Taming Regulation: Superfund and the Challenge of Regulatory Reform

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about brookings The Brookings Institution is a private nonprofit organization devoted to research, education, and publication on important issues of domestic and foreign policy. Its principal purpose is to bring knowledge to bear on current and emerging policy problems. The Institution maintains a position of neutrality on issues of public policy. Interpretations or conclusions in Brookings publications should be understood to be solely those of the authors. Copyright © 2003

the brookings institution 1775 Massachusetts Avenue, N.W., Washington, D.C. 20036 www.brookings.edu All rights reserved Library of Congress Cataloging-in-Publication data Nakamura, Robert T., 1945– Taming regulation : Superfund and the challenge of regulatory reform / Robert T. Nakamura, Thomas W. Church. p. cm. Includes bibliographical references and index. ISBN 0-8157-5942-8 (cloth : alk. paper)— ISBN 0-8157-5943-6 (pbk : alk. paper) 1. Industrial policy—United States. 2. Industrial laws and legislation— United States. 3. Hazardous wastes—Law and legislation—United States. I. Church, Thomas W., 1945–. II. Title. HD3616.U46N27 2003 363.738'4—dc22

2003018458 987654321

The paper used in this publication meets minimum requirements of the American National Standard for Information Sciences—Permanence of Paper for Printed Library Materials: ANSI Z39.48-1992. Typeset in Sabon Composition by Stephen D. McDougal Mechanicsville, Maryland Printed by R. R. Donnelley Harrisonburg, Virginia

For Jaye and Emily and Jonathan


Contents

Preface

ix

chapter one

Regulation, Coercion, and Popular Support

1

chapter two

Regulation and Its Critics

14

chapter three

“Regulatory Craft” and Regulatory Reform

27

chapter four

The Essential Superfund

50

chapter five

Reforming Superfund

60

chapter six

Succeeding at Regulatory Reform

76

chapter seven

Taming Regulation

91

Notes

109

Index

135 vii


Preface

This is a book about regulation and regulatory reform. It is grounded in our fifteen-year fascination with perhaps the most complex, controversial, and unusual regulatory program in American history: the Superfund program for cleaning up hazardous waste sites. Reflecting on our odyssey through figurative mountains of toxic garbage, we concluded that Superfund—with its highly coercive liability scheme, the costly and seeming intractable litigation it spawns, and its international reputation for producing ineffective and arbitrary governmental action—represents the proverbial poster child for what is allegedly wrong with regulation. If any regulatory program could have been predicted to meet an untimely end under the conservative-led Republican Congress of the mid-1990s or in the administration of a new Republican president bent on reducing government’s role in American life, it would surely have been Superfund. Indeed, the cleanup program was a special target of opponents of environmental regulation from its inception, and even supporters regarded its continuation intact into the new millennium as improbable. Yet at this writing, two years after George W. Bush entered the White House, we describe a reinvigorated program, generating little political controversy, even winning grudging support from many of its previous critics. Through an artful series of internal reforms undertaken in the late 1990s, the Environmental Protection Agency (EPA) transformed Superfund from a highly unpopular behemoth into a relatively uncontroversial and stable undertaking. The regulatory leviathan was tamed. Policy analysts ix

x

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infrequently find implementation successes to assess, particularly in as unpromising an environment as Superfund presented in the closing years of the twentieth century. We believe there are lessons here for the critical questions of how to make the inherently coercive aspects of regulation more politically acceptable, particularly in antiregulatory times, and how the legal and administrative challenges of reform in ongoing regulatory agencies might best be approached. Our context for drawing lessons from Superfund reform was provided by the developing concerns of policy scholars focusing on regulation. Regulation is in disfavor in the academy. Economists, in particular, have criticized its inefficient substitution of centralized decisionmaking for the alleged rationality of the market. As political scientists, however, our interests lie more in the political and organizational challenges posed by regulation than in its theoretical deficiencies. Recently, three important books were published that framed for us the questions dealt with here. They are Lester Salamon’s Tools of Government, Robert Kagan’s Adversarial Legalism, and Malcolm Sparrow’s Regulatory Craft.1 Salamon underscored the political difficulties encountered by those who would use coercive policy tools and noted the shift across government to less coercive instruments. Kagan, generalizing from a decade of work on America’s increasingly combative and legalistic policy domains, especially in the realm of regulation, produced a picture of an increasingly dysfunctional system. While many observers have taken these critiques as grounds to press for less regulation and the substitution of alternative policy instruments, we were less sanguine about the seemingly inexorable march toward ever less regulation. Few scholars appear to be concerned with investigating the ways in which necessary uses of regulatory power can be made politically and practically defensible. In this context, we find affinity with the work of Malcolm Sparrow. Sparrow evinces little concern for the theoretical debates on regulation and its alternatives. Rather, assuming that regulation will always be with us in one form or another, he addresses practitioners working in regulatory agencies, advising them on ways to make their programs more effective, to ensure that when the state’s coercive power is utilized, that effort will produce maximum social benefit at minimum cost. Like Sparrow, we take the need for command-and-control regulation as a given, a fact suggested most recently by the instinctive turn to regula-

preface

xi

tion—in an avowedly antiregulation administration—in the wake of the Enron and WorldCom accounting scandals. Even the harshest critics of regulation apparently recognize that not every public problem can be solved by relying on markets and devising better incentives, and that the government, at least in some circumstances, has valid reasons for turning to the stick instead of the carrot. Sparrow argued that regulators could do their jobs more effectively by identifying promising enforcement strategies for improving regulatory performance. Our own backgrounds—in implementation research, court reform, and in the nexus of law and public policy—made us wary, however, of counting on positive results from reform efforts in complex organizations, at least not without considerable difficulty. Specifically, we were concerned with the challenges of implementing even good ideas over the resistance of others; we were worried by the increasing judicial constraints on the ability of regulators to redefine their jobs as Sparrow advises; and we wanted to know what might motivate administrators to take on the risks and efforts inherent in these difficult organizational tasks. The recent metamorphosis in Superfund, where administrators overcame seemingly insurmountable legal, organizational, and political obstacles, provided us a context for investigating answers to what we see as the central issues regarding the project of regulatory reform. This book is the result of that examination.

A Note on Method We have been following Superfund for more than a decade, and our understanding of the program has been drawn from several projects undertaken during that time. Over the years we have collected documentary materials from EPA publications, officials, and the agency website. Interviews were conducted during 1992 for our initial study of Superfund,2 in 1999 and 2000 for our recent project with the National Academy of Public Administration,3 and again in 2002 for this book. In these various rounds of interviewing, we spoke to Superfund leadership in Washington, including EPA officials in enforcement and remediation offices as well as attorneys at the Environment and Natural Resources Division of the Department of Justice. In addition, we interviewed congressional staff (drawn from the Congressional Research Service, the Congressional Budget Office, the

xii

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General Accounting Office, and relevant standing committees) responsible for monitoring the program. We also talked with interested stakeholders, including environmental groups and representatives of the corporations and law firms involved in Superfund cleanups. Finally, we interviewed staff in the EPA regions and in state environmental agencies to get a sense of how the program was operating at the local level. We focused our interviews for the National Academy of Public Administration project—the source of much of our present discussion of Superfund’s administrative reforms—in EPA Region 2 (New York, New Jersey, Puerto Rico) and Region 3 (Delaware, Maryland, Pennsylvania, Virginia, and West Virginia) because our previous work showed them to represent distinct enforcement approaches to Superfund that might best illuminate regional responses to the reform effort.

Acknowledgments Our decade-long journey with Superfund has been supported by a number of individuals and institutions, and we owe them a debt of gratitude for both material resources and substantive guidance. The environmental organization Clean Sites provided support for our initial foray into the world of hazardous waste cleanup with a research grant that ultimately led to our first book on the program, and we especially thank its then-president, Thomas Grumbly, for his guidance and enthusiastic support.4 The Environmental Protection Agency funded a subsequent project in which we evaluated hazardous waste cleanup in Europe, allowing us to compare Superfund with a family of less coercive (and, in our assessment, less effective) programs.5 For support of the research that forms the basis of this book, we wish particularly to thank the National Academy of Public Administration for the funds to conduct the study, and Dewitt John and Rick Minard, then with the academy, for their confidence in us, for comments on drafts, and for help in gaining access to interviewees. We are also grateful to the University at Albany, State University of New York, and to Dean Frank Thompson of its Rockefeller College of Public Affairs and Policy, for a faculty grant to conduct follow-up interviews in 2002. A number of knowledgeable and helpful people at the Environmental Protection Agency, the Justice Department, the General Accounting Office, and in the Superfund community read and commented on our analy-

preface

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sis of the administrative reforms of Superfund for the National Academy of Public Administration. As we promised them anonymity, we can only thank them indirectly. We can thank the following people who were or are currently at EPA for their official comments on the draft: Barry Breen, Timothy Fields, Sven-Erik Kaiser, Stephen Luftig, and Walter Mugdan. Mitchell Zeller, formerly of the U.S. Food and Drug Administration, gave us the benefit of his expertise on the sections of chapter 3 dealing with administrative law. Marty Gottron ably copyedited our manuscript; any stylistic errors remaining can be attributed to our stubbornness rather than to lapses on her part. Chris Kelaher at Brookings provided editorial support and encouragement. Finally, we want to thank Robert Kagan for unknowing assistance with the title of this book. While cogitating on possible titles, we landed on the notion of “taming” regulation, the suggestion being that regulation is a beast in need of domestication, after which it can presumably provide its master with useful service. The title more or less “came” to us, or so we thought until we reread Bob’s fine book, Adversarial Legalism, in which a concluding chapter is entitled “Can the United States Tame Adversarial Legalism?” The book was important in our early thinking about the more general implications of the story we tell here, and the chapter title almost certainly provided the genesis of our title. We hope Bob considers imitation to be the highest form of flattery, rather than grounds for a suit on copyright infringement. We emphasize that the views presented here (and any errors made) are ours alone, and not the responsibility of those who helped us in this project—including especially the trustees, officers, or staff of the Brookings Institution. We should add that our long and happy collaboration has produced a number of publications; the order of the authors’ names in this progression has been alternated and does not reflect relative contributions to the effort. We are equally responsible—for better or worse—for what is said in the pages that follow.



chapter one

Regulation, Coercion, and Popular Support

This book deals with an intrinsic problem facing democratic government: How to reconcile the necessary use of coercion in regulatory programs with the need to retain popular support. It is also about the more practical and prosaic issue of how governmental agencies in the business of regulation might be transformed to succeed in this endeavor. Our analysis is wrapped around a case study of how a highly coercive, and extraordinarily unpopular program—the federal Superfund program, charged with cleaning up the nation’s abandoned hazardous waste sites— saved itself from the ax of an antiregulation Congress bent on gutting the program. We believe this story holds lessons for how regulation can be made more acceptable, and more functional, while still retaining its inherently coercive qualities.1 It is not surprising that coercion as a tool of government is universally disliked; this unpopularity is, of course, a particular problem in democratic polities. Economist Charles Schultze made the case for avoiding governmental compulsion in 1977 in his seminal book The Public Use of Private Interest. There he notes the irony of America’s reliance on command-and-control policy tools: “For a society that traditionally has boasted about the economic and social advantages of Adam Smith’s invisible hand, ours has been strangely loath to employ the same techniques for creative intervention. Instead of creating incentives so that public goals become private interests, private interests are left unchanged and obedience to the public goals is commanded.”2 The closing decades of the twentieth cen1

2

regulation, coercion, popular support

tury saw waves of policy initiatives aimed at achieving the ends of government through means that depended on voluntary choice rather than coercion. Market-based reforms continue to be favored alternatives to command-and-control regulation in environmental policy, health care delivery, welfare, and a host of other policy domains. The Reinventing Government movement in vogue during the administration of President Bill Clinton had at its heart a consumer- and market-based notion of how government should interact with the public—an orientation in which coercion has little place. The recent corporate accounting scandals may have temporarily dulled this enthusiasm for deregulation and reliance on selfregulation and markets, but regulation-bashing remains a hardy perennial in the American political landscape. Interestingly, the normative evils of coercion as a tool of government are seldom subjected to theoretical analysis. Most commentators accept what has been termed the Moral Superiority of Voluntary Compliance as largely self-evident.3 That much being said, we have uncovered no serious commentator who entertains the notion that coercion can be entirely removed from the government’s tool box.4 Our analysis thus proceeds from the commonsense notion that although the mix of coercive and noncoercive policy tools may well be optimized at a different level than currently exists, government will need to retain the quintessentially coercive penal law to restrain the most elemental aspects of antisocial behavior. There is as well substantial evidence of the continuing need for command-andcontrol regulation. One need look only at the more egregious recent examples of unrestrained corporate greed: the recent accounting scandals and accompanying imposition of a new regulatory framework on heretofore sacrosanct corporate auditors, the catastrophic saving and loan and arbitrage scandals of the early 1990s, and the continuing evidence of failed environmental stewardship on the part of a wide variety of business interests. This book thus raises two critical questions: First, how might government use its coercive regulatory tools more effectively—in both a political and a programmatic sense? Second, how might existing regulatory agencies, seldom known for innovation and risk-taking, overcome institutional inertia, individual resistance, and external obstacles to such changes?

Regulation as a Policy Tool Policy tools are identifiable methods through which collective action is structured to address a public problem.5 They are the means by which


3

government uses its inherent resources—the legitimate power to coerce and the attendant ability to tax and spend—to achieve policy goals such as a cleaner environment, a more productive economy, and public safety. Each policy tool, writes Lester Salamon, has “its own operating procedures, skill requirements, and delivery mechanisms, indeed its own ‘political economy.’”6 In addition, each tool generates a distinctive politics. Policy scholars have produced a number of different taxonomies of policy tools.7 However arrayed, they differ on two important dimensions: the extent to which the identified tool relies on governmental coercion, and whether it focuses on providing either the motivation or the requisite capacity of individuals to behave as the government wishes.8 The more voluntary tools achieve their ends by augmenting capacity (by providing subsidies, loans, vouchers, or information,) or affecting motivation through “soft” techniques such as exhortation or market-like incentives.9 The less voluntary tools use coercion or its threat to motivate the desired behavior. Examples include social and economic regulation, mandating mechanisms, and the criminal law.10 All these latter techniques assume that the regulated or mandated parties are capable of doing what the state wants but that they must be motivated to do so by the threat of various punishments at the government’s disposal.11 We begin with two propositions drawn from the policy literature. The first is that policies cause politics.12 Policies shape the politics of policymaking and implementation by making issues of what is to be done, how participants are to relate to one another, and the basic challenges to be faced.13 The second proposition is that policy tools differ in their implementation. Regulation is among the most difficult of tools to use successfully because it typically requires government agencies with insufficient resources to meet broad responsibilities in a polarized environment.14 Moreover, regulatory policies are frequently unpopular because they rely on coercion, thereby promoting an adversarial relationship between government and at least some of its citizens. Policies Cause Politics Policies cause politics, Theodore Lowi argued, because the choice of policies influences who wins and who loses.15 Lowi, a political scientist, was analyzing policies and politics on a grand scale, but a similar point has been made about the relationship between policy tools and the politics of tool choice.16 Lowi distinguished the politics of policies in terms of how

4


the potential winners and losers are distributed and aggregated: the most polarizing policies redistribute resources between classes, while the least controversial programs distribute benefits to particular individuals or groups. Distributive policies are popular among recipients and create supportive constituencies. Such policies pose administrative problems primarily related to determining eligibility. Their main political problem is keeping benefits targeted amid calls for greater dispersion.17 More coercive policy tools are seldom popular with the groups most directly affected, while the constituencies that support the use of such tools tend to be dispersed and disorganized. Administrative problems include the whole panoply of regulatory conundrums, especially definition of rules and standards, and choice of enforcement policies and practices. Distributive and coercive tools also differ in how they define those who pay and those who benefit. Distributive policies often depend on the success of a strategy of collecting money as quietly as possible and distributing it as noisily as possible.18 Sustaining political support for distributive policies, then, depends on dispersing the costs to minimize the pain, or at least the awareness of pain, and concentrating the benefits to maximize gratitude. Regulatory and other coercive policies turn the equation around—a small population is forced to do things they do not want to do so that a larger public will benefit. The costs of regulation are borne by the regulated while most benefits go to others. Here pain is concentrated while whatever pleasure is to be derived is spread over a much larger population, one that may not even be aware that it is benefiting from harms that do not occur or catastrophes that do not happen. The central political problem of using coercive techniques is maintaining essential political support for such policies when detractors are often unified and powerful and supporters are diffused across a population. At a minimum, regulatory policies depend for their support on keeping beneficiaries aware of benefits received while finessing serious hostility from powerful interests in the regulated population. Experience has shown that few regulatory agencies are successful in this balancing act for extended periods of time. Controversial Means Policy tools are accompanied by characteristic machinery for putting policies into effect. Particular tools deliver distinctive social benefits and


5

rely on characteristic delivery vehicles, with accompanying rules and procedures suited to implementing the policy. Coercion is cheap, at least in the short run, and promises to be effective, since the compliance that spells policy success is required of—and paid for by—others. But coercive programs inevitably create an adversarial relationship between government and those whose behavior the government is trying to influence. The hard edge of such programs is captured by Malcolm Sparrow, a professor at Harvard’s Kennedy School, who has written that: The core mission [of regulatory and law enforcement agencies] involves the imposition of duties. They deliver obligations rather than services. . . . Society entrusts regulatory and enforcement agencies with awesome powers. They can impose economic penalties, place liens upon or seize property, limit business practices, suspend professional licenses, destroy livelihoods. They can restrict liberty, use force, and even kill—either in the heat of some dangerous moment on the street or through the cold calculations of the execution room. They use these powers not against foreigners in war but against citizens in peacetime. How regulatory and enforcement agencies use these powers fundamentally affects the nature and quality of life in a democracy. Not surprisingly, regulators are scrutinized more closely and criticized more regularly for their uses or abuses of power than for their stewardship of public resources.19 With power comes the possibility of the abuse of power and the virtual certainty of distrust and disagreement from those toward whom the coercive power is directed.20 In the case of law enforcement and the criminal law, the target population has little political muscle, at least outside the area of white collar and corporate crime. Moreover, the social need for a criminal justice system is undisputed. Regulation, conversely, negatively affects powerful social and economic interests, and the need, effectiveness, reach, and operation of regulatory agencies is more controversial. Indeed, controversy and criticism seem to inhere in regulation. Perhaps just as important, the fundamental regulatory tasks—deciding how people should behave, monitoring their behavior, and enforcing standards against resistance—are seldom easy. Eugene Bardach has suggested some of the characteristic difficulties encountered by command-andcontrol regulatory programs: “Regulation is vulnerable to errors of

6


underregulation or overregulation or to both simultaneously. Political pressures and scientific uncertainty can lead to overly stringent or overly lax standards. Standards can also be too prescriptive or too ambiguous. The enforcement process is vulnerable to budgetary strictures, over-concentration on symbolic targets, go-by-the-book rigidity, and in some cases corruption.”21 Statutory obligations on regulators are often demanding because the public wants high levels of protection, particularly if someone else is paying for it.22 Legislators often avoid making trade-offs between competing values, leaving this determination to regulators. The scientific base for making regulatory decisions about how-safe-is-safe-enough or how-cleanis-clean-enough is typically weak.23 Final decisions are therefore shaped by cultural dispositions, the politics of conflicting interests or, increasingly, in adversary proceedings in court.24 Though critics of command-and-control policy tools may be unhappy with the activities of regulatory agencies, they have had limited success in repealing or significantly modifying major regulatory legislation.25 As a result, legislators have frequently resorted to placing procedural and resource obstacles in the way of agencies that are attempting to issue and enforce rules and regulations. These developments have not spawned an extensive literature, however, on how government regulators should respond to the problems presented by broad, often conflicting, statutory obligations, with too few resources, against the resistance and opposition of motivated opponents.

Organizational Change in Regulatory Agencies If regulatory agencies are to respond to these challenges, they must change the way they do business. Of course, statutory provisions can be revised to force changes in the behavior of regulators. Repeal of authorizing legislation or sunset provisions, for example, can effectively terminate a program. And less draconian legislative or budgetary attacks can effectively cripple an agency or fundamentally alter its mission and mode of operation. But much of the criticism of regulation centers more on the behavior of regulators than on the design of statutes, and there is frequently inadequate political support for fundamental alteration in statutory frame-


7

works. Given the difficulty of obtaining legislative consensus on major alterations in ongoing regulatory programs, many of the hopes for more effective regulation come from efforts to change the behavior of regulators without an accompanying modification in their statutory responsibilities or powers. Achieving regulatory reform through administrative, rather than statutory, means has been advocated in the literature on regulatory enforcement, much of which focuses on the evils of “regulatory unreasonableness” and the practice of “going by the book.”26 It has also been advocated in more general terms as a means by which regulators can moderate some of the inherent difficulties in regulation.27 Sparrow, a primary spokesman for this latter position, argues that regulators should take the bull by the horns: define priorities among their many responsibilities based on an assessment of comparative risk, design innovative ways to address those risks, and do not be especially concerned about legal and political constraints in the process. This approach holds substantial appeal in an environment in which statutory change is glacial and not always positive, and where the entrenched and unproductive behavior of some regulators exposes the entire enterprise to criticism. This approach—regulatory reform through administrative restructuring—has had success in a variety of contexts, including the Superfund program, which is examined in the central chapters of this book. But experience from a variety of policy contexts counsels caution for two important reasons: First, federal judges have shown themselves to be increasingly suspicious of regulators who stray very far from a narrow interpretation of their statutory authority; this trend complicates the lot of the conscientious regulator bent on rationalizing the allocation of agency resources among competing dangers and using innovative means to address risks. Increasingly, administrators must justify such policy choices to generalist judges in an adversary proceeding. The safer and easier path, both legally and politically, is thus often a narrow and mechanistic application of the authorizing statute. Reinforcing the appeal of this seemingly safe harbor is the second obstacle to the call for administrative reform—the pull of organizational culture and the pervasive disincentives for change in regulatory agencies. These issues are discussed in detail in chapter 3. We now turn to a brief description of the case study upon which the findings of our research are based.

8


Superfund Superfund, the program designed to clean up America’s inactive hazardous waste sites, is one of the most expensive and controversial environmental programs in history. The program is immense: it consumes a substantial portion of the entire staff and financial resources of the Environmental Protection Agency (EPA) and involves the agency in work— often lasting many years—at hundreds of sites located in every state of the Union. Superfund is not the prototypical regulatory program. Most regulation seeks to control current activities in order to moderate future dangers. Superfund, however, looks backward: its primary purpose is to clean up the results of past environmental harms rather than to prevent new ones. These cleanups can be accomplished through governmental action in a conventional public works mode, but the guts of the program—its most controversial and significant provisions—consist of a liability scheme that imposes expansive retroactive responsibility for cleanup of hazardous waste sites on a very broad categorization of potentially responsible parties (or PRPs). Virtually any individual, business, or governmental entity with some relationship to a hazardous waste site—as owner, producer of waste, or transporter—can find itself caught in the liability web, which can then require expenditure of vast sums of money for cleanup activities or, at the least, substantial legal expenses to escape or moderate liability. Rather than establishing operating constraints on ongoing enterprises— the usual approach of regulatory agencies—Superfund extracts money from businesses and state and local governmental entities in the service of a goal that has no direct connection to their current activities. Most regulatory programs, despite their undeniably coercive character, at least offer the regulated population the opportunity to continue productive activities, albeit with increased costs, decreased production, or modified procedures. Superfund offers its targets merely the opportunity to escape, at least temporarily, from the punitive elements of its liability scheme.28 Although there are important differences between Superfund and more conventional social regulation, the similarities are substantial. Superfund, like typical social regulation, achieves its collective goals by loading costs on narrowly selected publics. Like conventional regulation, Superfund substitutes a publicly determined standard of behavior for individual choices


9

and markets. As with other regulatory programs, it operates under laws that define government responsibilities broadly, but in an administrative context of limited resources that ensures that the agency cannot fulfill all its assigned obligations. When the inevitable choices are made among competing demands, they must be justified in what is often a hostile and partisan political environment. Superfund, then, represents regulation in what is perhaps its most unpalatable and politically vulnerable form. Its liability scheme, grounded in the broadest possible notion of the “polluter pays” principle, offends many elemental principles of fairness.29 It uses these controversial liability principles to extract—under threat of treble damages—vast sums of money from entities ranging from corporate titans to cash-poor municipalities to mom-and-pop dry-cleaning establishments. These extractions typically have nothing to do with the current operations of these businesses or governmental units. Rather, compliance is commanded in a highly adversarial and quasi-prosecutorial forum in which the program’s targets— regardless of their previous or current actions—are often treated more like criminals than responsible citizens and businesses. Finally, in terms of both governmental and private resources committed to the mission of Superfund, the program is immense. Throughout the 1990s spending on Superfund dwarfed all other programs in the EPA combined; estimates— which now appear to be reasonably accurate—suggested a total cleanup bill of at least $100 billion.30 For these and other reasons, Robert Kagan, a lawyer and political scientist at the University of California at Berkeley, has described Superfund as a definitional example of the evils of “adversarial legalism” in the regulatory forum: Adversarial legalism’s combination of higher lawyering costs, accountability costs, and opportunity costs probably reaches its apotheosis in the Superfund program, launched by Congress in 1980 to clean up non-operative hazardous waste disposal sites and abandoned dumps. In contrast to parallel European regulatory programs . . . the Superfund program operates as if it were designed by a plaintiff’s personal injury lawyer. Thanks in part to expansive judicial rulings, it imposed absolute, joint and several and retroactive liability for cleanup costs on any enterprise whose wastes found their way into the disposal site—regardless of the disposer’s share of the

10

regulation, coercion, popular support wastes, regardless of whether it acted lawfully under the legal rules and containment practices prevailing at the time of disposal, and regardless of demonstrated current harm to human health. EPA enforcement officials bring lawsuits against a few large corporate waste disposers, who then sue other potentially responsible parties. . . . As Landy and Hague describe the result, “the shovels often remain in the tool shed while the EPA pursues [potentially responsible parties] along the slow and tortuous path of litigation.”31

Contrasted to its highly visible costs and powerful detractors, Superfund’s benefits suffer the ills of other forms of regulation: direct beneficiaries are typically diverse, disorganized, and politically unsophisticated. While national environmental organizations can usually be counted upon to counteract some of the political weight opposing traditional environmental programs such as those dealing with air and water pollution, these organizations are much less attentive to issues surrounding Superfund. Unsurprisingly, in light of the foregoing, Superfund was at the center of a political firestorm during the first two decades of its existence. Its continuation was repeatedly threatened both from Capitol Hill and the White House. We have followed the development of Superfund almost from its inception. In our first comprehensive analysis of the program in 1993, the program that we described seemed neither politically nor administratively viable: Superfund has been roundly criticized for lengthy delays, high costs, and limited accomplishments. Some of these criticisms have ignored the program’s successes. . . . Nevertheless, we suspect that the overall picture that emerges from our descriptions of the operation of Superfund . . . at actual hazardous waste sites, will do little to allay concerns in the environmental policy community about either the operation or the design and organization of America’s hazardous waste cleanup program. . . . While some of the sites we have described moved toward cleanup more expeditiously than others, with less acrimony and fewer seemingly gratuitous transaction costs, the overall picture presented is one of lengthy delays, high costs, and conflict within the Environmental Protection Agency, between EPA and other government agencies, between the government and potentially responsible parties, and among the PRPs themselves.”32


11

Indeed, not long after we wrote those words, President Bill Clinton announced in his 1993 State of the Union address that Superfund was “broken,” thus joining a chain of presidents frustrated by the excessive costs and unimpressive accomplishments of the program. This negative assessment was echoed by the top leadership at the Environmental Protection Agency. Criticism of the program reached its apex after the election of 1994, when control of both the Senate and House of Representatives moved to the Republican Party, and the House Republicans’ Contract with America included a promise to radically alter the Superfund program. Yet in the six-year period from 1994 to 2000 something extraordinary happened to Superfund. The program was not a campaign issue, even a platform plank, in the 2000 presidential election. Despite the change in party control of the White House from Democrat to Republican, Christine Todd Whitman became the first EPA administrator in memory who did not enter office with a plan for reforming and reshaping Superfund. Indeed, she announced shortly after taking office that the program was “sound.”33 Bills to change various aspects of Superfund, previously as common as efforts to reinstitute prayer in the schools, largely disappeared form the congressional agenda. In the words of one congressional staffer we interviewed, Superfund “disappeared from the radar screen.” Perhaps even more surprising, the manufacturing, chemical, and insurance industries, which had previously waged an expensive and vituperative campaign against the program, were quiescent; some leaders of major industry groups even expressed grudging approval of the way Superfund was operating.34 And if the environmental lobby was unhappy with the changes EPA had wrought in the program, it did not announce so publicly. Moreover, the continuity of these changes initiated under President Clinton did not depend on Democratic victories in electoral politics. Although they were designed and implemented during the Clinton administration, the essential elements were retained by his Republican successor. Obviously something important changed in Superfund, and this change was not brought about by legislation. We believe that the changed position of the program can be traced in large part to a group of administrative reforms implemented in the six years from 1994 to 2000. These changes took place in an organizational context that implementation researchers would have considered stacked against success: a legal environment in-

12


creasingly unfriendly to administrative exercise of discretion, and a highly decentralized administrative structure based in semi-autonomous regions, with important decisionmaking authority vested in other federal and state agencies. The difficulties of bringing about change in such contexts have provided grist for many implementation scholars’ mills and have proven to be the undoing of many earlier attempts at comprehensive change in Superfund. It is, of course, easy to overstate the degree of equanimity facing the Superfund program at the moment. The changes discussed here are at the national level, and decisions at specific Superfund sites remain hotly disputed in many cases.35 Still, the national turnaround is important and unmistakable. It means that the current national political consensus is firm enough for EPA, the responsible parties, and other groups to operate in a predictable and stable environment, one in which privately funded cleanups are likely to remain the norm in the foreseeable future. It is true that the Republican Congress elected in 1994, bent on broad reform in all areas of environmental regulation, was singularly unsuccessful in its efforts. In the face of loud and persistent congressional attacks, however, the goal of most environmental programs in this period was simply to “hang on.” It was not necessary for these programs to remake themselves in order to survive. Yet that is what the Superfund program did—recasting itself from within the EPA. We believe the internal efforts to change the operation of Superfund hold lessons for the regulatory enterprise, and more particularly, for efforts to make the coercive elements of regulation more politically palatable.

Plan of the Book In this chapter we have suggested some of the reasons why coercive policy tools meet frequent and energetic challenges to their legitimacy and why efforts to reform such programs pose special administrative and implementation challenges. These two issues are explored in more depth in chapters 2 and 3, respectively. In chapter 2 we examine the theoretical and practical criticisms leveled against regulatory policy tools over the past half century to explain why proponents of these policies have found themselves on the defensive. Despite the often one-sided theoretical debate, we observe that regulation and other coercive tools remain effective and some-


13

times necessary tools for the achievement of public policy purposes. Chapter 3 deals with the challenges of changing regulatory behavior from inside an agency, through administrative rather than legislative reforms. Chapters 4 and 5 describe how changes in the Superfund program were designed and implemented. Chapter 6 sets out our assessment of why the reforms succeeded despite the obstacles. In Chapter 7 we draw general lessons about the prospects for other unpopular but necessary regulatory programs. Superfund has faced continuing and serious challenges to its legitimacy, challenges that magnify the critiques leveled against regulation in general. The program is highly coercive and arguably inherently unfair. It has a very broad mandate, necessarily leading to selective enforcement. Administrative resources are both inadequate and internally divided, and the program operates in an environment that makes internal reform difficult. So the task of changing Superfund presented the type of hard case that has often frustrated those who sought to implement administrative changes in other settings. Finally, it is a story of unexpected success—an unusual subject for scholars of policy implementation and organizational change.

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regulation and its critics chapter two

Regulation and Its Critics

This book focuses on how to make coercive regulatory policies more politically acceptable and more effective. “Clearly,” as Lester Salamon observes, “no matter what the prospects for effectiveness, a program that cannot win political support cannot make headway.”1 The efficacy, even the legitimacy, of regulatory programs has been under challenge for some time. The preceding chapter suggested that regulation sets up adversarial relationships that make such policies inherently contentious. In this chapter we examine the general critique of regulation and discuss how that most controversial of regulatory agencies—the Environmental Protection Agency—responded to these critiques. Regulation is never popular with those who are regulated because it makes them do things they don’t want to do, usually with accompanying costs in money, time, and aggravation. But the case against regulation is both more systematic and more pervasive than can be explained by determining whose ox is being gored. Three general sets of criticisms are usually at play. First, there are theoretical criticisms that fault regulation for substituting a collective judgment backed by coercion for individual decisions based on voluntary choice. Second, there is a body of empirical work about the shortcomings of regulation in practice, such as the problem of agency capture. A contrasting body of empirical and theoretical work identifies the problem as that of regulatory unreasonableness. And third, there is an emergent, systemic criticism of regulatory policies as helping to produce an environment of “adversarial 14

regulation and its critics

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legalism” in which decisionmaking becomes a drawn out, costly, inconsistent, and uncertain process.

