Hazardous Waste: EPA's Cleanup of the Eagle-Picher Henryetta,	 
Oklahoma, Site (05-SEP-03, GAO-03-1051R).			 
                                                                 
From 1996 to 1997, the U.S. Environmental Protection Agency (EPA)
conducted a cleanup action on a former zinc smelter operated by  
Eagle-Picher Mining and Smelting, Inc. and other areas		 
contaminated by materials from this site near Henryetta,	 
Oklahoma. EPA's cleanup focused on removing the immediate health 
threat posed by lead- and arsenic-contaminated soil transported  
from the Eagle-Picher site to residential and other highly	 
accessible areas. Cleanup actions on the Eagle-Picher site	 
involved establishing proper drainage on the site, encapsulating 
the Eagle-Picher site with clay and cover soil, and establishing 
vegetative cover at the site to protect nearby residents from the
recontamination from wind and water erosion of hazardous	 
materials. Since completion of the cleanup, private landowners of
a neighboring property have raised concerns about contamination  
of their property resulting from EPA's cleanup actions. 	 
Landowners allege that EPA, through its contractors, transported 
and negligently disposed of hazardous substances on their	 
property. The landowners also allege that EPA's actions at the	 
site contributed to the migration of contamination from the	 
Eagle-Picher site onto their property. These landowners are	 
currently pursuing litigation against EPA and the city of	 
Henryetta for damages incurred as a result of the cleanup. EPA	 
asserts that the cleanup met its objectives and successfully	 
removed the immediate threat to human health and the environment.
Congress asked us to provide information on (1) the environmental
cleanup actions EPA conducted at the Eagle-Picher Henryetta site 
and (2) the actions EPA has taken in response to neighboring	 
landowners' concerns related to the Eagle-Picher cleanup site.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-03-1051R					        
    ACCNO:   A08331						        
  TITLE:     Hazardous Waste: EPA's Cleanup of the Eagle-Picher       
Henryetta, Oklahoma, Site					 
     DATE:   09/05/2003 
  SUBJECT:   Environmental monitoring				 
	     Environmental policies				 
	     Hazardous substances				 
	     Health hazards					 
	     Land management					 
	     Litigation 					 
	     Henryetta (OK)					 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-03-1051R

GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta Hazardous
Waste Site

September 5, 2003 The Honorable James M. Inhofe Chairman, Committee on
Environment

and Public Works United States Senate

Subject: Hazardous Waste: EPA*s Cleanup of the Eagle- Picher Henryetta,
Oklahoma, Site

Dear Mr. Chairman: From 1996 to 1997, the U. S. Environmental Protection
Agency (EPA) conducted a cleanup action on a former zinc smelter operated
by Eagle- Picher Mining and Smelting, Inc. and other areas contaminated by
materials from this site near Henryetta, Oklahoma. EPA*s cleanup focused
on removing the immediate health threat posed by lead- and arsenic-
contaminated soil transported from the EaglePicher site to residential and
other highly accessible areas. Cleanup actions on the Eagle- Picher site
involved establishing proper drainage on the site, encapsulating the
Eagle- Picher site with clay and cover soil, and establishing vegetative
cover at the site to protect nearby residents from recontamination from
wind and water erosion of hazardous materials. Since completion of the
cleanup, private landowners of a neighboring property have raised concerns
about contamination of their property resulting from EPA*s cleanup
actions. Landowners allege that EPA, through its contractors, transported
and negligently disposed of hazardous substances on their property. The
landowners also allege that EPA*s actions at the site contributed to the
migration of contamination from the Eagle- Picher site onto their
property. These landowners are currently pursuing litigation against EPA
and the city of Henryetta for damages incurred as a result of the cleanup.
EPA asserts that the cleanup met its objectives and successfully removed
the immediate threat to human health and the environment.

You asked us to provide information on (1) the environmental cleanup
actions EPA conducted at the Eagle- Picher Henryetta site and (2) the
actions EPA has taken in response to neighboring landowners* concerns
related to the EaglePicher

cleanup site. To address these objectives, we reviewed documents on the
background of the site, EPA cleanup activities, and documents provided by
private landowners. We also interviewed officials from EPA headquarters
and Region 6 offices, the Department of Interior*s Bureau of Reclamation
and its contractor on the Eagle- Picher cleanup, the Oklahoma Department
of Environmental Quality, a representative of the city of Henryetta, and
private landowners. In addition, we visited the site and neighboring
property. Because

United States General Accounting Office Washington, DC 20548 United States
General Accounting Office Washington, DC 20548

Page 2 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

the landowners are currently involved in litigation against EPA and others
related to the site cleanup, we did not assess the sufficiency or
effectiveness of EPA*s cleanup or the merits of the landowners* litigation
against EPA. We present the results of the litigation, to date, but we did
not determine the cause of contamination associated with the cleanup or
any liabilities associated with the cleanup. A map of the Eagle- Picher
hazardous waste site and the landowners* property is included in enclosure
I. A detailed narrative chronology of events related to the Eagle- Picher
Henryetta hazardous waste site and legal issues surrounding litigation
against EPA and others is included in enclosure II.

Background

From 1916 to 1968, Eagle- Picher Mining and Smelting, Inc. operated a
smelter producing zinc, cadmium, and germanium on a 70- acre property near
Henryetta, Oklahoma. Eagle- Picher received ore from mines in northeastern
Oklahoma and operated a smelter for recovering metals from the ore. These
operations left the site with high concentrations of arsenic, lead, and
zinc in waste primarily located in four piles on the north and south areas
of the site. Eagle- Picher, Inc. ceased operations on the site in 1968,
and donated the property to the city of Henryetta in 1974. The city of
Henryetta took steps to develop the property, leasing portions of it to
industrial facilities, including a coal mining company that used the site
for storage and transportation and mined the property to the north of the
smelter extensively. In addition, the city used soil from the site as fill
material at locations throughout Henryetta, including residences, schools,
and parks, between 1974 and 1995.

