<DOC>
[1997 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:45561.wais]
S. Hrg. 105-42
BROWNFIELD LIABILITY AND RESOURCE ISSUES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
SUPERFUND, WASTE CONTROL, AND RISK ASSESSMENT
OF THE
COMMITTEE ON
ENVIRONMENT AND PUBLIC WORKS
UNITED STATES SENATE
ONE HUNDRED FIFTH CONGRESS
FIRST SESSION
__________
MARCH 4, 1997
__________
Printed for the use of the Committee on Environment and Public Works
U.S. GOVERNMENT PRINTING OFFICE
40-588 cc WASHINGTON : 1997
_______________________________________________________________________
For sale by the U.S. Government Printing Office
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20402
COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS
ONE HUNDRED FIFTH CONGRESS
JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire DANIEL PATRICK MOYNIHAN, New York
DIRK KEMPTHORNE, Idaho FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma HARRY REID, Nevada
CRAIG THOMAS, Wyoming BOB GRAHAM, Florida
CHRISTOPHER S. BOND, Missouri JOSEPH I. LIEBERMAN, Connecticut
TIM HUTCHINSON, Arkansas BARBARA BOXER, California
WAYNE ALLARD, Colorado RON WYDEN, Oregon
JEFF SESSIONS, Alabama
Steven J. Shimberg, Staff Director and Chief Counsel
J. Thomas Sliter, Minority Staff Director
------
Subcommittee on Superfund, Waste Control, and Risk Assessment
ROBERT SMITH, New Hampshire, Chairman
JOHN W. WARNER, Virginia FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma DANIEL PATRICK MOYNIHAN, New York
WAYNE ALLARD, Colorado BARBARA BOXER, California
JEFF SESSIONS, Alabama BOB GRAHAM, Florida
(ii)
C O N T E N T S
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MARCH 4, 1997
Page
OPENING STATEMENTS
Allard, Hon. Wayne, U.S. Senator from the State of Colorado...... 9
Baucus, Hon. Max, U.S. Senator from the State of Montana......... 6
Boxer, Hon. Barbara, U.S. Senator from the State of California... 11
Chafee, Hon. John H., U.S. Senator from the State of Rhode Island 4
Lautenberg, Hon. Frank R., U.S. Senator from the State of New
Jersey......................................................... 2
Sessions, Hon. Jeff, U.S. Senator from the State of Alabama...... 9
Smith, Hon. Robert, U.S. Senator from the State of New Hampshire. 1
Warner, Hon. John W., U.S. Senator from the Commonwealth of
Virginia....................................................... 8
WITNESSES
Bollwage, J. Christian, mayor, Elizabeth, NJ, on behalf of the
U.S. Conference of Mayors...................................... 15
Letter, Brownfield program funds, U.S. Conference of Mayors.. 136
Prepared statement........................................... 79
Report, Impact of Brownfields on U.S. Cities, U.S. Conference
of Mayors.................................................. 91
Responses to additional questions from:
Senator Chafee........................................... 90
Senator Lautenberg....................................... 90
Senator Smith............................................ 89
Fields, Timothy, Acting Assistant Administrator, Office of Solid
Waste and Emergency Response, U.S. Environmental Protection
Agency......................................................... 12
Prepared statement........................................... 50
Responses to additional questions from:
Senator Chafee........................................... 60
Senator Smith............................................ 58
Guerrero, Peter F., Director for Environmental Protection Issues,
Resources, Community and Economic Development Division, U.S.
General Accounting Office...................................... 33
Prepared statement........................................... 225
Responses to additional questions from:
Senator Chafee........................................... 230
Senator Smith............................................ 228
Louder, Lorrie, director of industrial development, St. Paul Port
Authority, on behalf of the National Association of Local
Government Environmental Professionals......................... 18
Prepared statement........................................... 219
Report, Building a Brownfields Partnership from the Ground
Up, NALGEP................................................. 176
Responses to additional questions from:
Senator Chafee........................................... 224
Senator Smith............................................ 223
Riley, William J., general manager for environmental affairs,
Bethlehem Steel Corporation, on behalf of the American Iron and
Steel Institute................................................ 39
Prepared statement........................................... 232
Responses to additional questions from:
Senator Chafee........................................... 234
Senator Smith............................................ 235
Scherer, J. Peter, senior vice president and counsel, Taubman
Company, on behalf of National Realty Committee................ 35
Prepared statement........................................... 250
Responses to additional questions from:
Senator Chafee........................................... 255
Senator Smith............................................ 252
Seif, James M., secretary of environmental protection,
Pennsylvania Department of Environmental Protection............ 14
Prepared statement........................................... 67
Responses to additional questions from:
Senator Chafee........................................... 78
Senator Lautenberg....................................... 79
Senator Smith............................................ 77
Wray, William K., senior vice president, Citizens Bank,
Providence, RI................................................. 37
Prepared statement........................................... 236
Responses to additional questions from Senator Smith......... 237
ADDITIONAL MATERIAL
Articles:
Turning Elizabeth Landfill into a Retail Center, New York
Times...................................................... 165
Clarification of Secured Party and Fiduciary Liability under
U.S. Environmental Statutes, BNA........................... 243
Memorandum, Environmental Liability and Real Property Collateral,
FDIC........................................................... 239
Reports:
Brownfields Redevelopment Action Agenda, U.S. Conference of
Mayors..................................................... 83
Building a Brownfields Partnership from the Ground Up, NALGEP 176
Statements:
Brownfields Redevelopment, Mayor Freeman R. Bosley, Jr....... 138
Daschle, Hon. Tom, U.S. Senator from the State of South
Dakota..................................................... 49
BROWNFIELD LIABILITY AND RESOURCE ISSUES
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TUESDAY, MARCH 4, 1997
U.S. Senate,
Committee on Environment and Public Works,
Subcommittee on Superfund, Waste Control
and Risk Assessment,
Washington, DC.
The committee met, pursuant to notice, at 9:30 a.m. in room
406, Senate Dirksen Building, Hon. Robert Smith (chairman of
the subcommittee) presiding.
Present: Senators Smith, Warner, Allard, Sessions,
Lautenberg, and Chafee [ex officio].
Also present: Senators Baucus and Wyden.
OPENING STATEMENT OF HON. ROBERT SMITH, U.S. SENATOR FROM THE
STATE OF NEW HAMPSHIRE
Senator Smith. The hearing will come to order.
Good morning, everyone. I would like to thank everyone for
coming this morning and thank the witnesses in advance for
being here.
We're here to review the issues associated with abandoned
and underutilized industrial sites, otherwise known as
brownfields. Although there are no concrete figures on how many
of these brownfield sites there are in the United States, GAO
estimates indicate there are over 150,000 acres of these sites
nationwide. While the number in size is unclear, what is clear
is it's a significant national problem. These properties sit
idle in many cities and towns. They not only represent a
nonproductive drain on municipal services, but also they're not
adding to the local tax or employment base. There are estimates
of billions of dollars in tax losses for these sites.
I believe that the problems associated with brownfields are
two-fold: first, at many of these sites we simply don't know
what the level of environmental contamination is. Sometimes we
don't know if there's any at all. By providing funding for
environmental characterization, many of the sites with limited
or no contamination can be quickly returned to productive
reuse. Second, at many of these sites the current owners,
including municipalities, that have taken these properties via
tax liens are aware that some environmental contamination
exists, but they're afraid to redevelop them for fear of being
caught in the web of Superfund liability.
While many of these owners are willing to clean up these
sites under State voluntary cleanup programs, they are
tremendously fearful of getting sucked into the Superfund
morass.
What they want is certainty. They want one entity in charge
of the cleanups; they want to have a clear and consistent set
of standards; they want to know at the end of the day after
they've cleaned up the site according to the agreed
requirements; and that they don't have to fear unlimited future
liability.
I believe this is a well-founded fear and one that Congress
needs to address. If we don't deal with this matter, companies
will continue to fence these older landholdings and put their
new facilities at pristine so-called ``greenfield sites.'' The
issue of brownfields redevelopment has long been an important
one for both political parties. The commitment on both sides is
also underscored by the fact that both of us this year have
introduced legislation affecting brownfields as part of the top
20 agenda for the U.S. Senate, S. 8 and S. 18.
Given the discussions that we have had together with the
various members of the committee on both sides, I think there
is general agreement that we should work hard to address these
and other difficult Superfund related issues this year.
Although we were not successful in our efforts to
comprehensively reauthorize Superfund last Congress, I was very
heartened by the positive negotiations that we had both at the
staff and member level with Senator Chafee, Senators Lautenberg
and Baucus, as well as the representatives of the Clinton
administration, specifically Carol Browner.
Working together I hope we will continue to make progress,
and I would like to thank my colleagues in advance for these
very cooperative comments in this regard.
I will turn it over now to the ranking member, Senator
Lautenberg.
OPENING STATEMENT OF HON. FRANK R. LAUTENBERG, U.S. SENATOR
FROM THE STATE OF NEW JERSEY
Senator Lautenberg. Thank you very much, Mr. Chairman.
I too want to salute the spirit of bipartisanship that is
evolving. I think that it's crucial that we get on with the
responsibilities. We have every right to differ, but the fact
is that we have a hearing today, for which I thank you, to
discuss the brownfields legislation as presently proposed,
separate from Superfund. I hope that we will be able to
establish the fact that brownfields legislation is, of and by
itself, quite an independent course of action from Superfund
reauthorization. We would like to see both get done. It is the
testament to the bipartisan interest and getting on with the
environment agenda that's so important.
I am hopeful that this spirit will continue as we address
the complex and controversial issues that will be coming before
this Superfund subcommittee.
Fortunately, the brownfields legislation isn't one of those
complex and controversial issues. Both parties have recognized
that the threat of Superfund liability is deterring the
redevelopment of contaminated properties. Both parties support
liability relief for prospective purchasers, developers, and
bankers who would clean up these blighted properties and
restore them to productive use.
Both parties have supported making low-interest money
available to communities to clean up hazardous waste sites, and
so it's fair to say that we all support brownfields
legislation, which would promote jobs in urban communities and
remove contaminants from the environment.
Mr. Chairman, now that we have this bipartisan consensus on
the value, we ought to try to act. There are more than 100,000
brownfields sites that Superfund will not clean up because the
contamination levels are too low to qualify. Cleaning up these
sites can make an enormous difference for communities all
around our country.
One of the first bills introduced this year was S. 18, my
legislation, to provide assistance for brownfields
redevelopment. The first title of S. 8 that Senator Smith and
Chafee introduced in their Superfund reauthorization bill had
many provisions similar to those contained in S. 18.
Unfortunately, there is disagreement about whether
brownfields legislation should go first or should be held until
both parties resolved the many issues involved in the
comprehensive reform of Superfund.
Some of my colleagues on the other side of the aisle have
suggested that a separate brownfields bill is nothing more than
a feel-good measure, which would distract Congress for more
important questions. With respect, I disagree. I think we
should act now. It's a much simpler case to review, and if we
can get it in place, I think we can help our communities
enormously. They need this legislation.
Mr. Chairman, I want to be clear that I remain very
interested in revising Superfund. We've had private
conversations about it. I think that there is a distinct
possibility that we can work out our differences, and,
certainly hope so. I would like to find an acceptable
bipartisan approach to such a bill because we both know, we all
know, that unless it's bipartisan, it's not going to happen.
But I don't want controversies over Superfund to stall this
critical brownfields legislation, and, frankly, as I see it,
enactment of brownfields is not only the right thing to do, but
it would help promote a spirit of progress and bipartisanship
on environmental legislation. It would show that we can move
things along.
I think that many of our witnesses today will help make the
case for moving forward to address the brownfields problems and
opportunities. I am especially looking forward to the testimony
of Mayor Bollwage from Elizabeth, NJ, from my State, and a city
I lived in during my movements around New Jersey with my
family. There were many communities that we lived in as my
father tried to establish a place to make a living. Elizabeth
was one of those good industrial towns. Elizabeth was home to
the Singer Sewing Machine Company. The city is a renowned place
for companies that came, worked and later on abandoned. That
wasn't in the plan, but that was the result. The economic
stabilization of Elizabeth is an inspiring story, and the Mayor
here has gained some significant distinction and leading the
fight to reinstall pride, jobs, and progress in that city.
Mayor, we congratulate you. I hope that the Mayor's story
will convince all my colleagues that we ought to get going on
brownfields legislation now.
Thank you very much, Mr. Chairman.
[The prepared statement of Senator Lautenberg follows:]
Prepared Statement of Hon. Frank R. Lautenberg, U.S. Senator from the
State of New Jersey
Mr. Chairman, I am pleased that we are here today to receive
testimony on brownfields legislation. This hearing is a testament to
the genuine spirit of bipartisanship that currently exists among
members of the committee. And I'm hopeful that this spirit will
continue as we address the complex and controversial issues that will
be coming before the Superfund Subcommittee.
Fortunately, brownfields legislation is not one of those complex
and controversial issues. Both parties have recognized that the threat
of Superfund liability is deterring the redevelopment of contaminated
properties. Both parties support liability relief for prospective
purchasers, developers and bankers who would clean up these blighted
properties, and restore them to productive use. Both parties have
supported making low-interest money available to communities to clean
up hazardous waste sites. And so we all support Brownfields
legislation, which would promote jobs in urban communities, and remove
contaminants from the environment.
Mr. Chairman, now that we have such bipartisan consensus, we should
act. There are more than 100,000 brownfields sites that Superfund will
not clean up because contamination levels are too low to qualify.
Cleaning up these sites can make an enormous difference for communities
all around our Nation.
One of the first bills introduced this year was S. 18, my
legislation to provide assistance for brownfields redevelopment. The
first title of S. 8, Senators Smith and Chafee's Superfund
reauthorization bill, had many provisions similar to those contained in
S. 18. Unfortunately, there is disagreement about whether brownfields
legislation should go first, or should be stalled until both parties
resolve the many issues involved in comprehensive reform of Superfund.
Some of my colleagues on the other side of the aisle have suggested
that a separate ``brownfields'' bill is a ``feel good'' measure, which
would distract Congress from more important questions. I respectfully
disagree. I think we should act now. Our communities need this
legislation. And many of them need it very badly.
Mr. Chairman, I want to be clear that I remain very interested in
revising Superfund, and would very much like to find an acceptable,
bipartisan approach to such a bill. But I don't want controversies over
Superfund to stall this critical brownfields legislation. And, as I see
it, enactment of a brownfields bill is not only the right thing to do,
but it would help promote a spirit of progress and bipartisanship on
environmental legislation.
I think many of our witnesses today will help make the case for
moving forward to address brownfields. I am especially looking forward
to the testimony of Mayor Bollwage of Elizabeth, New Jersey. His city's
experience shows that a concerted effort can turn contaminated lands
into gold mines. It's an inspiring story--one of many. And I hope it
helps convince all of my colleagues that we should act now to enact
brownfields legislation.
Senator Smith. Thank you, Senator Lautenberg.
We are delighted to have both the ranking member and the
chairman of the Full Environment and Public Works Committee
here this morning, Senator Chafee.
OPENING STATEMENT OF HON. JOHN H. CHAFEE, U.S. SENATOR FROM THE
STATE OF RHODE ISLAND
Senator Chafee. Thank you very much, Mr. Chairman.
I would prefer to go for 3 minutes if the lights could
alert me that because I'm anxious to hear the witnesses this
morning. I want to congratulate you, Mr. Chairman, for holding
this hearing on brownfields. I want to recognize you for your
leadership in the entire Superfund issue. You've worked on this
last year--I know the mere mention of Superfund makes you shake
your head, but don't despair. We shall prevail and get a
Superfund bill passed.
I also want to recognize the ranking members of the
committee and subcommittee, Senators Baucus and Lautenberg, for
their continued efforts on brownfields and on Superfund. Both
of them have labored long and hard on this subject.
One of the unintended consequences of the Superfund statute
is that new industries have shied away from urban areas,
because they're worried about liability under brownfields. They
move out to pristine areas in the countryside that we, as a
committee, are trying to preserve. So we've got an unfortunate
consequence of the legislation that we passed. The brownfields
effort is an attempt to overcome that problem.
As Senator Lautenberg pointed out, while there is a lot of
commonality between our two approaches--that is, S. 8 and S.
18--the basic difference is that we on this side believe that
brownfields should be part of an overall Superfund
reauthorization. In other words, pass Superfund legislation. On
the other hand, Senator Lautenberg has indicated that he would
like to proceed with S. 18, solely the brownfields part, and
later follow on with the Superfund revisions overall.
I agree with you, Mr. Chairman. I prefer to see it in a
package. We're having a hearing on brownfields, but I would
like to see that part of the overall Superfund reform. I really
do fear, Mr. Chairman, that absent that, if we just do
brownfields alone, that the enthusiasm to do something about
Superfund overall would slacken.
So, Mr. Chairman, I want to do everything I can to help
you. I would just quote from a letter that you and I wrote to
Administrator Browner in July 1996:
We see little benefit in moving forward with the
brownfields bill that fails to address the critically important
issues of the Federal-State relation, and potential liability
under Superfund, and we strive for the overall reform of
Superfund.
Thank you very much, Mr. Chairman.
[The prepared statement of Senator Chafee follows:]
Prepared Statement of Hon. John H. Chafee, U.S. Senator from the State
of Rhode Island
I want to thank the Chairman of the Subcommittee on Superfund,
Waste Control and Risk Assessment, Senator Smith, for holding this
hearing on the topic of Brownfields, and recognize him for his
leadership on Superfund reform generally and on this very important
part of Superfund reform, namely brownfields revitalization. I also
want to recognize the Ranking Members of the Committee and
Subcommittee, Senators Baucus and Lautenberg, for their continued
efforts on Superfund.
One of the unintended consequences of the Superfund statute is that
new industries have shied away from urban areas, which already have in
place an infrastructure to support new manufacturing and industrial
facilities, and have instead located in previously undeveloped areas
without any infrastructure to support them. Thus, a law that was
supposed to be protective of the environment has actually led to
increased development of formerly pristine lands.
In late January, both we and the Democrats introduced our bills on
Superfund and brownfields. A central focus of the Superfund bill we
introduced in January, S. 8--the ``Superfund Cleanup Acceleration Act
of 1997,'' is a strong pro-brownfields revitalization policy. We all
know what brownfields are--they are the abandoned plant that might be
contaminated, or might not be. It is the mothballed facility that a
large company is afraid to sell for redevelopment because a successor's
mismanagement might expose it to Federal liability years later. No one
knows exactly what the problems at these sites are, so people are
afraid to invest in them or redevelop them, people are afraid of
liability. So rather using old industrial sites, new development flees
the city and tears up our open space, green fields. In the meantime,
these old sites remain a blight and a big hole in local tax bases.
There is some commonality between our approach to brownfields and
the Minority approach. The legislation introduced by Senator Lautenberg
and others addresses some of the brownfields redevelopment barriers the
Committee previously identified. The bill includes grants for site
characterization, grants for States to set up revolving cleanup funds,
and liability relief or limitations for bona fide prospective
purchasers, and innocent landowners. All but one of the provisions are
similar to provisions in our comprehensive bill, S. 8.
Title I of S. 8 contains many provisions that should facilitate
brownfields redevelopment. It will provide $15 million annually to
capitalize revolving loan funds for site characterization and cleanup,
and an additional $25 million annually to capitalize a revolving loan
fund for site remediation. It provides an additional $25 million
annually to improve or create State voluntary cleanup programs. It will
lift the Federal liability cloud from sites cleaned up under a State
cleanup program, and it provides other assurance for prospective
investors.
A major difference between our position and that of the Minority is
the scope of a brownfields bill. It is our position that there are many
redevelopment candidates beyond the numerous lower risk, less-
contaminated sites that are not likely to be added to Superfund's
National Priorities List. In fact, there are many redevelopment
candidates that either are currently on the NPL or could be. Rhode
Island's Department of Environmental Management informs me that there
are over 200 Rhode Island sites that RIDEM screened as likely to score
above the Superfund listing threshold score. The vast majority of these
200 sites will never be added to the Superfund NPL list; inevitably it
will be Rhode Island's responsibility to supervise these cleanups. This
has led us to conclude that a complete solution to the brownfields
dilemma requires significant changes to CERCLA beyond Title I of S. 8.
These changes will make possible a brighter future for brownfields
sites, whether or not they are on the Superfund list or in a State
cleanup program.
During Superfund hearings in the last Congress, we repeatedly heard
testimony from State officials who were concerned about the potential
for increased Federal involvement in State voluntary cleanup programs.
We will hear similar testimony from many of our witnesses today. These
witnesses will tell us that a key element needed to make brownfield
programs work is the ability of States to provide future liability
waivers to parties that clean up these sites.
I agree. As Senator Smith and I noted in a letter on brownfields to
Administrator Browner in July, 1996, ``we see little benefit in moving
forward with a brownfields bill that fails to address the critically
important issues of the Federal-State relationship and potential
liability under Superfund.'' The time for tinkering around the edges of
Superfund is over. We need to extensively overhaul Superfund and I
invite the Minority and Administration to join us.
The Minority makes a strong case for enacting brownfields reform
legislation. While we appreciate the continued commitment on the part
of the Minority and the Administration toward improving this flawed
environmental program, we believe that pursuing stand-alone brownfields
legislation so early in the 105th Congress would seriously undermine
our effort to attain comprehensive Superfund reform this year.
Real brownfields reform starts with recognizing that States and not
the Federal Government are already cleaning up the vast majority of
these brownfields sites, therefore it follows that the key to reform is
empowering the States. It is for this reason that I believe that a real
solution for brownfields reform means removing the Federal impediments
to reusing these properties. I stand ready to work with the sponsors of
S. 18 and the Administration to make sure that we get real brownfields
reform, namely comprehensive Superfund reform, as a top priority for
the Environment and Public Works Committee and commend them for their
hard work on this issue.
I look forward to hearing from our witnesses today on this
important topic.
Senator Smith. Thank you, Senator Chafee, distinguished
ranking member of the full committee, Senator Baucus.
OPENING STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR FROM THE
STATE OF MONTANA
Senator Baucus. Thank you very much, Mr. Chairman.
I would like to speak about the approach rather than
getting in a debate about whether brownfields is a separable or
intrinsic part of Superfund reform. I believe that there's an
opportunity here to do something constructive, and I hope that
we do it.
I want to remind this committee that is the first hearing
that we've had this Congress on brownfields legislation. We've
had hearings on regulations, but this is the first hearing on
legislation. It's a good opportunity to set the right tone, to
go forward and not get bogged down by partisanship.
We would all agree there's been too much partisanship in
the last couple of years, but there has not been partisanship
on this committee. That is due to the leadership of our
chairman, Senator John Chafee and the chairman of this
subcommittee, Senator Smith. I think all of us have done a
pretty good job of trying to keep this debate above board, to
work hard to try to find solutions. We've made some progress.
I think it is also important to remind ourselves that the
approach that we have taken in the past has worked. Most
significantly, this committee wrote a very good law reforming
the Safe Drinking Water Act. That was legislation praised by
residents of both cities and States. It was praised by
environmental groups and it received overwhelming bipartisan
support.
I've been thinking a little bit about why that happened,
why in contrast to other legislation was that effort such a
success. Here is my view: the Safe Drinking Water Act was, to
use a cliche, a ``win-win'' proposition. We didn't just reduce
regulatory burdens, but we also increased environmental
protection, especially by expanding the public's right to know
about the quality of drinking water. Reducing unnecessary
regulations is a good thing in and of itself--we should do
that. Also, we should increase environmental protections. This
is a practical political matter. If you try to accomplish only
one of these goals and not the other, you are unlikely to
achieve a consensus.
As we begin to consider other environmental laws like
Superfund and the Endangered Species Act, I hope we take the
same approach that we took in the Safe Drinking Water Act.
Let's try to come up with a win-win approach that not only
makes the law less burdensome for those it regulates, but also
that provides more environmental protection for the American
people.
