A case history of EPA overkill.

1. Introduction

In July 1993, Environmental Protection Agency (EPA) Chief Carol Browner announced that EPA, through the Department of Justice (DOJ), had filed twenty-four civil lawsuits throughout the United States, demanding millions of dollars in penalties for violations of federal environmental statutes and regulations. In her words, "We're not going to tolerate that kind of behavior. We continue to have companies that think environmental laws don't apply to them, and that is unacceptable."(1)

This is the case history of one of those twenty-four lawsuits.

It also is a story of environmental overkill, one that cries for a reduction in federal regulation of localized environmental problems.

II. BACKGROUND

Taylor Lumber and Treating, Inc. (Taylor), the government's ostensible target, is a small, closely held Oregon corporation (the only two stockholders are sisters) that owns and operates a sawmill and wood treating plant in Sheridan, Oregon. Sheridan is more than a wide stop on a rural road, but not much more. Optimistically, it has a population of 7500; the nearest city of any size is the state capital of Salem, some 30 miles to the east as the crow flies. Sheridan's main claims to fame are that the community hosts an annual Phil Sheridan festival and is the site of a major federal correctional institution.

Taylor began its sawmill operation in the late 1940s and its wood treating plant operation in the 1960s. Its labor force was and is small by national standards, ranging from 115 to 135, depending upon the time of year and the status of the market for its products.

Taylor had long been environmentally conscious, even before that attitude was influenced by such federal laws as NEPA,(2) RCRA,(3) CERCLA Superfund),(4) the Clean Air Act,(5) and the Clean Water Act.(6) It consistently and conscientiously followed the rules and regulations of the Oregon Department of Environmental Quality (DEQ) and for many years was regulated solely by that state agency. Under DEQ, Taylor had begun the process of environmental cleanup at its Sheridan facility, addressing surface contamination from its wood treating operation.

However, Taylor's progress halted when EPA became active in the early 1980s, and particularly in 1988 and 1989 when EPA began making threatening moves to place Taylor on its Superfund list. New EPA rules promulgated in 1990 under RCRA regulating the use of chemicals in wood treating plants further complicated Taylor's progress toward cleanup.(7) One complication was that the new EPA rules had no relationship whatsoever to EPA's Superfund process, which was established to clean up the nation's worst abandoned sites.(8) Taylor's facility was still operating, and Taylor's express goal was to clean up the site and comply with environmental regulations.

To add fuel to the coals kindled by EPA involvement, an incident occurred in 1990 that was to have far reaching effect on the regulatory process then under way.

In August 1990, DEQ received an anonymous report that some eight years earlier Taylor had buried a number of barrels containing toxic wastes in an abandoned, concrete-lined, water storage area (the "vault" at its treating plant. Investigation by the current plant manager disclosed that the report was partially correct. Taylor immediately employed an environmental cleanup firm to reopen the vault and remove and properly dispose of any toxic material. Numerous barrels containing waste (sludge) as well as wood and other debris from the treating plant yard were discovered and removed. After decontaminating the vault, Taylor's experts were satisfied that none of the toxic material in the vault had entered the environment.(9) In ordinary English--no harm, no damage.(10)

Taylor, however, did not stop at just cleaning the vault. To comply with the new EPA wood treating rules, Taylor spent over $1.2 million in 1991 to build a state-of-the-art "drip pad" at its treating plant.(11)

In addition, Taylor ordered its experts to perform an environmental survey of its entire treating plant, prepare a Work Plan to determine the environmental status of the plant, and correct any problems that were found. Taylor submitted the Work Plan, similar to one given to DEQ in 1986,(12) to both DEQ and EPA in November 1991. Taylor was prepared to implement the plan as soon as it was approved.

But that was not to be.

The agencies neither approved nor disapproved Taylor's Work Plan. As a consequence, Taylor's attempts to resolve its environmental problems without further legal problems or litigation were not successful.

