State, EPA Dispute Details of McColl Dump Contract

The federal Environmental Protection Agency told state officials that it “wasn’t appropriate” to continue paying $315,000 a month to contractors hired to clean up the McColl hazardous waste dump after a court order delayed the project, an EPA official said Friday.

The decision to continue the contract eventually cost the state $1.4 million and was one of the items singled out for the most criticism in a scathing review of the state’s toxics cleanup efforts issued by the state auditor Thursday.

Paula Bisson, the EPA’s acting chief for federal Superfund projects in California, said Friday the agency has serious doubts whether the environmental impact report required by the court order can be completed quickly enough to justify keeping the contractors, Canonie Engineers Inc. and Radian Corp., on retainer until the cleanup is completed.

Moreover, she said, EPA officials were certain that the new environmental studies would change the eventual scope of the cleanup enough to require the project to be put out to bid again.

The EPA shared some of those concerns with the state Department of Health Services in two letters in August and October, urging the state to reduce the amount being paid on the contract and eventually announcing plans to terminate federal funding in October of last year.

Yet the state health department, which officially manages the cleanup contract with 90% reimbursement from the federal government, contended Thursday in a response to state auditors that the EPA “fully supported” continuation of the contract as long as money was available. State health officials told auditors that the EPA’s decision to back out was prompted by a dry-up in the federal Superfund program.

The state auditor said the health department should have terminated the cleanup contract in June, a month after a Superior Court judge ruled that a new environmental impact report would be required before wastes from the Fullerton World War II-era dump could be transported to Santa Barbara County.

$315,000 a Month

Instead, the state paid an estimated $315,000 per month in delay and standby costs, the auditors said, when it was certain that a new environmental report would take at least a year.

Bisson denied that the Superfund funding shortfall had anything to do with the EPA’s decision to terminate funding for the McColl contract--a decision that caused the state to cancel the contract almost immediately.

“The funding issue was not a concern to us. It was the advisability of keeping a contractor on standby when it was fairly apparent that we could never use them to do the work,” she said.

Yet federal officials were powerless to cancel the contract unilaterally because, under Superfund regulations, it was the state’s contract, Bisson said. “It’s a very difficult situation to be in. We can’t tell them to stop, or don’t do this, or we don’t think it’s right because it’s their contract. What we can do is cut off our money, and say we won’t pay any more.”

Foremost Priority

In its written response to the auditor general, the Department of Health Services said the decision was made to keep the contractors on board while the state decided whether to appeal the court order. “Foremost in the priorities” of the state was to avoid any delay in starting the cleanup, and it was thought that keeping the contract in force could help minimize delay once all the administrative hurdles were cleared, the department said.

But it also cited a third reason for continuing the contract--that the EPA allegedly agreed.

“EPA agreed with the decision to continue the contracts by participating in their 90% share of the cost,” the department said. “The EPA decision to terminate in October, 1985, was precipitated by a shortage of Superfund money caused by the absence of funding authorized by Congress. EPA fully supported the continuation as long as there were funds available.”

Bill Ihle, spokesman for the Health Services Department, said Friday that state officials still believe the funding issue was “the underlying reason” for EPA’s decision to back out of the McColl contract.

“We don’t think it was as much that they had problems with the program as the fact that they are simply running out of money,” he said, noting that the agency had already asked the state to take over costs on a Monterey Park landfill cleanup project because of funding shortfalls.

Possible Misunderstanding

Bisson said: “It’s possible the state misunderstood what our specific reasoning was in terms of not continuing with the contract.”

Spokesmen for Canonie Engineers said they would have no comment on the auditor general’s report until they have reviewed it more thoroughly.

But Rep. William E. Dannemeyer (R-Fullerton) said Friday that it is “obvious” there are “political ramifications” to the report.

“I note that the auditor general works for a Democrat-controlled state Legislature, and the inspector general is not inclined to make the Administration of a Republican governor look too good,” he said.

“In July of last year when the restraining order was issued by the court, what was the state to do? Assume that an appeal would not be successful? Or terminate the contract at once . . . and risk having egg on its face?” Dannemeyer said. “I think they did the prudent thing, to see whether the requirement for this unnecessary second EIR (environmental impact report) could be eliminated; it didn’t work out that way, and when that judgment became known in the fall of 1985, the contract was terminated.”