Criticisms from Economic Theory Scholarly critiques of regulation—particularly from economists and others influenced by economic theory—have fed a developing antiregulatory majority among policymakers. Because much of economics is organized around the virtues of market decisions, regulation is immediately suspect, on both theoretical and practical grounds, because it uses coercion to shift choice from individuals to government. Salamon writes of coerciveness: “Economists in particular consider [coerciveness] important since it essentially measures the extent to which a tool involves a deviation from reliance on the market as a mechanism to allocate resources and settle social roles. Such deviations are commonly viewed by economists as inappropriate except where ‘market imperfections’ make them imperative.”2 The more coercive the tool, the greater the infringement on individual liberty, the greater the potential threat to political legitimacy, and therefore the greater the burden of proof on those advocating use of the tool.3 This critique has both normative and practical aspects, elements that are seldom disentangled. The normative aspect is both pervasive and largely implicit in most critiques of regulation. As Salamon suggests, this critique is predicated on the usually unstated assumption that governmental reliance on voluntary choice is morally and ethically preferable to coercing individual decisions, independent of which approach is likely to be most efficacious. This position, which has been called the Moral Superiority of Voluntary Choice, is a postulate of modern economics and the school of policy analysis that relies upon it.4 While not subject to empirical validation, it stands largely unexamined in theoretical terms as well.5 In contrast, the practical indictment of coercion—that programs based on coercion are less effective and efficient than those based on voluntary decisions—can be examined through research, although comparative studies of the efficiency and effectiveness of different policy tools are few and far between, and many elements of these studies are based on reasoning from first principles rather than on observation of the real world. This view—that tools based on voluntary activities (such as market-oriented programs) work better than those based on coercion—is commonly taught

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in courses in policy analysis,6 used extensively by legal scholars,7 and found in many governmental policy analysis units.8 The argument has several elements: —Incentives to cheat. Charles Schultze identified the basic problem of regulation as pitting the private interests of the regulated against the public interest.9 Because regulations are onerous and costly, those being regulated have incentives to evade, delay, and otherwise try to frustrate governmental efforts to shape their behavior. Compliance can be had only with constant and effective government enforcement, and that is unlikely to materialize. Schultze advises instead that government explore programs based on voluntary decisions that structure private incentives in the service of the public interest.10 —Paying too much to get too little. The politics of regulatory decisionmaking can lead governments to be more concerned with benefits than with costs. Because in a typical market situation consumers cannot obtain benefits without paying for them, they balance costs and benefits in making decisions. In contrast, regulation separates payment from benefit and lays the condition for exploitation of those who pay by those who benefit.11 Government acts on behalf of a larger public of beneficiaries while making a smaller public of the regulated pay for those benefits. Economists reason that beneficiaries of regulatory programs will demand ever larger benefits since the costs are absorbed by someone else. For example, economists W. Kip Viscusi and James Hamilton argue that in hazardous waste cleanups, final acceptable pollution levels are a response to political rather than risk-reduction considerations and thus depart from a standard of efficiency based on a cost-benefit analysis.12 Stephen Breyer (now an associate justice on the U.S. Supreme Court), makes a similar argument.13 —Crude tools produce perverse incentives. In this view, command-andcontrol regulations impose a single standard on a diverse world. They are blunt instruments for shaping behavior in the desired direction and may produce results opposite from those intended.14 Pollution limits may encourage even those firms capable of reducing emissions to pollute to the maximum allowed.15 Similarily, more stringent pollution standards for new cars and higher automobile prices may lead people to keep older, dirtier cars on the road longer.16 —The shortcomings of politics for judging public demand. Markets are, in this view, a better instrument for making policy choices because


17

they are based on individual rather than collective decisions. Collective (that is, political) decisionmaking is said to suffer from a variety of flaws. There are the shortcomings of voting systems (in which majorities are an artifact of the sequencing of choices), the principal-agent problems posed by representative government, the problem of creating majorities through coalition building, and the effects of lobbying.17 These flaws, singly and together, may produce neither a valid nor a reliable method for finding out what the people really want and, more important, how much they are willing to pay for it. —The unreliability of measures of regulatory effectiveness. Economists are suspicious of nonmarket measures of worth. Regulatory agencies, like most governmental organizations, have trouble producing evidence of their effectiveness and responding to declining performance.18 —Counterproductive decisions. In the 1990s the imputed fecklessness of regulatory solutions led some scholars to argue that many regulatory schemes are actually counterproductive. Aaron Wildavsky, John Graham, and others observed that attempts to reduce risks through regulation inevitably involve creating other risks that may be greater than those avoided.19 The “richer-is-safer” school of economists noted that regulatory solutions to problems that take otherwise productive resources out of use may produce a society that is poorer, which in itself has costs in diminished public well-being.20 —Unnecessary except as last resort. The final argument from economic theory holds that, given the proper adjustments, regulation can be dispensed with in favor of less coercive instruments. The Coase theorem, for example, holds the promise that even market failures can be addressed through voluntary decisions if property rights are better defined.21 Viscusi provides examples of how in workman’s compensation and in differential pay for dangerous work the market may impose higher costs on those who run dangerous workplaces.22 David Weimer and Aidan Vining advise policymakers to think first about restoring or creating market mechanisms when confronted with market failure. More coercive instruments and direct delivery, they reason, should only be considered when the less coercive and less direct approaches are exhausted.23 These critiques of regulation are plausible, even compelling, in the realm of economic theory. Some examples from practice illustrate their validity, but their persuasiveness is often tied more to economic theology than to empirical studies of the actual performance of regulatory agencies. There

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is, however, a set of critiques of regulation more clearly grounded in the world of experience.

Criticisms from Practice: Agency Capture and Regulatory Unreasonableness This set of critiques is inductive, beginning with an examination of particular regulatory agencies, leading to generalizations about the overall regulatory project. Again, the problems of regulation are centered on its coerciveness. The use of government power raises the perennial concern over abuse of power in at least two forms: the use of government power for private ends, and the tyrannical use of power against individuals for political ends.24 These issues find expression in the assault on regulation in, respectively, the agency capture and regulatory unreasonableness critiques. Agency Capture Those who hold the agency capture view fault regulators for becoming the tools of the regulated. In the 1950s political scientists, generalizing from the experiences of New Deal and earlier regulatory agencies, hypothesized that the natural history of agencies runs from initial zeal to complacency to ultimate capture by the forces they are supposed to police. As one set of political scientists put it, “capture is a relatively natural consequence of the aging process. . . . When the support of elected officials and broad-based public groups are lost, the agency, in quiet desperation, turns to its own clientele for support.”25 The regulators cease to be protectors of the public and become partners in exploitation.26 Examples of areas where regulations kept prices artificially high were airline tickets, brokerage commissions, trucking rates, and long-distance telephone calls.27 Over the next three decades, this line of argument was elaborated into a more general critique of the subversion of public power by narrow alliances of bureaucrats, politicians, and business people. Grant McConnell argued that these links between public agencies and private business were undermining American democracy in a number of important areas, including agriculture.28 The “iron triangle” and “subgovernments” literature generalized the argument further, showing the importance of


19

connections between congressional committees, government agencies, and the private sector in the formulation of public policy.29 Fear of capture is an important rationale for legislative efforts centered on maintaining an arm’s-length relationship between government agencies and the publics with which they deal.30 Such efforts include rules governing the activities of policymakers who leave government service and subsequently accept work in the private sector, and the increasing congressional practice of drafting authorizing statutes that restrict agency discretion in a variety of ways.31 The danger of agency capture also motivates public interest groups to try to prevent it, using the resources provided by a pluralistic political and legal system, with its multiple points of access. These interest groups monitor agency activities, lobby on appointments, and use the courts to keep agencies independent of the regulated and to ensure that the often ambitious agency responsibilities written into law are fulfilled. The fear of stimulating such lawsuits produces a measure of defensiveness in the targeted agencies. Eric Patashnik argues that the process of developing constituencies among public interest groups is a requirement for the survival of any regulatory reform.32 In the absence of such efforts, he writes, regulation is to be avoided because it can become a tool for private interests to exploit the public.33 Regulatory Unreasonableness The regulatory capture argument emphasizes the dangers of regulators who establish cozy relationships with those they are supposed to be policing. The regulatory unreasonableness argument takes the opposite position; the concern here is the injurious effect of regulation on those subject to its mandates.34 Agencies are faulted for taking an overly aggressive stance toward regulated organizations and for applying rules and regulations mindlessly— going “by the book” when more flexibility and reasonableness would better serve all the interests involved. Regulators, for reasons that are discussed in chapter 3, tend to stress mechanistic compliance with rules and can thereby lose sight of broader agency goals. Fearing criticism for inappropriately close relations with the regulated population, they frequently overuse adversarial approaches while neglecting more cooperative mechanisms.35 As a result, the regulated are often treated more like criminals than as citizens in need of assistance in complying with regula-

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tory mandates. Such quasi-prosecutorial approaches have been said to encourage “the creation of a business subculture of legalistic resistance”36 that may “so sap the will to comply, so sour relationships and sabotage the inspectorate’s capacity to persuade, that behavior would become less rather than more safe.”37 The danger of this regulatory unreasonableness is its potential for unfair, wasteful, and even counterproductive governmental behavior.38

Adversarial Legalism Many of the antiregulatory themes discussed thus far find their systemic expression in what has been characterized by Robert Kagan as a culture of adversarial legalism.39 The key ingredients of this uniquely American approach to social policy are formal legal contestation over rights, duties, and procedural requirements in all areas of regulatory policy; litigant and lawyer activism in the formulation of policy and its application and enforcement; and pervasive uncertainty concerning the formulation and finality of regulatory decisions.40 Although Kagan’s argument covers more than regulatory policies, it finds perhaps its strongest support in this area. Kagan sees the emergence of an American policymaking and implementation style that is shaped by an adversarial approach to regulation: “In the United States the political struggle has resulted in systems of social regulation that do not differ greatly from those of other economically advanced democracies in terms of the kinds of social problems addressed or the substantive thrust of regulatory standards. But in terms of regulatory style, the United States is . . . more legalistic and more adversarial.”41 He attributes the development of this regulatory culture to several causes: —Fragmented governmental decisionmaking structures. Federalism, agencies with overlapping responsibilities, and judicial review create numerous points of access for diverse groups to intervene in decisionmaking. —Laws that create broad government responsibilities but leave considerable room for disagreements in interpretation. —A weak state apparatus in which the bureaucracy is not given enough resources to achieve the goals for which it is responsible. —A regulatory style heavily reliant on the threat of coercion, combined with often severe penalties for the regulated and potentially great benefits for other publics.


21

Taken together these features produce a system that is, in Kagan’s words, “more costly, more inefficient, more inflexible, and more uncertain” than those found in other advanced industrial societies.42 As the foregoing suggests, adversarial legalism is both a cause and a consequence of the behavior of agencies as they set out to interpret and implement regulatory statutes. Chapter 3 examines the challenge these circumstances pose to agencies charged with implementing regulatory statutes in a context of adversarial legalism.

The Regulatory Prospect The catalog of the alleged ills of regulation is daunting: Regulation is attacked from the realm of economic theory for being inherently inefficient, ineffective, even counterproductive. In practice, regulatory regimes have often shown themselves to be both costly and ineffective. They are susceptible to capture by the entities they are charged to monitor, or, if they avoid this pathology, regulators frequently make the opposite error, engaging in regulatory unreasonableness and a wooden application of rules. All of these ailments are magnified by the pervasive influence of the adversarial, hyper-legalistic environment in which regulatory policy must be implemented in the United States. Of course, many of these criticisms were not intended to be read so broadly and applied so widely. Instead, most are rooted in criticisms of abuses and shortcomings in specific programs. There are certainly realworld examples of successful uses of command-and-control regulation (although such examples do not appear prominently in either scholarly or public discussions of regulatory practice).43 Taken together, nevertheless, this body of criticism constitutes the political status quo in our understanding of the faults of regulation. The critique is a powerful one, and one that has strongly influenced regulatory policy over the past several decades. What is to be done? No responsible critics suggest that coercive tools can or should be removed from government altogether. The criminal law, that most coercive of policy tools, is likely to be with us as long as humankind is susceptible to the most elemental forms of antisocial behavior. Regulation, focusing as it does on risks and activities less central to society’s moral consensus, may be expendable, at least in theory. After all, governmental regulation

22


was largely unknown before the end of the 1800s. But it is difficult to imagine the outright abolition of the administrative state, premised as it is on the assumption of governmental responsibility for protecting citizens from harms ranging from environmental dangers to unsafe airlines, dangerous drugs, adulterated food, dishonest businesses, and a host of other hazards endemic to modern life.44 Assuming regulation will be with us, warts and all, for the foreseeable future, the critical questions then become, first, how to determine when and where coercive regulatory policies should be used, and, second, how to structure the application of regulation in those areas to maximize its potential social benefits, minimize its costs, and maintain its political support. Deregulation and Reregulation The proper scope of regulation and the substantive areas in which it is most essential are the policy issues underlying the decades-long move toward deregulation. The 1980s and 1990s saw the cessation, or at least serious restriction, of regulation in transportation, banking and securities, communications, and energy. This trend has been the subject of much scholarly debate. Increasingly, one hears the complaint that the move to deregulate has gone too far and that reregulation is in order.45 These issues moved to the center of political discussion in the fallout from the recent corporate accounting and associated scandals. Agencies have weathered the decades-long assault on regulation in different ways. Some simply went out of business, albeit seldom voluntarily. Others saw their regulatory powers and responsibilities cut drastically. A brief examination of the recent history of the Environmental Protection Agency is instructive. Of all federal regulatory agencies, EPA is most often the subject of the antiregulatory mantra. EPA, the nation’s largest regulatory agency, was defined nearly from the outset as an aggressive environmental enforcement agency.46 Its programs have been criticized for many of the general pathologies enumerated above: its performance (using economic criteria) has been faulted for relying on disincentives rather than incentives, contributing to inefficiency, delivering too little at too high a cost.47 It has been criticized for having been captured by narrow economic interests and working against the public good.48 And it has been attacked as an


23

unthinking tool of environmentalists—with being overly aggressive and uncooperative in its dealings with the regulated population.49 How, then, did the agency react to this onslaught of antiregulatory fervor? EPA by the mid-1990s had gotten the message that many of its coercive programs were in political trouble. Like other agencies, it sought to downplay the use of coercion and to emphasize more cooperative, less direct, and more consumer-oriented approaches.50 In large measure, the agency tried to retreat from an active regulatory role, though not always with notable success. This endeavor took a variety of forms: —Get out of the business of being the regulator without giving up regulation. Devolution was the watchword for EPA’s efforts to keep the benefits of regulation flowing and retain a degree of control while relying on the states to do the actual regulating.51 In a variety of areas EPA tried to emulate the successful state-oriented administration of the Resource Conservation and Recovery Act.52 —Use the market instead of regulation to shape behavior. The agency tried, as Schultze advises, to create individual incentives to serve the public interest. It experimented with achieving regulatory goals through quasimarket mechanisms such as pollution taxes that make people pay to pollute, pollution bubbles and other devices that allow people to make informed trade-offs, and permit trading and other devices that make it profitable not to pollute.53 —Self-regulation. EPA tried to put more discretion into the hands of those with the most knowledge, while retaining some control. The agency encouraged business to engage in environmental management and limited forms of self-regulation.54 The emphasis was on getting more performance through the carrot than the stick.55 —Emulate market decisionmaking. The agency adopted decisionmaking tools that model aspects of market decisionmaking, such as cost-benefit analysis and risk assessment and management.56 The goal here was to increase efficiency and better explain the benefits of regulatory actions. Evaluations of the Clean Air Act, for example, showed the savings in health care costs produced by a healthier environment.57 EPA thus attempted to retreat, albeit incrementally, from its highly coercive regulatory role. In edging away from traditional regulatory enforcement, the agency has had to be cautious and its capacity to do its job in this very different fashion has often suffered. While Congress may be

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increasingly hostile to regulation in general, and EPA in particular, legislators have chosen not to repeal EPA’s statutory responsibilities.58 Environmental advocacy groups, ever vigilant lest EPA be captured by the polluters, are even more concerned that the agency not be gutted by its congressional enemies. Moreover, EPA’s own bureaucracy has been shaped and socialized by the requirements of the major statutes it enforces. As a result, many of its attempts to reform itself have floundered because agency bureaucrats, hesitant to give up their traditional roles, are reinforced in their resistance by lawmakers and EPA’s attentive public. The agency’s attempts to reduce the coerciveness in its regulatory programs have met with mixed success. The process of regulatory devolution to the states has been a lengthy one, complicated by issues of state capacity, conflicting political agendas, and other issues.59 Creating markets is also a slow and difficult process and has proved unsuitable in some contexts. Evaluations of self-regulation programs have not shown much success. The technologies of risk assessment and cost-benefit analysis have not provided metrics acceptable to the public or critics.60 And the merits of cooperative enforcement approaches, according to at least one careful observer, currently have little empirical support.61 This spotty record of alternatives to direct, command-and-control regulation stands in contrast to findings about the effectiveness of regulation. David Markell, after a thorough review of the environmental regulatory enforcement literature, concludes that although the empirical record is fairly limited, there is convincing evidence that traditional environmental enforcement activity enhances compliance. He argues that there is far less data supporting the position that cooperative strategies work, or that they are more effective than traditional approaches.62 The evidence Markell cites for regulatory effectiveness includes findings showing that more frequent inspections produce fewer violations, that greater state and federal enforcement reduces air emissions, and that more enforcement is associated with less illegal dumping and reduced workplace injuries.63 For now, regulation and the coercion inherent in it remain tools of proven effectiveness in several policy realms, perhaps the only tools available in others. Wholesale movement away from regulation, moreover, seems unlikely given recent experiences in other areas (such as securities regulation, for example). Daniel Fiorino of EPA has written that command-and-control regulation is to the existing environmental policy frame-


25

work as “a stethoscope is to the physician or a violin to the symphony conductor.”64 Living with Regulation If regulation is a fact of life, then the second question becomes critical: How can coercive regulatory programs be effective, efficient, and politically sustainable in an environment of inadequate resources, overly ambitious statutory mandates, and adversarial legalism? Interestingly, questions about how regulatory effectiveness might be improved have been subject to much less scholarly examination than those related to deregulation. Economists seem not to be particularly interested in improving the operation of an enterprise that they regard, at best, with distaste. Lawyers, frequently imbued with a law-and-economics approach to social problems, have either joined the economists in their assault on regulation or focused their energy on administrative law and the legal environment of regulatory administration. Nuts-and-bolts issues of bureaucratic administration have never been a particularly hot topic among political scientists. The field has thus been left primarily to students of public administration and public management.65 Politicians, many of whom undoubtedly prefer continuing the wholesale movement toward deregulation witnessed in the 1980s, seem to have settled for an approach that simply makes the task of regulating more difficult. The process by which agencies formulate rules and regulations has been made more cumbersome. Executive orders have set procedural roadblocks to new regulations. Authorizing legislation frequently requires agencies to engage in time-consuming and costly cost-benefit and riskbenefit analyses before rules can be issued. Although it is difficult to argue that agencies should not balance costs, risks, and benefits when establishing rules, legislative requirements for particular types of formal analysis— subject to judicial challenge if viewed by any party as inadequate—clearly were motivated in part by a desire to limit the scope of regulatory authority and make the task of regulatory agencies more difficult. Legislative and judicial decisions have broadened substantially the list of necessary participants in the rulemaking process, making it easier for unhappy parties to challenge rules in court and further adding to the costs and uncertainty of regulation. Congress continues to use that ubiquitous, and frequently invisible, tool for punishing agencies involved in unfavored

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activities—budget cuts. Making regulation more difficult, of course, does not necessarily make it more efficient or effective. Indeed, the converse is likely to be the result.66 The Clinton administration was energized by a different strategy, part of a broad effort to make government more effective, efficient, and user friendly; that is, more like successful consumer-oriented organizations in the private sector. The effort was termed Reinventing Government, a strategy advocated by David Osborne and Ted Gaebler in a book of the same name.67 The movement’s focus on consumers, and the accompanying requirements for assessing government against performance indicators and targets embodied in a process called the national performance review, brought about substantial changes across the federal government.68 The application of these principles to regulatory agencies, however, proved problematic. At bottom, as already noted, regulation is based on coercion, on the threat of sanctions if regulated parties do not behave as required. In such circumstances, the targets of regulatory action are unlikely to view the agency from the perspective of satisfied customers. The focus on performance indicators is similarly problematic for regulatory agencies, since the most important indicator for many of them is found in nonevents—social harms that do not occur. Our interest here is on a third, admittedly more prosaic, approach to the problems of regulatory effectiveness: the attempt by regulators to rationalize and improve the operation of their agency from within, through administrative reforms. Chapter 3 focuses on internal regulatory reform in general: what are the challenges and the opportunities facing an agency attempting to address the problems of regulation and regulatory enforcement without sacrificing either its mission or the public support necessary to sustain it?

chapter three

“Regulatory Craft” and Regulatory Reform In light of the unrelenting criticism of regulatory practice, seemingly from all quarters, one might ask why agencies engage in such apparently dysfunctional behavior. Are regulators mindless automatons either without common sense or beyond caring about the original risks their agency was created to reduce? Are they power-hungry, striving to extend their bureaucratic empire despite its ineffectiveness? Are they “good people caught in bad organizations”? Or are they simply inept? Interestingly, amid the mass of ink spilled in the decades-long assault on regulation, much less attention has been paid to the view of regulation from inside the agencies. Assuming that at least some of the criticism of regulatory performance is correct, what is the internal dynamic that leads regulators to allocate their energy in inefficient ways, or to apply rules mechanically in situations where flexibility would seem so clearly preferable, or to develop inappropriately friendly relations with their clientele? Two observations are in order before these issues are addressed. First, many of the criticisms of regulation are in conflict, and thus movement to address one set of concerns inevitably provokes condemnation from the opposite direction. The conscientious regulator, sensitive to criticism and attempting to address it, often finds herself in a damned-if-I-do-anddamned-if-I-don’t situation. For example, the call for formal, law- and rule-based relations between agency and regulated groups was intended to avoid agency capture. More recently, however, critics complained that regulators tend to deal with their clientele by the book, in a contentious, 27

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“regulatory craft” and regulatory reform

adversarial fashion that is unnecessarily legalistic, expensive in time and transaction costs, and which may ultimately undermine the objectives of the program. Philip Howard has written a popular and widely cited assault on what he sees as the demise of common sense in regulatory agencies. He calls on regulators to exercise discretion and negotiate informal accommodations with regulated parties, thereby ensuring that the most serious risks are reduced while de-emphasizing less pressing problems, all with reduction of ritualistic (and, presumably, ineffective) application of rules.1 This sounds entirely sensible. Yet judges, legislators, and critics in watchdog groups and academia increasingly chastise regulators who stray outside the strict confines of the law they are meant to enforce, who use unauthorized discretion to pick and choose targets for regulatory action, or who engage in informal, “backroom” negotiations with potential bad guys. A second, related, observation is that many criticisms are, at bottom, directed not at regulators’ behavior, but at the underlying structure of a regulatory regime—at what the agency is and is not authorized, compelled, or forbidden to do. Increasing distrust of administrative agencies has led Congress to write legislation with more and more “shalls” and “shall nots,” and fewer “mays” in the key authorizing language. Recent environmental legislation, for example, sharply restricts agency discretion in rulemaking, with statutory pollution levels set in some circumstances and with mandatory deadlines for rulemaking in others. At the same time, these laws increasingly extend legal standing to outside groups, allowing them to turn to the courts if the agency appears to stray from a strict understanding of its statutory authority and responsibilities. Administrators seeking to avoid regulatory excesses grounded in statutory language must often play fast and loose with the law, a dangerous exercise in light of the increasing probability of legal or political embarrassment. Given this state of affairs, it is not surprising that many agencies adopt the path of least resistance and of greatest legal and political safety: a by-the-book approach where the agency cannot be faulted for ultra vires activities, regardless of the resulting inefficient, even irrational, consequences. Malcolm Sparrow has written an unusually sympathetic and provocative book aimed at helping beleaguered regulators deal with these conflicting assaults. The book, The Regulatory Craft, is almost unique in the literature in its focus on the nuts and bolts of operating a regulatory agency and on how forward-thinking regulators can improve the performance of


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their organization, reduce societal risks, and insulate themselves from some of the criticisms of regulation.2 Because of its relevance to the central focus of this book, and because many of Sparrow’s prescriptions are exemplified in the case study of Superfund that we discuss at length, we devote a major part of this chapter to a critical discussion of Sparrow’s analysis and its implications for regulatory reform. Sparrow summarizes the plight of contemporary regulators in the following terms: Regulators, under unprecedented pressure, face a range of demands, often contradictory in nature: be less intrusive—but more effective; be kinder and gentler—but don’t let the bastards get away with anything; focus your efforts—but be consistent; process things quicker— and be more careful next time; deal with important issues—but do not stray outside your statutory authority; be more responsive to the regulated community—but do not get captured by industry.3 In light of Sparrow’s explicit choice of audience for his book—practitioners working in regulatory agencies—the obvious question becomes: How should responsible, public-spirited regulators perform their critical responsibilities of public protection in an environment of inadequate resources, conflicting demands, and limited authority? Perhaps because of his previous life as a British police officer, Sparrow begins his answer with a refreshingly no-nonsense view of the social necessity of regulatory agencies. He spends little time agonizing over the calls for deregulation, or for a kinder, gentler form of consumer-oriented regulation suggested by the proponents of the Reinventing Government movement: bad guys will always be with us in one guise or another, he seems to be telling us, and they need to be restrained by the government. Regulators, like the police (and unlike most other governmental officials), deliver obligations rather than services. Their clientele are not consumers or customers, at least not in the usual sense of the word. Rather, regulatory officials, like police officers, perform the essential social function of protecting the public from the dangerous and potentially destructive acts of those who violate prohibitions or whose actions are subject to some form of governmental control in the public interest. Those benefiting from agency activities, their real clientele or customers, are the general public whose lives are improved through a cleaner environment, honest advertis-

30


ing, effective drugs, less dangerous workplaces, and the like. Yet this clientele seldom comes into direct contact with the agency; the public may not even know about or value its activities. Those who do come into contact with the agency are those whose behavior is monitored, controlled, or prohibited; they are typically met by sanctions, orders, rules, and regulations—hardly the stuff of a warm, fuzzy government. So what is a regulator to do? Sparrow’s short advice is to “pick important problems and solve them.” He suggests, in other words, that in the vast array of competing responsibilities facing most understaffed and underfunded agencies, regulators should determine the most serious social risks within their statutory remit and then design efficient, effective programs to reduce those risks. The implications of this directive are spelled out in painstaking detail throughout the book, but the basic message to regulators is summarized in what might be termed his regulator’s creed: Acknowledge the constant need to make choices. Make them rationally, analytically, democratically. Take responsibility for the choices you make. Correct, by using your judgment, deficiencies of law. Organize yourselves to deliver important results. Choose specific goals of public value and focus on them. Devise methods that are economical with respect to the use of state authority, the resources of the regulated community, and the resources of the agency. And as you carefully pick and choose what to do and how to do it, reconcile your pursuit of effectiveness with the values of justice and equity.4 The core of Sparrow’s book consists of a detailed description of how to design and implement the kind of risk-control strategy that would rationalize the activities of regulatory agencies, together with a series of examples where regulators have, knowingly or not, succeeded in putting Sparrow’s advice into practice. While Sparrow’s approach has much to recommend it as a prescription for rational regulatory policy, we believe that it requires a level of legal, political, and administrative risk-taking that may not be in large supply in agencies battered by decades of antigovernment, antiregulation rhetoric. Sparrow himself acknowledges that his approach presents “enormously complex implementation challenges” since “virtually every piece of supporting administrative machinery (such as budget processes, strategic planning, performance reporting, and information management) serves to hold


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regulators to past practice, and each has to be substantially disturbed to make room for new regulatory behaviors.”5 Sparrow’s proposals are based on two unexamined assumptions: that regulators will be permitted—by the courts, and by the political process— to reorient their activities as Sparrow suggests, and that they will be willing to undertake the risks and other personal costs necessary to do so. Three bodies of literature, one on the increasing judicial scrutiny of the exercise of administrative discretion, a second grounded in the area of policy implementation, and a third dealing with the relationship of individual incentives and local culture to criminal justice reform efforts, suggest that these assumptions may prove problematic. Indeed, an examination of these considerations provides an answer to the question that pervades much of Sparrow’s analysis: why is the kind of commonsense rationality he proposes in such short supply in regulatory agencies? Why are the successes he documents unusual stories of heroes rather than depictions of what one might expect of all conscientious public servants?

Delegation, Deference, and the Courts Modern scholars disdain the traditional axiom that bureaucrats “administer” the law rather than make policy, that Congress is not merely the preeminent policymaking institution, but the only body in the federal government vested with such powers. The modern administrative state originated in a series of enactments that vested substantial law- and policymaking authority in executive agencies and quasi-independent regulatory commissions. Although more recent authorizing legislation has frequently contained greater specificity and restrictions on agency decisionmaking (especially in the environmental area), broad statutes announcing a goal to be accomplished or social risk to be mitigated, together with an institutional structure and a remit hardly more specific than to “go forth and regulate in the public interest,” still characterize the authorizing legislation for many regulatory agencies. Ambiguous statutes—the result of a combination of political compromise, lack of legislative consensus, and sloppy draftsmanship—leave agencies with broad discretion to define which risks to focus their limited resources upon, to establish tolerance levels for those risks, and to marshal enforcement resources pretty much as the agency sees fit.

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Of course, these activities are monitored by Congress, which is sporadically concerned with agency behavior, usually after the publicity surrounding a catastrophe, large or small. Agencies also fall under the eye of the federal judiciary, an eye that has alternated between watchful and inattentive. During the first third of the twentieth century, federal judges blocked many congressional efforts to give administrative agencies discretion to deal with the social problems of the day. A favorite tool of the “Nine Old Men”—the Supreme Court justices who thwarted efforts of New Dealers to extend the regulatory reach of the federal government— was the delegation doctrine. This doctrine was a legal construct based on the notion that the separation of powers enshrined in the U.S. Constitution forbids Congress to delegate “legislative” powers to administrative agencies. The most frequently cited incarnation of this doctrine is Schecter Poultry v. United States, the infamous “sick chicken” case.6 While modern scholars might agree that the National Industrial Recovery Act, invalidated in the Schecter case, exceeded even a lenient notion of acceptable congressional delegation of lawmaking authority, the delegation doctrine of the old activist court majority has been thoroughly discredited: the post– New Deal Supreme Court has not invalidated a manifestation of the administrative state on delegation grounds in more than sixty years.7 Agencies routinely exercise policymaking authority in their formal and informal rulemaking and adjudicative decisions, when they interpret the vague contours of their authorizing legislation, and especially when they make managerial decisions allocating scarce resources among what is typically an impossibly broad set of statutory responsibilities. Whether it is called lawmaking, policymaking, or something else seemingly more benign, administrative discretion is ubiquitous and gives substantial power to administrators and regulators to shape the contours of regulatory programs.8 While this transfer of quasi-legislative power to agencies is not currently under serious threat on constitutional grounds, its exercise is still subject to judicial scrutiny. All agencies act in the context of a specific statutory grant of authority and are bound by procedures established both in their own authorizing legislation and, more generally, in the Administrative Procedures Act (APA), the broad statutory framework governing rulemaking and adjudication for all agencies in the federal government. Over the past several decades, courts have focused special attention on administrators’ interpretation of ambiguities in their authorizing legisla-


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tion and on their fidelity to proper decisionmaking procedures. Although courts have been loath to conclude that a vague or broadly worded statute vests unconstitutional legislative authority in an administrative agency, they have been less hesitant to rein in administrators by inserting themselves in the process of interpreting the ambiguous statutory language emanating from the Congress. Similarly, under the guise of ensuring that administrative policy is “reasonable,” courts have increasingly taken a hard look at the procedures agencies follow in reaching decisions. These judicial enquiries are said to ensure that relevant information was considered and proper procedures followed in the agency’s decisionmaking process. Almost inevitably, however, such searching judicial scrutiny of the factual grounds of administrative decisions moves imperceptibly toward a simple substitution of judicial policy preferences for those of the agency. This is not the place for an extended discussion of the various constraints courts place on agency decisionmaking. But a brief review of the current judicial stance on this issue suggests some of the problems that may be encountered by administrators who take Professor Sparrow’s advice to “correct” the “deficiencies” of law by aggressive action. Judicial Deference to Administrative Interpretations of Statute As indicated above, most of the statutes establishing the regulatory agencies of modern government contain ambiguous language—by design, inadvertence, or simple legislative inability to agree on more precise terms. Consequently, the issue facing judges in this context typically concerns who—judges or administrators—should have the primary responsibility for determining the meaning of ambiguous statutory text. This issue is typically cast in terms of the amount of “deference” courts should accord an agency in interpreting and applying provisions of its authorizing legislation. For a regulatory agency, more judicial deference means more latitude for administrators to define the risks they will focus their resources upon and a broader choice of the tools they may use to address those risks; less deference means that administrators must justify their actions in adversary proceedings where crucial management decisions are subject to judicial second-guessing. In the 1984 landmark decision in Chevron v. Natural Resources Defense Council, the Supreme Court set down a broad rule giving substantial deference to administrative agencies in the interpretation of vague or am-

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biguous statutory language.9 The Chevron decision is generally understood to establish a two-step process for judicial scrutiny of agency interpretation of statute. First, the court must determine if the statute is ambiguous; if so, the agency interpretation and application of the statute is approved so long as it is “reasonable,” that is, so long as the interpretation is not “arbitrary and capricious.” Thus, Justice Antonin Scalia wrote in a later case, the Chevron doctrine established that in a context of statutory ambiguity, the courts should presume “that Congress meant to give the agency discretion, within the limits of reasonable interpretation, as to how the ambiguity is to be resolved. By committing enforcement of the statute to an agency rather than the courts, Congress committed its initial and primary interpretation to that branch as well.”10 The limitation of “reasonableness” was interpreted, at least in the years immediately following Chevron, as a fairly lenient standard: so long as the agency’s interpretation is plausible, even if the reviewing court finds another interpretation more persuasive, it will be upheld. Recent signs indicate that judicial deference to administrative interpretation of ambiguous statutes is eroding and that federal judges are increasingly comfortable in substituting their own views of proper policy for those of administrators charged with implementing complex regulatory programs. In the Supreme Court’s 2000 decision that invalidated the determination of the Food and Drug Administration (FDA) that its statutory authority extended to regulation of cigarettes, the five-member majority purported to follow Chevron, but concluded that the Food and Drug Act should be read to preclude the FDA from a role in regulating tobacco. Rather than deferring to the FDA’s determination that nicotine in tobacco products was a drug that fell within the agency’s regulatory authority, the Court held that judicial deference to administrative determinations of statutory ambiguity did not necessarily apply in issues of particular social importance, and indicated that the Court would use its own “commonsense” views in determining congressional intent.11 Two subsequent decisions further weakened the Chevron doctrine. In Christiansen v. Harris County, the court narrowed the applicability of Chevron-type deference to exclude “interpretations such as those in opinion letters . . . , policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law.”12 The court majority implied, over a strong protest from Justice Scalia, that the only form of agency