Believing it had a hammer to use against a suspected polluter that had engaged in a "coverup"--in this case, the dumping of toxic waste in a vault which then was sealed--EPA sought the help of DOJ without responding to Taylor's November 1991 Work Plan. Without further investigation, DOJ launched its missiles. On June 10, 1993, DOJ notified Taylor that it had violated federal and state laws and regulations in numerous ways, that the penalty for each of the many violations dating back to September 1982 (when the vault was filled and sealed) was $25,000 per day, and that a federal lawsuit would be filed urless Taylor paid a settlement penalty of $1.7 million by June 24, 1993 (fourteen days from the date of notice) and agreed to clean up its Sheridan site.(13)

Like any small company whose net worth is less than $8 million, Taylor felt overwhelmed by a sense of impending financial disaster. Taylor's management was at a loss to understand how its status had changed from an environmentally conscious company to an environmental villain worthy of such a substantial "pound of flesh." Pleas to postpone, negotiate, discuss, and meet with DOJ were of no avail. The fact that Taylor had already spent $1.2 million on its new drip pad and over $130,000 for legal and environmental consultants to clean up the vault made no impact on DOJ's thinking or actions.

And so, on July 15, 1993, a case was filed in the United States District Court of Oregon(14)--one of twenty-four cases filed by DOJ nationwide. DOJ's principal contention was that the former cooling water pond--the vault--was intentionally and surreptitiously used as an unpermitted hazardous waste disposal facility.

In August 1993, the first meeting between DOJ, EPA, and Taylor occurred in Seattle, Washington. It was there that the government representatives learned that their hammer--an intentional dumping and cover-up of polluted material in a concrete-sealed vault-might not have the thrust that led the government to bring this lawsuit. The disclosed facts were that in the fall of 1982, Taylor's maintenance foreman at the treating plant unilaterally and without the management's knowledge decided to fill an abandoned concrete water holding vault with debris gathered from around the mill yard and to cover the enclosure with concrete so that a building could then be erected over the then-smooth and usable surface, thereby making an unusable space usable. To accomplish this objective, his crew knocked down a surrounding concrete railing into the vault and filled the remainder of the open space in the vault with debris from around the yard. Unfortunately, some of that debris included barrels containing sludge from the treating plant retorts, which at the time was not classified as federal "hazardous waste." If released from the concrete vault into the contiguous soil, the chemicals in the sludge would have violated environmental standards; however, there was no indication that any substance deposited in 1982 had escaped the vault before the cleanup in 1990. In other words, no irjury or damage to human health or the environment had resulted from the maintenance foreman's attempts to improve the plant.(15)

With thus information available and disclosed to government representatives, Taylor believed the penalty problems should go away. This was a desirable result because the potential of a major penalty was disturbing to Taylor's lending institution and its bonding companies.

However, that was not to be. Both EPA and DOJ insisted that their policy manual demanded a major penalty.(16) Taylor agreed that an honest mistake had been made but without any damage; that a modest, but not a major, penalty was in order; and that it had been and continued to be willing to take whatever steps were necessary to clean up its environmental problems. AH Taylor wanted were instructions and approval to proceed with its previously submitted 1991 Work Plan. So the balance of 1993 was spent on paperwork complying with EPA regulations, namely, working on a closure plan for the vault and a soil sampling plan for the soil remaining from the 1991 drip pad installation (both of which required numerous amendments and were not finalized until late 1994).

By the end of 1993, Taylor had spent another $170,000 which, when added to the $130,000 spent in the 1990-91 period, totalled $300,000 spent on legal and environmental consultants. However, Taylor had not yet spent a dime on actual site cleanup because EPA and DEQ had neither reviewed nor even acknowledged the receipt of plans for site cleanup submitted four years earlier.

In February 1994, DOJ offered to settle the civil penalty portion of its lawsuit for $550,000, an offer quickly rejected by Taylor.(17)

So back to the lawsuit for the litigants. Taylor, concerned about the absence of the Oregon DEQ from the litigation, filed a motion to make DEQ a party to the lawsuit--a motion that came before Federal Judge Robert E. Jones on April 13, 1994. Judge Jones, in a practical example of how to solve a problem, contacted the Oregon Attorney General personally and obtained a commitment that the state was content to let the federal government proceed and would be bound by that action.

With the paperwork aspect well under way and a major legal problem in the lawsuit having been resolved, the parties agreed upon another settlement conference.

