oversight

Federal Facilities: EPA's Penalties for Hazardous Waste Violations

Published by the Government Accountability Office on 1997-02-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                 United States General Accounting Office

GAO              Report to the Chairman, Committee on
                 Appropriations, U.S. Senate



February 1997
                 FEDERAL FACILITIES
                 EPA’s Penalties for
                 Hazardous Waste
                 Violations




GAO/RCED-97-42
                   United States
GAO                General Accounting Office
                   Washington, D.C. 20548

                   Resources, Community, and
                   Economic Development Division

                   B-275734

                   February 28, 1997

                   The Honorable Ted Stevens
                   Chairman, Committee on Appropriations
                   United States Senate

                   Dear Mr. Chairman:

                   The Environmental Protection Agency (EPA) imposes penalties on other
                   federal agencies for violations under the Resource Conservation and
                   Recovery Act (RCRA) of 1976 and the Comprehensive Environmental
                   Response, Compensation, and Liability Act (CERCLA) of 1980. RCRA controls
                   the management and disposal of hazardous wastes. CERCLA, also known as
                   Superfund, governs the cleanup of sites contaminated by hazardous
                   substances.

                   If EPA penalizes federal agencies for a violation, they may challenge the
                   assessed penalty under EPA’s dispute resolution procedures. The penalty
                   may be upheld, reduced, or eliminated entirely. Agencies may propose
                   projects to benefit the environment as part of the settlement. In some
                   cases, these “supplemental environmental projects” may increase the final
                   settlement amount above EPA’s original assessment.

                   Because of your interest in knowing the frequency of penalties and the
                   costs of settling their final amount, you asked us to determine (1) the
                   number and dollar amount of penalties assessed by EPA against other
                   federal agencies for violations under RCRA and CERCLA and (2) for selected
                   cases, the costs associated with negotiating the final amount of the
                   penalty.


                   From November 1989 through October 1996, EPA assessed penalties in 61
Results in Brief   cases totaling $16.4 million against federal agencies for violating the
                   hazardous waste management and cleanup provisions of RCRA and CERCLA.
                   Penalties were assessed against the Departments of Agriculture, Defense,
                   Energy, and the Interior and the U.S. Coast Guard. Forty-one cases having
                   EPA-assessed penalties of $8.2 million were settled for $8.4 million,
                   including the value of supplemental environmental projects. Agencies
                   made settlement through direct cash payments of $2.4 million and also by
                   agreeing to perform supplemental environmental projects costing about
                   $6 million. Twenty cases with assessed penalties of $8.2 million are still
                   being negotiated, and final settlements have not been determined.




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                         We reviewed three settled cases that had EPA-assessed penalties of
                         $6 million against the Departments of Defense and Energy, which
                         represented more than a third of the value of all the assessed penalties.
                         After negotiations—which lasted from 7 to 20 months—were finalized,
                         these cases were settled for $3.7 million. One case involving a Navy facility
                         was finally settled for $125,000 more than the assessed penalty because of
                         two supplemental environmental projects. EPA and the Departments of
                         Defense and Energy incurred about $364,000 in salaries, travel costs, and
                         other costs to negotiate these three settlements. Because each case has its
                         own unique attributes, we cannot say whether these costs would be
                         typical for all cases. We did note that for the most part, the settlement
                         costs reflect the number of personnel assigned to a case and the time they
                         devote to its resolution.


                         RCRA, as amended by the Federal Facility Compliance Act of 1992, and
Background               CERCLA are the primary statutes that impose hazardous waste management
                         and cleanup obligations on federal agencies and that allow the imposition
                         of penalties. EPA has established administrative procedures for appeals of
                         RCRA penalties and dispute resolution procedures for CERCLA penalties
                         assessed against agencies.


Enforcement Under RCRA   RCRA authorizes EPA to regulate the generation, treatment, storage, and
                         disposal of hazardous waste. Regulation is achieved largely through the
                         issuance of permits by EPA or states authorized by EPA to engage in
                         hazardous waste activities. These permits specify the terms and conditions
                         under which the activities must be carried out. For example, federal
                         facilities that handle RCRA-regulated waste must comply with
                         record-keeping, reporting, labeling, treatment, storage, and disposal
                         requirements. In fiscal year 1994, the latest year for which data were
                         available, 2,580 federal RCRA facilities existed.

                         EPA’s RCRA enforcement actions include formal and informal actions.
                         Formal actions, such as EPA orders, may impose a penalty on the facility
                         and require it to take some corrective action within a specified time and
                         refrain from certain behavior or require future compliance. An agency may
                         request a hearing to challenge the facts alleged in EPA’s complaint or the
                         amount of the penalty.

                         Informal actions such as notices of violations, notices of noncompliance,
                         and warning letters are advisory in nature. They inform the manager of a



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                         facility of what violation was found, what corrective action should be
                         taken, and when the corrective action should be taken. Informal actions
                         do not impose penalties or compel action but, if ignored, can lead to more
                         severe actions.


