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Cleanup Enforcement Program FY 2014 Accomplishments
The U.S. Environmental Protection Agency’s (EPA) cleanup enforcement program protects human health and the environment by getting those responsible for a hazardous waste site to either clean up or reimburse EPA for its cleanup of sites and facilities.
Through the cleanup enforcement program, the Agency continues to pursue two strategies: “Enforcement First” and cost recovery, which provide money and commitments to clean up sites and conserve federal funds. EPA takes enforcement actions at sites where viable, potentially responsible parties (PRPs) exist, requiring them to pay for or perform site cleanups. Enforcement enables the Agency to focus appropriated funds on sites where PRPs either do not exist or lack the funds or capability to conduct site cleanups.
In fiscal year (FY) 2014, EPA obtained more than $453.7 million in commitments from responsible parties to clean up Superfund sites. Additionally, responsible parties agreed to reimburse $57.7 million of EPA’s past costs from cleanup work at Superfund sites. Since 1980, EPA has attained over $39 billion in commitments from responsible parties. Of this amount, more than $32.9 billion has been committed to investigate and clean up Superfund sites, and more than $6.4 billion represents reimbursements to EPA for its past costs.
The cleanup work commitments by PRPs will address 870 million cubic yards of contaminated soil and ground water. This amount exceeds the FY 2014 target of 225 million cubic yards. Of the 870 million cubic yards, 15 million cubic yards will address contaminated soil, which is enough to cover approximately 2,800 football fields with three feet of dirt, and 855 million cubic yards will address contaminated ground water, which is enough to fill approximately 260,000 Olympic sized swimming pools.
The cleanup enforcement program’s FY 2014 accomplishments included work on landmark cases and addressing cleanup work and cost recovery as follows:
- Working with the Department of Justice (DOJ) to secure more than $5 billion in a fraudulent conveyance claims case to address cleanup activity at over 2,700 sites in 47 states.
- Pursuing bankrupt companies for environmental liabilities at facilities and sites across the country.
- Promoting cleanup of contaminated sediment sites across the country.
- Developing a robust insurance practice accessing general liability insurance policies to recover cleanup costs.
Fraudulent Conveyance Settlement to Provide more than $4.4 Billion for Environmental Cleanup
The vigorous pursuit of a fraudulent conveyance case associated with the Tronox bankruptcy proceedings resulted in the lodging of a settlement agreement that will secure more than $4.4 billion for environmental cleanup at contaminated sites across the nation. The United States and the bankruptcy estate, represented by a trust, brought a lawsuit to hold Kerr-McGee Corporation and related subsidiaries of Anadarko Petroleum Corporation accountable and require them to repay the value of the assets fraudulently conveyed from the old corporate entity.
With the intent of evading environmental liabilities as well as other liabilities, Kerr-McGee created a new corporate entity (New Kerr-McGee), and in 2002 and 2005 transferred its valuable assets to the new company. The legacy environmental liabilities were left behind in the old company, which was renamed Tronox. As a result of these transactions, Tronox was rendered insolvent and unable to pay its environmental and other liabilities. In 2009, Tronox filed for bankruptcy. On February 11, 2011, Tronox resolved its environmental liabilities with EPA, other federal, state, and local agencies, and the Navajo Nation relating to numerous contaminated sites around the country. Specifically, the Tronox bankruptcy settlement provided $270 million and 88% of Tronox’s interest in the fraudulent conveyance case to the governments and bankruptcy-created trusts for cleanup costs incurred or to be incurred at these sites.
On April 3, 2014, the parties in the fraudulent conveyance case reached a settlement that, once approved, will provide more than $4.4 billion for environmental cleanup. EPA will receive $2 billion pursuant to the settlement. The settlement agreement was approved by the bankruptcy court on November 14, 2014. More information from the fraudulent conveyance settlement case summary Web page.
Bankruptcy Settlement with Kodak Secures over $49 Million for Site and Facility Cleanups
The cleanup enforcement practice includes seeking costs for past and future cleanup from parties who have declared bankruptcy. While bankruptcy law entitles a party to obtain a fresh start through the bankruptcy process, bankruptcy law also permits creditors, such as EPA, to assert and recover on claims that they may have against the bankrupt party. EPA vigorously pursues claims for cleanup at sites from PRPs who have filed for bankruptcy. EPA collects to the fullest extent it can on its claims in bankruptcy while still adhering to the rules and goals of bankruptcy law.
