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Focusing Private-Sector Action on Public Hazards JOHN A. KLACSMANN Hazards equity means that those who caused the hazard should share proportionate responsibility for removing it that those who knowingly accepted the risk of permitting a hazard to exist and those who chose to ignore the risk have a responsibility to provide support for its elimination. Those who received short-term benefits must pay for long-term risk man- agement. Equity is the key to understanding how most companies view their respon- sibilities with respect to hazardous waste. Companies will step up to their responsibilities if they believe that doing so will ameliorate the situation, their perceived share of responsibility for removing a hazard is propor- tionate to their contribution to it, others are acting in the same way, their commitment is not open-ended, they will not be subjected to retroactive liabilities, and their own survival is not at stake. Companies will accept a responsible role based not solely on economics but also on the broader social responsibilities that American society is imposing upon them. The principle that "good citizenship is good business" reigns where the company has long-term goals and commitments. The trauma safety record ofthe U.S. chemical industry is a good example of not just a willingness, but a commitment to eliminate hazards in what is, in 185

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186 JOHN A. K~CSM~NN essence, a hazardous activity. Based on 1983 statistics, the National Safety Council found that of all U.S. industries, the chemical industry had the lowest rates of incidence for cases involving deaths or days away from work. Experience in working with the representatives of responsible parties at waste sites shows that they act with the same selflessness and self-interest that display themselves in all human endeavors, but also with a great sense of responsibility. From their actions can be inferred a commitment to rational resolution of the problems associated with hazardous waste cleanup. Responsible parties are even willing to accept a measure of injustice as long as others share in the settlement proportionately. Most corporate managers are willing to work toward a settlement that embodies significant elements of the principles of equity previously outlined. Today's corporate managers have a difficult time accepting the cost bur- dens imposed by the well-intended but unfortunate actions of their predeces- sors, because to do so may affect their perceived management performance. Yet these managers do face up to such unpalatable situations and attempt to take constructive steps. Where a single company has responsibility for a hazardous waste site, in large measure the site is cleaned up promptly and effectively. As the number of responsible parties for a site increases, a company's concern about fairness in the allocation of cleanup costs also increases. In situations where local governments have owned, operated, or encouraged dumping at municipal waste disposal sites, the private responsi- ble parties want local governments also to pay for their share of the liability and display an equal sense of commitment to cleanup. Moreover, the compa- nies believe that the land developers and residents who knowingly bought property adjacent to these sites bear a measure of responsibility that ought to be weighed in determining appropriate cleanup actions. The issue of hazards equity is easier to describe than to deal with in real life whether it be in the halls of Congress, the courts, regulatory agencies, or corporate boardrooms. Yet hazards equity has been for at least 15 years a major issue for environmental policymaking in the United States. Leaders from different sides of the policymaking arena have come to believe that a consensus-based, or coalition-based, approach to the question of equity may well hold the key to achieving significant new progress on the tough environ- mental problems facing the nation. It was this common belief that led to the establishment of Clean Sites Inc. (CSI) a nonprofit, nonpartisan institution created to help accelerate the cleanup of hazardous waste by stimulating voluntary action by private par- ties. In dealing with the problem of hazardous waste cleanup-perhaps the nation's most important environmental problem CSI faces a number of particularly vexing questions.

