Your company generated hazardous wastes. You took great pains to have it disposed of properly. The waste site was badly run. Now, the government wants you to pay the added price for cleaning up.
IT IS ONE OF THE FAILINGS OF GOVernment that the terms of the environmental debate have been set by people who, in the end, have very little to say about whether the next generation of Americans will enjoy clean air and water. Based on the self-righteous pronouncements of the Sierra Club, you would be led inevitably to the conclusion that pollution is the by-product of uncontrolled corporate greed. On the other hand, were you to be guided only by the nostrums of the National Association of Manufacturers, you might conclude that overzealous enforcement of draconian environmental laws has spurred the decline of American capitalism.
As often is the case, the reality is so much more interesting than that. Between the tragedy of Love Canal and the comic farce of the snail-darter caper lies a vast field of economic and moral ambiguity. Simple questions -- How clean is clean? Whose fault is it that this well is polluted? -- do not lend themselves to simple answers. Heroes and villains turn out to be hard to find.
What follows is one chapter in the unfolding environmental story. It opens in New York State in 1970, an early moment in official environmental history. Up to that point, most businesses generating industrial wastes were in the habit of simply throwing their goop into local dumps or letting it collect in oozy lagoons. A new environmental awareness called those disposal techniques into doubt, and many companies responded in what would have been considered, at the time, a thoroughly responsible manner.
Among them was Schenectady Chemicals Inc. In the process of manufacturing synthetic resins, which are used in industrial processes, the company generated spent solvents in prodigious quanitities. Disposing of the substances in the most environmentally sound way -- by burning them -- was at least twice as costly as burying them in a nearby landfill. But it was a cost Schenectady Chemicals was willing to bear.
To burn its wastes, Schenectady Chemicals contracted with a company in Oswego, way upstate, with the high-sounding name of Pollution Abatement Services of Oswego Inc. (PAS). For two years, the company shipped to PAS 1 million to 2 million gallons of spent solvent. The cost of incineration came to $50,000 to $100,000 -- not a tremendous burden for a $30-million chemical company, but not exactly petty cash, either.
At around the same time, Alcan Aluminum Corp., an American subsidiary of a $6-billion multinational, had begun to rely on PAS in an even bigger way. Its 4 million gallons of rolling oil emulsion came from an Oswego plant that manufactures aluminum sheets for beer and soda cans. "We ended up at PAS the way most people did," says Alcan attorney Larry Salibra. "We called up the New York Department of Environmental Conservation [DEC] and asked where we should go."
Not all of PAS's customers were so large. Industrial Oil Tank Service Corp., in Verona, N.Y., for example, was a $1-million company in the business of cleaning out the residual sludge from the bottom of fuel tanks -- a brew of rust scalings and lead compounds. While many of its competitors were still dumping this mix at local landfills, owner John Hitchings decided to play by new rules, and inquired at DEC for possible solutions. PAS, with a state incinerator permit, was among the recommended companies, and with that assurance, Hitchings sent along 11 large drums of waste in 1974. The cost was about $10 a drum.
Jones Chemicals Inc., located near Rochester, N.Y., is in the business of repackaging chlorine for use in water purification. Back in 1973 and 1974, Jones ran a sideline business of using some of its trucks to transport waste for other companies, and in the course of pursuing this, Jones's trucks dropped off 21,000 gallons of somebody else's waste one day, as requested, at PAS's site in Oswego.
In time, these four companies, and dozens more, would come to learn much more about PAS. For rather than becoming simply customers, these companies were soon to become, in effect, PAS's environmental guarantors, responsible for its bad management, bad luck, and bad judgment. And instead of being regarded as law-abiding corporate citizens, they would find themselves branded by the government and the local press as environmental outlaws.
Pollution Abatement Services was the brainchild of three businessmen and an attorney who saw the possibility of a commercial bonanza in the growing public concern about hazardous-waste disposal. The four included an attorney, William Hoag; an electrical engineer, Norris D. Jones; an insurance agent, H. Willard Pierce; and a metallurgical engineer, Jack Miller. With years of metal-melting experience at Aluminium Company of America and Reynolds Metals, Miller was the moving force among the founders, and when their Oswego operation opened in 1971, it was Miller who served as its vice-president of sales and operations.
