Search  |  Index  |  Home  |  Glossary  |  Contact Us

Congressional Testimony
The Clinton Administration's Proposal for Superfund Reform

Prepared Statement of

Carol M. Browner
Administrator
U.S. Environmental Protection Agency

Before the
Subcommittee on Water Resources and Environment
Committee on Public Works and Transportation
U.S. House of Representatives

June 9, 1994

At the time of its introduction, I was particularly moved by the spirit of cooperation and determination shown within the Administration that enabled us to bring this legislative package to fruition. Since its introduction, H.R. 3800 has continued to benefit from communication and interaction with a broad range of groups interested in Superfund,including industry, environmentalists, communities, environmental justice advocates, state and local governments, and the insurance industry. The untiring efforts of these groups, other Federal agencies, my staff, and Members and staff here on the Hill have produced a bill that represents a delicate balance of resolution and commitment to necessary reform. I believe it also demonstrates that support for this legislation is worthy of such towering endeavors. Because these reforms reflect a fragile consensus of many diverse interests, we must continue to proceed cautiously, or we will all lose the benefit of a much-improved Superfund program.

Recently, the Administration's bill received the full support from the other Committee of jurisdiction. We are here today to seek this Subcommittee's support as well. Superfund reauthorization will provide this country with a valuable opportunity to improve upon our successes and make changes to our shortcomings. However, as we all know, time is of the essence. Program authority for Superfund expires at the end of this fiscal year, and the failure to reauthorize the law could interrupt cleanups in progress, necessitate the termination of government contracts, impose additional administrative costs, preclude the start of new cleanups, and cause huge political repercussions in communities new, current, and prospective cleanup sites. Consequently, the Administration, and virtually all Superfund stakeholders agree that it is in our national interest to ensure that Superfund is reauthorized this year. I look forward to working with you to ensure that this bill is enacted into law.

Before discussing the provisions of the legislation, let me start out by briefly outlining the current state of the Superfund program. The Current State of Superfund was enacted in 1980 in response to public outcry over Love Canal in New York and the Valley of the Drums in Kentucky, which had become symbols of a widespread environmental problem that needed national attention. The uncontrolled dumping of hazardous wastes in some cases was posing serious risks to human health and safety and threatening valuable natural resources such as groundwater aquifers.

The original expectation was that the universe of sites needing cleanup would be only a few hundred, and the program would require relatively modest resources and would be paid for primarily by responsible parties (original budget: $1.6 billion over five years).

Cleanup was to be paid for by the parties responsible for the contamination or, if they couldn't be found, by a trust fired generated through business taxes, particularly on the chemical and petroleum industries.

Since 1980, the expectations for Superfund have increased dramatically. Approximately 1300 sites are on the National Priorities List for Superfund cleanup. It is estimated that a total of approximately 3,000 eventually will be a federal cleanup priority. Approximately one of every four Americans lives within a few miles of an active Superfund site.

Superfund has had many successes during its 13 year tenure. To date, Superfund has completed construction of long-term cleanups at more than 237 contaminated sites, and another 1100 sites are in various stages of response. Additionally, in more than 3500 actions at 2700 different sites across the country, Superfund has led to the emergency removal of hazardous substances that were posing immediate health and safety risks to neighboring communities.

Superfund was structured on the principle that polluters should pay for cleanup. As a result of Superfund enforcement actions, responsible private parties now are performing 70 percent of all cleanups, and they have committed $8.3 billion to reduce threats to public health and the environment, clean up groundwater, and restore sites to productive use. In addition, through Superfund over 1600 public health assessments have been completed at hazardous waste sites, and significant advances have been made in basic and applied research related to hazardous substances. Superfund also has spurred advances in cleanup technology. In cooperation with industry and other Federal agencies, EPA has identified more than 150 innovative technologies now being used to treat contaminated soil, groundwater, sludge, and sediments.

Finally, Superfund has spurred and fostered development of state cleanup programs to the point where a recent state/EPA study reports the states have cleaned up over 2680 non-NPL sites since the mid-1980s under state anthority and through state cleanup programs.