Interagency Agreements   CERCLA   created the Superfund program to clean up hazardous waste sites
Under CERCLA             that were releasing contaminants into the environment. Federal agencies
                         whose properties are on Superfund’s National Priorities List—the list of
                         the nation’s highest priorities for further study and possible
                         cleanup—must clean them up under EPA’s oversight. As of November 1996,
                         151 federal sites were on the National Priorities List. Section 120 of CERCLA
                         provides that an agency must enter into an interagency agreement with EPA
                         setting forth a plan for cleaning up each facility on the National Priorities
                         List. In most cases, states are also signatories to these cleanup
                         agreements. Under these agreements, failing to comply with the terms and
                         schedules of the cleanup plan may result in EPA-assessed penalties.


Penalties                RCRA allows EPA to impose penalties of up to $25,000 for each day of
                         noncompliance with the act’s provisions. Moreover, the Federal Facility
                         Compliance Act authorizes EPA to exercise its RCRA enforcement authority
                         over federal agencies. Under the Federal Facility Compliance Act, federal
                         facilities are also subject to state fines and enforcement actions. In
                         addition, CERCLA’s interagency agreements may contain provisions for
                         penalties of up to $5,000 for the first week of a violation and up to $10,000
                         for each additional week. The actual penalty levied by EPA under RCRA or
                         CERCLA depends on EPA’s judgment about such factors as the severity and
                         number of violations, damage sustained, and history of noncompliance.


Appeals                  RCRA’s regulations and CERCLA’s agreements set out procedures that
                         agencies must follow when challenging an EPA-assessed penalty. The RCRA
                         process for contesting an enforcement action by EPA requires an agency to
                         respond to EPA’s complaint within 30 days. The agency may also request a
                         formal public hearing as part of its response. EPA encourages the informal
                         settlement of RCRA disputes at any time during the process. If an agency
                         opts for a public hearing, an administrative law judge is appointed to hear
                         the matter. The judge’s decision on the nature and amount of the penalty
                         may be appealed to an Environmental Appeals Board and beyond to the
                         EPA Administrator. (See app. I for a more detailed discussion of the RCRA
                         hearing process.)



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                     Dispute resolution under CERCLA’s interagency agreements employs two
                     layers of committees comprising officials of EPA, the appealing agency, and
                     the state when it is party to the agreement. If the initial committee does
                     not resolve the dispute within a stipulated time, the dispute is forwarded
                     to the next higher committee. If a settlement cannot be reached by either
                     of the committees, the dispute is referred to the EPA Administrator for final
                     resolution. The agreements also state that all parties should pursue an
                     informal resolution at the working level. (See app. II for a more detailed
                     summary of CERCLA’s dispute resolution process.)


Settlements          If the final settlement stipulates that the agency must make payment, the
                     settlement may take one of two forms—cash only or cash plus a
                     supplemental environmental project. EPA defines this project as an
                     environmentally beneficial activity that an agency agrees to undertake as
                     part of settling the enforcement action.

                     A supplemental project imposes a monetary cost on the agency. But
                     according to EPA’s policy guidance, the final settlement penalty will usually
                     be lower for a violator who agrees to perform an acceptable supplemental
                     project compared with the violator who does not. EPA notes that
                     supplemental projects can play an additional role in securing
                     environmental or public health protection and improvements. Examples
                     include efforts to prevent pollution, improve the management of
                     hazardous waste, or conduct environmental assessments and audits. Even
                     if a supplemental project is undertaken, EPA requires that some amount of
                     cash be paid.


                     From November 1989 through October 1996, EPA assessed penalties
EPA’s Hazardous      totaling $16.4 million in 61 cases against five federal agencies. The
Waste Penalties at   agencies were the Departments of Agriculture, Defense, Energy, and the
Federal Facilities   Interior and the U.S. Coast Guard. Forty-one cases having EPA-assessed
                     penalties of $8.2 million were settled for $8.4 million, including the value
                     of supplemental environmental projects. Twenty cases with assessed
                     penalties of $8.2 million were still being negotiated. Of all 61 penalty cases,
                     33 involved violations of CERCLA’s interagency agreements, and 28 involved
                     violations under RCRA.1




                     1
                      In 3 of the 33 cases, assessed penalties were expressed as an amount per week of violation. No total
                     amounts were stated.



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                                      Of the 33 CERCLA cases, 30 were resolved as of October 1996, and 3 were
                                      still in negotiation. For the resolved cases, assessed penalties of about
                                      $6.7 million were settled for about $6.3 million. In five of these cases,
                                      supplemental environmental projects were a significant factor, accounting
                                      for about $4.5 million in the final settlements. Three CERCLA cases with
                                      assessed penalties totaling about $600,000 were still being negotiated.

                                      Of the 28 RCRA cases, 11 were resolved as of October 1996, and 17 were
                                      still being negotiated. The assessed penalties for the settled cases totaled
                                      about $1.5 million; they were settled for about $2.2 million—which was
                                      more than the assessed amount because, in two cases, the agencies were
                                      willing to perform higher-valued supplemental environmental projects. EPA
                                      was still negotiating assessed penalties of about $7.6 million for 17 cases.
                                      (See table 1.)

