Idahoan EPA Regional Director Blocks Superfund Cleanup
January 30, 1990
SUBJECT: Special Review of EPA Handling of the Bunker Hill Superfund Site, Report Number E6FGGO-13-2005-0400006
TO: F. Henry Habicht II Deputy Administrator
Enclosed is a copy of the Special Review conducted on the Bunker Hill Superfund Site. Our work in Region 10 developed additional information about the enforcement and permitting activities in this Region's water and air programs. Therefore, we are expanding our initial effort to cover these additional areas. A second report will be provided to you when this work is completed.
Of primary concern to us is the fact that nearly every Region 10 employee who we interviewed about the Bunker Hill site expressed fear of retaliation from the Region 10 Administrator because of their cooperation with this office. Such retaliation, should it occur, would be an extremely serious violation of several federal statutes which provide protection to employees who furnish information in matters of this kind. It is therefore vital that you take whatever action is necessary to ensure that no retaliatory action is taken against EPA employees because of their cooperation during this inquiry. We intend to monitor this situation closely as we continue our work in this Region.
As discussed in-the attached report, we found that the Regional Administrator took extraordinary steps to prevent formal enforcement actions from being initiated against the owners of the Bunker Hill Superfund site. As a result, the smelter complex was allowed to deteriorate to the point that it was declared a public health hazard by the Agency for Toxic Substances and Disease Registry; prompt action was not taken to protect the public from contamination resulting from salvage operations; and partners in the Bunker Limited Partnership moved company assets to other corporations through stock and property transfers which is expected to complicate attempts to recover cleanup costs.
In view of the serious nature of these ongoing problems at Bunker Hill, we recommend you ask senior EPA management at Headquarters to provide oversight to ensure the site is being cleaned up with all due speed and that all necessary safeguards are employed to protect EPA's and the public's interest at the Bunker Hill site.
During our review, we were approached by numerous regional employees who expressed high levels of mistrust and frustration about the handling of issues in the air and water programs similar to those we saw in the handling of the Bunker Hill site. Since our work in this area is not complete, we are in no position to make overall recommendations regarding what further actions might be needed in Region 10. However, we will provide you with such recommendations when our followup work is completed.
If members of your staff have questions or wish to discuss the report or our conclusions further, please have them contact Kenneth A. Konz, Acting Assistant Inspector General for Audit, on 382-4106.
John C. Martin
WASHINGTON. D.C. 20460
OFFICE OF THE INSPECTOR GENERAL
January 30, 1990
PURPOSE AND SCOPE
We performed this review in response to a confidential complaint against the Regional Administrator, Region 10. The complainant alleged that the Regional Administrator (RA) blocked or delayed the normally routine actions of the Hazardous Waste Division (HWD) to enforce the Superfund requirements against the Bunker Limited Partnership (BLP), the owners of the Bunker Hill Superfund Site. The specific allegations were the following:
We performed this review in EPA Headquarters; Region 10, Seattle, Washington; Idaho operations Office, Boise, Idaho; and the Bunker Hill Superfund Site, Kellogg Idaho. We met with and discussed the events relating to the allegations with the CERCLA Enforcement Division Director in Headquarters, the Region 10 Administrator, and officials in the Office of Regional Counsel and the Hazardous Waste Division in Region 10. These individuals were responsible for managing the cleanup process and had knowledge of the history and the sequence of events at the Bunker Hill Superfund Site.
We also met with officials from the Agency for Toxic Substance and Disease Registry (ATSDR) to discuss the events leading up to its inspection of Bunker Hill and the subsequent report, Idaho State officials to get their views of the progress at the site, and an Idaho Public Health official located in Kellogg to tour the facility. We also contacted or met with the past Assistant Administrator, OSWER and a former member of the Regional Counsel for Region 10.
We obtained copies of supporting documents, including official EPA reports and letters, draft documents that were prepared by the HWD staff in anticipation of taking enforcement action, and personal notes recording the subject and content of various meetings and telephone conversations.
The Bunker Hill Superfund Site was listed on the-National Priorities List in September 1983, and is one of the most complex sites in the nation. The site consists of about 21 square miles along 1-90 in the Silver Valley of Northern Idaho. It includes the towns of Kellogg, Page, Pinehurst, Smelterville and Wardner with a total population today of about 5,000 people; the Bunker Hill lead and zinc mine; the smelter complex; and the central impoundment area. Lead and other heavy metals were identified as the primary contaminants.