Despite these accomplishments, Superfund's weaknesses are recognized by virtually all stakeholders, and they threaten to undermine the efficacy of the statute. Criticisms of Superfund fall into six broad categories:

1. Inconsistent and Inadequate Cleanups: The law currently does not specify a standard level of cleanup nationwide; instead, it establishes a complex cleanup framework under which applicable and relevant and appropriate state and federal standards are used to set cleanup levels. Consequently, cleanup goals, remedies, and costs differ site-by-site across the country. This inconsistency contributes to uncertainty, protracted site-by-site evaluation, debate over cleanup goals, and higher cleanup costs.
2. High Transaction Costs: Most of the private sector costs not directly associated with cleanup activities are considered "transaction costs." While transaction costs for the government have been relatively low, there is wide-spread agreement that Superfund cleanups generate high transaction costs in private party contribution litigation and in follow-up litigation between those parties and insurance carriers. These costs are particularly burdensome to small businesses.
3. Perceived Unfairness in the Liability Scheme: In addition to excessive transaction costs, the current liability regime is criticized as being unfair to many parties. Small businesses, municipalities, lenders, trustees and others argue that the burdens imposed by the liability system are particularly unfair to them. Larger businesses resent having to pay more than their "fair share" of COSTS.
4. Overlapping Federal/State Relationship: The federal government has primary responsibility for implementing the Superfund program, and it has exclusive access to the money in the Superfund. States, however, play a significant role in the program's implementation. State standards apply to all cleanups, and states must pay a share of any Fund-financed remedial cleanup costs at nonfederal facility sites. In addition, states have significant input in selecting cleanup remedies. Due to this overlapping authority and responsibility, federal and state governments often disagree over the degree to which sites should be cleaned up, the remedy to be used, and the allocation of costs. These disagreements contribute to the cost and duration of cleanups, and they result in substantial confusion among all stakeholders.
5. Inadequate Community Involvement. Many communities near Superfund sites, including low income, minority, and Native American communities, do not feel they are given an adequate opportunity to participate in the Superfund process. These and other communities believe the program does not address local circumstances adequately when evaluating risk or determining the method and level of cleanup. Consequently, communities may conclude that the resulting cleanup is overly conservative or insufficiently protective.
6. Impediments to Economic Redevelopment: Current law extends liability to both past and future owners of contaminated sites. As a result, the market value of older industrial sites can be depressed, because the specter of Superfund liability diminishes the attractiveness of investing in industrial areas.Many claim that prospective owners who want to develop property have an economic incentive to use undeveloped, or "greenfield", sites to avoid potential Superfund liability, thereby contributing to suburban sprawl and exacerbating chronic unemployment often found in inner-city industrial areas.

A Vision of the New Superfund---The Clinton Administration is committed to new Superfund legislation that protects human health and the environment with greater efficiency and fairness than does the current law. To achieve this goal, the Administration has been guided by four objectives: 1) to reduce the time and costs needed to clean up sites; 2) to make the liability scheme fairer and more efficient; 3) to increase the involvement of communities that live near sites in Superfund decisions; and 4) to remove impediments to economic redevelopment of contaminated properties. These objectives are the fundamental building blocks for our reauthorization proposal and we believe that they also reflect the similar concerns Members of this Subcommittee have raised and reported previously.

H.R. 3800 will shorten the time required to conduct cleanups and will make cleanups less expensive in a variety of ways. To ensure protection, it establishes a process for setting national goals for all Superfund cleanups. The bill also provides for a National Risk Protocol for the conduct of risk assessments that will be used to determine the need for remedial action. The Protocol will include the development of standard formulae to be used in setting concentration levels for the most common contaminants to speed up the cleanup process. The bill will reduce transaction costs and achieve greater fairness by instituting an allocation process and by having EPA fired an orphan share. Joint and several liability will be retained for those parties who do not accept their allocation. H.R. 3800 achieves greater fairness and reduces transaction costs:

• by exempting from liability certain parties who contribute only municipal solid waste, and truly tiny contributors of hazardous substances;

• by expediting settlements for "de minimis" parties (those whose contribution is small relative to total site contributions) and certain parties with a limited ability to pay for cleanup costs;

• by providing settlers with greater finality; and,

• by capping the liability of generators and transporters of municipal solid waste, H.R. 3800 achieves greater fairness and reduces transaction costs.

The Environmental Insurance Resolution Fund, an idea developed by insurers and potentially responsible parties (PRPs), provides responsible parties with a mechanism for resolving coverage disputes with their insurers through the insurance resolution fund, and holds the potential for significantly reducing the number of disputes that end up in court, thereby reducing transaction costs.

The Superfund bill encourages beneficial reuse of contaminated properties by removing disincentives for property transfers and cleanups and by facilitating voluntary cleanups. It will lead to a more positive relationship between the federal government and the states, by expanding the ability of the states to assume responsibility for response actions,including remedy selection, allocation and enforcement at NPL sites and to take pre-remedial actions at non-NPL sites. In addition, it will accomplish more cleanups by more effectively leveraging the combined resources of EPA, other federal agencies, states, local governments, and private parties.