The brownfields legislation that we are considering today
is a good example. We all talk about the environment and the
economy going hand in hand, and the brownfields legislation
puts our words into action. There are thousands of old, vacant
industrial sites all over the Nation. Many of these sites have
some contamination but usually not very much. Most can easily
be cleaned up and returned to productive use. Yet, most of
these sites are sitting idle.
Why? One reason is that the developers are afraid of
Superfund liability. The brownfields bill makes it clear that
developers and innocent landowners would not be subject to
Superfund liability. Both bills also provide a little seed
money to help them get the ball rolling. These provisions will
help communities turn idle properties into new business
opportunities creating new jobs and economic growth. That is
already happening in some States like Oregon, and Illinois and
New Jersey. It's also happening in my home State of Montana. In
Butte, MT, county officials working together with the Chamber
of Commerce built a new Visitor's Center in an area that was
once used as a landfill. Nearby in Anaconda, folks have worked
for years to come up with a creative approach. We're turning
the site of an old smelter works into a world-class golf course
designed by Jack Nicholas. That will attract visitors from all
around the country and all around the globe. In each case it's
a win-win solution, good for the local economy, good for the
environment. The legislation that we are considering today
would mean more solutions like this.
There is another reason for passing brownfields
legislation--the Welfare Reform Bill that we passed last year.
That bill requires welfare recipients to find work--which is a
good thing--but the strategy is successful only if jobs are
available. The brownfields bill can play an important role in
helping to create jobs where they are needed. For this reason,
brownfields legislation is one of the most important economic
revitalization initiatives that we will consider this Congress.
In closing, I want to thank expressly Senator Chafee,
Senator Smith, and Senator Lautenberg and others on this side
of the dais for holding this hearing. It gets us off to a good
start. I hope and pledge every effort to work to find a common
solution, one that has give and take on both sides, as we did
when we passed the Safe Drinking Water Act.
Thank you.
Senator Smith. Thank you, Senator Baucus.
Senator Warner.
OPENING STATEMENT OF HON. JOHN W. WARNER, U.S. SENATOR FROM THE
COMMONWEALTH OF VIRGINIA
Senator Warner. Thank you, Mr. Chairman.
I join the others here in commending you and the
distinguished ranking member for your efforts and leadership.
You have been unfailing, Mr. Chairman, in your dogged
persistence to try and come up with legislative solutions to
this troublesome situation of Superfund.
It is interesting that the distinguished ranking member
from Montana, as well as, I believe, the distinguished ranking
member from New Jersey used in their statements the phrase,
``afraid of Superfund liability.''
It is deeply regrettable that Congress has passed a law
which people are fearful of. Therefore, if we have created that
fear, we have an obligation to remove it. Brownfields
legislation, in my judgment, is an effort in that direction.
But I take a word from Mr. Baucus' statement about welfare.
Many of these sites are co-located in those neighborhoods where
our welfare legislation will have a major impact. It will
provide, hopefully, the jobs that are needed. Most importantly,
these people don't have the ability to buy a car and drive to
the site on the outskirts of the cities. This legislation will
enable them to walk to work, saving the cost associated with
additional transportation. Very often public transportation in
place today will serve the sites we regard as brownfields.
So I think this is probably the best example of time and
economic advancement, together with an environmental
advancement. That opportunity is before us--let's make sure
this committee gives the Senate the leadership and guidance to
pass that legislation.
Thank you.
Senator Smith. Senator Allard.
OPENING STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR FROM THE
STATE OF COLORADO
Senator Allard. Thank you, Mr. Chairman.
It is great to be on your subcommittee, and I note with
interest all the seniority that we have on this committee.
Senator Sessions and I are the new men on the block. I don't
know about him, but I kind of feel like the cross-eyed javelin
thrower. You're not going to be making many points, but
everybody is going to be watching you.
[Laughter.]
Senator Allard. But let me just say from a Coloradan's
perspective that I come from a State that is interested in
green areas, and we've dedicated a lot of local dollars in the
State to do that. One of the frustrating things is the
brownfields sites' locations, and there are sites that can
never be dealt with because of the big liability issue that
goes with it. In some cases they are close to a Superfund site,
they get intermingled with those issues related to the
Superfund site. That is why I think we need to address both
Superfund as well as brownfields sites.
But the brownfields site legislation, which I am a co-
sponsor of with the chairman of this committee, I think would
help a lot in our State. I think from hearing the other
comments, it will help all over the country, and, certainly,
very worthwhile legislation. I hope we can get it to move
forward as a companion issue with the Superfund
reauthorization.
[The prepared statement of Senator Allard follows:]
Prepared Statement of Hon. Wayne Allard, U.S. Senator from the State of
Alabama
Thank you Mr. Chairman. I'm looking forward to today's hearing on
brownfields and the positive economic and environmental impact that
cleaning up these sites could have for Colorado and other States.
Specifically, I want to mention Colorado because in my State leaving
these sites abandoned can have a disproportionate impact on individuals
who live miles from a brownfield.
One of the unique aspects of Colorado, particularly the front
range, is that cities are broken up by green space. Unfortunately, one
of the challenges Coloradans face is growth pressure for both
residential homes and new businesses that lead to development of green
space. In fact, when Coloradans are asked what their major concerns
are, growth always ranks near the top. To protect from this the State
runs a program to buy open space for preservation called Great Outdoors
Colorado. GOCO, as it is called, spends hundreds of millions preserving
green space from development. Further, in last year's Farm bill
Congress authorized $35 million to preserve farmland threatened by
urban sprawl.
Unfortunately, the Federal Government doesn't always help in terms
of providing policies that could be characterized as preservation
friendly. Superfund, and the liability hammer it carries, is but one
good example. Because of the fear of liability, sites that otherwise
could be cleaned up and redeveloped are left empty and new industrial
development occurs elsewhere.
Mr. Chairman, with respect to brownfields I'm pleased to be a
cosponsor of your legislation. I think if we can get Federal agencies
out of the way, States will be able to clean up brownfield sites to a
satisfactory level. Thank you.
Senator Smith. Senator Sessions.
OPENING STATEMENT OF HON. JEFF SESSIONS, U.S. SENATOR FROM THE
STATE OF ALABAMA
Senator Sessions. Thank you, Mr. Chairman.
I salute you for the leadership you've given in working on
this matter. It's a complex and important issue, and I think
Senator Baucus' comments are well worthwhile. If we can improve
the environment at the same time, reduce burdensome and unwise
regulation, we've had a double advantage. I think that is
possible in this legislation, and that's why I've been
supportive of it.
I'll just share this story and conclude my opening remarks.
On the northern edge of the city of Mobile there is an area
that is of marginal strength economically. My law firm was
involved in a situation where there was going to be built a
nice, low-cost motel. A corner of that property had a service
station on it. Everything was ready to go forward, but it
became impossible for the environmentalists and the lawyers to
agree on whether or and not they could protect that motel from
future liability from the possibility of pollution from that
service station years before. As a result, that project was
dropped, the development was not made, and that property still
remains vacant. I think it indicates to us that we do need to
make sure that our government institutions and agencies can
promptly respond to determine promptly whether or not there is
a serious danger to the environment, and what it's going to
cost to fix it so that rational decisions by developers can be
made.
I salute you for working on the problem, and I look forward
to learning more about it as we go forward.
Senator Smith. Thank you, Senator Sessions.
[The prepared statement of Senator Sessions follows:]
Prepared Statement of Hon. Jeff Sessions, U.S. Senator from the State
of Alabama
Mr Chairman: I believe that today's hearing into the creation of
urban brownfields, and the barriers that impede their recovery for
productive use, are a classic illustration of what can occur when good
intentions go awry. As we look into the issues which will be raised
over the course of the next several days, I have deep concerns that in
its haste to remedy the problem of environmental contamination,
Congress has enacted legislation with structural defects that lead to
the kind of unforeseen and costly unintended consequences we will have
presented before us today.
In this case, passage of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 has led to these types of
unintended consequences. Clearly, the problem of urban brownfields is a
significant one, and we should seek to address this issue in the most
effective and efficient way possible.
The problem of ``brownfields'' is self-evident. It is estimated
that hundreds of thousands of brownfield acres exist in major cities
throughout the country. In fact, in many cities the amount of
brownfield land present exceeds the total land area of Washington, DC.
This abandoned or underutilized land, which once was put to productive
use, is often overlooked or ignored by future developers who fear
exposing themselves to Superfund's drastic joint and several, strict
and retroactive liability provisions. Further, the lack of finality and
certainty created by a State's certification of cleanup serves to
undermine incentives for restoring potentially contaminated brownfield
sites.
Finally, the effectiveness of the actual cleanup programs, both in
terms of cost and time, is often hampered by the tide of litigation
which has resulted from these regulations. Our cities and families
cannot afford the continuing loss in jobs or tax revenues that these
brownfield areas create, and we should seek measures which will remedy
the inherent problems that give rise to these situations. To this end,
I look forward to hearing the testimony of the witnesses on these
issues.
Senator Smith. Let's have the first panel of witnesses
please come forward.
Mr. Timothy Fields, the Acting Assistant Administrator at
the Office of Solid Waste and Emergency Response for the U.S.
EPA; Mr. James Seif, secretary of Environmental Protection,
Pennsylvania Department of Environmental Protection; The
Honorable J. Christian Bollwage, Mayor, city of Elizabeth, on
behalf of the U.S. Conference of Mayors; and Ms. Lorrie Louder,
director of Industrial Development. St. Paul Port Authority, on
behalf of the National Association of Local Government
Environmental Professionals.
Welcome to all of you this morning for being here. Each of
your statements, as you've written them, will be made part of
the permanent record, and if you could summarize those
statements in about 5 minutes each, we would appreciate it
because we do have another panel.
We also have a prepared statement by Senator Boxer for the
record.
[The prepared statement of Senator Boxer follows:]
Prepared Statement of Hon. Barbara Boxer, U.S. Senator from the State
of California
Mr. Chairman, resolving the issue of how to encourage the cleanup
of abandoned and underutilized industrial sites around the country is
of critical importance as we strive to revitalize our inner cities.
The city of San Francisco alone has an estimated 5,051 brownfields
sites. If we take into account the fact that many of these sites
contain multiple properties, San Francisco may have as many as 15,000
or more individual brownfields properties.
Each one of these abandoned, vacant industrial and commercial sites
means fewer inner-city job opportunities, neighborhood blight, and the
increased pressure of urban sprawl and loss of local tax revenue.
As reported in the 39-City Survey on the impact of brownfields on
U.S. Cities, local tax revenue losses to the city of San Francisco are
estimated to be between $16 million and $100 million.
The current Superfund law impedes brownfields development. Many new
businesses prefer to locate in uncontaminated areas outside cities
rather than face the costs of assessing and cleaning up brownfields,
and face the possibility of becoming involved in cleanup liability
issues for contamination caused by former users of the site.
In order to bring businesses back to intercity commercial sites,
and help revitalize our communities, we must provide liability relief
for prospective purchasers and innocent landowners while ensuring that
we in no way erode protection of human health and the environment. The
Lautenberg/Baucus bill of which I am a cosponsor would provide this
relief.
The Lautenberg/Baucus bill also authorize grants to State and local
governments to characterize brownfield sites and capitalize revolving
loan funds for brownfields cleanup. Providing these funds is critically
important as demonstrated by the success of EPA's grants for
brownfields pilot cleanup projects in the last 2 years.
California has four EPA brownfields National Pilot Projects: in
Sacramento, Stockton, Emeryville, and Richmond. We also have two
Regional EPA Pilot Projects--one in San Francisco and one in Oakland,
and EPA provides regional assistance to Los Angeles and East Palo Alto.
EPA brownfield grants are playing an important role in, for
example, the city of Stockton's plans to redevelop its abandoned
shipyard and industrial sites along the waterfront. EPA is helping the
City fund a master plan for brownfields site assessment and
remediation, and incentives for redevelopment.
San Francisco has received a $100,000 grant to help revitalize the
South Bayshore neighborhood adjacent to the Hunters Point Naval
shipyard.
In Sacramento, EPA grants are helping to redevelop the old Southern
Pacific and Union pacific railyard sites situated in the heart of the
city.
While there are many similarities between the brownfields
provisions in your Superfund reauthorization bill and the Lautenberg/
Baucus brownfields bill, I am particularly concerned about provisions
in your bill which allow Superfund cleanups to occur under State
voluntary cleanup laws and policies. State programs are designed to
clean up low risk sites and may not prove adequate not appropriate for
high risk Superfund site cleanup.
Mr. Chairman, acting quickly to resolve critically important
liability and cleanup issues in brownfield sites all over the country
is of utmost importance for our Nation.
I look forward to working with you to get brownfields reform
provisions approved as quickly as possible.
Senator Smith. We'll start with you, Mr. Fields.
STATEMENT OF TIMOTHY FIELDS, ACTING ASSISTANT ADMINISTRATOR,
OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, ENVIRONMENTAL
PROTECTION AGENCY, WASHINGTON, DC
Mr. Fields. Thank you, Mr. Chairman, and members of the
committee.
I am pleased to be here this morning to discuss the current
state of the EPA Brownfields Economic Redevelopment Initiative
and to discuss how those initiatives can inform the dialog with
the context of legislative reform, as expressed in S. 8 and S.
18.
As you know, Administrator Carol Browner will be testifying
before you tomorrow. She will discuss Superfund in a more
comprehensive way.
My purpose today is to discuss with you some of the
accomplishments of the Brownfields Action Agenda that we have
implemented over the last couple of years, and to identify some
of the issues that are raised by the legislation that is
pending before you on brownfields legislative reform.
As you know, the EPA has worked over the last 2 years to
try to address brownfields in a proactive way. There are four
major components of the Action Agenda. First, we've awarded 78
pilot grants to communities around the country. We had planned
on 50 pilots in fiscal year 1998, but 78 pilots have been
awarded to date to provide support for assessment, to
facilitate cleanup and to support redevelopment planning
activities in those communities, and to provide job training
support as well. Second, we have built partnerships with
various other players beyond the local governments. Federal
agencies, like Housing and Urban Development, the Economic
Development Administration of the Department of Commerce, the
Department of Labor--are working together to address
brownfields, job training, and redevelopment issues in
communities.
We also have worked with States. As you know, State
voluntary cleanup programs are a very important component of
effective brownfields redevelopment. Thirty-three States have
voluntary cleanup programs. The EPA has signed Memorandums of
Agreement with 10 of those State programs; most recently MOAs
were signed with Rhode Island and the State of Maryland in the
last few weeks. We have eight other Memorandums of Agreement
that are being negotiated with States. So, we hope to have 18
of those MOAs completed by the end of the year.
We also have in our budget this year $10 million to support
the establishment of voluntary cleanup programs and to make
sure those programs are developed in an effective way.
Finally, regarding State voluntary cleanup programs, we're
working together in a stakeholder process that would allow us
to develop national principles and guidance regarding the
operation of State voluntary cleanup programs and the
Memorandums of Agreement. In terms of our partnership efforts,
EPA and the States are working together on these initiatives.
We believe in terms of working together on brownfields that
the brownfields reforms that we have made under Superfund over
the last couple of years should inform the legislative debate
that you are undertaking today. We believe that brownfields
legislative reform should codify many of the reforms that we've
implemented administratively and include, among other things,
funding for technical assistance, for brownfields
identification, for assessment and reuse planning, for funding
to capitalize revolving loan funds and liability relief, for
bona fide prospective purchasers, as well as protection for
innocent landowners.
We believe also that S. 235 regarding the brownfields tax
incentive should be supported as part of the overall
brownfields redevelopment equation.
S. 8, we think, provides for many of the kinds of things we
want in legislative reform. We're encouraged to see the
substantial brownfields provisions, as well as the voluntary
cleanup provisions within S. 8. However, we do have concerns
regarding some of those provisions. We believe that the
voluntary cleanup provisions would eliminate the authority of
the EPA and other Federal agencies to respond to releases of
hazardous substances whenever a State remedial action plan has
been prepared.
The mere existence of a plan eliminates Federal authority
to respond to emergency events even where there is an imminent
substantial endangerment. The provisions would leave us
paralyzed to deal with those emergencies, and we think that is
something that should be fixed.
Second, we believe that the S. 8 language regarding
``adequate opportunity'' for community involvement is a
problem. Communities need to be involved. Those who live next
to these brownfields properties need to have a say involving
decisions of land use and remediation at these sites.
S. 8 also identifies elements for a qualifying State
voluntary response program. However, it allows some of those
programs to move forward without necessarily meeting all of
those qualifying program elements.
Finally, regarding S. 18, we think that that bill does
address many of the barriers that are preventing the cleanup
and economic redevelopment of brownfields. It promotes many of
the brownfields cleanup and economic development goals--that
are shared by the Clinton administration--and builds upon many
of the lessons learned by the EPA over the last couple of years
in implementing our Brownfields Action Agenda. We think that S.
18 has the liability relief that we need. The major concern we
have with S. 18 is that we don't believe it has an adequate
level of funding provided to support the full range of
brownfields activities.
In conclusion, the Clinton administration believes that a
comprehensive approach to brownfields legislative reform would
support all of the existing elements of the current program--
some of these elements that are in S. 8 and S. 18--but should
also include the brownfields tax incentive, we believe, is an
important element.
Mr. Chairman, thank you for the opportunity to address the
committee. Thank you for the little extra time, and I would be
pleased to answer any questions that you and the members might
have.
Senator Smith. Thank you very much, Mr. Fields.
Mr. Seif, welcome.
STATEMENT OF JAMES M. SEIF, SECRETARY OF ENVIRONMENTAL
PROTECTION, PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL
PROTECTION, WASHINGTON, DC
Mr. Seif. Thank you, Mr. Chairman.
Mr. Allard, I might point out that as a State official, I
occasionally feel in dealing with the EPA like a javelin
receiver, but I'll leave it up to the committee to decide if I
have become cross-eyed yet.
[Laughter.]
Mr. Seif. I would like to start with two stories in summary
of my testimony. One was December 1980 when President Carter
signed the Superfund bill, and he said at that point that ``for
$1.6 billion we had once and for all solved the problem of
abandoned waste sites in America.'' Flash forward nearly 16
years. Last Friday Senator Moynihan of this subcommittee
participated in a ceremony at the Smithsonian celebrating that
Institution's move for the first time outside the Beltway to a
site in Bethlehem, PA. An old steel mill will become the
National Museum of Industrial History in Pennsylvania.
If one knew nothing of the intervening 16 years, one could
say President Carter was right. Here comes a site back from
behind the cyclone fence and closed-down status. The fact is
since then we've learned that Superfund is the least successful
Federal environmental statute, at least in modern history. It
has every perverse incentive, it has frozen progress in any
number of communities around the Nation, it has enriched the
wrong people and impoverished others, and it must be reformed.
Pennsylvania would very much like to see that.
What has happened also, however, is the States which first
tried to mimic Superfund with their own hazardous site cleanup
bill got the message, and, as I believe one member of the panel
has pointed out, perhaps Mr. Fields, there are now some 30 plus
States that have programs. Our program is a statutory one. It
has pretty much gone its own way. While Superfund in
Pennsylvania has finished only 8 of 103 sites, we are now in 47
of our 67 counties with 64 final cleanups, 195 in progress. The
American legislative exchange has dubbed our program the model
for other States.
What are the elements of successful programs? My testimony
on page 2 lists them. First, let's abandon the Garden of Eden
cleanup standard. Pristine isn't even possible in nature we now
know. If we decide--and it's a fundamentally local decision--
what the future use of that land will be, we can craft a safe
level of cleanup.
Second, let's stop at some point the liability. If you have
a contaminated site and your uncle walked past it in 1952, you
will wind up litigating his estate over liability under the
present approaches of Superfund. I have myself been in Court
over residues of paint cans left in a factory in 1968. That
kind of litigation incentive has no place in community
cleanups.
Third, stop the delays in general. Get a pathway toward
bringing a site through a process and then follow it.
Finally, reduce the chilling effect of a far-reaching and a
liability scheme that reaches everybody and which is joint and
several. That has entrapped lenders and scared them off and
frozen many sites behind the cyclone fence.
Our cleanup standards are based on risk and the
fundamentally local decision of land use. Air statutes and
water statutes, it seems to me, do have a more appropriate
reach between States, but the fact is that land use still
remains fundamentally local and it should be that way with
brownfields statutes.
Second, liability protection is final in our State. You get
a release from my Department and you may proceed; it's
bankable. Unfortunately, the EPA regional office may decide
someday that there is a better way to clean it up and screw the
deal up. We hope that we can have some protection from that.
Finally, and I'll depart with a heartfelt agreement with
Senator Lautenberg on all of what he said except on one point,
and that is the use of Federal money or any money in these
sites. It seems to me that if you have a sensible cleanup
standard and then you get out of the way, the private sector
will find a site in, say, downtown York, PA, price it in terms
of its location, its value, existing infrastructure and so on.
If you then supply just enough money to determine what cleanup
costs would be and it's a realistic cost, then subtract cleanup
costs from the site value, the remainder puts the property in
play--the private sector will use it.
If it will not use it, there is not enough money in either
the Commonwealth budget or the Federal budget to bring them all
back. The fact is that we have found that money is following
sites. Law firms are advertising their ability to utilize our
Industrial Site Recycling Act, consultants are advertising it,
we have multi-site agreements with utilities and others. We can
make progress.
I see that my time is up. I simply refer to the
recommendations for Federal legislation that are at page 7 in
the testimony.
Senator Smith. Thank you very much, Mr. Seif.
Mayor Bollwage, welcome.
STATEMENT OF HON. J. CHRISTIAN BOLLWAGE, MAYOR, CITY OF
ELIZABETH, AND ON BEHALF OF THE U.S. CONFERENCE OF MAYORS,
WASHINGTON, DC
Mayor Bollwage Thank you, Mr. Chairman, and thank you for
this opportunity.
Senator Lautenberg, thank you for those kind remarks. It's
good to see you again.
Mr. Chairman, I know you have roots in New Jersey going
back to our Capital City, so I invite you back to our State to
view the work that we're doing in the city of Elizabeth.
It's a pleasure for me to testify here today on behalf of
the U.S. Conference of Mayors, as well as our great city of
Elizabeth. The U.S. Conference represents over 1,000 cities
throughout our Nation with populations of over 30,000 people,
and our nation's mayors have been at the center of our national
debate on the redevelopment of the brownfields sites and the
need for comprehensive Superfund reform. Last year the
Conference of Mayors adopted a National Brownfields Action
Agenda that called on Congress and the Administration to
develop a national brownfields.
Mr. Chairman, you have my full statement and the
attachments, which provide details on this agenda and other
items. We are now revising this agenda, and I will submit for
the record a further elaboration of these principles for a
national strategy once it is finalized.
The mayors of this nation want to thank the members of this
committee, Mr. Chairman, for all of your hard work in realizing
the importance and the development of a national strategy for
cleaning up hundreds of thousands of brownfields that can be
found all across this Nation. We believe that it is preferable
that brownfields be a major part of Superfund reform and the
reauthorization process. It is also critical that we move on
brownfields in this Congress.
Mr. Chairman, contamination of industrial property was not
caused by our local governments or the citizens who must now
live with the consequences of these lost jobs, as Senator
Lautenberg spoke about the great Singer complex in the city of
Elizabeth, and the abandonment of underutilized properties that
denigrate our communities.
In large measure, this unintended negative consequence of
our Federal Superfund policy has been the price for achieving
the Superfund program's national benefits. This unfortunate
situation simply must be addressed in a very aggressive way. We
must undo the unintended harm that Superfund has imposed upon
our communities that was spoken about by Senator Lautenberg and
Senator Warner.
I would like to explain to you and show you a little bit of
what is going on in the city of Elizabeth. You have the
Conference's 39-city survey on the impact of brownfields in our
cities. I have two photos here that show a basic before and
after site of the formal landfill in the city of Elizabeth,
which was a 166 acre tract that is now being converted into a
metro mall project.