Mining operations began about 1885, and the first smelter opened in 1917. The smelters produced lead, zinc, cadmium, silver, gold, and alloys of these heavy metals. Other plants in the complex produced sulfuric acid, zinc oxide, and phosphate fertilizers. In 1928, a dike was constructed to contain the mine tailings creating the central impoundment area, which now covers 160 acres and contains waste materials up to 70 feet deep. Mining continues today, but the smelter operations ceased in late 1981.
Almost 75 years of smelter operations have resulted in substantial environmental damage in the valley. During our visit to the valley, we observed the valley downwind of the smelter to be generally defoliated. We were told by the local health department official that the defoliation was due to the high acidic level of the soil caused by smelter emissions. According to this same official, the more critical problem is the extremely high content of lead and other heavy metals in the soil. For example, soil samples taken in Smelterville averaged 3,710 ppm (parts per million) of lead with a range of 110 to 18,500 ppm. We were told that the standard for determining lead contamination in soil is 1,000 ppm. As our objective was not a review of the Bunker Hill Superfund Site, we did not evaluate these numbers. Anecdotally, we were told that in some areas the lead level in the soil is so high that it could be mined.
One of the primary concerns of the public health officials in the area is the ingestion of lead by small children who, along with pregnant women, are the group most at risk. High levels of lead in the body can cause brain and nervous system damage in children, birth defects and developmental impairment in fetuses, and chronic kidney and cardiovascular system damage in adults. However, even low levels of lead in the body may cause more subtle health problems.
The Idaho Department of Health and Welfare has routinely monitored air emissions from the smelter since the 1950's. With the passage of the Clean Air Act, the emissions standard for the smelter was established at a maximum of 1.5 micrograms of lead per cubic meter of air based on a 3-month average. During the first 3 months of 1974, tests were recorded that exceeded 100 micrograms with a 3-month average of 30 to 40 micrograms per cubic meter of air. These emissions were the result of a decision by the Bunker Hill Company to bypass the emissions control equipment after a September 1973 fire destroyed about a third of the equipment's capacity. During the first 3 months of 1974, the smelter discharged approximately 20 years worth of lead emissions into the valley.
In 1974, the local health department tested the blood-lead levels of all the children living in the area. According to the project director, the blood-lead levels were the highest ever recorded. Of the 179 children living within one mile of the smelter, 99 percent had a blood-level over 40 ug/dl (micrograms of lead per deciliter of blood). At the time, anything over 40 ug/dl was considered hazardous. The highest level recorded was 164 ug/dl; 41 children had a blood-lead level over 80, the level established for lead poisoning. These tests resulted in a series of reactions by the State, the Community, and the Company. The blood-lead levels were so high that chelation, the clinical protocol for lead poisoning, was performed on about 15 children; and most, if not all, of the families living in a one-mile radius were relocated.
Annual tests for blood-lead levels have been performed since 1974. These tests have continued to identify a large number of children with high blood-lead levels. In August 1989, 8 years after the smelter closed, eight children out of 275 tested had a blood-lead level over 25 ug/dl, the current standard. The standard for blood-lead levels has been repeatedly lowered as scientists and public health officials learn more about the dangers of lead. The director of the blood-lead testing project told us that in the next year it may be lowered to 15 ug/dl.
In 1968, Gulf Resources and Chemical Corporation (Gulf) purchased the mine, the smelter complex and the central impoundment area. The HWD staff told us that, throughout the 1970's, the Bunker Hill Company, wholly owned by Gulf, had a history of noncompliance and obstructionism toward HWD's efforts to enforce air emissions regulations. The company's typical response was to ask for more specifics, agree to comply and fail to execute action, or simply refuse. With regard to compliance orders, they would require advance notice of inspections and would then ensure that the individuals involved were absent and that the equipment would be shut down at the time of inspection.
Gulf continued operations until late 1981, at which time its smelter and mining operations were terminated. On November 1, 1982, the Bunker Limited Partnership (BLP) purchased the smelter complex, the Bunker Hill Mine, and the related real property.
