Superfund

Parties responsible for cleaning up hazardous waste sites in the Superfund program have complained that the costs associated with resolving liability, sometimes called transaction costs, are excessive. The Environmental Protection Agency (EPA) has several tools to reduce these costs, including (1) de minimis settlements; (2) nonbinding allocations of responsibility for cleanup costs by EPA to responsible parties; (3) mixed-funding agreements between EPA and parties to share cleanup costs; and (4) alternative dispute resolution and use of neutral third parties to help resolve liability and cost allocation problems. GAO testified that these tools have been underused, mainly because EPA has not made a sustained effort to encourage regional offices to use them. EPA has been concerned primarily with getting as many responsible party-financed cleanups under way as quickly as possible and has viewed the tools as diverting enforcement resources from this effort. Although EPA has started to give the settlement tools a higher priority, further steps are needed to reduce transaction costs.