Table 1: Disposition of Cases Where
EPA Assessed Penalties on Federal     Dollars in thousands
Agencies Under CERCLA and RCRA,                                                                            Final settlement
as of October 1996
                                                                                     EPA-                    Supplemental
                                                                         Number assessed                    environmental
                                      Law              Status            of cases penaltya         Cash            project      Total
                                      CERCLA           Resolved                   30    $6,680 $1,747                $4,537 $6,284
                                                       Unresolved                 3        595
                                                       Subtotal                   33     7,275
                                      RCRA             Resolved                   11     1,516       623              1,528    2,151
                                                       Unresolved                 17     7,648
                                                       Subtotal                   28     9,164
                                      Total            Resolved                   41    $8,196 $2,370                $6,065 $8,435
                                                       Unresolved                 20    $8,243
                                                       Total                      61   $16,439
                                      a
                                       In three CERCLA cases, assessed penalties were expressed as an amount per week of violation.
                                      Because no total amounts were calculated, the table does not present assessed penalties for
                                      these cases.

                                      Source: GAO’s presentation of EPA’s data.



                                      CERCLA penalties may be imposed when agencies do not meet the terms
                                      and conditions of the interagency agreements they signed. For example,
                                      agencies may be penalized when they do not complete site contamination
                                      studies, prepare cleanup plans, or undertake required cleanup action
                                      within the timetables and deadlines called for in the agreements.
                                      According to EPA officials, penalties are usually not assessed until agencies




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                     fall substantially behind in their commitments. RCRA penalties are generally
                     imposed when agencies fail to conform their hazardous waste activities,
                     such as waste treatment, storage, or disposal, to the conditions stated in
                     their permits.


                     We obtained from agency officials their estimates of the costs of
Costs of Resolving   negotiating settlements of assessed penalties for (1) CERCLA violations at
Agencies’            the Army’s former West Virginia Ordnance Works and Energy’s Rocky
Environmental        Flats Environmental Technology Site and (2) a RCRA violation at the El
                     Centro Naval Air Facility. (See apps. III, IV, and V for a more detailed
Disputes With EPA    discussion of each case.) The estimates include salaries, fringe benefits
                     and other indirect costs, and travel costs. The three cases represented
                     about 36 percent of all EPA-assessed CERCLA and RCRA penalties.

                     At the West Virginia Ordnance Works, EPA assessed a $2 million penalty on
                     the basis of its assertion that the Army missed a deadline for submitting
                     draft cleanup studies and did not fully implement a community relations
                     plan. The case was settled for $500,000 after a 7-month negotiation
                     process. EPA assessed a $3.7 million penalty for Rocky Flats’ failure to
                     meet deadlines for completing cleanup studies set out in the facility’s
                     interagency cleanup agreement. Energy agreed to a $700,000 cash payment
                     and two supplemental environmental projects valued at $2.1 million
                     following 4 months of informal negotiations. At the El Centro Naval Air
                     Facility, EPA assessed a $258,000 RCRA penalty for various hazardous waste
                     management violations, including improper storage. The case was settled
                     for a $100,000 cash payment and two supplemental projects valued at
                     $283,000 after 20 months of informal negotiations.

                     According to their estimates, Energy, Defense, and EPA expended about
                     $364,000 to settle these three cases. Because each case has its own unique
                     attributes, we cannot say whether these costs would be typical for all
                     cases. We did note that for the most part, the settlement costs reflect the
                     number of personnel assigned to a case and the time they devote to its
                     resolution. (See table 2.)




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Table 2: EPA-Assessed Penalties, Final
Settlements, and Estimated               Dollars in thousands
Negotiation Costs for Three Federal                                                      Final settlement
Facilities
                                                               EPA-                        Supplemental                       Estimated
                                                           assessed                       environmental                      negotiation
                                         Facility            penalty              Cash           project             Total          cost
                                         West                 $2,025              $500                  $0           $500          $175
                                         Virginia
                                         Ordnance
                                         Works
                                         Rocky Flats            3,700              700                2,100          2,800           62
                                         El Centro               258               100                 283             383          127
                                         Total                $5,983          $1,300              $2,383            $3,683         $364
                                         Source: GAO’s analysis of data from EPA, Army, Navy, and Energy.



                                         Table 3 presents data on the duration of penalty negotiations, the number
                                         of personnel who worked on the case, and additional details on the costs
                                         of negotiating a settlement. Salaries constitute the largest portion
                                         (62 percent) of all costs, fringe benefits and other indirect costs constitute
                                         32 percent, and travel represents the remaining 6 percent.

Table 3: Estimated Penalty Negotiation
Costs, Number of Staff, Hours Worked,                                                Facility
and Length of Negotiations for Three                                                 Rocky Flats
Federal Facilities                                              West Virginia      Environmental              El Centro
                                                                  Ordnance           Technology               Naval Air
                                         Category                     Works                 Site                Facility           Total
                                         Number of staff                    28                  25                   18              71
                                         Hours worked                     2,491               1,185               2,732           6,408
                                         Negotiation                         7                    4                  20              31
                                         period (months)
                                         Negotiation costs
                                         Salaries                    $117,312              $41,364             $72,221         $230,897
                                         Fringe benefits                 42,569             16,556               52,243         111,368
                                         and other indirect
                                         costs
                                         Travel                         $15,600             $3,575               $2,953         $22,128
                                         Total                       $175,481              $61,495            $127,417         $364,393
                                         Source: GAO’s presentation of data from EPA, Army, Energy, and Navy.



