Superfund:

EPA Has Opportunities to Increase Recoveries of Costs

RCED-94-196: Published: Sep 28, 1994. Publicly Released: Oct 28, 1994.

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Pursuant to a congressional request, GAO provided information on the effectiveness of the Environmental Protection Agency's (EPA) settlement and cost recovery programs, focusing on the factors that inhibit EPA recovery of its Superfund costs.

GAO found that: (1) EPA efforts to compel responsible parties to clean up hazardous waste sites have been successful; (2) in 1993, EPA settlements with responsible parties for cleanup actions totalled $910 million; (3) EPA has recovered only $1.2 billion of the $8.7 billion it expended to clean up hazardous waste sites; (4) EPA recovers only a small amount of its costs because its definition of recoverable indirect costs is too narrow; (5) EPA has not established goals for taking timely action on cost recovery cases or recovering a specified percentage of its costs, and has not developed information to help it better manage the program; (6) by excluding some indirect costs, including research, development, and site assessment costs, EPA has lost $2.9 billion of the $8.7 billion it spent on cleanup actions; (7) although EPA is considering broadening its definition of recoverable indirect costs, it has not set a date for adopting a final rule; (8) EPA needs to develop better management information so that it can track progress and identify areas that need improvement; and (9) EPA could collect millions annually in interest if legislation were modified to allow it to charge responsible parties higher interest rates on recovery costs.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: EPA has abandoned its efforts to use a regulatory approach to maximize recovery of indirect costs from parties responsible for cleanups. However, EPA, in response to new accounting standards developed by the Federal Accounting Standards Advisory Board, is implementing a new methodology to more accurately compute its indirect cost rates. EPA's cost recovery program is adopting the new rates as ones it will charge to responsible parties when EPA tries to recover the costs it incurs for hazardous waste cleanups. EPA expects this could increase recoveries.

    Recommendation: To ensure maximum recovery of EPA cleanup costs from the parties responsible for these costs, the Administrator, EPA, should expedite the issuance of the regulation on indirect costs.

    Agency Affected: Environmental Protection Agency

  2. Status: Closed - Not Implemented

    Comments: Under the Government Performance and Results Act (GPRA), EPA set a goal that each region address 100 percent of the cost recovery cases at or exceeding $200,000 before EPA's authority to do so expires. EPA has decided not to establish any other goals to take early action on cost recovery cases. According to EPA, the agency wants to provide the regions with flexibility to determine when they address cost recovery cases, and because it can take several years to build a cost recovery case, EPA does not think it can further accelerate action on cases. EPA also has decided not to establish goals to recover a certain percentage of costs because it believes doing so would jeopardize negotiations with responsible parties to maximize recoveries and conduct cleanups. EPA justifies this decision based on its position that similar agencies that collect revenue, including the Internal Revenue Service, Coast Guard, and Department of Justice, have not established such goals because of enforcement concerns.

    Recommendation: To ensure maximum recovery of EPA cleanup costs from the parties responsible for these costs, the Administrator, EPA, should establish goals for early action on cases and for the percentage of costs to be recovered.

    Agency Affected: Environmental Protection Agency

  3. Status: Closed - Implemented

    Comments: In its response to this recommendation, EPA has (1) deployed a new Windows-based version of the Superfund database that is easier to access, (2) connected this database to its financial management database so that cleanup cost data between the two systems is updated nightly, (3) developed a new report that consolidates cleanup activity and cost data in a single document, and (4) implemented an automated system that has reduced the amount of manual labor by regional staff in assembling documentation for cost recovery actions.

    Recommendation: To ensure maximum recovery of EPA cleanup costs from the parties responsible for these costs, the Administrator, EPA, should develop better information on the recoverability of costs and the success of settlement negotiations.

    Agency Affected: Environmental Protection Agency

 

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