H.R. 3800 addresses the concerns of disadvantaged communities by building environmental justice criteria into the process for evaluating sites to be placed on the National Priorities List. The Administration proposal provides a strong role for the local community in future land use determinations and remedy selection decisions, thereby making those communities more effective participants in the system.

I would like to address each of these issues in a little more detail, and then I would gladly respond to questions. The detailed priorities of the H.R. 3800 are as follows:

1. Speeding Cleanups, Cutting Costs. The heart of Superfund reform has to be speeding the pace and lowering the cost of cleanup. Whether one talks to responsible parties, community groups, environmentalists, or other interested parties, all agree that the process for studying sites and evaluating and selecting remedies simply takes too long and costs too much today. Before we can improve this process, we must decide once and for all: how clean is clean?
   
   The Administration's original proposal was premised on the principle that all communities are entitled to receive the same protection from potential health hazards associated with Superfund sites. The bill advances that effort by requiring national goals to be set for the protection of health and the environment and by establishing a national risk protocol to be used in setting concentration levels. Formulae would be developed for the most common contaminants, and applied at sites, where appropriate, to avoid the need for a full risk assessment to develop cleanup levels at every site. The national goals and National Risk Protocol would be developed through negotiated rulemaking.
   
   EPA also would develop a menu of generic remedies that could be used at certain types of sites without lengthy study. This menu of generic remedies has evolved out of EPA's thirteen years of experience running the Superfund program. At certain types of sites, we can be relatively certain of the type of remedy most effective for cleaning up the particular contaminants and media involved. We therefore can avoid "reinventing the wheel" and save time and money.
   
   At the site-specific level, EPA would take the community's views on reasonably anticipated future land use into account in selecting remedies. A Community Working Group that is representative of the affected community would recommend to EPA a post-cleanup use for the site. In order to make the most efficient use of our limited resources, consultation with the community about future land use is essential. Where a property is located in an industrial area and the community determines that a factory should be sited on the property after cleanup, there is no reason to clean the site to residential levels. We must work with communities to design cleanups that meet their needs and their expected future uses for the sites.
   
   Current requirements for cleanups to meet both "applicable" and "relevant and appropriate" requirements would be significantly modified. Applicable state and federal requirements regarding the conduct and operation of the remedial action would be complied with. The National Risk Protocol, rather than the ARAR approach would be used to set cleanup levels; however, cleanup levels applicable under state remedial programs would be met by federal cleanups. Other state requirements could be made applicable, but only under certain circumstances and where the state demonstrates that such requirements are consistently applied under state cleanups. The statutory preference for permanence and treatment would be eliminated and replaced by the concept of long-term reliability at a reasonable cost coupled with a preference for treatment of hot spots. Long-term reliability would provide EPA with an impetus to select durable remedies, but it would not restrict the Agency from considering other factors such as community acceptance of the remedy and the availability of other treatment technologies.
   
   
2. Reducing Transaction Costs and Increasing Fairness. The Administration proposal represents a strong commitment to greatly reducing transaction costs. The proposal provides special accommodation for small businesses and contributors of small amounts of waste. It maintains the current level of PRP-managed cleanups. And it addresses the on-going litigation between insurers and policy holders with cleanup responsibilities. It achieves all these goals without introducing new litigation issues or expensive administrative adjudication procedures.
   
   Residential property owners and lessees, and small businesses, among others, who generate or transport only municipal solid waste or sewage sludge would be exempt from liability. So too would generators and transporters of truly tiny amounts of hazardous substances ("de micromis" parties), including many small businesses, be exempt from liability. Generators and transporters of small amounts of waste ("de minimis" parties), and parties unable to pay their fu11 responsibility for Superfund cleanups, would be provided an early opportunity to settle their liability with a full release from the government and protection against suits by third parties. These provisions provide special considerations for small businesses which are financially unable to bear their full share of liability. In addition, generators and transporters of solely municipal solid waste which do not come within an exemption category would have the opportunity for early settlement with the government; the aggregate liability of these parties would be capped at 10 percent of costs at the site.
   
   Owners and operators of municipal solid waste land fills with a limited ability to pay response costs would be able to settle early as well, and the amount of their payment would be subject to an ability to-pay analysis crafted specifically to consider the unique characteristics of municipal governments.
   