                                         All three cases were settled at management levels within EPA and the
                                         penalized agency. The West Virginia Ordnance case was settled by the



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                     Deputy Assistant Secretary of the Army and the acting EPA Region 3
                     Administrator; the Rocky Flats case, by the Energy facility manager and
                     the Deputy Administrator of EPA’s Region 8; and the El Centro case, by the
                     base commanding officer and the hazardous waste division director of
                     EPA’s Region 9.


                     EPA officials told us that despite the costs of negotiating settlements of
                     environmental penalties, the penalties are effective enforcement
                     techniques. In their opinion, the unwanted attention that results from EPA’s
                     public disclosure of violations and penalties and the possible need for
                     agencies to seek special funding to pay them are strong inducements for
                     compliance with hazardous waste requirements.


                     We provided the Departments of Defense and Energy and EPA with a draft
Agency Comments      of this report for their review and comment. We met with officials of these
and Our Evaluation   agencies, including a representative of the Office of the Under Secretary of
                     Defense-Environmental Security and the Senior Enforcement Counsel,
                     Federal Facilities Enforcement Office, EPA. In addition, we discussed the
                     draft with Energy headquarters and Rocky Flats officials from their
                     respective Office of General Counsel.

                     Overall, the agencies believed that our report was factually accurate. The
                     agencies had some concern about the interpretation of some information
                     and wanted us to include additional information. We revised our report
                     accordingly. In addition, the agencies provided us with editorial and
                     technical comments that we incorporated into the report as appropriate.


                     To respond to this report’s objectives, we visited several Defense and
                     Energy field installations and reviewed documentation on the processes
                     followed and costs incurred in establishing final settlements. We also met
                     with officials from EPA, Defense, and Energy headquarters units to review
                     data on the overall number and status of assessed penalties. We asked EPA
                     and the Departments of Defense and Energy to provide us with their best
                     estimates of the costs they incurred to reach settlement. These estimates
                     include hours worked, salaries, fringe benefits, other indirect costs, and
                     travel. Some of the estimates are based on officials’ recollections of past
                     events. We discussed the estimates provided by the agencies with agency
                     officials but did not verify them.




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We reviewed pertinent laws and regulations and examined EPA’s guidance
on assessing environmental penalties. We conducted our review from
August 1996 through January 1997 in accordance with generally accepted
government auditing standards. Appendix VI contains additional
information on our scope and methodology.

As arranged with your office, unless you announce its contents earlier, we
plan no further distribution of this report until 5 days after the date of this
letter. At that time, we will send copies to the Administrator of EPA and the
Secretaries of Defense and Energy. We will also make copies available to
others on request. Please call me at (202) 512-6520 if you or your staff have
any questions. The major contributors to this report are listed in appendix
VII.

Sincerely yours,




Stanley J. Czerwinski
Associate Director, Environmental
  Protection Issues




Page 9                                  GAO/RCED-97-42 Hazardous Waste Violations
Contents



Letter                                                                                               1


Appendix I                                                                                          12
                           Public Hearing                                                           12
RCRA’s Penalty             Informal Settlement Negotiations                                         12
Resolution Process
for Federal Facilities
Appendix II                                                                                         13

CERCLA’s Penalty
Resolution Process
for Federal Facilities
Appendix III                                                                                        14

Summary of CERCLA
Enforcement Action:
West Virginia
Ordnance Works
Appendix IV                                                                                         16

Summary of CERCLA
Enforcement Action:
Rocky Flats
Environmental
Technology Site
Appendix V                                                                                          18

Summary of RCRA
Enforcement Action:
U.S. Naval Air Facility,
El Centro




                           Page 10                            GAO/RCED-97-42 Hazardous Waste Violations
                        Contents




Appendix VI                                                                                       20

Objectives, Scope,
and Methodology
Appendix VII                                                                                      22

Major Contributors to
This Report
Tables                  Table 1: Disposition of Cases Where EPA Assessed Penalties on              5
                          Federal Agencies Under CERCLA and RCRA, as of October 1996
                        Table 2: EPA-Assessed Penalties, Final Settlements, and                    7
                          Estimated Negotiation Costs for Three Federal Facilities
                        Table 3: Estimated Penalty Negotiation Costs, Number of Staff,             7
                          Hours Worked, and Length of Negotiations for Three Federal
                          Facilities
                        Table III.1: Estimated Number of Army and EPA Staff, Hours                15
                          Worked, and Costs Involved in Settling Assessed CERCLA
                          Penalty at the West Virginia Ordnance Works
                        Table IV.1: Estimated Number of EPA and Energy Staff, Hours               17
                          Worked, and Costs Involved in Settling Assessed CERCLA
                          Penalty at the Rocky Flats Environmental Technology Site
                        Table V.1: Estimated Number of EPA and U.S. Navy Staff, Hours             19
                          Worked, and Costs Involved in Settling Assessed RCRA Penalty at
                          the U.S. Naval Air Facility, El Centro




                        Abbreviations

                        CERCLA     Comprehensive Environmental Response, Compensation,
                                       and Liability Act
                        EPA        Environmental Protection Agency
                        GAO        General Accounting Office
                        NAF        Naval Air Facility
                        NAVFAC     Naval Facilities Engineering Command
                        RCRA       Resource Conservation and Recovery Act


                        Page 11                             GAO/RCED-97-42 Hazardous Waste Violations
Appendix I

RCRA’s Penalty Resolution Process for
Federal Facilities

                          The adjudication process for all enforcement actions taken under the
                          Resource Conservation and Recovery Act (RCRA) is governed by the
                          Environmental Protection Agency’s (EPA) Consolidated Rules of Practice
                          Governing the Administrative Assessment of Civil Penalties and the
                          Revocation or Suspension of Permits (40 C.F.R. part 22). These rules
                          establish the timing and procedures that a federal agency must follow to
                          preserve its appeal rights. Under these rules, an agency may either elect to
                          challenge any of EPA’s RCRA enforcement actions through a public hearing
                          or engage in an informal settlement negotiation. EPA’s regulations
                          encourage informal negotiations.