There's been identified 56 brownfields locations in the
city of Elizabeth, and we've been able to focus our resources
on rehabilitating several of these properties.
Mr. Chairman, if you come back to New Jersey and look at
the city of Elizabeth on a former brownfields site, you will
see the Ikea store that was built on Port Authority property,
sold to the city of Elizabeth, that is now generating, along
with a Toys-R-Us Superstore, the first of its kind in the
Nation, next to an Incredible Universe that is now generating a
million dollars in annual tax revenues and more than $2 million
in State-urban enterprise zone revenues, providing thousands of
jobs for people in our city and our neighboring communities.
The pictures that I just showed you is the former municipal
landfill, 166 acre site, that we hope to put pilings in the
ground this Spring and summer that will convert to a 250-store
mega mall project and create as many as 5,000 jobs.
This has been done with minimal investment on the
government's side because we care. We have worked with a
developer on brownfields legislation, on applying for grants.
We're currently applying under that pilot program for a
$200,000 EPA grant in revitalizing this site.
But we are also, Mr. Chairman, the home of Chemical Control
that dates back to 1980, which was a Superfund site that was
destroyed by a fire, and it took 13\1/2\ years to clean up that
site, $13 million of investment in the EPA and $26 million of
investment by the State.
The Superfund site, known as chemical control, is now a
cement slab with no ability to create jobs, no ability to be
reused. It is just going to be monitored by the EPA forever.
The brownfields site, on the other hand, have generated tax-
ratables, have generated jobs and clearly an effort on
brownfields legislation in the 105th Congress is something that
will benefit our cities throughout the Nation.
Mr. Chairman, we are pleased that the brownfields issue has
the bipartisan support of this committee. The bills that have
been introduced, both S. 8 and S. 18, are excellent starting
points. We are pleased, for example, that these bills make
efforts to address the many issues that we have laid out as our
principles.
The Conference president, Chicago Mayor Richard Daley, has
made brownfields legislation one of our top priorities, and we
want to work with you to refine our proposals. We are pleased
that the funds will be made available for site characterization
and assessment work on brownfields sites, although these funds
are quite frankly very modest compared to the damage that has
been done to our communities.
Likewise, we are very pleased that both the EPA pilot
program and your bills call for the capitalization of local
revolving loan funds, although, again the effort is too modest
compared to the magnitude of the program that our cities face.
We believe that the funds generally should be directed to local
programs unless such State programs are targeted to smaller
jurisdictions that would be unlikely to administer their own
revolving loan fund.
We believe both bills need to address brownfields sites
that are not in the hands of public entities. Not only must
liability protections be extended to such public entities, but
direct grants should be available for the cleanup of properties
in neighborhoods that have shown disinvestment.
We also want to commend the committee for addressing the
need for liability protections for redevelopers of brownfields
sites, and we believe that to examine the relationship between
the State voluntary cleanup programs and the local brownfields
cleanup initiatives to effectively address the brownfields
problems in our communities.
Mr. Chairman, many other issues remain to be addressed, and
we will be supplementing our comments with further technical
comments in the drafts of both bills. But let me, again,
commend the committee for beginning a bipartisan debate on
brownfields. We support your efforts to address brownfields in
the 105th Congress, and we look forward to working with you
this year to enact legislation.
We cannot, as mayors of this great country, afford to let
another Congress go by without enacting a comprehensive
national program that will lead to the thousands of brownfields
cleanups, creation of jobs and sound local economies.
Mr. Chairman, one final point, while it is not in the
jurisdiction of this committee, we believe it is extremely
important for the Congress to enact tax incentives that will
help companies redevelop brownfields sites. I would like to
thank you for this opportunity to appear before you today, and
I am available to answer questions.
Thank you.
Senator Smith. Thank you very much, Mayor.
Ms. Louder, welcome.
STATEMENT OF LORRIE LOUDER, DIRECTOR OF INDUSTRIAL DEVELOPMENT,
ST. PAUL PORT AUTHORITY, ON BEHALF OF THE NATIONAL ASSOCIATION
OF LOCAL GOVERNMENT ENVIRONMENTAL PROFESSIONALS, WASHINGTON, DC
Ms. Louder. Good morning, Chairman Smith, Chairman Chafee,
Senator Lautenberg and committee members.
One of my main responsibilities at the St. Paul Port
Authority is to redevelop brownfields. I am also a member of
the Brownfields Advisory Committee for the National Association
of Local Government Environmental Professionals, NALGEP, whose
membership includes more than 50 cities. It represents local
officials responsible for developing and implementing
environmental policies and programs in their communities.
Mr. Chairman, I am pleased to have the opportunity to
testify here today on behalf of NALGEP and present the findings
of its brownfields project.
NALGEP's findings are documented in our report entitled,
``Building a Brownfields Partnership From The Ground Up: Local
Government Views On the Value and Promise of National
Brownfields Initiatives,'' which we have provided for your
committee, Mr. Chairman, and which we would like to submit for
the record today.
Today I will summarize NALGEP's key findings with a
particular focus on the need for legislative solutions to
facilitate the cleanup and reuse of brownfields sites across
the country.
Mr. Chairman, I would like to compliment and thank the
members of your committee for your leadership in promoting the
legislative solutions for the brownfields issue. Virtually
every community faces this important challenge. We should not
forget the fact that brownfields revitalization provides key
environmental and economic outcomes including expediting site
cleanup, renewing local economies and generating jobs, limiting
urban sprawl and associated environmental problems and
assisting Welfare reform through customized job training and
linking jobs with area residents.
In St. Paul the Williams Hill project provides an excellent
example. This 30-acre site is within the federally designated
enterprise community area. It consists of 200 to 300 foot
mounds of sand and aggregate material. There have been
substantial environmental quality problems, air quality
problems, along with sub-surface soil contamination.
The Port Authority in St. Paul recently acquired this site,
and we will take this site from 16 jobs currently to 325 jobs
with wages in the $10 to $15 per hour area. We will take the
tax-base from $80,00 per year to $650,000 per year. We will
achieve full environmental cleanup, and the bottom line is that
after we have invested over $10 million in public cost on this
site, we will leverage over $11 million in private sector
investment.
Now, Mr. Chairman, I am going to focus on NALGEP's
findings:
We have found that the EPA's overall leadership and its
package of liability clarification policies have in fact helped
establish a climate conducive to brownfields renewal. However,
we have also found that legislative action is needed to
facilitate the cleanup and redevelopment of more sites. One of
the most significant things the Federal Government can do to
facilitate brownfields reuse is to enable the EPA to delegate
the authority to limit liability and issue no further action
decisions for none Superfund caliber sites to the States with
cleanup programs, and it's important to note that these States
must have minimum requirements to protect public health and the
environment.
Here's why: States with voluntary cleanup programs are
completing the most significant brownfields activity today. New
Jersey estimates that they have cleaned up several thousand
sites; other States report similar successes. Also, the specter
of Superfund liability continues to put a damper on brownfields
cleanup and redevelopment in the development and lender
communities. Additionally, the EPA clearly does not have the
resources to review and sign off on the hundreds of thousands
of brownfields sites that exist across the country.
To delegate to the States NALGEP suggests the following
approach:
No. 1, the EPA and the States should clearly distinguish
between NPL-caliber sites and the far numerous less
contaminated brownfields sites. For example, Minnesota has
approximately 160 NPL-category sites, as compared to the over
1,500 brownfields sites.
No. 2, the EPA should only delegate to States that meet the
minimum requirements and States, as you probably know, vary
widely because of the differing technical expertise and
capacities.
No. 3, the EPA should retain its ability to reopen its
involvement at a particular brownfields site under exceptional
circumstances.
Continued Federal investment is critical to site
assessment, remediation and redevelopment. This is where the
Federal dollars will help dramatically. The EPA pilot grants
have enabled many communities to develop brownfields programs,
leverage private sector investment and begin to give developers
and lenders the confidence and the clear message that the
communities are serious about brownfields developments.
NALGEP has found that Congress should build on this success
by broadening the Federal investment in brownfields through the
following:
Mr. Chairman, we recommend and we have found that Federal
grants are needed to establish more pilot programs. Funds for
cities and States are needed to capitalize brownfields
revolving loan funds, and, last tax credits for expenses
related to assessment and cleanup of brownfields sites is
important, as well.
Mr. Chairman, thank you for your time today. We appreciate
it.
Senator Smith. Thank you very much, Ms. Louder.
We will take 5 minutes on the first round. Let me just
start with you, Ms. Louder, on a question--some have said with
voluntary cleanup that the States would participate in a race
to the bottom.
Have you seen any signs that the States have endangered
their citizens in their voluntary cleanup programs?
Ms. Louder. Mr. Chairman, not at all. In Minnesota, which I
can speak to relative to the State Pollution Control Agency,
this is an agency that is very clearly interested in doing the
right thing as far as cleaning up the environment. In a word,
they are our counterparts. They are our partners in the
development business, as we are attempting to bring these sites
into a redeveloped status and bring jobs to these sites. So the
combination of both the real estate and financing expertise, as
well as their environmental expertise, is critical.
I think that the safeguard here would be the EPA reopener
where if the States do not do the right thing, the EPA can in
fact step right back in, and NALGEP feels very strongly about
that, Mr. Chairman.
Senator Smith. Mayor Bollwage, do you have any idea how
many sites, brownfields sites, you have in Elizabeth?
Mayor Bollwage Yes, Mr. Chairman. We did a study with the
Regional Plan Association in the metropolitan area, and there
were 56 identified sites in the city of Elizabeth--that is
combined between land that is owned by the Port Authority,
Conrail, the railroads and former abandoned industrial sites,
as well as some neighborhood sites such as a cleaners that may
want to expand. I mean, you know it is always different.
Brownfields sites could be--they are like fingerprints, Mr.
Chairman. I mean, they are unique to each individual community.
Senator Smith. What is your estimate of tax revenue loss to
your city?
Mayor Bollwage We could estimate anywhere between $5
million to $10 million on an annual basis on all of the
brownfields sites that we lose on an annual basis in the city
of Elizabeth.
Senator Smith. What is your position, and if it's
different, the position of the Conference of Mayors on the
issue of finality in the cleanup of these sites?
Mayor Bollwage The mayors, especially myself, regarding the
Chemical Control site--we were not informed of the final
capping of the location. It was basically dictated to us as a
municipality on how the final structure was going to occur at
the chemical control site, and I don't know if you are aware of
what happened there in 1980, but there were 55,000 drums of
hazardous material that just blew into the sky and created a
massive pollution. About eight firemen had serious health
problems and eventually died during the course of the next 10
years. The chemical control site in all of our estimations
during the 1980's was eventually going to be able to be turned
over to a municipality and be created into a park land for some
type of reuse.
That did not happen, Mr. Chairman. It's just a cement slab
out there that could never ever be used; whereas, brownfields
will generate jobs, generate tax ratables and create a stronger
local economy.
Senator Smith. Do you believe, though, that once States or
communities have completed a cleanup either at the State level
or through voluntary cleanup, do you believe that they should
be liable for additional Federal liability?
Mayor Bollwage Who should be liable?
Senator Smith. Those who cleaned up the sites. Should there
be additional Federal liability at the State level after a site
has been----
Mayor Bollwage For the people responsible for cleaning up
the site?
Senator Smith. Right.
Mayor Bollwage Well, Mr. Chairman, I can only look back at
the history. You had Singer Sewing Machine in the city of
Elizabeth. You had an awful lot of corporations that paid an
awful lot of income taxes and corporation taxes to the U.S.
Government through the years, and they have now either
abandoned or walked away from the site and left the
municipality the ability to clean up those sites. So the burden
on the municipality is an extremely unfair burden after the
Federal Government has clearly benefited from the corporation
and the income taxes through the years of this.
Senator Smith. So you support waiving Federal liability if
the sites cleaned up, after it's cleaned up?
Mayor Bollwage There has to be waiving of some liability at
some point.
Senator Smith. Mr. Seif, I was interested in the story that
you told regarding the success in Pennsylvania, and I was just
curious as to how you were able to get the numbers of people
involved in the cleanup in those various sites that you talk
about in your statement without the waiving of Federal
liability. How were you able to pull that off?
Mr. Seif. In a couple of ways. Finality is important, and
we give a very definite, final release under State law,
including from private lawsuits. Bureaucracies don't like
finality but the private sector does. I'm not saying one is
right or wrong, but we need to, I think, demonstrate a bias, if
we legislate, in favor of finality--really exceptional
circumstances to interrupt what has in fact gone into a stream
of commerce or onto the tax rolls after it has been done.
That finality that we are able to give, plus sensible
cleanup standards and a great deal of public relations work--
and that's just what it is, going out and looking for
customers--has brought us as many sites as we have.
Senator Smith. But you could have been--are you saying that
your success would be greater if you had finality?
Mr. Seif. I think so. We continue to hear evidence from
people about reluctance to join our program because of the fact
that it's only our program and not a broader one.
Senator Smith. Senator Lautenberg
Senator Lautenberg. Thanks very much, Mr. Chairman.
Mayor Bollwage, I just want to be certain about something
that was in your testimony and I read on page 2--``We believe
that it's preferable that brownfields be a major part of
Superfund reform and the reauthorization process.'' And you say
in the same sentence, ``It is also critical that we move on
brownfields during this Congress.''
So are you connecting brownfields to Superfund
reauthorization because in the second part of the sentence it
sounds to me like you're saying, ``Hey, we've got to move on
brownfields.''
Mayor Bollwage Senator, I don't want to trivialize the
impact of Superfund legislation or cleanup throughout this
country, but I think it's important that brownfields
legislation moves in some form in order to benefit our
municipalities and the ability to create jobs and stimulate
economic development. I think brownfields could probably move
on its own with a minimal investment because the developers in
our community, they want to know that not only the Federal
Government, and the State governments and the municipal
governments care, but they want them to play a role in the
development of this property. That is why I believe that
brownfields could probably move on its own.
Senator Lautenberg. Thank you. I wanted to be sure of that
because you in particular, since we know each other and we are
both long-time New Jerseyans, know that our State problems are,
as usual, the same but more of the same. We have--our
industrial past has left us a legacy that we didn't expect to
inherit, and that is lots and lots of contaminated sites, and I
assume Pennsylvania has a similar structure, as has Rhode
Island perhaps with its industrial history.
So to me having seen the success you've had with mine
fields of contaminated sites there--the Port Authority, PCBs,
you name it--you've been able to create an incredible business
site. You neglected to say that when a sale is on at IKEA, the
turnpike can be tied up for miles with people waiting to bring
their money in and buy their goods there at this formerly
abandoned site.
Mayor Bollwage Like you said, Senator, if you would have
asked me 10 years ago would people be coming to the city of
Elizabeth enough to shut down an exit of a turnpike, I would
say to you, ``That would be a bit ridiculous,'' but that is
exactly what happened in November this year when the turnpike,
Exit 13A, was shut down for 4 hours because of the numerous
shoppers that were coming to former brownfields locations and
now doing their shopping for the holiday season.
Senator Lautenberg. I don't know if you remember, but I was
the Commissioner of the Port Authority that paid for 13A at the
time that it was being done.
Mayor Bollwage Well, we thank you for that, Senator.
[Laughter.]
Senator Lautenberg. It wasn't done for you. It was done for
the public at large but Elizabeth benefited.
[Laughter.]
Senator Lautenberg. Mr. Seif, in contrast with the song,
``there's seldom heard a discouraging word,'' your description
of Superfund was at best bleak, and I would have to say lots of
discouraging words. But I ask you as you appropriately boast of
Pennsylvania's successes with their own sites, what the level
of contamination was? Would these sites have qualified for NPL
registration or are they on the low side of contamination?
Mr. Seif. Your point is well taken. Clearly, they are not
NPL-rankable sites, though there are quite a number of sites in
Pennsylvania which for some reason are on the NPL and subject
to 1,200 pages of directions and decades of cleanup that
probably should not have been either, and I can think of a few
in New Jersey from my days at the EPA that meet the same
description.
Senator Lautenberg. The number of pages doesn't necessarily
make for bad legislation. What makes for bad legislation is the
inability to enforce it into an effective program.
Mr. Seif. Well, those 1,200 pages are just the
instructions, not even the law itself.
Senator Lautenberg. What would you have done with those
sites? Would you just simply have them walked away from? Who
would you go after to clean them up? Where would the money come
from?
Mr. Seif. Superfund has performed and will perform at some
sites, with a narrower range than I think it is now applied, a
critical and non-duplicable function. Indeed, the forcing of
technology and the inventorying of sites, and indeed the energy
we see behind this brownfields legislation arises out of
Superfund. I think what we need to do, however, is not mimic
Superfund in the States--and we've explicitly not done that--
but to take the next step, to go beyond, and to get the EPA to
understand that the setting up of criteria, as it now wishes to
do--and some indeed are in Senate legislation about approving
our programs--could well be reversed. I think the States ought
to get together and decide to approve the EPA's programs every
once in a while, including in this area.
Senator Lautenberg. I would think it might vary from State
to State? When you come into a State like New Jersey, the most
densely populated State in the country, and compare that to my
colleague from Montana, one could reasonably disagree on what
level of cleanup might be in order, but the one thing that I do
see is that Superfund ought to be renewed. I think what you're
suggesting in your last comments is that brownfields could very
well fill that kind of gap, as I heard you describe it, between
the very complicated, the highly contaminated site, and that
which needs just a little bit of a push. I think the
brownfields legislation would fill that gap nicely.
Thank you.
Mr. Seif. I certainly agree with that.
Senator Smith. Senator Chafee.
Senator Chafee. Thank you, Mr. Chairman.
First, I want to congratulate Senators Allard and Sessions
for their willingness to plunge into this very complicated
area. I'll be the first one to confess--although I've been
wrestling with this for a number of years--that I don't claim
to know all of it. But I applaud you for your willingness to
try and master this intricate subject.
I would like to ask the panel a question to see if I've got
this thing correctly. What we're trying to do here is to give
some definiteness to lenders and potential purchasers. Is that
correct? In other words, we're trying to solve the problem that
Senator Sessions referred to, that people just wouldn't touch a
particular site because they didn't know of the potential
liability. So what we're trying to do is get exactness, if we
can.
Is that right, Mr. Fields? Don't give to long of an answer
because I'm under a time limit here.
[Laughter.]
Mr. Fields. I think that is a critical element. I think
there are elements in S. 8 and S. 18 regarding relief for
prospective purchasers and innocent landowners. It is a
critical part of the equation.
Senator Chafee. OK, all right.
Now, as I see it, we've got three kinds of sites that we're
talking about, what you call low-risk sites, low-risk
brownfield sites. Then the next one are those NPL, National
Priority List, as possible, but not listed sites. In my State
we've got 200 of them. They've pre-scored over 28.5. They're
not on the list but they pre-scored at that.
OK, is everybody with me? That is the second group.
Now, the third group are the NPL-listed Superfund sites.
OK, now as I understand it--and you can correct me, Mr. Fields,
if I'm wrong. What Mr. Seif wants, and, as I understood the
first part of Ms. Louder's testimony, when the State takes
over, the low-risk ones or, the ones that pre-score, that the
EPA does not have a lead role in those. The EPA can have a lead
role in the third group, the NPL-listed sites. Now it stands
that the next EPA may easily re-enter the issue, and the EPA
now shows up and says, ``You, Pennsylvania did a lousy job,''
so we're coming back in to make you do it all over again
because, ``This cleanup isn't adequate.''
Now, as I understand it here, we, at least S. 8, only lets
the EPA come in in extraordinary circumstances.
Now, am I right here, Mr. Seif, or tell me what you think.
Mr. Seif. We would hope that that is what S. 8 does and
would urge that it do that and that it define an extraordinary
circumstances, because----
Senator Chafee. Because if you let the EPA come back in at
one of these less polluted sites after the State cleans it up
and everything seems fine, but then along comes the EPA and
says, ``No, that is not right.''
Now, do you agree with me, Mr. Fields?
Mr. Fields. Well, I didn't read S. 8 quite the same way.
The way I read S. 8 is that if a State had a voluntary response
plan the EPA would be precluded from going in, and I'm really
concerned about that. I do believe that--although there are
very effective State voluntary cleanup programs out there--when
there is an imminent and substantial endangerment, an emergency
situation, like in Hoboken, NJ, for example, the EPA needs the
ability to be able to respond and assist as well as when there
is a need to respond to a State request to supplement State
authority or State ability in these types of emergencies or
imminent substantial endangerment situations. I'm concerned
that the way that the current brownfields provisions of S. 8
are drafted would preclude us from responding to real
emergencies.
Senator Chafee. What do you say, Mr. Seif?
Mr. Seif. I can only speak for Pennsylvania but----
Senator Chafee. Well, that's good enough, speak for
Pennsylvania.
[Laughter.]
Mr. Seif. I would be delighted to do so. It goes almost to
the ``race to the bottom'' problem--will some State not have a
decent program and should, therefore, the Senate, the Federal
Senate, legislate for that case fully. We would rather not be
fettered by any Federal oversight on the category of site you
list after we have run it through our program. It just seems to
me that there are diminishing public policy returns, down to
zero, to do that.
Senator Chafee. Well, I see my time is up so I just want to
quote or say what Ms. Louder has said on page 8. She said, as I
understand it:
The EPA should provide that it will not plan or anticipate
any further action at any site unless at a particular site
there is an imminent and substantial danger to public health in
an environment, and/or the State response is inadequate or the
State requires the EPA's assistance.
What we're trying to do here, it seems to me, is get some
cutoff point where the Federal Government won't come back in,
and so that there is definiteness to the whole business. What I
worry about is ending up with some program where no matter what
you do you have a State voluntary cleanup program, and you
think you're done with it, and then comes in the EPA and says,
``No, that is not right.''
Well, my time is up here.
Ms. Louder. Mr. Chairman?
Senator Smith. Yes, Ms. Louder.
Ms. Louder. If I might respond----
Senator Smith. Yes, you want to respond, sure.
Ms. Louder. Thank you, Mr. Chairman, and Senator Chafee.
That is precisely it, and let me clarify my earlier
comments. NALGEP's position is that the States in fact should
take the lead on the non-NPL sites, and that the EPA should be
involved in the Superfund sites and that the States must have
adequate methods to draw the distinction between the two and to
deal with that. The safety net, so to speak, Mr. Chairman, is
that if one of the States has a problem with that procedurally,
then the EPA could come in under the re-opener, but the bottom
line is we do need closure because our lenders and our end-
users of the sites, the manufacturers, and the developers and
so forth are, quite frankly, afraid of the EPA coming in
subsequently, and that has put a chill on developing these
sites.
Senator Smith. Thank you.
Senator Allard.
Senator Allard. Thank you, Mr. Chairman.
Mr. Fields, I don't know whether you've had an opportunity
to read over the testimony from some of the other members of
your panel, but I'm looking at testimony from Mr. Seif, and he
says that there are three points that need to be laid for
brownfields redevelopment. I would like to have your response
to those three points. I'll go over them to refresh your
memory.
His first point is a release of Federal liability of State
land recycling sites, and his second is a waiver of Federal
permitting requirements at State and land recycling sites, and
then the third point is the authority for Governors to veto
proposed NPL listings.
I would like to know what your response is to his
suggestion.
Mr. Fields. On the first point, we, obviously, want to
provide clarity as to what sites are covered by a State
voluntary cleanup program and to make sure that only in very
limited situations would the EPA get involved.
We do think that there are some situations where it may be
appropriate, and we should make that very clear, as Ms. Louder
says, but that should be a very rare occurrence. The State is,
obviously, going to handle most of these sites, and we at the
EPA will not get involved. But we do think that there are some
situations, an emergency situation, for example, where it may
be appropriate for the Federal Government to step in or to lend
assistance. We don't think that our ability to do that ought to
be precluded.
