On behalf of the Environmental Defense Fund (EDF), I appreciate this opportunity to present our views on S. 1090, the "Superfund Program Completion Act of 1999." EDF has been actively involved in the Superfund reauthorization process, serving on EPA's NACEPT Committee on Superfund and on the National Commission on Superfund, and testifying repeatedly on Superfund during the last several Congresses.
We recognize that this bill differs significantly from earlier Superfund reauthorization bills introduced in this Committee. Unlike its predecessors, S.1090 does not contain radical changes to current provisions on cleanup standards and natural resource damages - changes that we believe would have greatly weakened cleanups, gutted the polluter-pays liability system, and profoundly hampered recovery for natural resource damages.
Nonetheless, S.1090 contains numerous objectionable provisions, compelling us to oppose it strongly. Key problems include:
sharp reductions in cleanup resources authorized, even as EPA's workload is expanded by the allocation process and other provisions;
dramatic slowdowns in the pace and quality of cleanups that are likely to result from the superficially innocuous fair-share allocation provisions;
the preferential status of funds for liability relief compared to cleanup;
the numerous holes in the federal safety net for cleanups, including the unwarranted cap on the number of sites, the requirement that sites can be listed only upon a governor's request, and restrictions on federal authority at state-cleanups sites even where problems remain; and
over-breadth of some of the liability limitations.
Before detailing the problems with the bill, I must address the related issue of Superfund's polluter-pays taxes. It is our understanding that the sponsors of this bill do not intend to introduce companion legislation to re-impose the taxes in conjunction with this bill, and indeed will oppose re-imposition of the taxes absent radical revisions to Superfund.
In our view, this bill must be accompanied by companion legislation that re- institutes Superfund's polluter-pays taxes. In simple terms, it's time for the $4-million- plus daily tax holiday for industry to end. Since the taxes lapsed at the end of 1995, industry has benefited to the tune of more than $5 billion in avoided taxation.\1\
\1\ This estimate is on the low side, as economic expansion in the years since 1995 would have produced tax revenues higher than the approximately $1.5 billion collected in 1995.
Superfund embodies the polluter-pays principle - which is overwhelmingly supported by the American public - in two distinct ways: in its liability provisions, under which responsible parties must conduct cleanups themselves or pay for EPA's cleanup activities, and in its tax provisions. The taxes cover what the liability system does not: sites at which responsible parties cannot be identified or lack the resources needed for cleanups, and certain broader programmatic activities.
But under S.1090, funds for cleanup operations would be appropriated from general revenues, not from the polluter-pays taxes [SPCA 401 (a), amending CERCLA 111 (p.89)].\2\ We oppose this fundamental shift in the nation's dumpsite-cleanup strategy for both on principle and for pragmatic reasons. As a matter of principle, these- taxes should be paid by groups with a closer relationship to the problem, namely industry, rather than individuals with a less-direct relationship, namely the general public. This is rough justice, to be sure, but rough justice is better than none.
\2\ In addition, to the extent that cost-recovery actions produce amounts in the Trust Fund in excess of specified levels, those funds can be used for cleanups, but without any concomitant increase the annual authorizations [SPCA 401 (a), amending CERCLA 111 (h), p.98].
From a pragmatic perspective, the existence of a dedicated stream of funds increases the odds that appropriators will spend those funds (at least most of them) for their intended purpose. It is true that, historically, appropriations have not kept pace with the level of tax revenues generated - but those accumulated funds have been financing the program for the last four years since expiration of the tax, thus fulfilling the original purpose of their collection.
Additional concerns with the bill are set forth below.\3\
\3\ All references to the bill are to the version introduced on May 20, 1999, headed O\TOM\TOM99.310, as downloaded from www.senate.gov/~epw/ on May 21, 1999.