   At every privately-owned multi-party site where the EPA has selected a remedy after introduction of the Superfund Reform Act of 1994, an allocations process would be conducted by a neutral professional to develop a percentage share of responsibility for all allocation parties. Let me emphasize that the Administration proposal relies on private professionals to perform these allocations. The Administration does not want to see the allocations process turn into an overly bureaucratic, overly legalistic, "big government" lawyer-intensive solution. Specifically, we believe an informal process managed by experienced allocators is preferable to the establishment of a formal, legalistic system based on federal administrative law judges.Potentially responsible parties would be provided an opportunity to settle their liability to the United States based on the allocation and, if they pay a premium and meet other conditions, obtain full protection against future liability.
   
   Settlors who conduct response actions the value of which exceeds the aggregate of their allocated share and premium payment are eligible for reimbursement for the excess. To ensure that neither the allocation process, nor litigation against recalcitrants, will slow the pace of cleanup, EPA will retain authority to issue unilateral cleanup orders. Parties who satisfactorily perform cleanup under such an order and who meet other conditions will be eligible for reimbursement of most of the difference between their allocated share and the necessary costs of work they perform. To facilitate settlements, Superfund resources would be used to cover "orphan shares," which consist mainly of allocated shares attributable to liable panics that can be identified but are no longer in business or able to pay their share. The agreement of the government to devote substantial resources to orphan shares demonstrates this Administration's commitment to reducing litigation and increasing the fairness in this program.
   
   In order to greatly reduce ongoing contribution litigation, the United States would take on the task of pursuing non-settling parties to require site response activities and recover expended funds. Such actions would be premised on joint and several liability for the nonsettlers, and they could result in the recovery of some or all of the orphan share. The retention of joint and several liability is essential to the new liability scheme to ensure that responsible panics resolve their liability through the allocation and settlement process rather than through litigation. Again, the agreement of the government to take on the responsibility of pursuing non-settling panics represents a commitment to reducing transaction costs and litigation for private parties. The government's pursuit of nonsettlers provides settling parties with the certainty that they can settle with the government for their share and not concern themselves with going after other parties for contribution.
   
   H.R. 3800 does not include a provision on abolishing retroactive liability. Abolition of retroactive liability would fundamentally transform the program from one in which 70% of response work is performed by PRPs, those who contributed to the contamination, into one in which 70 % of the response work would be performed by the Trust Fund, through a public works program. Other problems would occur:
   
   
• proposals to abolish retroactive liability contemplate raising at least $1.1 billion in new tax revenues sufficient to replace the 70 % of response work performed by PRPs;
• cleanups performed by the Trust Fund would likely be significantly more expensive than those performed by private sector companies who are directly paying for the cleanup and who have an immediate incentive to control costs;
• elimination of retroactive liability would remove any incentive for voluntary cleanups for sites covered by the public fund. Tens of thousands of voluntary cleanups occur now. Without these voluntary cleanups, even contamination which has been discovered could remain or worsen while society waits for public cleanup funds; and
• changing Superfund to a taxpayer-financed cleanup program would create a huge public works program at a time when we are trying to scale back government programs and foster efficiencies.

A new Environmental Insurance Restoration Fund (EIRF) would be established with the objectives of ensuring settlement of insurance claims related to Superfund liability for pre-1986 disposal of waste. The litigation over these claims is currently a major source of litigation related to Superfund -- estimated to cost approximately $300 million per year. The insurance industry has worked with .the PRP community to develop a method of financing the EIRF. As a result of these efforts, the EIRF would be financed by a fee on the insurance industry.

3. Expanding State Authority. Among the reforms suggested in your report, and included in H.R. 3800 as a means of speeding up and increasing the number of Superfund cleanups, is a provision that would enhance the state role in Superfund and limit the overlap between the federal and state governments at specific sites. It provides the states with more authority and, therefore, with more autonomy. The state role provisions in the bill delegate remedy selection authority explicitly and give states access to the federal allocation scheme to ensure enhanced fairness at all Superfund sites. In addition, to provide settling parties with greater finality and eliminate dual sovereignty at sites, covenants not to sue will bind both the federal government and the State, so long as both entities have been given notice and an opportunity to object to the settlement.
   
   States will also have access to funding from the Superfund Trust Fund, subject to a fixed cost share of 15%, to carry out response actions.
   
   
4. Involving Communities. H.R. 3800 reflects the principle that communities must be involved in the cleanup process from the time a site is discovered to the time it is finally cleaned up. Superfund, after all, is first and foremost a local program. The bill sets out several innovative mechanisms for getting communities involved in the cleanup process and for public meetings at significant stages of the process.
   