The HWD staff devoted most of their efforts during 1983 and 1984 to defining the problems at the site. Early on the staff saw a need to divide the project into two parts&emdash;the populated area and the unpopulated area. Dividing the project into two parts allowed the cleanup to progress faster in the populated areas, where more was known about the contamination problems. Therefore, less investigation was required before cleanup could begin. In 1986, six inches of lead-contaminated soil were removed and replaced with clean soil and sod or gravel on 16 public properties. In 1989, lead-contaminated soils were removed from approximately 80 residential properties with children under three years old.
The lack of information about the unpopulated area, including the smelter complex, resulted in considerable uncertainty regarding the pollution problems and their solution. A detailed study of the area had to he completed before any cleanup could commence . HWD staff had the difficult task of defining the study and identifying PRPs.
Any study performed in the area was dependent on the cooperation of the community. However, during their early visits to the area, HWD staff encountered an extremely hostile attitude from the community. This attitude was the result of about 50 percent unemployment caused used by the smelter closure. The community believed that Gulf closed the smelter because of the high cost of compliance with EPA regulations. The community also believed that BLP wanted to reopen the smelter, and these same regulations were preventing them from doing so. The community thought EPA was the cause of their unemployment, and therefore, wanted EPA to stay out of their affairs. In the community's view, jobs were more important than lead contamination.
Primarily in reaction to the attitudes and beliefs of the community, HWD staff determined that Gulf, as the major contributor of the pollution in the area, would be identified as the sole PRP. BLP had purchased the facility after the smelter had closed, and had not contributed to the pollution. Therefore, BLP was not identified as a PRP. The staff believed that any additional PRPs could be named later as conditions at the site changed and/or other companies were identified. The HWD staff discussed this case with the previous Regional Administrator, and they all agreed that this was a reasonable way to proceed. In October 1984, EPA notified Gulf that it was a PRP and entered into negotiations for Gulf to perform the remedial investigation of the unpopulated areas. It was not until May 1987, that Gulf and EPA Region 10 finally reached agreement for the study.
In July 1985, HWD staff learned through a newspaper advertisement that BLP was in the process of disposing of various material and equipment located in and around the smelter. HWD officials were concerned that the lack of proper decontamination procedures could result in a serious health hazard to the recipients of the material. They requested a meeting to determine the extent of the salvage operations. In an August 1985, letter, BLP officials did not agree to a meeting, but assured HWD that they were not engaged in an extensive salvage operation. They were only trying to sell some excess equipment, primarily rolling stock. Continued effort by HWD staff finally resulted in a meeting on January 9, 1986. In this meeting, EPA raised several issues in addition to the salvage activities&emdash;public access to the site, fire prevention, and the identification and containment of various hazardous materials on the site. According to HWD staff, BLP officials were cooperative and agreed to address each of the various issues discussed. BLP officials again assured HWD staff that the salvage operation was very limited, and that they would notify EPA if it continued or expanded.
HWD staff told us that they knew in January 1986, that the president of BLP was the same person as the president of the old Bunker Hill Company and they were familiar with the obstructive and delaying tactics used in the past. However, at that time, HWD staff did not anticipate a continuation of these tactics. It had been over 4 years since the smelter was closed, and it would be prohibitively expensive to reopen it. HWD staff thought the cleanup of the site was the common goal. Subsequent events clearly revealed their expectations to be in error.
THE REGIONAL ADMINISTRATOR'S INVOLVEMENT
We were told by both Headquarters and Region 10 officials that the review and approval of PRP notice letters and administrative orders issued to companies related to a Superfund site are routine procedures that are delegated to the Division Director level in the Regions. The HWD Director stated that it was routine to inform the RA of the status of each Superfund Site, but it was not normal for the RA to require that he approve these documents. According to HWD officials, the RA took an unusual interest in the activities at the Bunker Hill Superfund Site, and gave verbal orders that no document could be issued or action taken relative to this site without his prior approval.
In our discussions with the RA, he stated that he believes more effective and efficient resolution of problems can be achieved through informal negotiations. He, therefore, does not support EPA's penchant for formal orders. As a result, he always attempts to achieve the regulatory objectives of EPA through informal negotiations and agreements.