I. Money Matters: Declining Authorizations Will Retard Cleanups
Far from assuring that additional resources will be available so that EPA can accelerate or even maintain the rate of cleanup completions while meeting the new demands imposed by S. 1090,\4\ the bill does precisely the opposite: it sharply ratchets down authorizations, beginning with fiscal year 2000 [SPCA 401 (a), amending CERCLA 111(h), p.98]. The exact degree of reduction is difficult to ascertain, because the bill creates new categories for various kinds of expenditures. Nonetheless, it is clear that the amount of funding authorized for FY2000 is substantially below that actually appropriated for FY1999. In addition, authorizations decline by another $100 million by 2004 (and inflation will reduce the real-dollar values even further).
\4\ These include conducting allocations at hundreds of sites [SPCA 303(a), adding CERCLA 122(n), p.76]; revising the National Priorities List to address the "parcelization" problem for contiguous properties [SPCA 102(b), adding CERCLA 105(h), p. 181; and reviewing the CERCLIS database of potentially contaminated sites within 2 years to determine which sites should be listed as NPL sites [SPCA 202, amending CERCLA 105(b)(1), p.381.
Ratcheting down authorizations at this point in the Superfund program is insupportable. There is no basis for believing that EPA will need less money to conduct cleanups in the next five fiscal years than it does in this one. While construction is complete for about 600 Superfund sites,\5\ there are another 700 sites still to be completed.\6\ It is my understanding from informal discussions with EPA staff that the agency expects to continue construction-completions at the same pace for the next five years, namely about 85 per year - unless, of course, funds are curtailed.
\5\ There had been 599 construction completions as of 4123199. See http://www.epa.gov/superfund/sites/npl/nplfin.htm (as of 5/21/99).
\6\ As of May 18, 1999, there were 1211 sites on the National Priorities List of Superfund Sites, with several dozen additional proposed sites. See http://www.epa.gov/superfund/sites/npl/nplfin.htm (as of 5/21/99).
For years, critics of the Superfund program have bemoaned the slow pace of cleanups. Now that progress is faster,\7\ the sponsors of this bill propose to curtail sharply the availability of the resources needed to sustain that progress. As a result, communities that have long awaited completion of nearby Superfund cleanups will have to wait longer still.
\7\ The faster rate of progress is a silver lining with some serious clouds on the horizon. Anecdotal reports suggest that EPA's eagerness to achieve a faster rate of construction completions has prompted the agency to rely heavily - unduly so - on containment-based rather than treatment-based remedies. Indeed, it is our understanding that only about 30% of current remedies involve treatment. While treatment options are not always available, they are strongly preferable where they are feasible, since containment remedies threaten health and the environment if monitoring and maintenance is allowed to lapse. Moreover, containment remedies inevitably hamper communities' flexibility to change land use over time as community needs change, since the containment restrictions must continue to be observed.
This makes no sense.
Moreover, while it is true that there are fewer sites in Superfund's pipeline overall for future cleanup than was recently the case, the bill simply ignores the fact that - correspondingly - there are more sites now in the operation and maintenance phase. A recent article by Dr. Joel Hirshhorn (copy appended) points out that EPA to date has done a miserable job in conducting the statutorily required five-year reviews of sites at which some contaminants are left in place.\8\ Only by this kind of active oversight can we possibly hope to know if remedies are working, and to have advance warning where they aren't.
\8\ Hirshhorn, "EPA's Five-Year Review of Superfund Sites Needs Higher Priority," Environment Reporter, Vol. 29, No. 42 (Feb. 26, 1999). Dr. Hirshhorn has had extensive hands-on experience with the Superfund program through many years of service as a Technical Adviser to communities and was previously with the Office of Technology Assessment.
In other words, even if EPA were to need fewer resources for construction- completions over the next five years - an assumption that is by no means warranted - the agency will clearly need more resources to conduct five-year reviews, and to take follow-up action where needed.