                      •   EPA’s notice of violation and compliance order is final unless the penalized
Public Hearing            agency files a response and requests a public hearing within 30 days.
                      •   The agency’s response must deny, admit to, or explain each of EPA’s
                          allegations. A failure to respond will constitute an admission of all alleged
                          facts.
                      •   If the agency fails to file a written answer within 30 days of EPA’s order, the
                          penalty assessed by EPA will become due and payable.
                      •   If the agency requests a public hearing, it will be conducted by an
                          EPA-appointed administrative law judge.
                      •   An agency may appeal a hearing decision to an Environmental Appeals
                          Board and beyond to the EPA Administrator.


                      •   Whether or not the agency requests a hearing, the agency may confer
Informal Settlement       informally with EPA to discuss the alleged facts, violations, and penalty.
Negotiations              But the informal conference does not affect the agency’s responsibility to
                          file a written response within 30 days of EPA’s complaint. This informal
                          conference may be pursued simultaneously with the public hearing
                          procedure.
                      •   Any settlement reached must be set out in a written agreement.
                      •   If a settlement cannot be reached informally, filing a written response
                          within 30 days of EPA’s complaint preserves the agency’s right to a hearing.




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Appendix II

CERCLA’s Penalty Resolution Process for
Federal Facilities

                  Interagency cleanup agreements under the Comprehensive Environmental
                  Response, Compensation, and Liability Act (CERCLA) establish schedules
                  for evaluating and cleaning up contamination at federal facilities. If
                  agencies fail to comply with any terms or conditions relating to interim or
                  final remedial action, the agreements authorize EPA to impose a penalty.

                  Should agencies disagree with EPA’s assessed penalty, the agreements set
                  forth a series of dispute resolution procedures. The agreements state that
                  all parties should pursue an informal resolution at the working level.
                  Failing an informal resolution, the agreements set out the following
                  process:

              •   Within 30 days after any action that leads to or generates a dispute, the
                  agency must submit to a Dispute Resolution Committee1 a written
                  statement setting forth the nature of the disagreement and, among other
                  things, the technical, legal, or factual information that the agency relied
                  upon to support its position.
              •   The Dispute Resolution Committee has 21 days to unanimously resolve the
                  issue and prepare a written decision.
              •   If the committee cannot resolve the matter within the 21-day resolution
                  period, the dispute is forwarded to a Senior Executive Committee.2
              •   The Senior Executive Committee has 21 days to reach a unanimous
                  resolution. If unanimity is not achieved, the cognizant EPA Regional
                  Administrator must issue a written position. If the two non-EPA members
                  do not disagree with the Regional Administrator’s decision within 21 days,
                  they will be considered as being in agreement with EPA. If one of the
                  members disagrees with the EPA decision, that member has 21 days to
                  issue a written notice elevating the case to the EPA Administrator.
              •   The EPA Administrator has 21 days to issue a written decision, which is
                  final on all parties. The Administrator’s duties cannot be delegated.




                  1
                   While the makeup of the Dispute Resolution Committee varies, it is usually composed of the following
                  three individuals (or their equivalents): the EPA regional waste management division director, the
                  federal facility’s deputy manager or deputy base commander, and a state environmental official.
                  2
                   The Senior Executive Committee is usually composed of three individuals: the EPA Regional
                  Administrator, the federal agency’s Deputy Assistant Secretary (or equivalent official), and a state
                  environmental representative of comparable rank.



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Appendix III

Summary of CERCLA Enforcement Action:
West Virginia Ordnance Works

                   During World War II, the U.S. Army manufactured TNT and other
                   explosives at the West Virginia Ordnance Works—an 8,323-acre tract along
                   the Ohio River. At the close of TNT-manufacturing operations in 1945, the
                   facility was placed in standby status, and most of the industrial portion of
                   the site was deeded to the state of West Virginia, which used it as a state
                   park.

                   In May 1981, a West Virginia park official noticed an unusual seepage of
                   red groundwater, causing West Virginia and EPA to investigate the incident.
                   The shallow groundwater discharging to a nearby pond was found to
                   contain TNT by-products. On the basis of these and other studies by EPA
                   and the state, the site was listed on the Superfund National Priorities List
                   in September 1983.

                   Because of the facility’s status as a formerly used defense site, the Army
                   became responsible for managing the cleanup. In September 1987 and
                   July 1989, EPA and the Army entered into two separate interagency cleanup
                   agreements.