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FOCUSING PRIV~E-SECTOR ACTION ON PUBLIC H~Z~RDS HAZARDOUS WASTE CLEANUP: THE SCOPE OF THE PROBLEM 187 In recent years, environmental policymaking has been painfully slow, as evidenced by the number of major federal environmental laws awaiting reauthorization. The Conservation Foundation, in its 1984 State of the Envi- ronment report, described the environmental policy debate as "suspended between old problems and new, between progress and retrogression, between cooperation and polarization" (Conservation Foundation, 1984, p. 1~. The U.S. Environmental Protection Agency (EPA) estimates (1984, pp. 4-8 and 4-9) there may be as many as 22,000 potentially hazardous waste sites in the United States, and that about 2,500 ofthose eventually may require action on Superfund's National Priorities List. The Superfund was created by Congress as a result of growing public concern about the potential threat that abandoned disposal sites pose to public health and the environment. But progress has been slow since the establishment of Superfund in 1980. Federal and state officials involved in this issue report that they are caught in a paradox-that at the same time the public is demanding vigorous Superfund activity, there is significant public opposition to most plans for cleaning up individual sites (see Tschinkel, in this volume). Another impediment to action is the complexity of cleanup regulation, often involving several different layers of government that sometimes do not agree on the nature ofthe problem or its solution. This situation is paralyzing action at many sites-particularly at multiparty sites and at municipal sites, where there may be scores or even hundreds of potentially responsible parties. CLEAN SITES INC.: GOALS AND ORGANIZATION Clean Sites Inc. is a response to this situation both to the potential threat to public health and the environment and to the obstacles presented by the process itself. Its mission to accelerate the process by encouraging private party cleanup is based on a premise that is central to the question of equity. The premise is that it is only fair and reasonable that the parties contributing to the problem should contribute to the solution. CSI is designed to address the hazardous waste problem in three ways: 1. Settlement support bringing together potentially responsible parties to resolve differences and allocate costs impartially;

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188 JOHN A. K~CSMANN 2. Project management planning end managing cleanups;and 3. Technical review and compliance providing quality assurance and quality control of cleanups. Clean Sites Inc. was established on May 31, 1984, after a 10-month planning period by a steering committee comprising representatives from industry and the environmental communities, former government officials, and private citizens. Figure 1 depicts the organizational structure of CSI and lists its distinguished board of directors, recruited from industry, academia, the environmental community, and state and local government. Clean Sites is supported by contributions from well over 100 companies in a variety of industries, as well as donations from a labor union and some individuals. Industrial contributors include electrical manufacturers and chemical, steel, petroleum, and paper companies. It is important to note that these contribu- tions support only CSI administrative costs not the costs of cleanup, which must remain with the responsible parties. Clean Sites Inc. intends to build its current resources to support activities at approximately 60 sites; it is now active at more than 40 sites, helping the affected parties move toward settle- ment and remedial cleanup. One of the keys to CSI involvement at waste sites is an agreement reached in February 1985 with the EPA to indemnify CSI for certain negotiating and technical activities early in the Superfund process. This agreement was necessary because CSI found, after extensive discussions with the insurance industry, that adequate protection has become unavailable for many pollution-related activities and simply is not available for an organization like CSI. For a nonprofit institution, this is a life-threatening situation, and government indemnification is the only realistic alternative until the insur- ance market changes. WHAT CAN CLEAN SITES INC. DO? Clean Sites Inc. is now working in various ways to help accelerate the hazardous waste cleanup process. CSI's efforts include the following: bringing new parties to the discussion; achieving allocation among volume, hazardousness, and cost; devising ways to avoid premature admissions; possibly facilitating mixing of public and private funds; working with potentially responsible parties to interpret evolving pol- icy and mesh technical approach with government requirements; certifying to government that cleanup proposals and work are worthy of evaluation and meet basic criteria; establishing various project management roles, including direct project

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FOCUSING PRIV'E-SECTOR AtCTION ON PUBLIC HAZARDS BOARD OF DIRECTORS Office of the President and Executive Vice President 189 Office of Office of the Public General Counsel Accountabi I ity Office of Office of Corporate Financial Affairs Planning & Human Resourc-es 1 1 ~1 Settlement Su pport Function CSIBoard Chairman Russell E. Train President World Wildlife Fund-U.S. Douglas M. Costel Wald, Harkrader& Ross Louis Fernandez Chairman of the Board Monsanto Company Sandra S. Gardebring Chairwoman The Metropolitan Council Edwin A. Gee Chairman and Chief Executive International Paper Company Technical Review & Compliance Function Clean Sites Inc. Board of Directors Project Management Fu notion Donald Kennedy President Stanford University Joshua Lederberg President The Rockefeller University Charles W. Powers President Clean Sites Inc. William K. Reilly President The Conservation Foundation Henry B. Schacht Chai1 titan and Chief Executive Cummins Engine Company FIGURE 1 Clean Sites Inc. organizational structure and list of members of board of directors.