The Comprehensive Environmental Response, Compensation, and Liability Act
of 1980 (CERCLA) established the Superfund program to clean up highly
contaminated hazardous waste sites. CERCLA authorizes EPA to respond to
hazardous substance releases that threaten public health or welfare or the
environment in two general ways: (1) removal actions, which generally
address environmental emergencies and are generally short- term actions to
diminish the threat of a release, or (2) remedial actions, which are
generally permanent cleanups that are more costly and take longer to
complete. CERCLA authorizes EPA to compel parties responsible for the
contamination to clean up the sites; allows EPA to pay for cleanups, then
seek reimbursement from the responsible parties; and establishes a trust
fund to help EPA pay for cleanups and related program activities. EPA may
enter into settlement agreements with potentially responsible parties
(PRPs) that require them to clean up the site or pay for cleanup. In
addition, PRPs may sue to seek contribution from other PRPs for their
response costs incurred during cleanups.

In 1996, Oklahoma state environmental officials requested assistance from
EPA in addressing contamination on the Eagle- Picher site and other
locations throughout Henryetta. Sampling conducted for EPA indicated soil
taken from the EaglePicher site and used as fill in residential and other
highly accessible areas, including areas frequented by children, was
contaminated with lead and arsenic.

Page 3 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

Specifically, EPA found contamination at levels presenting health concerns
at three schools, three parks, 93 residential alleys, and 162 residential
properties.

EPA*s Cleanup Action Focused on Removing Hazardous Waste from HighAccess
Areas and Consolidating and Containing Waste at the Eagle- Picher Site

In August 1996, EPA initiated a removal action on the Eagle- Picher site
and other locations throughout Henryetta in accordance with CERCLA. EPA
determined that the site, including locations where material from the site
was used as fill material in construction, presented an imminent and
substantial endangerment to public health and the environment because of
lead and arsenic contamination in high- access areas. However, because the
site did not affect residential drinking water or a large population, it
did not qualify for proposal to EPA*s list of the nation*s most
contaminated sites, called the National Priorities List. EPA placed a
ceiling of $8 million on EPA*s project cost.

Working in partnership with the Oklahoma Department of Environmental
Quality, EPA*s removal action focused on excavating contaminated soil and
wastes used as fill material in residential and high- access areas such as
schools and parks, and on addressing residential areas contaminated by
wind or water erosion from the site. The cleanup action also included
moving contaminated material from these locations to the Eagle- Picher
property; consolidating contaminated material present at the site; and
placing a clay cap, cover soil, and vegetation over the

material to protect nearby residents from further contamination. In
January 1997, EPA officials also obtained an agreement granting access to
property to the north of the Eagle- Picher site from the then- current
landowner. This agreement allowed EPA to address contamination in a pond,
located on both properties, which was filled with coal sediments used by
the coal mining company that leased a portion of the Eagle- Picher site to
wash coal after it was mined from the property to the north. EPA states
that it filled this pond with clean soil and uncontaminated debris such as
cement blocks from residential properties to remove the threat of direct
contact with contaminated waste material in the pond.

EPA completed the majority of its cleanup actions on the site in August
1997, with other drainage work completed in December 1997. On February 4,
1998, EPA notified the Henryetta Economic Development Authority that all
phases of the design and implementation of the cleanup action at the site
were complete and that the site was ready for appropriate commercial or
industrial redevelopment. 1 On December 11, 1998, the Oklahoma Department
of Environmental Quality sent

a similar letter to the city of Henryetta stating that EPA and the
department had completed a project that identified and buried remaining
contamination from the smelter operation and that no environmental factors
precluded construction and use of the property for industrial or
commercial purposes. 1 A January 2001 deed restriction placed on the
Eagle- Picher site prohibited residential, childcare, or nursing care
development.

Page 4 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site EPA Provided Neighboring Landowners with Documents
Related to the

Eagle- Picher Cleanup

On October 10, 2000, owners of a portion of the property located to the
north of the Eagle- Picher site submitted a hazardous waste release
incident report to EPA*s National Response Center. One of four private
citizens co- owning the property reported stepping in water near the
Eagle- Picher property line and later experiencing chemical burns on his
feet. The landowners retained legal counsel on October 17, 2000, and made
a series of Freedom of Information Act requests for documents relating to
the Eagle- Picher removal action from October 2000 through March 2001. The
landowners asserted in communication to EPA that the removal action failed
to eliminate exposure to hazardous substances and failed to prevent the
migration of contaminants through soil erosion into water pathways.
Landowners reported incurring expenses for two environmental engineering
studies, a property survey, laboratory tests on soil and water samples,
telephone calls, travel to EPA Region 6 and EPA headquarters, and medical
expenses.

According to EPA regional and headquarters officials, EPA responded
appropriately to the concerns of the landowners, expressed through
correspondence, telephone calls, and requests for information under the
Freedom of Information Act between October 2000 and March 2001. EPA
referred the October 2000 incident report submitted by the landowners to
EPA*s National Response Center to the Oklahoma Department of Environmental
Quality, which responded by reviewing the landowners* concerns and
contacting the landowners to explain that the levels of contamination
present did not warrant action by EPA or Oklahoma. EPA responded to the
landowners* written requests for information by advising them of the cost
to provide documents, and when the cost proved excessive, providing the
documents for landowners* counsel to review at EPA*s offices. Although EPA
took several months to respond to some requests for information, EPA
attributes these delays to the time required to retrieve documents placed
in storage, review files to locate appropriate documents, and determine a
cost estimate for providing the documents directly to the landowners.

The landowners disagree that EPA was responsive to their concerns about
contamination on their property and assert that EPA*s systemic attitude
has impeded their efforts to obtain information about the cleanup. The
landowners cited unnecessary delays in providing documents and alleged
that EPA attempted to hide the truth about cleanup actions.