                   On March 29, 1993, following several requests for compliance with the
                   second interagency agreement, EPA assessed penalties of $2.025 million,
                   citing the Army’s failure to deliver certain required documents.
                   Specifically, EPA alleged that the Army failed to (1) submit four draft
                   groundwater-monitoring plans for EPA’s review ($900,000 penalty) and
                   (2) fully implement a community relations plan ($1.125 million penalty).

                   The following is a chronology of significant events outlining the Army’s
                   and EPA’s actions to settle the penalty.

               •   On April 9, 1993, the Deputy Assistant Secretary of the Army
                   (Environment, Safety, and Occupational Health) wrote EPA noting that the
                   Secretary was unaware of EPA’s significant concerns about the site’s
                   cleanup. The Army’s letter formally invoked dispute resolution regarding
                   the existence of and length of time for violations and the amount of the
                   assessed penalties. The Army also provided EPA with a statement of
                   technical, legal, and factual information to support the former’s position.
               •   On May 5, 1993, EPA and Army representatives on the Dispute Resolution
                   Committee met to resolve the dispute.
               •   From May 5 through May 18, 1993, the Dispute Resolution Committee
                   attempted to resolve the issue through telephone conferences and
                   exchanges of letters.




                   Page 14                               GAO/RCED-97-42 Hazardous Waste Violations
                                            Appendix III
                                            Summary of CERCLA Enforcement Action:
                                            West Virginia Ordnance Works




                                        •   On May 19, 1993, the committee concluded that no resolution could be
                                            reached and formally elevated the dispute to the Senior Executive
                                            Committee.
                                        •   From May 19 through July 15, 1993, staff of the EPA and Army
                                            representatives to the Senior Executive Committee met, exchanged letters,
                                            and held telephone conferences to narrow the issues and refine the
                                            proposed terms of a resolution.
                                        •   From July 16 through September 23, 1993, the Senior Executive
                                            Committee members continued discussions during telephone conferences
                                            and exchanges of letters.
                                        •   On September 24, 1993, the Senior Executive Committee agreed to resolve
                                            the dispute for $500,000 (reducing the original penalty by about
                                            $1.5 million). EPA and the Army cited the need “to concentrate the parties’
                                            efforts on environmental restoration activities” at the site. The terms of the
                                            resolution also noted that nothing in the agreement should be construed as
                                            an admission of liability by the Army.
                                        •   On October 6 and 18, 1993, the acting Administrator, EPA Region 3
                                            (Philadelphia) and the Deputy Assistant Secretary of the Army
                                            (Environment, Safety, and Occupational Health), respectively, agreed to a
                                            final settlement.

                                            Table III.1 shows the Army’s and EPA’s estimates of staff assigned, hours
                                            charged, and costs involved in negotiating the final penalty.

Table III.1: Estimated Number of Army
and EPA Staff, Hours Worked, and                                                               Costs of settling assessed penalty
Costs Involved in Settling Assessed                                                                     Fringe
CERCLA Penalty at the West Virginia                                                                   benefits
Ordnance Works                                                                                       and other
                                                                   Number        Hours                 indirect
                                            Agency                  of staff    worked      Salaries     costs      Travel       Total
                                            EPA Region 3                  9          535     $18,239    $18,614          0    $36,853
                                            Army Corps of
                                            Engineers                    19        1,956      99,073     23,955    $15,600    138,628
                                            Total                        28        2,491   $117,312     $42,569    $15,600   $175,481
                                            Source: GAO’s presentation of EPA’s and the Army’s data.




                                            Page 15                                          GAO/RCED-97-42 Hazardous Waste Violations
Appendix IV

Summary of CERCLA Enforcement Action:
Rocky Flats Environmental Technology Site

                  The Department of Energy’s Rocky Flats facility, located on 6,500 acres 16
                  miles northwest of Denver, Colorado, produced plutonium components
                  for Energy’s nuclear weapons program. In late 1989, plutonium operations
                  were suspended for various reasons, including concerns about health and
                  safety. The site has been listed on the Superfund National Priorities List
                  since October 1989.

                  In January 1991, EPA, Energy, and the state of Colorado signed an
                  interagency cleanup agreement. Energy did not provide 14 remedial study
                  documents required by the agreement—some were nearly a year overdue.
                  According to EPA, these violations effectively rendered the entire
                  agreement moot. Consequently, EPA, Energy, and Colorado agreed to
                  negotiate Energy’s penalty for noncompliance with the agreement and
                  discuss the terms of a new agreement.

                  The following is a chronology of significant events outlining Energy’s,
                  EPA’s, and Colorado’s actions to informally resolve the penalty issue and
                  prepare a new interagency agreement.