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decision entitled to Chevron-type deference is one arrived at through formal procedures, such as formal adjudication and notice-and-comment rulemaking.13 Less formal agency interpretations are merely “entitled to respect . . . but only to the extent that those interpretations have the ‘power to persuade.’”14 Obviously, it is judges who must be persuaded, and if the agency fails to do so, judges will substitute their reading of the statute for that of the agency.15 A second case, United States v. Mead Corp., reinforced the narrowing of Chevron begun in Christiansen. While the Mead ruling did not clearly set out when agency interpretations of statutory ambiguity are and are not entitled to judicial deference, most agency interpretations of statutory authority that are made outside the relatively narrow confines of formal adjudication and rulemaking would now appear to warrant nothing more than judicial “respect.”16 These rulings appear to curtail substantially the authority of regulators to “correct” statutory “deficiencies.” Indeed, they cast some doubt on the ability of regulators to determine the meaning and scope of the statutes they must administer. Administrative Decisionmaking under a Judicial “Hard Look” The Administrative Procedures Act was a creature of the New Deal, and its rulemaking procedures favored agency activism. In the early years, courts more or less confined their role to ensuring that agency rules were constitutional, that they were broadly in keeping with congressional intent, and that they were not patently irrational. Thus, courts did not conduct a searching examination of the facts and rationale behind agency actions; as with the issue of agency interpretation of ambiguous statutes under Chevron, the courts deferred to agency expertise. Starting in the late 1960s and 1970s, however, agency decisionmaking came under increasing judicial scrutiny. The wellspring of the case law that established this heightened judicial role is the same 1946 text of the Administrative Procedures Act that guided courts in the formative years. Courts continued to restrict their concerns to searching for violations of the Constitution and for actions that did not comport with an agency’s authorizing statutes. But the nature of these examinations changed from one of substantial deference to the agency to a far more independent-minded and searching inquiry into both the substance and process of agency decisionmaking.17

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The basic judicial standard demanded of agencies has remained constant over the years: that actions be neither arbitrary nor capricious and that decisions be reasonable. These seemingly unobjectionable requirements are, in fact, terms of art in modern administrative law, and new enquiries by courts into the reasonableness of agency action have placed judges in the guts of the administrative process. Judges have shown themselves increasingly willing to examine the technical merits of agency decisions, to see whether, in their view, the evidence supports the administrative determinations. Judges increasingly demand that agencies demonstrate that they have seriously considered the concerns of those who participated in the rulemaking process, that they have evaluated all the relevant evidence, and that their ultimate decision can find empirical grounding in that evidence. As a result, the arbitrary and capricious standard—originally a fairly low hurdle for agency decisions to clear (and one that therefore implies a limited role for courts)—now serves as shorthand for a wide variety of substantive and procedural issues on which agency decisions can be challenged in court. The moniker for this new style of judicial review of agency decisions is the “hard-look” doctrine. The Supreme Court has stated that the arbitrary and capricious test now requires a court to consider “whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment.” The inquiry must be “searching and careful.”18 A subsequent decision made the expansive nature of the judicial inquiry even plainer: an agency rule will be found arbitrary and capricious “if the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.”19 To defend in court against the inevitable procedural challenges, agencies must demonstrate what they considered and what they did not consider; they must show that their decisions were based on the evidence presented, and a federal judge must be convinced that the decision is, at the least, plausible in light of the evidence presented. Such enquiries provide substantial opportunity for judges to make substantive policy decisions under the guise of a hard look at process. In the words of Patricia


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Wald, a judge on the appellate court most involved in challenges to the actions of federal agencies: “Arbitrary and capricious” has turned out to be the catch-all label for attacks on the agency’s rationale, its completeness or logic, in cases where no misinterpretation of the statute, constitutional issue or lack of evidence in the record to support key findings is alleged. Frequently the arbitrary and capricious charge is grounded on the complaint that the agency has departed from its prior rationale in other cases without admitting it or explaining why. Sometimes the agency is rebuffed because it did not give adequate consideration to an alternative solution. But most often the court simply finds the agency’s explanation for what it is doing “inadequate.”20 It would be extraordinary if this newer form of judicial review had not limited the discretionary authority of agencies, and there is substantial evidence to suggest that the ever-present specter of judicial scrutiny has changed the way agencies do business, especially in newer agencies such as the Environmental Protection Agency.21 Sparrow counsels regulators to “ignore [laws] that are obsolete or unimportant” and to initiate regulation of risks in new areas “even before they are recognized in law.”22 As with an agency’s interpretation of its statutory authority, so it is with its substantive decisions: the ability of administrators to exercise the kind of discretion Professor Sparrow advises in the choice and definition of risks may be severely constrained by an increasingly activist judiciary. It should be said that Sparrow is aware of the legal dangers inherent in his advice. Indeed, he relates a telling example of precisely the kind of judicial nullification that threatens those who exercise his version of regulatory craft. He describes an effort by the Occupational Safety and Health Administration (OSHA) to reduce enforcement actions against certain employers in exchange for agreements by those employers to adopt a comprehensive safety and health program that went beyond existing OSHA standards. Even though this program involved enforcement policy, an area of regulatory practice in which agencies are given the widest latitude by the courts, the U.S. Court of Appeals for the District of Columbia Circuit invalidated the program on the grounds that the directives to inspectors regarding reduction in inspections constituted a “rule” subject to public notice and comment provisions of the APA. In so doing, the court rejected

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the agency’s arguments that the program was voluntary and did not carry the force of law. The agency subsequently abandoned the program. Sparrow is unfazed by the setback: In the grander scheme of things, the demise of OSHA’s cooperative compliance program probably represents only a temporary setback. As risk orientation takes firmer hold, regulators will continue to devise rational, sensible, and artful ways of structuring their discretion; and they will continue to influence behaviors beyond the strict limits of existing law. Of course, the design of such structures should be open to challenge and review. But eventually such practices will come to be accepted as a normal component of the regulatory craft.23 Sparrow offers no evidence to support this optimistic assessment of the future, presumably more limited, role of the judges in restraining the efforts of regulators who attempt to overcome the constraints of law.24 A less sanguine observer might conclude that courts have shown no inclination to reverse their increasingly intrusive role in regulatory decisionmaking and that legal challenges will almost certainly beset regulatory reformers in the future.

Regulatory Reform and Policy Implementation A second body of scholarship sets out a series of factors that may both promote and inhibit successful policy implementation; these factors suggest that change in regulatory agencies may be especially difficult to effect. Regulatory programs are typically characterized by conflicting goals, decentralized decisionmaking based on discretionary actions of street-level bureaucrats, and what political scientists Jeffrey Pressman and Aaron Wildavsky call “the complexity of joint action”—the difficulty of coordinating policy implementation when numerous groups and individuals are involved.25 These factors combine with the legal difficulties discussed above to make regulatory reform difficult. Virtually all regulatory programs embody conflicting goals. As Sparrow suggests, regulators are typically asked to reconcile safety with cost, efficiency with effectiveness, speed with comprehensiveness.26 In addition, the actual output of most regulatory programs—like those of law enforcement agencies—is determined by the aggregate of decisions made and ac-


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tions taken by enforcement personnel exercising discretion in virtually every interaction they have with the regulated population. In this sense, regulatory officials carrying out inspections are not greatly different from police officers; agency enforcement personnel who determine whether to proceed formally or informally to deal with a regulatory infraction are similar to prosecutors. Finally, regulatory programs frequently require cooperation from agencies and organizations beyond their direct control. Most federal agencies, for example, must use attorneys from the U.S. Department of Justice to initiate formal enforcement actions in court. Others require the cooperation of uniformed personnel in other agencies to initiate law enforcement activities. Often state regulatory officials must be involved. A perusal of the implementation literature shows that most scholars would view an effort to change the way regulatory agencies operate as particularly difficult.27 Box 3-1 lists some common features of regulatory programs, exemplified by the Superfund program, with several suggestions from the literature that point to implementation difficulties such features have encountered in the past. Eugene Bardach has summarized these challenges as follows: The principal explanatory framework in the early literature highlighted the institutions and practices of American pluralist and federalist democracy that were unfriendly to implementation, e.g., the susceptibility of programs to continuing political conflict over their goals and resources, weak or nonexistent inter-agency and interjurisdictional coordinating systems, and cumbersome accountability procedures and heavy-handed overhead agencies. In this world of fragmented political power, the many resources required for program construction are controlled by different actors—from frontline regulatory enforcers and service professionals to personnel officials writing civil service job descriptions—with only partially overlapping interests and with highly variable abilities and motivations to induce cooperation among one another. Furthermore, these actors normally—and often quite properly—have different priorities than those of the advocates for the new mandate. They have ongoing responsibilities, after all, some of which are poorly fulfilled as it is, given normal governmental resource constraints.28

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“regulatory craft” and regulatory reform Box 3-1. Superfund Reform and the Policy Literature Conflicting statutory goals in Superfund Mazmanian and Sabatier: Clarity in the law structures the implementation process and increases the likelihood of successful implementation; ambiguity has the opposite effect.1 Nakamura and Smallwood: Conflict among policymakers and statutory ambiguity increase discretion for lower-level implementation actors to pick and choose which directives to follow.2 Decisions in Superfund require approval of participants pursuing different goals, responding to different constituencies, and held to different statutory and political responsibilities. Pressman and Wildavsky: Chances of success are reduced when the program delivery system is complex and success depends on the cooperation of multiple actors with different and conflicting perspectives. Such systems are characterized by a multiplicity of decision points that provide opportunities for delay and breakdown. The authors call this problem the complexity of joint action.3 Bardach: Participants in such systems play “implementation games” to achieve their separate purposes, which can dissipate program resources or displace program goals. Loss of resources means less to achieve program purposes; deflection of goals leads to dissipation of efforts.4 Many Superfund decisions are made at the regional level and substantial discretion resides with regional decisionmakers. Weatherly and Lipsky: In systems characterized by decentralization, imperfect technology, and inability or impracticability of close monitoring, the discretion of “street level bureaucrats” grows.5 They can reshape top-down efforts by selective compliance. 1. Daniel Mazmanian and Paul Sabatier, Implementation and Public Policy (Lanham, Md.: University Press of America, 1989). 2. Robert T. Nakamura, and Frank S. Smallwood, The Politics of Policy Implementation (St. Martin’s Press, 1980). 3. Jeffrey Pressman and Aaron Wildavsky, Implementation, 3d ed. (University of California Press, 1984). 4. Eugene Bardach, The Implementation Game (University of California Press, 1977). 5. Richard Weatherly and Michael Lipsky, “Street Level Bureaucrats and Institutional Innovation: Implementing Special Education Reform,” Harvard Educational Review, vol. 47 (1977): pp. 171–97.

“regulatory craft” and regulatory reform McLaughlin: Such situations create the chance that those charged with implementation can redefine and co-opt instructions from above.6 Moe: The inability to monitor subordinate-agent behavior increases the chances that agents will pursue their own interests separate from principals’ preferences.7 Superfund reform was to occur without a new statutory or legislative mandate, within the existing program structure. Selznick: The creation of new structures and the replacement of old leadership are the first steps in infusing an organization with a new sense of mission.8 Behn: New public managers work their trade by restructuring organizations, redefining what they do and how they do it. To do new things, new organizations have to be created by administrative legerdemain out of the old.9 The Superfund program is defined by the aggregate of decisions made and carried out at the site level in response to often highly particular circumstances. Elmore: A survey of policy research of the 1970s found that “most of the notable failures were with policies involving complex changes in existing organizations, the creation of new organizations, or the delivery of highly individualized services.”10 6. Milbrey McLaughlin, “Implementation as Mutual Adaptation: Change in Classroom Organization,” in Walter Williams and Richard Elmore, eds., Social Program Implementation (New York: Academic Press, 1976). See also McLaughlin, “Learning from Experience: Lessons from Policy Implementation,” Educational Evaluation and Policy Analysis, vol. 9, no. 2 (1987), pp. 171–78; and McLaughlin, “The Rand Change Agent Study Revisited: Macro Perspectives and Micro Realities,” Educational Researcher, vol. 19 (1990), pp. 11–16. 7. Terry Moe, “The New Economics of Organization,” American Journal of Political Science, vol. 28 (1982), pp. 739–77. 8. Philip Selznick, TVA and the Grassroots (University of California Press, 1949). 9. Robert Behn, Leadership Counts (Harvard University Press, 1999). 10. Richard Elmore, “Implementation of the Youth Employment and Demonstration Projects Act.” Commissioned paper reprinted as chapter 3 of the National Academy of Science Report on Youth Employment and Training Programs (Washington: 1986), p. 285. See also Elmore, “Youth Employment: National Policy and Local Delivery in Three U.S. Settings,” in R. C. Rist, ed., Finding Work: Cross National Perspectives on Employment and Training (London: Falmer Press, 1986).

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Consider these institutional problems in systemic terms. Changing a complex operational system made up of many, varied, and interdependent elements is vulnerable to failure from many quarters. Bureaucratic resistance, prolonged bargaining, political sabotage, weak technical capacity, and a host of other conditions could affect many of these elements. Although Bardach and others indicate that success in such a difficult enterprise is possible, in many contexts failure would appear almost overdetermined.29

Individual Incentives and Local Culture The previous sections focused upon the legal impediments and implementation challenges facing a conscientious regulator bent on following Professor Sparrow’s advice to “choose important problems and solve them.” The legal and political risks of such an endeavor, to say nothing of the effort required, are suggested by its infrequency. Sparrow’s book gives examples of successes in a variety of administrative contexts, but he also recognizes the difficulties involved, that “if it were all easy and obvious, then regulators everywhere would be doing it all the time, and there would be nothing innovative about it.”30 Sparrow sets out a “dream” in which he describes the underlying problems of frustrated regulators, the solution to which constitutes his book. A few elements of this depiction of the regulator’s situation: —There are too many laws to enforce and not enough resources. Enforcement, the distinctive competence of your agency, seems to have become politically unfashionable and is now accepted only grudgingly by those who hold political sway over you as a necessary evil, a thing of last resort, and better not to talk of it. Given your agency’s traditions of audit, inspection, and enforcement, embracing the new tools of voluntary compliance . . . has presented considerable cultural challenges, but you and your colleagues have persevered. . . . —Ever eager to help, your loyal staff brought to your attention a few inspiring stories, dredged up from the bowels of the organization. Individuals or small groups acting on their own initiative had identified some important issue, problem, risk, or pattern of non-


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compliance; had invented a solution and implemented it; and it had worked. The world was a better place! At least, a little piece of it. —You rewarded these individuals, celebrated them, and let them stand with politicians and dignitaries. Their exploits were written up—and then written off (by your critics) as anecdotes. You wondered why other employees could not behave so courageously and intelligently. But deep in your heart you knew (as all regulatory managers know) that none of the agency’s managerial, administrative, or support systems required, supported, or rewarded such actions. These isolated successes were really stories of organizational subversion. The heroes and heroines, celebrated by the politicians, were “good people locked in bad systems.”31 Sparrow recognizes that reform in regulatory agencies faces the same obstacles as reform in other contexts: bureaucratic inertia, failure to “think outside the box,” entrenched interests vested in the status quo, and so forth. He devotes much of his book to an encyclopedic discussion of how the reform itself should be designed, even down to such seeming minutiae as finding office space for the new activities. While there is little systematic discussion of how the various successful projects he describes managed to negotiate these bureaucratic and organizational obstacles, some lessons are implied: the importance of perseverance, commitment to change from the top of the agency, the importance of measuring performance. Another literature on organizational change—that dealing with criminal justice reform—suggests additional, possibly more serious, impediments to regulatory reform. These obstacles lie not in simple inertia, or the difficulty of changing ongoing administrative systems, but rather in the norms, informal practices, and personal incentives of the individuals expected to direct and implement the changes. These issues are not directly raised in Sparrow’s analysis, perhaps because it is aimed at administrators, rather than academics, or because his goal is to encourage action rather than resignation. However, a discussion of bureaucratic change without a consideration of the key constraints of agency culture and individual incentives and motivations risks irrelevance. The unasked question in the many tales of successful regulatory innovation related by Sparrow emerges as the question-in-chief in other contexts: Why did these public officials screw up their courage, take the

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political, bureaucratic, and legal risks, and do the hard work required to produce these victories over inertia? Why did they choose to engage in the dangerous and exhausting business of what Sparrow calls organizational subversion? And how does one provide an environment to lead others to do the same? To pose these queries does not denigrate the public-spiritedness of regulators, question their commitment to the goals of their agency, or suggest a lack of courage or stamina. It simply recognizes that making a little piece of the world a better place may not be enough motivation in and of itself to support the kind of long-term commitment needed to undertake the difficult task of organizational change that Sparrow advocates. The extensive and well-documented experience with reforms in the criminal justice systems over the past several decades is instructive on this issue, particularly since the institutions of criminal justice share many of the attributes of regulatory agencies: the “customers” of the criminal justice system are seldom involved in the enterprise by choice, but rather through an involuntary encounter with a police officer. The job of criminal justice officials is much like the job of regulators—the suppression of antisocial behavior through the identification, investigation, adjudication, and punishment of those who break the rules. And the criminal justice system, like most regulatory agencies, is pervaded by discretion, at all levels and surrounding almost all issues. Lessons from Criminal Justice Reform Like regulators, criminal justice officials never have the resources necessary to enforce all the mandates for which they are responsible. Whether through conscious policy or simple inadvertence, some areas of responsibility receive attention and resources while others do not. Police officers and prosecutors, like enforcement staff in regulatory agencies, are streetlevel bureaucrats who have enormous discretion regarding how—or even whether—to enforce the mandates and proscriptions for which they are responsible.32 This discretion is most often exercised in low-visibility decisions that are difficult to review or even influence. As such, line personnel are insulated from efforts from above—whether from within or outside their agency—to change their behavior. At the same time, this pervasive discretion encourages the growth of informal norms and practices to guide its exercise. When an attempt is made to change the way the system operates, such local cultures are difficult to dislodge.


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Efforts to improve the operation of the various elements of the criminal justice system—prosecutors, courts, corrections, and especially police— are almost as old as the republic. Empirical documentation of the results of these efforts is of more recent vintage, with the majority of work done in the 1970s and 1980s, when the federal Law Enforcement Assistance Administration doled out hundreds of millions of dollars to the institutions of criminal justice across the country, and spent a few million dollars on empirical research to evaluate these efforts. Several themes run through the literature on criminal justice reform that are instructive when considering reform in regulatory agencies: discretion and its displacement as an obstacle to reform, the centrality of the local culture in the operation of the criminal justice system and its impact on reform efforts, and the importance of individual incentives in efforts to change ongoing systems. discretion and its displacement. Criminal justice systems, like regulatory agencies, involve pervasive discretion at virtually all levels, from the police officer on the beat deciding how to deal with a violation of the law, to the prosecutor’s choice of whether and what to charge and what position to take in plea bargaining, to the judge’s decisions in such critical areas as bail and sentence. Most efforts to reform criminal justice systems have involved constraining this discretion in one way or another, such as changing police behavior regarding arrests, searches, and interrogation; or reducing or eliminating prosecutorial plea bargaining; or mandating minimum sentence provisions on judges. A common finding of research examining efforts to change the behavior of criminal justice practitioners is what might be termed the displacement of discretion: discretion removed from one aspect of the system pops up in another guise at another point in the process. An example: the 1970s and 1980s saw a number of efforts to reduce or eliminate the incidence of plea bargaining, the process by which defendants are offered reduced charges or sentences in exchange for pleading guilty. While the form of the bargains often changed as a result of these reform efforts, the substance of plea bargaining—the implicit or explicit exchange of sentencing consideration for a plea of guilty—always remained. When assistant prosecutors were forbidden to reduce charges in exchange for guilty pleas, bargaining shifted to judges who were asked to indicate the sentence before the defendant agreed to a guilty plea.33 When judges were constrained

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in their sentencing decisions because of mandatory minimum sentences and the like, prosecutors bargained over whether or not to charge the defendant in a way that would trigger the statutory minimums.34 When both prosecutor and judge were constrained, judges engaged in “implicit plea bargaining,” where they made it clear that defendants who pleaded guilty would receive lighter sentences than those who put the state through a trial.35 Analogous findings in other aspects of criminal justice led researchers to conclude that top-down changes in the operation of what one scholar termed “local discretionary systems” are frequently subverted by practitioners who regard such changes as inappropriate.36 Even change initiated at the local level, by a district attorney or chief judge, can face similar obstacles both within the local organization and in other parts of the system; in the words of one judge, discussing how he sidestepped the district attorney’s ban on plea bargaining: “When faced with an unpleasant policy, resourceful judges and lawyers can generally find acceptable ways around it.”37 Existence of similar discretion in regulatory agencies suggests that analogous means of avoidance are available to those who disagree with reforms. l e g a l c u l t u r e . Studies of the operation of criminal justice in various towns and cities across the United States have revealed what practicing lawyers knew all along—despite a common substantive and procedural law, and a hierarchical state court system, criminal justice remains an intensely local affair. Courts are tied to particular places, and court communities develop informal norms, practices, and relationships that distinguish them from other communities, even within the same state. Distinctive norms regarding sentencing—the “going rates” for particular types of crime and criminal defendants—have been found to exist in individual courts, as have norms concerning disposition time and mode of disposition.38 For example, studies of court delay suggest that jurisdictions develop informal standards regarding proper disposition time, for when a case is “ripe” for disposition and when it is “old.”39 Similarly, scholars investigating plea bargaining have found that local courts develop norms regarding which cases should be tried, and which should be plea bargained.40 Accompanying these norms are distinctive local practices and relationships between participants in the criminal justice system regarding such issues as how and when motions are filed, when case files and evidence


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are revealed to the other side, and how requests for postponements are made. These localized norms and practices require lawyers with cases in unfamiliar jurisdictions to secure local counsel to help them avoid the pitfalls of the uninformed. They also make it difficult to change the operation of local systems, particularly when those efforts come from outside the community. Local norms, combined with the possibility of displacement of discretion, make resistance to unwelcome policy initiatives both likely and resilient. Numerous studies have shown that when local practitioners believe that a particular sentence is the fair and proper one for a particular class of offender, they will resist mandated sentences that are very far removed from that “proper” sentence. When they believe a particular length of time is necessary to prepare cases and ensure fairness, they will resist delay-reduction efforts that attempt to accelerate the pace of litigation beyond what they believe to be a fair pace. When they believe a negotiated resolution of a case is the appropriate mode of disposition, they will find ways to bargain, even if the usual forms of negotiation are closed. The implications of these findings for regulatory reform are obvious. Regulatory agencies frequently have localized cultures, much as they exist in the criminal justice system.41 Indeed, Sparrow speaks of “agency culture” and its implications for enforcement style, although he does not discuss it as a potential obstacle to reform.42 Informal norms regarding how to treat particular types of violation and violator, assessing what kinds of rule infractions are more or less serious, and determining the proper relationship between the agency and the regulated parties are well documented.43 In light of the already-noted similarities between regulatory agencies and criminal justice agencies, we would expect that reforms that go contrary to local norms would face resistance. And the ever-present discretion in regulatory agencies provides opportunities for superficial adherence to reforms, while the substance of the process remains very much the same. incentives and disincentives. The final strand of the findings on criminal justice reform is perhaps of most moment for Professor Sparrow’s enterprise. Many criminal justice reforms were predicated on a good government model of better protecting public safety by a variety of substantive and procedural changes designed to move criminal cases faster, to eliminate negotiated deals with criminals, to ensure that convicted

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criminals spend an appropriate (that is, longer) time in prison, and so forth. Many of these reforms were top-down efforts by state officials—in the courts, the attorney general’s office, or the legislature—to impose changes upon local criminal justice systems. The assumption underlying all these reform efforts was that they would result in a fairer, more efficient criminal justice system and that public-spirited practitioners working in the system would buy into these obvious improvements and cooperate with the reform effort. The reforms typically had in common a failure to take the individual criminal justice practitioner into consideration. In particular, it was seldom asked why the local assistant district attorney, or judge, or police officer would embrace the changes and abide by them. Malcolm Feeley, in an insightful study of several criminal justice reforms, made the point well: “The central obstacle to change in the courts is not the resistance to reform, but is, more fundamentally, the lack of interest in even thinking about change. This is not to suggest that there are no efforts at planned change . . . only that there is little incentive for those engaged in day-today administration of the criminal courts to think about systemwide changes or, when they do, to pursue them vigorously.”44 Informal systems and cultures, such as those that operate in criminal justice and regulatory agencies, exist because they serve the interests of those who work within them. These interests may be as prosaic as an easier job, shorter hours, or less stressful relations with others. They may include a reduction in political risks originating either inside or outside the agency, or a simple desire to avoid conflict. These individual interests are nurtured by a culture that supports the current way of dealing with offenses and offenders, and a system rife with discretion that permits, even encourages, avoidance of unwelcome changes. Perhaps, then, a major reason why regulatory reform of the type Sparrow advocates is so unusual is because it often runs counter to actual or perceived personal incentives, norms, and values of those whose cooperation is essential for the reform to succeed.

Conclusion We have engaged in an extended discussion of Malcolm Sparrow’s important contribution to the field of regulatory reform because it presents an


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almost unique effort to consider regulation from the perspective of the regulator, rather than the legislator. In addition, the extended case study on Superfund that makes up much of this book is an example of an agency that appeared, unknowingly, to be following Sparrow’s advice. The Superfund program in 1995 faced most of the frustrations of regulation that Sparrow sets out: public criticism for being both too lenient and too rigid; inability to show success despite substantial expenditures and much effort; performance measures that failed to describe what the agency was actually doing and that provided ammunition to its critics; and a failure to focus on the most serious risks at individual sites, and lack of a clear methodology for doing so. Thus, the Environmental Protection Agency’s successful overhaul of the administration of the Superfund program can be seen as supporting Sparrow’s analysis. In fact, many of the reforms’ successes are directly analogous to the advice Sparrow gives regulators. However, if Sparrow understates the difficulties in the reform effort he proposes, the Superfund success story may be the exception that proves the rule. Success stories are not found in abundance in either the literature or the practice of regulation. By focusing attention on just one case study, we hope to illuminate the legal, implementational, and organizational issues involved to a greater degree than was possible in Sparrow’s broader study of regulatory reform. First, however, we offer a short introduction to the complexities of the Superfund program.

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the essential superfund chapter four

The Essential Superfund

The underlying tasks facing the Environmental Protection Agency in Superfund are simple to state but difficult to perform. The purpose of the program is to identify dangerous hazardous waste sites, determine what should be done to clean them up to protect human health and the environment, and finally to make certain that those tasks are completed. Although the American public remains adamant about being protected from hazardous waste, the means for achieving this goal have been controversial since EPA started to implement the program in 1981. When Congress began to debate the Superfund law in the late 1970s, lawmakers assumed that the cleanup task would be simple, quickly achievable, and relatively inexpensive. They reasoned that there were a fairly small number of sites to be addressed and that it would not be especially difficult or expensive to clean them up. These assumptions were proven inaccurate: thousands of waste sites were discovered, and cleanup at many of them was much more complex and expensive than anticipated. Revenues available to the program could easily be exhausted without putting an appreciable dent in the problem, and the task of establishing cleanup goals and procedures at the multitude of sites generated seemingly endless conflict and controversy. Lawmakers may have believed that science and common sense could readily produce cleanup standards that would provide desirable levels of public protection and acceptable levels of risk. It soon became clear, however, that this task is essentially a political, rather than scientific, exercise. 50

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Congress had avoided making unpalatable choices among competing values in the authorizing legislation and instead created lists of conflicting goals that EPA was required to consider in determining how a site should be handled. These goals included preferences for protectiveness, permanence, cost-effectiveness, speed, and consistency with regulatory programs of other national, state, and local governmental agencies. The agency was given no metric for making the necessary but essentially political tradeoffs among these competing objectives at particular sites. At bottom, the underlying questions facing the Superfund program at each new site remain those that challenged EPA at the beginning of the program: “Who shall pay for the cleanup?” and “How clean is clean enough?”

Statutory Origins and Program Design Superfund originated in 1980, following the discovery of hazardous waste under a housing tract on Love Canal in upstate New York and in other locales such as the “Valley of the Drums” in Appalachia and the town of Times Beach in Missouri.1 The resulting political uproar from these toxic revelations produced the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), the authorizing legislation for the Superfund program.2 As political scientist John Kingdon might have predicted, a crisis-induced policy window opened, and new, unexpected, and sweeping legislation passed through it.3 CERCLA provides EPA with a diverse set of tools for dealing with hazardous waste cleanup, and the program that grew up around these devices is extraordinarily complex. We attempt to keep these intricacies to a minimum in the description that follows, but a brief journey into the guts of the program is necessary to understand the reform measures initiated by EPA in the mid-1990s that are the focus of our case study in chapter 5. The “Superfund” that gave the cleanup program its name is a trust fund that received proceeds from a tax on petroleum and chemical feed stocks and from a broad-based corporate environmental tax. The fund can be used for public-works-style cleanups and for emergency actions to protect against immediate risks from hazardous waste contamination. It can also be used to pay for site remediation before reimbursements are

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obtained from the parties responsible for the waste. The authorization for the trust fund income stream expired in 1994 and was not renewed. The crux of the program is the liability scheme established in the original legislation and strengthened through subsequent judicial interpretation. The legislative record clearly shows that Congress intended that the majority of cleanup expenses would be paid by those responsible for the waste—the potentially responsible parties, or PRPs, which can be businesses, individuals, or units of state or local government. The potent liability scheme is retroactive, strict, and joint and several. Retroactive liability means that PRPs are liable for cleaning up sites where dumping occurred before the Superfund law was enacted. Strict liability means that PRPs can be held liable for cleaning up a site even if they were not negligent in disposing of the waste. Joint and several liability means that any PRP at a site involving multiple parties can be saddled with the entire cost of cleanup. The retroactive and strict elements of the liability scheme are explicitly set out in the statute; the third—joint and several liability—was added, through a creative exercise in statutory interpretation, by the federal courts.4 To strengthen the government’s hand in cleanup actions, the Superfund law casts this liability net widely: virtually any party associated with a site—landowner, waste producer, transporter, or dump operator— is statutorily responsible for cleanup. No other environmental agency in the world has such a powerful tool for transferring hazardous waste cleanup costs to businesses and units of state and local government. Indeed, one environmental official we interviewed in the Netherlands in connection with another project referred to Superfund’s liability scheme as “oriental despotism.”5 The muscular liability doctrine, particularly its joint and several element, encouraged EPA to confine its enforcement activities to just one or two wealthy PRPs at multiparty sites. Companies involved at Superfund sites read like a “who’s who” of major American industry: General Electric, General Motors, Dupont, and so on. Why, EPA officials asked in the early years of the program, should the agency waste precious time and money to establish cases against all the parties at a site when the liability scheme allowed it to affix complete liability on one or two “deep-pocket” corporations? But once targeted by EPA in cleanup actions, these parties—frequently among the nation’s largest and most influential businesses—sought to reduce their own cleanup burden by initiating scores of


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so-called third-party lawsuits against the other responsible parties. This aspect of the program generated substantial controversy because of the avalanche of litigation it produced, and its potential for involving small businesses, municipalities, even ordinary citizens, in sometimes ruinous litigation. The reliance on liability-based financing for cleanups had far-reaching consequences for EPA as an organization. Obtaining money for environmental remediation required creating and administering a far-flung structure for identifying, pursuing, and compelling parties associated with hundreds of sites to pay up. Within the agency, legal enforcement actions and engineering decisions on the mechanics of cleanup became increasingly intertwined, with EPA lawyers and environmental scientists exercising joint control over a process that was part legal, part scientific, and part political. As with any liability system, transaction costs in the form of lawyers’ fees and other litigation expenses consumed substantial resources both for EPA and the PRPs, usually before the first shovel entered the ground. The growing controversy over the procedure for determining who would pay for the cleanups further complicated the issue of answering how clean is clean enough. The more stringent the cleanup standard, the more expensive the cleanup, and the Superfund legislation evinces a strong preference for “permanent” remediation. EPA initially interpreted permanent remediation to require that pollutants at sites be restored to their “background levels,” or the amount that existed naturally at a site. This standard is ambitious and usually very costly: in the 1990s average cleanup expenses hovered around $30 million a site. These costs are borne primarily by large and influential PRPs with both an incentive and the requisite resources to attempt to influence the decision on cleanliness in a less expensive direction. This, in turn, mobilizes environmental groups and local citizens to exert pressures in the opposite direction. The result: political controversy, litigation, and spiraling transactions costs, frequently with little significant movement toward actual site remediation.

Remediation Decisionmaking: The Complexity of Joint Action The task of determining who should pay and how clean is clean enough has several components. First, EPA must characterize the contaminants and their danger to human health.6 Second, the agency must ascertain the

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pathways (through the air, soil, or water) these harmful substances can take to reach current and future populations. Third, the agency must make decisions about how to clean up the site and who should pay for it. Each question must be answered anew at every site, based on local circumstances. Those hazardous waste sites across the country deemed most in need of cleanup are listed on the National Priority List, or NPL.7 When addressing a site, EPA can initiate either a removal action or a remediation. A removal is designed to address an “imminent and substantial threat to human health or the environment.” Removals are usually financed (at least in the first instance) from the trust fund, and involve such activities as removing leaking drums from the site, excavating or pumping waste pools, removing other immediate threats, or merely building a fence to keep people away from contaminated land. These actions are relatively cheap and effective in reducing the most dangerous risks of actual or potential public exposure to hazardous substances. For some sites, a removal action is sufficient to clean up the hazardous waste. For others, however, substantial contamination is left behind that requires subsequent remedial action. Removal actions are relatively noncontroversial and arguably have provided the majority of actual risk reduction brought about by the Superfund program. It is the far more complex, expensive, and time-consuming remediations that have generated the controversy. A remediation is an action designed to clean up or permanently contain hazardous substances at a site. A remediation can be conducted as a public works project, paid for by the trust fund (often with compensation from responsible parties obtained in subsequent litigation). Alternatively, the potentially responsible parties at a site can be ordered (by use of a unilateral administrative order) to perform the cleanup, upon threat of treble damages if they fail to comply. PRPs may voluntarily participate in cleanup work under one of several forms of settlement agreement. EPA also has authority to initiate (or to threaten to initiate) legal action to force the PRPs to clean up the site. Such actions frequently result in a consent decree, by which the PRPs and the agency agree on the specific nature of the cleanup and its financing.8 The first step in the remediation process is completion of a remedial investigation and feasibility study, or RI/FS. This step includes a geographic, geologic, and hydrologic assessment of the site, together with an engineering report that sets out the various options for cleanup and their estimated costs. Completion of the RI/FS, which can be undertaken either by EPA or


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by the PRPs under agency supervision, can take anywhere from several months to several years. The next step is remedy selection. The remedy selected by EPA must meet a number of statutory requirements. It must: —Adequately protect human health and the environment, —To the extent possible, utilize permanent solutions (rather than containment remedies that leave waste on the site or merely move it to another location), and best available technology, —Be “cost-effective,” and —Satisfy all applicable or relevant and appropriate regulations (or ARARs) on environmental standards at the federal, state, and local levels.9 After a series of hearings at which PRPs and the local community may comment, EPA publishes its preliminary choice of remedy. After another statutorily mandated comment period, EPA finalizes its choice in a Record of Decision, or ROD. If PRPs are to undertake the cleanup, the Justice Department must approve major provisions of the ROD, as it does other major steps in the process. Once the ROD is finalized, the cleanup moves into the remedial design and construction phase, which can take anywhere from several months at a relatively simple site to several decades at sites requiring the use of long-term technologies such as those used to clean polluted aquifers. As is obvious from the foregoing, the process of remedial decisionmaking is a textbook example of the complexity of joint action. At numerous decision points, a broad array of interested parties can influence, delay, or scuttle decisions concerning cleanup standards and procedures as well as the allocation of financial responsibility. Unsurprisingly, remedial decisionmaking often generates transaction costs, conflict, and litigation, rather than actual cleanup activity. It also creates obstacles to reform of the process, since efforts to change existing procedures must be filtered through all of the interested parties, each of whom has a different constituency and set of goals—and each of whom has opportunities to obstruct changes that they regard as inappropriate or contrary to their interests.