So we do agree in general about providing clarity, but we
don't believe in a complete elimination of Federal authority.
Second, with respect to his point on the waiver of Federal
permitting requirements, under RCRA corrective action, the
State wants to clean up that site, where they have not already
done a cleanup of that RCRA corrective action unit, under a
State voluntary cleanup program, we, the Federal Government,
are willing to go along with that and allow the cleanup to
proceed, pursuant to that State program, and it would not have
to be further addressed under the RCRA corrective action
program, as it is currently.
We are trying to make that clear in our guidance and to
make sure that we work with States to make clear that voluntary
cleanup programs are another option.
Regarding the authority of Governors to veto proposed NPL
listings, we've operated for the last several years in EPA
under a system where we seek State concurrence on the listing
of sites on the NPL. We are OK with that, and with our ability
to work together with States to get their concurrence on
listings. That process has worked fairly well. We do believe,
though, that there may be situations where a Governor's veto
for the listing may be threatening the public health and safety
of the public around that site. So, I do believe that there
ought to be certain exceptions or waivers from that ability of
the Governor to approve the listing of a site. We may want to,
in an emergency, or for public health reasons list a site, if
that is the only way we can assure that the people who live
around that site are protected.
Senator Allard. And, as you might guess, Mr. Seif, I would
like to have you respond to his response, if you would please?
Mr. Seif. We would go directionally the same but a little
further in each case. The release of Federal liability, of
course, is the issue of, as Senator Chafee says, ``Where are we
going to cut it off and make for finality?''
On the waiver of permits our own State statute and some
other State statutes provide for the waiver of State permits.
That includes water, and air and other things or activities
that go on during the cleanup.
When those permit requirements attach, and if the Federal
ones also are attached, we would be right back into the morass
of delay and problems and too many cooks baking the cake. If a
State has a good brownfields program, let it work without
interference. That is the whole purpose of the brownfields
carve-out, I think.
Third, we think that sometimes the Federal Government
doesn't know best about what local conditions are, and that the
Governor probably has a better shot at knowing and could
exercise his or her authority in that regard. I don't believe
you're going to get a Governor at a site that is a falling down
emergency saying, ``We don't want to list it.'' The fact is
that that Governor will use every statutory tool, Federal or
State, at his disposal but would not use the Superfund when its
track record has been so dismal.
Senator Allard. I want to thank both of you for your
responses. I see my time is up.
Senator Smith. Senator Sessions.
Senator Sessions. Thank you very much, Mr. Chairman.
Mr. Seif, let me just ask you this just briefly. How is it
that a piece of property--like in my example of the motel and
the gas station. Everyone seemed to know about it; they were
concerned about it. At what point is the State environmental
agencies or the EPA aware that this possibility exists, and
what's the danger for a purchaser to develop over that area
without telling anybody. How does this occur?
Mr. Seif. Generally local lore and anecdotes. There's also
the CERCLA list maintained by the EPA of all sites about which
any allegation of contamination has ever been lodged. If you
own land and you're on the CERCLA list, you've, of course, just
had a considerable devaluation of your property, whether or not
the allegation was correct. You can get off that list
eventually, but at Superfund speed, meaning not very fast.
Senator Sessions. Well, I think sometimes it is publicly
known by the government agencies and sometimes not.
Mr. Seif. Correct.
Senator Sessions. To me two things are necessary. First is
a prompt decision, a plan for the proposed developers that
someone can afford. He can know that if he follows this plan,
he should be able to develop that property successfully. If he
thinks he is going to get into it and spend hundreds of
thousands of dollars and then later finds out that there
millions of dollars, that he was going to be asked to do more,
he will walk away and find another site in the suburbs
somewhere and leave the inner-marginal area alone.
OK, that being said, looking at some of these proposed
expenditures, we've got here--I've have some questions about
the wisdom of that. I would rather use that money, it seems to
me, in a way that could get a potential developer a prompt, an
authoritative, definitive answer on what he needs to do before
he can buy that property. A lot of them will buy it, if they
know. If they are not certain, they're going to leave it
undeveloped.
Do you have any comments or thoughts about that?
Mr. Fields. Just a couple. One is that over the last couple
of years we have removed more than 30,000 sites from the
overall master Superfund inventory--that is 75 percent of the
40,000 sites have been dropped and many of the sites are in
major urban cities around the country.
That effort has provided for some relief from the stigma
associated with being in the Superfund inventory, and that has
encouraged prospective purchasers and developers to develop
many of those properties.
For example, an old steel mill in Buffalo, NY, is being
converted into a tomato farm because the site is no longer in
the Superfund inventory and people there are more willing to
get involved in the development of properties like this one.
I think also that, as we have tried to do administratively,
and the various bills before this committee are trying to do
legislatively, things that change liability for prospective
purchasers, innocent landowners. In addition, the change last
year to the statute to deal with lender liability, we believe,
will provide a greater incentive for people to get more
involved in redevelopment of these properties. I think we're
sending a signal that we want to encourage developers, we want
to work with people who want to redevelop contaminated
property. Relief from liability can be provided in these ways.
We are trying to do all we can to remove the stigma of being
associated with the Superfund inventory.
Senator Sessions. Sometimes the States are slow in
responding too, aren't they?
Mr. Seif. Our statute has specific deadlines in it so that
there can be certainty in those respects as well. I would say
in fact if there is a reopener for the EPA in a statute, that
it too would see some deadlines so that that might be the way
to get some finality into a site after the running of a certain
amount of time--just a thought.
Senator Sessions. One more question, Mr. Fields.
S. 8 proposes grants and loans for characterizing and
remediating brownfields and identification of brownfields. How
mechanically will those grants be allocated? Who will make the
decision and what standards will be employed, or do you know?
Mr. Fields. The terms of S. 8 are fairly similar to what
we've been implementing now the last couple of years. The
grants are awarded out to communities who are interested in
assessing and planning for remediation of brownfields
properties in their jurisdiction. The EPA regions under our
current program work with us in headquarters to identify
communities that would be recipients of those grants, and we
would work with them to provide the funding.
Senator Sessions. Who makes the decision about when three
cities apply and there is money for one, who makes the
decision?
Mr. Fields. Right now that is a decision made by the EPA,
and right now it's me. You're looking at him right here.
[Laughter.]
Senator Sessions. Right, I know who to call.
[Laughter.]
Senator Sessions. All that line, I'm somewhat concerned
about the word ``remediating'' because to me once we start
remediating, then Washington, DC, is going to be in the
business of cleaning up. Is that a distinction? Can you see a
distinction between remediating and paying for the cleanup in
every city in America?
Mr. Fields. Yes, we are looking at that. That is a very
limited amount of money that is provided in both bills for
remediation. Dollars for remediation are provided through a
grant program to local governments to capitalize revolving loan
funds.
Senator Sessions. Once the doors get open----
Mr. Fields. Right. We recognize that most of the cleanup is
being done by responsible parties or by other private
investors. We're finding that the $200,000 in grant money for
inventory and assessment that we're providing is being
leveraged by millions of dollars in private sector investment
in these communities across the country. The limited amount of
money that we're currently providing to capitalize loan funds
for cleanup are for those rare situations where municipalities,
for example, acquire bankrupt property, and then the city has
to remediate it because the responsible party has walked away.
So we think that the revolving loan fund would allow loans to
be given to prospective purchasers who want to redevelop
property where there is not a private interest there to provide
money for cleanup.
Senator Sessions. You decide which one is getting it?
Mr. Fields. Yes, sir.
[Laughter.]
Senator Sessions. Certainly, every eligible person--there
wouldn't be enough money to come close to supplying the needs
of every eligible claimant.
Mr. Fields. We have seen historically over the last couple
of years that about $200,000 to a community who really has
expressed an interest in getting involved in our brownfields
assessment program, and who has applied for one of these grants
can benefit greatly from it. We expect that communities may
benefit from seed money up to about $350,000 for cleanup of
brownfields.
Senator Smith. Thank you, Senator Sessions.
We do have another panel so I'm going to ask that in the
second round we just ask one question and try to not have four
parts to each question, if you can do it that way.
Mr. Fields, and to all the panel, there seems to be
something indefinite about the term ``finality'' here. There's
not an agreement on how we reach finality. It is very
interesting what you said a few moments ago. You said that
``The EPA may want to overrule a Governor because of health
concerns,'' and there's a good example there. I mean, what is
the implication there, that the Governor doesn't care about
health concerns of his State or her State? I mean, I think the
issue--and I didn't mean to imply that you meant that--but that
is really the underlying implication here, and I think that is
where we have trouble coming up with finality. I believe that a
Governor probably has as much interest in finality and cleanup
and preservation of the environment as you or anyone else in
the Federal Government.
Let me ask you specifically how do we--what is the best way
to get finality? Are you willing to allow the States to make
the decision that they need to make in order to get somebody to
clean that site up, the brownfields site and redevelop it? Are
you willing to accept their decision?
Mr. Fields. I think, Mr. Chairman, that on for both the
toxic waste dump, the NPL site, and the brownfields sites the
same situation applies. We do not want to overrule the
Governor, as you say. I think that we would like to work
together, as Commissioner Seif has said. We would like to work
together with the States and agree that if a site poses a high-
risk, public health threat, this type of site ought to go on
the NPL. That way there won't be any difficulty, there won't be
any controversy, there won't be any disagreement between the
Federal Government and the States because we will all agree up-
front that this type of situation would possibly trigger a site
listing on the NPL.
Likewise, in the case of a voluntary cleanup program, we
would hope to work together with Mr. Seif and other State
officials around the country and agree that there would only be
a rare, limited number of situations, as the panel has
indicated, that would reopen a voluntary cleanup program and
possibly trigger some Federal involvement. They would be
situations that everyone would agree on--the imminent
substantial endangerment, an emergency situation that may
occur. That way when we, the EPA, and the States all agree that
these are the limited, very limited, number of situations where
we might get involved, I think that would provide a great
degree of finality to the regulated community, to developers. I
think that would provide the kind of finality that everybody on
the panel has been talking about. But, we have to have some
criteria for the listings of NPL sites and what would trigger
Federal involvement, and, second, in the case of voluntary
cleanup programs, we need to identify up front those rare
events where we might need some additional assistance to be
provided in that site-specific case.
Ms. Louder. Mr. Chairman?
Senator Smith. Yes.
Ms. Louder. If I might offer just a brief suggestion here,
NALGEP is recommending on the bottom of page 13 just a simple
way of doing that--brownfields should be delegated to the
States, and there are only two circumstances under which the
EPA would walk back in and get involved in that: First, is an
imminent and substantial threat to public health or the
environment; and, second, either the State response is not
adequate or the State requests EPA assistance if they don't
have the capacity.
Mr. Chairman, in getting to finality, as you mentioned, I
would suggest that the committee look seriously at that
suggestion on page 13 of our report.
Thank you.
Senator Smith. Thank you.
Senator Lautenberg.
Senator Lautenberg. Yes, thank you, Mr. Chairman.
I'll make a short statement for the benefit of our new
colleague, Senator Sessions, and that is that you have to be
sure that Mr. Fields doesn't have Caller-ID, which shows the
number that's calling in before he answers the phone.
[Laughter.]
Senator Lautenberg. I would ask this question. In New
Jersey there is a famous philosopher named Yogi Berra who said,
``It ain't over 'til it's over,'' and that kind of applies to
this question of finality because I ask you what do you do with
a newly discovered problem? You find out that there is
migration of contaminants from one place to another that was
unexpected. Very often the terminology--and Mr. Seif, you know
it well--``O and M'', operations and maintenance, because you
haven't really been able fully to get at the source of the
contamination. What does one do? Who pays in the event of a
discovery of a new problem at an old site?
Mr. Seif.
Mr. Seif. I guess I have to dissent from Ms. Louder on that
point. Someone will pay but it seems to me that the buck can
stop at the State House, and increasingly the idea of delegated
programs and then watching over it is something the EPA has
been doing for 30 years micromanaging is becoming increasingly
less appropriate as the States have gone up and running.
I think the States can run programs like this once they're
delegated, and that State brownfields laws can have--or State
tort laws; you know, the discovery rule and all of that being
imported into how much did you know and when did you know it--
can be run by the States. Every case doesn't have to be a
Federal case.
Senator Lautenberg. I am prohibited by the code set down by
the Chairman from following on with an intelligent deep
perspective question. So I will not ask it.
Mr. Fields. Can I just add a comment? I think we all agree
that in the majority cases the sites that we are talking about
today, the brownfield sites, the sites covered by State
voluntary cleanup programs, are typically going to be covered
by State programs. They are dealt with at the local level. I
think, though, as you said, Senator Lautenberg, we have to make
some provision for when the unexpected does occur, those rare
events that occur, the emergencies that happen. There needs to
be some agreement up front that there are some situations when
the Federal Government may need to provide assistance or may
need to get involved. Those situations should be rare but we
need to make clear that we define those, and that we don't
preclude those protections. That is my biggest concern.
Senator Smith. Senator Chafee.
Senator Chafee. Mr. Seif, I would like to ask you the
following question: the low risk, or what the EPA calls
brownfield sites, they're taken care of. The State can go in
there and probably the chances of the Federal Government back
in are very, very slight. I would like to go to the next
category of the three that I formerly outlined; namely, those
NPL caliber sites. They're not on the list yet but they pre-
scored a 28.5 or more.
Now, tell me please your experience with those sites. When
you go in and clean them up under a voluntary State program,
does the--do purchasers come along and buy them with complete
confidence or is there always the worry that EPA will come back
in in some form?
What has been your experience in those, that category?
Mr. Seif. As Secretary in Pennsylvania and as a private
practitioner before that, we keep people away from those sites.
If a site ranks, even if not formally listed and subject to an
instruction back of 1,200 pages about how to clean it up,
investors will not come. The situation doesn't arise when a
site gets ranked like that.
Senator Chafee. So the only ones that get cleaned up are
the so-called brownfields low-risk sites? It is hopeless to try
this second category, or the NPL caliber sites? They don't get
cleaned up or people don't come and buy them?
Mr. Seif. Well, until Superfund is reformed that may be the
case, yes.
Senator Chafee. Well, not maybe; it is, isn't it?
Mr. Seif. In Pennsylvania that has been the case, yes, sir.
Senator Smith. Senator Sessions.
Senator Sessions. Mr. Fields, as a former Federal
prosecutor, and you mentioned, I believe--somebody did--the
limitations on action.
Has any thought been given to extending the length of the
statute of limitations from discovery of the fact that a
previous owner had a deliberately, and willfully and knowingly
deposited illegal substances? Are you familiar with that?
Mr. Fields. I am familiar with that, yes.
Senator Sessions. What is the status of that?
Mr. Fields. Well, we're just beginning to look at that in a
broader context of overall Superfund reform. We have not come
up with any sort of position on that issue yet. That is
something that we should look at.
Senator Sessions. Well, what is frustrating is you find a
site and investigation shows that it was a deliberate dump,
willfully and knowingly done. The company is bankrupt and the
only real vindication that can be done would be a prosecution
of the person who willfully and deliberately did it, but the
statute of limitations has run by the time they find it.
I think that is something we ought to give some thought to.
Mr. Fields. We will do that.
Senator Sessions. And I think--I'll just share this.
Mr. Seif, your comments about agencies--I've worked with
them as a Federal prosecutor and U.S. attorney for 12 years,
and it is an institutional feeling. It is hard to overestimate,
as you suggest in your opening remarks how reluctant they are
to make any final decision, but somebody somewhere has got to
do so. You've got to decide what is a minimally dangerous site,
which ones are--you're going to let the State do and let it go
forward and identify the ones that are not. Hopefully, this
legislation will help in that regard.
Senator Smith. Thank you, Senator.
Let me just say before we go to the next panel that
committee members will have until Friday to submit additional
questions. Should they do so you would have until March 14 to
submit the answers to those questions, and that would also hold
true for the next panel as well.
Thank you all very much for coming. We appreciate it.
Mr. Seif. Thank you.
Ms. Louder. Thank you, Mr. Chairman.
Mr. Fields. Thank you, Mr. Chairman.
Mayor Bollwage Thank you.
Senator Smith. The next panel is Mr. Peter Guerrero, the
Director for Environmental Protection Issues, Resources,
Community and Economic Development Division, General Accounting
Office; Mr. William Riley, general manager of Environmental
Affairs at Bethlehem Steel Corporation; Mr. Peter Scherer,
senior vice president and counsel of the Taubman Company,
Bloomfield Hills, MI; and Mr. William K. Wray, senior vice
president of Citizens Bank in Providence, RI.
Gentlemen, thank you all for being here today, and, again,
as with the previous panel, your complete statements will be
part of the record. If you can summarize it in 5 minutes or
less, that would be appreciated.
We'll start with you, Mr. Guerrero, if you are ready to go.
STATEMENT OF PETER F. GUERRERO, DIRECTOR FOR ENVIRONMENTAL
PROTECTION ISSUES, RESOURCES, COMMUNITY AND ECONOMIC
DEVELOPMENT DIVISION, GENERAL ACCOUNTING OFFICE
Mr. Guerrero. Thank you, Mr. Chairman.
I am pleased to be here today to discuss the committee's
efforts to support the cleanup and redevelopment of
brownfields. While a number of factors have impeded the
redevelopment of these properties, real or perceived,
environmental contamination has required businesses to incur
additional costs associated with assessing and cleaning up
these sites.
For some businesses these additional costs have encouraged
them to locate elsewhere, resulting in a loss of tax revenues
and employment in communities with brownfields.
Last year you asked us to provide information on the legal
barriers that Superfund presents for redeveloping brownfields
and the types of Federal financial support needed. My testimony
today summarizes the findings from that work and provides some
additional information from our ongoing review of State
voluntary programs, a tool available for addressing
brownfields.
State voluntary programs replace enforcement actions with
incentives to encourage rather than compel private parties to
clean up contaminated properties. States, like Pennsylvania,
have found these programs to address brownfields are faster and
less costly than enforcement-based cleanup programs.
In summary, Mr. Chairman, we found the following:
First, even though most brownfields are not contaminated
enough to be listed as Superfund sites, owners are unwilling to
identify contaminated properties and prospective developers and
property purchasers are reluctant to invest in projects that
could leave them liable for future cleanup costs under
Superfund. Most of the voluntary cleanup program managers in
the 15 States that we surveyed felt this concern discouraged
some participation in their programs. Both bills before the
committee include various provisions that would help address
these concerns.
Second, to help promote the redevelopment of brownfields,
States and localities desire Federal financial support to cover
some of the costs associated with assessing these properties
for contamination, cleaning them up and developing voluntary
cleanup programs. Over the past few years the EPA and the
Congress have provided funds used by States and localities to,
for example, develop inventory of brownfields properties.
Funding provisions in the bills would continue to expand this
support.
I now would like to turn to the issue of Superfund legal
barriers. Under Superfund the EPA could compel the parties
responsible for hazardous waste contamination to clean up a
contaminated property or pay for its cleanup. Most States have
also adopted enforcement-based programs modeled on Superfund.
These State and Federal programs have limited resources and
have generally been used to address the most highly
contaminated sites. While the EPA targets its Superfund
enforcement actions to properties on the National Priorities
List, or NPL, a national list of the most highly contaminated
sites, Superfund's liability and enforcement provisions apply
to non-NPL sites, as well. States have found that the threat of
Superfund liability often convinces responsible parties to
clean up highly contaminated sites. However, States also
believe that Superfund liability discourages some parties
responsible for sites with lesser contaminated, such as
brownfields, from coming forward to voluntarily cleanup their
properties.
For example, prospective investors and developers are wary
of cleanup liability provisions that may hold them liable for
any contamination later found at sites. Former property owners
may also be liable for cleanup costs if contamination occurred
while they owned properties.
Thus, even the suspicion of current or prior contamination
may make developers hesitant to purchase brownfield properties
and owners reluctant to place them on the market.
To deal with this concern and encourage participation, most
States with voluntary programs offer a release of liability
under State law. However, State officials feel that some
potential volunteers would still find Superfund liability a
deterrent to their participation.
Moreover, managers of State voluntary programs cited
limiting Federal liability for certain parties, such as
prospective purchasers, as one of the more important ways the
Federal Government could facilitate additional voluntary
cleanups.
The Congress has already taken action last session to limit
the liability of lenders. The two bills before this committee
also include various provisions to help address concerns about
Superfund liability issues at brownfields, such as limiting the
liability for prospective purchasers and clarifying
circumstances under which current landowners would not be held
liable for past contamination.
Now I would like to turn to Federal financial support.
During our review of brownfields and voluntary programs, we
found that States and localities desire Federal financial
support to help them characterize, assess and cleanup
brownfields, as well as to establish and support voluntary
programs.
Most of the States in our review of voluntary programs,
even those that levied fees high enough to cover their program
costs, identified Federal funding as a key way for the Congress
to promote these programs. The pending bills would continue and
expand on the Federal support already provided. Specifically,
the bills would give the EPA the authority to provide grants of
up to $200,000 per property, to characterize and assess the
nature and extent of contamination at these sites. These
characterization and assessment studies are required before
these properties can be redeveloped.
Because these studies involve research into a property's
history and a technical analysis of its conditions, they may be
costly and potentially discourage redevelopment. We estimated
that for most brownfields assessment costs could average from
$60,000 to $85,000 per site, and for some properties with
groundwater contamination costs could exceed $200,000. However,
the per site amounts in the bills to help fund property
characterization and assessment should be sufficient for most
brownfields.
In addition to providing funds for site characterization
and assessment, both bills would provide other financial
support for brownfields redevelopment. It was clear from our
discussions with key parties that such financial support would
be most welcome.
Mr. Chairman, this concludes my statement. I would be happy
to answer any questions you or the committee members may have.
Senator Smith. Thank you, Mr. Guerrero.
Mr. Scherer.
STATEMENT OF J. PETER SCHERER, SENIOR VICE PRESIDENT AND
COUNSEL, TAUBMAN COMPANY, ON BEHALF OF NATIONAL REALTY
COMMITTEE
Mr. Scherer. Thank you, Chairman Smith, Chairman Chafee,
Senator Lautenberg, Senator Sessions.
My name is Peter Scherer. I'm the senior vice president
with the Taubman Company. The Taubman Company is a national
real estate company specializing in the development and
management of regional shopping centers. I'm speaking today on
behalf of the National Realty Committee. NRC represents the
Nation's leading real estate owners, builders, managers,
lenders, and advisors. As such, the organization has focused
extensively on the national policy issues associated with the
redevelopment of our Nation's brownfield properties.
Several weeks ago I was here in Washington and had the
pleasure of meeting with Jeff Merrifield of the chairman's
staff, and Scott Slesinger from Senator Lautenberg's office. We
had a wonderful exchange of ideas and I left our meeting
encouraged and energized, and I am delighted to be here today
to have the opportunity to share with you some thoughts on what
the real estate industry believes it will take to get our
country's non-productive, modestly contaminated and hopelessly
idle real estate back into the Nation's economic mainstream.
Two very positive legislation proposals, S. 8 and S. 18,
include provisions which reflect a sophisticated understanding,
in our view, of how current law can best be modified to
encourage brownfields development. NRC is on record as
supporting both of these bills.
We are also on record as supporting the efforts made by the
EPA to foster brownfields development, but while these efforts
are encouraging, they are simply not enough to achieve the
economic and environmental objectives sought by S. 8 and S. 18.
As the sponsors of the bill our well aware, and as EPA
Administrator Browner has stated, changes to the Superfund law
are required to achieve the significant long-term impact that
we seek, and let me specifically mention some initiatives taken
by the EPA that the real estate industry applauds. But at the
risk of striking a more sober note, let me also explain why
these well-intentioned initiatives fall short of their intended
objectives.
First of all, we've heard earlier this morning that the EPA
has removed thousands of sites from the so-called CERCLIS list
and issued guidance encouraging regulators to consider
realistic future land uses in determining the extent of the
cleanup activities. If it's known that a property will become a
parking structure, then why force a cleanup to the level needed
for a day care facility? This is a common sense approach which
the business community finds both workable and sensible.