The RA told us that he was very interested in the Bunker Hill Site. He said that before taking office he met with the Governor of Idaho, who requested EPA emphasize the cleanup of Kellogg. He, therefore, established the Bunker Hill Site as a top priority in the Region. He used the emergency removal of lead-contaminated soil from private yards and public areas of the towns in the Superfund site as an example of progress at the site. He claimed that he was unaware of the conditions at the smelter complex. Upon learning of the conditions&emdash;through the ATSDR report&emdash;he sent BLP and its affiliates a unilateral order to perform specific acts to preclude the release of hazardous material. He also sent notices to BLP and its affiliates stating that they were designated PRPs.
The RA did not think he intervened in the routine activities of the staff. He stated that he got involved only when he was called upon to make a decision. He also denied giving any orders that would prevent the HWD staff from performing their duties. The RA stated that the HWD staff failed to keep him adequately informed; and, until the ATSDR report was issued, he was unaware of the deteriorating conditions at the site. He thought the HWD officials who blame him for preventing enforcement actions against BLP are trying to avoid their own responsibility for consensus decisions that subsequent events have shown to be wrong.
Based on the events that are described in the following sections, we have concluded that, since his arrival in August 1986, the RA delayed or prevented the HWD staff from taking timely enforcement action against BLP. If the enforcement action had been taken when it was first considered necessary, some of the environmental and physical hazards that exist today at the smelter complex would have been avoided.
RA delayed issuance of administrative orders
In October 1986, a fire occurred in the lead smelter facility. The cause was never determined, but HWD staff suspect it may have been started by an employee using a cutting torch to disconnect equipment identified for salvage. Luckily, no serious damage occurred, but considerable concern was raised over the potential hazards if the fire had not been controlled. The potential release of toxic substances present in the smelter could have required an evacuation of the area.
In November 1986, HWD staff drafted an administrative order that would have required BLP to take action to minimize the potential for a fire and to ensure adequate fire fighting capability at the facility. The RA, consistent with his stated desire to resolve conflicts informally, suggested that the HWD staff call BLP officials and negotiate an agreement. We were told that there was general agreement among the HWD staff for this approach. At this time, their contact with BLP officials had been limited, and they did not anticipate any difficulty in negotiating an agreement to minimize the risk of fire.
0n December 2, 1986, the HWD Director formally requested a meeting with BLP to discuss various fire prevention measures at the smelter complex. At a December 11, 1986, meeting, BLP agreed to implement several of EPA's suggestions. However, BLP would not agree to allow an inspection of the smelter complex until July 1987. During the inspection, the HWD staff observed that BLP had taken various fire prevention measures There were differing opinions between BLP and HWD on the effectiveness of the fire-fighting equipment and the availability of sufficient water, the details of which are beyond the scope of this report. However, HWD staff told us that during subsequent visits to the area they observed that most of the equipment had been dismantled.
During the same time that HWD staff were discussing the fire prevention issues, they were also trying to meet with BLP officials to discuss the continuing salvage activities and other issues of concern&emdash;such as access to the property, future use of the smelter complex, fugitive dust control, and the containment of various hazardous materials. In a series of telephone calls, letters and meetings, BLP officials continually stated that they wanted to cooperate, and that they were not trying to deceive EPA. BLP officials also assured HWD staff that they did not plan an extensive salvage operation. With the exception of fugitive dust control, little progress was made on any of these issues.
Toward the end of 1987, an HWD staff member observed a salvage company removing large quantities of railroad ties and rails from the smelter complex. At EPA's request, a local lab performed swipe tests (passing a filter paper across a specified area) on three railroad ties. Analysis of the results revealed extremely high levels of lead. We were told that no standard directly applies in this case; however, as stated before the standard set for determining lead contamination of soil is 1,000 ppm. The swipe tests, listed below, showed the amount of lead on the surface of the ties.
Upon notification of the contaminated condition of this material, a salvage company official told the EPA representative that they had a contract to salvage about nine miles of track. The salvage company had already removed and sold about half the rails and 10 percent of the ties. The remaining rails and approximately 1,000 ties were stacked and ready for removal from the site. The salvage company agreed to wash the remaining rails before removing them from the site. However, an adequate cleaning method did not exist for the ties, so the salvage company agreed to stop removing them.