Decentralized Administration and Regulatory Culture in Superfund Another factor that should not be overlooked in the discussion of how Superfund works is the decentralized administration at EPA. When we

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looked at the implementation of Superfund in the late 1980s, we discovered not one program, but several. Each of EPA’s ten semi-autonomous regions is responsible for implementing Superfund in its specific section of the country. Superfund’s tool box of policy implements provides a broad choice of means for cleaning up hazardous wastes, with little statutory guidance for assembling those tools into a coherent program. While headquarters in Washington sets broad policy, establishes performance measures by which the regions are judged, and may have input into high-visibility cleanups, most day-to-day decisions affecting how sites are handled are made at the regional level. This decentralized decisionmaking structure makes good sense. Geography, geology, and hydrology differ across regions, making engineering considerations somewhat different from region to region. Regions differ substantially in their environmental awareness and political culture; state and local statutory and regulatory provisions also vary. This degree of functional independence encourages the development of distinct regional norms, values, and informal practices—different regulatory cultures within the same agency. In a bureaucratic context of weak central control, and a need to show results in different environments, the EPA regions fashioned their own strategies for implementing Superfund, norms guiding how they should deal with PRPs, and perspectives on how to evaluate answers to the central questions of who shall pay and how clean is clean enough. In the late 1980s, we identified three distinct implementation strategies associated with different regional offices:10 —Prosecution: an adversarial strategy that achieves cleanup by aggressively pursuing PRPs through litigation. The strategy emphasizes legal compulsion and often treats the potentially responsible parties as miscreants who must be coerced into fulfilling their statutory obligations. PRPs described agency officials in such regions as “uncooperative,” “unreasonable,” and “aggressive.” —Accommodation: a strategy that also emphasizes the obligation of PRPs to pay for cleanups. But here the agency attempts to facilitate a settlement with PRPs by negotiation and use of the various inducements to cooperation found in the authorizing legislation. PRPs described officials in these regions as more “reasonable,” “helpful,” or “creative.” —Public works: a strategy that turns first to the trust fund to pay for cleanups, rather than focusing attention on litigation and forcing PRPs to


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pay the cleanup bill. Here “getting on with the cleanup” is the order of the day, with the expectation that lawyers will sort out who pays afterward. As individual implementation strategies grew across EPA’s regions, so did norms guiding decisionmaking. The prosecutorial and accommodation strategies were associated with norms governing how the agency should treat PRPs. Prosecutorial regions tended to view all PRPs with distrust and maintained a legalistic, adversarial stance toward them; regions using an accommodation strategy viewed PRPs, at least those who were cooperative, with more equanimity. PRPs we interviewed in the late 1980s asserted that they were treated as quasi-partners in some regions, as quasicriminals in others, regardless of the blameworthiness of their original actions, their subsequent degree of cooperation with the agency, or their current efforts to be responsible corporate citizens. Our research in three regions suggested that norms and practices governing agency relations with PRPs existed independently of norms guiding cleanup and regional variation in enforcement styles. There was, in other words, no relationship between the enforcement strategy used by the region against PRPs and the specific cleanup requirements imposed. PRPs complained that various regional offices were requiring different cleanup technologies and cleanup standards—carrying substantially different price tags—at sites with similar characteristics. Some regions seemed open to new technologies and to PRP proposals to moderate cleanup costs. Others demanded that all cleanups fit a prescribed mold that implied higher cleanup costs without (at least in the view of the PRPs) appreciable environmental gains. These findings suggest some of the difficulties facing those hoping to change a system in which decentralized decisionmaking is linked to strong local norms regarding the process and the substance of regulatory decisions. Both the public policy literature on implementation and the criminal justice reform literature suggest the challenges inherent in such an undertaking.

Program Operation: 1980–92 The Superfund authorizing legislation was enacted by a lame duck Congress in the closing days of 1980 and signed by Jimmy Carter as one of his last official acts as president. It then fell to Ronald Reagan, no supporter of new regulatory programs, to put the program into operation. The first

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twelve years of Superfund were characterized by intense political controversy, a series of EPA stumbles and about-faces as it attempted to formulate a national cleanup strategy, and a paucity of actual cleanups. Reagan’s appointee to head the new program, Rita Lavelle, was accused by environmentalists in and out of Congress of being inappropriately lenient on polluters and of making “sweetheart deals” with PRPs. The resulting political furor resulted in her resignation and was an important element in the ouster of Anne Gorsuch, President Reagan’s first appointee to serve as administrator of the Environmental Protection Agency. Gorsuch was replaced in 1983 by William Ruckelshaus, who had been appointed by President Richard Nixon in 1970 as the first administrator of EPA. By the time Ruckelshaus again took the reins at EPA, the magnitude of the hazardous waste cleanup job and the insufficiency of trust fund monies to support it was becoming clear. The political dangers of the agency appearing to be “soft” on polluters was similarly evident. Ruckelshaus shifted Superfund from its beginnings under Rita Lavelle as a public works cleanup effort financed primarily by the trust fund to an aggressive “enforcement first” program committed to obtaining maximum cleanup dollars from PRPs. The political debate over the program intensified in subsequent years. EPA secured victories in the courts that established the liability doctrine and proceeded to use those liability provisions to require many of America’s industrial giants to pay for expensive cleanups at sites across the country. The PRPs, for their part, turned to litigation to stall or derail EPA’s enforcement efforts at individual sites, and to friends in Congress to change the legislative framework. Regional variation highlighted perceived unfairness in the liability scheme, and the aggressive enforcement policy encouraged a confrontational governmental posture toward PRPs. The reauthorization of the Superfund statute in 1986 was a political donnybrook between a Republican president committed to lessening regulatory burdens and lowering taxes, and a Democratically controlled Congress bent on ensuring that EPA aggressively pursue PRP-financed cleanups at Superfund sites, and on enlarging the tax base of the trust fund to finance cleanup of sites where no solvent PRPs could be found. The resulting statute—the Superfund Amendments and Reauthorization Act—added a new broad-based tax on manufacturing to augment the trust fund. It contained provisions that allowed EPA to offer incentives to PRPs to encourage settle-


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ment, together with new coercive tools to compel their cooperation. And in response to the allegedly cozy relations between PRPs and the agency during the Gorsuch years, the law put legal enforcement of the Superfund program under ultimate control of the Department of Justice and placed new statutory requirements on the agency’s remedial decisionmaking. Within EPA, Superfund’s first decade saw officials in regional offices, with help from headquarters, “invent” the various administrative processes specified in the authorizing legislation.11 And scientists and engineers, in and out of the agency, began to learn which diagnostic and cleanup technologies worked, for which types of contamination and site characteristics, at what cost. Establishing the administrative and scientific apparatus to clean up massive toxic dumps took several years. The agency’s efforts in the courts to establish and apply the liability doctrine was similarly time consuming. Unsurprisingly, at many individual sites, litigation and administrative confusion seemed pervasive. Superfund’s first decade was thus characterized by seemingly intractable delays, ubiquitous and acrimonious litigation, and little apparent progress in actually cleaning up sites. As a result of these factors, the Superfund program began its second decade with few vocal friends and numerous critics. Because Superfund encompassed so many different decisions, based on a variety of approaches in different regions and at different sites, critics could find particular decisions and approaches that they disagreed with and could charge dramatic program shortcomings. However, there was a drumbeat of common criticisms that were difficult for the agency to ignore, if only because they were gaining increasing support both on Capitol Hill and in the White House: The program costs too much and accomplishes too little; it is too slow and engenders endless, expensive litigation rather than results on the ground; it pushes protection to absurd lengths; its liability scheme is inherently unfair; and responsible businesses—to say nothing of local “mom and pop” enterprises—are treated like criminals and threatened with ridiculously large cleanup bills. A few voices complained that the program was not protective enough of human health and the environment, but they were drowned out in the chorus of those charging in one way or another that Superfund’s minimal accomplishments came with too high a price tag, in an unnecessarily litigious and acrimonious fashion.12 This was the unhappy condition of Superfund as the Clinton administration took office in 1993.

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reforming superfund chapter five

Reforming Superfund

The Clinton administration entered office in 1993 with a president who, as noted, described Superfund as “broken,” a vice president, Al Gore, who was dedicated to advancing an aggressive environmental agenda, and a new administrator of the Environmental Protection Agency, Carol Browner, who was explicitly committed to reforming the Superfund program. The timing seemed fortuitous, since the program’s statutory authorization was scheduled to expire in 1994. EPA officials and members of the community concerned with Superfund were already considering changes, and a consensus was emerging as to the broad outlines of a reformed program.1 EPA, under Browner, convened a working group on legislative reauthorization, made up of representatives of the major stakeholders: the relevant agencies and departments, congressional staff, the environmental community, and lawyers and policy staff of the major PRPs and the insurance industry. On a parallel track, EPA established an internal group to consider administrative reforms to improve operation of the program. The reauthorization working group reached a hard-fought consensus on a proposed package of legislative reforms in early 1994, and the Clinton administration introduced legislation in both houses of Congress embodying this consensus. The administration bill limited liability for several classes of PRPs, and clarified the obligations of smaller (“de minimis” and “de micromis”) parties. It did not, however, modify strict, joint and several liability. Remedy selection provisions replaced the statutory preference 60

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for permanent remedies; the new provisions had a goal of “long-term reliability,” restricting full cleanups to “principal threats” (or, in the vernacular, “hot spots”) of highly dangerous substances at a site. The legislation also authorized EPA to consider reasonably anticipated future land use in remedial decisionmaking.2 For a time, prospects for passage of this consensus legislation looked bright. Three House committees and two Senate committees passed reauthorization legislation based on the administration’s proposals. But the legislation ultimately died in the closing days of the 103d Congress, a casualty of political maneuverings immediately before the 1994 elections, when Republicans sensed an opportunity to take control of both chambers of Congress and were thus uninterested in handing legislative successes to the Democrats. The 104th Congress arrived in Washington in January 1995 with new Republican majorities in both House and Senate, dynamic and outspoken leadership, and a policy agenda that included major changes in environmental legislation—including the beleaguered Superfund program.3 The new chairmen of the relevant congressional committees were bent on major changes in the liability structure and funding mechanisms, alterations that opponents said would gut the program. The insurance industry—alarmed by burgeoning environmental liability at Superfund sites—mounted a major public relations campaign aimed at undercutting public support for Superfund. Acrimonious congressional hearings were held at which EPA officials were excoriated for running an absurdly costly, unfair, and ineffective program. It was clear that the compromise legislation of 1994 was dead.4 This, then, was the political context in which EPA initiated its farreaching administrative reforms of the Superfund program: a hostile Congress bent on major changes in environmental legislation in general, and in Superfund’s cleanup standards and the liability regime in particular, and a maelstrom of criticism, seemingly from all quarters. EPA leadership perceived that changes in program administration and improvements in performance were the only way to defuse the criticism and maintain the integrity of the program.

Administrative Reforms of 1995 In early 1995 EPA announced an ambitious set of administrative reforms of Superfund designed to bolster political support and improve operation

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of the program.5 To a substantial degree, the reforms echoed provisions of the consensus reauthorization legislation that died in the previous Congress, changes that had already been accepted by major players in the political environment. The goal of a “faster, fairer, more efficient” Superfund became a mantra that gave coherence and structure to more than three dozen specific changes in the way Superfund was administered. Superfund operated the way that it did—with high internal transaction costs, program elements working at cross purposes, and elevated levels of conflict between the government and the PRPs—because the legal and administrative structures, and the self-interest of participants, disposed it to do so. EPA’s initial responses to the two key questions facing Superfund managers at every site—Who shall pay? and How clean is clean enough?— had engendered the intense criticism that engulfed the program through the 1980s and early 1990s. If Superfund were to be reformed to any substantial degree, the effort would require a major organizational commitment to new answers to these fundamental questions, and new norms, incentives, and practices to support those answers. We set out below the major elements of the reform program, organized around the key issues of enforcement and remedy selection.6 Enforcement: Who Shall Pay? The enforcement reforms responded primarily to allegations that Superfund was administered by EPA in an unnecessarily unfair and arbitrary manner. During the first decade of the program, agency staff generally considered a Superfund settlement to be “fair” if the parties responsible for the pollution, rather than the taxpayer, paid for the cleanup. Indeed, our interviews in the early 1990s with enforcement staff in some regions suggested they believed in a kind of moral imperative that, in light of joint and several liability, any settlement in which the PRPs paid less than 100 percent of cleanup costs was improper. Furthermore, most agency staff considered a government role in ensuring that each responsible party at a site pay a fair share of the total cleanup costs to be both burdensome and unnecessary. Because joint and several liability allows the government to impose the full cost of site cleanup on any party, or group of parties, caught in the liability net, it encouraged use of a “deep-pocket” enforcement strategy that overtly disregarded issues of fairness among PRPs. The process led

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enforcement staff to find one or two wealthy (or well-insured) corporations or governmental entities that were clearly liable, regardless of their proportional share of the waste at a site. EPA would then issue unilateral administrative orders requiring those PRPs to clean up the entire site, or negotiate a consent decree with them, using the threat of litigation if “voluntary” agreement were not forthcoming.7 This practice conserved agency resources, since it did not require the costly investigations necessary to find all PRPs at a major site. It also eliminated the need for the agency to deal with large numbers of contentious parties, each with arguments about why it should be exempted or treated differently from the others. However efficient it may have seemed to the agency, this mode of enforcement contributed to the perception in the PRP community that EPA was uninterested in maintaining even the most basic elements of distributive justice in apportioning costs at Superfund cleanups. Perhaps more than any other aspect of the Superfund program, it rankled corporate executives, who balked at paying a disproportionate share of cleanup expenses simply because their company had the resources to do so. And the strategy spawned spiraling numbers of third-party lawsuits, as the PRPs who were fingered by EPA sought to obtain payment from other parties at a cleanup site that were not targets of EPA’s initial legal actions. These suits in turn delayed final resolution at many of the affected sites and incidentally (or, perhaps, as a result of conscious PRP diversionary tactics) brought mom-and-pop dry cleaners, grocery stores, and other bit players into the quagmire of Superfund litigation.8 The reforms required Superfund staff to adopt a different conceptualization of fairness. The new, largely inchoate, notion required specific attention to equity in the allocation of cleanup shares among the various PRPs: the agency was to facilitate fair-share allocations by ensuring that all PRPs were brought to the table (rather than simply issuing administrative orders against a few deep-pocket PRPs and letting them sue other responsible parties to obtain reimbursement for cleanup costs), by helping with the allocation process (through a pilot program of governmentally supervised allocations of responsibility), and by paying from government revenues a portion of the “orphan shares”—the share of cleanup costs allocable to parties who were deceased, insolvent, or otherwise unable to pay their portion of the expenses. It was hoped that the effort to bring a PRP’s share of cleanup costs more closely in line with its

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contribution of waste to a site would encourage it to cooperate with the cleanup process from the outset, rather than engage in litigation against the agency or third parties. In addition, the reforms attempted to simplify negotiations and site decisionmaking by getting small parties out of the process early. Finally, although not an explicit part of the formal reform package, the EPA leadership tried to encourage operational staff (particularly in regions that had developed a quasi-prosecutorial stance toward enforcement) to deal with cooperative PRPs in a nonthreatening, nonadversarial manner. “equitable” issuance of unilateral administrative orders. EPA headquarters issued a directive in August 1996 requiring administrative orders to be issued to “all appropriate parties following consideration of the adequacy of evidence of the party’s liability, their financial viability, and their contribution [of waste] to the site.”9 This reform was originally part of the basic enforcement strategy in Region 2 (encompassing New York and New Jersey), where it was called a “big party, all come” invitation for PRP participation in cleanup discussions. Many regions were initially hesitant to follow suit because of the added effort necessary to conduct investigations and prepare cases against a large number of PRPs before issuing the orders. EPA reported that this reform was “complete” by 1999 and indicated that headquarters personnel had independently reviewed documentation on unilateral administrative orders prepared by regional staff to ensure compliance with this directive.10 We have no direct evidence that regions fully complied with this new policy. But our interviews at EPA headquarters, in the PRP community, and in Region 3 (encompassing the middle Atlantic states), where it had not previously been the practice to issue administrative orders broadly, suggest that the directive was being followed. The interviews also indicated that regional staff had concluded that the policy on administrative orders did not require as much extra work as was predicted and that the policy did, in fact, simplify and accelerate the settlement process. m i x e d f u n d i n g a n d o r p h a n s h a r e s . Although the government is legally permitted—through joint and several liability—to saddle any liable PRP at a multiparty site with the entire cost of cleaning it up, it is not required to do so. The 1984 reauthorization of the program included a provision that allowed the agency to participate in mixed-funding

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arrangements in which the government would absorb a portion of cleanup costs attributable to parties that could not be found or that were otherwise incapable of shouldering their share of the burden. EPA practice in the early years of Superfund was simply to allocate these “orphan shares” among the other PRPs, and mixed-funding agreements were relatively rare. Joint and several liability made such governmental largess legally unnecessary, and mixed-funding proposals ran counter to norms in many regions against settlements in which PRPs did not pay the entire cleanup bill. Moreover, because mixed funding was new and untried, few EPA regions were willing to experiment with a new authority that might incur additional administrative costs. The reforms sought to revive the underutilized provisions on mixed funding in order to keep the cooperative PRPs’ share of cleanup expenses more in line with their contribution of waste to a site. They specified that regions should “provide greater fairness, reduce litigation and promote cleanup of Superfund sites by compensating parties who perform cleanups for a portion of cleanup costs [attributable] to orphan shares.”11 EPA headquarters issued orphan-share guidance to the regions in 1996 and 1997, and the number of sites with orphan-share compensation became a performance measure used by headquarters to monitor regional activity. By the end of fiscal 1998, the agency had offered approximately $145 million in orphan-share compensation at seventy-two sites.12 We heard grumbling in the PRP community that the orphan-share reform had not gone as far as it might. But some form of orphan-share compensation reportedly became a standard part of all settlement negotiations. de minimis and de micromis provisions. A prevalent theme in the public and congressional criticism of Superfund was the number of parties dragged into the process at multiparty sites, even though many of them contributed a minimal share of the waste (the de minimis parties) or were so small that they could not be expected to pay a meaningful share of the cleanup costs (the de micromis parties). The Superfund reauthorization in 1986 authorized EPA to allow parties that contributed a relatively small portion of the waste at a site to extricate themselves from liability by paying a proportional share of estimated cleanup costs, plus a premium to cover unexpected costs in the future. These provisions were rarely used, however. For EPA, de minimis buyouts meant doing substantial administrative work to obtain relatively

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little additional money. And the major PRPs at a site were seldom enthusiastic about allowing any parties to get off the liability hook before it was clear what the final cleanup bill would be. The 1995 reforms changed these practices and substantially increased the number of parties granted de minimis buyouts. Major PRPs at some sites found themselves to be de minimis PRPs at others, leading them to be more amenable to the new procedures.13 Agency staff found that the administrative burdens required by the process were often offset by elimination of smaller parties at an earlier stage of the negotiations, which expedited negotiations and accelerated cleanup activities. The de micromis reforms were aimed at a different problem. Frequently the major parties at a site initiated third-party lawsuits against every potential party they could locate, even those with a tiny contribution to the site and no real resources to pay for cleanup. As a result, small businesses and even private individuals were dragged into expensive Superfund litigation. The de micromis reforms were designed to allow EPA to settle with these small parties and grant them legal protection against thirdparty lawsuits.14 Our interviews suggest that few formal de micromis settlements with EPA actually took place. The agency regards this as a programmatic success, however, since the existence of the procedures, and the readiness of the agency to grant legal protection to these parties, arguably deterred PRPs from proceeding against these small parties in third-party litigation. n o n b i n d i n g a l l o c a t i o n s o f r e s p o n s i b i l i t y . A final fairness-oriented reform involved governmental assistance to PRPs in allocating costs among themselves. One of the underutilized provisions of the 1986 Superfund reauthorization allowed EPA to conduct nonbinding allocations of responsibility (NBARs). NBARs involve the government directly in the complex and high-stakes business of allocating shares of cleanup expenses at multiparty sites. Before the administrative reforms were initiated, EPA staff generally believed that work on NBARs was inappropriate and unnecessary. Allocation of cleanup shares, however, is one of the most difficult, acrimonious, and time-consuming activities in the cleanup process. PRPs persistently asked EPA to aid them. This reform established nine pilot projects in which a neutral “allocator” conducted a nonbinding, out-of-court process that resulted in a proposed allocation of shares to guide the settlement process.

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The allocation procedures were tested at several sites and there was general agreement that the process was ineffective. The agency resources needed to establish and guide the process were not commensurate with its utility in accelerating settlements. Rather, most of those we interviewed both in EPA and in the PRP community concluded that direct negotiations among PRPs, particularly in a world in which all the viable PRPs are sitting at the table, is the most efficient way of allocating cleanup shares. Remedy Selection: How Clean Is Clean Enough? Analogous changes affected remedy selection norms and practices. Program staff took seriously the statutory preference for permanent remedies at Superfund sites in the initial years of the program. They expected sites to be cleaned up to a standard that would allow their unrestricted use in the future—presumably clean enough for residential purposes. The reforms, however, required project managers and their supervisors to balance permanence against other goals that they previously considered far less important: the cost of a remedy, for example, and the likely future use of the remediated land.15 As might be expected, the more thorough the cleanup, the more it costs. The remedy selection reforms were aimed primarily at reducing the costs of cleanup, the major concern of the large corporate participants at Superfund sites. The processes used in the early years of Superfund were criticized as arbitrary and idiosyncratic, with substantial variation across, and even within, regions. But, at bottom, the corporate players complained that they were often compelled to pay for extraordinarily expensive remediations that were unjustified in terms of reducing risks to public health. In the early years of the program, the cost of remediation was discussed during settlement negotiations, but the government’s perspective was typically that PRPs were legally responsible for the pollution, that the statute called for permanent (that is, squeaky clean) remedies, and that the responsible parties should pay whatever it cost to make things right. The notion that EPA should attempt to balance the cost of such expensive remedies against prospective benefits in terms of reduction in risk, or that the agency should even be concerned about the amount of money PRPs were paying to atone for their past environmental sins, required a major

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change in the norms and practices of remedial project managers and their supervisors.16 The major vehicle through which the cost savings were to be obtained was a new focus on prospective land use.17 The statutorily preferred standard of permanent cleanup ensures future generations will be safe from toxic contamination, regardless of how a former Superfund site is ultimately used. But such cleanups are usually extraordinarily expensive. They are sometimes not possible, even with the most sophisticated technology available. Moreover, at least in the eyes of many critics, such high-level cleanups are frequently unnecessary at sites where the probability of future residential or other sensitive use is very low. The administrative reforms pertaining to remedy selection were designed to lower the cost of remedial action at Superfund sites, primarily through a new focus on prospective land use at sites where a residential-level cleanup was deemed to be unnecessary. The specific means utilized for achieving this cost reduction were embodied in guidance from headquarters concerning both process (how to conduct risk assessments, for example) and result (such as “presumptive remedies” at common site types), and in a variety of monitoring devices to promote compliance. In addition, a procedure was established that allowed remedies previously adopted under the older, more stringent standards to be updated, allowing some of the cost savings to be applied at sites where cleanup was already under way. choosing remedies. Headquarters officials, in consultation with regional staff, developed several tools that were used to communicate and clarify how remedies were to be chosen: —Formal guidance. A “guidance” is an administrative document that spells out how new policies are to be understood and implemented; the regions may issue clarifications and guidances to further instruct their own staff. The reforms resulted in headquarters guidance on a number of key issues surrounding remedy selection: on the role of land use and cost in remedy selection, on the importance of improving national consistency in remedies, and on establishment of a standardized methodology for conducting risk assessments.18 —Presumptive remedies. The agency also announced policies on the preferred remedy to be used at common site types, such as solid waste landfills operated by municipalities and on military bases, wood treatment sites, and sites involving groundwater and volatile organic compounds in the soil. The

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specific remedies set out were not mandatory, but project staff typically had to justify deviations from the presumptive remedy. Our interviews in Washington and in the regions indicated that the practical impact of these changes was to move remedies away from remediation and toward containment—with expensive cleanup techniques used to treat severely polluted parts of a site, and containment remedies (ranging from impermeable caps to fences and warning signs) used to deal with the less dangerously polluted areas. Because such sites were not fully remediated, the engineering responses were accompanied by “institutional controls” enjoining present and future owners of the land from engaging in particular activities, such as drilling wells, or using the land for proscribed purposes, such as housing. We have no direct data on the extent of compliance with these various policies. Our interviewees indicated that most regional staff acquiesced in the new orientation, although we heard reports of moderate to intense grumbling from project managers who saw the new programmatic emphasis on cost and containment as environmentally unsound. m o n i t o r i n g c o m p l i a n c e . Mindful that previous efforts to change Superfund remedy selection had foundered on the shoals of a decentralized decisionmaking process that was insulated from headquarters supervision, the agency established devices to monitor compliance with the remedy-related reforms: —Remedy review board. To “promote cost-effectiveness and national consistency in remedy selection,” EPA established a remedy review board in late 1995. This board, consisting of headquarters staff and representatives from each of the regional offices, reviewed all unusually expensive remedies.19 —Remedy selection management flags. EPA developed rules of thumb governing remedy selection for use as management flags by which senior managers were alerted to what the agency termed “potentially ‘controversial’ cleanup decisions.”20 These efforts were designed to create monitoring devices to detect deviation from a uniform policy on remedy selection and to encourage compliance. Project managers and their supervisors in the regional offices were not anxious to have their choice of remedy examined by a group of experts outside the region. Not only was the process potentially embarrassing (if the board recommended changing the decisions of the region), but

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it also required substantial paperwork to prepare documentation and justifications for the board. Thus, the remedy review board’s very existence served as an incentive for project managers to select less expensive remedies that did not require board consideration. Similarly, one would expect project managers to avoid selecting remedies that raised management flags. There is no direct evidence on the impact of these monitoring devices in encouraging compliance with the new remedy selection standards. The last figures published under the Clinton administration indicated that the remedy review board reviewed thirty-three sites through September 1998, and that subsequent changes in the remedies resulted in an estimated $43 million in savings.21 We suspect, however, that the more profound changes came from a conscious effort on the part of project managers to keep decisions out of the review board by selecting less costly remedies that would not invoke a review.22 remedy updates. The remedy selection and compliance reforms were entirely prospective; they had no impact on the many sites at which remedial decisions were concluded before 1995. The remedy update procedure made it possible to reevaluate previously adopted (but incomplete) remedies in light of the reforms. EPA stated that the update process was applicable “at sites where new scientific information or technological advancements will maintain protectiveness of human health and environment and enhance overall remedy and cost-effectiveness.”23 Technological advances and new information obtained during a cleanup’s progress may explain some of the remedy updates reported, but our interviews suggest that most of the changes in the previously prescribed remedies came about because of the new emphasis on prospective land use and the receptiveness of the agency to remedies that involved containment rather than full remediation. It is not accidental that most, if not all, of the updates resulted in less costly remedies, a fact that is strongly supported by EPA, which reported in 1998 that the “estimated future cost savings” flowing from updated remedies were expected to exceed $1 billion.24

Conclusion: Overcoming Obstacles We regard EPA’s effort to reform the administration of the Superfund program as a major implementation success:

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—The administration of Superfund changed. In contrast to previous initiatives from headquarters, the regions implemented major changes in the way they administered the program. And, while our study cannot provide conclusive evidence of national uniformity, we heard consistent reports that implementation of the reforms was successful on a national basis and that regional variation in Superfund implementation had diminished substantially.25 —Changes in regional behavior were reflected in changing program outputs. Remedies selected were less costly; potentially responsible parties, at least those that cooperated with the agency, were being treated with more equanimity and respect; the agency engaged in more mixedfunding arrangements; and remedies were revised in light of the new policies, resulting in major cost savings. —At the outcome level, Superfund showed improved performance. The proportion of sites on the National Priority List at which construction was complete jumped from less than 5 percent in 1991 to nearly 50 percent in 1999. By summer 2002, the assistant administrator of EPA in charge of the Superfund program could tell Congress that 93 percent of the sites then on the National Priority List were either undergoing actual cleanup or had completed cleanup construction.26 The extent of the independent contribution of the reforms to this improvement in performance is not clear, since other factors (such as simple maturation of the program, or the number of sites in the pipeline that would have been completed without the reforms) undoubtedly contributed. However, most of the individuals we interviewed, in and out of the agency, believed that much of the improvement in outcomes resulted from the administrative changes initiated in 1995.27 —The combination of changed EPA behavior and better results produced a turnaround in Superfund’s political prospects. We believe that the program’s success in avoiding a congressional hatchet was a substantial achievement, one that cannot be explained wholly in terms of the broader Republican failure to enact its promised environmental agenda. The Superfund regulars—the attentive environmental lobby, the major PRPs and their trade associations, even the insurance industry— moderated their criticism of the program, and some even expressed begrudging approval of its operation. Perhaps reflective of this relative quiescence of Superfund’s former critics, major legislative changes in the

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structure of the Superfund program dropped from the congressional agenda.28 —These reforms successfully weathered the 2000 change in administrations. President George W. Bush’s first administrator of the Environmental Protection Agency, Christine Todd Whitman, expressed satisfaction with the operation of the program, and there continue to be few serious calls for major alterations.29 To place these changes in context, it is instructive to relate them to the generic obstacles to reform discussed in chapter 3. There we outlined both the legal and organizational problems that might be encountered by efforts to bring about a fundamental reordering of priorities and procedures in regulatory agencies. Legal Obstacles to Superfund Reform Federal judges, as noted in chapter 3, are increasingly reluctant to defer to regulators’ interpretation of their statutory mandate or to accept regulators’ decisions—as embodied in rules and formal determinations— without first taking a “hard look” themselves. And judges take a decidedly negative view of administrators’ straying very far from their statutorily defined regulatory mission. Superfund reformers encountered few legal obstacles to their efforts to change enforcement procedures. The movement toward mixed funding and government absorption of some of the costs of orphan shares was specifically authorized in statute; indeed, the agency had been criticized for not making use of the settlement inducements provided by Congress. The government’s use of nonbinding allocations of responsibility was specifically authorized. The policy of issuing unilateral administrative orders to all viable PRPs at a site is similarly unassailable from a legal perspective. The handling of de minimis and de micromis settlements may have been somewhat more problematic. This conclusion is supported by the fact that statutory changes in the authorized handling of small parties were included in the consensus legislation that failed in 1994 and that EPA subsequently sought from Congress, and ultimately received, new legislation exempting certain classes of de micromis parties from Superfund liability.30 These provisions, and the actions they supported, were of relatively low visibility and low salience, however.

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The remedy selection reforms raised legal issues of a different order. Superfund’s authorizing legislation contained a clear preference for permanent remediation of sites. It did not authorize the agency to consider future land use in its choice of remedies. In the formative years of the program, the agency interpreted this legislation as a directive to effectuate cleanup to background levels wherever technically feasible, regardless of the cost and regardless of the likely prospective use of the remediated site. The continuing criticism of this aspect of remedy selection had been largely accepted by the leadership of EPA in the early 1990s, when the consensus legislation was being formulated. The draft legislation contained an explicit shift from a statutory preference for permanence in remedy selection to one of “long-term reliability.” Remediation remedies were to be restricted to hot spots of highly dangerous substances at a site, and reasonably anticipated future land use was specifically authorized as a consideration in remedy choice. The legislation was never enacted, but these substantial changes were nonetheless put into effect administratively. Our interviews with policymakers and legal staff in EPA and the Department of Justice suggest that these actions were undertaken with trepidation. Indeed, one official told us that the legal issues were “huge” when the reforms were being considered.31 The sensitivity with which EPA regarded this issue was made clear to us when an early draft of the research on which this book is based was circulated in the agency. It was strongly suggested that we not refer to the cost of cleanup as a criterion upon which remedial decisions were being made, despite the fact that “cost savings” was a major selling point in the public relations offensive launched by EPA to publicize its Superfund reforms. The newly minted preference for containment remedies was downplayed, if not officially denied, despite the fact that everyone we interviewed, in and out of the agency, saw a major element of the reforms as a clear movement away from remediation and toward containment. The very fact that the agency sought statutory authority in 1994 to do what it ultimately did administratively in 1995 suggests the legal uncertainty of its position, an uncertainty that only increased in light of subsequent court decisions. In the event, there was no lawsuit, and EPA was not compelled to justify its reinterpretation of the remedy provisions of its authorizing statutes to a federal judge.