Second, the EPA has issued guidance identifying
circumstances under which it will enter into prospective
purchaser agreements. Developers are willing to take risks, but
there is simply too many other opportunities available for any
successful developers to bet their balance sheet on a
brownfield where you have unlimited environmental downsides,
not to mention the difficulty in obtaining financing.
In each of these situations the EPA has set a course, which
my industry believes is in sync with the national policy
objective of returning our country's brownfields to productive
use. So why isn't it enough? Well, let me tell you specifically
in 50 words or less, and at the end of each guidance I've
referred to above, the EPA has inserted a disclaimer which
reads as follows, and I quote:
This policy does not constitute rulemaking by the Agency
and is not intended and cannot be relied on to create a right
or benefit, substantive or procedural, enforceable at law or in
equity, by any person. Furthermore, the Agency may take action
at variance with this Policy.
So as well-intentioned as these initiatives may be, it is
clear they will fall short of providing the kind of certainty
to attract private-sector capital.
I come here today not asking for the creation of economic
or financial incentives to encourage brownfields developments,
but rather, in the case of our industry, we're looking only for
the removal of disincentives and asking that you level out the
playing field, and, in doing so, create the kind of certainty
that permits prudent investment and intelligent risk
assumption.
So what do we think is needed? The various amendments to
CERCLA that we've discussed today would significantly reduce
the uncertainty that kills many deals with the type of
stability, predictability, and certainty needed for brownfields
initiatives to succeed. The EPA has endorsed this reform and
there is no doubt that its enactment would make a difference in
the real world.
At the end of the day our industry is asking for nothing
more than the kind of certainty and predictability that other
Federal agencies are able to provide. We ask that you empower
the EPA to provide the equivalent of no further action letters,
which can be obtained from the Securities and Exchange
Commission or the private letter rulings that the Internal
Revenue Service regularly provides to parties concerned with
the consequences of contemplated activities.
Companies will frequently seek from these agencies an
advance ruling before a certain activity, such a complex
corporate restructuring, is undertaken. It is only after an
assurance from the Agency is received, after there is certainty
as to how the restructuring will be treated, and after the
parties receive a document they can rely on does the actual
transaction occur.
Providing this degree of predictability and certainty with
respect to our Nation's brownfields will give our industry the
confidence and the ability, we believe, to achieve the type of
long-lasting objectives that we've talked about this morning.
The National Realty Committee remains committed to the
enactment of policies and encourage reinvestment, and we remain
willing to work to achieve those goals that I know that we all
share.
Thank you very much for this time.
Senator Smith. Thank you, Mr. Scherer.
Mr. Wray.
STATEMENT OF WILLIAM K. WRAY, SENIOR VICE PRESIDENT, CITIZENS
BANK, PROVIDENCE, RI
Mr. Wray. Thank you, Mr. Chairman, and thank you for this
opportunity to address this important subject.
My name is Bill Wray, and I'm a senior vice president of
Citizens Financial Group. Citizens is a $15 billion commercial
bank holding company headquartered in Providence, RI. We have
over 230 branches throughout Connecticut, Rhode Island,
Massachusetts, and New Hampshire.
Please realize that I am not attempting to represent an
official position on behalf of the banking industry or any of
its trade associations. In my role as manager of Credit
Administration for Citizens, I've seen first-hand how
environmental risk affects banking at the community level. This
testimony is a reflection of my personal experience in that
role.
In my review, both bills are fairly similar in their
approach to the brownfields issue, although S. 8 also addresses
a variety of other needed reforms. Since my charter was to
address brownfields, I will confine my comments to that.
Let me start by saying we have a great deal of interest in
seeing brownfields initiatives work. As a secured creditor, we
can't succeed unless our borrowers succeed. This means they
must be able to quantify and respond to environmental risk
issues without incurring inordinate expense or disproportionate
liability.
We, in turn, have direct exposure to environmental
liability arising from our role as a secured creditor, as well
as an owner and operator of facilities.
But, finally, as members of the community, we live and work
alongside our customers. We pass by abandoned industrial sites
that have been locked out of consideration for productive reuse
because of the chilling effects of unpredictable environmental
liability. All of us want to see these sites brought back to
useful life with the economic and aesthetic benefits that will
result.
We believe that these bills represent a substantive effort
to address many of the issues at hand, and it is an effort we
welcome. We know that this process can work, and here is a real
life example:
About 18 months ago, Citizens made a presentation at a
seminar that had been sponsored by the Rhode Island Department
of Environmental Management. Our message was that brownfields
projects were a good business opportunity. We encouraged
potential borrowers in the audience to bring their deals to us
for review. As a result of that presentation, the owners of a
company called Display World, Inc., contacted us about
financing the purchase of the 13-acre Carol Cable facility in
Warren, RI, which had been idle for some time due to various
contamination problems.
We were part of the team involving the site owners, Display
World, a prospective purchaser, and State regulators. Today the
facility is again in operation and over 100 jobs have returned
to Warren, RI, as a result, with growth expected to continue in
that facility.
So you can see we believe in this process, and we're
encouraged to see the attention it's receiving from this
committee.
Let me address two specific provisions of S. 8:
First, I understand and appreciate the reasoning behind the
windfall lien provisions in section 105. However, it is unclear
what precedence the proposed lien in favor of the United States
would have. If the intent is to have the lien be junior to all
encumbrances of record at the time the lien arises, this should
be explicitly provided in the bill. If the intent is otherwise,
this creates a difficulty for lenders because of the
uncertainty associated with the amount involved. As a practical
matter, it can be difficult to quantify the incremental market
value that is attributable to a response action. So this
provision, as currently drafted, could insert an unknown
quantity of unknown precedence into the credit underwriting
equation.
I recommend then that the bill explicitly provide that the
windfall lien is junior to prior encumbrances of record. In any
event, I ask that the intent of this provision be made clear to
avoid this being decided case-by-case by the courts.
My second comment relates to section 106, which provides a
safe harbor for purchasers of real estate in certain
circumstances. One of those circumstances applies when the
purchaser has made all appropriate inquiries into the
environmental contamination. We support the bill's direction to
the Administrator to provide clear standards for these
inquiries, but we would ask in addition that the Administrator
recognize that banking regulators have also issued guidelines
on appropriate inquiries for environmental contamination, and
we are examined as to our compliance with these guidelines. Our
hope is that these two sets of directives could be reviewed and
synchronized so that lenders do not receive direction from the
Federal Government which is in conflict or inconsistent on this
issue.
If I may, let me close with a more general comment, again,
based on my front line experience:
All parties to this subject--legislators, regulators,
community groups, and private sector businesses--seem to agree
that our goal is to foster responsible reaction to existing
environmental problems, and to provide safeguards against
future danger from contamination.
But the statutory and regulatory apparatus that has been
created to foster this goal can be bewildering. It is
especially difficult for grassroots businesses, small scale
entrepreneurs or community banks, to afford the legal and
technical analysis necessary to untangle the Gordian knot of
environmental rules, and to understand the myriad of potential
liabilities that may arise from them.
As a result, those grassroots businesses must either take
on these liabilities blindly, which we must all agree is
undesirable, or more commonly, they forego opportunities for
desirable redevelopment. Thus, many smaller sites will remain
undeveloped and unremediated, which otherwise could have been
revitalized by the energies of the private sector.
Again, I think we must all agree that this latter outcome
is undesirable, even tragic. It is made no less tragic by the
fact that none but the best intentions have underlain the
legislative and regulatory initiatives in this area.
The bills we're discussing today are a laudable effort to
further our common goal, as I've outlined it above, but they
are limited to a narrow section of the regulatory spectrum as
it affects environmental matters. I hope this constructive
approach will be continued and will be eventually broadened to
cover a greater range of environmental legislation.
Please realize we are not asking for our risks to be
eliminated, or for our costs to be subsidized, or for
protection against the consequences of negligence on our part.
We ask only that our environmental risks be quantifiable,
predictable, and reasonable. This will allow us to evaluate
environmental risks in context with our business risks, rather
than having it loom as a black hole of liability that trumps
all other issues when making a credit decision. This will help
our borrowers to succeed, and that is the only way that we, as
lenders, can succeed.
Again, I applaud the tone and direction of these bills, and
that of other recent legislation in this area. I appreciate the
opportunity to provide this testimony.
Senator Smith. Thank you, Mr. Wray.
Mr. Riley.
STATEMENT OF WILLIAM J. RILEY, GENERAL MANAGER, ENVIRONMENTAL
AFFAIRS, BETHLEHEM STEEL CORPORATION, ON BEHALF OF THE AMERICAN
IRON AND STEEL INSTITUTE
Mr. Riley. Thank you, Mr. Chairman.
I represent the American Iron and Steel Institute who is
here today in the interest of cleaning up the sites that we're
talking about today.
The committee's leadership is to be commended for
addressing brownfields legislation, which has been addressed in
a number of bills introduced in Congress, in particular, S. 8
and S. 18. These bills address some of the issues associated
with brownfields, but we believe that legislation must address
all of the issues which created the impetus for legislation in
the first instance.
The steel industry has been a leader in promoting
reasonable brownfields legislation at the Federal, State, and
local levels. The States have taken the lead on this issue
through voluntary cleanup legislation, such as you've heard
from Mr. Seif today, and have collectively developed the model
framework that has achieved widespread support.
In particular, I would like to commend Governor Ridge of
Pennsylvania, who has been a strong advocate in the Great Lakes
region for brownfields legislation. A wide variety of
brownfields sites can be cleaned up and redeveloped effectively
and efficiently under existing State programs if Federal
legislation is enacted that promotes the one master concept--
namely, that remediation under a State program will satisfy
Federal requirements.
There are basically two categories of brownfields sites--
abandoned sites and underutilized sites. Usually, abandoned
sites are relatively small in size and have been left
deteriorating for a number of years. As a result, the
infrastructure associated with these sites has also been
deteriorating. Such sites are often municipally owned and
usually will require financial assistance for redevelopment.
Brownfields sites with a viable owner are far larger in size,
and, with effective legislation, can undergo cleanup without
the need for public funds. Often these sites are underutilized
or surplus portions of large manufacturing sites which have
ongoing adjacent operations.
As a result, the infrastructure associated with these sites
is usually in much better condition than that for abandoned
sites, making them more attractive to potential buyers. There
are a growing number of these sites in the United States,
especially as a result of the restructuring activities in
industries, such as steel, that have been made, and continue to
be made, in response to intense competitive environments.
There are three primary objectives that must be addressed
in comprehensive brownfields legislation. They are Federal
finality, certification of State voluntary programs and
eligibility of sites. I will address each of these as follows:
Federal Finality--State voluntary cleanup program provide
certain incentives to buyers and sellers of contaminated
industrial properties, and thus facilitate faster cleanup and
redevelopment of sites. However, to provide buyers and sellers
sufficient incentive to make the necessary investment in these
properties, these parties need assurances of finality--that is,
assurances that they will face no further liability under
Federal and State law for those sites, or portions of those
sites, that are investigated and cleaned up in accordance with
the State voluntary cleanup program. We support the provision
in S. 8 that eliminates CERCLA liability once a site has been
cleaned up under a State plan. We are concerned, however, that
the EPA could second guess the cleanup through the RCRA
statutes, and, therefore, need RCRA liability relief as well.
Certification of State Voluntary Cleanup Programs--To
quality for Federal liability relief a cleanup should be
conducted pursuant to a certified State voluntary response
program. We believe that the criteria set forth in section
102(b) of S. 8 would be appropriate criteria for the
certification of State voluntary response programs.
Eligibility of Sites--In order to promote and accelerate
the cleanup and redevelopment of a wide universe of
underutilized industrial properties, brownfields should be
broadly defined. In particular, we strongly believe that RCRA
sites where cleanup has not yet commenced and where cleanup
would be accelerated by participating in a State voluntary
cleanup program should be eligible. There are approximately
6,100 RCRA corrective actionsites, large portions of which
often have minimal or no contamination. Less than 5 percent of
these sites have completed cleanup.
We would like to have the ability to clean up portions of a
facility under a State voluntary cleanup program and sell them
to potential buyers for economic redevelopment purposes. RCRA,
which triggers corrective action facility-wide, often precludes
our ability to redevelop these properties in a timely manner.
Again, we are not proposing to skirt our corrective action
obligations, but merely striving to accelerate cleanup for
economic redevelopment purposes. In addition, we are not
seeking financial assistance or grant money to clean up our
facilities. We believe the one master concept where the State
programs satisfies all cleanup requirements results in
comprehensive liability relief is the way to proceed.
Thank you for addressing this issue.
Senator Smith. Thank you very much, Mr. Riley.
Senator Sessions has to leave early so I'm going to yield
my time to him at this point.
Senator Sessions. Thank you, Mr. Chairman.
It is an area--it does appear that business developers and
realtors, environmentalists and government officials ought to
be able to agree. We are at a point where if we can take these
marginal sites and have them cleaned up by private investment
and make them into productive taxpaying properties, we have
done something real good and it does appear that the present
law prohibit and inhibits that. Mr. Chairman, and all of you
that have worked on this so long, I salute you.
Let me ask Mr. Scherer in the course of his real estate
experience, and Mr. Wray, as a lender, have you actually seen
circumstances yourselves in which properties where there was a
willing buyer and developer and a willing lender in those
circumstances collapsed and not be developed because of fear of
environmental concerns?
Mr. Scherer. Yes, we have in our own company one example of
a relatively small project, one project that didn't go forward
because of the inability to obtain the appropriate, in this
case, both State or Federal sign-offs, and I think that there
are many examples that are out there that are all too familiar
to people in my industry.
Mr. Wray. The bank I worked at before I joined Citizens,
Senator, in 1 year during the real estate depression that hit
New England we had at least $10 million of charge-offs just in
one State because we couldn't foreclose on properties because
the environmental liabilities were too uncertain. They may not
have been too severe; they were too uncertain, so we had no
choice but to walk away.
Senator Sessions. And if you had foreclosed on it, you
could have been liable for the cleanup which would have
exceeded the amount of loan you had outstanding?
Mr. Wray. That is correct, and some of those issues have
been corrected, but we had a lot of potential buyers who we
could have worked with to take that site who wouldn't touch it
for the same reason.
Senator Sessions. It is my experience that when you've got
a willing developer and a willing lender, delay is the enemy.
Is that fair to say?
Mr. Scherer. You know our industry well.
Senator Sessions. The longer the delay, the more likely it
is to collapse. Another property becomes available and the
person goes somewhere else. I do think you're dealing with a
real problem.
Mr. Chairman, I hesitate to suggest a new little twist to
this, but it is something that is coming to mind that I think
might be helpful.
In terms of Federal dollars that's spent how does the idea
of a program, a grant program, to encourage State environmental
management agencies to form rapid response teams to do an
immediate analysis in review, and, if appropriate, approval of
cleanup plans for sites.
Would that be a cost-effective way, in your opinion, to
increase the number of sites that are cleaned up? Do you have
any thoughts about that?
[No response.]
Senator Sessions. Mr. Riley.
Mr. Riley. I can't speak from personal experience. In the
States in which we operate, which are principally here in the
Northeast, we, as a company--most of those States have programs
underway. I can't speak to the other States from the point of
view of whether or not that kind of a program would help.
However, I do have a personal observation, and that is that we
have been at this environmental program since the early 1960's,
and I think we should substantially increase the ability of
States to manage programs. I think we need to stand back and
let them assess their ability to do that. We should be in a
position to do that.
Mr. Scherer. In Michigan I can tell you that the State is
very active in trying to get a number of brownfields sites
under some sort of productive use, and I met fairly recently
with a senior executive of a large national grocery chain.
There was a meeting with the Department of Environmental
Quality in Michigan, and they were very motivated in learning
from us can we help them identify these sites so that they can
try to market them.
For example, the fellow from the grocery industry said,
``You know, we're in this business and we understand it well,
but our risk is, whether somebody is going to walk in today and
buy a loaf of bread or something. We cannot accept a risk which
subjects our balance sheet to unlimited liability, even if the
site is in the exact location where we want to be.'' Many of
these sites are serviced by public transportation, and in the
real estate industry if you don't eliminate those unlimited,
environmental risks and provide certainty, developers will go
to the suburbs or go somewhere else where there is ample
opportunity to develop properties. You need to take a look at
some of these sites and their locations and how ideal they
would be for what we want to do, but, yet, unreasonably risking
private capital just doesn't make business sense.
Senator Sessions. Well, that--I think nothing can be
better. In some of the lower income neighborhoods they have a
discount grocery store very conveniently located. It could save
them a significant part of the income.
Mr. Scherer. And a nice new one instead of one that has
been run down and not renovated.
Senator Sessions. Thank you.
Senator Smith. Thank you, Senator.
Senator Lautenberg.
Senator Lautenberg. Thanks, Mr. Chairman.
Mr. Scherer, I was curious, is there a--are there minimum
sizes for companies to belong to the National Realty Committee,
the NRC?
Mr. Scherer. I don't know what the--if there are actual
printed criteria. It is----
Senator Lautenberg. Are there small--yours is a giant
company, but are there smaller operators?
Mr. Scherer. Yes, very much. It's a very broad spectrum of
people interested in the real estate industry.
Senator Lautenberg. Because I was curious as to whether the
rules that you're proposing would be of benefit to all size
purchasers.
One of the things that I sense in the panel's discussion--
it was very good; all of you, let me compliment you--is that
the focus kind of gets away and gets to the larger entity.
Mr. Riley, in particular, you had an appeal there, if I
understood correctly in a quick review of the testimony, for
the companies to be able to develop these sites to a point, or
clean them up, and then turn them over to other people who
would develop them. In that role the company would be kind of a
middle man.
Mr. Riley. Yes, Senator, we've got large steel plants, many
of which we've closed and we're in the process of cleaning them
up under various programs, and primarily the EPA's corrective
action program. What we are attempting to do is develop
portions of those properties, and what we're seeking is
legislative changes which facilitates that, not avoids
responsibility in the program but which removes the heavy
bureaucracy within these programs, which impede progress and
impede our ability to separate out particular portions of
properties, which we, in fact, have done in many instances but
do not have any liability relief. That portion of it, the lack
of liability relief, we believe is going to impede the further
development from the financial community and buyers.
Senator Lautenberg. Yes, but what--it raises a question for
me and that is why isn't the smaller business, the smaller
proprietor, able to get kind of first-hand review of that? As
you construct liability and definition of what constitutes
finality, I think you run into some serious problem there. It
is very hard to say that this is all that we have to worry
about, and I couldn't agree with you more--you don't want to
leave these things open-ended because, my gosh, where does it
stop?
For the banking industry, Mr. Wray, we've taken very good
effort in the signing of the budget reconciliation last year to
limit lender liability, which I think makes sense. Lend someone
$10,000 and wind up with an obligation for a half a million
dollars. It just didn't make sense, but in this case, Mr.
Riley, what I kind of sense is that the companies are looking
for a chance to make some money on this public program, really
narrowing the definition of finality, liability, etcetera, and
I think if the same conditions were made available to the
smaller businessman, the individual who wants to open a couple
of stores or something of that nature, I think that what we're
doing is assuring the larger company that they wouldn't have
any risk connected with it. I think we ought to extend the same
courtesies and the same opportunity to the smaller
businessperson who can't afford what XYZ steel company can do,
and let them get in there and do it.
Do you disagree?
Mr. Riley. I don't disagree. I think liability relief
across the board is appropriate.
Senator Lautenberg. Yes.
I just want to ask Mr. Guerrero a question, if I may, Mr.
Chairman.
In your testimony you talked about States as well as
localities that need Federal assistance to do the evaluation
characterization, assess and cleanup--$85,000 is the number you
used--of brownfields sites. And, by the way, this number is
jumping all over the place, as you know. It's gone from a low
of 85,000 to a high of 500,000, based on witness presentations.
That is a fairly narrow range.
You say that the assessment themselves would have to be
there before the developers would come into purchase the
property, and I think that that is probably reasonable, but S.
8--if we're distinguishing between two bills--there is no
argument about the fact that we could use good brownfields
legislation. It is a question of where it comes in the scheme
of things.
S. 8 excludes States from receiving assistance to perform
these assessments. S. 8 also requires that the States put up a
50 percent match in order to qualify for Federal funds to
capitalize that, a cleanup loan fund.
Won't the S. 8 provisions end up preventing States from
moving expeditiously to get brownfields development programs
started?
Mr. Guerrero. To date the States have been a very effective
partner in this process, and it would seem reasonable to want
to include them in the future.
Senator Lautenberg. But if we could limit the scope of the
liability, why couldn't we expedite these things, going direct,
which is what I'm proposing in S. 18, and not incumber them
with the requirements of S. 8?
Mr. Guerrero. I'm not sure I entirely follow your question,
but I think the concern initially is whether the funds could be
made available to the States, as well as localities and the
parties themselves.
Senator Lautenberg. Yes, I have no problem with that, but
we tried to make it easier by not having the States serve as an
intermediary that might slow the process down. I would ask you
to take a look at S. 8 and S. 18 and make the comparison. We
want to jump out ahead because we think that we have a piece of
legislation that can be considered, that doesn't in anyway
inhibit the inability to reform Superfund, which is a goal that
we all salute here. But get this section out and I haven't
heard one witness yet say that we don't want to clean up the
brownfields. We want to do it; we're interested in limiting
liability. Everyone, by virtue of their testimony, certifies
that this is a pretty good program, and I say then let's move
it.
I don't want to inhibit Superfund's reauthorization in any
way, but I thing this is separate and apart. I was trying to
get an assessment from you, as you did your study, whether you
saw problems, one with the other.
Mr. Guerrero. Our own view is that from talking to the
States and others involved in brownfields redevelopment, the
States have been a very effective partner in that process and
have not slowed it down, but in fact have facilitated
brownfields redevelopment.
Senator Lautenberg. Thank you.
Thank you, Mr. Chairman.
Senator Smith. Senator Chafee.
Senator Chafee. Thank you, Mr. Chairman.
First, Mr. Riley, I would like to commend you for the
summation you have in the back of page 5 and then goes on to
page 6, where you list those things that will be the result if
we can speed up this brownfields and the overall approval of
cleanups.
The only thing I would add in there is a point that was
made by Senator Lautenberg and Senator Warner, and that is,
what it means to the creation of jobs in the inner city. Not
only would jobs be created, but I think this point is an
excellent one about we would be retaining those jobs in the
inner city where so many people would find them readily
available. They would not have to drive to some green, pristine
area where the plants would otherwise go. So I would just
suggest you add that into your list.
Mr. Wray, I was interested where you said you deplored the
red tape that you had to go through: ``the regulatory and
statutory operation or apparatus that has been created to
foster the attainment is bewildering, and especially difficult
for grassroots business--small entrepreneurs, community
banking--to afford the legal and technical analysis necessary
to untangle the Gordian knot of environment rules.''
I think that presents us with a real challenge. We really
should do something about this. So I appreciate that guidance
that you gave us and want to thank you, and want to thank all
the members of the panel. You've been very helpful.
I have no further questions, Mr. Chairman.
Senator Smith. Thank you, Senator Chafee.
Mr. Guerrero, in your testimony you said that the voluntary
program managers in the 15 States that you had surveyed
identified Superfund liability as a barrier to tracking
volunteers to accomplish cleanups, including those at
brownfields.
Did you mean to limit that to only prospective purchasers
or did you also include owner-operators in terms of the
liability issue?
Mr. Guerrero. We surveyed States using a questionnaire and
they were very clear in stating that proposals to limit the
liability of lenders, fiduciaries and prospective purchasers
would be very helpful. In another area they said that they felt
that the lack of resolution of this issue of Superfund
liability did limit the participation by some individuals in
their voluntary programs.
Senator Smith. Could I ask each of you the same question?
