement outcome to bottom-line positions, including the EPA rationale for any deviations in those positions.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Not Implemented

    Comments: EPA believed that its existing guidance on documentation as adequate.

    Recommendation: To improve internal controls in the Superfund program, the Administrator, EPA, should implement explicit procedures for documenting the settlement process. At a minimum, those procedures should include requirements to document: (1) a realistic bottom-line position before beginning negotiations; and (2) key decisions and significant events occurring during negotiations, especially negotiating sessions with potentially responsible parties, changes in bottom-line positions and the reasons for them, and the results of internal meetings.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Not Implemented

    Comments: EPA disagreed with the recommendation.

    Recommendation: To enable EPA to pursue all potentially recoverable costs from responsible parties, the Administrator, EPA, should include administrative settlements with unrecovered costs and financially viable nonsettlers in the nonsettler tracking system.

    Agency Affected: Environmental Protection Agency

    Status: Closed - Not Implemented

    Comments: EPA has no firm plans to implement the recommendation.

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