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reforming superfund Organizational Obstacles

The public policy literature on program implementation, discussed in chapter 3, indicates that many aspects of the Superfund reform effort would also prove challenging: —Programs with conflicting statutory goals, such as Superfund, increase the discretion of line personnel, a situation that leads to opportunities for administrative avoidance of unwanted changes.32 —The complexity of joint action, which finds a textbook example in Superfund, suggests that the need to obtain cooperation from multiple participants from different constituencies pursuing different goals diminishes the likelihood of success and provides policy actors with the opportunity to engage in “implementation games” that sap program resources and efforts.33 —A decentralized organizational structure that places substantial authority in regional offices makes top-down program initiatives difficult, providing an opportunity for those charged with implementation to redefine instructions from headquarters and making it difficult to monitor behavior at the operational level.34 —Policies involving “complex changes in existing organizations, the creation of new organizations, or the delivery of highly individualized services” are among those most likely to fail in implementation.35 These organizational obstacles were accentuated by a context in which regional staff often had both an incentive and an opportunity to subvert the reforms, something that had occurred in the agency during previous administrative efforts to change and improve Superfund. Superfund, like other regulatory agencies and the organizations of the criminal justice system, is administered by a professional staff vested with substantial discretion. Previous research has shown that the regional offices of the Superfund program developed distinctive norms and practices, different regulatory cultures. Our interviews in the regions both before and after implementation of the administrative reforms reveal the extent to which these factors constituted a serious barrier to their success. The enforcement reforms ran up against strong norms regarding fairness in the system, and the remedy selection reforms were even more problematic in the minds of many regional staff members. The reforms also affected agency workload since they required regional staff to engage in

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activities that were time consuming and, at least in their initial view, unproductive. These factors provided a motivation to individuals in the regions who wished to resist the new system. Moreover, the distance from headquarters and the low visibility of many of their decisions regarding both enforcement and remedy selection gave disgruntled staffers ample opportunities for obstruction. In light of these impediments, why did the reforms succeed? What lessons might be drawn for other efforts to change the operation of regulatory agencies administratively, in the face of legal, organization, and cultural roadblocks? We address these questions in chapter 6.

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succeeding at regulatory reform chapter six

Succeeding at Regulatory Reform

As discussed in chapters 2 and 3, the literature is replete with advice on strategies that regulatory agencies might use to improve compliance. Irrespective of the utility of such advice, however, it must be put into effect in the environment of an agency’s competing political, economic, legal, and organizational demands if it is to improve regulatory practice. Deciding how an agency should reallocate its resources, redefine its risk-reduction targets, and alter its interactions with the regulated population may prove less problematic than actually bringing about such changes in the context of ongoing agency operations. That was the case with Superfund. As described in chapter 5, before EPA instituted administrative reforms in 1995, attempts to change implementation of Superfund had been frequent, but all failed to bring about significant alteration in the behavior of the regional staffers responsible for implementing the hazardous waste cleanup program. Thus, the primary problem for EPA had not been identifying new regulatory approaches, but persuading personnel in the agency to change their behavior, and achieving a degree of consistency on how the program was to operate, both over time and across regions. The administrative reform package initiated in 1995 faced the same organizational obstacles that had scuttled previous reform efforts. Why did the 1995 Superfund reforms succeed where earlier efforts had failed? What—if any—lessons emerge from the experience of Superfund to inform the broader goal of implementing regulatory reform? 76

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It is our judgment that three factors accounted for the success of the 1995 reforms: the leadership at the top of the agency, the management of the reforms throughout the agency, and attention to individual incentives at both headquarters and regional levels.

Leadership Commitment, unity, and constancy characterized the leadership of Superfund throughout the period during which the administrative reforms were designed and implemented. We think that these factors go a long way toward explaining successful implementation of the program. The leadership of EPA in general, and Superfund in particular, has not always exhibited these attributes, and they are worth examining more closely in light of strong tendencies pushing in other directions. Divided, transient, and inconstant leadership is an oft-cited cause of implementation failure.1 Our pluralistic political system, with its fragmented policy process, undermines the chances that any given policy will be pushed long enough, with enough support and enthusiasm, to take hold.2 A view of the policy process widely shared among political scientists suggests that policies are made when a focusing event occurs and three elements converge: problems, solutions, and political support.3 The critical events for the administrative reforms of Superfund were the failed 1994 statutory reauthorization and the subsequent Republican takeover of Congress. The problem from the administration’s perspective was the need to make Superfund more defensible so that it could withstand the congressional assaults. Defensibility was defined from the outset as showing results on the ground at Superfund sites around the country, and reducing the drumbeat of criticism coming from influential members of the PRP community. Often the search for solutions to policy problems is haphazard, and responses are cobbled together. In the case of Superfund, however, a menu of proposed changes embodied in the failed 1994 legislation had already been hammered out within the Superfund community. Although most of these responses were reforms of the law itself, rather than its administration, it was quickly concluded by leadership at EPA that many of the key alterations contemplated in the legislative package could be attained through administrative action alone. When hopes for passage of that legislation faded, those compromises formed the basis for the administrative reforms.

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Finally, the reform initiative drew strong political support from the top. President Clinton, EPA Administrator Browner, Assistant Attorney General Lois Schiffer (in charge of the Justice Department’s Environment and Natural Resources Division), and other key players chose to support the administrative changes.4 President Clinton had made it publicly clear that he thought Superfund was “broken,” and although leadership at EPA and in the Department of Justice might have disagreed about the extent of existing problems with Superfund, they all agreed that it had to be “fixed” for both internal programmatic as well as external political reasons. While there was general concurrence on the need to have a politically defensible response to the external challenge to Superfund, structural factors divided program leadership between EPA and the Department of Justice, and within EPA itself. Our interviews made clear that several things happened at the outset of the reform effort that overcame those inertial tendencies: —Support from the top. While the administrative reforms evolved over time, the mantra of “faster, fairer, and more efficient” reflected priorities set by key officials. Those decisions included establishing practices that would produce less costly remediations while protecting human health from hazardous waste through other means; expanding the program’s conception of fairness to include all those who are liable; and raising to primacy the goal of actually cleaning up sites. —Consistency. Top administrators at EPA and Justice reflected (and influenced) the new priorities in their words and behavior. So, for example, some interviewees noted that EPA staff in the program and enforcement divisions of Superfund at one time seldom spoke with one another, and their perspectives on the program were sometimes quite different. That situation changed during the reform process, with regularized contact and joint efforts between the two divisions to ensure that the various reforms were being implemented. Similarly, our interviews at Justice and EPA indicated that top managers seemed to be “talking about the same thing,” something that was not true when we conducted similar interviews in the 1980s. EPA’s heads of program and enforcement, for example, went on joint “road shows,” in their phrase, “wearing out shoe leather” traveling to the EPA regional offices to explain and support the reforms in meetings with regional officials. —Stability. Many top-level participants at EPA and Justice stayed in their jobs for a substantial period of time. In a government where the


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average tenure of subcabinet appointees is about thirty months, the sixyear time frame in which the same team was in effective charge of Superfund was unusual.5 —Willingness and ability to play a “fixer” role. Complex administrative changes in a decentralized agency require multiple things to happen, sometimes in sequence, across both time and space. Learning about and fixing things that go wrong require the capacity to get information from multiple sources—which is difficult to do in a compartmentalized agency— and access to the appropriate powers to fix them .6 Superfund’s top leaders arranged their staffs, reporting systems, and communications contacts to play that role. EPA created regional liaisons in Washington responsible for tracking developments; frequent consultations were held at critical junctures; and task forces were created to span programmatic and regional divisions. —Share the credit, encourage participation. Most of the Superfund staff we interviewed in Washington, and a smaller but significant portion of Superfund staff in the regions, indicated that they had participated in the continuing discussions on the administrative changes. Participation was of several kinds: contributing new ideas, identifying past best practices, and sharing knowledge of past mistakes. These discussions continued during the design of the various guidance documents that spelled out the operational changes to regional staff. Just as important, headquarters signaled when the end of the participatory process had been reached and decisions were to be implemented.

Management The second component of EPA’s success in shaping regional behavior in Superfund lies in how EPA’s top managers implemented the new policy. If “implementation is the process of carrying out, accomplishing, fulfilling, producing and completing a policy,” then policy can be thought of as a set of instructions from policymakers to implementers that spells out both goals and means for achieving those goals.7 Formulating and communicating policy, and ensuring that it is appropriately received and carried out, define the challenge for managers. The elements of successful implementation are well known. Managers should provide clear goals, staff training, accurate reporting, monitoring, communication, and delegation.8 These activities, while nearly universally

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lauded, are often difficult to perform.9 The critical problems for implementation are the “how to” issues. How do managers bring clarity and focus, teach the right lessons, identify goals and establish monitoring and evaluation systems that measure and spur performance without creating perverse incentives, listen and change when appropriate and hold fast when not, and delegate without losing overall control?10 EPA headquarters took these concerns seriously and responded by wrapping the reforms around a mission statement: Superfund staffers should protect the public and save the program by making it “faster, fairer, and more efficient.” EPA’s top managers created procedures and nurtured practices to operationalize those goals by making it easier to do those things they wanted done and by making it more difficult to do those things they did not want done. In addition, they assembled headquarters and regional teams to inspire, cajole, monitor, report, adjust, and otherwise nurture change. Two features about the management of the reform effort stand out as major contributions to its success: the technical and administrative feasibility of the reforms, and their political feasibility. Technical and Administrative Feasibility If program staff members are to change their behavior, they must believe that their new responsibilities are possible to perform, both administratively and technically. Thus many aspects of the administrative reform came out of discussions about existing best practices, both in and out of the agency. That aspect of the reform played out in several ways. —Identify what individual regions were already doing well. Region 2, for example, had a long-standing practice of issuing administrative orders against all potential PRPs and so was both reinforced in its efforts and able to report continuing good performance on the “bean count”—the monitoring measures established to encourage compliance in the regions. Region 3 had engaged in mixed funding from the outset of Superfund, often over resistance from headquarters. Under the reforms, the regions were congratulated for these efforts and also achieved reportable successes. —Move toward the mean. The transaction costs of change grow larger as the contemplated changes increase in magnitude, so administrative changes were made incrementally. Region 2, for example, like many re-


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gions with a heavy enforcement load, would have preferred not to divert resources from dealing with major PRPs to time-consuming de minimis settlements. But it complied—in part because it could do so without seriously disrupting other activities, in part because the performance of other regions made noncompliance seem less a matter of dealing with impossibilities than a simple lack of commitment to the reforms.11 —Flexibility. Even after directives or guidances were issued from headquarters, there remained possibilities for flexibility and discretion in implementing the reforms. The remedy review board did not have the power to make binding decisions, but regional decisionmakers were expected to give its recommendations “substantial” weight. Regional officials we interviewed said they interpreted the board’s authority to approve highercost remedies to mean that expensive remedies were not always disfavored. So, while the board was an obstacle to costly remedies, the process allowed regions to argue for higher-cost remedies that they believed were necessary. Political Feasibility Superfund administrators knew that they were under constant scrutiny from sometimes-hostile congressional committees, the General Accounting Office, and a critical and skeptical media whose stories were often shaped by environmental activists or aggrieved parties caught in the liability net. EPA also knew that Superfund’s reputation was not high among ordinary citizens. Such scrutiny and criticism affected the administration of Superfund. The multiple, conflicting goals of the program made past achievements today’s shortcomings, producing pressures to move in still another direction. Some of those difficulties are part of the natural history of any evolving program, but Superfund has had a more difficult history than most because of its unprecedented novelty, reliance on an unpopular liability scheme, ambiguity and conflict in its goals, uncertainty about the technologies involved, and the often-divergent visions of stakeholders. Not surprisingly, then, regional staff, whose time commitment to the program almost certainly exceeded that of the agency’s political appointees, was concerned about the political feasibility of the reforms. How firm and constant was the support of EPA’s leadership for the measures? How widely were the goals of the reforms shared by Superfund’s attentive public of

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diverse stakeholders? Perhaps most important to regional staff, what were their vulnerabilities to criticism from those publics, and conversely, what were the prospects of gaining credit and support? We note that several features of the reform effort dealt with those concerns in ways that encouraged regional officials to take the reforms seriously, for both technical and political reasons. —Politically vetted reforms. An important set of calculations involves the amount of political grief the contemplated changes will bring and the possibilities of credit and support should they be implemented. As noted earlier, the administrative reforms were shaped by the internal administrative review and the external negotiations over the 1994 legislative reauthorization. The incorporation of the latter into the administrative reforms was important because the legislative proposals represented a consensus among all major stakeholders in Superfund, from the environmentalists to the major PRPs and their trade associations. As such, the major elements of the administrative reforms were a set of already vetted changes that carried minimal political risk and the possibility of readily mobilized supporters.12 —Leadership commitment. Implementation is shaped by how seriously subordinates take the directions of superiors, particularly in systems where the top can speak through many voices with differing goals. One positive indicator of commitment at the top is the extent to which an organization’s leadership pays attention to how well a program is performing and claims credit for its achievements. In the latter regard, the Superfund reforms became a centerpiece of EPA’s external presentation of itself to Congress and the outside world. Regional officials and others involved in the effort were regularly mobilized to report their indicators and stories for incorporation into the EPA administrator’s testimony to Congress. Staff in the agency identified with the reforms were promoted, singled out for credit, and otherwise rewarded visibly for their efforts.

Attention to Incentives Psychologists and policy scholars distinguish between capacity and motivation when discussing how to influence behavior.13 The regions had the capacity to change their behavior in the directions required by the administrative reforms. The constancy in leadership and management gave clear signals as to what was expected and how the reforms should be carried


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out, and in some instances regions were given additional tools to help them. The EPA leadership worked on the motivation side in a variety of ways, creating both positive and negative incentives for individuals at all levels of the program to induce them to cooperate and redirect their efforts toward implementing the programmatic changes. Performance Measures and “Better Beans” Performance measures are important both to indicate programmatic success to external audiences and to provide internal benchmarks by which to assess the performance of the regional offices. Although the process is frequently dismissed as “bean counting” within EPA, there is little question that regional offices, and the agency as a whole, pay great attention to the beans being counted—budgets, reputations, and public support all depend upon them to some extent. Performance measures thus can serve as powerful motivators, although Superfund did not always utilize them effectively. On the external dimension, EPA had difficulty showing positive measures of programmatic success during Superfund’s early years. The overall objective of the program was defined in most quarters as “delisting” sites from the National Priority List, a goal that frequently required decades of negotiation, design, construction, and postconstruction maintenance of complex systems for groundwater remediation. Even an efficient, welloiled cleanup program was likely to come up short on this measure in its early years. And, as we have seen, neither efficiency nor constancy characterized the early years of Superfund. The agency first attempted to compensate for its failure to achieve success in delisting sites by formulating process measures by which to demonstrate performance: the number of sites where remedial assessments were completed, for example, or the number of sites where the record of decision establishing the remedy had been finalized. These measures did not placate a Congress increasingly distrustful of a program that seemed to have little to show in terms of actual cleanups. Moreover, the measures motivated regions to emphasize completion of purely administrative milestones, sometimes to the detriment of getting on with cleanup activity. In the years immediately before the administrative reforms were initiated, EPA shifted its emphasis from site delisting—a measure that still failed to show much programmatic success after nearly two decades of

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effort—to what it termed “construction completions.” A site qualified for this status if all the engineering and construction work to clean up or contain the waste had been completed, whether or not it could be removed from the National Priority List.14 We heard general agreement that the number of construction completions is a valid outcome measure for Superfund for several reasons: it is a more realistic and attainable standard than the number of delisted sites; it is a major physical milestone in EPA’s intensive work at a site that involves work on the ground rather than a paper-oriented step in the administrative process; it is within a region’s ability to affect; and political leaders have come to understand it as a valid indicator of program achievement. Increases in the number of sites in which construction was completed served as the centerpiece of EPA’s presentations to Congress in the years following initiation of the administrative reforms. While there is some uncertainty as to how much of the very substantial improvement in this measure is directly attributable to the reforms, the results were dramatic, with the proportion of listed sites at which construction was completed rising from less than 5 percent in 1991 to more than 50 percent by 1999. Regions competed on this dimension, with substantial effort at the end of each quarter to push sites to completion and score another bean on this important measure. The agency also fashioned performance measures assessing other key aspects of the administrative reforms, both to demonstrate success to external audiences and to motivate regional performance. For example, regions were required to report the number of sites at which some form of mixed funding was offered by the agency to cooperative PRPs. Regions reported on the numbers of de minimis buyouts obtained, and the total monetary savings to PRPs achieved by review and changes made in previously established remedies. Many of these new measures assessed aspects of regional activity that EPA regions had previously regarded as unimportant or even inappropriate. A governmental offer to pay a portion of the cleanup costs, for example, was regarded in some regions as an unnecessary raid on the federal treasury by rich polluters who could pay for cleanup themselves. Similarly, reopening records of decision, reducing cleanup burdens on PRPs, and trumpeting the dollar savings thereby achieved would previously have been condemned throughout the agency. By all reports, however, this re-


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formulation of performance measures spurred regional performance to achieve the goals of the reform program and began a process by which contrary norms and practices fell into disuse. Disincentives for Costly or Nonstandard Remedies The performance measures provided regions, and the agency as a whole, with both positive and negative incentives to alter individual staff behavior along the lines sought in the reforms. Several other aspects of the reform program relating to remedy selection served to monitor compliance with the new emphasis on restricting remediation remedies to principal threats at a site. Three of the remedy-related reforms, discussed in the previous chapter, served as disincentives for regional staff to choose unusually costly remedies. These were presumptive remedies, in which headquarters (in consultation with regional staff) published informal guidance to the regions on what it termed presumptive remedies for common site types; management flags, or rules of thumb that alerted headquarters staff of sites with potentially controversial cleanup decisions; and the remedy review board, which reviewed unusually expensive remedies. None of these innovations removed the ability of regional staff to impose unusual, or unusually expensive, remedies at Superfund sites. But they did serve as a constant reminder and incentive to conform remedies to the new guidelines. Congress and the Fear of a Gutted Program Throughout most of 1994 and 1995, many observers—inside and outside EPA—expected the Superfund program to be fundamentally altered by Congress.15 As indicated earlier, bills were under active consideration in both houses that would drastically modify the liability scheme, cleanup guidelines, and program funding. Few in EPA doubted that passage of any of these bills would result in a smaller, weaker, less effective Superfund program. Headquarters staff in Washington was not shy about working that threat into its pitch to the regions. One member of the staff described the argument: “Congress [serves as our] gorilla in the closet. They are going to take this program away from you. You enforcement guys: they are going

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to change liability. [There is] language in one of the bills [that] would eliminate regional discretion. . . . [But we can] take their strongest criticisms away from them. Those twenty reforms were designed to do it.” This message was received at the regional level. Regional administrators were often long-term veterans of the program who saw decades of work in danger and the overall effectiveness of Superfund at risk. And because compliance at the regional level—while subject to some monitoring—depended on the internalization of the reasons for making changes, the spur provided by external challenges to the program served as an important motivation.

Unanswered Questions It is our judgment that strong agency leadership and insightful management of the process of administrative change within the Environmental Protection Agency account for much of the success of EPA leadership in overcoming the organizational challenges posed by a decentralized structure, a system that had absorbed previous attempts at redirection of Superfund without effect. We believe that these factors, together with the structuring of individual incentives of regional staff and the specter of potential demolition of the entire program if progress were not made, explain how much of the inertia of organizational culture was overcome. We are left with two quandaries suggested more generally in chapter 3: How was the reinvention effort able to avoid the seemingly inevitable legal challenges to its attempt to accomplish by administrative means what it was unable to obtain in the form of legislation from Congress? And, what was the incentive for Superfund’s senior staff to engage in the prolonged heavy lifting necessary to change the shape of Superfund administration? Legal Challenges: The Dog That Didn’t Bark As noted earlier, the most ambitious aspects of the administrative reform package embodied changes in enforcement practices and remedy selection criteria for which the agency had sought and failed to obtain legislative approval in 1994. The changes involving remedy selection were especially problematic from a legal perspective: the law creating Superfund and its subsequent amendments express a clear statutory preference for permanent remediation at sites, yet the administrative reforms directed


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agency personnel to restrict remediation to principal threats and to use nonpermanent containment remedies elsewhere. The authorizing statutes do not authorize the agency to balance cleanup cost and risk at Superfund sites, yet the administrative reforms specifically directed agency staff to make such trade-offs and to pay serious attention to reducing cleanup costs. Furthermore, although the administrative reforms required a consideration of future land use in determining how clean a site should be, such considerations were not authorized in the statute. The agency obviously felt that legislative approval of these new practices was important, or it would not have sought it in the legislation that failed in 1994. We were told in interviews that EPA was quite concerned that these provision might be invalidated if they were challenged in court.16 Court challenges of EPA actions are by no means unusual: there is a general expectation in the agency that a substantial number of important decisions will be litigated.17 In the event, no legal challenge was mounted. For whatever reason, no aggrieved party saw fit to sue EPA over its new, administratively designed, Superfund program. We are not in a position to state with certainty why this was the case, any more than we can assess what the likely result of such a lawsuit might have been. But we can offer our informed speculation on the former question. It would be unlikely for a disgruntled PRP to challenge the reforms, since such action would almost certainly be contrary to its interests. The reforms resulted in cheaper cleanups, more governmental cooperation, and taxpayer contributions to cleanup expenses. It would thus have been difficult for a PRP to claim the injury necessary to obtain standing in a lawsuit. The most obvious candidate for a plaintiff challenging the administrative reforms in Superfund would be a local or national environmental group, charging that cleanup decisions were insufficiently protective of human health and the environment, in violation of the clearly expressed statutory preference for permanent remedies and complete remediation. It could be alleged that EPA took into consideration inappropriate factors (such as prospective land use and cost) in making remedial decisions. Further, the methods by which the new policies were promulgated, through formal guidance documents that did not undergo the rigors and opportunities for participation provided by notice-and-comment rulemaking, might be challenged as well.

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Our interviews with officials of several of the environmental organizations that mount such litigation in other contexts suggest two factors that may have been responsible for the lawsuits that did not happen. First, Superfund has never been a particularly high priority for mainline environmental groups. While these organizations could be predicted to fight legislative changes destructive of the basic liability scheme and the polluter pays principle, or actions at particular sites, general administration of Superfund infrequently reached environmental radar screens. The environmental groups that do pay attention to Superfund, those that participated in the discussions that resulted in the consensus legislation that failed in 1994, were in something of a bind regarding a challenge to the reforms. They had signed off on these same changes in remedial decisionmaking when they were part of the consensus legislation, making a subsequent challenge seem at the least unsportsmanlike. Environmental politics, however, are seldom conducted under the Marquis of Queensbury rules, and it is unclear how much this consideration would have impeded a lawsuit that might be expected to produce a real environmental victory. However, any knowledgeable observer of Superfund in the late 1990s would appreciate the precarious status of the entire program. The administrative reforms constituted a last-ditch effort to save the program from what seemed likely to be legislative evisceration. A lawsuit that halted these efforts might well promote the chances of new legislation that would almost certainly result in fewer cleanups, to lower standards. Whatever may be said regarding the absence of court challenge to a set of administrative actions that were—at the least—legally questionable, it is reasonably clear that the specific factual situation surrounding the reforms of Superfund was unusual, if not unique. Other regulators, contemplating similar efforts to stretch existing law to fit a bold administrative initiative, may not dodge the litigation bullet so effectively. Incentives at the Top: Why Did They Do It? The story of Superfund administrative reform is a story of energetic, committed administrators implementing a reform agenda in an organizational, legal, and political environment that was heavily weighted against success. We have suggested that the reforms were successfully implemented primarily because of dogged, consistent leadership from the top. This leadership was supported by a series of management devices that served both to convince staff at lower levels of the agency that the reforms were neces-


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sary, and to provide positive and negative incentives to promote compliance and discourage backsliding. And the reforms, despite their aggressive interpretation of the agency’s statutory authority, took place in a serendipitous legal environment in which no court challenge was mounted. We are left with a final, unanswered question: what accounts for the decisions of program executives to engage in this difficult, risky, and exhausting effort? Previous efforts to change the direction of Superfund from the top had failed, with some of the same cast of characters in leadership positions. The 1995 reforms required a major change in organizational culture and some of the changes, particularly those relating to remedy selection, ran counter to environmental norms of the leadership responsible for directing the program. Our assessment, after interviews with many of the major players, is that most shared a substantial professional commitment to the Superfund program itself. Many were long-timers, who began with the program at its inception and who had spent fifteen years trying to figure out how to make this complex program work. Most of these individuals were not prepared to see the program gutted without a fight. This was precisely the message we received in interview after interview: the very existence of the program was under threat, there was one last chance to save it from the congressional wrecking ball, and the leadership of the program was committed to doing what was necessary to reduce the threat and maintain the program. This commitment would not have been possible without the support of the political appointees at the top of the agency and—most probably—at the White House. Similarly, many of the reforms would have been difficult to implement without the cooperation of both civil service and political personnel in the Department of Justice. But the heavy lifting of Superfund reform was performed by mid- and upper-level civil servants who saw their program under attack. This apparently provided the necessary motivation to succeed where other, less vital, reform efforts had failed.

Lessons The story of administrative reform of Superfund illustrates that farreaching regulatory reform emanating from inside an agency is possible, that dedicated, hard-working leaders can effectuate fundamental changes in the hidebound, fragmented environment of regulatory agencies. The

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organizational, cultural, and legal obstacles to success in such an undertaking are substantial, however. Organizational and cultural obstacles, those arising from the complexity of joint action and from informal norms and practices that may not support the reform effort, can be successfully addressed by committed and consistent leadership and by smart management that creates an environment that supports the changes and provides incentives for cooperation and disincentives for resistance. The Superfund case study offers less generalizable advice on overcoming the legal impediments to regulatory reform and on the crucial question of providing individual incentives for the leaders of regulatory reform to take on the political and organizational risks and the extraordinarily hard work of internal reform when less arduous and risky alternatives are always at hand. It suggests that a public-spirited commitment to an agency’s mission—at least when it appears seriously threatened by outside forces— can provide such an incentive. It must be admitted, however, that the threat to Superfund was unusually clear and serious and that the ready availability of a package of agreed-upon reforms also make the situation unusual. The absence of legal challenges that characterized the administrative reforms of Superfund, however, based as it was on a serendipitous absence of potential plaintiffs, is unlikely to be present in many other regulatory contexts. This much being said, it is difficult to suggest alternatives for conscientious regulators bent on improving the programs they are administering. Sparrow argues that legislators evaluating the performance of regulatory agencies “should . . . anticipate the artful structuring of discretion (which some may mistake for unauthorized rulemaking).”18 The same argument might be more appropriately directed to courts, since it takes far fewer judges than legislators to strike down an administrative initiative, and judges increasingly exhibit a jaundiced view of “unauthorized rulemaking.” Regulatory initiatives of the sort undertaken by the Superfund reformers, if frequent enough and successful enough, may lead courts to be more sympathetic to such experimentation. Alternatively, Congress may be persuaded to rein in the courts through changes in authorizing legislation or in the Administrative Procedures Act. Such changes are improbable in the foreseeable future, however, casting some doubt on whether the unusual successes of Superfund reform can serve as a general model for similar reforms in other regulatory agencies.

chapter seven

Taming Regulation

As we indicated at the beginning of this book, the coercive element in regulation is inherent: it may be tamed, but not eliminated altogether. Many of the scholarly criticisms of regulation discussed in chapter 2 implicate coercion in one way or another. Primary among them are assertions that coercive, command-and-control policies lead inexorably to inefficient allocation of resources, to unnecessarily aggressive and unreasonable behavior on the part of public officials, and—at least in the United States—to an unhealthy environment of adversarial legalism. Yet regulation, like death and taxes, appears to be inevitable in the administrative state. Two questions thus arise: When should government turn to this policy tool, forsaking other less coercive alternatives? And how can regulation, when it is used, best attain its policy objectives while retaining essential popular and political support? The first question is the subject of an extensive literature in law, economics, and public policy. The second, less examined, issue is the subject of this final chapter. Governmental application of coercion does not always create political problems. Public and political concern with the criminal law—that most coercive of policy implements—typically consists of charges that it is not punitive and coercive enough, seldom that an excessive reliance on coercion in criminal justice is either unfair or ineffective. Most citizens see little of the coercive business end of the criminal law, which is directed almost entirely at a class in society that has little public voice or political power. Instead, the public sees graphic depictions in the media (if not in 91

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their own lives) of the failures of the system when criminal acts take place or when seemingly blameworthy defendants escape the clutches of the law. The usual political response to such events, unsurprisingly, is for more rather than less coercion. The preeminent political concern with criminal justice is effectiveness: are criminal acts deterred, and are criminals apprehended and punished?1 The situation is quite different in regulation, which commands obedience from major corporations, local businesses, and ordinary citizens. Virtually everyone in society comes under its sway on a daily basis. Furthermore, few of the successes of regulation are palpable—the public is rarely cognizant of the streams that were not polluted, the food that was not tainted, the industrial accident that did not occur. But significant elements of the public chafe under its omnipresent irritations and costs. The political problem with regulation, then, is not so much that it is coercive, but that the coercion is directed at elements of society with a political voice. The title of this chapter, and this book, suggests that regulation can be unruly, that it may be in need of domestication.2 The source of this potential unruliness is the government’s coercive authority that can lead to inefficiency, ineffectiveness, unreasonableness, and adversarial legalism. EPA’s administrative reforms of Superfund can be viewed as an effort to tame that unruliness. The highly coercive liability scheme remained intact, but its application was softened, its reach reduced. As a result, when George W. Bush came into the White House in January 2001, Superfund was enjoying a period of political quiescence, if not begrudging support, from Congress, the executive branch, and even the PRP community. This support had developed with surprising rapidity once the Clinton administration reforms were in place, without any fundamental reordering of the program’s highly coercive mandate. Our reflections on the rocky history of Superfund—guided by conversations over more than a decade in the Superfund community—suggest that two basic public perceptions determined the overall political standing of the program: views as to its effectiveness and to its fairness.3 It is instructive that the reforms were continually put forward under the mantra of “faster, fairer, more efficient.” We suggest that these evaluative criteria of effectiveness and fairness have broader applicability to guide the reconciliation of coercion and pubic support for regulatory agencies. While hardly

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the stuff of new paradigms, these elements, particularly fairness, are sometimes forgotten in the clash of ideologies intrinsic to the political and scholarly debate over regulation.

Effectiveness Regulation, like any activity of government, is expected to be effective. Since our concern here is public and political support for regulatory agencies, we use a rather broad definition of effectiveness: are the programmatic goals achieved at what is generally perceived to be a reasonable cost?4 Although there is some debate on the subject, most commentators suggest that programs that can demonstrate effectiveness are more likely to be popular and politically viable than those that cannot do so.5 The literature on the effectiveness of government is extensive, and a major strand of the Reinventing Government initiatives of the Clinton administration and its National Performance Review was aimed at improving the effectiveness of governmental programs.6 Frequently, however, broad analyses of governmental performance fail to account for the special problems of defining programmatic effectiveness in a regulatory context.7 Defining effectiveness requires specification of programmatic goals. Many governmental programs have multiple and conflicting goals, but regulatory programs seem particularly problematic on this dimension. Superfund, for example, was expected to clean up sites expeditiously, protect the public and the environment, be efficient, and pay for cleanups primarily with funds derived from potentially responsible parties. Success at one goal necessarily implied difficulties, if not failure, on another: speed and efficiency may not be possible while obtaining high levels of protection, for example, and neither speed nor efficiency (nor, perhaps, even protectiveness) is readily compatible with a system that relies on the coercion of unwilling businesses to pay for cleanups. Malcolm Sparrow’s The Regulatory Craft focuses primary attention on this special challenge to regulatory agencies. He advises them to center their activity on risk reduction. Specifically, Sparrow urges regulators to review the broad set of regulatory responsibilities and goals in their statutory remits, identify those that are most significant and amenable to reduction by concerted effort, and then find inventive ways to reduce those

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risks. It could be said that the designers of the Superfund reforms unknowingly followed this advice quite directly. Measuring regulatory effectiveness is as thorny a task as defining it, since performance measures are especially difficult to formulate for programs with multiple goals, particularly where success is defined primarily in terms of risk reduction. As discussed in chapters 1 and 2, regulatory programs frequently are successful to the extent that they prevent bad things from happening, rather than the more usual situation in which governmental programs can claim credit for good things that do happen. The Superfund program is unusual among regulatory programs in that success can be measured in terms of cleanup activity as well as by a reduction in societal and environmental risk. As described earlier, EPA reformulated its major performance measure as construction completions rather than the previous focus on delisting sites from the National Priority List. Yet these output variables do not assess outcome. The social purpose of Superfund—like that of most regulatory programs—is to reduce risks to human health and the environment. A count of sites at which the bulldozers have finished their work shows success on one dimension of program operation, but the resulting number says little about whether it has had a salutary effect on these more fundamental, but difficult to measure, goals. Economists James Hamilton and Kip Viscusi carried out an ambitious attempt in the late 1990s to assess the effectiveness of Superfund.8 After creating a unique database with extensive information on 150 Superfund sites, the authors used sophisticated statistical techniques to apply a variety of effectiveness measures to the program. Program performance came up short on many of these dimensions, and the authors recommended that Superfund focus its attention on assessing risks more accurately and choosing cleanup alternatives based on their respective costs and benefits. As suggested above, however, Superfund has multiple goals which cannot be reduced to one notion of risk, or even one notion of programmatic effectiveness. As Katherine Probst wrote of the Hamilton-Viscusi study: In Calculating Risks, [the authors] suggest that there are objective measures of the benefits and costs of Superfund cleanups and that using a benefit-cost framework as the decision model will ensure a rational Superfund program. This sounds deceptively simple and easy, but nothing could be further from the truth. . . . The rational and

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dispassionate tone of this book fails to communicate the flavor of what is actually a very heated and often nasty debate over the underlying question of whether benefit-cost analysis should be the decisionmaking framework for selecting what Superfund sites to clean up and how much to clean them up. More central to the regulatory reform debate is the question of whether we want public policy decisions to be based solely on the analysis of technocrats and whether we expect our public programs to be 100 percent efficient. Issues about cleanup decisions are really value judgments, not just scientific or technical decisions.9 Probst’s point is that regulatory effectiveness is frequently a matter more of political than scientific judgment. The call for “objective” measures of outcome in regulatory agencies necessarily leads to some form of costbenefit or risk-benefit analysis. The mechanics of such statistical techniques are difficult in the real world of limited data on virtually all the key assumptions that underlie such analyses.10 Perhaps even more problematic, the promise of statistical objectivity in measuring performance obscures the inherently political choices made in the definition of effectiveness that underlies the methodology. From the limited perspective of maintaining political support for regulatory programs, the issues involving programmatic effectiveness are somewhat less challenging. EPA could not demonstrate easily that Superfund had succeeded on the central outcome measure, that it had reduced risks to humans and the environment at an appropriate cost. But the agency mounted a public relations campaign throughout the period of the administrative reforms to demonstrate that the reinvented Superfund was “faster, fairer, and more efficient.” Impressive figures on the number of sites at which construction of the remedy had been completed refuted criticisms that the program was accomplishing little by way of actual cleanup. The agency had chosen an output measure of performance that was defensible and that showed clear improvement. These successes were touted in a variety of ways heretofore unexploited by the program. The EPA website was expanded to include a large set of reports and other information on the progress of the reforms. Public relations became a major preoccupation of the program, and press releases, communications to Congress, and various activities in the local communities where sites had been cleaned

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up were increased substantially. It is our judgment that these efforts, together with a quieting of the criticisms of the program emanating from the PRP community, reduced the calls for fundamental statutory changes in the program that were so prevalent in 1994.