HWD staff never learned who received the ties that were removed from the site. However, they heard rumors that the ties were sold to a landscape company in the Spokane, Washington area. They also told us that during the next several months the stack of 1,000 ties disappeared. They did not know who took them or where they went.
During their visits to the area, Region 10 staff observed big holes in the sides of the smelter complex where equipment had literally been ripped from the building apparently to be salvaged. This action resulted in the disturbance of large quantities of asbestos-containing material. During their observations, HWD staff could see no indication of any attempt to contain the material. They observed loose material hanging from the building and lying on the ground. They told us that, even after repeated requests, BLP officials did little, if anything, to contain the material.
As a result of BLP's lack of cooperation&emdash;and despite the verbal orders of the-RA&emdash;the HWD Director, with the support of the staff, decided it was time to take action. In a November 12, 1987, letter, he informed BLP about EPA's concern over salvaged material being removed from the Bunker Hill site without notifying EPA and without proper decontamination procedures. Therefore, any future activity would be governed by an administrative order to ensure proper handling of contaminated material. The letter concluded that the terms of the order could be negotiated; however, a unilateral administrative order would be issued if acceptable agreement could not be reached. The HWD Director took this action without notifying the RA because he did not believe the RA would approve.
HWD management officials believe that BLP officials called the RA and complained about the letter. This belief is based on the fact that the RA scheduled a meeting in January 1988, and then called the HWD Director to tell him to attend. The subject of the meeting was the HWD Director's November 12, 1987, letter.
The RA told us that he did not remember anyone from BLP calling him to request a meeting. He said that he hardly knows the BLP officials, so it would be unlikely that they would call him. He remembered attending a meeting with BLP to discuss salvage operations at the site. He told us that he viewed the HWD Director's action as another attempt by HWD staff to take formal action when, in his opinion, informal negotiation would suffice. The RA said that prior to meeting with BLP, he met with the HWD Director and the Superfund Branch Chief to discuss the need to issue an administrative order, and they reached a mutual agreement that an order was not necessary.
In any case, the meeting in January 1988, took place. The HWD staff present at the meeting stated that the RA belittled the issues identified in the November 12, 1987, letter which he indicated were not significant and could easily be resolved. The RA then stated that reasonable people could discuss these issues and reach an agreement that would satisfy everyone. There would then be no need to issue an administrative order. BLP, again, promised to ensure that any salvaged material would be properly decontaminated and they would notify HWD of any new or revised salvage plans. The administrative order was never completed.
According to HWD staff, 1988 was spent trying to negotiate with BLP officials. BLP officials continued to deny they were doing anything wrong, and they continued to deny access to their facilities. The HWD staff told us that the level of frustration was extremely high during this period because of the RA's refusal to allow then to take enforcement action against BLP. The HWD staff believed the situation at the smelter complex was critical because it was becoming a potential health hazard to the community. They said that the RA was repeatedly informed, through informal discussions and formal briefings, about the hazardous conditions at the site. Despite these efforts, the RA would not change his decision.
In the middle of 1989, EPA staff secretly contacted the resident staff of ATSDR to discuss the possibility of performing a public health review at the site. ATSDR staff agreed, and in July 1989, inspected the smelter complex. They determined that the presence of chemical and physical hazards at the smelter complex presented a significant risk to public health. On October 5, 1989, ATSDR issued a Public Health Advisory for the Bunker Hill smelter complex. Public Health Advisories are issued only under extraordinary conditions where the release or threatened release of hazardous substances may pose a serious threat to human health and the environment. ATSDR staff told us that fewer than a half dozen advisories have been issued nationwide since inception of the Superfund program
The public health advisory was based on (1) the threat to human health and life from the significant concentrations of lead, cadmium, arsenic and asbestos in the smelter-complex; and (2) the risk of physical injury due to the unrestricted access to the area and to physical hazards, such as the deteriorated and unsound structures, salvage debris, and open shafts in the smelter area.
Shortly before the ATSDR report was issued, HWD management scheduled a meeting to inform the RA of the reports findings. We were told the RA asked who the ATSDR was and why were they doing a study. He went on to say that nobody died out there, so what was the problem. He then asked if the Region should try to block it. The HWD staff present at this meeting told us they informed the RA that ATSDR is part of the Center for Disease Control and was established by the Superfund legislation to do these kinds of studies. It could not be stopped.
