EPA Admits Failure To Enforce Financial Requirements For Hazardous Waste Cleanup At Dupont Site for 23 Years

Congress Established Financial Assurance Requirements in 1984 RCRA “HSWA” Amendments

EPA Issued Dupont a RCRA Permit in 1992 to implement the HSWA Amendments

Chemours Spinoff Reveals That EPA Failed To Enforce Those HSWA Permit Requirements

[Update: 3/17/15 – I just was forwarded a March 4, 2015 reply letter from EPA Walter Mudgan.

Mudgan claims he simply forgot to mention in his Feb 6 reply to our request for information the fact that EPA provided a corporate guarantee  for financial assurance for interim measures back in 1992!

He then criticizes us for making a mistake – that was based on his own oversight!

Like playing whack a mole – more to follow on Mudgan’s March 4 reply. ~~~~ end update]

As we previously noted, the Dupont Corporation’s proposed spinoff of the Chemours company, including plans to shift liability for hundreds of millions of dollars in toxic site cleanup costs from Dupont to the new Chemours group, has prompted EPA national review, see:

• EPA Conducting National Review of Dupont Chemours Spinoff

Based on these concerns, on January 21, 2015, Pompton Lakes residents wrote EPA Region 2 Administrator Judy Enck a letter requesting EPA review of the Chemours spinoff and for concrete assurances that Dupont would continue to be held responsible for cleanup, including complying with RCRA requirements to demonstrate financial assurance to pay for cleanup and at least 30 years of post cleanup site monitoring and maintenance.

Walter Mudgan, USEPA region 2

In an astonishing February 6, 2015 reply, Walter Mudgan, the head of EPA Region 2’s Superfund and RCRA cleanup programs admitted that EPA had not enforced RCRA “financial assurance” requirements for the full costs of cleanup for 23 years since those requirements were included in a 1992 EPA RCRA Corrective Action Permit.

Mugdan wrote:

The first question in your January 21 email concerns the dollar amount of financial assurance for the site.  There is not a specific dollar amount of financial assurance for corrective action at the site under the federal permit at this time, since the permittee is not as yet required to provide such assurance.  However, the Chemours Form 10 filing with the federal Securities and Exchange Commission (referenced in your January 21 email) contains an estimate of $116 million for remediation activities at the site, of which $60 million is estimated to be spent on remediation activities at the site in the next two to three years, including the dredging and other remediation activities contained in the proposed Acid Brook Delta permit modification.

Regarding questions 2-4 in your email, first, please note that the DuPont Pompton Lakes RCRA permit provides that financial assurance must be demonstrated to EPA for “approved” corrective measures.  The proposed RCRA Acid Brook Delta permit modification contains corrective measures, including dredging within Pompton Lake and remediation of adjacent Upland Soils Areas, which will become “approved” measures when the permit modification becomes effective in final form.  Within thirty days thereafter, the permittee is required to demonstrate to EPA in writing that it has financial assurance for the approved corrective measures.  The permittee’s submission should contain a cost estimate for the required work, including post remediation care requirements, and identify the method the company selects to provide the assurance.  Since the permittee’s financial assurance submission for the corrective action has not yet been made, EPA cannot at this time evaluate the nature and content of the assurance.  

[Would a mortgage bank not enforce homeowner’s insurance requirements for 23 years? Could you get your car registered for 23 years without insurance? Ever try Mugdan’s argument on a cop that asked for driver’s license, registration & insurance? How many small contractors get let off the hook for posting performance bonds?

How much money did Dupont save by avoiding demonstrating $116 million financial assurance for 23 years? The financial assurance instruments may vary, but they all cost something. Plus, if EPA had Dupont’s cash in hand for a complete cleanup, wouldn’t that provide significant additional leverage to get Dupont to move a little quicker, under threat that EPA would just take their money and do the cleanup themselves?]

Mugdan’s bureaucratic obfuscation, about what the lawyers euphemistically call the timing and applicability of regulatory requirements, ignores the facts that Dupont has been conducting cleanup under the 1992 permit for 20 years, and that financial assurance requirements were established by EPA in the 1992 RCRA Corrective Action HSWA permit.

Mudgan’s shocking admission about failure to enforce basic requirements prompted outrage among Pompton Lakes residents,  who for many years have complained that DEP and EPA have not strictly enforced cleanup laws on Dupont.

On February 12, 2015, residents wrote another letter, this time to EPA Administrator McCarthy in Washington – with copies to NJ Senators Menendez and Booker.

The letter goes into great detail to rebut Mugdan, citing language from: 1) RCRA Corrective Action financial assurance regulatory requirements; 2) the specific financial assurance conditions of Dupont’s 1992 EPA permit; 3) EPA financial assurance guidance; 4) the EPA National RCRA Corrective Action Enforcement Strategy, and 5) EPA’s 2010 Dupont RCRA permit modification.

Residents are demanding that EPA take immediately enforcement action:

Given USEPA’s historic failure to enforce corrective action financial assurance requirements under RCRA/HSWA and EPA regulations; the enforcement options articulated in USEPA Guidance; USEPA’s reservation of discretion in the DuPont RCRA permit to “modify the enclosed Compliance Schedule should additional information become available that may impact DuPont’s ability to meet a specific scheduling Due Date or Due Dates”; and the new information legal and financial risks posed by the DuPont announced spinoff of Chemours, we respectfully demand that EPA must immediately issue an Enforcement Order to mandate demonstration of financial assurance for all corrective action, closure, and post closure monitoring.

We were shocked by Mudgan’s reply and learning that EPA had failed to enforce these basic permit requirements for 23 years.

EPA will now need to move quickly to assure that EPA has liquid assets that can be secured for site cleanup in the event that the Chemours spinoff company is recalcitrant or financially insolvent or unwilling or unable to finish the massive and costly cleanup at the Dupont Pompton Lakes site.

Based on Dupont’s SEC 10K filing documents, EPA estimated that will cost at least $116 million – and very likely much more because we do not have the cost breakdown of how that cleanup cost estimate waste derived.

Liquid assets must be obtained by EPA before July 1, 2015, which EPA claimed was the effective date of the Chemours spinoff deal.

We understand that EPA is preparing a written response – we’ll keep you posted when we receive that.

[* full disclosure: I drafted the EPA letters.]