On March 16, 2001, the landowners sued EPA and other parties in federal
district court, seeking among other things to recover cleanup costs under
CERCLA resulting from contamination on their property. The landowners
alleged that a release of hazardous substances from the Eagle- Picher
property caused the contamination and that EPA*s cleanup activities had
caused the release. At a February 2002 meeting with Department of Justice
attorneys representing the United States, the landowners proposed settling
its litigation for $602 million: $373 million to remedy alleged
contamination on the landowners* property; $100

Page 5 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

million to remedy the alleged failure of the Eagle- Picher cleanup; $2
million in damages for trespass, nuisance, and personal injuries; $126
million for economic losses; and $103,000 in expenses incurred for two
environmental engineering studies, a property survey, laboratory tests on
soil and water samples, telephone calls, travel to EPA Region 6 and EPA
headquarters, and medical expenses. The landowners later revised this
figure to $28 million, citing a desire to compromise and save taxpayer
dollars. Justice contacted the landowners in March 2002 and stated that it
would not settle. Among other things, the government argued that
landowners had not incurred any cleanup costs recoverable under CERCLA.
Although the landowners report that they have not cleaned up or contained
the contamination on their property, they argue that some of the costs
they have incurred, including the costs of the environmental engineering
studies, are response costs under CERCLA.

The district court dismissed the suit, holding in part that the landowners
themselves were responsible parties because the release was occurring on
their property, and that under CERCLA responsible parties cannot generally
recover cleanup costs. While there is an exception to this rule for
*innocent landowners,* those that exercised due diligence before purchase
in determining whether the property was contaminated and due care with
respect to hazardous substances found on the property, the landowners
failed to assert that they qualified for this exception. The landowners
appealed, contending among other things that they are not responsible
parties and that in any event they qualify as innocent landowners. The
appeal is pending. A more detailed description of the litigation is
included in enclosure II.

Observations

Based on our observations, EPA has carried out its planned activities to
remove lead and arsenic contamination from residential and high- access
areas and to mitigate exposure to and migration of lead- and arsenic-
contaminated material from the Eagle- Picher site. From 1996 to 1997, EPA
and its contractors took actions designed to remove contamination from
residential and high- access areas, establish proper drainage on the
Eagle- Picher site, consolidate and cover hazardous material on the Eagle-
Picher site with clay and cover soil, and establish vegetative cover over
the hazardous material on the site to protect nearby residents against
further contamination. Our review of EPA*s records shows that the Eagle-
Picher site and the landowners* property were used for a number of
industrial activities over the past century, hence determining the cause
of current contamination on either property would be problematic. Further,
the removal action did not purport to eliminate hazardous material at the
Eagle- Picher site or to make the Eagle- Picher site suitable for
residential development. Similarly, the action was not intended to remove
contamination from the landowners* property because, unlike the other
properties where EPA took action, it is not a residential property where
EPA determined that an imminent and substantial endangerment existed. As
we describe above, the district court dismissed the landowners* suit in
its entirety, and the landowners are appealing on the cleanup cost issues.
We note

Page 6 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

that final judgment regarding the merits of the landowners* case against
EPA is reserved for the court.

Agency and Other Interested Party Comments

We provided EPA with a draft of this letter for review and comment. EPA
agreed with the letter*s findings and observations and stated that the
actions EPA has taken at the Eagle- Picher site were appropriate to
address the human health threats posed by the site. EPA also provided
technical comments and clarifications, which we incorporated in the letter
as appropriate. In addition, we provided the landowners with an
opportunity to review and comment on a draft of this letter. The
landowners disagreed with several of the letter*s findings and
observations. The landowners maintain that EPA*s cleanup of the Eagle-
Picher site failed and assert that EPA*s actions during the cleanup were
negligent or incompetent. Based on our review of EPA records and
discussions with EPA, EPA*s contractors for the cleanup, and state and
local officials, we believe EPA carried out its planned activities at the
Eagle- Picher site. Written comments provided by EPA and the private
landowners appear in enclosures III and IV, respectively.

We conducted our work from May 2003 through August 2003 in accordance with
generally accepted government auditing standards.

- - - - - As agreed with your office, unless you publicly announce the
contents of this letter earlier, we plan no further distribution of it
until 30 days after the date of this letter. At that time, we will send
copies to other interested parties and make copies available to others who
request them. In addition, the letter will be available on GAO*s Web site
at http:// www. gao. gov. If you or your staff have any questions about
this letter, please contact me or Peg

Reese at (202) 512- 3841. Major contributors to this letter were Richard
Johnson, Joanna McFarland, Kirk Menard, Judy Pagano, and Leigh White. John
B. Stephenson

Director, Natural Resources and Environment Enclosures

Enclosure I

Page 7 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site Map of Henryetta, Oklahoma, Eagle- Picher Hazardous
Waste Site and

Adjacent Landowner Property Note: Eagle- Picher site and adjacent
landowner property are not to scale.

Enclosure II

Page 8 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site Narrative Chronology of Events Related to the Eagle-
Picher Henryetta

Hazardous Waste Site

This enclosure provides a narrative chronology of events related to the
EaglePicher site in Henryetta, from its historical industrial use to EPA*s
1996 CERCLA removal action and current litigation related to that action.
This enclosure presents private landowners* concerns about contamination
from the EaglePicher site onto neighboring property, culminating in a
lawsuit against EPA and others, and EPA*s response to the landowners*
concerns. Figure 1 provides a timeline of key events related to the Eagle-
Picher site.

Figure 1: Timeline of Key Events

Eagle- Picher Site History

The Eagle- Picher CERCLA site is located in the city of Henryetta,
Oklahoma, in east- central Oklahoma. The property is located northeast of
downtown Henryetta, population 6,096, and is west of the town of Dewar,
population 919, in Okmulgee County. From 1916 to 1968, Eagle- Picher
Mining and Smelting, Inc. (now EaglePicher Inc.) operated a smelter on 70
acres near Henryetta, Oklahoma. The smelter was used to recover zinc,
cadmium, and germanium from ore received from mines in northeastern
Oklahoma. From 1943 to 1949, the U. S. Defense Plant Corporation also
operated on approximately 20 acres of the 70- acre site.

