Consulting Practice of Paul R. Amman, M.S.

Analyses of Past and Future Costs

In hazardous waste insurance cases and other contexts, it is frequently important to determine how much money was spent to deal with specific pollution problems, such as cleanup of an abandoned hazardous waste site.   The development of such information often requires detailed analysis and sound engineering judgment, both of which are critical to recovering past costs from insurers.

Historical costs are usually found in existing documentation.  However, it is sometimes very difficult to determine whether a past cost is relevant to the issue at hand, or whether the cost information is incomplete.  In such situations, detailed knowledge of engineering costs and practices proves extremely useful to making correct, defensible calculations.  Mr. Ammann has examined past cost information related to many Superfund sites and has helped to assemble appropriate documentation, including realistic engineering cost estimates to fill gaps in available information.

Estimation of future costs poses unique challenges, as the amount of information may vary over a wide range, depending on many different variables that are not yet known with certainty.  Engineering and economic techniques are useful in projecting investment and annual operating and maintenance costs for many years in the future.  However, multiple issues may affect future costs, including changes in the speed and direction of migrating plumes of contaminants; possible alterations in future regulatory requirements; unanticipated failure of control measures; and development of new technologies, which may or may not work as anticipated.  Mr. Ammann has helped to quantify these uncertainties so they can be factored into probabilistic estimates of future cleanup costs.

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Engineering Analysis Related to Economic Benefit Analyses

When a federal or state environmental agency or a citizen’s group sues a corporate or municipal entity regarding alleged noncompliance with environmental requirements, the plaintiff often attempts to convince a court to require that the alleged violator disgorge the amount of “economic benefit” that it obtained due to the assumed violations.  Various issues arise in the context of calculating economic benefit, including many that may involve engineering and cost analysis.

Together with individual economists, Mr. Ammann has worked as a consulting or testifying expert in approximately thirty economic benefit cases.  He has testified both in depositions and at trials. 

Typically, his first step is to analyze any reported data indicating that exceedances of any permit parameters have occurred.  This is an important step because many companies report emission or effluent measurement data without evaluating underlying causes of the alleged violations.  Identifying causation is the second step that Mr. Ammann takes.  Sometimes this step leads to the identification of multiple factors that the alleged violator should have addressed in a timely manner to have attained and/or maintained compliance with environmental requirements.

The third step is to ascertain the pollution control measures that the defendant actually undertook during the period of noncompliance to mitigate any exceedances.  It is important to identify the capital costs, one-time expenses, and annually recurring operating and maintain costs that were taken during this time period to address pollution control problems, and to determine whether these were the least cost means of compliance.  If they were not, this might be a factor in mitigating some of the alleged economic benefit.

The next step is to determine what additional compliance measures the alleged violator should have undertaken to avoid the occurrence of historical exceedances.  Not all of these compliance measures may have been needed at the beginning of the period of noncompliance.  The actual dates when specific pieces of equipment should have been installed can have an important effect on the economic benefit results.  Also, some physical measures that should have been undertaken may have very long useful lives, another factor that fits into a sound analysis of economic benefit.

Mr. Ammann’s work in economic benefit cases started in the mid-1980s and continues to the present time.  His contributions have been particularly important in complex cases, where there are many different pollution control problems.  He has often brought significant creativity to these cases, sometimes identifying least-cost, technical solutions that were overlooked by in-house engineering professionals.  For example, in one case where the installation of very expensive additional pollution control equipment was contemplated, Mr. Ammann identified a physical change in the metal refining process that would eliminated the pollution control problem at very little incremental cost.

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Compliance with the National Contingency Plan

The federal government’s cleanup of Superfund sites includes actions that failed to meet the requirements of the National Contingency Plan (NCP). According to CERCLA Section 107, EPA and the States can recover “all costs of removal or remedial action … not inconsistent with the NCP.”  Courts have treated the NCP as a framework for determining the reasonableness of federal, state, and private party response actions.

The Potentially Responsible Party (PRP) in a cost recovery action bears the burden of showing that response costs were inconsistent with the provisions of the NCP.  A PRP must show that elements of the response action were arbitrary and capricious.  For example, EPA may have failed to consider an important aspect of the alleged problem, relied on factors not identified by Congress, not have undertaken cost-effective remedies, and/or not have provided appropriate cost documentation.  Such situations may lead to significant disallowances of past costs that EPA or some other entity is trying to recover and whatever future costs may result from ill-conceived efforts to cleanup a given site.

Mr. Ammann has reviewed cost data for dozens of Superfund sites and has evaluated the costs of remedial actions that are either proposed, underway, or completed to determine whether they were or are justified and have been expended consistent with the NCP.  In many of these matters, he completed documented reports supporting his conclusions and opinions.  Some of these reports have led to significant reductions in cost recovery by governmental parties.

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