PAS's plans were greeted enthusiastically by Oswego County officials, who had been concerned that, for lack of alternatives, local companies would be dumping liquid wastes into the Oswego River, or Lake Ontario, and even onto vacant farmland. PAS, they reasoned, would provide a safe and intelligent alternative. And to make it possible for PAS to get up and running, the county donated about 15 acres for the project and helped the company secure a $113,000 start-up loan backed by the Small Business Administration. An additional $400,000 investment from the founders and others completed the financing, which made possible the construction of a giant incinerator capable of heating up to 2,700 degrees Fahrenheit and reducing liquid hazardous waste virtually to nothing.
With the site secured and the incinerator in operation, customers came running, just as predicted. They included some of the biggest names in American industry -- General Motors, Du Pont, General Electric, Atlantic Richfield, Union Carbide, Xerox, Dow Chemical, Monsanto -- as well as less well-known small and midsize companies. Three universities and an Air Force base rounded out the client list. Indeed, so heavy was demand for PAS's services that, before long, the company was taking in more waste than it could handle, including solid wastes for which it had no incineration permit.
"We learned quickly that if we insisted on taking only liquids, we didn't get anything," Miller recalls. "Customers wanted to get rid of drums of waste, and the didn't know how to segregate it. To get income, we were forced to take drums that, in many cases, had a foot or more of sediment at the bottom. Well, that sediment did not go through the incinerator, and so we started to build up a terible inventory of drums."
Pricing presented another difficulty. Today, companies generating industrial wastes have come to accept the fact that proper incineration will cost anywhere from $200 to $350 per drum. But back in the early 1970s, when laws were few and enforcement weak, a price that high would have simply encouraged potential customers to continue dumping in landfills at a cost of $4 a drum. As the owners of PAS learned, a price of $8 to $10 per drum was all that the market would bear.
There were problems with the scrubber on the incinerator as well. It broke down repeatedly, and when it did, the barrels just piled up. And even when it was running full bore, it turns out, it wasn't exactly a picture-postcard view for the neighbors. "At night, you'd see a big orange flame shooting out of that son of a bitch," Miller says, almost laughing. "After we got the scrubber working, the flames were no longer there. But we never did solve the odor problem."
Rancid smells weren't the only thing coming from the plant. One neighbor complained to a local newspaper reporter that every time the incinerator "burped," it sent a shower of greasy particles into the air, soiling laundry on his backyard clothesline. Soon a petition was circulating through the neighborhood to have the place closed. "The public outcry was unbelievable," Miller remembers. "We had guys coming into the site at night with shotguns."
By the mid-1970s, however, sagging community relations were the least of PAS's problems. Its backlog of drums was staggering, so much so that untreated barrels had to be moved to satellite storage facilities elsewhere in the area. A plot owned by farmer Richard Clothier received an estimated 1,500 barrels. To a county landfill in the town of Volney went 8,000 drums. Gale Holbrook, a PAS employee who owned an old creamery in the town of Mexico, agreed to store 6,800 drums of liquid wastes -- he stacked the barrels 10 feet high to support the creamery roof where beams had rotted out. There were also the large storage tanks in a two-acre lot off the main street in the city of Fulton, just 50 feet from the east bank of the Oswego River. Finally, there were several truckloads of barrels that a private contractor, Richard Irwin, had crushed and then buried in a ravine on his own property, near a creek that flowed into a nearby pond.
All told, investigators identified eight satellite locations. But for a sorry spectacle, nothing came close to the main site in Oswego. By 1976, the property was littered with some 14,000 drums. On hot summer days, neighbors said, you could actually hear the barrels popping and buckling. The site also featured three lagoons, the largest containing more than a million gallons of water, oils, solvents, and solids. So viscous was the sludge that, years later, government inspectors would throw rocks in it, only to find that they didn't sink.
Between 1970 and 1976, however, there were no inspectors. Although DEC was aware of problems at the site, limited state regulations and bureaucratic confusion prevented anything from being done about it. And, for all its problems, storing the wastes at a badly run PAS site was still preferable to illegal or improper disposal.
While the state might have been somewhat philosophic about the deteriorating situation in Oswego, PAS executives were not. After a September 1976 visit, company secretary Norris Jones pronounced himself "appalled" at the conditions. He found oil and dirty water leaking from the incinerator and some tanks. "What further bothers me," he wrote to president Will Pierce, "is that it appears that this is standard operating procedure and no one even turns a hand to prevent it or clean it up." A month later, Jones resigned his position with the company.
By then, however, it was relatively late in the game for PAS. During the previous April, heavy rains had flooded a lagoon, washing out part of a dike and spilling hazardous fluid into a nearby stream that feeds Lake Ontario. The Coast Guard, spotting the stuff, did a quick cleanup. The U.S. Environmental Protection Agency would later construct a dike to block further spillage, at a cost approaching $500,000.