Eagle- Picher ceased operations on the site in 1968 and donated the
property to the city of Henryetta in 1974. The city never operated the
site, but leased portions of the property beginning in 1975 to four
companies: Permocast, Inc. (an aluminum casting company), P& K Company,
Ltd. (a coal mining operation), Klutts Trucking (coal hauling for P& K
Company), and Glover Construction (an asphalt plant). During P& K*s
occupation of the land, the company built a coal sedimentation

Enclosure II

Page 9 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

pond* a pond used to remove coal sediments during coal processing* on the
northern end of the property extending beyond the Eagle- Picher property
line. According to a representative for the city of Henryetta, P& K
Company also conducted extensive coal mining operations on the property to
the north of the Eagle- Picher site under an informal agreement with the
then- owner. P& K Company, Klutts Trucking, and Glover Construction
vacated the Eagle- Picher site prior to EPA*s 1996 removal action.
Permocast is still active on about 3 acres near the northwest corner of
the site.

Industrial operations left the Eagle- Picher site with high concentrations
of arsenic, lead, and zinc in waste primarily located in piles on the
north and south portions of the site. Over 170,000 cubic yards of bulk
solid waste from the smelter remained on the site from Eagle- Picher*s
operations. During the 1980s, EPA and Oklahoma state agencies conducted
numerous site investigations on the EaglePicher property, identifying high
concentrations of several metals in waste piles and soil located near
these piles. Air samples also indicated lead and zinc contamination near a
residence located near the Eagle- Picher site. In 1988, EPA conducted a
site assessment to determine if a removal action was necessary to address
the lack of site security around heavy metal- contaminated zinc ore and
waste piles on the Eagle- Picher site. The assessment was conducted to
determine if lead contamination in waste material posed a threat to public
health and welfare through direct physical contact with the material.
However, because sampling indicated that contamination levels did not
present an imminent and substantial endangerment at that time, EPA decided
that no further action was necessary.

In 1996, prompted by heightened concern about material from the Eagle-
Picher site moved to residential and high- access areas, the Oklahoma
Department of Environmental Quality (ODEQ) contacted EPA requesting a
CERCLA cleanup of the site. This time EPA decided to proceed. EPA
officials explained that several factors contributed to the agency*s
decision to conduct a removal action at the site in 1996.

(1) The health standard for lead had changed, indicating that lead levels
in the area were a greater concern than previously believed. (2) Samples
indicated that contaminated material from the Eagle- Picher

site was migrating to residences located immediately south of the site.
(3) ODEQ informed EPA that material from the Eagle- Picher site was

used as fill material in the construction of residential driveways,
schools, alleys, and other high- access areas.

A site assessment conducted for EPA by Ecology and Environment, Inc. from
1995 to 1996, prior to the removal action, reported that the site posed a
threat to the public and the environment through the risk of direct
contact and off- site migration of contaminants through wind and water
erosion. The assessment found that contaminated material had traveled
through a tributary to a creek located to the north of the Eagle- Picher
site. The assessment also found that

Enclosure II

Page 10 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

residences and businesses located south of the Eagle- Picher site within
500 feet of the southern waste piles as well as high- access areas where
smelter material was used as fill material were contaminated with lead.
Lead exposure can be harmful to humans when ingested or inhaled, but is
particularly harmful to children because of their increased susceptibility
to the adverse neurological and developmental effects of lead. Ecology and
Environment, Inc. also developed a work plan that provided the conceptual
design and cost estimates for the removal action.

Eagle- Picher Henryetta CERCLA Removal Action

EPA initiated a removal action on the Eagle- Picher site and other
locations contaminated with material from the site in August 1996. EPA and
ODEQ entered into a contract pursuant to CERCLA setting forth the
responsibilities of both agencies in conducting the removal action. The
removal action addressed threats at areas accessible to children,
residential properties, and the Eagle- Picher site, as well as an
additional industrial site in the area. The primary concern was the threat
to public health posed by arsenic- and lead- contaminated soil.

As the lead agency under the contract, EPA*s responsibilities included
excavating contaminated soil from residential properties and other highly
accessible areas, restoring these properties to near original condition,
and consolidating and encapsulating waste at the Eagle- Picher site. EPA*s
responsibilities at the EaglePicher site also included establishing proper
drainage to minimize further off- site migration of hazardous material,
placing a clay cap over the heavily contaminated areas, and placing cover
soil over the entire smelter facility site to protect nearby residents
from further contamination. The initial work plan developed by Ecology and
Environment, Inc. included draining and filling the coal sedimentation
pond located on both the Eagle- Picher site and the property to the north
with clean soil or hazardous material from the northern waste pile, or
both. ODEQ*s responsibilities included establishing a vegetative cover on
areas of the EaglePicher site and providing funding to reimburse EPA for
18 percent of the cost of performing the removal action. In addition, the
removal action included the excavation of waste from a separate former
smelter site in the area, operated by Victory Metals, and the
consolidation of this waste at the Eagle- Picher site. EPA was responsible
for excavation and consolidation of the waste, while ODEQ was responsible
for establishing vegetative cover on disturbed areas at the Victory Metals
site and reimbursing EPA for costs in connection with the removal action
at the Victory Metals site.