By November 1994, when the next settlement conference convened in Seattle, both the government and Taylor were ready for a settlement, and that is exactly what happened. The parties settled the civil penalty claim for $70,000, a far cry from the $1.7 million initially demanded. As the vehicles to complete the settlement, the parties also negotiated and ultimately agreed to a thirty-page Consent Decree and a sixty-one-page Administrative Order on Consent. The settlement contemplates, in effect, that Taylor implement its previously submittedd 1991 Work Plan and pay a modest fine because of the 1982 vault incident, a penalty that Taylor had repeatedly agreed to pay.(18) The result of the settlement is that the government's slat did nothing but run up both Taylor's and the government's legal costs and delay environmental remediation efforts by years.

By February 8, 1995, the documents were signed by the parties and lodged with the federal court to await a thirty-day period of public comment as required by regulation.

And so, finally, on April 10, 1995, there being no adverse comment from the public, the ca-se history of United States v. Taylor Lumber Treating, Inc. came to its end when Judge Jones signed the Consent Decree.

So the careful reader might inquire, "When does any environmental cleanup start?" The answer is somewhat disconcerting; under the terms of the documents, the first such work probably will not occur until 1996, some five years after Taylor offered its second cleanup work plan.(19)

To get to this point, Taylor spent nearly a half million dollars, not a penny of which has been used to clean up the environment.

III. Lessons Learned

Not every case presents environmental agencies, regulations, and programs in as poor a light as this one does. Consequently, it is dangerous and possibly presumptuous to draw major conclusions about the operations of a federal agency from experiences in one civil lawsuit. Nevertheless, certain conclusions seem to clearly emerge based on Taylor's experience over the last seven years in dealing with state and federal environmental agencies.

1. States should assume more of EPA's regulatory authority. Most of EPA's authority should be turned over to state regulators. Except in cases affecting the nation as a whole (for example, acid rain) or transcending two or more states (for example, pollution of the Mississippi River), environmental regulation of matters strictly local in nature (for example, Taylor's operations at Sheridan, Oregon) should be turned over to each state.

2. EPA paperwork is incredible. The focus of EPA today is to require absolute compliance with regulations, which then requires mountains of paperwork at each step along the EPA way. Focus on corrective action of environmental problems seems incidental.(20)

3. EPA regulations are "cast in stone." Little or no discretion is given to field personnel to solve environmental problems in practical ways. Regulations designed for application to polluting steel mills in the Eastern Seaboard have little application to a small business in a rural area in Oregon. EPA representatives in various regions should have discretionary authority to avoid "cast-in-stone" rules when circumstances so require. Flexibility is a must. For example, the former concrete cooling water pond at Taylor's facility did not fit neatly within any one of EPA's descriptions of regulated units. At the outset, the parties struggled with this difficulty. Taylor called the pond a 'tank' while EPA called the pond a "landfill." Eventually, when EPA became bent on resolving the conflict rather than winning it, EPA relented and agreed to designate the pond as a "surface impoundment."(21)

4. Small operators and businesses cannot afford the current regulatory overkill. Taylor has already spent over $500,000 in paperwork and other nonremedial efforts and has yet to begin corrective action. Most of that $500,000 should have been spent on the cleanup of its site.

5. Bureaucracy is the inevitable result of EPA regulatory overkill. To ensure that RFAs (RCRA Facility Assessments), RFIs (RCRA Facility Investigations), hazardous waste permit applications, work plans, health and safety plans, SWMUs (Solid Waste Management Units), AOCs (Areas of Concern), SEPs (Supplemental Environmental Projects), TSDFs (Treatment, Storage, and Disposal Facilities), and so forth, are in compliance with its "cast-in-stone" regulations, EPA must maintain a major staff of scientists, lawyers, accountants, and other workers. Numerous studies indicate that environmental regulation is the source of the largest single body of federal rules.(22) It is not the statutes enacted by Congress that have created this enlarged bureaucracy. The spirit and intent of those statutes are not the problems; all of us care about our environment. Rather, it is the myriad of poorly drafted, set-in-concrete regulations which lack flexibility that have inevitably led to a bloated federal environmental bureaucracy.