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190 ties. JOHN A. K~CS~NN management, access of other companies, and oversight of the work done by responsible parties; anticipating and addressing community concerns; effectively linking requirements of different governmental units and divisions of same unit; and working out appropriate releases and relationships of nonsettling par In the initial stages of the process, CSI can bring parties into the discussions and strive for an appropriate allocation of costs. Yet CSI is more than just a negotiator or mediator. It can work with the potentially responsible parties to help them understand how government policy applies to their situation and to coordinate a technical approach that meets government requirements. These are issues that touch directly upon two other key equity criteria for industry that their perceived share of the costs is proportionate to the contribution, and that others are participating in the same way. Additionally, CSI certifies to the government that a cleanup plan and the work that follows meet government standards. CSI can also help negotiate liability releases when appropriate and can help sort out the allocation relationships between the settling and nonsettling parties. From this activity can be derived indust~y's fourth equity criterion for cleanup of hazardous waste sites: restricting retroactive liabilities when the situation warrants. Even though the fairness and equity principles built into CSI are ideas few would disagree with, the CSI board and senior management recognize that the ultimate success of the Clean Sites concept must be based on more than an appeal to good will. CSI must be able to show-both at the specific sites where it becomes involved and in the models it builds that there are ways to complete voluntary, private-party cleanups in a cost-effective manner that fully protects public health and the environment. Clean Sites settlements can save money in the construction, technical work, and transaction costs associated with hazardous waste cleanup. By the very nature of the settlement process which typically involves prolonged litigation at multiparty sites-the most costly cleanups will be those in which the government must seek recover of costs through administrative proce- dures and in the courts. In construction associated with waste cleanup, CSI's emphasis on private-sector initiatives can bring about more efficient man- agement of cleanup projects. That is not CSI's judgment alone but the view of many people in government and industry as well. With regard to the technical work involved in waste cleanup, CSI's approach eliminates dupli- cation of effort by potentially responsible parties at specific sites. At the same time, it is believed that the remedial investigation of the problem will be better focused. The use of CSI as a third-party facilitator in the settlement

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FOCUSING PRIV'E-SECTOR ACTION ON PUBLIC H~Z~RDS 191 process can also greatly reduce the transaction expenses for all sides. Simul- taneously, this approach will help avoid the extraordinary costs of govern- ment recovery efforts. The CSI settlement support staff is the key to achiev- ing this savings in transaction costs. CSI's first job in developing a settlement is to create an atmosphere condu- cive to problem solving. The CSI settlement support staff includes lawyers, mediators, and technical personnel experienced in the Superfund negotiat- ing process. Because CSI is committed to the settlement process rather than to specific positions, it can help participants concentrate on the issues that will be important to resolve. As a facilitator only, CSI serves primarily as a catalyst keeping the negotiations moving, providing a forum for airing ideas and suggestions, and continuing to work toward the goal of a negoti- ated settlement that is acceptable to all affected parties. It must be emphasized that CSI will not be involved throughout the process leading to cleanup at every site. Still, CSI's contribution can be greatest when it is brought in early and can provide continuity toward cleanup. Even if CSI provides just one service at a site such as rendering a technical judgment that speeds progress toward settlement it can make a critical contribution to the overall cleanup effort. Many sites will not require intervention by an independent third party. However, CSI may have a special role to play at sites where there are many potentially responsible parties but no dominant party taking the lead in negotiations or in management of the cleanup. These can include sites where the allocation of liability for costs may need an independent party that can move from facilitating negotiations to formal arbitration, at the request of the parties involved; sites where the availability of CSI's technical and project management skills may facilitate a settlement; sites where distrust among potentially responsible parties shows the advantage of third-party intervention in bringing together the conflicting interests; sites where there is need of a regional solution involving a cost- effective remedy that covers several sites clustered in a defined geographic area; and sites where the possibility of both public and private funding may encourage a settlement. These include municipally owned or operated sites as well as sites where a party not involved in the settlement is blocking the actual cleanup. All sides in the process of cleaning up hazardous waste sites devote resources at every stage either to gathering evidence or to preparing a defense. Thus, although most voluntary settlements do save money, it is