To conduct the removal action, EPA entered into an interagency agreement
with the Department of Interior*s Bureau of Reclamation (BOR) for
engineering and contracting support for removal activities. BOR contracted
with Environmental Chemical Corporation (ECC) to conduct the engineering
work on the site. ECC began excavating material from residential and high-
access areas in August 1996 and completed excavation at three parks, three
schools, and 162 residential properties by July 1997. Relocation and
consolidation of waste at the Eagle-

Enclosure II

Page 11 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

Picher site was initiated in February 1997. Small ponds located on the
site were filled with soil and compacted, and the most contaminated
smelter material was relocated to the consolidated waste area on the site.
Material from waste piles, as well as waste excavated at the Victory
Metals site and other areas, was also relocated to the consolidated waste
area. BOR officials explained that culverts were installed to drain water
from the consolidated waste area* a large, contoured plateau* and direct
water into natural gullies located on the site.

In addition, in January 1997, EPA and the then- owner of the property
immediately north of the Eagle- Picher site entered into an agreement
allowing EPA access to the property. The property, used for coal mining
operations by P& K Company during its lease on the Eagle- Picher site,
contained a portion of the coal

sedimentation pond located on both pieces of land. The access agreement
stated that the landowner consented to officers, employees, and parties
authorized by EPA entering and having continued access to the property for
taking samples and other actions related to the investigation of
contamination and for the performance of a response action including, but
not limited to

the use of mechanical equipment,

the removal of contaminated material,

the replacement of removed contaminated material with clean material and
regrading of replaced material to the property*s nearoriginal grade,

the replacement of vegetation whose removal was necessary with locally
available vegetation, and

other actions necessary to mitigate releases or threats of releases of
hazardous substances from the property.

EPA contractors began draining the north coal sedimentation pond in March
1997. EPA officials stated that its contractors placed clean soil and
large, uncontaminated debris into the coal sedimentation pond partially
located on this

property. EPA officials explained that although Ecology and Environment,
Inc. *s initial plan mentioned the possibility of placing hazardous waste
in the pond, EPA did not proceed with this plan. EPA and its contractors
state that activities conducted on the private property were limited to
draining and filling the coal sedimentation pond with clean material and
installing a large drainage pipe that directed excess water around the
coal sedimentation pond into natural gullies on the site.

EPA began capping the consolidated waste area with clay donated by a local
company in April 1997. Soil donated by a local strip mine in exchange for
leveling the property provided cover soil for the entire Eagle- Picher
site. With technical support from the U. S. Department of Agriculture*s
Natural Resources Conservation Service and other local entities,
vegetation was planted to provide protection against the erosion of
contaminated materials. Sewage sludge provided by the city of Tulsa and
the city of Okmulgee also assisted in treating soil to facilitate
revegetation. EPA completed major removal operations in August

Enclosure II

Page 12 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

1997. Additional drainage work was completed in December 1997, and ODEQ
continued planting vegetation on the site into the spring of 1998.

After completion of the removal action, the city of Henryetta agreed to
conduct long- term maintenance on the Eagle- Picher site. ODEQ has
provided technical expertise on maintenance activities to the city as
needed. According to city and EPA officials, the primary concern in
maintaining the site is ensuring the integrity of the cap placed over the
consolidated waste area to prevent exposure of hazardous waste. EPA
officials explained that appropriate maintenance activities include
controlling erosion at the site, particularly around drainage pipes where
water erosion of cover soil could occur. EPA officials stated that they
asked the previous owner of the property north of the Eagle- Picher site
to assume responsibility over maintaining the portion of the cleanup that
occurred beyond the Eagle- Picher property line, but the previous owner
declined. According to a city of Henryetta representative, the city
attempted to conduct maintenance on this property, although the city
lacked the authority to enter the property. A city of Henryetta official
noted that the logistics of this arrangement were unclear. In January
2001, a deed restriction was placed on the Eagle- Picher site that limited
land use to commercial or industrial use and prohibited residential,
childcare, or nursing care development because of the continuing presence
of authorized concentrations of hazardous substances in the soil and
groundwater. The deed restriction also stipulated that the groundwater
under the site should not be used for drinking or industrial uses and that
activities on the site must preserve and protect the cap over the
hazardous waste.

Private Landowners* Concerns about Contamination from the EaglePicher Site
onto Neighboring Property

Four private citizens began leasing the property north of the Eagle-
Picher site in October 1999. The property was used by P& K Company for
coal mining while it leased a portion of the Eagle- Picher site from the
city of Henryetta, and is located downwind from the Eagle- Picher site and
subject to prevailing southerly winds. The citizens stated that they had
an informal agreement with the previous landowner to lease the land with
the intent of purchasing it later. The citizens occupied the site to
pursue several business developments, including building an asphalt plant,
building and leasing commercial properties on land fronting the highway,
and building a prison facility. The citizens reportedly paid $250,000 to
purchase, transport, and erect an asphalt plant on the property in late
1999. The citizens also report initiating discussions with a potential
investor in 1996 about financing the construction of a medium- security
geriatric prison facility on the site.

During discussions in May 2003, the landowners told us they believed the
land they intended to purchase was suitable for these development plans
because state and local newspaper articles reported that EPA had cleaned
up the Eagle- Picher site adjacent to the land and deemed it available for
industrial business use. The landowners stated that they assumed from this
information that the property they

Enclosure II

Page 13 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

planned to purchase was a good site for locating an asphalt plant and a
prison. Furthermore, the landowners noted that no deed restrictions
existed on the property and no problems were identified by the title
search conducted before they purchased the property. The landowners also
stated that they did not realize the coal sedimentation pond, drained and
filled by EPA during the cleanup, was partially located on their property.
When asked whether a survey was conducted on the property to clarify the
property boundary with the Eagle- Picher site before the purchase was
made, the citizens told us that the local bank providing the loan did not
require one. The citizens* purchase of a portion of the 330- acre property
became final in July 2000. 2 The citizens maintained an informal agreement
with the previous owner to purchase the remainder of the property located
along the

highway when they were able. In October 2000, one of the landowners stated
that he stepped into water on the southern portion of his property
bordering the Eagle- Picher site and experienced chemical burns on his
feet. On October 10, 2000, a private law firm representing the landowners
called EPA*s National Response Center reporting that a hazardous waste
release occurred on the landowners* property. From October 2000 through
March 2001, the landowners and their counsel contacted EPA requesting
additional information about the Eagle- Picher site. The landowners also
employed two environmental firms to conduct a site investigation that
entailed testing soil and water on the property and to conduct an
assessment of health risks associated with contamination on the property.
The site investigation found elevated levels of pollutants and concluded
that portions of the Eagle- Picher cleanup had been compromised. The
assessment of health risks found that contamination on the site could pose
carcinogenic risks to workers. The landowners also engaged an engineering
firm to survey their property to confirm the location of the boundary with
the Eagle- Picher site.