Do you believe that the prospective purchaser is sufficient or
do you believe that the owner and the operator must also be
given the same treatment as to prospective purchaser?
Mr. Scherer.
Mr. Scherer. Well, I must say in the case of these sites,
the members of the National Realty Committee by and large
aren't the current owners of them, given the constituency of
our membership, but, obviously, we are the kinds of people who
would like to become a prospective purchaser, purchase and
develop these properties. So I speak from the standpoint of the
developer, not necessarily from the current owner, but I do
know that with many sites out there it's a lot cheaper to put a
chain-link fence and a couple of Dobermans on the property than
it is to go through the worrisome and very expensive, and
perhaps unlimited, liability situation involved with a cleanup.
So I think that there does have to be some recognition of
that. Many of the sites, perhaps sites we've talked about this
morning even, won't get into the cleanup program because of
sellers who are unwilling to let the regulators or consultants
come on to their land and begin peeling the onion of
information.
Senator Smith. Mr. Wray, do you want to answer the same
question?
Mr. Wray. Senator, as I said, we can't do anything right
unless our borrowers understand what's going on and that their
good faith efforts are rewarded, and so we lend typically to
very small businesses and our typical commercial loan may be
under a million dollars. What I'm concerned about is that those
folks can't afford to pay somebody to read 1,200 pages of
cleanup standards, can't afford to have somebody understand
this on their behalf so I think, without getting very specific,
you have to look at prospective purchasers but you also have to
look at owner-operators to the extent that they acted in good
faith or they may not have been aware of issues.
I mean, there was an article in the Providence Journal the
last couple of days about a gas station owner who lives about 2
miles from me whose business is being closed down because of a
leak. He had no idea where it came from, what's happening to
him, or how to deal with it.
Now, again, these things have to be dealt with, but right
now it's simply bewildering. No offense intended, but the
Bethlehem Steel probably understand this to the T, but a
community bank and a community bar is going to have a very hard
time coping with this. As a result, the response has been to
run away from it.
Senator Smith. Mr. Riley.
Mr. Riley. Thank you, Mr. Chairman.
Not surprisingly, we believe that owners-operators need
liability relief, and that is appropriate. We operate very
large sites for Bethlehem. We're usually in the center of a
community. We've been present for a very long time--many
years--and we have an investment in the community. When we shut
down these facilities, we have an interest in trying to help
preserve the jobs. Senator Chafee pointed out we should
preserve the jobs in the inner cities. We have chain-linked
fences around our properties for security purposes. We would
like to take those fences down and develop the properties. It's
in our interest to remove all barriers to that process. We see
barriers throughout various statutes, and what we're trying to
do is to work with you and your staff to remove them so that
proper cleanups can occur and those properties can be
redeveloped.
Senator Smith. A major difference between the provisions in
brownfields and S. 8, section 1 of the bill, and S. 18 is that
one deals only with prospective purchasers and the other deals
with owner-operators and prospective purchasers. It seems a bit
discriminatory, doesn't it, if you have a owner-operator who
wants to clean the site up but doesn't get liability relief,
whereas if he sells the property, the liability relief is
there.
I mean, do you all agree with that point?
Mr. Wray. Senator, if the intent of this is to put these
back in the economic mainstream and it lets you understand and
quantify risk, you can't leave that half of the equation out,
meaning it should apply to both.
Mr. Riley. We believe that S. 8 is a very good start. We
would recommend addressing the issues which we've outlined.
Senator Smith. Let me just ask one more question of each of
you on finality.
As I asked the last panel, there seems to be some
difference as to how you get that finality and indeed who has
it. Are you willing to accept finality at the State level?
Mr. Guerrero, is that acceptable or do you believe there
are States that couldn't meet the standards to provide for the
protection of the environment by granting them that authority?
Mr. Guerrero. I would like to make a couple of observations
on that question.
First, of the State voluntary programs we looked at 12 of
the 15 States did provide a release from State liability. Of
course, they could not do that for CERCLA, but they were able
to do that under their own State laws.
To help shed light on this, I would add there are an
important number of considerations--first, that almost none of
them did, however, provide a blanket release from liability.
They all allowed for some type of reopener under certain
circumstances--fraudulent submission of data, ineffective
remedies and so forth.
The second consideration is that the States themselves when
it came to Superfund liability did find Superfund liability to
be useful in bringing recalcitrant parties to the table for
dealing with the problem sites, not the brownfields sites but
the sites of higher risk--the Superfund NPL caliber type of
sites. In other words, Superfund liability was useful for
getting those parties to the table to deal seriously with those
problems and to own up for their responsibilities there.
But it is a balancing act and it's balancing between having
in your back pocket the threat of that liability to get the
cleanups versus the incentive to get volunteers to come forward
and cleanup sites of lesser risk, and a number of States that
we talked to were able to maintain that kind of balance by
adapting the degree of liability relief, as well as the
conditions of the programs, to the degree of risk posed by the
sites.
Senator Smith. Are there sites out there, brownfields
sites, that would be redeveloped if there was a way for Federal
liability to be released?
Mr. Guerrero. I can't point to specific sites, but I can
say that we were told by any number of States that
participation would increase if that issue were more
definitively resolved.
Senator Smith. Does anybody on the panel have a problem
with the State being the final arbiter? You brought up a very
good point about fraud or some other problem. We're not asking
people who commit fraud be eliminated from liability, but if
there should be an additional problem on the site after all
good intentions, who should be liable?
[No response.]
Senator Smith. Don't all speak at once.
[Laughter.]
Senator Smith. I mean, where does the liability fall? Does
it go back to the Federal Government? If so, then they need to
look back, right, or does it go to the State? Who is ultimately
liable?
Mr. Riley. Senator, I don't see why the standard couldn't
be that the State either concurs in or requests the EPA's
intervention and involvement, but I don't see any need for
something beyond that. Even in the event of an imminent
hazardous threat, which was raised many times, it appears to me
that the State ought to be the best judge of when the Federal
Government needs to be involved.
Senator Smith. All right, so the issue then of finality
really gets to the point of good faith efforts on the part of
all those who are volunteering to do the cleanup whether they
be prospective purchasers or purchasers, whether they be owner-
operators, or the States, or, for that matter, the Federal
Government? It's good faith intent. If it falls short, then
your--is it your position if all of that occurred, it's a good
faith attempt that the people who were on that site whether
they be owner-operator or prospective purchaser would not be
liable, if everything was done in good faith and good science,
and everybody thought they were doing the right thing?
Mr. Scherer. Senator----
Senator Smith. That is the only way you can get finality,
right?
Mr. Scherer. You need certainty, predictability and
finality, and I think you've defined what that means.
Senator Smith. Did you say you thought I defined it?
Mr. Scherer. I believe you defined it.
Senator Smith. Mr. Riley.
Mr. Riley. I agree with that. Typically, when we go through
the cleanup programs, the evaluations are very extensive. I
can't believe that we're going to leave ticking time bombs if
we're responsible, and I know we are, as a company. We
initiated our programs well before RCRA. We initiated site
evaluations when we went into a major restructuring program
within the corporation and sold many properties. We wanted to
know what we were selling. We wanted to make sure we were not
selling liabilities to others, and I think where there is a
good faith attempt, responsible management, I think that under
those circumstances there should be liability relief.
Senator Smith. Senator Chafee.
Senator Chafee. Mr. Wray, one question. On page 5 you said,
The bills we are discussing today are a laudable effort to
further our common goal, as I have outlined it above, but they
are limited to a narrow section of the regulatory spectrum as
it affects environmental matters. I would hope that this
constructive approach will be continued and will be eventually
broadened to cover a greater range of environmental
legislation.
What are you referring to there specifically?
Mr. Wray. Well, Senator, I know it takes me a long time to
think in my head the difference between RCRA and CERCLA,
besides what the acronyms mean, and one can be applied to when
the other can. What I understand is they overlap and sometimes
they can beat you about the head with CERCLA and then use RCRA
as another club. There's all the other issues affecting
operation of properties, cleaner air acts, and clean water acts
and various components, which don't appear to be touched on
here.
This is primarily focused on spilling things on dirt. I'm
concerned about operational liabilities, again, particularly
for our small borrowers who may be running a lobster boat or
doing something like that, understanding all the different
legislative issues and regulatory issues that might affect
them. I, frankly, don't understand them all but I know they're
out there, and I can guarantee that our borrowers don't
generally understand them.
So this whole approach to cleaning up, simplifying and
addressing good faith I would like to see extended beyond these
laws, which primarily affect just real estate.
Senator Chafee. Yes, I'm--let me say if we solve this
problem, we'll deserve a lot of kudos, and if we can move on to
the others, three cheers.
Mr. Wray. Well, I get to fly home tonight, Senator, I don't
have to worry about it. I can say it and leave.
Senator Chafee. OK, thank you.
Senator Smith. Final question, do you believe that the
States are going to try to get away with what we would call
``crummy cleanups'' that some have charged or do you feel
confident that we're going to get the type of cleanups that are
warranted without the heavy hand of the Federal Government
overseeing them or second guessing in here? Each of you, yes or
no.
Mr. Scherer. We're talking brownfields, and my experience
has been that the States are very interested and very careful
when they go through these, and also at this point in time very
motivated to try to get them back into the mainstream. So I've
seen nothing that would suggest that States aren't capable, in
my experience, Senator.
Mr. Wray. We agree.
Mr. Guerrero. I would observe that the States have adopted
these streamlined voluntary approaches simply because you can't
do everything under Superfund. You can't do everything under
the State Superfunds, and the majority of programs we looked at
have controls in place. But I would also observe that those
controls do vary from State to State.
Senator Smith. Given the liability problems we have under
Superfund, does it--is it better to go forth with brownfields
separately or is it better to go with the broader Superfund
reform and include brownfields?
Mr. Guerrero. I don't have any opinion on that matter.
Mr. Scherer. Well, I think that we're encouraged by seeing
the way that both sides are working together, and we would love
to see that continue to provide the type of bill we've talked
about.
Senator Smith. All right, I guess that's it. Thank you very
much for coming today.
The hearing is adjourned.
[Whereupon, at 12:02 p.m., the subcommittee adjourned,
subject to the call of the Chair.]
[Additional statements, submitted for the record, follow:]
Prepared Statement of Hon. Tom Daschle, U.S. Senator from the State of
South Dakota
Mr. Chairman and Ranking Member, thank you for holding this hearing
to explore the merits of enacting legislation to encourage brownfields
cleanup and redevelopment. This is a very important issue affecting
both the quality of our urban environment and the potential for urban
economic development. It is my hope that Congress will move in a
bipartisan manner to enact brownfields legislation in the very near
future.
Throughout this country there is an enormous unfulfilled potential
to restore contaminated industrial sites, known as ``brownfields,'' and
create urban parks and rejuvenated centers of commerce. Unfortunately,
current law and a lack of resources have combined to hinder the cleanup
and development of these sites for productive use.
That is why Senate Democrats have introduced legislation, as one of
our first ten bills, to change current law and provide the resources
needed to address this problem.
The legislation developed by Senator Lautenberg and introduced as
part of our leadership package will, if enacted, encourage the cleanup
and development of contaminated industrial sites and thus help
communities to rehabilitate these areas for productive use and reduce
the public health risks posed by many of these sites.
When most people think of brownfields, they envision vast and aging
urban areas where dying industries have left behind a dangerous, and in
some cases toxic, legacy of blight. But this caricature is not always
accurate. Even in largely rural States, such as South Dakota, there are
opportunities to transform brownfields into productive and
aesthetically desirable parts of the city landscape.
The city of Sioux Falls has worked for years to redevelop a
brownfield site in the center of town. As is often the case in these
circumstances, lack of resources have hampered this effort.
Fortunately, last year, Sioux Falls succeeded amidst enormous
competition in obtaining a grant from EPA to assist in this process and
the project is moving forward.
But for every Sioux Falls, there are a number of other worthy
cities and sites that have not been able to obtain assistance. There is
much more demand for brownfields redevelopment assistance than the
current system can support. That is why legislation is needed and why
Senate Democrats have made brownfields legislation one of our top
priorities for this Congress.
Our legislation authorizes EPA to provide grants to local
communities for use in evaluating and cleaning up brownfield sites. It
also eliminates the existing disincentives in Superfund that have
hindered independent efforts to clean up sites by innocent landowners
and prospective buyers.
By providing relief from potential Superfund liability to innocent
owners and prospective buyers who had no hand in causing the
contamination, the legislation will encourage characterization and
cleanup of sites in a fair and equitable manner.
There is broad agreement that brownfields legislation is needed. I
note that the Republican's Superfund reauthorization bill, S. 8,
includes a brownfields title. Our legislation, S. 18, would encourage
the redevelopment of brownfields sites and does not link passage of
needed reform in this area to broader and more contentious Superfund
legislation.
There is no need to delay enacting brownfields legislation. We were
successful at the end of last session of Congress in passing the Safe
Drinking Water Act, reform of pesticide regulation, and the Magnuson
Fisheries reauthorization with strong bipartisan cooperation.
Brownfields legislation clearly has strong support on both sides of the
aisle and deserves to be enacted quickly.
______
Prepared Statement of Timothy Fields, Jr., Acting Assistant
Administrator, Office of Solid Waste and Emergency Response, U.S.
Environmental Protection Agency
introduction
Good morning, Mr. Chairman, and Members of the Committee. I am
pleased to have this opportunity to appear before you today to discuss
the current state of the Brownfields Economic Redevelopment Initiative.
I am also pleased to have the opportunity to begin these discussions
within the context of legislative reforms to the Superfund program. I
am, of course, preceding Administrator Browner, who will be testifying
before you tomorrow. Her testimony will provide a broader perspective
and context for discussion of the substantial accomplishments EPA has
achieved over the past few years through its administrative reforms of
Superfund. It will also provide the framework for legislative reforms
that will address the remaining barriers to success for the Superfund
program and that can help us achieve responsible legislative reform in
this Congress.
My purpose today is threefold: (1) to share with you the
substantial accomplishments EPA has achieved since the initiation of
the Brownfields Economic Redevelopment Initiative in 1995 and the very
positive linkages these activities are engendering among other key
stakeholders; (2) to identify key EPA brownfields legislative
principles for you; and (3) to examine the reflection of those
principles in legislation now before this Committee and the U.S. Senate
for consideration--S. 8 and S. 18.
brownfields economic redevelopment initiative
EPA is promoting redevelopment of abandoned and contaminated
properties across the country that were once used for industrial and
commercial purposes (``brownfields''). While the full extent of the
brownfields problem is unknown, the United States General Accounting
Office (GAO/RCED-95-172, June 1995) estimates that approximately
450,000 brownfields sites exist in this country, affecting virtually
every community in the Nation. EPA believes that environmental cleanup
is a building block, not a stumbling block, to economic development,
and that cleaning up contaminated property must go hand-in-hand with
bringing life and economic vitality back to communities. EPA's
Brownfields Economic Redevelopment Initiative places a new focus on
brownfields. The Brownfields reforms are directed toward empowering
States, local governments, communities, and others to work together to
assess, safely cleanup, and sustainably reuse these sites. As the
National Community Reinvestment Coalition (NCRC) said ``[W]e
wholeheartedly support the EPA's Brownfields Economic Redevelopment
Initiative. NCRC believes that [EPA's] multifaceted initiative
represents a significant step forward by the Administration in working
with distressed communities on the local level in their revitalization
efforts.''
EPA efforts, to date, have been accomplished through the
Brownfields Action Agenda--an outline of specific actions the Agency is
conducting.
Brownfields Action Agenda
The initial Brownfields Action Agenda announced on January 25,
1995, outlined four key areas of action for returning brownfields to
productive reuse: (1) awarding Brownfields Assessment Demonstration
Pilots; (2) building partnerships to all Brownfields stakeholders; (3)
clarifying liability and cleanup issues; and, (4) fostering local
workforce development and job training initiatives.
Brownfields Pilots are Encouraging Redevelopment
The Brownfields Assessment Pilots form a major component of the
Brownfields Action Agenda. Chosen through a competitive process, these
pilots are helping communities articulate a reuse strategy that
demonstrates model opportunities to organize public and private sector
support, leverage financing, while actively demonstrating the economic
and environmental benefits of reclaiming brownfield contaminated sites.
The Brownfield pilots will develop information and strategies that
promote a unified approach to site assessment, environmental cleanup,
and redevelopment. In addition, these pilots are providing
opportunities to stimulate jobs and economic activity. EPA exceeded its
early commitment to fund at least 50 pilots by actually funding 76
pilots at up to $200,000 each by the end of 1996. And, just this month,
the Administrator announced the addition of two more pilots, bringing
the total to 78. These 2-year pilots are intended to generate further
interest in Brownfields redevelopment across the country. Many
different communities are participating, ranging from small towns to
large cities. Stakeholders tell the Agency that Brownfields
redevelopment activities could not have occurred in the absence of EPA
efforts.
Brownfields Partnerships Build Future Solutions
The Brownfields Initiative is clearly about partnerships--with
other Federal, State, and local agencies, and a diverse array of
stakeholders. The EPA has undertaken partnership efforts with
individual States as well as through broad organizational structures
like the Association of State and Territorial Solid Waste Management
Officials (ASTSWMO), the National Governors Association (NGA), and the
National Association of State Development Agencies (NASDA). Federal
partnerships have been fostered, in particular, through Memoranda of
Understanding (MOUs). EPA has signed MOUs with the Economic Development
Administration of the Department of Commerce, the Departments of Labor,
Housing and Urban Development, and Interior. EPA is working with the
Agency for Toxic Substances and Disease Registry and county health
officials to address the health concerns of brownfields communities.
EPA also forged working relationships with a vast spectrum of other
stakeholders, including the Mortgage Bankers Association of America,
the Irvine Foundation's Center for Land Recycling, NASDA, ASTSWMO,
International City/County Management Association (ICMA), to mention but
a few. Other outreach efforts include coordination of brownfields
efforts with the Agency's Common Sense Initiative.
Ultimately, it is the voice of the community that all brownfields
stakeholders hear. The recently released report, Building A Brownfields
Partnership from the Ground Up, by the National Association of Local
Government Environmental Professionals, February 13, 1997, presented
the views of a network of local government brownfields leaders on the
value of EPA's brownfields programs and policies. The report calls
local government leaders ``a key link in the success of brownfields
partnerships, for it is the environmental, health, development and
political leaders in our cities, counties and towns who can best build
a brownfields partnership ``from the ground up.'' EPA has developed its
brownfield capacity for outreach through each of its ten regions. Each
region has a designated ``Brownfields Coordinator'' to assist and
oversee the brownfields pilots and other actions under the Brownfields
Initiative. We believe our Brownfields Coordinators are the most
effective link to communities and form the linchpin of success under
the Brownfields Action Agenda. In addition, EPA has assigned staff
members to cities around the country (e.g., Detroit, Los Angeles,
Dallas, East Palo Alto) through Intergovernmental Personnel Assignments
(IPA) to further support brownfields activities.
These partnerships and those that we will develop in the future
represent new ways of doing business with communities. We are working
hard to continue to improve communication and coordination among all
stakeholders. In this regard, we are encouraged by the increasing
linkage being made between brownfields redevelopment and environmental
justice. The National Environmental Justice Advisory Council (NEJAC)
released its report, Environmental Justice, Urban Revitalization, and
Brownfields: The Search for Authentic Signs of Hope.'' in July of last
year. Recommendations from the NEJAC are the result of a series of
public hearings held in five cities (Boston, MA; Philadelphia, PA;
Detroit, MI; Oakland, CA; and Atlanta, GA). These recommendations will
be used to address not only past mistakes of urban planning but also to
benefit brownfields identification and redevelopment.
Redevelopment Barriers--Addressing Liability Concerns
The Agency also committed to addressing the threat of liability and
other barriers impeding the cleanup and redevelopment of brownfields.
Over the past year, EPA has announced a variety of guidance and
initiatives that have had a positive impact among Brownfields
stakeholders in terms of removing uncertainties often associated with
brownfields properties. EPA is promoting redevelopment of brownfields
properties by protecting prospective purchasers, lenders, and property
owners from the threat of Superfund liability. EPA's ``prospective
purchaser'' policy is stimulating the development of sites of Federal
interest where parties otherwise may have been reluctant to take action
by clarifying (through agreements known as ``prospective purchaser
agreements'' (PPAs) that bona fide prospective purchasers will not be
responsible for cleaning up sites provided they do not further
contribute to or worsen contamination. EPA issued new guidance in May
1995, which allowed the Agency greater flexibility in entering into
such agreements. The new guidance expanded the universe of sites
eligible for such agreements to include instances where there is a
substantial benefit to the community in terms of cleanup, creation of
jobs, or development of property. Of the 50 agreements to date, more
than 50 percent have been reached since issuance of the May 1995
guidance. Environmental justice advocates see these agreements as
providing a new flexibility that will assist the consideration of
environmentally sustainable enterprises occupying former brownfields
sites next to residential areas, or of converting past industrial
properties to green spaces or non-polluting commercial operations.
People owning property under which hazardous substances have
migrated through groundwater also feared liability under the statute.
EPA responded by announcing that it will not take enforcement actions
under the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA) against owners of property situated above
contaminated groundwater, provided the property is not a source of
contamination. Further, EPA also will consider providing protection to
such property owners from third party lawsuits through a settlement
that affords contribution protection.
EPA has given reassurance to the lending industry and to
governmental entities who acquire property involuntarily. EPA outlined
in guidance what it considered appropriate actions a lender may
undertake without becoming a liable party. In the 104th Congress, EPA
worked with concerned White House offices (including the Council on
Environmental Quality and the National Economic Council) in a
successful effort to gain legislation to clarify the liability of
lenders and fiduciaries under CERCLA and other toxic waste laws. This
reform, which was developed through a bipartisan effort involving this
Committee and the Senate Banking Committee, reflected the principles of
EPA's own policy guidance as well as the approach Senator Lautenberg
had developed for his earlier brownfields bill. The resulting proposal
was incorporated into a broader banking reform bill enacted in the
final days of the Congress as part of the continuing budget resolution.
This change in the law will provide significant relief to banks and
lending institutions, expand the availability of credit for small
businesses, and greatly facilitate the assessment, cleanup, and
redevelopment of brownfields sites. We were also pleased to have the
support of the Bankers Roundtable, the American Bankers Association,
and the Environmental Defense fund in achieving this reform.
EPA also is providing ``comfort/status letters'', in appropriate
circumstances to new owners, lenders, or developers to inform them of
EPA's intentions at the site. The Policy on the issuance of Comfort/
Status Letters is designed to assist parties who seek to clean up and
reuse brownfields. EPA often receives requests from parties for some
level of ``comfort'' that if they purchase, develop, or operate on
brownfield property, EPA will not pursue them for the costs to clean up
any contamination resulting from the previous use. The policy contains
four sample comfort/status letters which address the most common
inquiries for information that EPA receives regarding contaminated or
potentially contaminated properties. The policy aims at using such
``comfort'' to where it may facilitate the cleanup and redevelopment of
brownfields, where there is a realistic perception or probability of
incurring Superfund liability, and where there is no other mechanism
available to adequately address the party's concerns.
Finally, EPA believes that the removal of sites from the active
Federal inventory, the Comprehensive Environmental Response,
Compensation and Liability Information System (CERCLIS), is having
positive repercussions for the Brownfields Initiative. To date, EPA has
removed approximately 30,000 sites from CERCLIS, about 75 percent of
the Federal inventory. EPA expects to remove more than 1,000 additional
sites from CERCLIS per year over the next several years. The removal of
these sites eliminates the stigma of potential contamination and fear
of liability associated with these sites, and allows stakeholders to
focus on the future land use and redevelopment of such sites.
Brownfields Job Development and Training
Brownfields may be a consequence of industrial downsizing,
relocation or bankruptcy. The loss of jobs may also result. Training
members of brownfields communities to fill potential jobs created as a
result of cleanup and redevelopment efforts is a critical component of
the Brownfields Initiative, particularly for groups representing
dislocated workers, welfare recipients, or the chronically unemployed.