The RA told us that he was aware of the study. He did not elaborate, however, on when he became aware of it. He also stated that he supported the study and did not try to block it.
In October 1989, Region 10 officials conducted an inspection and assessment of the smelter complex and confirmed all of ATSDR's findings. Additional threats requiring immediate actions were observed including approximately 250 drums containing mercury-laden sludge in varying degrees of deterioration and decay. EPA inspectors also observed eight open tanks containing various amounts of sulfuric acid and mercury sludge and a ninth tank containing an estimated 56,000 gallons of 80 percent sulfuric acid and mercury sludge. This tank was extensively corroded. Tests revealed that the thickness of the tank wall had been reduced in places by as much as 68 percent.
As a result of the conditions noted and ATSDR's public health advisory, EPA, on October 24, 1989, finally issued a unilateral administrative order to BLP, Gulf, Mineral Corporation of Idaho, and Bunker Hill Mining Company (U.S.), Inc. for the performance of necessary response actions at the smelter complex. This was about 3 years after the HWD staff first attempted enforcement action against BLP.
RA delayed notification that BLP is a PRP
In 1984, the previous RA and the HWD staff decided to name Gulf as the sole PRP for the Bunker Hill Superfund Site. As mentioned earlier this decision was based on the HWD staff's belief that Gulf was the primary cause of the pollution in the area and the community's resistance to EPA. They planned to name additional PRPs as conditions changed and other companies were identified.
Shortly after assuming his position in August 1986, the RA was briefed on the reasons for the decision to name Gulf as the sole PRP. The RA concurred with this decision and referred to it during our discussions as an established policy.
Almost immediately after being named a PRP, Gulf began to lobby EPA to name other PRPs. In December 1987, Gulf presented a fairly detailed argument for EPA to name more PRPs. Gulf claimed that it was unjust to place all the financial burden on them. There were. many other companies that operated in the area, and these other companies should be required to pay their fair share. Gulf also pointed out that the failure to name additional PRPs could delay site remediation if the cost apportionment issues were not resolved. Gulf then provided a listing of over 25 companies that, in their opinion, should have been identified as PRPs. At the end of the meeting Gulf asked that Region 10 respond to this request by January 1988, or they would take their case to Headquarters.
on January 11, 1988, the HWD Director signed two internal memos addressed to the RA. The memos, a background paper and an option paper, described the changing conditions at the site. In a discussion of equity considerations, the background paper stated that as the operator of the site was responsible for a great majority of the pollution problems at Bunker Hill. However, BLP, through various actions or inactions, had contributed to many of these problems. The paper also established a link between the upstream mining companies and the site contamination. The option paper discussed timing of the PRP notices and then presented options for notifying additional PRPs. According to HWD management, the paper recommended that BLP be immediately named a PRP, and that other companies be named as they were identified.
We were told that the RA refused to accept the recommendation in the paper, and called a meeting to discuss the options. The attendees included the HWD Director, the Superfund Branch Chief, the Site Management Section Chief, and a representative from Regional Counsel. According to the attendees, the RA adamantly opposed-sending BLP a PRP notice letter. During the meeting, the RA asked each member for concurrence on his decision not to name BLP. The HWD staff present at the meeting told us they believed that BLP should be named a PRP, and the paper submitted to the RA clearly supported this belief. However, they all indicated they were intimidated by the RA, and, therefore, they concurred with his position.
At the end of the meeting the RA directed that the recommendation be dropped from the option paper. The two memos were to then be declared confidential and exempt from a Freedom of Information Act request. He then ordered that only four copies be produced and numbered for control purposes.
The RA stated that he was unaware of the HWD staff's changing opinion regarding naming BLP a PRP. He met regularly with the HWD Director and occasionally the Superfund Branch Chief, and they would generally agree on a course of action. He stated that if the Branch Chief had a change of mind, he never stated it directly. He thought that he and the Director were in basic agreement. He admitted, however, that sometime before the fall of 1988, the Director may have changed his mind. We showed him copies of the January 11, 1988, memos addressed to him which presented background and options for naming other PRPs. He denied ever seeing them. He claimed that prior to the March 1988, meeting with Gulf officials, the staff and he met and mutually agreed that the policy would not change. If the HWD staff had changed their collective minds, he was not informed.