In July 1977, the EPA filed suit in federal court in Auburn, N.Y., seeking civil penalties against PAS, which by then had ceased operations. The judge, apparently struck by the magnitude of the Oswego debacle, found the company and Jack Miller and H. Willard Pierce liable for the environmental damage and its cleanup (see box, "Justice EPA Style?" page 58).
It hadn't turned out as the good people of Oswego County had hoped. Instead of a crackerjack disposal plant, they now found themselves with millions of gallons of waste, some of it hazardous, most of it in corroding drums. Tests would later show the ground to be heavily contaminated with PCBs, metals, phenols, cyanide, and sulfide. Some of those same substances had seeped into the groundwater and migrated to nearby wetlands and streambeds. Eventually, they made their way into Lake Ontario, the source of drinking water for dozens of communities along its shore.
It was because of such environmental disasters that Congress created the Superfund program, known formally as the Comprehensive Environmental Response, Compensation, and Liability Act of 1980. At the time, no one really knew the scope of the hazardous-waste problem in America, the extent to which drinking waters were threatened, or even the number of problem sites. Spending for the program was authorized at $1.6 billion.
By 1986, when the program came up for renewal, the EPA had a better fix on the problem, if not exactly a better handle on what to do about it. More than 25,000 potentially hazardous-waste locations had been identified, and 950 of the worst ones had made it onto the National Priorities List (NPL) for cleanup. The EPA now estimates that the NPL will eventually grow to 2,000 sites. Another $8.5 billion in Superfund spending was authorized through 1991, with the almost certain prospect that more still would be needed after that.
To meet this challenge, the EPA has hired 3,800 Superfund specialists, including engineers, scientists, and lawyers. But so time-consuming are the cleanups, so thick is the red tape, and so contentious is the legal wrangling that seven years into the effort fewer than 20 sites had been fully cleaned and the costs finally apportioned. With sites being added to the NPL much faster than they are being cleaned up, it is clear the program has become a permanent part of the federal government. Lawyers and consultants and cleanup companies will be going to lunch on Superfund well into the twenty-first century.
Even from its inception, Superfund was a controversial program, no more so than on the question of who would pay for all this cleanup. Congress was explicit on this point -- the "polluters" should shoulder the costs. And so Congress empowered the EPA to enforce the principle of joint and several liability as it relates to any particular site. By this theory, a company that generated as little as 1% of the waste at any one site could be made to pay for 100% of the cleanup if no other generator with sufficient funds could be identified. For good measure, Congress also tacked on a "strict liability" clause to the law, meaning that the government would not have to prove that a company was in any was negligent or reckless in its disposal techniques -- merely to have generated it or transported it to a site would be sufficient to establish liability. By stacking the legal deck in favor of the government, Congress not only intended to shift the bulk of the cleanup costs to American industry, but also to send a strong message to industrial companies about risks in skirting environmental regulations.
"They created a mechanism to take corporate America's money, justly or unjustly, to clean up those sites," says Robert Yunick, a chemist and vice-president at Schenectady Chemicals. "The public thinks the EPA is rounding up the bad guys. It's not. Even the good guys realize that they have no way of fighting this, and that creates a lot of oil feeling about fairness."
It was mostly good guys who were summoned by the EPA to the federal building in Manhattan in August 1983. The 113 companies and organizations represented ranged from General Motors down to one-person outfits, from industries diverse as sporting goods, steel, and forest products. What they had in common was that they had all contracted with PAS for disposal of their hazardous wastes in Oswego. Now, the EPA intended that they should pay for the cleanup.
By the EPA's reckoning, the PAS site was the top Superfund site in New York State, and number seven on the national list. From 1980 through 1982, state and federal regulators had removed some 14,000 drums from the site, and more than a million gallons of lagoon sludge had been treated and discharged. The incinerator had been torn down, a hydrogeological study performed, and moneys obligated for a remedial design that would make the site environmentally sound. Although still incomplete, the EPA was talking about a cleanup that cost in the neighborhood of $3.2 million.
The agency intended to assign the full cost to the 113 entities represented in the room, known in EPA-speak as PRPs, or potentially responsible parties. Despite its shabby management of its site, PAS had done a superb job in cataloging all of its waste-in transactions, and the EPA now had an entire roomful of documents to support its claims against former PAS customers. As the meeting in New York convened, an EPA official passed out a computerized sheet listing every company, its waste shipments, and its percentage of total liability. Then, after outlining the status of the cleanup and the work that remained, the EPA officials left the room so the "polluters" could discuss their predicament among themselves. The collective sense of outrage and injustice was nearly palpable.