It is no secret that the authors of this bill view cleanup of highly contaminated hazardous waste dumps as a state responsibility, not a federal one, and are moving to dump cleanups back on the states - regardless of whether all states have, and will continue to have, the resources and inclination to clean up highly contaminated sites. In our view, this approach elevates theoretical federalism over protection of health and the environment, and we oppose it strongly. Dumping Superfund responsibilities on states that may currently or in the future lack the resources or aptitude to provide effective cleanups is as unconscionable as dumping wastes into the environment in the first place.
Moreover, down-sloping authorizations are unnecessary. Authorizations provide a ceiling, not a floor. If it turns out during the next five years that fewer funds are needed than were authorized, the Appropriations Committee will be able to make mid- course corrections. As programs seldom receive the full amount of appropriations that are authorized, this is hardly a-revolutionary concept.
11. Money Matters, Part 2: Preferential Treatment for Liability Relief over Cleanups
To add insult to injury, S.1090 provides that funds for liability relief get preferential treatment and that inability to finance liability relief at a site limits EPA's ability to order additional cleanup at that site [SPCA 303(a), adding CERCLA 122(o)(4)(B), p.80 and (p)(2)(B), p.82]. Specifically, liability-relief funds tap the remaining balance in the Trust Fund from the accumulated reserves of the now-expired taxes, while funds for cleanups come from general revenues [SPCA 401 (a), amending CERCLA 111(a) p.90 and 111 (h), p.98].
Moreover, while EPA is obliged to spend funds reimbursing polluters for all costs attributable to a party whose liability is limited [SPCA 303(a), adding CERCLA 122(p)(2)(J)(ii), p.88], there is no corresponding obligation to spend one thin dime on actual cleanups. And because there is no "fireball" between funds for paybacks and funds for cleanups, all of the moneys in the Superfund could be exhausted on liability-relief funds, leaving none for actual cleanups, oversight, and enforcement by EPA, as well as vitiating programs for Technical Assistance Grants.
Finally, S.1090 contains extremely confusing language that could readily be interpreted to require EPA to reimburse polluters for work they have already agreed to do - an unwarranted windfall. Specifically, the bill provides that a "judicially-approved consent decree or settlement shall identify the total statutory orphan share owing for a facility'' if the decree or settlement covers the last stages of the cleanup [SPCA 303(a), adding CERCLA 122(o)(4), p. 80 (italics added)].
During discussions with majority staff, we were told that it is not the sponsors' intent to re-open any existing settlements. We concur that this bill should let "bygones be bygones" for both fiscal and practical reasons, as generally occurs in new legislation. However, we are far from convinced that the language now in the bill achieves that objective. To the contrary, the use of the words "total" and "facility" suggest that before the final settlement, EPA must go back, determine how much the statutory orphan share would have been for all the other stages of the cleanup, and deduct that from the amounts owed by the polluters in the final settlement. This approach would be a logistical nightmare, as well as a huge drain on program resources. It is imperative that this language be clarified to avoid such an outcome.
III. A Cure Worse than the Disease: How the Allocation System Will Degrade the Quality and Pace of Cleanups.
Although a fair-share allocation system sounds innocuous, the approach taken in S. 1090 is likely to result in a dramatic curtailment in the pace of cleanup progress - and in the quality of cleanups as well. This somewhat counter-intuitive result will occur for the following reasons.
Most overtly, the bill expressly bars issuance of cleanup orders where EPA cannot pay the orphan share when required to do so [SPCA 303, adding CERCLA 122(p)(2)(B), p.82]. In other words, if liability-relief funds run short, cleanups can't be completed. This approach is simply unacceptable. There is nothing "fair share" about a system that holds completion of cleanups hostage to the availability of liability- relief funds - it just punishes communities that have waited completion of cleanups for far too long already.
Moreover, by replacing joint and several liability with a "fair share" system, and simultaneously cutting the authorization, the bill leaves the agency with a Hobson's choice among three unappealing alternatives: (i) EPA can pay for cleanups itself - until it runs out of funding for that year; (ii) EPA can enter into consent decrees for cleanups - giving polluters leverage to insist on cheaper, containment-based remedies rather than treatment-based remedies that offer superior long-term protection but have a higher initial price-tag, or (iii) EPA can issue unilateral administrative orders to polluters that require them to carry out a cleanup - but the prior experience suggests that unwilling parties do a poor job, require extensive oversight, and drag their heels. None of these approaches achieves environmentally sound outcomes.