Fairness Assessments of regulatory effectiveness contain at least the pretext of neutral objectivity, although as we have indicated, such measures are often based at least as much on political as on scientific judgments. Regulatory fairness, in contrast, is almost entirely normative, subjective, and political. Much regulation emerges from concerns over market failure in situations where a small group, if unregulated, would impose unrecoverable costs on society at large. Yet the redistribution of costs required by regulation is seldom susceptible to a reliable and uncontroversial calculus. Reasonable people are likely to disagree, sometimes vigorously, over whether a specific regulation imposes an unfairly high burden, is inequitably distributed, or is unaccompanied by sufficient social benefits. This much being said, we conclude from the experience of Superfund that perceptions of unfairness in basic statutory design can be overcome, or at least substantially moderated, by attention to basic principles of fairness in program implementation. Superfund’s liability scheme violates the most elemental aspects of fairness: its retroactive elements (which Europe and Japan have refused to adopt) run counter to the same basic notion of fairness encompassed in the constitutional prohibition of ex post facto legislation. Its provision for strict liability, particularly in the context of its retroactive character, allows imposition of liability on parties whose behavior may have been faultless, even exemplary. And the joint and several liability provisions allow EPA to ignore the basic commands of distributive justice in allocation of cleanup burdens. In light of this pervasive, almost universally acknowledged, unfairness in the underlying statutory design, the early years of Superfund’s implementation heaped insult on top of injury, for EPA staff showed little recognition that the program might impose substantial unfair burdens on PRPs, or that the agency might accomplish programmatic objectives more effectively by moderating, even symbolically, some of the harsher elements of the liability scheme. The resulting complaints from the PRP community

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were loud and constant. They were expressed in public relations campaigns in national publications. They were voiced in the halls of Congress and in the White House. Ultimately, they found a receptive audience in the conservative wing of the Republican Party, which gained control of Congress in the 1994 election and threatened to dismantle the program altogether. The preeminent concern of the PRP community was the cost of cleanup, which EPA addressed in its administrative reforms. But another major complaint implicated several dimensions of fairness in the system. PRPs told us that while the liability scheme imposed by statute and subsequent judicial interpretation contained the potential for substantial unfairness, they did not believe that the agency had to capitalize on that unfairness through its enforcement procedures; rather, they felt EPA could moderate the unfairness and utilize other aspects of the statutory framework to ameliorate some of its more draconian elements. It took almost fifteen years for the Environmental Protection Agency to heed this advice. Faced with the danger of the program’s imminent demise in 1995, the designers of Superfund’s administrative reforms successfully addressed a set of fairness issues that transcended the basic design of the statute. These changes, together with the modifications in remedy selection and measures of increased programmatic effectiveness, resulted in a turnaround in the prospects for the program. We believe there are lessons here for less draconian regulatory regimes. When our interviewees discussed fairness in the context of Superfund, when they argued that a particular decision or policy of EPA was unfair, we discovered that they often applied different conceptualizations of fairness to different situations. We have unpacked these notions and grouped them into four aspects of regulatory fairness: equity, proportionality, predictability, and equanimity.11 We suspect that these notions are potentially applicable to a broad range of regulatory programs and may hold some promise for the thorny task of reconciling coercion and political support. Equity Equity requires distributional fairness. The concern here is with how the burdens of a regulatory program are apportioned among those who fall within its statutory provisions. A major tension in many regulatory

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programs involves reconciling the goal of equity—treating similarly situated parties the same—with the goal of individualized treatment—a recognition that different situations should evoke different regulatory responses. The more discretion vested in regulatory officials to grant exemptions or to pick and choose among targets of regulatory action, the more opportunity they have for both individualized and inequitable treatment.12 The most obvious examples of inequitable implementation of regulation involve corruption and graft, such as the sale of licenses, “shakedowns” during routine inspections, or political favoritism in allocation of regulatory burdens. Our interviews showed that the government’s initial strategy of using the joint and several liability doctrine to target one or two deep-pocket corporations at a multiparty site was more roundly hated in the PRP community than the strict and retroactive elements of the liability scheme. The agency’s selective prosecution seemed arbitrary, based simply on administrative convenience and a corporation’s ability to pay, rather than on any notion of a PRP’s proportional responsibility for the pollution at a site. In fact, most EPA officials would admit that these decisions were arbitrary: the agency was shorthanded and had limited resources to conduct investigations of the many PRPs at a large multiparty site. Joint and several liability allowed EPA to conserve resources by focusing its actions on the wealthiest corporations for which they had a strong case. It was then up to the corporations targeted by EPA to determine whether they wanted to develop the evidence on other PRPs in subsequent third-party litigation. Several EPA regions concluded that this approach was counterproductive. The PRPs initially targeted were reluctant to negotiate with EPA until they had a clear notion of what their final share of the liability would be, an assessment that could not be made until time-consuming litigation against other PRPs at a site was completed. Further, the approach generated immediate animosity among the targeted PRPs. The result was frequently “stonewalling” and litigation rather than movement toward a cooperative resolution of cleanup decisions. Research in other regulatory realms illustrates a similar response to perceptions of “regulatory unreasonableness.”13 As indicated in chapter 5, EPA’s initial interpretation of joint and several liability was based on a different notion of fairness, one that defined a fair allocation of cleanup costs as full payment by the PRPs, irrespective of

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how those costs were apportioned among the responsible parties. The administrative reforms aimed to change that view of fairness to one that distributed the cleanup burdens equitably among the PRPs. Three of the reforms were specifically directed at this aspect of fairness: the policy of issuing administrative orders at the commencement of the enforcement process to all viable PRPs at a site, the reinvigoration of the mixedfunding provisions, and the initial effort (later abandoned) to involve the government in helping PRPs allocate shares of cleanup burdens. The administrative reforms changed the equity of the Superfund system only at the margins. At sites with substantial numbers of bankrupt or similarly nonviable PRPs, the government share picked up through mixed funding was insufficient to compensate for the full orphan share of cleanup expenses. And the final allocation of cleanup burdens among the PRPs, even before the reforms, usually reflected a rough approximation of proportional responsibility for the contamination at a site. The reforms merely promoted that result without the costly and time-consuming third-party litigation that the earlier strategy had encouraged. But it was clear to us in interviews that these changes were important in a symbolic sense and served to dampen criticism of the program. Proportionality If regulated parties must make compulsory contributions for the good of society, they expect that the social benefit attained is roughly proportionate to its cost. The PRPs we interviewed appeared to engage in a rough cost- or risk-benefit calculus at the sites they were responsible for cleaning up, and considered it unfair to be forced to pay for cleanups that were unnecessarily expensive or that used technologies that were unlikely to succeed in reducing risks. For example, PRPs argued that cleaning up a site in the center of an active industrial park to a level that would permit construction of a nursery school full of dirt-eating infants, at extraordinary expense, was a needless expenditure of their assets. Project managers could demand the highest possible cleanup levels, with the most expensive technologies, because the statute permitted it and because the costs came not from EPA’s budget, but from the pockets of the wealthy PRPs. PRPs regarded it as arbitrary and unfair for the agency to use its coercive powers in this way. They viewed EPA’s reforms of the remedy process (such as

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the focus on future land use and the restriction of remediation techniques to principal threats at a site) as reducing the unfairness of the system. The relationship of costs incurred by the regulated population to benefits obtained by society at large is probably the most contentious element of regulation. The regulated population will almost always argue that its expenditures are unnecessary, that the social benefits of the required actions are insubstantial. The Superfund experience suggests that regulatory agencies using coerced extractions from a defined population to benefit society need to pay particular attention to the legitimate concerns of those who wish to make sure that the costs they are being asked to bear are providing commensurate benefits to society at large. Predictability A major, often unappreciated, concern of PRPs was the unpredictable nature of Superfund liability. Two elements of Superfund’s unpredictability struck PRPs as particularly unfair: the seemingly arbitrary differences from region to region in practices involving both enforcement and remedy selection, and the limitless nature of their future liability at a site, even after it had been cleaned up to EPA’s specifications. We have already described the regional differences in enforcement style and remedy selection procedures. Many of the major PRPs were cleaning up sites in several regions. They said they were treated almost like criminals in some regions; in others, the treatment was more accommodating and cooperative. Regional differences were similarly pronounced on remedy selection issues. We were told that some regions allowed PRPs to try newer technologies that held the promise of remediation at a lower cost, or to use containment and other cheaper remedies at sites where complete remediation seemed needlessly expensive. At similar sites in other regions, the PRPs claimed that they were required to clean up to very high levels using older, more expensive technologies. This problem of unpredictability existed even within regions. PRPs said that the frequent turnover of remedial project managers was particularly problematic. PRPs reportedly would spend substantial time demonstrating their cooperativeness to one project manager, or convincing her of the promise of a new technology, only to have that person leave and be replaced by someone with quite different ideas and requirements. Cooperation and persuasion were not transferable. Project managers came and

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went, and good deeds done on one administrator’s watch were not remembered or rewarded by the next. The publication of guidance documents and presumptive remedies addressed these concerns by making enforcement and remedy selection decisions more uniform across and within regions. The second criticism relating to predictability was less amenable to administrative fixes. PRPs told us that they regarded it as highly unfair that no matter how thorough the cleanup, no matter how much money they committed to site remediation, they could never obtain closure and a release from potential future liability. There was always the possibility that an unexpected event years in the future would require them to dig up the site again and expend still more money on cleanup. The government is reluctant to grant releases from future liability at Superfund sites.14 There thus remains a specter of seemingly limitless liability should the PRPs’ cleanup efforts, directed and designed by EPA, fail. PRPs are required to absorb all the risk of remedy failure, the government none. This failure of EPA to absorb some risk for the cleanup projects the agency designed and mandated continues to strike PRPs and their insurance companies as unfair.15 Equanimity This final issue of fairness is primarily presentational, one of regulatory style. But previous research, and our own findings on Superfund, illustrate that form can be almost as important as substance in the regulatory context. Corporate managers and officials of local governments do not expect to be treated like criminals; they rankle under nonnegotiable demands; they object to threats from federal government officials. All too often in the early years of the Superfund program, the attitude of government lawyers, according to one PRP attorney, was “Up against the wall, despoiler of the environment!” Such attitudes were particularly offensive to PRPs who had disposed of their wastes legally and according to best practices at the time. This approach left little room for accommodation or for negotiation over enforcement and remedial alternatives. One element of the administrative reforms of Superfund, largely implicit but communicated informally from headquarters to the regions nonetheless, was that PRPs, at least the cooperative ones, were to be treated with respect in an evenhanded, nonconfrontational manner. Project managers

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and regional attorneys were encouraged to listen to PRP concerns and to accommodate them if possible. PRPs were given opportunities to conduct major parts of the remedial process themselves, under EPA supervision.16 The manner in which governmental officials present themselves to the outside world is not readily subject to performance measures, and we have no reliable evidence of the extent to which regional officials changed their presentational style. Our postreform interviews revealed that PRPs perceived changes in the governmental stance toward them, at least in a general sense. The excessively adversarial approach was reportedly less prevalent; a governmental stance of equanimity and accommodation more frequent.

Concluding Thoughts: The Bad News and the Good News from Superfund This chapter summarizes the lessons we have drawn from Superfund for the broader issue of reconciling regulation’s inherent coerciveness with the special need of coercive programs to maintain at least minimal public and political support. It is perhaps useful to cycle back to the beginning of our discussion for some concluding thoughts. The debate over regulation starts with dissatisfaction with what it is and how it is implemented. Policy scholars Ian Ayres and John Braithwaite observe: “The deregulation debate stems in large part from dissatisfaction with the efficacy of the contemporary regulatory state. On the right, critics claim that regulation is an inefficient and stifling force that drives them to laissez-faire prescriptions. The political left, however, often views contemporary regulation as ineffectual or co-opted.”17 Not surprisingly, the political right has favored remedies such as deregulation and market-like mechanisms, and the left has advocated tougher laws and more aggressive regulators. For now, at least, the proponents of alternatives to regulation are ascendant. As the two authors put it, “Market-based instruments often seem to have become the new conventional wisdom among policymakers in the environmental realm, at least in the United States.”18 While recognizing that regulation is both politically unpopular and intellectually unfashionable, we have chosen in this book to deal directly

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with the political problem of regulation’s unpopularity rather than examine either its softer alternatives or the even less likely prospects for tougher statutory approaches. We justified our choice with the observation that while support for regulation may wane, it also waxes, and the reminder that, as a policy tool, regulation has a record for efficacy yet to be matched by the alternatives. To better understand how regulatory programs could make themselves more politically acceptable, we examined how EPA, the nation’s largest regulatory agency, transformed Superfund from an endangered program high on the conservative Republican political hit list to an accepted element of an avowedly conservative Republican president’s environmental policy. We have discussed how that change took place and tried to explain the reasons that underlay its success. This turnaround is important in itself, because Superfund remains the world’s most comprehensive and expensive cleanup program. But we also hoped to discover lessons for regulatory programs in general. And we were able to draw some conclusions about the contributions of the program’s design, management, and leadership to success, and about how some of the new practices embodied more general conceptions of fairness and equity. As for speculation about more general applications for our findings, this case offers both bad news about the difficulties of generalizing from Superfund and good news about how we might read its lessons more widely. The Bad News Superfund is an unusual regulatory program, and the administrative reforms we have described took place in an environment unlikely to be duplicated in many other contexts. Somewhat paradoxically, the beleaguered Superfund program had unique advantages as its leaders attempted to “reinvent” its operation. The most significant of these advantages were: —An existing plan of reform that was carefully constructed, politically vetted, and extensively discussed. The plan for statutory revision that failed in the final days of the 103d Congress was the product of a process of conciliation and negotiation that brought all the disparate stakeholders in the program into agreement. The provisions of this legislative proposal, it will be remembered, formed the basis for the administrative reforms that were subsequently adopted. Although not impossible to replicate in other

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settings, the Superfund reform plan represents a level of care, planning, and participation that is rare in the literature and still rarer in the annals of administrative theory and experience. Past studies have tended to dwell more on the attributes of leaders or the characteristics of policy instruments than on the substantive quality of their plans of action. —A potent motivation for change provided by the widely perceived danger that the entire Superfund program was under threat by powerful enemies in Congress. Superfund administrative reform took place in an atmosphere in which agency leadership, program staff, and many outside observers believed that the program faced imminent legislative evisceration if major changes were not made in its procedures and performance. Few motivations for reform are as strong. And few regulatory contexts present these motivations in as clear and unambiguous a form. —The failure of environmental groups to mount a legal challenge to those elements of the reforms that arguably exceeded the agency’s statutory authority. The tacit acceptance of the Superfund reforms by environmental groups was of a different order than the factors discussed above, and our characterization of it is more speculative. We indicated in chapter 3 that an important constraint on reformminded regulatory officials is the prospect of being sued by those unhappy with their decisions; a major contention in these lawsuits is that the agency made unauthorized use of discretion and an incorrect interpretation of regulatory authority.19 The increasing threat of such lawsuits is both a general problem for the creative use of regulatory discretion and was a particular challenge for the Superfund reforms, which included at least an implicit change from the legally mandated preference for “permanent” cleanups.20 This danger is most often posed by a limited number of groups rather than the diffuse citizenry. Michael Greve and Fred Smith describe it this way: The term citizen suit evokes the image of a more or less spontaneous action by “concerned citizens” who seek to remedy some environmental problem in their neighborhood. However, this picture is very misleading: Citizen suits are almost always brought by nationally organized, professional advocacy groups such as the Sierra Club Legal Defense Fund or the Natural Resources Defense Council. Proving ongoing, site-specific violations of environmental standards is costly

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and difficult; often it cannot be done at all without the alleged violator’s cooperation, which is rarely forthcoming. Few individuals have sufficient time, money, or incentives to overcome these obstacles. Environmental groups, in contrast, do possess sufficient expertise and resources to monitor how the Environmental Protection Agency administers environmental statutes and to take legal action when they consider it necessary.21 And it was these groups, discussed previously as the “dog that did not bark,” that chose not to sue EPA for what in other contexts would be regarded as a highly adventurous experiment in statutory interpretation and enforcement discretion. This inaction by environmental “private attorneys general” is all the more unusual because EPA’s Superfund reforms almost certainly produced less environmentally protective cleanups, with more deference to the interests of “corporate polluters.” Our speculation as to why this occurred goes back to the plan and its acceptance by the environmental lobby as the last, best hope for preserving the basic structure of Superfund in the face of a legislative onslaught. While environmental watchdogs might very well have prevailed in a lawsuit charging EPA with unauthorized exercise of discretion and an “unpersuasive” interpretation of a statute, the result would have forced EPA to return to higher cleanup standards, which almost certainly would have rekindled recalcitrance and delay from the PRPs, strengthening the hand of legislators who wanted to gut the program. Other potential environments for regulatory reform cannot count on the existence of a ready-made and politically agreed agenda for change, the motivation of regulatory self-preservation posed in stark terms, or the legal quiescence of groups who increasingly find allies in the federal judiciary for keeping regulators on a tight rein. The Good News If Superfund reform took place in a unique environment that may not exist in many other regulatory realms, we believe that at least three positive lessons can be learned from this case study that may inform other efforts. —Fair treatment is a productive use of scarce enforcement resources. Although regulatory reformers for some time have been advocating fair

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treatment as a way of stimulating more voluntary cooperation, this is a lesson that often runs against the grain of lawyer-regulators steeped in a strict enforcement approach. In our previous work on Superfund, we noted that chronic short staffing and the lawyerly ethic of avoiding actions that are not compelled by legal necessity encouraged tough treatment of all PRPs—cooperative or otherwise—in the early years of the program.22 This did not prove to be a wise strategy for Superfund, any more than it has been successful for special prosecutors, IRS agents, or regulators in other agencies. The lesson is perhaps obvious but often forgotten: in Superfund, as in all regulatory enforcement programs that deal with individuals and organizations who have a political voice and some legitimacy, enforcement activities necessarily reflect on the political standing of the program itself and regulatory enforcement generally. Fair treatment, in terms of equity, proportionality, predictability, and equanimity, can thus be an important contributor to maintaining an enforcement program’s political legitimacy, irrespective of its impact on cooperation or programmatic success —An effective regulatory program needs to have its assigned problem “under control.” Few regulatory programs, Superfund included, have a realistic chance of eliminating all of the risks they are legislatively assigned to address. The only realistic expectation is that they control the problem and minimize the risks to the greatest extent possible. Clearly the regulators must succeed in actually reducing these risks, but an important element is presentational—the regulator must not only take care of the problem to the extent possible, but also must demonstrate to the public that the problem has been dealt with successfully. This was precisely what EPA accomplished with its Superfund reform initiatives. In 1993, the program was widely perceived as out of control on most dimensions: cost, delay, risk reduction. In 2002, our interviews suggested much more of a business-as-usual approach to Superfund than the earlier perspective that the sky was falling. On Capitol Hill we found congressional expectations that the program was “ramping down,” that there was light at the end of the tunnel. At present, although knowledgeable observers see Superfund cleanups continuing for some time, albeit as a diminishing activity, the wilder speculations of a decade ago are now history. The problem of hazardous waste cleanup is “under control.” The lessons for other enforcement programs are centered on controlling trajectories. The reformers of Superfund created procedures that pro-

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duced greater predictability for the regulated public, along with performance indicators that measured a trajectory of reasonable achievements and promised diminishing economic and social disruption. Few other regulatory programs can promise, even in theory, that their mission will someday be finally completed, that the risks they are assigned to control will disappear. But they can promote an image and perhaps even the reality of regularity, predictability, and control. These factors surely promoted the changed shape of the political landscape that currently exists for Superfund. —The continuing challenge of regulation is maintaining political support from two disparate but attentive and potentially influential publics. The regulated public typically wants leniency and accommodation— “reasonable” regulation based on commonsense notions of what is necessary and what is possible. Groups and individuals threatened by the risks addressed by regulation demand a measure of harshness toward alleged miscreants, formal adherence to rules, and distance between regulators and those being regulated. This problem has been presented as a choice between two competing perspectives, or perhaps a choice that merely follows swings of the pendulum from “regulatory unreasonableness” to “sweetheart deals.” Our discussion of Superfund, however, indicates that addressing both the regulated population—at least potentially cooperative and responsible elements of that population—and the advocates for more aggressive governmental control of risks can and should be a more conscious process, marked by an effort to deal with the two constituencies at the same time. Indeed, our discussion strongly suggests that the conscious crafting of accommodations between these two publics is essential for an agency that might otherwise be battered by competing interests in an environment that seems permanently hostile to the regulatory enterprise.

A Final Word The continuing task of regulatory agencies is to enforce the law in the public interest. But agencies must also maintain the political support necessary to do their jobs. Regulatory agencies are typically chronically short on enforcement resources and long on legal obligations, but they do have awesome powers at their disposal: powers that can unnecessarily harm individuals and society, and powers to promote the public good through

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effective policies fairly administered. Building and maintaining public support for this enterprise is primarily an exercise in explaining how these powers can be used in the latter sense to address the risks the public wants controlled. In Jonathan Swift’s Gulliver’s Travels, the Lilliputians—not often thought of as a particularly wise people—nonetheless had some good ideas about how to use coercive powers and about the symbolism that explained and justified such use to larger publics. It is perhaps fitting to give Gulliver the last word: Although we usually call Reward and Punishment the two Hinges upon which all Government turns; yet I could never observe this Maxim to be put in Practice by any Nation, except that of Lilliput. . . . And these People thought it a prodigious Defect of Policy among us, when I told them that our Laws were enforced only by Penalties, without any Mention of Reward. It is upon this account that the Image of Justice, in their Courts of Judicature, is formed with six Eyes, two before, as many behind, and on each Side one, to signify Circumspection; with a Bag of Gold open in her right Hand, and a Sword sheathed in her left, to shew she is more disposed to reward than to punish.23

Notes

Preface 1. Lester M. Salamon, ed., The Tools of Government: A Guide to the New Governance (Oxford University Press, 2002); Robert Kagan, Adversarial Legalism: The American Way of Law (Harvard University Press, 2001); and Malcolm Sparrow, Regulatory Craft: Controlling Risks, Solving Problems, and Managing Compliance (Brookings, 2000). 2. Thomas W. Church and Robert T. Nakamura, Cleaning Up the Mess: Implementation Strategies in Superfund (Brookings, 1993); Nakamura and Church, “Reinventing Superfund.” 3. Robert T. Nakamura and Thomas W. Church, “Reinventing Superfund: An Assessment of EPA’s Administrative Reforms,” in National Academy of Public Administration, environment.gov: Transforming Environmental Protection for the 21st Century, vol. 3 (Washington, 2000). 4. Church and Nakamura, Cleaning Up the Mess. 5. Robert T. Nakamura and Thomas W. Church, “Beyond Superfund: Hazardous Waste Cleanup in Europe and the United States,” Georgetown International Environmental Law Review, vol. 7, no. 1 (Fall 1994), pp. 15–57.

Chapter One 1. This is an important goal within the stream of policy research that seeks to improve government effectiveness. Peter May writes that instrumental policy learning “entails new understandings about the viability of policy interventions or implementation designs. The foci are policy instruments that form the basic building blocks of public policy. These include attention to the way that policy tools such as rules, sanctions, incentives, information, and new organizations affect the

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workings of particular policies.” Peter J. May, “Policy Learning and Failure,” Journal of Public Policy , vol. 12 (part 4, 1992), pp. 331–54. 2. Charles Schultze, The Public Use of Private Interest (Brookings, 1977), p. 6. 3. Thomas W. Church and Milton Heumann, Speedy Disposition: Monetary Incentives and Policy Reform in Criminal Courts (State University of New York Press, 1992), pp. 6–7. There are dissenters, however. See Max Nieman, “The Virtues of Heavy-Handedness in Government,” in John Brigham and Don W. Brown, eds., Policy Implementation: Penalties or Incentives? (Beverly Hills, Calif.: Sage Publications, 1980); and Amitai Etzioni, “On Solving Social Problems—Inducements or Coercion?” Challenge (July-August 1985), p. 35. 4. Indeed, government is frequently defined in terms of its monopoly on the legitimate use of coercion. See John Austin, The Province of Jurisprudence Determined (Cambridge University Press, 1995); Max Weber, From Max Weber, translated and edited by H. H. Gerth and C. Wright Mills (New York: Galaxy, 1946, reprinted 1958). 5. Lester M. Salamon, ed., Beyond Privatization: The Tools of Government Action (Washington: Urban Institute, 1989), ch. 1. 6. Lester M. Salamon, ed., The Tools of Government: A Guide to the New Governance (Oxford University Press, 2002), p. 2. 7. See Eugene Bardach, “Implementation Studies and the Study of Implements,” paper presented at the 1980 annual meeting of the American Political Science Association; and Lorraine McDonnell and Richard Elmore, “Getting the Job Done: Alternative Policy Instruments,” Educational Evaluation and Policy Analysis, vol. 9 (summer, 1987), pp. 133–52. McDonnell and Elmore list four policy tools (inducement, mandating, capacity building, systems change). John French and Bertram Raven present a psychologist’s view of personal motivations, which they classify as reward, coercion, legitimacy, expertise, and referent. John R. P. French and Bertram Raven, “Bases of Social Power,” in Dorwin Cartwright, ed, Studies in Social Power (University of Michigan Press, 1959). Salamon provides the longest and most specific list: direct government, government corporations, economic regulation, social regulation, government insurance, public information, corrective taxes, contracting, purchase of service contracting, grants, loans/guarantees, tax expenditures, vouchers, and tort liability. Lester M. Salamon, “The New Governance and the Tools of Public Action: An Introduction,” in Salamon, ed., Tools of Government. 8. Salamon distinguishes four dimensions on which tools differ by degrees of coerciveness, directness, visibility, and “automaticity.” Salamon, ed., Beyond Privatization. 9. On subsidies, loans, and vouchers, see Ron Feldman, “Government Insurance,” Steven Kelman, “Contracting,” David Beam and Timothy Conlan, “Grants,” Thomas Stanton, “Loans and Loan Guarantees,” Eugene Steuerle and Eric Twombly, “Vouchers,” all in Salamon, ed., Tools of Government. On infor-


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mation, see Janet Weiss, “Public Information,” in Salamon, ed., Tools of Government. On soft techniques, see Joseph J. Cordes, “Corrective Taxes, Charges, and Tradable Permits” in Salamon, ed., Tools of Government. See also McDonnell and Elmore, “Getting the Job Done,” for a discussion of inducement and capacity-building approaches. 10. Lester M. Salamon, “Economic Regulation,” and Peter May, “Social Regulation,” in Salamon, ed., Tools of Government; McDonnell and Elmore, “Getting the Job Done”; Malcolm Sparrow, Regulatory Craft: Controlling Risks, Solving Problems, and Managing Compliance (Brookings, 2000). 11. Thomas W. Church and Milton Heumann, “The Underexamined Assumptions of the Invisible Hand: Monetary Incentives as Policy Instruments,” Journal of Policy Analysis and Management, vol. 8 (1989), pp. 641–57. 12. Theodore Lowi, The End of Liberalism, 2d ed. (W. W. Norton, 1979). 13. Salamon, ed., Beyond Privatization. 14. Sparrow, Regulatory Craft. 15. Of course Lowi was referring to larger genres of policy types: distributive, redistributive, and regulatory. Theodore Lowi, “American Business, Public Policy, Case Studies, and Political Theory,” World Politics, vol. 16 (1964): 677–715; Lowi, The End of Liberalism. 16. B. Guy Peters, “The Politics of Tool Choice,” in Salamon, ed., Tools of Government, pp. 552–53. 17. See McDonnell and Elmore, “Getting the Job Done,” for a discussion of implements, and Eugene Bardach, The Implementation Game: What Happens after a Bill Becomes a Law? (MIT Press, 1977) for a discussion of “piling on” and other “games” that disperse policy resources and multiply goals. 18. James Schlesinger has written: “The tool of politics . . . is to extract resources from the general taxpayer with minimum offense and to distribute the proceeds among innumerable claimants in such a way as to maximize support at the polls. Politics, so far as mobilizing support is concerned, represents the art of calculated cheating—or more precisely how to cheat without really being caught.” James Schlesinger, “Systems Analysis and the Political Process,” Journal of Law and Economics (October 1968), p. 285. 19. Sparrow, Regulatory Craft, p. 2. 20. Power and control of power is a major theme in American thought. The issue for the Federalists was the creation of a government strong enough to deal with the problem of faction while being itself controlled by the people. See Grant McConnell, Private Power and American Democracy (Vintage Books, 1966). 21. Eugene Bardach, “Policy Implementation,” April 1999 (unpublished paper, available from the authors). 22. National Academy of Public Administration, Setting Priorities, Getting Results: A New Direction for the Environmental Protection Agency (Washington, 1995).

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23. Richard N. L. Andrews, Regulating the Environment, Regulating Ourselves (Yale, 1999). 24. Mary Douglas and Aaron Wildavsky, Risk and Culture (University of California Press, 1983). 25. See the discussion of the Reagan years in Andrews, Regulating the Environment, Regulating Ourselves. Norman Vig and Michael Kraft, Environmental Policy in the 1990s (Washington: CQ Press, 1996), make a similar point in their discussion of presidential influence. 26. Eugene Bardach and Robert Kagan, Going by the Book: The Problem of Regulatory Unreasonableness (Temple University Press, 1982); Robert Kagan and John Scholz, “The ‘Criminology of the Corporation’ and Regulatory Enforcement Strategies,” in Keith Hawkins and John Thomas, eds., Enforcing Regulation (Boston: Kluwer-Nijhoff, 1984); John Braithwaite, To Punish or Persuade: Enforcement of Coal Mine Safety (State University of New York Press, 1985). On enforcement generally, see Robert Kagan, “Regulatory Enforcement,” and John Scholz, “Managing Regulatory Enforcement in the United States,” both in David H. Rosenbloom and Richard D. Schwartz, eds., Handbook of Regulation and Administrative Law (New York: Marcel Dekker, 1994). 27. Sparrow, Regulatory Craft. 28. For discussion of the differences between tort law and regulation, see Susan Rose-Ackerman, “Tort Law in the Regulatory State,” in Peter Schuck, ed., Tort Law and the Public Interest (W. W. Norton, 1991); and Eugene Bardach and Robert Kagan, “Liability Law and Social Regulation,” in Eugene Bardach and Robert Kagan, eds., Social Regulation: Strategies for Reform (New York: Transaction Books, 1982). 29. Thomas W. Church and William Wilkerson, “The Gorilla in the Closet: Joint and Several Liability and the Cleanup of Toxic Waste Sites,” Law and Policy, vol. 11 (October, 1989) pp. 425–49. See also chapter 7 of this volume. 30. Clean Sites, Making Superfund Work: Recommendations to Improve Program Implementation (Alexandria, Va., 1989). Milton Russell, E. William Colglazier, and Mary English, Hazardous Waste Remediation: The Task Ahead (University of Tennessee, Waste Management Research and Education Institute, 1991), put forward an even higher figure. The $100 billion figure for the total cleanup bill may be fairly close to the mark. A recent study of prospective costs of the Superfund program in 2001 estimated that the federal share of Superfund expenses from fiscal years 2000 to 2009 would range between $13.99 billion and $16.4 billion; Katherine Probst and others, Superfund’s Future: What Will It Cost? (Washington: Resources for the Future, 2001). EPA estimates that roughly 70 percent of cleanup expenses at National Priority List sites have been paid by PRPs (Statement of Marianne Lamont Horinko, Assistant Administrator, Office of Solid Waste and Emergency Response, U.S. EPA, before the Subcommittee on Superfund,

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Toxics, Risk and Waste Management, U.S. Senate, July 31, 2002, p. 2). If this ratio stays relatively constant into the future, and the Resources for the Future estimate of prospective federal costs is accurate, the total cleanup bill would be roughly $50 billion in additional expenditures in the first decade of the twentyfirst century. Approximately $15 billion in federal appropriations was spent from the program’s inception through fiscal year 1998; see Government Accounting Office, “Superfund: Information on the Program’s Funding and Status” (1999), p. 5. If the EPA estimate of federal-to-PRP expenditures is accurate, PRPs paid approximately $35 billion in cleanup expenses through 1999, the same as the estimate for 2000–2009. These figures sum to $100 billion. These figures do not include expenditures beyond 2009 or PRP legal expenses, which, at least in the first decade of the program, consumed more than one-third of total PRP expenditures on Superfund. See L. S. Dixon, Superfund and Transaction Costs: The Experiences of Insurers and Very Large Industrial Firms (Santa Monica, Calif.: RAND Corp., 1992). 31. Robert Kagan, Adversarial Legalism: The American Way of Law (Harvard University Press, 2001), p. 202. 32. Thomas W. Church and Robert T. Nakamura, Cleaning Up the Mess: Implementation Strategies in Superfund (Brookings, 1993), p. 143. 33. Christine Todd Whitman, “Keep the Momentum for Superfund Cleanups,” New York Times, July 18, 2002, p. 21. 34. The Superfund Settlements Project, an ad hoc group of major PRPs, including DuPont, General Electric, General Motors, and IBM, issued a report in late 1996, which concluded that “EPA’s track record since it began implementing the October 2, 1995 administrative reforms . . . is substantial, especially in light of the severe obstacles that EPA encountered during fiscal year 1996 as it began implementation of these reforms. . . . Readers of this report will likely find much here to applaud. . . .” Superfund Settlements Project, “EPA’s Superfund Reforms: A Report on the First Year of Implementation” (Washington: Morgan, Lewis & Bockius LLP, 1996), pp. viii–ix. A Chemical Industry report published in 1997, while urging legislative changes to address the program’s “deep-rooted, systemic problems” and complaining that the reforms had not yet been uniformly implemented in all regions, concluded somewhat begrudgingly that “at sites where the reforms have been fully applied so far, EPA’s reforms have produced benefits that otherwise would not have occurred.” Chemical Manufacturers Association, “A Chemical Industry Perspective on EPA’s Superfund Administrative Reforms” (Washington, 1997). 35. The most controversial Superfund site in years involves an ambitious and very expensive (estimates range up to $1 billion) EPA plan to require General Electric to clean up PCB contamination in the Hudson River. General Electric has a history of aggressively contesting EPA’s actions against it in Superfund, and

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these activities may have reached their apotheosis in the Hudson River case. Indeed, General Electric has mounted a legal battle challenging aspects of Superfund as unconstitutional, a legal question that most observers consider to have been decided in the 1980s. At this writing, a federal district court judge has dismissed GE’s case, General Electric Co. v. Whitman, Administrator, U.S. Environmental Protection Agency, No. 00-2855 (D.D.C. Mar. 31, 2003). General Electric has filed a notice of appeal, Newsday, Nassau and Suffolk Edition News, April 23, 2003, p. A18.