IV. CONCLUSION

As one observer noted, the fast growth of environmental regulation at all levels of government and their arbitrary enforcement create the problems.(23) Those regulations place an enormous burden on businesses just to keep abreast of, much less interpret and fill out, all the compliance reports.(24) Hopefully, Taylor's experience will serve as an impetus for slowing the runaway freight train of environmental regulation and infusing some common sense. No one questions the need for environmental regulation, but it must be done with more focus on cleanup, less focus on paperwork and process, more flexibility, and more authority at the local level.

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Robert H. Nelson. Lanham, MD: Rowman & Littlefield Publishers, Inc., 1995. 373 pp. $61.50 Clothbound, $24.95 Paperbound.

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Principles of International Environmental Law, Volume I: Frameworks, Standards, and Implementation

Philippe Sands. New York, NY: Manchester University Press, 1995. 773 pp. $150.00 Clothbound, $49.95 Paperback.

This comprehensive introduction to international environmental law begins with a review of the general principles of international law, including discussions of international law-making, regulation, and compliance. Sands then examines, by category, specific environmental problems and attempted international solutions, including activities affecting the atmosphere, oceans and seas, freshwater resources, biological diversity, hazardous substances, waste, the polar regions, and the European Community. The volume concludes with discussions of techniques for implementing international environmental law, including environmental impact assessment, environmental information, liability and compensation for environmental damage, issues of international trade and competition, and issues of financial resources, technology, and intellectual property. The volume includes materials from the 1992 United Nations Conference on Environment and Development. Documents in International Environmental Law, Volume II and Documents in European Community Environmental Law, Volume III have also been published and gather together most of the important documents for international environmental law.

Sun Power: The Global Solution for the Coming Energy Crisis

Ralph Nansen. Ocean Shores, WA: Ocean Press, 1995. 252 pp. $14.95 Paperbound.

In this innovative book, space engineer Ralph Nansen offers human-kind a pollution-free energy plan: the use of solar power satellites. The need to develop an alternative energy source has become one of the most urgent problems of our century. Oil shortages of the past have forced us to realize the limited availability of that resource. Also, the pollution created by today's energy sources-foul air, radiation poisoning, oil-slicked waters, and acid rain--demand that we come up with a "clean" source of energy. Nansen looks to space to find the solution. Sun Power proposes a plan to capture solar energy in space by using solar power satellites that will transmit energy down to earth. This plan is more effective in generating power than land-based solar energy devices, because capturing solar energy in space will not be affected by the weather. Furthermore, the method generates no hazardous pollution. Nansen's insights into the technical aspects of the plan are complemented by his ability to communicate his ideas in an easy-to-understand language.

Green Politics Three

Edited by Wolfgang Rudig. Edinburgh, Great Britain: Edinburgh University Press, 1995. 282 pp. $45.00 Paperbound.

This work is the final volume in a trilogy that offers a comprehensive account of the academic works on green movements and political parties around the world. This volume brings together articles written by various international experts on environmental politics and concentrates on the theoretical aspects of ecologism and the importance of the left-right dimension for green theory and practice. Articles in the book explore the theoretical underpinnings of environmental action, analyze the theory and activities of European and American Green Parties, and offer insightful comparisons of eco-groups Green Peace and Earth First!. Green Politics Three will be useful both as an introduction to international green politics and a guide for students of comparative politics, environmental studies, and sociology.

The Politics of Nature: Explorations in Green Political Theory

Edited by Andrew Dobson & Paul Lucardie. New York, NY: Routledge, 1993. 240 pp. $18.95 Paperbound.

Andrew Dobson and Paul Lucardie bring together a number of essays on green political ideas, identifying and exploring the relationships between these ideas and liberalism, anarchism, feminism, social democracy, individualism, critical theory, and Christianity. Although the contributors to the Politics of Nature come from a variety of disciplines, including philosophy, political science, sociology, and economics, the chapters are not purely theoretical; some examine social policies and direct democracy. Scholars and students of politics, philosophy, and environmental studies will be particularly interested in the ideas presented by the various contributors.

Environmental Effects of Mining

Earle A. Ripley et al. Delray Beach, FL: St. Lucie Press, 1996. 356 pp. $65.00 Hardbound.