In addition, S.1090 could substantially delay cleanups for which no final settlement has yet been adopted. Under the bill, a party's statutory orphan share must be estimated before a settlement can be adopted [SPCA 303(a), adding CERCLA 122(p)(2)(K), p.89]. It is not at all clear how these estimates are to relate to the allocations required under section 122(n) (as added by SPCA 303(a), p.76). If the estimate must be based on the allocation, substantial delays will arise. This is because the allocation itself will take quite a while, particularly for sites with a large number of parties. Each party will have to be contacted (including any de minimis parties or others who have long since received settlements), and directed to gather and submit their records (which is certain to raise the ire of parties who have already entered into settlements). That information will have to be evaluated and the allocation prepared. Moreover, polluters will have an incentive to identify as many additional potential parties as feasible, in the hopes of lowering their own allocated share, despite the added workload for those parties in gathering their records.
If it is not intended that the estimate be based on a 122(n) allocation, that should be made clear in the text. (While this would alleviate some of the pace concerns, it by no means obviates them, as EPA-will still have to conduct a large number of complex allocations - diverting its limited resources from cleanups.)
None of these evils are necessary ones. If Congress wants to assure that EPA will help cover the costs of entities who can't or shouldn't be sued - as the agency has been doing with considerable success for the last few years - it can designate a pot of funds for that exclusive purpose.\9\ At this juncture, a statutory allocation system is a solution in search of a problem, and one that will create innumerable problems in itself.
\9\ However, such funds should not have priority over cleanup funds, nor compete directly with them.
II. Cutting Holes in the Federal Safety Net.
A. Limits on Superband Authorities at State Cleanup Sites
The public needs and deserves an effective federal fallback, or safety net, where states fail to carry out their environmental responsibilities appropriately for toxic site cleanups, just as occurs for air and water pollution programs. Yet, with certain exceptions, S.1090 bars EPA from ordering cleanups, and from recovering cleanup costs, for releases that are "within the scope of a response action that is being conducted or has been completed under State law" [SPCA 201 (b), adding CERCLA 1 28(c)]
Remarkably, there are no criteria at all for these prohibitions. They apply - regardless of whether there has been any public participation whatsoever in -development of that state response action,
regardless of whether that action will be protective,
regardless of whether citizens have judicial review for unprotective cleanups,
regardless of whether the state response plan is actually being complied with, and even regardless of whether the state has the legal or practical capacity to enforce the action.
Once a state response action exists, EPA is barred from ordering a cleanup or recovering cleanup costs, even where a site presents an imminent and substantial endangerment to health or the environment (save by using the Fund's increasingly limited resources, without cost-recovery).
Moreover, there are no substantive standards whatsoever for state cleanups. Unless a state opts to establish regulations, each site's plan will be issued an ad hoc basis with no baseline standards to assure the safety or adequacy of cleanups, meaningful public participation, judicial review, or any other safeguard. Tens or hundreds of thousands of sites may be dealt with on an ad-hoc basis, making effective public oversight completely impossible - even apart from the fact that the bill makes no provisions for community technical assistance. And meanwhile, use of Superfund's authorities at these sites are limited.
We recognize that the bill provides certain exemptions that allow EPA to issue cleanup orders and recover costs. These include a request from the state, or EPA's finding of interstate pollution. In addition, EPA may act upon determining that the state isn't taking appropriate action and the situation presents "a public health or environmental emergency" for an ongoing cleanup. For already-completed responses, the standard is "substantial risk" as evidenced by new information, fraud, or failure of the remedy where there is a clear threat of exposure [SPCA 201 (b), adding CERCLA 1 28(c)(3)(B).] In other words, EPA cannot come in, even where the remedy isn't working, unless the agency can show a clear threat of exposure.