Albert Levit, director of technical services for Azon Corp., in Johnson City, N.Y., remembers thinking that the EPA's attitude was narrowly legalistic, without even a hint of sympathy or understanding for the companies. In the mid-1970s, when his was a company with 130 to 140 employees and $20 million in annual sales, specializing in coating paper and film, Azon had sent 82 drums of waste to PAS. The site had been recommended by the state.
"We tried to do the right thing, the legal thing, and we got burned," Levit says. "That's the way most of us felt. We were vilified for doing the right thing."
In his case, Levit said he tried to get the EPA to agree that at least half of the Azon waste was nonhazardous, but "they would not accept any evidence we could show to prove that. Then later, when the records were refined, we learned that one of our shipments -- half of our waste -- never wound up with PAS. It went to a different waste-treatment company altogether. But when we tried to convince the EPA of that, they refused to accept that, too. Now we're just waiting to see if that other company will itself become a Superfund site."
Larry Schongar, environmental affairs director of Jones Chemicals, experienced similar frustrations. Jones was merely a transporter of waste to the PAS site. But now Schongar was to learn that, under the Superfund law, transporters could also be held liable if the original generator could not be located. In this case, the effect of that provision was to leave Jones Chemicals holding the bag for 21,000 gallons of somebody else's hazardous waste. "Everybody who touches it ends up with liability," Schongar complains.
Gary Warfle was in much the same bind. In the 1970s, aside from his small construction firm, Warfle also owned a septic-tank cleanout service in the small town of Bestal. Because his truck was licensed to carry hazardous material, Warfle would sometimes rent it out, with a driver, to pick up and transport industrial waste. On several occasions, the truck took material to PAS, where, as Warfle understood it, the wast was incinerated. Then came that bolt from the blue in 1983.
"After a number of years, when records are gone and memories are dimmed, the EPA comes down and says, 'Whoops, you are a PRP in a Superfund site," says Bruce Becker, Warfle's attorney. "It's a stiff law. I can understand that there is a social purpose behind it, but there's also a social purpose behind licensing these sites to handle material properly. If the state licensed the place, why isn't the state liable?"
The mood in the Manhattan conference room quickly turned ugly. As the companies came to comprehend the extent of their financial exposure, they grew angry -- angry at PAS, angry at the EPA, angry at the Superfund law itself. Many of them wanted to take the case to court. In stepped Francis Kearney, then director of environmental operations for one of the operating companies of Monsanto Co., which so far has been identified as a PRP in about 30 Superfund sites.
"You have an education process to go through," says Kearney, who is something of a Superfund veteran. "There were companies there that day that had never been involved with Superfund. And the thing is, it really is unfair. But the public wants the sites cleaned up, so whether it is fair or not is beside the point. The government has the law on its side, and you don't have a lot of choice. You just have to swallow hard and take your lumps."
At EPA's suggestion, the companies formed a steering committee that could thrash out the issues professionally and speak to the EPA with a single voice. Twelve representatives volunteered and were elected by unanimous acclaim. Kearney was selected as a cochairman, along with attorney Larry Salibra from Alcan.
Among the committee's first choices was whether to accept the offer of EPA's regional counsel for settlement from the group for $3.2 million, the estimated price tag for the cleanup at that time. Horrified at the amount and outraged at the injustice of the whole process, the committee members decided instead to dig in.
Trying to juggle the interests of 113 different parties would, under any circumstances, be something of a taxing assignment. But consider the added difficulty when the companies were being asked to invest cold hard cash in an effort that would yield no return other than lawyers' fees, extra travel expenses, and bad publicity. And that is what running a Superfund steering group is about.
Meeting regularly in New York City and elsewhere, the PAS committee quickly ran into snags. After reviewing their own records, some of the PRPs began to claim that their waste was less hazardous and less toxic than others, and pushed for lower levels of liability -- a process that led to hours of contentious hair-splitting. In addition, 20 or more of the really small-volume contributors withdrew from the settlement process, hoping that the EPA would find them too inconsequential to bother suing. At the same time, more than a few of the larger PRPs began to argue that their wastes had, in fact, been incinerated, so they weren't part of the problem.