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Risk VS. Risk: Tradeoffs in Protecting Health and the Environment

Edited by John D. Graham & Jonathan Baert Wiener. Cambridge, MA: Harvard University Press, 1995. 337 pp. $39.95 Clothbound.

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Readings from the Environmental Professional: Risk Assessment

Edited by John Lemons. Cambridge, MA: Blackwell Science, Inc., 1995. 209 pp. $24.95 Paperbound.

Readings from the Environmental Professional: NATIONAL Environmental Policy Act

Edited by John Lemons. Cambridge, MA: Blackwell Science, Inc., 1995. 203 pp. $24.95 Paperbound.

READINGS FROM THE ENVIRONMENTAL PROFESSIONAL: NAtural RESOURCES Edited by John Lemons. Cambridge, MA: Blackwell Science, Inc., 1995. 175 pp. $24.95 Paperbound.

The Environmental Professional is a series sponsored by the National Association of Environmental Professionals--a professional society made up of over 3500 environmental professionals practicing in various environmental disciplines. The publications contain articles on "current issues and trends in environmental research, technology, law, and government policy that affect the field of environmental science." Currently there are three titles in the compilation series, focusing on risk assessment, the National Environmental Policy Act, and natural resources. In each title, the editor assembles eighteen to twenty recent articles to create a timely comprehensive review on the theoretical and practical application of the title topic.

The Risk Assessment title contains theoretical articles, concentrating on risk assessment theory, risk communication, and risk perception. Other articles concentrate on the application of these theories to fields such as water resource management, pesticide risk-benefit analysis, and evaluation of hazardous waste management facilities. The National Environmental Policy Act title offers articles of varying emphasis, including an overview of NEPA's role, purpose, and efficacy, a procedural guide to NEPA, and working with NEPKS environmental impact assessments and statements. The Natural Resources title contains articles focusing on theoretical and practical problem-solving regarding protection of natural resources. Sample articles deal with agricultural, forestry, and construction impacts upon the wilderness, climate, and wetlands.