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192 JOHN A. K~CSM~NN believed that the Clean Sites approach can reduce the expense of settlement even further. This relates directly to two other key equity criteria by which industry gauges its responsibilities for hazardous waste cleanup putting limits on the financial commitment involved, and ensuring that a company's survival is not threatened by the agreement reached. Addressing the concerns of the community that surrounds a waste site can, in a narrow sense, also be viewed as part of the settlement process. Of course, it is much more than that. Because of the public health implications of a waste site, no one has as compelling a stake in the cleanup of a site as its neighbors. Public concern is fueled by the threats of cancer, genetic damage, and bird defects from exposure to hazardous substances. These considerations make the issue a volatile one that must be handled openly and with great sensitivity in any community surrounding an inactive disposal site. For if citizens come to believe that they are only receiving information and not exchanging it, or that they are being asked to comment on a project that is a fait accompli, the settlement process will not succeed. Thus, community involvement is crucial to the question of equity. Com- mon sense-as well as all the best research on hazardous siting issues dictates that citizens be brought into the process early and given opportuni- ties to make a significant contribution. In practical terms, if citizens are not brought into the process, the alternative often is an unfortunate political and legal stalemate that can disrupt the process and substantially increase these transaction costs. DIRECTIONS FOR THE FUTURE Clean Sites Inc. is building models for negotiation, arbitration, and alloca- tion that will significantly advance the state of the art in waste site settle- ment. For example, CSI is developing a "cluster site" concept the notion that major economies of scale in the settlement process could result from dealing with geographically proximate sites at the same time. This new approach arose not from abstract theoretical reflection but from a search by professionals within CSI for a way to deal with a specific hazardous waste site in the Texas Gulf Coast region. Clean Sites Inc. is developing models for helping potentially responsible parties organize themselves into appropriate working groups and subgroups at the start of settlement discussions. Work is also under way on a model for an independent allocation process for determining percentages of waste contribution at individual sites. Clean Sites Inc. receives site invitations from a variety of affected parties at the rate of about two per week. Since CSI clearly cannot work on that many sites, the challenge it faces is to screen and select appropriate sites.

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FOCUSl~G PRIV~E-SECTOR ACTION ON PUBLIC H~Z~RDS 193 This requires identifying potentially responsible parties at sites newly nomi- nated to the National Priorities List, selecting sites for demonstration of CSI's project management approach, and building relationships with regional federal offices and state and local governments. Clean Sites Inc. is a bold experiment in consensus-based environmental policymaking. This is evident every day in its offices, when people who previously worked for organizations like Du Pont, the National Audubon Society, the EPA, Exxon, and the Justice Department sit down in an atmo- sphere of creative problem solving and work together to move the hazardous waste cleanup process forward. Like many other nonprofit organizations, CSI faces challenges in buch the scope and nature of its funding. Of the support currently received through grants from more than 125 industrial corporations, a major portion is con- tributed by chemical and petrochemical companies. CSI must broaden the base of its industrial funding- both to increase the number of sites at which the institution can become involved, and to draw upon a wider spectrum of industries. The organization also is seeking foundation grants to increase both the depth and independence of its financial support. In summary, although U.S. environmental policy is, in the words of the Conservation Foundation (1984), "suspended between progress and retro- gression, between cooperation and polarization," CSI is an institution that can help the nation break this gridlock. Addressing the complex question of hazards equity is an important part of this mission The ultimate value of the Clean Sites approach to cleanup of hazardous waste sites is perhaps best described by its chairman of the board, Russell Train, former EPA administrator and president of the World Wildlife Fund- U.S. Mr. Train noted at the news conference at which the creation of CSI was announced that the environmental problems facing the United States are less and less clear-cut. He observed that the debate "centers not on whether a problem needs to be dealt with, but on how to do it most efficiently and effectively." If you accept this premise, then the logical conclusion is that in the 1980s and beyond, the only realistic path toward continued environmental progress is one that is less adversarial and more cooperative. REFERENCES Conservation Foundation. 1984. State of the Environment. Washington, D.C.: The Conser- vation Foundation. U.S. Environmental Protection Agency. 1984. Extent of the Hazardous Release Problem and Future Funding Needs: Final Report. Office of Solid Waste and Emergency Response. Washington, D.C.

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