EPA committed as an Agency to environmental workforce training programs
in brownfields communities throughout the country. Efforts successfully
underway include the following:
<bullet> Work with the Hazardous Materials Training and Research
Institute to expand environmental training and curriculum development
at community colleges located near brownfields pilots. Since 1995,
three workshops for 40 colleges in or near Brownfields communities have
been held. Of the colleges attending these workshops, 13 have
established credit and noncredit environmental programs, 13 have target
dates for program startup, and 14 are collecting data and conducting
labor market surveys to determine the need for and feasibility of
starting a program.
<bullet> Establishment of an environmental education and training
center to provide comprehensive technician-level training with an
emphasis on Superfund and Resource Conservation and Recovery Act
(RCRA)-related subjects with the Rio Hondo Community College District
in Whittier, California.
<bullet> A partnership with Cuyahoga Community College in
Cleveland, Ohio, to develop training programs that increase cultural
diversity in environmental employment.
<bullet> Working with the Department of Labor collaboration with
EPA to leverage job training opportunities for Brownfields Pilot
communities.
<bullet> Working with the National Institute of Environmental
Health Sciences (NIEHS) to ensure that Minority Worker Training grants
overlap with Brownfields pilot communities.
<bullet> Working to incorporate the Housing and Urban Development
Department's Step-up Apprenticeship Initiative with community jobs
strategies for Brownfields.
The Brownfields Initiative Today
By mid-1996, EPA completed all of its commitments on the initial
Action Agenda. It has become clear to us that the brownfields problem
requires more interaction among all levels of government, the private
sector and non-governmental organizations. The need for continuation
and expansion of the national brownfields response was further
buttressed by the recommendations of the President's Council on
Sustainable Development regarding the redevelopment of brownfields
sites. To that end, EPA and more than 20 other Federal agencies
established an Interagency Working group on Brownfields in July 1996.
Our colleagues at HUD and the Department of Transportation (DOT), for
example, play a critical role in brownfields redevelopment. Through our
Working Group collaborations, we are planning ways to further identify,
strengthen, and improve commitments to brownfields, while continuing
efforts toward a comprehensive, community-based approach to clean up
and redevelopment of contaminated property. The new Brownfields Action
Agenda for fiscal year 1997 and fiscal year 1998 is based on protecting
human health and the environment, enhancing public participation in
local decisionmaking, building safe and sustainable communities through
public/private partnerships; and, recognizing that environmental
protection can be the engine that drives economic redevelopment.
EPA's brownfields efforts this year will include the announcement
of an additional 25 Brownfields Assessment Demonstration Pilots (up to
$200,000 each). The application deadline for award of these new pilots
is now past and EPA is in the process of reviewing and evaluating the
applications. Award announcements are expected by late March or April
1997.
For the first time, EPA will be awarding funds for a new type of
brownfields pilot. The $10 million Brownfields Revolving Loan Fund
(BRLF) pilot program is designed to enable eligible States, cities,
towns and counties, U.S. Territories, and Indian Tribes to capitalize
revolving loan funds to safely cleanup and sustainably reuse
brownfields. EPA's goal is to select BRLF pilots that will serve as
models for other communities across the Nation. Only entities that were
awarded National or Regional Brownfields Assessment Demonstration
Pilots as of September 30, 1995, will be eligible to apply to EPA's
BRLF pilot program. Therefore, up to 29 BRLF pilots may be awarded in
fiscal year 1997. Fiscal year 1997 BRLF pilots will be funded at up to
$350,000. The BRLF pilots will be awarded through a competitive
process.
EPA recognizes the important role that State environmental agencies
have in encouraging economic redevelopment of brownfields. EPA also
plans to provide $10 million, in fiscal year 1997, to encourage the
development or enhancement of State programs that encourage private
parties to voluntarily undertake early protective cleanups of less
seriously contaminated sites, thus accelerating their cleanup and
redevelopment. EPA recently issued a memorandum setting out an interim
approach for its relations with State voluntary cleanup programs. The
memorandum includes criteria for State voluntary cleanup programs that
are enabling EPA and the States to start negotiating a division of
labor between EPA and the States in memoranda of agreement (MOAs) as
well as ensuring protection of public health and the environment. EPA
hosted a meeting here in Washington on February 27th to continue our
dialog with stakeholders and to solicit their views on a variety of
voluntary cleanup issues. We will use that input to develop principles
and national guidance on State voluntary cleanup programs. Finally, EPA
is pleased with the progress it has made in signing MOAs with States.
Ten States have now signed MOAs with EPA regarding sites to be cleaned
up under voluntary cleanup programs. Both Rhode Island and Maryland
have signed MOAs with EPA in the last few weeks. We are in the process
of negotiating with 8 other States.
Other elements for the fiscal year 1997 program include additional
support for an expanded site assessment initiative as well as technical
assistance to existing pilots and partnerships with other Federal
agencies and nongovernmental organizations (NGO's).
key elements of brownfields legislative reform
The Brownfields Economic Redevelopment Initiative has achieved much
initial success. The continuing value of the Brownfields Initiative is
its evolution and promise for the future. To build upon these
successful first steps and launch others, we must not lose sight of our
overall goal to revitalize communities. Future efforts under the
Brownfields Economic Redevelopment Initiative must be viewed as an
important component of any strategy for reform of Superfund. With the
breadth and variety of activities and stakeholders converging on the
brownfields issue, we have tried to establish a framework that
articulates a complete and comprehensive brownfields program. It is
against this framework that we will measure legislative proposals
addressing brownfields.
Address Full Range of Brownfields Reforms
Brownfields reforms made under CERCLA should be codified, and
should reaffirm use of the Superfund Trust Fund to address the full
range of brownfield issues including: technical assistance funding for
brownfields identification, assessment and reuse planning, cooperative
agreement funding to capitalize revolving loan funds for brownfields
cleanup, support for State development of voluntary cleanup programs,
liability protection to bona fide prospective purchasers, protection
for innocent landowners of contaminated property, support for
mechanisms for partnering with Federal, State, local and tribal
governments and other non-governmental entities to address Brownfields,
and support and long-term planning for fostering training and workforce
development.
By the end of fiscal year 1997, more than 100 communities will have
received grants from EPA for brownfields assessment pilots. The United
States Conference of Mayors has stated regarding the fiscal year 1998
budget which has just been proposed by the Administrator that the
``budget reflects the fact that momentum for brownfields redevelopment,
one of the mayors' highest priorities, is building.''
The Administration is also supportive of the continued growth of
the State and Tribal regulated and voluntary programs which have
greatly expanded the number of hazardous waste sites cleaned up to
protect human health and the environment. More than 30 States have
established voluntary cleanup programs to date.
EPA has sought to integrate job training opportunities into
brownfields cleanup and redevelopment and is supported in this endeavor
by the President's Environmental Initiative. Forging these vital links
between jobs and environmental cleanup is both challenging and
encouraging to us. Our pilots are providing specific examples. In
Bridgeport, Connecticut, one of EPA's first pilot cities, a job summit
was held as part of its public outreach strategy. The pilot in
Cleveland, Ohio is now home to several new businesses which have
provided almost 200 new jobs. And, in Baltimore at the former American
Smelting and Refining Company (ASARCO) site, old buildings are being
razed, and 350,000 of the 750,000 square foot complex is being
renovated. Currently there are 200 construction workers employed on the
property. Additionally, it is expected that more than 180 permanent
jobs will be in place over the next 3 years.
EPA primarily supports the job training and workforce development
aspect of the Brownfields Initiative with non-Superfund general
appropriations. Section 311(a) of CERCLA provides limited authority for
training and continuing education within the context of hazardous
substance basic research. As part of a comprehensive strategy for
brownfields, we are also examining ways to address these statutory
limitations.
Presidential Initiatives
Support Brownfields Tax Incentive
Innovative approaches and solutions to the problems faced by
communities are manifested in every aspect of brownfields. Innovative
financing efforts are no exception. The Federal Government can help
level the economic playing field between brownfields and greenfield
sites. Last year, in his 1996 State of the Union address, President
Clinton proposed a Brownfields tax incentive. Senators Moseley-Braun,
Lieberman, Abraham and others have introduced this proposal in the
Senate (S. 235). (A companion bill, H.R. 505, has been introduced in
the House by Congressman Rangel). We support this proposal and believe
it is an essential element of a complete and comprehensive brownfields
program. Under the proposed Brownfields tax incentive, environmental
cleanup costs for properties in designated areas would be fully
deductible in the year in which they are incurred, rather than
capitalized. This incentive would reduce the capital cost for these
types of investments by more than one half.
The proposed tax incentive would be applicable to properties that
meet specified land use, contamination, and geographic requirements. To
satisfy the land use requirement, the property must be held by the
taxpayer incurring the eligible expenses for use in a trade or business
or for the production of income, or the property must be properly
included in the taxpayer's inventory. To satisfy the contamination
requirement, hazardous substances must be present or potentially
present on the property. To meet the geographic requirement, the
property must be located in one of the following areas: EPA Brownfields
pilot areas designated prior to February 1, 1997; census tracts where
20 percent or more of the population is below the poverty level; census
tracts that have a population under 2,000, have 75 percent or more land
zoned for industrial or commercial use, and are adjacent to one or more
census tracts with a poverty rate of 20 percent or more; and
Empowerment Zones and Enterprise Communities (both existing and those
that would be designated in the second round proposed in the
President's fiscal year 1998 budget). Both rural and urban sites would
qualify for the proposed incentive. Sites on EPA's National Priorities
List would be excluded.
Support Environmental Initiative
Last August, the Clinton Administration announced an Environmental
Initiative which supported the significant expansion of the Brownfields
program. We estimate that with the expansion of the Brownfields
Assessment Pilots and the BRLF Pilots, a total of 300 cities/pilots can
be reached resulting in cleanup at many thousands of brownfields sites
over the next 4 years. In addition, the Initiative called for
additional support for State Voluntary Cleanup infrastructure and
brownfields related job training efforts. Many of these proposals are
reflected in the President's Budget for fiscal year 1998.
The Environmental Initiative also supported an expansion of HUD's
Economic Development Initiative (EDI) grants and use of HUD section 108
loan guarantees to leverage brownfields redevelopment funds.
EPA urges the Committee to support these components of the
President's Budget as we work together on other statutory changes that
will not only enhance our ability to implement these proposals, but
also enable us to forge stronger partnerships with States, local
governments, communities, and private interests and successfully
accelerate brownfields revitalization.
concerns with s. 8
The Administration supports brownfields legislation within the
context of Superfund legislative reform. We are supportive of
legislation which continues the progress made under the EPA's
administrative reforms and which also addresses brownfields itself in a
comprehensive manner.
EPA is very encouraged to see substantial Brownfields provisions,
as well as voluntary cleanup program provisions, within S. 8. The bill
authorizes EPA to issue grants for assessment and to capitalize
revolving loan funds, although the details are of some concern to us.
The provision which exempts ``bona fide'' prospective purchasers from
CERCLA liability and the requirements that must be met to assert an
innocent landholder defense are also valuable additions to our
authority. As with other aspects of S. 8, however, we are concerned
that the brownfields provisions would erode protection of human health
and the environment.
Voluntary Cleanup Program Concerns
The Administration is opposed to provisions in S. 8 regarding
voluntary cleanup that would eliminate the authority of EPA and other
Federal agencies to respond to releases of hazardous substances
whenever a State remedial action plan has been prepared, whether under
a voluntary response program, or any other State program. Under S. 8,
the mere existence of such a cleanup plan eliminates any Federal
authority to respond to a release or threatened release of hazardous
substances--even where there may be an imminent and substantial
endangerment to human health and the environment. This compromise of
public protection is alarming. The provisions of S. 8 could leave us
powerless to respond to immediate threats from the worst toxic waste
sites (VRPs are given authority to clean up NPL sites) even where the
State's VRP program lacks the resources and expertise to ``qualify''
under the provisions of S. 8.
Though S. 8 provides the elements for ``qualifying'' State
voluntary cleanup programs, these elements are not used to make funding
decisions. A State is required to merely notify EPA of its ``intent to
establish a qualifying State voluntary response program ``to receive
funding. Funding for States is provided at $25 million per fiscal year.
While S. 8 identifies elements for a ``qualifying'' State Voluntary
Response Program (VRP), these provisions do not preclude a private
party from cleaning up a site, including an NPL site, pursuant to a
State VRP that does not meet, or intend to meet, the ``qualifying''
elements. Under this bill, States without a ``qualifying'' program may
authorize such cleanups so long as they do not request or receive
technical or other assistance, including funding from EPA.
In addition, the level of community involvement provided by S. 8 is
questionable. The bill limits the community to an ``adequate
opportunity'' for public involvement and does not guarantee
participation in all levels of the cleanup process or determinations
regarding end uses of the property. Finally, the preclusion of all
private and citizen suits belies the apparent commitment in S. 8 to
strengthen community participation.
As mentioned, EPA is already developing MOAs with concerned States
to ensure that its response authorities complement and encourage rather
than duplicate or discourage, voluntary cleanups. This approach, we
believe, strikes the right balance between Federal and State programs
while continuing to provide the needed protection of public health and
the environment for our communities.
Brownfields Characterization and Assessment Grants Do Not
Include States
One of the major concerns with S. 8's Brownfields characterization
grants provision is the exclusion of States from the list of eligible
recipients. EPA's experience with the Brownfields Pilot Program has
taught us that in many cases, where small communities are involved it
may make more sense and be more efficient to provide the grants
directly to States. Six brownfields pilots have been awarded directly
to States. We are also finding that the availability of pilots at this
level of government can increase awareness of and involvement in the
program.
Additionally, the limitation on funding of $100,000 per year for
these grants may restrict and inhibit the grant recipient from
efficiently managing and benefiting from the grant itself. Under the
current brownfields program, EPA does not limit funding or proscribe
activities on a site-specific basis. Rather, EPA pilot funds are
awarded to State, Tribal, and municipal governments, which then
determine, based on their own priorities and resources, activities and
allocations among different brownfields sites.
Another concern is found in the definition of Brownfields. S. 8
improperly excludes sites where removals have occurred, or are planned
to occur, and sites deleted from the NPL with ``No Action'' RODs. These
sites may be appropriate candidates for redevelopment. In addition, EPA
has first-hand experience with prospective purchaser redevelopment of
these properties.
Finally, we are concerned that the application for a
characterization pilot would require information which may not be
available until after the Brownfields process has been completed.
Inventorying sites and casting economic projections have been, in our
experience, within the range of activities for which the pilot is being
awarded in the first place. Thus, the pilot applicant may find itself
in the proverbial ``catch-22'' situation--unable to complete the
application to do the very thing that should be done under the pilot.
s. 18
Before concluding my discussion this morning, I would like to
mention S. 18, The Brownfields and Environmental Cleanup Act of 1997,
introduced by Senator Lautenberg (and Senators Baucus, Reid, Moynihan,
Graham, Boxer, Wyden, Levin, Torricelli, Breaux, and Kennedy). This
bill addresses many of the barriers that are preventing the cleanup and
economic development of brownfields. It promotes many of the
brownfields cleanup and economic development goals shared by the
Clinton Administration and builds upon many of the lessons learned by
EPA over the past 3 years as the Agency developed and implemented its
Brownfields Economic Redevelopment Initiative. The bill authorizes EPA
to issue grants to State and local governments to inventory and assess
brownfields sites as well as providing grants for States and local
governments to capitalize revolving loan funds for the cleanup and
economic redevelopment of brownfields sites. Other provisions of the
bill which capture important elements of the existing program include
those referring to prospective purchasers and innocent landowners. They
are important tools that will encourage lending and investment
institutions to fund brownfields redevelopment. I would add, however,
that we do see some drafting problems with the bill and have been
assured by Senator Lautenberg that his staff will work with us to
address those concerns. Our most significant concern is the inadequate
level of funding provided in this bill to support brownfields
activities.
conclusion
EPA's Brownfields Economic Redevelopment Initiative represents an
innovative approach to environmental protection while bringing the
focus of that protection directly to communities. It has spurred
environmental cleanup, reduced neighborhood blight, generated tax
revenues, and created jobs and in so doing it has helped to stabilize
and enrich communities. Through this Initiative we have identified
innovative ways to address the brownfields problem in the United
States, which will assist us during the discussion of legislative
reform.
The Clinton Administration believes that a comprehensive approach
to brownfields legislative reform would include support for all the
existing elements of the current program, as well as the brownfields
tax incentive. We believe that brownfields legislative reform should be
addressed within the context of responsible legislative reform of the
Superfund statute. The Administration is fully committed to
participating in that process and to seeing that responsible reform of
the Superfund law is the proud legacy of the 105th Congress.
Mr. Chairman, thank you for this opportunity to address the
Committee. would be pleased to answer any questions you or the other
Members may have.
______
Responses of Timothy Fields, Jr., EPA, to Additional Questions from
Senator Smith
Question 1. In your testimony, you site GAO figures of 450,000
brownfield sites in the United States. Do you have any opinion about
the accuracy of these figures? Does EPA have the financial and
personnel resources to oversee this many cleanups?
Response. The number of brownfields sites has not been determined.
The June 1995 GAO/RCED-95-172 estimated 450,000 contaminated commercial
and industrial sites across the country. The GAO report also states
that ``the precise magnitude and severity of brownfields is unknown
because there is no national inventory.'' The EPA's fiscal year 1997
budget for brownfields is $36.7 million. The fiscal year 1997 Superfund
budget is, in total, $1.3 billion. For a comparatively small
investment, the Brownfields Economic Redevelopment Initiative is seeing
positive results among its pilot recipients, encouraging others to take
steps toward brownfields redevelopment, and producing results of
national replicability.
The success of the Brownfields Assessment Demonstration Pilots, in
particular, will encourage others to take steps toward brownfields
redevelopment, too. Stakeholders tell the Agency that brownfields
redevelopment activities could not have occurred in the absence of EPA
efforts. Institutions such as the Bank of America, the National
Community Reinvestment Coalition and others attribute new interest and
enthusiasm for brownfields redevelopment directly to EPA's policies and
efforts to focus attention on the issue. The need for continuation and
expansion of the national brownfields response was further buttressed
by the recommendations of the President's Council on Sustainable
Development regarding the redevelopment of brownfields sites. To that
end, EPA and other Federal agencies established an Interagency Working
group on Brownfields in July 1996. This Working Group began drafting a
national plan to guide future work on brownfields. The purpose of this
effort is to continue to strengthen and improve upon the commitments
made initially while continuing efforts toward a comprehensive,
community-based approach to cleanup and redevelopment of contaminated
property.
As the report Building A Brownfields Partnership from the Ground
Up, by the National Association of Local Government Environmental
Professionals, February 13, 1997, stated:
The EPA Brownfields Action Agenda represents a new generation
of partnership between the Federal Government and local
communities. Since EPA Administrator Carol Browner's
announcement of the Brownfields Action Agenda in January, 1995,
the Agency has successfully promoted a national message about
the value of brownfields renewal, launched nearly 100 pilot
projects and successfully implemented policies for the
clarification of liability, job training and development, and
Federal/local partnerships and outreach. These EPA efforts have
helped spur genuine results in communities across the Nation.
EPA does not intend to fund or oversee the cleanup of all
brownfields properties. EPA has not taken the position that overseeing
the cleanup and redevelopment of brownfields properties is solely a
Federal responsibility. Rather, EPA has taken a creative approach to
effectively leverage Federal, State, local government and private
resources, including State and local government capacity building, to
encourage brownfields cleanup and redevelopment.
Question 2. In your testimony, you make note that States should
also be eligible recipients of brownfields characterization grants. We
have heard from local governments who oppose State control over these
funds. Is there a disagreement between the States and local governments
over who should be the appropriate recipients of this funding?
Response. EPA believes States should be eligible recipients of both
brownfields ``characterization'' grants and grants to capitalize
revolving loan funds for the cleanup of brownfields sites. This is
particularly true in those circumstances where local communities are
unable to manage grants due to a lack of resources, personnel,
experience or other management capability. In such circumstances,
limitations on State eligibility may deprive some communities of the
benefits of a grant. Since 1995, EPA has awarded ``Brownfields
Assessment Demonstration Pilots'', under cooperative agreements, to
States, cities, towns, counties, and Tribes. These Pilots, each funded
up to $200,000 over a 2-year period, are designed to support creative
explorations and demonstrations of brownfields solutions. The Pilots
are intended to provide EPA, States, Tribes, municipalities, and
communities with useful information and strategies as they continue to
seek new methods to promote a unified approach to site assessment,
environmental cleanup, and redevelopment. States and other eligible
entities are invited to apply for pilot grants. Pilot applications are
required. To date, 78 Brownfields Assessment Demonstration pilots have
been awarded. In fiscal year 1997, EPA expects to fund 25 new National
Brownfield pilots on the basis of a competitive application process.
The Brownfields Assessment Pilot applicants were required to
address the following criteria:
1. Problem Statement and Needs Assessment
--Effect of Brownfields on your Community or Communities
--Value Added by Federal Support
2. Community-Based Planning and Involvement
--Existing Local Commitment
--Community Involvement Plan
--Environmental Justice Plan
3. Implementation Planning
--Appropriate Authority and Government Support
--Environmental Site Assessment Plan
--Proposed Cleanup Funding Mechanisms
--Flow of Ownership Plan
4. Long-Term Benefits and Sustainability
--National Replicability
--Measures of Success
The Application Guidelines for Brownfields Assessment Demonstration
Pilots (October 1996, EPA 500-F-96-067) state that while group
applications are encouraged, a single legal recipient must be
designated. Moreover, as mentioned, local governmental entities must
provide documented evidence of support from State and local
environmental, economic development, and health agencies. In addition,
the application must describe the legal authority--State or municipal
Superfund or voluntary action/cleanup programs or other local, State,
Territorial, or Tribal regulatory programs available for identifying,
assessing, and remediating brownfields. EPA strongly encourages States
and municipalities to work together to identify and improve brownfields
strategies. EPA also encourages municipalities to use existing tools
such as State voluntary cleanup programs to enhance their Brownfields
efforts. EPA encourages State-wide applications to be community
specific. State-wide proposals that offer tangible cleanup and
redevelopment success stories within the 2-year time-frame of the
awards will be considered; however, proposals that specify the target
location of these activities are stronger proposals than those that do
not. To date, 6 State pilots have been awarded.
Question 3. I know that a number of individuals at the EPA,
including Administrator Browner, have frequently stated that Superfund
is not the same program it was 5 or 10 years ago? Given the
significantly improved ability and sophistication of the State
hazardous waste cleanup programs, isn't it fair to say that the State
programs aren't the same that they were 5 or 10 years ago?
Response. Yes, EPA agrees State programs have changed over the past
few years. The vast majority of States (See table V-2, page 62,
December 1995 50-State Study) have followed the Federal lead and
established hazardous waste cleanup programs in order to address sites
not covered by the Federal program. These programs vary by their age,
and breadth and depth. For many States, as with the Federal program,
experience and maturity have resulted in an increased number of
cleanups taking place and being completed. So too, both Federal and
State programs are succeeding in getting responsible parties to clean
up sites. The States are not, of course, uniform in their authority,
resources (both cleanup ends and personnel), success or accomplishment.
A study is presently being conducted by the GAO that will focus on, in
particular, State voluntary cleanup programs which supplement the
enforcement-based State cleanup programs. (A copy of the EPA 1995
``Analysis of State Superfund Programs'' is provided.)
Question 4. We have previously heard comments alluding to the fact
that while some States may have the technical sophistication to address
brownfield and voluntary cleanups, others do not? Do you agree with
this assertion? If so, would you please provide the committee a
specific list of every State you believe does not have the ability to
conduct voluntary cleanup programs and the reasons why?