The landowners reported experiencing additional health problems since the
October 2000 incident, including heart problems, skin lesions, and
difficulty speaking and breathing while on their property. The landowners
also indicated that contamination on their property has left them on the
brink of bankruptcy. The landowners ceased discussions with a potential
investor in a prison to be built on the property in December 2000, citing
the discovery of a hazardous material release on the Eagle- Picher site.
The landowners also stated that the asphalt plant erected on the property
was never operated because of the discovery of hazardous material.

EPA*s Response to Landowner Concerns about the Eagle- Picher Cleanup

EPA responded to the private landowners* October 10, 2000, incident report
to the National Response Center by referring the incident to EPA Region 6,
which referred the incident to ODEQ. EPA officials explained that when the
National

2 According to a city of Henryetta representative, the landowners
purchased approximately 280 acres in 2000.

Enclosure II

Page 14 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

Response Center receives an incident report, it contacts the appropriate
EPA regional office to determine if immediate response is warranted. EPA
officials explained that events such as train wrecks or airplane crashes
would require immediate response. In this case, EPA determined that the
incident was indicative of a pre- existing condition and did not warrant
immediate response. Region 6 officials referred the report to ODEQ because
state officials are closer to and more familiar with sites in their area.
The director of the Waste Management Division at ODEQ told us that ODEQ
handles incident report referrals on a caseby- case basis and does not
have formal procedures in place for responding to reports. In this case,
ODEQ reviewed sampling data supplied by the landowners* counsel and
determined that the site did not need to be cleaned up to residential
standards, and therefore the level of contamination present did not
justify a cleanup. ODEQ officials telephoned the landowners and explained
its conclusion that the contamination did not require any action. On
December 17, 2002, one of the landowners E- mailed EPA Region 6*s Internet
Comments E- mail address reiterating concerns about contamination
resulting from the Eagle- Picher cleanup. An EPA Region 6 official
responded to this E- mail with a letter sent January 17, 2003, stating
that the concerns raised were the same as, or very similar to, issues EPA
discussed previously with the landowners and their counsel and did not
warrant additional EPA response or action.

From October 2000 through March 2001, the landowners and their counsel
contacted EPA through written correspondence, telephone calls, and Freedom
of Information Act requests seeking information about the Eagle- Picher
cleanup. EPA responded to landowners* written requests for information by
advising the landowners of the cost to provide documents and, when the
cost proved excessive, providing the documents for landowners* counsel to
review at EPA*s offices. EPA officials told us the agency responded to
landowners* concerns appropriately. Although EPA took several months to
respond to some requests for information, EPA explained that delays
resulted from the time required to retrieve documents placed in storage,
review files to locate appropriate documents, and determine a cost
estimate for providing the documents directly to the landowners. For
example, EPA responded to the landowners* December 13, 2000, request for
documents on March 12, 2001, attributing the delay to the time required to
review site documents and determine an estimated cost for identifying and
copying appropriate documents. EPA officials stated that document requests
after the landowners filed suit were treated as discovery requests within
the litigation rather than Freedom of Information Act requests and were
addressed by EPA and Department of Justice attorneys.

Landowners Pursue Litigation against EPA, ODEQ, the City of Henryetta, and
Others

The landowners disagree that EPA was responsive to their concerns about
contamination on their property and assert that EPA*s systemic attitude
has impeded their efforts to obtain information about the cleanup. The
landowners

Enclosure II

Page 15 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

cited unnecessary delays in providing documents and alleged that EPA
attempted to hide the truth about cleanup actions.

On March 16, 2001, the landowners filed suit in federal district court
against numerous defendants, including EPA and the city of Henryetta, the
two defendants that are the focus of this report. Alleging that these
defendants were respectively a former and the current owner, the
landowners sought response costs under CERCLA and an injunction under
CERCLA requiring EPA and the city to carry out further cleanup activities
on the Eagle- Picher site and to clean up the landowners* property. The
landowners also brought several claims under state law, alleging that (1)
EPA had trespassed on their property; 3 (2) the contamination from the
Eagle- Picher site constituted a public nuisance for which EPA and the
city were responsible; (3) the landowners had suffered personal injury
from the contamination on their property originating from the Eagle-
Picher site; and (4) the landowners had suffered economic loss as a result
of the contamination on their property from the Eagle- Picher site.

On February 12, 2002, the landowners, Department of Justice attorneys
representing EPA in the lawsuit, EPA Region 6 officials, and a
congressional staff member met to discuss the litigation. The landowners
proposed settling its litigation for $602 million: $373 million to remedy
alleged contamination on the landowners* property; $100 million to remedy
the alleged failure of the EaglePicher cleanup; $2 million in damages for
trespass, nuisance, and personal injuries; $126 million for economic
losses; and $103,000 in expenses incurred for two environmental
engineering studies, a property survey, laboratory tests on soil and water
samples, telephone calls, travel to EPA Region 6 and EPA headquarters, and
medical expenses. The landowners later revised this figure to $28 million,
citing a desire to compromise and save taxpayer dollars. Following this
meeting, Justice wrote the landowners* counsel on March 19, 2002,

and stated that it would not settle. Justice stated in its letter that EPA
did a good job in cleaning up the Eagle- Picher site and that Justice has
not seen any evidence that EPA*s work harmed the landowners* property or
that the cleanup action failed. Justice also stated that no contaminated
wastes were placed in the coal sedimentation pond or on the landowners*
property. With regard to the landowners* claims for nuisance, economic
losses, and medical expenses, Justice stated that the landowners failed to
follow the appropriate procedure for filing tort claims against the United
States. 4 Regarding their claims under CERCLA, Justice asserted that the
landowners had not established that they had already incurred response
costs or that any such costs were necessary. Justice also noted that the
only way for the landowners to recover all of their costs would be to show
that they were *innocent landowners* under CERCLA, meaning among other
things that they exercised due diligence in inquiring into the condition
of the

3 Specifically, the landowners alleged that EPA had dumped both hazardous
and nonhazardous substances on their property, moved and used soil on
their property, and erected signs on their property, all without
permission. 4 The landowners have not pursued these claims.

