Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

When EPA issued its preliminary plan in May for review of its regulations, I said that the proof would be in the pudding. Well, EPA has now issued its final plan. My review? The pudding tastes ok, but it doesn’t taste as good and it’s not as filling as it could be.

My major complaint with the preliminary plan was its failure to target the single biggest area for reform – those areas where EPA still relies on command and control regulation. Obviously, statutes dictate EPA’s approach in many cases, but not all. There is much more friendly generic language on this score in the final plan. For example, EPA now states that:

To supplement traditional compliance approaches, EPA plans to routinely structure federal regulations and permits as effectively as possible to achieve compliance, through adequate monitoring requirements, public disclosure, information and reporting mechanisms, and other structural flexibilities, including self-certification, and third-party verification.

Unfortunately, specific example of proposed changes to rely on self-certification and third-party verification are few and far between in either EPA’s “early action” or “longer term” lists of potential reforms. Why couldn’t EPA have included one simple bullet? Why couldn’t EPA simply have directed each program to review its statutory authority to shift from technology-based or other command and control approaches to performance standards and market based approaches?

It is telling that only 1 of 35 specific proposals relates to Superfund, which remains purely a command and control program – and even that item concerns only National Priorities List rules, not how cleanups are selected and overseen. I don’t see any provisions in CERCLA that would prevent EPA from revising the NCP to identify risk-based standards for different media and allow PRPs to meet those standards in whatever cost-efficient manner they can identify.

True regulatory reform is clearly not going to happen overnight. EPA’s current plan probably qualifies as a step in the right direction, but it’s not much more than a baby step.

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When President Obama issued Executive Order 13,563, on Improving Regulation and Regulatory Review, it was not obvious whether the Order was simply an attempt to protect the President’s right flank or whether the agencies would respond substantively. Yesterday, EPA released its Preliminary Plan for Periodic Retrospective Reviews of Existing Regulations. Initial review of the Plan suggests that EPA has taken the task seriously and has made some constructive suggestions. To me, however, they missed the elephant in the room and therefore cannot be given better than a B grade at this point.

There is a lot of good stuff in the plan, which is certainly too long to summarize here. The highlights from where I sit include the following:

• Increased use of electronic reporting. This falls in the category of “now why didn’t I think of that?” Telling point? EPA has put use of e-manifests under RCRA in the long-term action, rather than early action, category, while acknowledging that this was proposed in 2004. How hard is some of this stuff?

• Improved transparency, i.e., increased public disclosure of compliance and other regulatory information. Cynical translation? If we can provide more information to the public, citizen suits will be easier and we can do less government enforcement. Still, hard to argue with.

• Coordination of emission reduction regulations across multiple pollutants. Interestingly, EPA has put this in the early action category. Although EPA identified the pulp and paper industry specifically, this has to be thought of mainly as a longer-term project. Well worth it, however long it takes.

• Encouraging innovative technology. Who could be against it? This is probably the most important issue, precisely because it is here that the Plan is the weakest. I think that EPA has largely missed the point, because it has not correctly defined the problem. The single action EPA could take that would have the most impact on encouraging innovative technology would be to get out of the command and control business once and for all. The highest priority of this regulatory review should be for EPA to identify areas where it can move from command and control regulation to performance-based standards. A fruitful initial target? CERCLA and the NCP. EPA does not have to privatize Superfund cleanups as several states have done; that would require legislation. Even without privatization, it could simply set standards for what constitutes a significant risk and require PRPs to eliminate such risks. I promise, innovation will follow. Not only that, but EPA could eliminate a significant percentage of its existing CERCLA staff, or redirect that staff to more productive uses. 

EPA is taking comment on the proposed plan, at least through June 27, 2011. Get your comments in here. I am the eternal optimist, though the 7-year delay in implementing an e-manifest program should probably give me some pause as to how quickly EPA can really reform.

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As some of my clients know all too well, I’ve been spending a lot of time on some Superfund matters recently. Although I can’t remember a period when I didn’t have at least one moderately active Superfund case, significant immersion in complex remedial decision-making and negotiations provides an unwelcome reminder just how flawed CERCLA is. Almost 20 years after the acid rain provisions of the Clean Air Act ushered in wide-spread acceptance of the use of market mechanisms to achieve environmental protection goals and the state of Massachusetts successfully privatized its state Superfund program, the federal Superfund program, like some obscure former Russian republic which remains devoted to Stalinism, is one of the last bastions of pure command and control regulation.

Can anyone tell me why the remedy selection process takes years and costs millions of dollars – before any cleanup has occurred or risk reduction been achieved? Can anyone tell me why, after the remedy has been selected, EPA has to spend millions of dollars – charged back to the PRPs, of course – to oversee the cleanup? Oversight costs can easily exceed 10% of cleanup costs, while oversight during the remedial design and feasibility study process sometimes seem to be barely less than the cost of actually performing the RI/FS.

While there are certainly a multiplicity of causes, there are two factors which greatly contribute to the problem. One was, coincidentally, highlighted in a post today by my friend Rob Stavins. As Rob noted, unlike the acid rain program, which was new at the time, the Superfund bureaucracy is well entrenched and there are a number of actors with a vested interest in maintaining the status quo. 

The second issue relates to the genesis of the Superfund program, as well as its continuing raison d’être. Whenever EPA has ranked relative risks from different environmental hazards, Superfund sites come in at the bottom. However, if you think back to Superfund’s origins, what comes to mind? Love Canal and the Valley of the Drums – and some concerned near-by residents who rallied around a cause to ensure that the problem would be addressed. As renowned risk communications expert Dr. Peter Sandman has noted, there is not necessarily a significant correlation between actual risk levels and public outrage, and it’s not possible to decrease outrage simply by providing accurate information about risks.

In short, the public is outraged by hazardous waste sites and does not trust PRPs to clean them properly. All of those EPA oversight costs are, in large part, intended not to decrease risk, but to lower outrage.  Outrage is understandable in some circumstances, and efforts to reduce it are laudable, but is it really an appropriate use of scarce environmental protection resources to spend the money that gets poured into Superfund sites?

There has to be a better way. Indeed, there is a better way. It’s called a privatized system in which PRPs have to meet well-defined cleanup standards, but are allowed to do so on their own, in whatever manner is most cost-effective, subject to audits by regulators. Privatized programs such as the one in Massachusetts are not perfect. However, their flaws – which largely stem from a failure to fully support privatization -- pale in comparison to the waste that is the federal program under CERCLA.

In other contexts, I’ve called on the Obama administration to embrace regulatory reform. Why not start with Superfund? Notwithstanding Rob Stavins’ point about the difficulty of overturning an entrenched status quo, if the states could do it, why not the federal government?

Besides, I have an entrenched personal reason for seeking Superfund reform. This stuff drives me nuts.

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