(1) Casey Bukro, EPA Making Polluters Go to Prison, The Oregonian, Aug. 1, 1993, at K1. (2) National Environmental Policy Act of 1969, 42 U.S.C. [subsections] 4321-4370b (1988 & Supp. V 1993). (3) Resource Conservation and Recovery Act of 1976, 42 U.S.C. [subsections] 6901-6992k (1988 Supp, V 1993). (4) Comprehensive Environmental Response, Compensation, and liability Act of 1980, 42 U.S.C. [subsections] 9601-9675 (1988 & Supp. V 1993). (5) Clean Air Act, 42 U.S.C. [subsections] 7401-7671q (1988 & Supp. V 1993). (6) Federal Water Pollution Control Act (Clean Water Act), 33 U.S.C. [subsections] 1251-1387 (1988 Supp. V 1993). (7) Eg., 40 C.F.R. [subsections] 265.440-.445 (1994) (regulating drip pads). (8) The wood treater rules promulgated under RCRA were designed to regulate operating wood treatment facilities, whereas the Superfund program was designed for the cleanup of disposal sites. Compare 40 C.F.R. [sections] 265.440 with 42 U.S.C. [sections] 9607 (1988). Taylor foresaw the prospect of having to answer to two programs (the RCRA regulations and the Superfund program) regarding the cleanup and management of its treatment facility. Because of RCRA's emphasis on active ongoing operations, Taylor sought and received permission to enter the Oregon State RCRA program in March 1991. (9) Materials found in the vault included concrete rubble, 116 35-gallon drums filled with sludge, treated lumber, and miscellaneous materials such as visquine and scrap metal. (10) However, as noted later, the report of Taylor's experts apparently led someone in the government bureaucracy to conclude that Taylor was a polluter and had tried to 'cover up" its pollution. In the wood treatment process, logs are treated with chemical solutions in an enclosed cylinder known as a retort. The treated logs are then removed from the retort. The drip pad is a concrete pad constructed at the exit from the retort to capture drippage from logs as they leave the retort before being transported to storage areas. (12) In 1986, Taylor had begun assessing the environmental condition of the soil, surface water, and groundwater at its facility under DEQ's supervision pursuant to an NPDES (National Pollution Discharge Elimination System) permit. Taylor had completed Phase I of its investigation and received approval of its Phase II Work Plan when EPA informed Taylor in 1988 that EPA would be conducting its own assessment of the facility to determine whether the site should be added to the National Priorities List (NPL) of Superfund sites. Taylor resisted EPA's involvement because ft duplicated the work Thylor had already commenced and because the NPL listing process would take years to complete. After duplicating much of Thylor's work, EPA finally relented and allowed Taylor to pursue cleanup of the site under the state Superfund, and subsequently state RCRA, programs. (13) The demand letter and the subsequent lawsuit alleged that Taylor's storage or disposal of hazardous waste in the vault violated federal and state statutes and regulations concerning the treatment, storage, and disposal of hazardous waste, including 42 U.S.C. [sections] 6925 (1988) (storage without a permit), 40 C.F.R. pt. 265, subpt. B (general operating requirements), subpt. F (groundwater monitoring requirements), subpt. G (closure and post-closure requirements), subpt. H (financial assurance requirements for closure and post-dosure and third-party liability insurance requirements), and subpt. N (landfill requirements). (14) United States v. Taylor Lumber & Treating, Inc., No. 93-858-JO (D. Or. filed July 15, 1993). (15) One might question whether, despite the absence of actual irjury, the vault posed a threat to human health or the environment The answer is very little, if any. The vault was made of thick concrete, had no leaks, and was completely enclosed by a reinforced concrete cover. Furthermore, by the time EPA became involved, Taylor had removed the contents and sent them to a licensed disposal facility, and the vault had been cleaned and backfilled with pea gravel. (16) See U.S. Envtl. Protection Agency, RCRA Civil Penalty Policy (Oct. 1990). (17) The other portion, or component, of the lawsuit was EPA's request for injunctive relief ordering Taylor to clean up the facility ("corrective action"). Taylor had wanted to clean up its facility since it began working with DEQ in 1986, but Taylor had been forestalled by EPA's Superfund assessment and later by EPA's and DEQ's failure to act on its 1991 Work Plan. Therefore, Taylor did not contest the need for corrective action at the facility. (18) In a nutshell, the work Taylor will perform includes assessing the nature and extent of soil and groundwater contamination at the site and then implementing measures to contain or clean up contamination that poses a threat to human health or the environment. The project will take years to complete, and the estimated cost for the first year alone is $217,500. (19) See, eg., Taylor Lumber & Treating, Inc., Administrative Order on Consent, U.S. EPA Docket No. 10-94-0244-RCRA (Jan. 1995), and attachments A-D to the Order. (20) See, e.g., id.; Taylor Lumber & Treating, Inc., 60 Fed. Reg. 9860 (Feb. 22, 1995) (consent decree). 21 Although this little round robin in semantics may seem trivial, the end result will probably substantially decrease the cost to Taylor of 'clean closing" a "surface impoundment" rather than a "landfill." (22) See, e.g., Whose Business Is It, Anyway?, The Bus. J., Nov. 25, 1994, at 9. (23) See Brent Bowers, OSHA to Mix a Little Mercy with Latest Crackdown, WALL ST. J., Feb. 1, 1994, at B2. (24) Id.

(*) Norman J. Wiener, J.D. 1947, University of Oregon Law School. Since graduating, Mr. Wiener has, except for military service in the Korean War, practiced law as a trial lawyer with the current law firm of Miller, Nash, Wiener, Hager & Carlsen in Portland, Oregon.

Clifford B. Olsen, J.D. 1949, Willamette University College of Law. Mr. Olsen practiced law until 1969, when he became a circuit judge in Multnomah County, Oregon. Since he left the bench in 1989, he has been of counsel with Miller, Nash, Wiener, Hager & Carlsen in Portland, Oregon.

Jerry B. Hodson, J.D. 1987, UCLA School of Law. Since graduation, Mr. Hodson has been an associate at Miller, Nash, Wiener, Hager & Carlsen in Portland, Oregon, practicing with an emphasis in environmental litigation.