In March 1988, the RA and HWD staff met with Gulf representatives to present the Region's position on naming additional PRPs. At the meeting, the RA stated that the decision to name only Gulf was made before his appointment in Region 10, but he continued to support that decision. He then turned the meeting over to the HWD Director to explain the rationale. The Director told us he was completely surprised by the RA's action. He had not expected to have to publicly defend a position which he and his staff no longer supported. However, to avoid looking foolish, he repeated the initial rationale for naming only Gulf. Gulf was apparently furious, and subsequently solicited a decision from Headquarters.
The RA stated he remembered the meeting with Gulf. He believed that Gulf was simply trying to avoid the financial burden of the cleanup. He stated that he believed then, and still believes, that Gulf was primarily responsible for the pollution and should have to pay. He agreed with the policy established by the previous Regional Administrator and saw no reason to change it.
In March 1988, Gulf officials requested a meeting with the then Assistant Administrator for Solid Waste and Emergency Response to discuss the PRP situation at the Bunker Hill site. Between March and June of 1988, Gulf had various contacts, either directly or through counsel, with EPA Headquarters officials. On June 9, 1988, the Vice President and General Counsel for Gulf summarized Gulf's position in a letter to the Director, office of Waste Programs Enforcement. In general, Gulf believed that many other companies contributed to the pollution problems at-the site, and that Region 10 had sufficient evidence to support naming additional PRPs, particularly the current owner of the facility. They also claimed that Bunker Hill was the only significant site where only one PRP was named.
The CERCLA Enforcement Division Director told us that the former AA supported Gulf's argument and agreed that more PRPs should be named. The former AA asked the Director, CERCLA Enforcement Division to work with the Region 10 officials and find some way to resolve the conflict between the RA and the HWD staff. The CERCLA Enforcement Division Director told us that his primary goal was to develop language to modify the PRP notice letter into a form that the RA would accept. On July 29, 1988, the CERCLA Enforcement Division Director sent the revised language to the Office of Regional Counsel in Region 10. His intent was to soften the language so it would not appear as harsh, but still transmit the idea that it was a PRP notice letter. He believed this new language provided an implicit notice rather than the explicit notice that was normally issued. He stated that this was not the ideal approach; but, in his opinion, an average person would read the letter and conclude that it was a notice letter.
The HWD Director told us of a conference call in September 1988, with the former AA, the then Director of the Office of Waste Programs Enforcement, the RA and himself. The purpose of the call was to discuss sending BLP the revised PRP notice letter. According to the HWD Director, the discussion between the RA and the former AA turned confrontational and no conclusion was reached. The RA told the HWD Director that he was not going to discuss this any more, and the HWD Director should continue to work with Headquarters and resolve the situation. The HWD Director and the Headquarters officials agreed to send the revised PRP notice letter to BLP.
On October 18, 1988, the HWD Director sent the revised PRP notice letter and an attached request for information to BLP. The HWD staff believed that this was a PRP notice letter. In fact, they informed Gulf and the local community that BLP had been notified it was a PRP. Each staff member we talked to stated that after the notice letter was issued, the RA took every opportunity to make the point that the letter was not a notice letter, and BLP was not a PRP.
In our meeting with the RA, he stated that he did not know what a standard PRP notice letter looks like, so he would not be able to tell us if one had been revised or not. We specifically asked him if he believed the letter sent to BLP was a PRP notice letter. He stated that since he did not see the letter before it was sent to BLP, he did not know whether it was or not. During our discussion, he expressed doubt that it was a notice letter; however, he would not commit himself to an opinion one way or the other. He also stated that this whole issue is irrelevant. In his opinion, Gulf is the only responsible party and should have to pay for the cleanup. BLP just bought the property and did not contribute to the pollution. They should not have to pay.