Enclosure II

Page 16 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

property before they bought it and due care with respect to hazardous
substances that may be present on their property.

On September 30, 2002, the district court dismissed the landowners* suit
against EPA and the city. 5 The court held that the landowners were PRPs
for the contamination on their property, and that applicable CERCLA case
law generally prohibited PRPs from recovering response costs. 6 Although
"innocent landowners" may bring cost recovery actions under CERCLA, the
court noted that the landowners did not argue that they qualified for this
exception to the general rule prohibiting cost recovery actions by PRPs. 7
Because the landowners could not seek any response costs from EPA and the
city, the court did not decide whether the landowners had in fact incurred
such response costs. Because no federal claims remained, the court
accordingly dismissed the state law claims against the city, although it
noted that the landowners could re- file these claims in state court. In
an earlier ruling, the district court also rejected the landowners attempt
to obtain an injunction, holding that because CERCLA does not require EPA
to take remedial action, courts lack the power to order it to do so. 8 The
earlier ruling also dismissed the landowners* state law claims against the
United States, holding that the landowners had failed to follow required
administrative procedures in filing such claims against the United States.

The landowners have appealed that part of the district court*s order
dismissing their claim for response costs under CERCLA. The landowners
contend among other things that they are not responsible parties, that in
any event they qualify as innocent landowners, and that applicable CERCLA
case law does not prohibit them from recovering costs from EPA and the
city. The landowners have hired new counsel to pursue the appeal, which is
pending. City of Henryetta Attempts to Condemn a Portion of Private
Property

Neighboring the Eagle- Picher Site

Because the landowners will not allow the city of Henryetta to conduct
maintenance on the portion of the cleanup that occurred on their property,
the city is currently attempting to condemn about 12 acres bordering the
Eagle- Picher site. A representative of the city of Henryetta explained
that city officials attempted to conduct maintenance on the landowners*
property but were told

5 Young v. United States, No. CIV- 01- 155- S (E. D. Okla. Sept. 30,
2002). 6 The court also noted that the landowners could have sought
contribution from EPA and the city for the landowners* cleanup costs had
the landowners themselves been subject to a cleanup order or a cost
recovery action under CERCLA. However, neither circumstance was present in
this case. 7 To be considered an innocent owner, owners must establish
that at the time of acquiring the contaminated property they exercised due
diligence in determining whether the property was contaminated, and that
since acquiring the property they have exercised due care with respect to
any hazardous substances present. 42 U. S. C. S:S: 9601( 35), 9607; see
Sinclair Oil Corp. v. Dymon, Inc., 988 F. Supp. 1394, 1397 (D. Kan. 1997).
8 In addition, the earlier ruling held that to the extent EPA was not
negligent, CERCLA specifically exempted it from liability under the theory
that it had arranged for the disposal of hazardous substances on the
landowners* property as a result of EPA*s cleanup activities.

Enclosure II

Page 17 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

they were trespassing and were asked to leave the property. An EPA
official stated that surface water is cutting into a gully along the
drainage pipe that terminates into a natural drainage pathway on the
landowners* property. This gully needs to be repaired because, if left
unchecked, it could eventually damage the drainage pipe or cut into the
hazardous substances encapsulated on the site.

Enclosure III

Page 18 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site Comments from the Environmental Protection Agency

Enclosure IV

Page 19 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site Comments from Private Landowners

Enclosure IV

Page 20 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

Enclosure IV

Page 21 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

Enclosure IV

Page 22 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

Enclosure IV

Page 23 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site GAO Comments

The following are GAO*s comments on the private landowners* undated
letter, received by GAO on August 26, 2003.

1. Determining the cause of contamination associated with the cleanup was
beyond the scope of our review. We note, however, that the cause of
contamination on the landowners* property is not clear. As our report
states, our review of EPA*s records shows that the Eagle- Picher site and
the landowners* property were used for a number of industrial activities.
Federal and state officials told us that at least some contamination was
present on the landowners* property before EPA conducted its removal
action. Therefore, our report states that determining the cause of current
contamination on either property would be problematic.

2. As we reported, in addition to EPA*s Action Memorandum, EPA*s
contractor, Ecology & Environment, Inc., prepared a Removal Site
Assessment Report that included a Conceptual Closure Design & Work Plan
for the removal action. This document provided the conceptual design for
the removal action. We agree that BOR did not submit any design plans.
However, EPA contracted with BOR to conduct the engineering work to
implement EPA*s design plans for the removal action, not to provide
additional design plans.

The landowners assume that we spoke to many workers about their accounts
of work performed during the cleanup and that we found inconsistencies
between these accounts and EPA*s plans for the site. While we reviewed the
affidavits obtained by the landowners from two workers who performed work
on the site, it was beyond the scope of our review to interview every
worker associated with EPA*s cleanup. EPA officials and EPA contractors
told us that the actions taken during the cleanup were consistent with the
design plan.