After the Eastman Kodak Company (Kodak) filed for bankruptcy on January 19, 2012, DOJ, on behalf of EPA, filed a proof of claim stating that Kodak has various obligations under the Resource Conservation and Recovery Act (RCRA) at the Eastern Business Park (EBP) and Genesee River in the City of Rochester, N.Y. and the Town of Greece, N.Y., and under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, commonly known as Superfund) at the Mercury Refining Superfund Site in Colonie and Guilderland, N.Y., and the Fairlawn Well Field Superfund Site in Fair Lawn, N.J.
On May 13, 2014, the U.S. Bankruptcy Court for the Southern District of New York approved three settlement agreements involving EPA, DOJ, Kodak, and the New York State Department of Environmental Conservation (DEC). The settlement agreements provide the following:
- Kodak committed to fund a trust with $49 million for cleanup at the EBP site and DEC agreed to fund any additional costs of cleanup between $49 million and $99 million. Any costs over $99 million will be equally shared by Kodak and DEC.
- EPA and DEC will investigate contamination in the Genesee River and implement the selected cleanup remedy.
- For costs incurred in past cleanup work, Kodak will pay EPA $2 million for the Fair Lawn site and approximately $750,000 for the Mercury Refining site, plus additional amounts for each site pursuant to the terms of Kodak’s plan of reorganization.
Additional information is available from the Kodak bankruptcy settlement case summary Web page.
Enforcement Mechanisms Work to Achieve Cleanup of Contaminated Sediment Sites
EPA is actively promoting collaboration between the Clean Water Act (CWA) and Superfund at contaminated sediment sites across the country. The Superfund program is overseeing the cleanup of contaminated sediment sites costing hundreds of millions, and sometimes billions, of dollars. EPA and the states are responsible for issuing water discharge permits that may impact the same sediments that a Superfund cleanup is remediating. The water program is also responsible for addressing impairments to waterways, some of which are linked to contaminated sediments. Controlling the source of pollutants is integral to both the CWA and Superfund programs.
Different types of enforcement mechanisms are used to help achieve our cleanup goals in these environments, including orders, settlement agreements, and consent decrees. EPA is encouraging collaboration between CWA implementers (EPA and states) and Superfund implementers to achieve more effective and sustainable results that meet the goals of both programs and protect human health and the environment.
Many of the contaminated sediment sites are in urban areas and ports. For example in FY 2014, EPA issued orders to multiple PRPs, including the City of New York, to address the significant historic and ongoing sediment contamination at the Gowanus Canal Superfund Site. Completed in 1869, the Gowanus Canal was once a major transportation route for the then separate cities of Brooklyn and New York City, N.Y. As a result of years of discharges, storm water runoff, sewer outflows and industrial pollutants, the Gowanus Canal has become one of the nation's most extensively contaminated water bodies.
Under the orders, the settling parties will conduct remedial design at the Gowanus Canal site. Remedial design is the phase in Superfund site cleanup where the technical specifications for cleanup remedies and technologies are developed. Additional information on the orders is available from the case summary on the Gowanus Canal remedial design orders.
Agency’s Cost Recovery Efforts include Investigation of General Liability Insurance Policies
EPA continues to successfully pursue old general liability insurance policies, issued to responsible parties for recovery of cleanup costs when the responsible parties cannot pay because of insolvency, bankruptcy, or other financial hardship. In FY2014, over $15 million in settlements were negotiated and will be recovered through these insurance policies. From 2006 to 2013, EPA recovered approximately $86 million through negotiated insurance settlements for a total of over $100 million.
While the primary focus of EPA’s insurance recovery practice remains on older commercial general liability policies, the Agency has recently enhanced its expertise in pursuing modern environmental impairment liability policies.
Information on the Agency’s cleanup enforcement program is available from the Agency’s Waste, Chemical, and Cleanup Enforcement website.
Summaries of cases and settlements for FY 2014 are available on the Agency’s Cases and Settlements Database.