But perhaps the biggest blow to the negotiations was dealt by Alcan Aluminum, which was responsible, according to the EPA estimates, for one-fourth of the PAS material. In 1985, Salibra declared his opinion that all but 200 of the 4 million gallons that Alcan had shipped to the site were not hazardous at all, and that he was resigning from the committee and dropping out of the negotiations. Salibra said the company would take its chances and duke it out alone with the EPA in federal court, where its case would turn on some of the finer points of inorganic chemistry.
"The material we sent to PAS, rolling oil emulsion, was 95% water and 5% mineral oil containing trace amounts of lead, cadmium, and chromium configured in insoluble compounds," explains Salibra. "One big question is whether lead is in a form that is harmful. The comparison one might make is with sodium. You put sodium in your hand and it will burn. If you put sodium chloride in your hand, it won't burn -- that's table salt. So the way the chemicals are combined affects whether they are hazardous." Unfortunately for Alcan, the government takes the position that there is no difference between the sodiums and the sodium chlorides, which, in effect, leads to the ridiculous conclusion that just about everything is a hazardous substance.
Up at the site in Oswego, meanwhile, there was more bad news. Scientists had found groundwater contamination as deep as 45 feet below the surface. The fish in the streams flowing away from the property had begun to show low levels of contaminants. And although it was not possible to prove any connection between the PAS site and the overall pollution levels in Lake Ontario, it was still a matter of daily reality to the people who lived around it that while you could swim in it, boat on it, and fish in it, you were supposed to eat not more than one-half pound of fish per week, just to be safe.
In June 1984, the EPA signed its "record of decision" for the PAS site -- its final plan for cleanup. The agency proposed to build a slurry wall around the entire property, and install an underground collection system to catch contaminants before they could leach into the nearby aquifers. Then the EPA proposed to cap the site with an impermeable layer of clay. Groundwater testing would be required for the next 30 years.
As moon-suited construction crews went to work, costs mounted quickly -- the new EPA estimate was approaching $8 million. The steering committee, still bogged down on the big question of apportioning costs among the PRPs, was anxious to reach agreement. In desperation, they called Clean Sites Inc., a nonprofit group of mediators who specialize in bringing adversarial Superfund parties to the table. It was June 1985, 23 months since the PRPs first gathered in Manhattan.
James Kohanek seemed to have spent his life preparing to mediate Superfund sites. A former research chemist and a lawyer both, he had spent six years as an EPA enforcement attorney under Superfund before joining Clean Sites. It took Kohanek nine months to bring about an agreement -- nine months of reviewing voluminous data and refining various proposals. Although he investigated the possibility of assigning costs among the companies based on the kinds and the toxicity of chemicals that they had shipped, as some had proposed, that approach proved too complicated, and in the end the committee opted to allocate costs strictly on the basis of volume.
When the consent decree on the PAS site was filed in October 1987, it set the costs of the cleanup to date at $12.3 million. With Alcan Aluminum the only major recalcitrant party, the settlers' share of that cost came to $9.1 million, or about 74%. Another $2 million is likely to be assessed for further groundwater treatment. And even then the liability does not end. Under Superfund, PRPs are liable for the rest of time.
Among the 82 settlers, Industrial Oil Tank Services, the fuel tank cleaners, got off relatively cheaply -- $2,500. Azon, the paper-coating company, ponied up about $8,000 for its 82 drums. For Gary Warfle's Stage Construction, the bite was significant -- $16,000. Jones Chemicals, the other company that hauled someone else's refuse, paid $15,000.
All of that, however, was small change compared to the bill assigned to Schenectady Chemicals, whose share came to $1.3 million, slightly more than for giant Monsanto. In addition, Bob Yunick, the chemist who steered Schenectady Chemicals through the bureaucratic shoals, estimates that travel and meeting costs and legal fees boosted the tab by at least another $100,000. "It was a very, very expensive experience," he says sadly. His outlook was scarcely brightened when he learned that Schenectady Chemicals was named as a PRP at three big Superfund sites in New Jersey.
As for Alcan, a trial date has yet to be set on its claim that only 200 gallons of its contribution to the PAS site in Oswego were toxic. However, more than its potential $3-million liability rides on its claim. So far, Alcan has been named a PRP in at least eight other Superfund cleanups.
Epilogue: During the past year, the EPA has declared that three of the eight satellite sites set up by PAS are Superfund sites in their own right. According to an engineer from the New York Department of Environmental Conservation, the combined costs of cleanup could well exceed the $12 million expended for the main PAS site in Oswego. And already the word has gone out from the EPA's regional office in Manhattan: round up the usual suspects.