3. The landowners assert that the drainage system installed by EPA and its
contractors was installed on both the Eagle- Picher site and the
landowners* property, included a drainage pipe that was installed
backwards, and was designed to transport and deposit contaminated material
onto their property. Our report states, and we have explained our role and
scope on this review to the landowners on numerous occasions, that we did
not evaluate the sufficiency or effectiveness of EPA*s actions during the
cleanup. However, we note that EPA obtained an agreement with the then-
current owner of the adjacent property north of the Eagle- Picher site
that allowed EPA to access the property to conduct a range of work during
the removal action, including installing a portion of the drainage system.
EPA officials told us that a portion of the drainage system was installed
on the adjacent property to direct drainage around the consolidated waste
area on the Eagle- Picher site and into natural gullies located on the
adjacent property. Regarding the installation of the drainage pipe, we
observed the drainage pipe during our site visit, but were unable to
determine whether the pipe was installed backwards or not. We disagree
with the landowners* assertion

Enclosure IV

Page 24 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

that the drainage system was designed to transport and deposit
contaminated material onto the landowners* property. According to BOR*s
Removal Action Report, drainage control measures were constructed to
significantly minimize the potential for off- site migration of
contaminants by capturing and redirecting water on the site. We note that
EPA and city of Henryetta officials told us the drainage area on the
landowners* property needed maintenance, and that city workers were
refused access to the landowners* property. We further note that the
removal action purported to mitigate migration of contaminants, not to
prevent any migration of contaminants.

The landowners also assert that the party responsible for designing and
installing the drainage system was negligent or grossly incompetent. As
our report states, because the landowners are currently involved in
litigation against EPA and others, we did not assess the sufficiency of
the cleanup or determine any liabilities associated with the cleanup.

4. Regarding the landowners* claims of trespass, we note that EPA obtained
an access agreement signed by the former owner on January 20, 1997. The
agreement authorized EPA to conduct a range of activities on the property,
including the use of mechanical equipment, removal and replacement of
contaminated material, and other actions necessary to mitigate releases or
threats of releases from the property. With regard to whether hazardous
material was placed on the adjacent property during the cleanup, officials
from EPA, BOR, and Environmental Chemical Corporation (BOR*s contractor)
have all stated that, although EPA*s initial plans included placing
hazardous waste into the pond as an option, EPA and its contractors did
not proceed with this plan. Rather, EPA and its contractors state that
uncontaminated debris such as cement blocks were placed into the pond,
along with clean soil.

Regarding the landowners* assumption that we conducted our own sampling
and testing to ascertain the truth about what was deposited into the pond
located on both properties, as we stated in comments 1 and 3, determining
the cause of contamination or any liabilities associated with the cleanup
was beyond the scope of our review.

5. We disagree with the landowners* characterization of our report
statements regarding ODEQ*s response to the landowners* hazardous waste
incident report. Our report does not state that ODEQ made the
determination that the levels of

contamination did not warrant further action by EPA because EPA raised the
required levels for action in 2001. Rather, our report states that ODEQ
reviewed sampling data supplied by the landowners* counsel and determined
that the site did not need to be cleaned up to residential standards, and
therefore the level of contamination present did not justify a cleanup.
While we reviewed the landowners* environmental studies, it was beyond the
scope of our review to determine the cause of contamination or any
liabilities associated with EPA*s removal action.

Enclosure IV

Page 25 GAO- 03- 1051R EPA*s Cleanup of the Eagle- Picher Henryetta
Hazardous Waste Site

Based on our observations, EPA carried out its planned activities to
remove contamination from residential and high- access areas and to
mitigate exposure to contaminated material from the Eagle- Picher site.
Federal, state, and local officials told us that EPA*s removal action met
its objectives. We note that the removal action did not purport to
eliminate hazardous material at the EaglePicher

site or to remove contamination from the landowners* property because the
property was not a residential property.

6. We have no response to the landowners* comments regarding litigation
against EPA and others. As stated in our report, we present the results of
litigation but because the landowners* litigation is ongoing, we did not
assess the merits of the landowners* litigation against EPA. We state,
however, that final judgment regarding the merits of the landowners* case
against EPA is reserved for the court. (360336)

This is a work of the U. S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

GAO s Mission The General Accounting Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting its
constitutional

responsibilities and to help improve the performance and accountability of
the federal government for the American people. GAO examines the use of
public funds; evaluates federal programs and policies; and provides
analyses, recommendations, and other assistance to help Congress make
informed oversight, policy, and funding decisions. GAO s commitment to
good government is reflected in its core values of accountability,
integrity, and reliability. The fastest and easiest way to obtain copies
of GAO documents at no cost is

through the Internet. GAO s Web site ( www. gao. gov) contains abstracts
and full- text files of current reports and testimony and an expanding
archive of older products. The Web site features a search engine to help
you locate documents using key words and phrases. You can print these
documents in their entirety,

including charts and other graphics. Each day, GAO issues a list of newly
released reports, testimony, and correspondence. GAO posts this list,
known as Today s Reports, on its Web site daily. The list contains links
to the full- text document files. To have GAO e- mail this list to you
every afternoon, go to www. gao. gov and select Subscribe to e- mail
alerts under the Order GAO Products heading.

The first copy of each printed report is free. Additional copies are $ 2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:

U. S. General Accounting Office 441 G Street NW, Room LM Washington, D. C.
20548

To order by Phone: Voice: ( 202) 512- 6000 TDD: ( 202) 512- 2537 Fax: (
202) 512- 6061

Contact: Web site: www. gao. gov/ fraudnet/ fraudnet. htm E- mail:
fraudnet@ gao. gov Automated answering system: ( 800) 424- 5454 or ( 202)
512- 7470 Jeff Nelligan, Managing Director, NelliganJ@ gao. gov ( 202)
512- 4800 U. S. General Accounting Office, 441 G Street NW, Room 7149
Washington, D. C. 20548 Obtaining Copies of

GAO Reports and Testimony Order by Mail or Phone To Report Fraud, Waste,
and Abuse in Federal Programs Public Affairs
*** End of document. ***