              •   On March 10, 1994, Energy, EPA, and the Colorado Department of Health
                  met to discuss Rocky Flats’ inability to meet pending and potential
                  milestones established by the January 1991 agreement. EPA assessed total
                  penalties of $3.7 million.
              •   On April 26, 1994, the parties agreed to a single settlement for all actual
                  and anticipated violations through January 1995. As part of the settlement,
                  Energy agreed to undertake supplemental environmental projects. The
                  settlement terms also required a new cleanup agreement for the Rocky
                  Flats facility.
              •   On May 2, 1994, Energy offered a settlement of $2.8 million consisting of
                  $750,000 cash and the remainder of $2.1 million in supplemental
                  environmental projects.
              •   From May 9 through May 12, 1994, the parties held discussions about a
                  settlement. Rocky Flats officials indicated that $2.8 million was the highest
                  amount they were authorized to propose—any larger sums would require
                  negotiations with Energy headquarters staff.
              •   On May 17, 1994, the parties agreed to a $2.8 million settlement, thus
                  reducing the $3.7 million penalty by $900,000, and continued discussions
                  about the possible use of supplemental environmental projects.
              •   From May 26 through June 23, 1994, the parties discussed proposed
                  settlement language and the state of Colorado’s concerns.
              •   On July 7, 1994, the Deputy Regional Administrator, EPA Region 8; the
                  Manager, Rocky Flats Field Office; and the Director, Office of



                  Page 16                                GAO/RCED-97-42 Hazardous Waste Violations
                                         Appendix IV
                                         Summary of CERCLA Enforcement Action:
                                         Rocky Flats Environmental Technology Site




                                         Environment, Colorado Department of Health, agreed to a final settlement.
                                         Energy agreed to pay $350,000 to the Superfund account, $350,000 to the
                                         Colorado Department of Health, and $2.1 million to acquire 900 acres
                                         adjoining the facility for open space preservation as a supplemental
                                         environmental project. The parties further agreed to use best efforts to
                                         reach a new cleanup agreement by January 31, 1995.

                                         Table IV.1 shows Energy’s and EPA’s estimates of costs incurred to resolve
                                         penalty issues.


Table IV.1: Estimated Number of EPA and Energy Staff, Hours Worked, and Costs Involved in Settling Assessed CERCLA
Penalty at the Rocky Flats Environmental Technology Site
                                                                        Costs of settling assessed penalty
                                                                          Fringe benefits and
Agency                Number of staff   Hours worked             Salaries other indirect costs                 Travel               Total
Energy
HQ                                 9                199            $9,567                  $1,147              $1,575            $12,289
Rocky Flats                        7                748            23,708                    4,873              2,000             30,581
Subtotal                          16                947            33,275                    6,020              3,575             42,870
EPA
HQ                                 2                  6               317                         85                 0               402
Region 8                           7                232             7,773                  10,450                    0            18,223
Subtotal                           9                238             8,090                  10,535                    0            18,625
Total                             25               1,185          $41,365                 $16,555              $3,575            $61,495
                                         Note: Some portion of these costs was spent on negotiating a new site cleanup agreement. These
                                         costs cannot be determined separately.

                                         Legend

                                         HQ = headquarters

                                         Source: GAO’s presentation of Energy’s and EPA’s data.




                                         Page 17                                          GAO/RCED-97-42 Hazardous Waste Violations
Appendix V

Summary of RCRA Enforcement Action:
U.S. Naval Air Facility, El Centro

                 The U.S. Naval Air Facility, El Centro—located approximately midway
                 between San Diego, California, and Yuma, Arizona—furnishes support for
                 U.S. Navy carrier aircraft. The facility provides tactical air training, such as
                 carrier-landing practice, air-to-air and air-to-ground weapons training, and
                 air combat maneuvers.

                 On January 20, 1993, EPA conducted an inspection at El Centro and
                 determined that the facility violated various RCRA provisions. The following
                 is a chronology of EPA’s and the Navy’s efforts to resolve the RCRA
                 enforcement action.

             •   On May 3, 1993, EPA filed a compliance order with the cognizant EPA
                 regional office hearing clerk alleging a variety of RCRA violations at El
                 Centro. Among other things, the order noted (1) a failure to determine
                 whether waste was hazardous, (2) the storage of incompatible waste,
                 (3) the failure to adequately train personnel, and (4) the mismanagement
                 of waste accumulation areas. EPA assessed a penalty of $257,580.
             •   On June 9, 1993, the Navy filed an “answer” to EPA’s complaint and
                 requested an opportunity to meet with EPA to resolve the matter.
             •   On July 12, 1993, EPA and the Navy held an initial meeting at which the
                 Navy presented information regarding the violations and presented a
                 settlement offer. The Navy also inquired whether a portion of the penalty
                 could be satisfied through supplemental environmental projects.
             •   EPA requested additional information, which the Navy provided in
                 September 1993. From September 30 through December 7, 1993, EPA and
                 the Navy submitted various offers and counteroffers.
             •   On January 20, 1994, a second meeting was held, and the parties reached
                 an agreement in principle. The total penalty would be $129,309, of which
                 $100,000 would be paid in cash and the balance would be suspended on
                 the condition that the Navy perform two supplemental environmental
                 projects.
             •   From February through July 1994, various discussions occurred about the
                 exact nature of the supplemental projects. It was agreed that the first
                 project would consist of installing a system that uses nontoxic solutions to
                 clean aircraft parts. The second project would involve building a
                 Hazardous Waste Minimization Center to reduce the volume of hazardous
                 waste by controlling the procurement and use of materials. (The eventual
                 cost of these two supplemental projects was $283,480.)
             •   On August 29, 1994, EPA and the Navy formally agreed to a “Consent
                 Agreement and Consent Order,” which was filed formally with EPA’s
                 regional hearing examiner.