Chapter Two 1. Lester M. Salamon, “The New Governance and the Tools of Public Action: An Introduction,” in Lester M. Salamon, ed., The Tools of Government: A Guide to the New Governance (Oxford University Press, 2002), p. 24. 2. Ibid., pp. 24–25. 3. Ibid. 4. Thomas Church and Milton Heumann, “The Underexamined Assumptions of the Invisible Hand: Monetary Incentives as Policy Instruments,” Journal of Policy Analysis and Management, vol. 8 (1989), p. 641. Compare Max Nieman, “The Virtues of Heavy-Handedness in Government,” in John Brigham and Don W. Brown, eds., Policy Implementation: Penalties or Incentives? (Beverly Hills, Calif.: Sage Publications, 1980). 5. This position is not unchallenged. See Niemann, “Virtues of HeavyHandedness.” 6. Two leading policy analysis textbooks taking this view are David Weimer and Aidan Vining, Policy Analysis: Concepts and Practice, 3d ed. (Prentice-Hall, 1989), and Michael Munger, Analyzing Policy (Norton, 2000). 7. See, for example, Stephen Breyer, Breaking the Vicious Circle: Toward Effective Risk Regulation (Harvard Paperbacks, 1995). 8. See Beryl Radin, Beyond Machiavelli: Policy Analysis Comes of Age (Georgetown University Press, 2000). While Radin argues that there are other types of policy analysis, she acknowledges the primacy of economic analysis. 9. Charles Schultze, The Public Uses of the Private Interest (Brookings, 1977). 10. Ibid. 11. See George J. Stigler, “The Theory of Economic Regulation,” Bell Journal of Economics, vol. 2, no. 1 (1971), pp. 3–21. 12. W. Kip Viscusi and James T. Hamilton, “Are Risk Regulators Rational?” American Economic Review, vol. 89, no. 4 (September, 1999). This article reviews this literature and presents findings from hazardous waste decisions. 13. Breyer, Breaking the Vicious Circle, ch. 1. 14. W. Kip Viscusi, Fatal Tradeoffs: Public and Private Responsibilities for Risk (Oxford University Press, 1992), p. 168. Cotton dust regulations were intro-

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duced to protect worker health, but may have inadvertently increased the accident rate among workers. The author notes that “the higher level of lost workday accidents may have been a consequence of new technologies that were introduced in connection with meeting the standard.” 15. Schultze, Public Use of the Private Interest. 16. John D. Graham and Jonathan Baert Wiener, eds., Risk vs. Risk: Tradeoffs in Protecting Health and the Environment (Harvard University Press, 1995), p. 90. 17. See Munger, Analyzing Policy , ch. 6; Weimer and Vining, Policy Analysis, ch. 8, and pp. 183–85 (principal-agent problems), 160–65 (manipulation of electoral systems); and Stigler, “Theory of Economic Regulation.” 18. See Robert W. Hahn, “Policy Watch: Government Analysis of the Costs and Benefits of Regulation,” Journal of Economic Perspectives, vol. 12 (Autumn 1998). See also Anthony Downs, “Why the Government Budget Is Too Small in a Democracy,” World Politics, vol. 12 (1960), pp. 541–63, on the difficulties of measuring performance. 19. See Mary Douglas and Aaron Wildavsky, Risk and Culture (University of California Press, 1983); Graham and Wiener, Risk vs. Risk. 20. See, for example, Ralph Keeney, “Mortality Risks Induced by Economic Expenditures,” Risk Analysis, vol. 10, no. 1 (1990), pp. 147–59. For a critical discussion, see Lisa Heinzerling and Frank Ackerman, “The Humbugs of the AntiRegulatory Movement,” Cornell Law Review, vol. 87 (2002), p. 668. 21. Ronald Coase, “The Problem of Social Costs,” Journal of Law and Economics, vol. 3, no. 1 (1960), pp. 1-44. 22. Viscusi, Fatal Tradeoffs, ch. 4. 23. Weimer and Vining, Policy Analysis, ch. 9. 24. Grant McConnell, Private Power and American Democracy (Vintage Books, 1966). See also James Madison, “Federalist Number 10,” in Clinton Rossiter, ed., The Federalist Papers (Mentor Books, 1999). 25. Neal Shover, Donald McClelland, and John Lynweiler, Enforcement or Negotiation: Constructing a Regulatory Bureaucracy (State University of New York Press, 1986) p. 5. 26. See, for example, McConnell, Private Power and American Democracy; Marver H. Bernstein, Regulating Business by Independent Commission (Westport Conn.: Greenwood Press, 1955, Reprinted 1977), pp. 144, 156; Samuel P. Huntington, “The Marasmus of the ICC: The Commission, the Railroads and the Public Interest,” Yale Law Journal 61 (April 1952), 467–509. A more recent variant is the environmental justice movement and its view that even government environmental agencies cooperate in helping to concentrate pollution in poor areas; again, the regulators become partners of polluters. See Robert Bullard, Dumping in Dixie (Boulder, Colo.: Westview Press, 2000), pp. 99–103.

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27. This list is from Alfred Kahn, The Economics of Regulation (MIT Press, 1988), p. xviii. 28. McConnell, Private Power and American Democracy. 29. The term “subgovernments” was coined by Douglass Cater, Power in Washington (Random House, 1964). For examples of the regulatory capture literature, see Bernstein, Regulating Business by Independent Commission; and Huntington, “The Marasmus of the ICC.” See also Morris Fiorina, Congress: Keystone of the Washington Establishment (Yale University Press, 1999); Theodore Lowi, The End of Liberalism: Ideology, Policy and the Crisis of Public Authority (W. W. Norton, 1969); and Phillip Nicholas, “The Securities and Exchange Commission and Shareholder Democracy,” unpublished Ph.D. Dissertation in Political Science, State University of New York at Albany, 2002. 30. Paul Light, Tides of Reform: Making Government Work 1945–1995 (Yale University Press, 1997). Light calls reforms of this type of policy the “watchful eye.” 31. A notable example is the prohibition against balancing costs against benefits in particular matters involving health and safety. 32. Eric M. Patashnik, “After the Public Interest Prevails: The Political Sustainability of Policy Reform,” paper delivered at the American Political Science Association Annual Meeting, San Francisco, 2001. 33. See Stigler, “A Theory of Economic Regulation.” 34. Indeed, Eugene Bardach notes that social regulation seems particularly prone to two opposite excesses. He writes: “Command-and-control programs typically have three main components: a set of standards, a cadre of inspectors and auditors to detect noncompliance, and a set of sanctions with which to threaten noncompliant firms or citizens. This sort of regulation is vulnerable to errors of underregulation or overregulation or to both simultaneously. Political pressures and scientific uncertainty can lead to overly stringent or overly lax standards. Standards can also be too prescriptive or too ambiguous. The enforcement process is vulnerable to budgetary strictures, over-concentration on symbolic targets, go-by-the-book rigidity, and in some cases corruption.” Eugene Bardach, “Policy Implementation,” unpublished manuscript, 1999. 35. Steven Kelman, “Adversary and Cooperationist Institutions for Conflict Resolution in Public Policymaking,” Journal of Policy Analysis and Management, vol. 11, no. 2 (1992), p. 178. 36. Robert Kagan, Adversarial Legalism: The American Way of Law (Harvard University Press, 2001), p. 197. 37. John Braithwaite, To Punish or Persuade: Enforcement of Coal Mine Safety (State University of New York Press, 1985), p. 182. 38. See Robert Kagan and John Scholz, “The ‘Criminology of the Corporation’ and Regulatory Enforcement Strategies,” in Keith Hawkins and John Thomas eds., Enforcing Regulation (Boston: Kluwer Nijoff, 1984); Braithwaite, To Punish or To Persuade.

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39. Robert Kagan, “Adversarial Legalism and American Government,” Journal of Public Policy Analysis and Management, vol. 10 (1991), pp. 369–406; Kagan, Adversarial Legalism. 40. Kagan, “Adversarial Legalism and American Government,” p. 372. 41. Kagan, Adversarial Legalism, p. 182. 42. Ibid, p. x. 43. For several examples, see Malcolm Sparrow, The Regulatory Craft: Controlling Risks, Solving Problems, and Managing Compliance (Brookings, 2000). 44. See Lawrence Friedman, Total Justice (New York: Russell Sage, 1985). 45. See Paul Stephen Dempsey, “Deregulation and Reregulation: Policy, Politics and Economics,” in David Rosenbloom and Richard Schwartz, eds., Handbook of Regulation and Administrative Law (New York: Marcel Dekker, 1994). 46. Richard N. L. Andrews writes: “From EPA’s earliest days, a key policy decision was to emphasize aggressive standard setting enforcement rather than negotiation and assistance. The agency’s first administrator, William Ruckelshaus, was a prosecutor who had worked aggressively to abate air and water pollution in Indiana. . . . The core of Ruckelshaus’ strategy was to use high-visibility enforcement lawsuits to establish the agency’s power and creditability.” Richard N. L. Andrews, Managing the Environment, Managing Ourselves (Yale University Press, 1999), p. 230. 47. Breyer, Breaking the Vicious Circle; Viscusi and Hamilton, “Are Risk Regulators Rational?” 48. Andrews, Managing the Environment, Managing Ourselves, pp. 258–60. 49. See discussion of prosecutorial and accommodation strategies in Thomas W. Church and Robert T. Nakamura, Cleaning Up the Mess: Implementation Strategies in Superfund (Brookings, 1993). 50. Salamon in another context observed that many of the “newer” tools of government share a significant feature: “they are highly indirect.” Salamon, “The New Governance,” p. 2. For a discussion of the customer-oriented feature of government reinvention, see Frank Thompson and Norma Riccucci, “Reinventing Government,” Annual Review of Political Science, vol. 1 (1998), pp. 231–57. 51. Rena I. Steinzor, “EPA and Its Sisters at 30: Devolution, Revolution, or Reform?” Environmental Law Review, vol. 31 (2001), pp. 11086–97. 52. Robert Nakamura, Thomas Church, and Phillip Cooper, “A Blip on the Radar Screen: Passage and Implementation of the Medical Waste Tracking Act,” Journal of Health Politics, Policy, and Law, vol. 17 (1992), p. 299. 53. See Myrick Freeman, “Economics, Incentives and Environmental Regulation,” in Norman Vig and Michael Kraft, Environmental Policy in the 1990s (Washington: CQ Press, 1996). See also Alvin Alm, “Tools to Protect the Environment: A Need for New Approaches: Command and Control Is No Longer a Cure-All,” EPA Journal, vol. 18 (1992), pp. 6–11.

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54. Richard Andrews and others, “Environmental Management Systems: History, Theory, and Implementation Research,” in Cary Coglianese and Jennifer Nash, eds., Regulating from the Inside: Can Environmental Management Systems Achieve Policy Goals? (Washington: Resources for the Future Press), pp. 31–60. 55. Daniel J. Fiorino, “Performance Track Places Trust in the Carrot over the Stick,” Pollution Prevention Review (Summer 2001), pp. 61–75. See also Alfred A. Marcus, Donald A. Geffen, and Ken Sexton, Reinventing Environmental Regulation: Lessons from Project XL (Washington: Resources for the Future, 2002); Thomas Caballero, “Project XL: Making It Legal, Making It Work.” Stanford Environmental Law Journal, vol. 17 (1998), pp. 399–471; B. Mank, “The Environmental Protection Agency’s Project XL and Other Regulatory Reform Initiatives: The Need for Legislative Authorization,” Ecology Law Quarterly, vol. 25 (1998), pp. 1–88; Rena I. Steinzor, “Reinventing Environmental Regulation: The Dangerous Journey from Command and Control to Self-Control.” Harvard Environmental Law Review, vol. 22, no. 1 (1998), 103–37. 56. Robert T. Nakamura, Thomas W. Church, and Jeryl Mumpower, “Assessing Environmental Risks: Lessons from Superfund,” Journal of Contingencies and Crisis Management, vol. 2 (1994), p. 136. 57. Freeman, “Economics, Incentives and Environmental Regulation.” 58. National Academy of Public Administration, Setting Priorities, Getting Results: A New Direction for the Environmental Protection Agency (1995). 59. For a discussion of the issues presented by the delegation of air and water permits from EPA to New York state, see David Markell and Robert Nakamura, “The Article X Public Participation Process,” unpublished report to the Hudson River Foundation, New York, 2001. 60. Nakamura, Church, and Mumpower, “Assessing Environmental Risks.” 61. Kathryn Harrison, “Is Cooperation the Answer? Canadian Environmental Enforcement in Comparative Context,” Journal of Public Policy Analysis and Management, vol. 14 (1995), p. 223. See also Andrew A. King and Michael J. Lenox, “Industry Self-Regulation without Sanctions: The Chemical Industry’s Responsible Care Programs,” Academy of Management Journal, vol. 43, no. 4 (2000), pp. 698–716; Kathleen Segerson and Thomas J. Miceli, “Voluntary Environmental Agreements: Good or Bad News for Environmental Protection?” Journal of Environmental Economics and Management, vol. 36 (1998), pp. 109–30. 62. David Markell and Clifford Rechtschaffen, Reinventing Environmental Enforcement and the State/Federal Relationship (Washington: Environmental Law Institute, 2003), p. 251. 63. For the timber and pulp industry, see Wesley A. Magat and W. Kip Viscusi, “Effectiveness of the EPA’s Regulatory Enforcement: The Case of Industrial Effluent Standards,” Journal of Law and Economics, vol. 33 (1990), pp. 353–54. For petroleum refining, see Wayne B. Gray and Mary E. Deily, “Compliance and

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Enforcement: Air Pollution Regulation in the U.S. Steel Industry,” Journal of Environmental Economics and Management, vol. 31 (1996), p. 110. On air emissions, see Evan J. Ringquist, Environmental Protection at the State Level: Politics and Progress in Controlling Pollution (Armonk, N.Y.: M. E. Sharpe, 1993), pp. 135–50. On dumping, see Hilary Sigman, “Midnight Dumping: Public Policies and Illegal Disposal of Used Oil,” RAND Journal of Economics, vol. 29 (1998), p. 172; and on workplace injuries, see John T. Scholz and Wayne B. Gray, “OSHA Enforcement and Workplace Injuries: A Behavioral Approach to Risk Assessment,” Journal of Risk and Uncertainty, vol. 3 (1990), pp. 296–97. 64. Daniel J. Fiorino, Making Environmental Policy (University of California Press, 1995), p. 172. 65. Sparrow, Regulatory Craft. 66. For a useful history of congressional efforts to subvert the regulatory work of EPA in the Gingrich years, and EPA’s reaction, see Thomas O. McGarity, “Deflecting the Assault: How EPA Survived a ‘Disorganized Revolution’ by ‘Reinventing’ Itself a Bit,” Environmental Law Reporter, vol. 31 (November 2001), pp. 11249–65. 67. David Osborne and Ted Gaebler, Reinventing Government (AddisonWesley, 1992). 68. See Don Kettl, “Reinventing Government: A Fifth Year Report Card,” Brookings, 1998.

Chapter Three 1. Philip K. Howard, The Death of Common Sense: How Law Is Suffocating America (Random House, 1994). 2. Malcolm Sparrow, The Regulatory Craft: Controlling Risks, Solving Problems, and Managing Compliance (Brookings, 2000). 3. Sparrow, Regulatory Craft, p. 17. 4. Ibid., p. 28. 5. Ibid., p. xvi. 6. Schecter Poultry Corp. v. United States, 295 U.S. 495 (1935). 7. This does not mean that the delegation doctrine is completely dead, however. The influential U.S. Court of Appeals for the D.C. Circuit recently invalidated action by EPA on delegation grounds, although the Supreme Court unanimously reversed. See Whitman v. American Trucking Associations, 531 U.S. 457 (2001). For a history of delegation doctrine, see Samuel Krislov, “The New Separation and Delegation of Powers Doctrine,” in David H. Rosenbloom and Richard D. Schwartz, Handbook of Regulation and Administrative Law (New York: Marcel Dekker, 1994). 8. There is some semantic disagreement in the Supreme Court over what the exercise of this discretion is termed, however. A majority of the Court is reluctant

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to call this “legislative” power, since that seems to conjure up the image of unconstitutional delegation of legislative responsibility. See the debate between the justices in Whitman v. American Trucking Associations, 531 U.S. 457 (2001). 9. 467 U.S. 837 (1984). 10. United States v. Mead Corp., 121 S. Ct. 2164 (2001) at 2179, dissenting opinion. 11. Food and Drug Administration et al. v. Brown & Williamson Tobacco Corp. et al., 529 U.S. 120 (2000). 12. Christiansen v. Harris County, 529 U.S. 576 (2000), at 586. 13. According to Justice Scalia, “Chevron-type deference [to the agency] can be inapplicable for only three reasons: (1) the statute is unambiguous, so there is no room for administrative interpretation; (2) no interpretation has been made by personnel of the agency responsible for administering the statute; or (3) the interpretation made by such personnel was not authoritative, in the sense that it does not represent the official position of the expert agency. . . . Chevron establishes a presumption that ambiguities are to be resolved (within the bounds of reasonable interpretation) by the administering agency.” 529 U.S. 576 (2000), at 591, fn. 14. 529 U.S. 576 (2000), at 587. 15. This was, in fact, precisely what the Court did in Christiansen. The Court found the Department of Labor’s interpretation of an admittedly vague provision of the Fair Labor Standards Act “unpersuasive” (at 583) and concluded that its own resolution of the statutory ambiguity was “the better reading.” 529 U.S. 576 at 585. 16. 121 S. Ct. 2164 (2001). See William S. Jordan III, “United States v. Mead: Complicating the Delegation Dance,” Environmental Law Reporter, vol. 31 (2001), p. 11425. 17. See, for example, Richard Stewart, “The Reformation of American Administrative Law,” Harvard Law Review, vol. 88 (1975), pp. 1669–813. 18. Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402 (1971), at 416. Almost as an afterthought, the Court added that the reviewing court “is not empowered to substitute its judgment for that of the agency.” Ibid. 19. Motor Vehicle Manufacturers Association v. State Farm Insurance, 463 U.S. 29 (1983), at 43. 20. Patricia Wald, “The Fiftieth Anniversary of the Administrative Procedure Act: Past and Prologue Judicial Review in Midpassage,” Tulsa Law Journal, vol. 32 (1996), pp. 233–34. 21. See, for example, Cornelius M. Kerwin, “Elements of Rule-Making,” in Rosenbloom and Schwartz, eds., Handbook of Regulation and Administrative Law, pp. 372–75; R. Shep Melnick, Regulation and the Courts: The Case of the Clean Air Act (Brookings, 1983); and Rosemary O’Leary, Environmental Change: Federal Courts and the EPA (Temple University Press, 1993), ch. 7.

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22. Sparrow, Regulatory Craft, p. 27. 23. Ibid., p. 254. 24. The only cautionary note is the conclusion of the discussion: “Meanwhile, OSHA’s experience with the program serves as a reminder that such practices are not yet considered normal and that regulatory agencies are more likely to face legal challenge when they declare the basis for the exercise of discretion— however, rational—than when they exercise their discretion in an arbitrary manner without declaring it” (ibid., p. 254). Sparrow offers no evidence as to why this existing state of legal affairs is likely to change in the near future, other than his view that the current situation is irrational. Dickens’ Mr. Bumble was less sanguine (“The law is an ass”). 25. Jeffrey Pressman and Aaron Wildavsky, Implementation (University of California Press, 1984). 26. This is particularly true in Superfund, where program staff are statutorily advised to design cleanups, speedily and painstakingly carefully, that are both permanent and cost effective, consistent with national standards, and sensitive to local concerns. 27. A useful summary of these problems can be found in Richard Matland, “The Ambiguity-Conflict Model of Policy Implementation,” Journal of Public Administration Research and Theory, vol. 5 (April 1995), 145–58. 28. Eugene Bardach, “Policy Implementation,” unpublished manuscript, April 15, 1999, p. 17. 29. Indeed, Bardach formulates a challenge for scholars that is a major concern of this book: “The current theoretical challenge of greatest significance is to explicate the process of adaptation and to identify factors that increase the likelihood of success or failure. The corresponding empirical challenge is to identify the conditions under which skilled adaptive leadership is drawn into certain implementation processes but not into others.” Ibid., p. 23. 30. Sparrow, Regulatory Craft, p. 10. 31. Ibid., pp. 13–14 (emphasis added). 32. The phrase is taken from Michael Lipsky, Street-Level Bureaucracy (New York: Russell Sage Foundation, 1982). 33. Thomas W. Church, “Plea Bargains, Concessions and the Courts: Analysis of a Quasi-Experiment,” Law and Society Review, vol. 10 (1976), p. 377. 34. For example, some statutes providing minimum sentences for repeat offenders stipulate that the minimum sentences come into play only if the defendant is charged as a repeat offender. Thus prosecutors may bargain over whether to so charge the defendant. See, generally, Alfred Blumstein and others, eds., Sentencing: The Search for Reform (National Academy Press, 1983). 35. Another study involving an outright prohibition of charge reduction and a set of mandatory sentences constraining judicial discretion in sentencing found that

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judges and cooperative defendants were resorting to nonjury trials (“slow pleas of guilty”) in which defendants were found (by the judge) guilty of lesser offenses and not guilty of offenses carrying mandatory sentences. Milton Heumann and Colin Loftin, “Mandatory Sentencing and the Abolition of Plea Bargaining: The Michigan Felony Firearm Statute,” Law and Society Review, vol. 13 (1979), pp. 515. 36. Raymond Nimmer, The Nature of System Change: Reform Impact in the Criminal Courts (Chicago: American Bar Foundation, 1978). 37. Church, “Plea Bargains, Concessions, and the Courts.” 38. See, generally, Blumstein and others, eds., Sentencing; Heumann and Loftin, “Mandatory Sentencing”; and Church, “Plea Bargains, Concessions, and the Courts.” 39. Thomas W. Church, Justice Delayed: The Pace of Litigation in Urban Trial Courts (Williamsburg, Va.: National Center for State Courts, 1978). See also David Neubauer and others, Managing the Pace of Justice: An Evaluation of LEAA’s Court Delay Reduction Programs (U.S. Department of Justice, 1981). 40. Milton Heumann, Plea Bargaining (University of Chicago Press, 1978); Thomas W. Church, “Examining Local Legal Culture,” American Bar Foundation Research Journal (1985), pp. 449. 41. See Thomas W. Church and Robert T. Nakamura, Cleaning Up the Mess: Implementation Strategies in Superfund (Brookings, 1993); Lipsky, Street-Level Bureaucracy; Herbert Kaufman, The Forest Ranger (Johns Hopkins University Press, 1960); James Q. Wilson, Bureaucracy: What Government Agencies Do and Why They Do It (Basic Books, 1989). 42. Sparrow, Regulatory Craft. 43. See, generally, Robert Kagan, “Regulatory Enforcement,” and John T. Scholz, “Managing Regulatory Enforcement,” in Rosenbloom and Schwartz, Handbook of Regulation and Administrative Law. 44. Malcolm M. Feeley, Court Reform on Trial: Why Simple Solutions Fail (Basic Books, 1983), p. 183.

Chapter Four 1. The first sites discovered were among the largest and most dangerous to human health and the environment. Residents were evacuated from Love Canal and Times Beach, for example. The sources of the hazardous waste deposits varied; most were deposited by businesses engaged in manufacturing or chemical production or by local governments in municipal landfills. Sometimes the waste disposal was contrary to existing governmental regulations; more often the deposits were made prior to governmental regulation of dumping. 2. P.L. 96-510. The statute was reauthorized and modified slightly in 1984 in the Superfund Amendments and Reauthorization Act of 1986 (P.L. 99-499). In 1990 another reauthorization extended the life of the program and the tax, with

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no substantive programmatic changes. The tax that funded the Superfund trust fund and supported cleanup activities expired in 1994, and efforts to reinstitute it—and “reform” the program—failed in the 103d, 104th, and 105th Congresses. (A modest change in the liability provisions of Superfund was made by the 104th Congress; it limited the liability of lenders, fiduciaries, and government agencies that involuntarily acquired property; another statutory change provided relief for small businesses in 2002.) The statutory environment of Superfund has, thus, remained relatively static for the past decade. 3. John Kingdon, Agendas, Alternatives and Public Policy, 2d ed. (AddisonWesley, 1995). 4. Thomas W. Church and William Wilkerson, “The Gorilla in the Closet: Joint and Several Liability and the Cleanup of Toxic Waste Sites,” Law and Policy, vol. 11 (October, 1989), pp. 425–49. 5. Robert T. Nakamura and Thomas W. Church, “Beyond Superfund: Hazardous Waste Cleanup in Europe and the United States,” Georgetown International Environmental Law Review, vol. 7, no. 1 (Fall 1994), pp. 15–57. 6. The statute also requires a consideration of harm to the environment, but this element of the statutory scheme is highly controversial and largely eclipsed by the mandate to protect human health. 7. This process is based in part on science, part on politics. Listing is formally based on a ranking system that considers several factors affecting human health and the environment including type and levels of the contaminants and the proximity of pathways to population centers, aquifers, or surface water. The rankings are numerical, but their assessment involves substantial subjectivity. In addition, EPA practice, if not policy, requires governors to consent before sites in their state are added to the NPL. 8. In recent years, as a result of the administrative reforms, the consensual settlement has been used twice as often as unilateral administrative orders. Presently about 70 percent of cleanups are paid for out of private funds rather than the trust fund. For an extended discussion of “Superfund’s Tool Kit,” see Thomas W. Church and Robert T. Nakamura, Cleaning Up the Mess (Brookings, 1993), ch. 2. 9. The ARARs requirement is frequently a major stumbling block because it essentially requires assent from every agency—federal, state, and local—that monitors environmental standards that might be affected by the cleanup: federal agencies involved in the protection of fish and wildlife, soil conservation, national parks and forests; state environmental agencies concerned with air, water, soil, and wildlife protection; and assorted local governments. These agencies may have little direct interest in cleaning up a site, and a substantial concern that they protect themselves against post-cleanup allegations that they were insufficiently vigilant in the protection of their particular aspect of the environment. See Church and Nakamura, Cleaning Up the Mess, pp. 7, 156–57.

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10. These strategies are described at length in Church and Nakamura, Cleaning Up the Mess., chs. 3–5. 11. For a full description of the administrative process, see Church and Nakamura, Cleaning Up the Mess, chs. 3–5. 12. For complaints that EPA was not protective enough, see Environmental Defense Fund and others, Right Train, Wrong Track (Washington, 1988).

Chapter Five 1. In addition, a substantial literature on Superfund was produced by researchers in and out of the academy. While these studies by no means set out a uniform position regarding the proper direction of the program, they contained common themes: the need to consider future land use in remediation decisions, for example, and the need for more government help in funding orphan shares. Several researchers also pointed to the dysfunctional results of a consistent prosecutorial stance toward PRPs. See, for example, Harold Barnett, Toxic Debts and the Superfund Dilemma (University of North Carolina Press, 1994); Marc Landy, Mark Roberts, and Stephen Thomas, The Environmental Protection Agency from Nixon to Clinton: Asking the Wrong Questions (Oxford University Press, 1994); Thomas W. Church and Robert T. Nakamura, Cleaning Up the Mess: Implementation Strategies in Superfund (Brookings, 1993); Daniel Mazmanian and David Morrell, Beyond Superfailure: America’s Toxics Policy for the 1990’s (Boulder, Colo.: Westview Press, 1992). 2. In a bow to the insurance industry, the bill included a fund, supported by a tax on business insurance premiums, that would be used to pay certain costs in disputes between insurance companies and PRPs. The bill also included provisions for greater community involvement at Superfund sites, for a variety of initiatives for redeveloping reclaimed land (so-called “brownfields”), for a procedure for governmental help in allocating cleanup shares among cooperating PRPs, and for an enlarged role for the states at Superfund sites. 3. See, for example, “Beyond Politics as Usual,” Washington Post Magazine, April 10, 1995, p. W20: “This year, conservative Republicans hope to repeal much of Superfund.” Conservative publications produced a drumbeat of articles advocating major revisions, or outright repeal, of Superfund. See, for example, Jerry Taylor, “Salting the Earth: The Case for Repealing Superfund,” Regulation, vol. 18, no. 2 (1995), pp. 53–66. A shortened version appearing in the Washington Times (May 1, 1995) began: “Perhaps the worst environmental law on the books today is Superfund, the regulatory equivalent of the Vietnam War.” Other examples include David Ridenour, “Cleaning Up the Superfund Mess: Five Steps to Recovery,” Talking Points on the Economy (Washington: National Center for Public Policy Research) August 31, 1995. In “How to Rescue Superfund: Bringing Common Sense to the Process,” Heritage Foundation Backgrounder, no. 1047

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(July 31, 1995), John Shanahan recommends, inter alia, repeal of joint and several liability, repeal of retroactive liability, and the turnover of most cleanup activities to the states. 4. Congressional Republicans had a much broader environmental agenda than Superfund. And it is true that they were singularly unsuccessful in enacting legislation that would have compromised any of the major environmental programs. For example, a major Republican goal was enactment of legislation requiring extensive risk-benefit analyses to be concluded (and almost certainly litigated) before new regulations could take effect; this measure failed. See Marc Landy and Kyle D. Dell, “The Failure of Risk Reform Legislation in the 104th Congress,” Duke Environmental Law and Policy Forum, vol. 9, no. 1 (Fall 1998), pp. 113– 32. The Republican Contract with America also included a broad provision prohibiting unfunded mandates (which was enacted in modified form) and a provision that would turn many regulatory statutes into unconstitutional “takings” (which did not win legislative approval). On unfunded mandates, see Pete du Pont and Nelson Lund, “Pleading the Truth,” National Review, vol. 47, no. 22 (November 27, 1995), pp. 50–54; and Angela Antonelli, “Promises Unfulfilled: Unfunded Mandates Reform Act of 1995,” Regulation, vol. 19, no. 2 (1996), pp. 44–53. Superfund, however, was a particular programmatic target of a number of congressional Republicans. It was one of only a few environmental statutes up for renewal in 1994 and—because of its general unpopularity—was especially vulnerable. The conservative publication Reason, for example, indicated that the Republican “game plan” put alteration of Superfund’s liability provisions immediately after the more general regulatory changes in risk analysis, takings, and unfunded mandates. Superfund, in fact, was the only environmental program specifically targeted for “reform.” Rick Henderson, “ A New Environment: Braking the Green Machine,” Reason, vol. 26, no. 9 (February 1995), pp. 36–41. 5. A first round of administrative reforms to the Superfund program had been put into effect in 1993. These programmatic changes, while setting out the general direction of many of the reforms that followed, were not regarded by most of our interviewees as having a substantial effect on program operation. Our focus is thus on the more substantial changes begun in 1995. These came in two subsequent groups that we discuss together. 6. We do not discuss the full panoply of administrative reforms, several of which dealt with such issues as improving community participation and encouraging reuse of remediated land. It is our judgment, supported by our interviews inside and outside EPA, that the enforcement and remedy selection reforms addressed the key sources of criticism of Superfund, and were the most fundamental and difficult changes to effect. 7. One staff member we interviewed in a regional office referred to such parties as “slam dunk PRPs.”

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8. Many Superfund sites concern only a few PRPs and thus do not involve these perceived abuses. Because many of the major PRPs are involved in a number of different sites, however, all seemed to have a particular horror story of what they regard as the agency’s deep-pocket pathology at complex, multiparty sites. Thus, even though these occurrences did not take place at all, or even at most sites, they seemed to drive the perceptions of many disaffected PRPs. 9. “Interim Guidance on Orphan Share Compensation for Settlers of Remedial Design/Remedial Action and Non-Time-Critical Removals,” memorandum from Steven A. Herman, assistant administrator, to regional offices, June 3, 1996 (www.epa.gov/oerrpage/superfund/programs/reforms/press96/orphansh.txt). Enforcement personnel at EPA headquarters told us that it had always been EPA’s policy to issue unilateral administrative orders to all appropriate parties; apparently either regional practice did not follow national policy or the definition of an “appropriate” party changed with the reforms. 10. Ibid. 11. U.S. Environmental Protection Agency, Superfund Reforms Annual Report FY 1998 (Government Printing Office, 1999), p. 36. 12. Ibid. All of the orphan-share compensation was in the form of forgiveness of past or future administrative costs incurred by EPA, rather than actual cleanup costs incurred by PRPs at a site. Whether $145 million is a lot or a little depends on one’s perspective; a common complaint of PRPs regarding the orphan-share reforms is that too little money is committed to the program. 13. A further incentive for large PRPs to support de minimis settlements was a reform measure ensuring that interest earned on monies paid by de minimis parties to buy out of Superfund liability at a site could be used to offset cleanup costs. This was the so-called “special accounts” provision of the administrative reforms. Up to the end of fiscal 1998, EPA reported that it had established 115 special accounts totaling more than $399 million, with accrued interest of more than $69 million. 14. A de micromis liability exclusion was enacted into law in 2002 in the Small Business Liability Relief and Brownfields Revitalization Act (P.L. 107-118). 15. Remedies changed. But did this occur because regional attitudes and practices changed or because of something else? One reviewer of an earlier version of this book suggested that the move toward less expensive containment remedies had less to do with the reforms than with the failure of earlier, more expensive remedies to deliver the promised levels of cleanup. There may be some truth in this assertion. We note, however, that the technical uncertainty of remedies in the past, given the then-dominant preference for higher levels of cleanup, did not deter the selection of more expensive choices. Similarly, we could expect that knowledge of past failures would not deter EPA from choosing equally uncertain but promising remedies in the present if the expected standard for cleanup were unchanged.