This approach is the antithesis of prevention. It creates different legal standards, and provides ammunition for polluters to argue that they should be exempt from cleanup or payment obligations based on supposed lack of clear exposure, or on the ground that the state wasn't really unwilling to act, or that there wasn't an "emergency."
We strongly oppose these limits on Superfund authority. While carefully crafted liability relief for prospective purchasers may well be desirable (assuming community participation rights are assured), limiting Superfund authorities for a large but amorphous range of sites is indefensible. Such limitations are also unnecessary: the private market is increasingly providing mechanisms for moving forward brownfield redevelopment today, with Superfund in place.\10\
\10\ Conferences with titles such as Getting Contaminated Property Deals Done," proclaiming that "we will excite you with brownfield and financial success stories" are increasingly common. [Flier for RTM Communications conference, April 6-7 1999, Washington, DC]
B. Silent Vetoes through Gubernatorial Inertia.
In another highly objectionable feature of the bill, new sites can be added to the Superfund list only upon the written request of the Governor of the State in which the sites is located [SPCA 202,adding CERCLA 105(b)(3), p.38]. (S.1090 is even more extreme than its predecessor bills, which required concurrence rather than an affirmative request.)
While it may be appropriate to give states "first dibs" on cleanups at sites that will be appropriately addressed through state action, this provision goes much too far. A state could, through simple inaction, bar action under Superfund even though the site will not otherwise be cleaned up. The State need not even give any reasons for failing to submit a request, inviting potential abuses (if, for example, a major potentially responsible party at the site also happened to be a campaign contributor to a high-ranking State official). EPA should defer to a state only upon affirmatively determining that the State will conduct an adequate, timely cleanup absent the listing or 106 order.
C. The NPL Cap: Dumping Cleanups on Communities and States
Yet another serious problem is the bill's inclusion of an arbitrary cap on the number of additional sites that can be added to the National Priorities List. Under S.1090, EPA cannot add more than 30 sites annually until 2004 [SPCA 202, adding CERCLA 105(b)(2), p.37]. A cap has profound consequences because, unless a site is listed, EPA cannot undertake cleanup activities (other than a short-term, low-cost emergency removal). In effect, this provision dumps the problem of Superfund site cleanups into the laps of the States -- regardless of whether they have the resources or capacity to conduct those cleanups.
Late last year, the General Accounting Office reported that more than half of the 44 state officials interviewed said that their ability to fund cleanups is poor or very poor.\11\ The same report concluded that, for about 1,800 sites potentially eligible for Superfund listing, it was unclear how more than half would be handled, while states and EPA said that about 13% may be listed on Superfund - but with little overlap as to which ones.
\11\ U.S. General Accounting Office, Unaddressed Risks at Many Potential Superfund Sites. GAO/RCED-99-8, . November 1998.
Earlier, the GAO had reported that a cap could force States to accept responsibility for 1,400 to 2,300 sites (1,100 already identified by EPA, along with an estimated 300-1,200 yet-undiscovered sites).\12\ The estimated cleanup costs range from $8.4 to $19.9 billion.
\12\ U.S. General Accounting Of rice, Impact on States of Capping Superfund Sites. GAO/ACED-106R. March 1996. As the 1998 report does not refer to the 1996 report, it is not entirely clear how GAO would view the relationship between these two sets of findings.
The GAO report makes painfully clear that the States are in no position to take on this added burden. Indeed, States are having difficulty securing resources for their current cleanup efforts. Of the states surveyed by GAO,
"three of the seven states with active programs said that taking on these additional cleanups would exacerbate an already difficult financial situation. Two other states said that they expect to face funding shortfalls beginning in fiscal year 1997 that will make it difficult to absorb the additional cleanup responsibilities, at least for a few years subsequent to that time. Another two states said that while they had sufficient funds to manage their own inventories, funding the additional cleanups would be difficult."\13\
\13\ Ibid.,p.2.