                 Page 18                                 GAO/RCED-97-42 Hazardous Waste Violations
                                          Appendix V
                                          Summary of RCRA Enforcement Action:
                                          U.S. Naval Air Facility, El Centro




                                      •   On September 14, 1994, the Navy directed that the base operating support
                                          contractor for the El Centro facility pay $60,466 as its share for penalties
                                          assessed in areas where the contractor exercised direct control and
                                          responsibility.

                                          Table V.1 shows the Navy’s and EPA’s estimates of staff assigned, hours
                                          charged, and costs involved to reach settlement.


Table V.1: Estimated Number of EPA and U.S. Navy Staff, Hours Worked, and Costs Involved in Settling Assessed RCRA
Penalty at the U.S. Naval Air Facility, El Centro
                                                                         Costs of settling assessed penalty
                                                                                  Fringe benefits
                             Number of               Hours                             and other
Agency                           staff              worked           Salaries      indirect costs           Travel            Total
Civilian Navy staff
NAF— El Centro                        8                 992           $18,367               $4,939                          $23,306
NAVFAC— San Diego                     1                 765            24,452               30,076                           54,528
Subtotal                              9               1,757            42,819               35,015                           77,834
Military                              4                 495            14,274                        0      $2,953           17,227
Total—Navy                           13               2,252            57,093               35,015           2,953           95,061
EPA Region 9                          5                 480            15,128               17,228                           32,356
Total                                18               2,732           $72,221              $52,243          $2,953         $127,417
                                          Legend

                                          NAF = Naval Air Facility

                                          NAVFAC = Naval Facilities Engineering Command

                                          Source: GAO’s presentation of the Navy’s and EPA’s data.




                                          Page 19                                          GAO/RCED-97-42 Hazardous Waste Violations
Appendix VI

Objectives, Scope, and Methodology


              We were asked to determine (1) the number and dollar amount of
              penalties assessed by EPA against other federal agencies for violations
              under RCRA and CERCLA and (2), for selected cases, the costs associated
              with negotiating the amount of the penalty.

              To address our first objective, we compiled information on penalties that
              EPA had assessed for agencies’ violations of CERCLA’s interagency
              agreements and RCRA at 61 federal facility sites. This information was
              based on EPA-developed data of penalties against the Departments of
              Agriculture, Defense, Energy, and the Interior and the U.S. Coast Guard.
              By reviewing these cases, we were able to determine the penalties
              assessed initially by EPA as well as the final penalty amounts negotiated
              between EPA and the agencies.1

              To address our second objective, we selected for further review three
              resolved penalty cases that represent more than a third of the value of all
              the assessed penalties. For the Rocky Flats case study, we visited Energy’s
              headquarters, Washington, D.C.; Energy’s Rocky Flats Environmental
              Technology Site, Rocky Flats, Colorado; and EPA’s regional office, Denver,
              Colorado. For the West Virginia Ordnance Works study, we visited the U.S.
              Army Corps of Engineers’ headquarters, Washington, D.C., the Corps’ Ohio
              River Division, Cincinnati, Ohio; and EPA’s regional office, Philadelphia,
              Pennsylvania. For the El Centro case, we visited the Naval Air Facility, El
              Centro, California; the Naval Facilities Engineering Command, Southwest
              Division, San Diego, California; and the EPA regional office, San Francisco,
              California.

              According to the agency officials we interviewed, separate cost records on
              settling interagency disputes generally do not exist. However, the
              negotiation period is usually the time between the agency’s notification
              that it will formally contest the EPA-assessed penalty and the final
              resolution. Using this reference point, we asked EPA and the Departments
              of Defense and Energy to provide us with their best estimates of the costs
              they incurred to reach settlement, including salaries, fringe benefits, other
              indirect costs, and travel. Some of the estimates are based on officials’
              recollections of past events. We discussed the estimates provided by the
              agencies with agency officials but did not verify them.

              1
               We noted that the Nuclear Regulatory Commission also has authority to penalize federal agencies for
              regulatory violations. Since October 1979, the Commission has assessed fines totaling $265,000 on
              federal agencies including Defense, Veterans Affairs, the U.S. Geological Survey, and Agriculture.
              Through September 1996, the Commission had collected $251,000. The fines were imposed for
              infractions of the Commission’s regulations on the management of nuclear materials. According to
              Commission officials, federal agencies have never invoked the appeals process available to dispute the
              Commission’s fines.



              Page 20                                             GAO/RCED-97-42 Hazardous Waste Violations
Appendix VI
Objectives, Scope, and Methodology




We gathered policy guidance and other documentation on the RCRA and
CERCLA dispute processes as well as EPA’s supplemental environmental
project policy. We also met with officials at EPA, Defense, and Energy to
obtain their views on the resolution of disputes.

We conducted our review from August 1996 through January 1997 in
accordance with generally accepted government auditing standards.




Page 21                               GAO/RCED-97-42 Hazardous Waste Violations
Appendix VII

Major Contributors to This Report


                        James F. Donaghy, Assistant Director
Resources,              John D. Yakaitis, Evaluator-in-Charge
Community, and          Earl P. Williams, Jr., Communications Analyst
Economic
Development
Division, Washington,
D.C.
                        Richard P. Johnson, Attorney
Office of the General
Counsel, Washington,
D.C.




(160360)                Page 22                              GAO/RCED-97-42 Hazardous Waste Violations
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