In response to the information request attached to the notice letter, BLP's attorneys began a year-long exchange of letters with the Regional Counsel. BLP's attorneys stated that BLP would not provide the information requested unless they were granted a specific confidentiality agreement. BLP's attorneys were concerned that the proprietary information would be leaked to Gulf. A Regional Counsel representative told us that this was totally ridiculous. BLP, under current law, can protect its records by simply declaring that they contain proprietary information and must be kept confidential. EPA is then bound by law to maintain confidentiality. Based on past experience with this company, a Regional Counsel representative believed this was just another tactic to avoid responding to EPA's information request.
When the ATSDR report was issued the RA then reversed his position to limit liability to Gulf and issued a second notice letter and information request to BLP. This letter was sent on October 4, 1989. In a meeting to discuss the request for information, one of BLP's attorneys told an HWD staff member that they were just told that BLP was a PRP, so they needed some time to collect the information. The staff member thought that this was just a continuation of BLP's normally obstructive tactics.
In an October 13, 1989, memo to Regional Counsel, BLP's attorney stated that BLP does not own any part of the Bunker Hill complex identified in the information request. The attorney noted in the letter that he consulted with the owners of the complex to obtain the information requested so EPA could avoid the inconvenience of dealing with three legally distinct entities.
Regional Counsel provided us a copy of an investigation into the corporate ownership of the Bunker Hill Site. The report was completed in December 1989 The report makes two important points. The first is that the corporate officers of the original Bunker Hill Company (owned by Gulf), BLP, and all the newly formed corporations (one of which is chartered in British Columbia) that now own the complex are the same people. The second point is that the majority of the corporate restructuring occurred during 1987 and 1988&emdash;the same period that the conflict over enforcement actions and naming additional PRPs was occurring.
Based on the above report, Regional Counsel expressed concern over EPA's ability to collect for the costs of any cleanup of the smelter complex. The report recommended, in part:
... the ready and instant organization and reorganization of corporate entities has been used to transfer assets and responsibilities. Real property, personal property and shareholdings have been traded among different corporate entities for no apparent par value. The possibility exists that once capitalization is realized, the assets will be applied to other ventures unassociated with Bunker Hill. The delaying tactics, both in answering EPA request letters and obstructing EPA investigations, suggest that an asset freeze or trust fund arrangement should be implemented to protect EPA's cost recovery interests.
We were informed by a Regional Counsel representative that they are reviewing this case in anticipation of a possible referral to the Environmental Enforcement Section of the Department of Justice. They also plan to meet with attorneys from the Securities and Exchange Commission to review BLP's disclosure of its environmental liabilities in its application to sell stock in this country.
Discussion of value of stock issue
As part of the more general allegations, we received a specific allegation that the RA discussed the negative impact that EPA's enforcement action would have on the value of the company's stock offering underway at the time in Canada. The alleged discussion took place in a meeting held in January 1988 with BLP officials, Region 10 officials and an assistant to the Governor of Idaho.
We discussed the contents of this meeting with three of the attendees at the meeting&emdash;the RA, the HWD Director, and the Director of Region 10's Idaho operations. The RA told us that he did not recall the discussion. He remembers that BLP spoke generally about getting funding, but he did not remember specifically how they planned to do it. In any case, he stated that a company's financing would not be considered in any decision he may have to make regarding EPA regulations.
The HWD Director stated that he recalled the discussion. He thought it was a thinly disguised threat that any enforcement action would reduce the value of their stock offering and, thus, impact on their ability to reopen the mine. This would have an adverse effect on the community's opinion of EPA. The Director of Idaho operations remembered that there was some comment about the value of stock, but he could not remember exactly what was said. Both officials stated that the RA did not respond, nor did he discuss the incident after the meeting.
We believe the evidence indicates that the RA took extraordinary measures to prevent the HWD staff from performing the normal.and proper activities required to enforce the Superfund regulations. During the period from August 1986 through October 1989, the RA blocked or delayed any formal enforcement actions initiated against BLP despite the recommendations of the HWD staff. As a result, EPA failed to take timely enforcement action against BLP. This failure has had serious consequences:
It was not until October 1989, coincident with the issuance of the ATSDR report, that the RA finally allowed HWD staff to take the action they considered necessary.
Within the limited scope of our review, we found no evidence to support the allegation that the RA discussed the impact of EPA's enforcement action on the value of the company's stock offering, although BLP officials raised the issue at the meeting.