EVERY TIME it rains, an industrial landfill near Niagara Falls turns red with leaking chemicals. One of those chemicals is called dioxin; three ounces of it, properly distributed, would destroy the entire population of New York City. There are two thousand pounds of dioxin in the landfill.

There are other dumps. Only a few miles away, near a barren field called the Love Canal, 240 families had to be evacuated last year when state officials found enough dioxin buried beneath their homes to kill half the earth's population. Several other industrial dumpsites in New York may also be feeding the chemical into nearby rivers; and from Maine to Arkansas to California and Oregon, dioxin has left a trail of sickness, fetal miscarriages and death wherever it has entered the environment.

Yet dioxin is only one of hundreds of poisonous chemicals that have been seeping out of more than 40,000 industrial dumpsites across the nation And, although many of the exact sites and chemicals have already been identified by the Environmental Protection Agency (EPA), in the vast majority of cases the federal agency has done nothing to stop the pollution. Instead, reports one EPA official, "There's been a cover-up."

Internal memos and interviews with EPA officials reveal that pressure from President Carter and from regional EPA offices has led to sharp curtailments of the agency's never very energetic enforcement of pollution laws. The chief casualty of this political pressure is the Hazardous Waste Management Division, which has been unable to prevent some 80 billion pounds of dangerous industrial by-products from contaminating reservoirs, drinking wells and rivers. One reason for this colossal failure is the division's miniscule funding, which amounts to less than 1 per cent of the total EPA budget--and is being cut even more by the White House Office of Management and Budget (OMB).

OMB environment chief James Tozzi admits that the fledgling EPA program will remain a low priority and that "there'll be no big changes" in the hazardous waste budget until "all the various options are weighed." EPA official Hugh Kaufman observes, "The president wants to hold down the budget. It doesn't come cheap, saving people's lives."

The EPA in Washington is also feeling the pressure of power-jealous bureaucrats in the agency's regional offices. When federal EPA officials began investigating complaints of 300,000 leaking barrels of pesticides in Toone, Tenn.--where six carcinogens were later found in drinking water at 2400 times the "safe" level--regional EPA officials refused to cooperate. "I'm not going to tell you anything more about this," said one, who warned, "Listen...you people up there better stay out of this. I mean, I'm telling your office to stay out of this altogether." It wasn't until the Washington Post published a front page expose on Toone that the EPA changed its mind and began to purify drinking water supplies which, in the words of one congressman, smelled "like shoe polish."

Jurisdictional jealousy, while annoying, is harmless--unless the regional offices are not doing their jobs. Internal memos state that regional offices have repeatedly ignored reports of leaking industrial dumpsites, and have allowed toxic chemicals to pollute water and food supplies for thousands of people without taking any action.

One dumpsite in Seymour, Ind., is known to have leaked cyanide for years, poisoning wildlife and water, while the regional office sat by idly; when the federal EPA ordered a $4 million cleanup, regional officials "cursed us up, down and sideways," Kaufman says, adding, "And when we asked them what they were going to do about those sites in their regions that were supposedly worse than Seymour, they said, 'Nothing, and stay out of it."'

FEDERAL EPA officials, naturally, have demanded an explanation for this insubordination. One regional official expressed an "extreme reluctance" to expose his employees to the dangerous chemicals in the dumpsites. Another employee complained of "a large backlog of work" and lack of manpower and lab facilities. And a third official--this one a regional director--stressed that "it is important to pursue (only) cases that the agency can win" in court and ignore the less blatant violations of environmental laws.

Internal memos indicate that a more likely reason for EPA inaction may be incompetence. One federal official who toured a regional office reported, "It seemed as if no one really knew what they should be doing and how to accomplish it." The regional staff seemed unable to gather basic information on dumpsites, sample hazardous materials, or even follow elementary safety precautions; several staff members were injured and hospitalized because of poor sampling methods. To make matters worse, "material documenting hazardous conditions at waste facilities have been sitting in files for years," says branch chief Kaufman. "It would look very bad for these officials if they came to light now," he adds.

Regional officials are not the only ones covering up the problem. According to Rep. Albert Gore (D-Tenn.), EPA Assistant Administrator Thomas Jorling "more or less ordered the regional people to 'look the other way"' when they received complaints about chemical pollution. Hamstrung by a subsistence budget and reluctant to step on the sensitive toes of its regional offices, top administrators have quietly suspended all action on chemical dumps despite evidence that 90 per cent of the nation's 50,000 hazardous waste desposal sites are leaking. "Because of pressure from the White House to fight inflation," EPA branch chief William Sanjour reports, "we were directed to avoid regulating hazardous waste from the oil and gas industry, electric power companies, and other large industries. We were told to do things which we knew were not right. We were required to write public documents which we knew were misleading."

This political arm-twisting has turned the EPA's regulatory efforts into, as one congressman put it, "a complete joke." Top agency officials have exempted from regulation more than half of all hazardous wastes--some tens of thousands of substances known to cause birth defects, mutations, radiation poisoning and infectious diseases. Branch chief Sanjour observes, "Whereas previously these wastes may have been disposed of inadequately and secretly, they can soon (thanks to a clean bill of health from EPA) be disposed of inadequately and openly." He concludes, "The actions taken by EPA are, quite simply, illegal."

EPA's misdeeds, fortunately, may not go completely unchecked. Assistant Administrator Jorling, whom both Kaufman and Sanjour have targeted for many of the agency's "illegal" policies, resigned in September after congressional hearings showed that he had condoned, if not ordered, the sudden cutbacks on EPA enforcement. His successor, Christopher Beck, "certainly talks like he's aggressive," says EPA official Steven Caldwell, who adds, "He has a good reputation for being an action-oriented, go-getter type."

But it is as yet uncertain whether Beck can capitalize on his aggressive image and persuade regional offices to remedy the most flagrant instances of chemical pollution. Until he produces some substantive improvements, Americans can only hope that, if there is a hazardous waste dump in their neighborhood, it will not spring a leak.