   In addition, the bill authorizes the establishment of Community Working Groups, as advisory bodies, to provide direct, regular input by representatives of a variety of interested parties to State and federal agencies involved in the cleanup. These advisory groups would reflect the racial, ethnic, and economic makeup of the community, and they would include all community elements affected by the cleanup. The advice and preferences of these groups would be solicited at every stage of the cleanup process. The role of the community would be especially important in defining future uses of restored sites, which will be an important criterion for determining cleanup levels and technologies.
   
   Federal funding would be available for the establishment of independent state Citizen Information and Access Offices (CIAOs) which will serve as information clearinghouses for all the sites, both NPL and non-NPL, in a state. The CIAOs will also assist EPA in nominating members to the Community Working Groups. I believe these offices will provide community groups with the information and assistance they need to be full players in the cleanup process.
   
   The bill also addresses some of the same concerns this Subcommittee has had regarding Technical Assistance Grants. As amended, the Superfund Reform Act of 1994 also would greatly simplify the process for applying for technical assistance grants to ensure that this important source of funding is more widely available to community groups who need financial assistance. For the first time, technical assistance grants would be made available for sites that are not on the NPL.
   
   
5. Encouraging Economic Redevelopment. H.R. 3800 is designed to reduce current Superfund-related obstacles to the redevelopment of contaminated sites. Economic redevelopment and community involvement are two of my personal priorities in this package. The flight of industry from urban brownfields to suburban and rural greenfields is often noted in the press these days. Inner cities lose jobs and industry, while previously virgin green space is converted to industrial uses or suburban sprawl. The Administration proposal addresses this issue head on. Currently, parties can be liable under Superfund if they own a piece of contaminated property, whether or not they owned the property when the contamination occurred or contributed to the contamination. This provision of the law has discouraged prospective purchasers from buying property that might be contaminated and banks from lending money for such purchases.
   
   The bill would provide an exemption from Superfund liability for prospective purchasers of contaminated property, so long as they did not worsen the contamination at the site, agreed to either clean up the property or allow the government or responsible parties access to the site to clean it up, and meet certain other conditions. Lenders and trustees (such as bankruptcy and testamentary trustees) also would be given protection from liability under certain conditions to remove the current disincentive to making loans on potentially contaminated property.
   
   
6. Encouraging Advances in Science and Technology. We agree with the comments in the Subcommittee report that EPA must address barriers that impede the development of innovative and alternative technologies. H.R. 3800 would improve the scientific basis for evaluating risks to public health and the environment posed by hazardous waste sites, and it would encourage the development, demonstration, and commercialization of innovative, efficient, and cost-effective cleanup technologies. Environmental technology development must be nurtured and encouraged if we are to make great strides in the coming years. Government must share some of the risk in this area. Under the Administration proposal, the government would share with private parties the risk of employing innovative technology to cleanup sites. Specifically, the Superfund trust fund would contribute a percentage of the costs of any additional remedial action required due to a failed innovative remedy, as opposed to placing that burden entirely on private parties.
   
   

In conclusion, the CERCLA reauthorization reforms embodied in H.R. 3800 stand as a unique representation of a cooperative and consensus building undertaking. This undertaking has engaged the time and efforts of the Clinton Administration, the Congress and many of the Act's most direct stakeholders. Many predicted, more than once, that all was lost for Superfund reauthorization. We have persevered. Wide divergence of opinion and extensive policy debate was reported and, nevertheless, consensus on these reforms was reached. The reforms in H.R. 3800 share a common goal of faster, fairer and better cleanups under Superfund while ensuring that protection of human health and the environment remain our paramount concern. These reforms are a genuine step forward to secure: increased state exercise of authority at facilities and greater community involvement at all stages of the cleanup process; the removal of barriers to economic development that currently exist in the statute; a neutral allocation process and faster resolution of a party's fair share liability in a single proceeding; expeditious settlement opportunities for certain parties; a streamlining of the remedy selection process and the promulgation of a single national goal for consistent cleanups; and the establishment of a new insurance settlement fund.

I cannot stress too strongly the Administration's level of commitment and the personal commitment that I share toward working with the Congress over the coming months to ensure that meaningful reform of Superfund is passed this year.

Mr. Chairman, thank you for this opportunity to address the Subcommittee. I will be pleased to answer any questions you may have.

ATSDR Home  |  Search  |  Index  |  Glossary  |  Contact Us
About ATSDR  |  News Archive  |  ToxFAQs  |  Public Health Assessments
Privacy Policy  |  External Links Disclaimer  |  Accessibility
U.S. Department of Health and Human Services