Thus, there is no basis for capping the number of sites that EPA may add to the National Priorities list.
This provision also undercuts two of the valuable incentives created by Superfund: that which prompts voluntary cleanup of non-NPL sites in order to avoid a potential future NPL listing, and that which prompts careful management of wastes generated now.
GAO noted that State program managers "pointed out that a major incentive for private parties to clean up sites is to avoid having their properties added to the list of the most contaminated sites in the country."\14\ In short, a cap on the number of Superfund sites may have the perverse effect of creating a greater need for more Superfund listings, by reducing incentives for non-Superfund voluntary cleanups.
\14\Ibid.,p.3.
The NPL cap will also undercut incentives for sound prospective waste management. Facilities will be able to gamble that states will lack, or forego use of, cleanup enforcement authorities for tackling sites created after the NPL list is effectively closed. The continuing nominal availability of litigation authorities under 107 is far from an adequate substitute, given that 107 suits can only be brought to recoup expenditures - thus requiring cash-strapped States to front all the cleanup money.
Where they are unable to do so, today's polluters will evade cleanup responsibilities, and sites will remain unaddressed.
In short, the cap should be eliminated. As a matter of sound science and good public policy, EPA should be able to list however many sites need listing.
IV. Liability Provisions.
There is no dispute that Superfund's existing liability system has often been abused by polluters that have filed massive contribution actions against entities with minimal or no connection to the site. Curbing these abuses is necessary, but does not necessarily require legislation, since EPA routinely provides contribution protection to settling parties.
EDF does not oppose carefully crafted provisions that would bar abuses of the liability system for small parties that won't, as a practical matter, end up putting much money into a cleanup. Even though such parties may theoretically qualify as polluters, Superfund's liability system is and should be pragmatic: it's a way of getting resources to pay for cleanups from the parties most closely associated with the site. It simply isn't efficient for litigation to involve parties who sent only trivial quantities, or who sent wastes that don't affect cleanup costs, or who clearly won't be able to put more than a token amount into a cleanup.
If statutory liability relief is to be provided to such parties, as it is under S.1090, we believe it is imperative to have an appropriate "pull-back" provision. We believe the pull-back contained in S.1090 is appropriately crafted. That set of provisions addresses whether the wastes in question "contributed significantly" to response costs (e.g., [SPCA 301 (b), adding CERCLA 107(r)(2) and (s)(2), p.46]. The bill's liability-relief provisions provide rough rules of thumb for parties it probably doesn't make sense to sue, but they are just that - rough. The pull-back assures that when it really matters, the liability provisions won't force an anomalous result. For example, if the one drum that a party sent to a site was full of dioxin, that party should not be exempted from liability under the de micromis limitations. Likewise, if a party qualifies for the small- business exemption (which as discussed below is unduly broad) but was a primary actor in the events leading to creation of the site, it will be appropriate to take a hard look at the business to determine just what its ability-to-pay really is.
With regard to the small business limitation itself, while we do not necessarily oppose curtailing liability for truly small businesses with a limited connection to a site who have limited ability-to-pay in any event, the current exemption is ill-crafted. First, the $3 million annual-revenue threshold is simply too high [SPCA 301(b), adding CERCLA 107(s)(1), p.45]. Moreover, the exemption applies to companies with either fewer than 75 employees, or less than $3 million gross revenues. This potentially exempts wealthy corporations that happen to have relatively few employees (and 75 is a significant number of employees in any event). If a small-business exemption is to be adopted, it should use narrower thresholds, and should require meeting criteria for both numbers of employees and gross revenues.
Conclusion.
Thank you for this opportunity to present our views. We would welcome an opportunity to work with the Committee in crafting a Superfund bill that reinstates the taxes, adopts narrowly drawn liability-relief provisions to make the liability system operate more effectively, and preserves the basic structure of this important statute.