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16. We should note that EPA officials took exception to our characterization of their goal in remedy selection as reducing costs, and it is fair to say that a shift to less expensive remedies was not explicitly put forward as an objective of the administrative reforms. At the same time, the agency has taken credit for millions of dollars in “savings” made under the new system. And regional staff were well aware that more expensive remedies would receive closer scrutiny than those which fell on the low end of the cost continuum. EPA would have preferred us to characterize their decisions in terms of process and decision criteria (dealing with principal threats, considerations of land use, and so forth) rather than in terms of the actual decisions made (movement toward containment remedies, less expensive remedies, and the like). The inherent difficulty for the agency, suggested by their concerns over our explicit discussion of the shift to lower cost containment remedies, is that the Superfund legislation makes the agency responsible for dealing with efficiency and safety issues simultaneously, while prohibiting trade-offs between costs and risks, however small those risks may be. EPA has been faulted for making inefficient choices in the past, and for making inconsistent choices across sites. See W. Kip Viscusi and James Hamilton, “Are Risk Regulators Rational? Evidence from Hazardous Waste Cleanup Decisions,” American Economic Review, vol. 89, no. 4 (September 1999), pp. 1010–27; W. Kip Viscusi, James Hamilton, and Christen Docksin, “Conservative versus Mean Risk Assessments: Implications for Superfund Policies,” Journal of Environmental Economics and Management, vol. 34, no. 3 (November 1997), pp. 187–206. And, of course, only in the statutory world can decisionmakers avoid making explicit trade-offs between cherished values. See W. Kip Viscusi, “Economic Foundations of the Current Regulatory Reform Efforts,” Journal of Economic Perspectives, vol. 10, no. 3 (Summer, 1996), pp. 119–34. EPA did not achieve the “no trade-off” state of affairs in the past, and does not do so currently. Rather, the Superfund reforms—at least in our judgment—were an attempt to shift the trade-offs in the direction of a greater (though not exclusive) concern with costs to both PRPs and the government, using an increased focus on risk reduction to achieve this end. This approach is precisely what a number of reform advocates—including the General Accounting Office and the National Academy of Public Administration—have been suggesting for some time. The results of this approach, in terms of cost savings without a significant increase in risk, were a major theme of EPA’s efforts to publicize its administrative reform package. 17. Future land use policies were included in the remedy selection guidance issued as part of the reforms. In commenting on an early draft of this report, an EPA official told us that remedies were supposed to deal with “principal threats” instead of entire sites, and “in addition . . . we established a policy of basing risk assessment and remedy selection on the ‘reasonably anticipated future land use’

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to ensure these critical decisions are based on realistic assumptions of potential future exposure.” (Letter to authors from Stephen Luftig, director, OSWER, EPA.) 18. Other reforms expanded the ability of cooperating PRPs and selected states to perform risk assessments and mandated early community input in the risk assessment process. 19. U.S. Environmental Protection Agency, Superfund Reforms Annual Report FY 1998 (Government Printing Office, 1999), p. 31. Remedies are reviewed if they fall into one of two categories: those in which the estimated cost exceeds $30 million; and remedies of at least $10 million where the estimated cost of the chosen remedy is at least 50 percent more than the cost of the least expensive alternative that both protects public health and is consistent with all applicable or relevant and appropriate environmental requirements. The review board also reviews proposed decisions in Department of Energy sites in which the remedy selected exceeds $75 million, or where the estimated cost is at least $25 million and the cost is 50 percent greater than that of the least costly, protective, cleanup alternative that complies with ARARs. 20. Ibid. 21. Ibid. 22. We also heard reports in our regional interviews of strategic activities in the regions to keep sites away from board consideration. Sites can be broken into several “operable units,” for example, none of which individually totals $30 million, but which taken together as one site would exceed the $30 million limit. 23. U.S. Environmental Protection Agency, Superfund Reforms Annual Report FY 1998, p. 31. 24. Ibid. An EPA communication to us in late 1999 indicates that the savings figure has risen to $1.3 billion. 25. Interestingly, some measure of regional variation was a goal in the Nixon administration’s initial decision to decentralize the structure of EPA radically. This decision was spurred by the hope that federal policies would reflect the distinctive requirements of different regions. See Richard N. L. Andrews, Managing the Environment, Managing Ourselves (Yale University Press, 1999), p. 232. 26. Statement of Marianne Lamont Horinko, Assistant Administrator, Office of Solid Waste and Emergency Response, U.S. Environmental Policy Administration, before the Subcommittee on Superfund, Toxics, Risk and Waste Management, U.S. Senate, July 31, 2002. “Construction completion” is defined by the agency as the point at which the actual engineering work at a site is finished and the bulldozers and other earthmoving equipment depart. It is not the same as a determination that the site is fully cleaned up because many sites require decadeslong operation of pumps and other devices to clean ground water or soil before cleanup is fully completed. 27. Limitations on available data and the absence of plausible control groups make it difficult for us to assess definitively the effects of the reforms on program

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results. The difficulties inherent in trying to sort out “reform effects” from “maturation effects” are suggested in a subsequent controversy between the General Accounting Office and EPA over what might be regarded as a fairly noncontroversial issue: how to classify sites into pre- and post-administrative change cohorts for purposes of analysis and attribution of effects. Horinko testimony before the U.S. Senate. 28. Rough indicators of how the political situation has changed from controversy to quiescence can be found in the decline of interest in Superfund in Congress in general, and in the decline of congressional efforts to repeal or otherwise modify the liability doctrine at the heart of Superfund in particular. We conducted a search (using the Lexis database) of major U.S. newspapers, using the keywords Congress and Superfund and found that the number of articles declined from 409 in 1994, when the reauthorization legislation was debated, and 408 in 1995 when EPA initiated the administrative reforms to 18 in 2000, a presidential election year, and 11 in 2001, George Bush’s first year in office. A similar search (keywords Superfund, Congress, and liability) showed congressional interest in Superfund liability also declining from 150 articles in 1994 and 170 in 1995 to 4 in 2000 and 2 in 2001. 29. At this writing, in July 2003, Whitman had resigned, and no successor had yet been named. The position of Superfund under a new administrator remains an open question, although the political environment of the program remains quiescent. 30. Small Business Liability Relief and Brownfields Revitalization Act, P.L. 107-119 (2002). 31. He suggested that the situation would have been complicated further by the 2001 Supreme Court decision in United States v. Mead, 121 S. Ct. 2164, which restricted the application of Chevron-style judicial deference to questions that Congress had explicitly or implicitly given discretion to the agency (see chapter 3). This official highlighted the use of guidance documents by EPA to set out its new enforcement guidelines as being especially risky from a legal perspective, since such informal policy directives do not qualify for judicial deference under Chevron (thereby subjecting them to a court’s requirement that the agency’s interpretation of the statute is in line with its own), and might be interpreted to be “rules,” which can be adopted only through the formal publication-andcomment procedures of the Administrative Procedures Act. 32. Daniel Mazmanian and Paul Sabatier, Implementation and Public Policy (Lanham, Md.: University Press of America, 1989); Robert Nakamura and Frank Smallwood, The Politics of Policy Implementation (St Martin’s Press, 1980). 33. Jeffrey Pressman and Aaron Wildavsky, Implementation, 3d ed. (University of California Press, 1984). 34. Richard Weatherly and Michael Lipsky, “Street-Level Bureaucrats and Institutional Innovation: Implementing Special Education Reform,” Harvard Educational Review, vol. 47, no. 2 (1977), pp. 177–97.

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35. Richard Elmore, “Implementation of the Youth Employment and Demonstration Projects Act.” Commissioned paper reprinted as chapter 3 of the National Academy of Science Report on Youth Employment and Training Programs (Washington, 1986), p. 285.

Chapter Six 1. See, for example, Martin Levin and Barbara Ferman, The Political Hand (Pergamon, 1985). 2. Anthony Downs, “Up and Down with Ecology: The Issue-Attention Cycle,” Public Interest, vol. 28 (Summer 1972), pp. 38–50. 3. John Kingdon, Agendas, Alternatives and Public Policies (Little, Brown, 1984). 4. According to one interviewee, the leadership at the Department of Justice initially gave only grudging support to the changes, but other sources indicated that cooperation between Justice and EPA developed relatively rapidly. 5. For a discussion of transiency, see Hugh Heclo, A Government of Strangers: Executive Politics in Washington (Brookings, 1977). Although some Clinton administration appointees did serve for long periods, transiency was about average for those in regulatory agencies. That estimate and the thirty-month figure come from Kelly Chang, Nolan Lewis, and David McCarty, “The Tenure of Political Appointees,” paper prepared for delivery at the annual meeting of the Midwest Political Science Association, in Chicago, April 19–22, 2001. 6. For a discussion of fixers, see Eugene Bardach, The Implementation Game: What Happens after a Bill Becomes a Law (MIT Press 1977); and Levin and Ferman, The Political Hand. Such a role is central to Robert Behn’s view of the new public manager. See Robert Behn, Leadership Counts (Harvard University Press, 1991). 7. Robert T. Nakamura and Frank Smallwood, The Politics of Policy Implementation (St. Martin’s Press, 1980), p. 31. 8. This 1979 Urban Institute list identifying successful work incentive programs is reprinted in Behn, Leadership Counts. 9. These tasks are, with some modifications, the features of the latest “tide” of managerial reform. See Paul Light, The Tides of Reform (Yale University Press, 1997). 10. Behn, Leadership Counts. 11. In another example, Region 3 was told it was lagging behind the other regions in the speed of its processing Superfund cases and in the number of constructions completed. The regional staff saw this problem as being caused in part by its more time-consuming approach to PRP relations but recognized the legitimacy of the criticism and attempted to devise ways to appear less out of step.

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12. See Margaret Kriz, “Superfight,” National Journal, January 29, 1994, p. 226; “How the Twain Met,” National Journal, June 6, 1994, pp. 1291–95 . The reforms were supported, even guided, by members of the PRP community who had participated in the negotiations surrounding the failed legislative reform package in 1993 and 1994. Our interviews with some of these individuals suggested that PRPs were faced with a political choice after the 1994 election: they could help EPA make Superfund work more effectively through administrative action, or they could join the voices (coming principally from the insurance industry) urging Congress to gut the program. The strategic calculation for many of the major industry PRPs in the Superfund Settlements Project was to take the former course. These PRPs, among the most common deep-pocket PRPs at national Superfund sites, included Allied Signal, Bayer, Ciba-Geigy, Dupont, General Electric, General Motors, IBM, Lucent Technologies, and United Technologies. 13. See Thomas Church and Milton Heumann, “The Underexamined Assumptions of the Invisible Hand: Monetary Incentives as Policy Instruments,” Journal of Policy Analysis and Management, vol. 8 (1989), p. 641. 14. Construction completions are not dependent on postconstruction remedial efforts, such as efforts to clean the groundwater. If a remedy is determined to rely on containment of some of the hazardous materials on the site rather than full remediation, it can be counted as a construction completion, even though it will remain on the National Priority List as long as the contamination remains on the site. 15. “Beyond Politics as Usual,” Washington Post Magazine, April 10, 1995, p. W20. 16. The sensitivity with which EPA regarded the remedy reforms is also suggested in the agency response to our previous report on the reforms, conducted for the National Academy of Public Administration. While generally complimentary, EPA commentators repeatedly took issue with our characterizations of the remedy selection reforms, insisting that we should speak of “principal threats” rather than “hot spots” at a site and that we avoid suggesting that the agency had evinced a preference for containment remedies and for remedies that were less costly to PRPs (see chapter 5). 17. We originally intended to cite a statistic suggesting that 80 percent of EPA regulations are challenged in court. The source of this statistic is William Ruckelshaus, and it has been cited by James Q. Wilson in Bureaucracy: What Government Agencies Do and Why They Do It (Praeger, 1989) and by Philip Howard in The Death of Common Sense: How Law Is Suffocating America (Random House, 1994). According to one careful scholar who actually did the numbers, the real rate of legal challenge to EPA regulations is between 19 and 36 percent. That rate is high, given the substantial number of regulations issued by EPA, but it is much lower than the 80 percent figure that exists in the realm of

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urban legends. See Gary Coglianese, “Assessing Consensus: The Promise and Performance of Negotiated Rulemaking,” Duke Law Journal, vol. 46 (1997), pp. 1255–349. 18. Malcolm Sparrow, The Regulatory Craft: Controlling Risks, Solving Problems, and Managing Compliance (Brookings, 2000), p. 311.

Chapter Seven 1. This is not to suggest a lack of concern in some quarters with overzealousness in the administration of criminal justice, or that lawyers, civil rights advocates, and other concerned citizens are not critical of what they perceive as the mistreatment of criminal defendants. Such voices, however, are seldom as loud or politically influential as those urging the criminal justice system to get tough with criminals. 2. The regulatory capture literature, of course, suggests an opposite pathology—that regulation can become toothless, subject to the inappropriate influence of the parties that are supposed to be regulated. This concern has been much less in evidence in contemporary discussions of regulation, although we have uncovered at least one study that suggests an unexamined corollary of the regulatory capture literature: here the suggestion is that environmental regulation has been captured not by big business but by environmentalists, to the detriment of the public good. See Michael S. Greve and Fred L. Smith, eds., Environmental Politics: Public Costs, Private Rewards (Praeger, 1992). 3. We recognize that these dimensions could be unpacked even further. Lester Salamon, for example, has argued that policy tools should be assessed on the basis of effectiveness, efficiency, equity, manageability, and legitimacy. Lester M. Salamon, “The New Governance and the Tools of Public Action: An Introduction,” in Lester M. Salamon, ed., The Tools of Government: A Guide to the New Governance (Oxford University Press, 2002). Because our focus is primarily on political support for regulatory programs, we have set out the criteria somewhat differently. 4. We combine the question of effectiveness (does the program “deliver the goods”?) with the related notion of efficiency (does the program achieve its objectives with the minimum expenditure of resources?). It should be noted that in a broad sense efficiency is also one of the elements of fairness—proportionality— which asks whether the extractions taken from the regulated population are appropriate in light of the public benefits derived. 5. According to Robert Putnam, “institutional performance . . . is, in fact, the only consistent predictor of who is satisfied with . . . government and who is dissatisfied.” Robert D. Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton University Press, 1993), p. 78. Paul Light offers a contrasting view: “It is not clear, however, why making government work would

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affect public confidence. The two are poorly linked at best. Political scientists have long argued that confidence in government rises and falls more with economic performance, the president’s personal approval, and individual social trust than with real progress made on procurement reform, administrative procedures, even paperwork reduction. Thus, even the most successful management reforms might not affect confidence.” Paul Light, The Tides of Reform (Yale University Press, 1997), p. 180. Public confidence in government, however, is a broader concept than political support—particularly congressional support—for a particular program. 6. See J. Clarence Davies and Jan Mazurek, Pollution Control in the United States: Evaluating the System (Washington: Resources for the Future, 1998), for a guardedly positive assessment of environmental legislation; W. Kip Viscusi, Fatal Tradeoffs: Public and Private Responsibilities for Risk (Oxford University Press, 1992), pp. 206–20, for a more negative analysis of the Occupational Safety and Health Administration; and W. Kip Viscusi and James T. Hamilton, “Are Risk Regulators Rational? Evidence from Hazardous Waste Cleanup Decisions,” American Economic Review, vol. 89, no. 4 (1999), pp. 1010–27, and James T. Hamilton and W. Kip Viscusi, Calculating Risks: The Spatial and Political Dimensions of Hazardous Waste Policy (MIT Press, 1999) for a negative assessment of Superfund. 7. The Reinventing Government initiatives of the Clinton administration, for example, applied the goal of consumer satisfaction to regulatory agencies. As one result of this endeavor, the customs service reportedly spent more than a year in a fruitless debate over whether drug smugglers should be considered “customers” of the agency. See Malcolm Sparrow, The Regulatory Craft: Controlling Risks, Solving Problems, and Managing Compliance (Brookings, 2000), pp. 54–57. In the same volume, Sparrow discusses similar problems that beset the Internal Revenue Service (pp. 57–64). 8. Hamilton and Viscusi, Calculating Risks. 9. Katherine Probst, “Superfund Debate,” Issues in Science & Technology, vol. 17, no. 1 (2001), p. 78. 10. See Robert T. Nakamura, Thomas W. Church, and Jeryl Mumpower, “Assessing Environmental Risk,” Journal of Contingencies and Crisis Management, vol. 2 (September 1994), pp. 136–45. 11. We should emphasize that these terms are our own shorthand for the concepts of fairness we heard from our interviewees. It is fair to say that we never heard these specific terms in an interview. We also recognize that these terms may have somewhat different meanings in other contexts. 12. See Peter J. May, “Social Regulation,” in Salamon, The Tools of Government. 13. Robert Kagan and John Scholz, “The ‘Criminology of the Corporation’ and Regulatory Enforcement Strategies,” in Keith Hawkins and John Thomas, eds., Enforcing Regulation (Boston: Kluwer/Nijoff, 1984).

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notes to pages 101 –08

14. There are some exceptions, such as very minor contributors of waste, or some classes of prospective buyers of previously contaminated land. 15. The Department of Justice has been a major stumbling block to granting legal assurances to PRPs regarding future liability. The department has resisted any formal liability releases at Superfund sites. This policy has been an impediment to subsequent development of remediated land at sites on the National Priority List, as well as at sites with less serious contamination. In most circumstances, the department and EPA provide what is known as a “comfort letter,” specifying that the government has no plans to require additional cleanup efforts on a site. In many circumstances, these documents have proved sufficient to allow land sales, redevelopment efforts, and mortgage approvals to move forward. As Superfund sites are remediated and made available for future development, these letters may answer some of the concerns of PRPs regarding future liability at sites they have remediated. But there is no binding assurance forthcoming from the government. 16. Several regions had been encouraging PRPs to conduct the Remedial Investigation/Feasibility Study for some time before the initiation of the administrative reforms. 17. Ian Ayres and John Braithwaite, Responsive Regulation: Transcending the Deregulation Debate (Oxford University Press, 1992), p. 158. 18. Paul R. Portney, and Robert N. Stavins, eds., Public Policies for Environmental Protection, 2d ed. (Washington: Resources for the Future, 2000), p. 2. 19. For detail, see chapter 3. 20. Walter Rosenbaum quotes Christine Todd Whitman as saying: “I am just trying to keep people from going berserk when they get mad at me. . . . And to keep the lawsuits to a minimum of two to three per decision.” Walter W. Rosenbaum, “Still Reforming after All These Years: George W. Bush’s New Era at the EPA,” in Norman Vig and Michael Kraft, eds., Environmental Policy (Washington: CQ Press, 2003), p. 175. 21. Greve and Smith, Environmental Politics, p. 107. 22. Thomas W. Church and Robert T. Nakamura, Cleaning Up the Mess: Implementation Strategies in Superfund (Brookings, 1993). 23. Jonathan Swift, Gulliver’s Travels, reprint (Oxford University Press, 1998), p. 47. We are indebted to James Goggi, a graduate student at our university, for alerting us to this quotation.

Index

Administrative Procedures Act (APA), 32, 35, 37, 90 Adversarial legalism, 9–10, 14–15, 20–21, 27–28 Agencies, regulatory: activism, 35; agency capture, 18–19, 22, 27; authorizing legislation, 31, 32–35; budget cuts, 25–26; challenges, 25–26; conflicting demands on, 29; constraints, 28, 31; criticism of, 6–7, 27–28; decentralized decisionmaking, 38–39; delegation doctrine, 32; discretionary decisions, 32, 38– 39; enforcement processes, 25–26; impact of Reinventing Government, 26; legislative attempts to control, 6, 25–26, 28; New Deal, 18, 32, 35; organizational change in, 6–7; organizational cultures, 43, 47; policymaking authority, 31, 32; political support, 107–08; powers, 5; presentational styles of officials, 102; and private sector, 18–19;

135

social functions, 29. See also specific agencies by name APA. See Administrative Procedures Act Authorizing legislation, 31, 32–35. See also Superfund authorizing legislation Ayres, Ian, 102 Bardach, Eugene, 5–6, 39, 40, 42 Behn, Robert, 40–41 Braithwaite, John, 102 Breyer, Stephen, 16 Browner, Carol, 60, 78 Bush, George W., 72, 92, 103 Bush (G. W.) administration, 11, 72, 103 Carter, Jimmy, 57 CERCLA. See Comprehensive Environmental Response, Compensation, and Liability Act Chevron v. Natural Resources Defense Council, 33–34, 35 Christiansen v. Harris County, 34

136 Citizen suits, 104–05 Clean Air Act, 23 Cleanup standards: containment, 69, 70, 73, 87, 100; debates on, 50– 51, 53; permanent remediation, 53, 67, 73, 86; reforms, 67–68 Clinton, Bill, 11, 60, 78 Clinton administration: Reinventing Government, 2, 26, 93. See also Environmental Protection Agency; Superfund reforms Coase theorem, 17 Coercion: compared to voluntary choice, 15–17; in democracies, 1, 15; as deviation from market, 15; need for, 2; as policy tool, 1, 3; in regulation, 1–2, 3, 4, 91, 92–93; unpopularity, 1–2. See also Criminal law; Regulation Command-and-control regulation. See Regulation Complexity of joint action, 55, 74 Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA), 51, 57. See also Superfund authorizing legislation Congress: agency budget cuts, 25–26; debates on Superfund, 50, 52, 61; delegation doctrine, 32; expectations of Superfund, 106; 1994 elections, 11, 61, 97; oversight of Superfund, 81, 83; policymaking authority, 31, 32; relations with EPA, 23–24, 82; relations with regulators, 28, 32; Republican control, 11, 12, 61, 97; threatened changes to Superfund, 85–86, 88, 89, 97, 104. See also Authorizing legislation

index Contract with America, 11 Corporate scandals, 2, 22 Cost-benefit analysis, 24, 25, 94–95 Courts. See Criminal justice system; Judicial scrutiny Criminal justice system: discretionary decisionmaking, 45–46; local cultures, 46–47, 48; need for, 5, 21; reforms, 43, 44–48; sentencing decisions, 45–46 Criminal law, 3, 5, 91–92 Cultures: of EPA, 24, 56–57, 74; informal, 48; legal, 46–47; local, 46–47, 56–57, 74; organizational, 24, 43, 47, 48, 56–57, 74; of regulatory agencies, 43, 47 Delegation doctrine, 32 De micromis parties, 65–66, 72 De minimis parties, 65–66, 72, 84 Deregulation, 2, 22, 25, 102 Discretion: displacement of, 45–46; limits on, 7; in regulatory decisionmaking, 32, 38–39 Dupont, 52 Effectiveness, regulatory, 24, 92–96; definition, 93; improving, 25; measures of, 17, 94, 106; political aspects, 95 Elmore, Richard, 41 Environmental organizations: lack of attention to Superfund, 10, 88; potential lawsuits against Superfund reforms, 87–88, 104, 105; scrutiny of Superfund, 81; view of EPA, 24; views of Superfund reforms, 11, 105 Environmental Protection Agency (EPA): alternatives to coercion, 23, 24; in Clinton administration,

index

137

11; criticism of, 22–23; decentralized administration, 74; devolution of regulation to states, 23, 24; directors, 58; judicial scrutiny of, 37; leadership, 78–79, 89; mission, 22; organizational culture, 24, 56–57, 74; public relations efforts, 82, 95–96; recent history, 22–24; regional offices, 55–56, 74, 79, 83, 85; Region 3, 64, 80; Region 2, 64, 80–81; relations with Congress, 23–24, 82. See also Superfund Equanimity, 101–02 Equity, 97–99

Greve, Michael S., 104–05 Gulliver’s Travels (Swift), 108

Fairness: in enforcement, 105–06; equanimity, 101–02; equity, 97– 99; increased by Superfund reforms, 65, 78, 97; perceived unfairness in Superfund, 58, 62– 63, 92–93, 96–97, 98; predictability, 100–01, 107; proportionality, 99–100; regulatory, 96–102 FDA. See Food and Drug Administration Feeley, Malcolm M., 48 Fiorino, Daniel J., 24–25 Food and Drug Administration (FDA), 34 Funding, mixed, 64–65, 72, 80, 84, 99

Judicial scrutiny: deference to agency interpretations, 33–35; effects, 37; hard look doctrine, 36, 72; as limit on regulators’ discretion, 7; of regulators, 32–33, 34, 35–38 Justice, Department of: regulatory enforcement actions, 39; Superfund reforms and, 73, 78, 89; Superfund responsibilities, 59

Gaebler, Ted, 26 General Accounting Office, 81 General Electric, 52 General Motors, 52 Gore, Albert, Jr., 60 Gorsuch, Anne, 58, 59 Graham, John D., 17

Hamilton, James T., 16, 94–95 Hazardous waste sites: cleanup costs, 50, 53; cleanup technologies, 59; discoveries of, 51; final acceptable pollution levels after cleanups, 16; future land uses, 67–68, 70, 73, 87, 99; National Priority List, 54, 71, 83, 84, 94. See also Cleanup standards; Potentially responsible parties; Remedy selection process; Superfund Howard, Phillip K., 28

Kagan, Robert, 9–10, 20–21 Kingdon, John, 51 Lavelle, Rita, 58 Law enforcement. See Criminal justice system Law Enforcement Assistance Administration, 45 Liability. See Superfund liability scheme Lipsky, Michael, 40 Love Canal (N.Y.), 51 Lowi, Theodore, 3–4 McConnell, Grant, 18

138 McLaughlin, Milbrey, 40 Markell, David, 24 Market-based mechanisms: EPA use of, 23; preferences for, 2, 15, 16– 17, 102 Market failure, 17 Mazmanian, Daniel, 40 Mead Corp, United States v. , 35 Moe, Terry, 40 Nakamura, Robert T., 40 National Industrial Recovery Act, 32 National Performance Review, 26, 93 National Priority List (NPL), 54, 71, 83, 84, 94 NBARs. See Nonbinding allocations of responsibility New Deal, 18, 32, 35 Nixon, Richard M., 58 Nonbinding allocations of responsibility (NBARs), 66–67, 72, 99 NPL. See National Priority List Occupational Safety and Health Administration (OSHA), 37–38 Organizational change, 43–44 Organizational culture. See Cultures Orphan shares, 63, 65, 72, 84 Osborne, David, 26 OSHA. See Occupational Safety and Health Administration Patashnik, Eric M., 19 Policies: congressional powers, 31; distributive, 4; factors in making of, 77; implementation issues, 38– 42, 79–80; judicial influence, 36–37; politics and, 3–4 Policy tools: capacity augmentation by, 3; coercion as, 1, 3; definition,

index 2–3; implementation, 3, 4–6; motivation-oriented, 3; politics in choice of, 3–4; regulation as, 2–3 Potentially responsible parties (PRPs): allocation of cleanup shares, 66–67, 99; benefits from Superfund reforms, 87; criticism of Superfund, 96–97, 100–01; deep-pocket companies, 52–53, 62–63, 98; de micromis, 65–66, 72; de minimis, 65–66, 72, 84; lawsuits against other parties, 53, 63, 66, 98; legal actions against, 54, 56; liability for hazardous waste sites, 8, 52; nonbinding allocations of responsibility, 66– 67, 72, 99; reforms in allocation of cleanup shares, 63–64; regional differences in treatment of, 56–57, 58, 64; settlement agreements, 54, 56, 58–59, 62; treatment of, 9, 57, 64, 100–02, 106; unilateral administrative orders to, 54, 63, 64, 72, 80, 99. See also Superfund liability scheme Predictability, 100–01, 107 Pressman, Jeffrey, 38, 40 Probst, Katherine, 94–95 Proportionality, 99–100 PRPs. See Potentially responsible parties Reagan, Ronald, 57, 58 Reform, regulatory: administrative changes, 6–7, 90; incentives and disincentives, 47–48; infrequency of, 42; leadership of, 77; lessons from criminal justice reform, 44– 48; obstacles, 7, 38–44, 47, 72– 75, 90; risk reduction, 30–31, 93– 94; Sparrow’s recommendations,

index 7, 28–31, 37, 42–43, 49, 90, 93– 94. See also Superfund reforms Region 3 (EPA), 64, 80 Region 2 (EPA), 64, 80–81 Regulation: alternatives to, 2, 16–17, 24, 102; coercive, 5; distribution of costs and benefits, 4, 29–30, 92, 100, 107; enforcement issues, 16, 19–20; environmental, 24; fairness, 92–93, 96–102, 105–06; implementation issues, 5–6, 25– 26; need for, 2, 21–22, 24–25; as policy tool, 2–3; reconciling coercion and popular support, 1– 2, 3, 4, 91, 92–93; self-regulation, 2, 23, 24; taming, 92; unpopularity of, 102–03. See also Agencies Regulation, criticism of: adversarial legalism, 9–10, 14–15, 20–21, 27–28; agency capture, 18–19, 22, 27; difficulties of addressing, 6–7, 27–28; from empirical research, 14, 18–20; enforcement issues, 6; regulatory unreasonableness, 7, 19–20, 22– 23; theoretical, 14, 15–18 Reinventing Government, 2, 26, 29, 93 Remedial investigation and feasibility studies (RI/FS), 54–55 Remedy selection process: balancing costs and risks, 67–68, 87, 94, 99; compliance monitoring, 69–70, 85; consideration of future land uses, 67–68, 70, 73, 87, 99; cost reductions, 67, 68, 73, 84–85, 87; criticism of, 67; legal requirements, 53, 55, 67, 73, 86; management flags, 69, 70, 85; presumptive remedies, 68–69, 85;

139 reforms in, 60–61, 67–70, 73, 74– 75, 81, 86–87, 99–100; remedy review board, 69–70, 81, 85; reviews of prior decisions, 70, 84– 85. See also Cleanup standards Republicans: acceptance of Superfund, 71–72, 92, 103; control of Congress, 11, 12, 61, 97; environmental agenda, 11, 12, 61, 71, 97; threat of congressional changes to Superfund, 85–86, 88, 89, 97, 104 Resource Conservation and Recovery Act, 23 RI/FS. See Remedial investigation and feasibility studies Risk: assessment techniques, 24, 25, 95; balancing with cleanup costs, 67–68, 87, 94, 99; reduction, 30– 31, 93–94 Ruckelshaus, William, 58 Sabatier, Paul, 40 Salamon, Lester M., 3, 14, 15 Scalia, Antonin, 34 Schecter Poultry v. United States, 32 Schiffer, Lois, 78 Schultze, Charles, 1, 16, 23 Self-regulation, 2, 23, 24 Selznick, Philip, 40 Smallwood, Frank S., 40 Smith, Fred L., 104–05 Sparrow, Malcolm, 5, 7, 28–31, 33, 37, 38, 42–43, 44, 47, 48–49, 90, 93 States: environmental regulation, 23, 24 Street-level bureaucrats, 38, 44 Superfund: benefits, 10; compared with other programs, 8–9; conflicting goals, 51, 74, 93;

140 congressional debates on, 50, 52; criticism of, 10–11, 49, 50, 59, 81, 96; decentralized administration, 55–57, 59; early problems, 10–11, 49, 59; effectiveness, 92–96; as adversarial legalism, 9–10; future of, 12, 106; implementation strategies, 56–57; National Priority List, 54, 71, 83, 84, 94; operation, 51–52, 53–55, 57–59; performance measures, 71, 83–85, 94, 95, 107; political acceptance, 71–72, 92, 103; public works projects, 56–57; purpose, 8, 50; regional differences in administration, 64, 74; remediation decisions, 53–55; results, 54, 71, 83, 84, 94; revenues, 50, 51, 52, 58; size, 9; staff, 78; threat of congressional changes to, 85–86, 88, 89, 97, 104; trust fund, 51–52, 54, 56– 57. See also Cleanup standards; Potentially responsible parties; Remedy selection process Superfund Amendments and Reauthorization Act (1986), 58– 59, 65, 66 Superfund authorizing legislation: CERCLA, 51, 57; consensus bill (1994), 60–61, 62, 72, 73, 77, 82, 86, 88, 103–04; reauthorizations, 58–59, 64–65, 66 Superfund liability scheme, 9–10; congressional intentions, 52; consequences of, 53; controversial aspects, 53, 96–97, 100–01; increased fairness, 65, 78; joint and several liability, 52, 62, 65, 96, 98–99; legal decisions, 52, 58,

index 59; perceived unfairness, 58, 62– 63, 92–93, 96–97, 98; reforms, 60, 62–66; retroactive liability, 52, 96; strict liability, 52; transaction costs, 53; unlimited future liability, 100, 101; unpredictability, 100–01 Superfund reforms: absence of lawsuits against, 86–88, 104, 105; acceptance, 11, 71; administrative actions, 61–62, 77; announcement, 61–62; benefits for PRPs, 87; congressional debates, 61; consensus bill (1994), 60–61, 62, 72, 73, 77, 82, 86, 88, 103–04; context, 11–12, 61; de minimis and de micromis provisions, 65–66, 72, 84; development of proposals, 60–61, 82; enforcement changes, 62–66; fairness increased by, 65, 78, 97; goals, 62, 78, 80, 92; government funding of orphan shares, 63, 65, 72, 84; incentives for implementation, 82–86; leadership, 77–79, 82, 88–89; lessons, 49, 89–90, 102, 103–07; liability scheme changes, 60, 62– 66; management, 79–82, 88–89; mixed funding, 64–65, 72, 80, 84, 99; motives, 77, 86, 104; nonbinding allocations of responsibility, 66–67, 72, 99; obstacles, 55, 72–75, 76, 90, 104– 05; potential resistance, 74–75; publicity, 73, 82, 95–96; regional participation, 79; success factors, 77–86, 103–04; successful implementation, 70–72. See also Remedy selection process Supreme Court, U.S., 32, 33–34, 35

index Swift, Jonathan, 108 Times Beach (Mo.), 51 Toxic waste. See Hazardous waste sites U.S. Court of Appeals for the District of Columbia Circuit, 37–38 United States v. Mead Corp, 35

141 Vining, Aidan, 17 Viscusi, W. Kip, 16, 17, 94–95 Wald, Patricia, 36–37 Weatherly, Richard, 40 Weimer, David, 17 Whitman, Christine Todd, 11, 72 Wildavsky, Aaron, 17, 38, 40

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