Response. EPA believes State voluntary cleanup programs currently
vary. Not all States possess the same capability, resources, personnel,
nor have they all achieved the same level of success. There are
approximately 37 State voluntary cleanup programs. The agency has not
evaluated each of these State voluntary cleanup programs to determine
how many would appropriately address brownfields sites. (A GAO study is
currently underway to evaluate State voluntary cleanup programs).
Several years ago, Regions began evaluating a limited number of State
voluntary cleanup programs to determine their capabilities, adequacy
and appropriate State/EPA roles with respect to sites addressed under
these programs. From these efforts, EPA Regions entered into Memoranda
of Agreement with 10 States regarding voluntary cleanup programs. In
addition, in order to facilitate discussions between EPA and States on
these issues, on November 14, 1996, EPA issued its ``Interim Approach
for Regional Relations with State Voluntary Cleanup Programs'' which
sets out some basic criteria for EPA Regions to consider when entering
into MOAs with States. Since its issuance, Rhode Island and Maryland
signed MOAs with EPA and are included among the 10 States mentioned.
Discussions are now underway with 8 other States.
EPA believes the promotion of effective State voluntary cleanup
programs will provide an integral tool to converting a significant
portion of the brownfields sites in this country into areas that offer
the public both protection of their health and environment, and
sustainable reuse of these sites. Voluntary cleanups can benefit the
public by reducing risk posed by releases of hazardous substances, and
by facilitating the beneficial reuse of brownfields sites. To
accomplish this however, it is imperative that Federal, State and local
governments works together to define complementary government roles
that are focussed on restoring brownfields properties to beneficial
reuse.
______
Responses of Timothy Fields, Jr., EPA, to Additional Questions from
Senator Chafee
Question 1. I understand that EPA has not finalized the final State
Voluntary Cleanup program guidance and that a major point of contention
is the universe of sites to be covered under these agreements. I would
like to ask you about the treatment of so-called National Priority List
caliber sites--those sites that score above the 28.5 hazard ranking
system threshold for listing on the NPL. In my own State, the Rhode
Island DEM informs me that there are over 200 sites have been pre-
scored above 28.5. Some of these sites may have significant
redevelopment potential. Do you believe the Rhode Island Voluntary
Cleanup Program should not be allowed to address these sites?
Response. The decision regarding the scope of sites covered by an
MOA concerning State voluntary cleanup programs is a complex issue that
the Agency has not yet resolved. Under consideration are issues such as
the level of cleanup and public participation, the State preparedness
to assume costs and responsibilities, and appropriate State/Federal
roles with respect to clean up and enforcement.
EPA will continue to seek comment from affected stakeholders prior
to finalizing guidance that addresses the scope of sites to be included
within an MOA on State voluntary cleanup programs. EPA and the Rhode
Island DEM have discussed their respective approaches to addressing
sites, and their respective resources, and have negotiated an MOA that
excludes sites referred for evaluation pursuant to the CERCLA Hazard
Ranking System (HRS). By entering this agreement, EPA and Rhode Island
DEM believe they are expediting the assessment and cleanup of
contaminated property and are facilitating the return of such property
to productive use.
Question 2. If EPA does not decide to include NPL-caliber sites in
these agreements, would it be EPA's intent to list these sites on the
NPL?
Response. EPA may not list all NPL-caliber sites on the NPL.
However, each site would require individual evaluation. Occasionally,
sites initially screened and ranked above 28.5 may not require NPL
listing based upon subsequent evaluation. EPA has issued guidance as to
what constitutes ``NPL-caliber sites'' in its October 12, 1993 OSWER
Directive 9320.2-07A, entitled ``Additional Guidance on `Worst Sites'
and `NPL-Caliber Sites' to Assist in SACM (Superfund Accelerated
Cleanup Model) Implementation.'' In addition, the fact sheet
``Assessing Sites Under SACM--Interim Guidance'' (OSWER Directive 9203-
1-05I, Vol. 1 No. 4 December 1992) offers examples of NPL-caliber
sites. Those examples include sites where:
<bullet> Public drinking water supplies are contaminated with a
hazardous substance
<bullet> Private wells are contaminated with a hazardous substance
above a health-based benchmark
<bullet> Soils on school, day care center, or residential
properties are contaminated by a hazardous substance above background
levels
<bullet> A hazardous substance is detected above background in an
offsite air release in a populated area
<bullet> A highly toxic substance known to bioaccumulate (e.g.,
PCBs, mercury, dioxin, PAHs) is discharged into surface waters
<bullet> Sensitive environments (e.g., critical habitats for
endangered species) are contaminated with a hazardous substance above
background levels
EPA recognizes that some percentage of sites that have the
characteristics described above, will, upon site-specific review, not
score for proposal on the National Priorities List (NPL), due to the
small number of targets, small waste quantity, etc. Thus, it is
difficult to draw a clear line between sites that will be listed on the
NPL and sites that will not be on the NPL for programmatic purposes, i.
e., without site-specific review. In general terms, EPA guidance states
that sites where significant human exposures to hazardous substances
have been documented or where sensitive environments have become
contaminated should be considered NPL-caliber sites.
Finally, CERCLA and its regulations, particularly the National
Contingency Plan (NCP), contain certain provisions concerning sites on
the NPL. For example, under the NCP, the Superfund cannot be used to
pay for remedial actions at non-NPL sites. (See 40 CFR 300.425.) CERCLA
and its regulations set out certain site cleanup requirements and
provide for public comment on proposed remedies at NPL sites (see
CERCLA 121 and the NCP); thus, consistent with these requirements,
Federal remedial actions, which are usually taken at NPL sites, must:
be ``protective of human health and the environment,'' utilize
``permanent solutions and alternative treatment technologies or
resource recovery technologies to the maximum extent practicable,'' be
``cost-effective,'' attain applicable and relevant and appropriate
requirements (ARARs) and provide for meaningful public participation.
CERCLA and its regulations also provide funding for technical
assistance grants (TAG) to certain parties to help ensure meaningful
community involvement at sites on the NPL. These resources and
opportunities are important to many stakeholders who live near sites.
Question 3. In November 1996, you issued interim guidance which
sets out the criteria EPA plans to use to evaluate the adequacy of
State Voluntary Cleanup programs when negotiating Memoranda of
Agreement with States. Under such agreements, EPA would not plan to
take any action at sites under a voluntary cleanup action, except in
cases of imminent and substantial endangerment. I have a number of
questions regarding this guidance.
a. Under the guidance, having an MOA does not constitute a release
from Superfund liability. Does this mean that volunteers could still
face future requirements for removal or remedial action even after they
have cleaned up a site under a State program?
Response. As the Interim Approach for Regional Relations with State
Voluntary Cleanup Programs states ``generally EPA does not anticipate
taking removal or remedial action at sites involved in this Voluntary
Cleanup Program unless EPA determines that there may be an imminent and
substantial endangerment to public health, welfare, or the
environment.'' Should such imminent and substantial endangerment occur,
EPA would take appropriate action in compliance with CERCLA.
b. If volunteers still face liability under an MOA, what does the
MOA really provide to volunteers?
Response. The MOA is a work planning tool for Regions and States.
It defines respective roles and responsibilities within the current
law. The MOA provides volunteers information about how EPA and a State
are coordinating their efforts to address sites in a complementary
manner.
EPA believes that the ten Memoranda of Agreement between States and
the Agency concerning voluntary cleanup programs offer private parties
(volunteers) some comfort that subsequent Federal action under CERCLA
will not be taken except under limited conditions, such as imminent and
substantial endangerment to the public health, welfare, or the
environment as the Interim Approach for Regional Relations with State
Voluntary Cleanup Programs states ``generally EPA does not anticipate
taking removal or remedial action at sites involved in this Voluntary
Cleanup Program unless EPA determines that there may be an imminent and
substantial endangerment to public health, welfare, or the
environment.''
c. What has been the States' and State associations' response to
this guidance?
Response. EPA has entered into MOAs with ten States--Minnesota,
Illinois, Indiana, Wisconsin, Texas, Colorado, Michigan, Missouri,
Rhode Island and Maryland. EPA does not believe that the November 14,
1996, Interim Approach has slowed the pace of MOAs. Since November, two
States, Rhode Island and Maryland, have signed MOAs and eight other
MOAs are now in negotiation.
The decision regarding the scope of sites covered by an MOA
concerning State voluntary cleanup programs is a complex issue that the
Agency has not yet resolved. Under consideration are issues such as the
level of cleanup and public participation, the State preparedness to
assume costs and responsibilities, and appropriate State/Federal roles
with respect to clean up and enforcement. EPA will continue to seek
comment from affected stakeholders prior to finalizing guidance that
addresses the scope of sites to be included within an MOA on State
voluntary cleanup programs.
In addition, as further background on this matter, this was one of
the Superfund reforms announced in February 1995. In March 1995, EPA
invited States, as co-implementers of the Superfund program, to work
with it in investigating the feasibility of developing National
guidance concerning State voluntary cleanup programs. Representatives
from five States (California, Pennsylvania, Tennessee, Minnesota, New
Jersey) agreed to participate with EPA and U.S. Department of Justice
(DOJ) on a workgroup tasked with drafting guidance that would then be
recommended to senior EPA management for concurrence and release as
final guidance. The workgroup developed draft guidance in October 1995,
which included the six criteria outlined in the November 14, 1996
interim approach memo.
Senior EPA management discussed further Federal Government comments
on the October 1995 draft guidance with the States, primarily those
States on the ASTSWMO Voluntary Cleanup Task Force, from November 1995
through August 1996 via teleconferences and meetings. By August 1996,
EPA believed that States had clearly stated their position.
Furthermore, EPA wanted to seek public comment from other interested
stakeholders. In the meantime, at least ten States had expressed to
their EPA Regions interest in negotiating MOAs. In order to keep these
negotiations on track, EPA senior management decided to issue the
November 14, 1996 interim approach memo to its Regional Superfund
Policy Managers. The issuance of the interim approach was needed to
prevent further delays in negotiating MOAs with individual States.
d. You set out six criteria State Voluntary Cleanup programs needed
to meet or obtain an MOA including: (1) providing for meaningful levels
of community involvement; (2) using protective cleanup requirements;
(3) having adequate resources; (4) ensuring the completion of cleanups;
(5) overseeing cleanups; and (6) taking enforcement action if
necessary. Do you think most States will meet the criteria you set out
in the guidance?
Response. EPA believes that the goal of promoting effective State
voluntary cleanup programs is an important issue. As EPA negotiates
Memoranda of Agreement (MOAs) with States, EPA will evaluate State
programs against the criteria and specific enforcement language
contained in the November 14, 1996, memorandum entitled ``Interim
Approaches for Regional Relations with State Voluntary Cleanup
Programs'' until such time as other voluntary cleanup program guidance
is finalized.
To enhance and develop State voluntary cleanup programs, EPA will
be providing States with technical and financial assistance ($10M in
fiscal year 1997).
Question 4. I understand 8 States signed MOAs with EPA before the
Interim Guidance was issued. I have some questions about these States
experiences.
a. Did these States receive any kind of release from Superfund
liability?
Response. MOAs do not constitute a release from liability under
CERCLA. However, they do provide comfort language as to EPA's general
intentions to conduct a response action and the conditions under which
EPA might consider doing so.
b. Have these States told you whether the MOA has helped them in
any way?
Response. EPA is actively pursuing initiatives to encourage the
development and use of strong State voluntary cleanup programs. Several
States at the February 27, 1997, stakeholder meeting expressed the
belief that the MOAs helped to encourage private party cleanups.
c. Are these States interested in additional releases from
liability, such as those offered in S. 8?
Response. EPA has not heard directly any States requesting
``additional releases'' to date. Moreover, releases are normally
granted on a site-specific basis.
Question 5. On page 14 of your testimony you talk about a
stakeholder meeting on voluntary cleanups held last week. You state
that ``[w]e will use that input to develop voluntary and national
guidance on State voluntary cleanup programs.''
a. Is this meeting the last outreach effort to States before the
guidance is finalized? What was the result of that meeting? Do you
believe all stakeholders, especially States with mature Brownfields
programs were represented; and how were the States selected.
Response. The primary purpose of the EPA stakeholder meeting on
voluntary cleanup programs held February 27, 1997, was to seek
individual input from a diverse group of stakeholder representatives as
part of EPA's deliberations, rather than to reach a consensus of the
stakeholder participants. Once EPA has had an opportunity to consider
the information that this meeting produces, we will publish the
resulting draft guidance in the Federal Register for formal public
comment.
The State representatives invited to the meeting included
representatives from a geographically diverse group of States that
represented an array of experience with voluntary cleanup programs. We
invited States with relatively mature voluntary cleanup programs that
address a large number and/or diverse type of sites, such as Minnesota,
Texas, and New Jersey; States that have recently signed an MOA, such as
Rhode Island; and, States that have recently enacted a brownfields law,
such as Maryland. We also invited States who had experience in
particular areas such as environmental justice issues found in the
south and southwest part of the country, or whose voluntary cleanup law
specified a more limited scope of sites to be addressed under the
voluntary cleanup program. In addition to States, we invited
representatives from communities and community organizations, local
governments such as mayors and county commissioners, economic
development agencies, large and small industry, the business, banking
and development community, environmental justice communities,
environmental groups and citizens.
b. Will the final guidance include a certain release from Superfund
liability for States meeting the criteria than the interim guidance?
Response. EPA is in the process of developing the voluntary cleanup
guidance and will announce the contents of guidance upon its
completion. No determination on the contents of that guidance have been
made at this time. The draft guidance will be published in the Federal
Register for comment.
Question 6. On page 14 of your testimony, you discuss FY97 EPA
funding for State voluntary cleanup programs. I have a number of
questions on this topic. To date, how much of the FY97 $10 million
appropriated for State voluntary cleanup programs have you distributed?
a. When do you plan on distributing the money? What criteria do you
plan on using to distribute this money and have you shared this
criteria with the States/State organizations?
Response. The $10 million identified in the fiscal year 1997
Brownfields budget is for general capacity building by States to
implement State VCPs. The funding will be distributed based solely on
State need during fiscal year 1997.
Acting Assistant Administrator Tim Fields (Office of Solid Waste
and Emergency Response) committed to States that they would have the
opportunity to provide individual State input concerning the criteria
used to distribute EPA funding in support of State Voluntary Cleanup
Program (VCP) infrastructure. A draft paper entitled ``Draft Approach
for Regional Funding of State Voluntary Cleanup Programs'' has been
prepared and made available for review by States. Individual State
comments are due on that draft document, March 20, 1997.
EPA plans to assemble its Regional Brownfields and Core Program
Coordinators in Washington, DC for a meeting in April 1997 to discuss
the criteria and process for distributing the $10 million budgeted in
FY97 for support of State VCPs. State representatives have been invited
to attend the part of the meeting where criteria and quarterly
reporting are discussed. It is not appropriate, however, for States to
participate in any EPA discussion of ranking State proposals for
funding should that prove necessary.
b. Do you plan on distributing this money through your normal
processes, i.e., allocating a lump sum to each region and allowing the
regions to negotiate with the individual States?
Response. The $10 million identified in the fiscal year 1997
Brownfields budget is for general capacity building by States to
implement State VCPs. The funding will be distributed to the Regions
based solely on State need in developing or enhancing voluntary cleanup
programs. The core program cooperative agreement vehicle will be the
funding vehicle used to distribute the money to the States. For
purposes of EPA Regional/State planning, EPA is preparing to discuss
the distribution methodology in a meeting with its Regions. EPA HQ and
Regional representatives will participate in a National Coordinators'
meeting in April 1997 for the purpose of allocating the first year of
National resources ($10M in fiscal year 1997) specifically dedicated to
the development and enhancement of State Voluntary Cleanup Programs.
The purpose of this National meeting is to communicate the need for
National consistency in the allocation of VCP infrastructure funding.
Regional Core Funding Coordinators and Brownfields Coordinators are
encouraged to participate in this National meeting. At this time,
States are being advised that each State should estimate its annual
funding requests in support of its VCP at a level not to exceed
$300,000.
c. What role will headquarters play in this process? Do you
realistically believe headquarters can evaluate State programs better
than individual regions?
Response. EPA headquarters' role in the process of funding State
voluntary cleanup programs infrastructures is to promote consistency
among the Regions in the areas of activities eligible for funding and
quarterly reporting on the use of the funds. EPA HQ is using this
meeting to guide up-front planning so that the Agency will be prepared
to address future requests for information about voluntary cleanup
programs. This planning will help EPA successfully implement the
funding process in the out-years. EPA will evaluate whether a State
voluntary program qualifies for funding based on its meeting, or plans
to meet, the base-line criteria and specific enforcement language
contained in the November 14, 1996, memorandum entitled ``Interim
Approaches for Regional Relations with State Voluntary Cleanup
Programs'' until such time as other voluntary cleanup program guidance
is finalized. EPA Headquarters and Regions are working to draft
criteria and procedures that will be used to allocate the funds for
voluntary cleanup programs. In the November 14 interim approach, EPA
identified six baseline criteria that we think are minimum elements
that a voluntary cleanup program should contain. EPA may modify these
criteria as agency discussions on issues surrounding the development
and enhancement of these programs continue. A draft set of criteria was
provided to ASTSWMO to distribute to the States March 6, 1997. Comments
are due to the Agency on March 20.
EPA will request States to address how they meet, or plan to meet,
these criteria in the context of their applications for either funding
their efforts to develop voluntary cleanup programs or their efforts to
enhance existing voluntary cleanup programs. State requests for funding
voluntary cleanup programs may exceed the $10 million available in
fiscal year 1997. To prepare for that, EPA HQ and Regions are
discussing ways to balance the needs of those States who are just
starting a program versus those States that want to enhance an existing
program. We want to reward those States who were forward-looking and
innovative in establishing voluntary cleanup programs at the same time
we want to provide seed money to those States who need assistance in
establishing voluntary cleanup programs. This is the type of issue that
EPA HQ and Regions are now discussing and for which we are developing
criteria. Funds will be awarded by the Regions through the existing
core cooperative agreement mechanisms.
d. Will States without an existing voluntary cleanup program
receive preference over States with existing programs which desire
program support funding? Will you require States to have signed
Voluntary Cleanup MOAs to receive funding?
Response. EPA HQ and Regions are discussing ways to balance the
needs of those States who are just starting a program versus those
States that want to enhance an existing program. We want to reward
those States who were forward-looking and innovative in establishing
voluntary cleanup programs at the same time we want to provide seed
money to those States who need assistance in establishing voluntary
cleanup programs. This is the type of issue that EPA HQ and Regions are
now discussing and for which we are developing criteria.
MOAs will not be required to receive funding from EPA, nor will the
presence of a signed MOA preclude a State from receiving funding.
Question 7. Does EPA seek legislation allowing RCRA corrective
actions to be addressed under State brownfield or voluntary cleanup
plans? Please explain why such a legislative fix is necessary, in light
of EPA's long-standing policy against listing on the NPL sites subject
to RCRA corrective actions. (53 Fed. Reg. 51417 (Dec. 21, 1968).
Response. EPA believes the existing flexibility to use State
brownfield or voluntary cleanup programs at RCRA facilities under
current law is appropriate; EPA is not seeking additional legislation
in this area and does not support legislation that would grant
prospective waivers of corrective action liability for RCRA sites that
are cleaned up under these programs. Under current law, EPA and
authorized States have the discretion to allow cleanup of RCRA
corrective action sites under appropriate State brownfields or
voluntary cleanup programs. EPA notes that the discretion to allow
cleanup of RCRA facilities using State brownfield or voluntary cleanup
programs does not affect the RCRA hazardous waste permit requirements
to address corrective action section 3004(u) or RCRA enforcement
authorities related to corrective action. However, allowing these sites
to be handled under State brownfields and voluntary cleanup programs
can affect the amount of corrective action needed in any given RCRA
permit or enforcement order. For example, if part of a RCRA facility
were appropriately cleaned up under a State brownfield or voluntary
cleanup program before a permit or order was issued, for the purposes
of the permit or order for that facility, RCRA corrective action
requirements should be considered fulfilled action for those areas
addressed under the State brownfields or voluntary program.
Question 8. (a) Please provide examples of sites where a State had
lead cleanup authority under CERCLA; where a State responded to a
hazardous substance release under its own authority; or where a State
certified that a cleanup was complete and there was no need for further
cleanup, in short, being handled or evaluated under State auspices, and
where: a) a State requested that EPA assume the lead (e.g., as is
happening at the Grand Street site in Hoboken, NJ); b) EPA assumed lead
on its own--e.g., upon finding of imminent and substantial
endangerment; or c) EPA assumed lead for another reason--e.g., upon
finding that the State failed to obtain a cleanup using its own
enforcement authority; or that the State-lead cleanup was failing to
meet EPA standards for protectiveness. For these sites, please describe
the mechanism used by the State to respond to or evaluate site
conditions, and the mechanism which ushered in EPA involvement. In
addition, for each site, please indicate the cost of the EPA response,
and whether EPA sought reimbursement of this amount from a PRP.
Answer a. HOBOKEN, NEW JERSEY--Grand Street Mercury Site
Background: Mercury vapor lamps were manufactured at this site
during the 1930's. The 5-story building used for manufacturing was
later used as a tool and die company. In the early 1990's the owner of
the tool and die company sold the building. Prior to that sale, the
owner notified the New Jersey Department of Environmental Protection
(NJDEP), as required pursuant to the State's Environmental Cleanup
Responsibility Act. (ECRA).
Under ECRA, the tool and die company owner was required to conduct
sampling and implement a cleanup plan for the building. This work by
the owner was limited to sandblasting oil stained areas and removing an
underground storage tank containing fuel oil. Upon completion of this
voluntary cleanup action, the NJDEP issued an approval of negative
declaration of ECRA. (Allows property to be sold.)
In 1993, the building was sold to Grand Street Artist Partnership
(GSAP). The building was renovated and converted into condominiums and
artist studios. Sixteen families purchased condominiums or otherwise
came to live in the building.
Shortly after moving into these condominiums, a resident found
elemental mercury dripping out of the ceiling. The NJDEP was contacted.
NJDEP, in turn, contacted U.S. EPA. after air monitoring detected
elevated levels of mercury. The State requested U.S. EPA take the lead
at the site. EPA, the Agency for Toxic Substance and Disease Registry
(ATSDR), the State and local health agencies conducted urine analysis
on the residents of the building. Urine sample results indicated that
mercury levels in some residents were five times safe levels. Elevated
levels of elemental mercury can damage the central nervous system and
in severe cases cause death.
The Hoboken Department of Health ordered the residents to vacate
the building. On January 4, 1996, EPA announced that it would provide
temporary relocation assistance and study the extent of contamination
in the building. Since the relocation of the residents, the site has
been proposed for listing on the NPL and is undergoing extensive
assessment.
On December 23, 1996, the NJDEP rescinded its approval of the
negative declaration under ECRA.
Concerns Regarding Voluntary Cleanup and Proposed Legislation:
Because the assessment conducted under ECRA was limited, the NJDEP was
not aware of the extensive, and potentially life-threatening, levels of
mercury contamination on this site. It is for circumstances such as
these, that EPA wishes to preserve its section 104, 106, and 107
authorities. In most States, Voluntary Cleanup Programs are only 2-3
years old, thus, extensive long-term monitoring history of VCP cleanups
is not available. While the Agency does not expect to be called upon to
exercise its authority, it is important to preserve them for
unanticipated circumstances as Hoboken exemplifies.
Answer b and c. EPA does not know of any specific examples.
Question 9. Please indicate whether EPA seeks to retain an
``overfiling'' authority (i.e., an ability to take over responsibility
for cleanup and enforcement at a site whether or not a State requests
or concurs in EPA's action.)
Response. As the Interim Approach for Regional Relations with State
Voluntary Cleanup Programs states ``generally EPA does not anticipate
taking removal or remedial action at sites involved in this Voluntary
Cleanup Program unless EPA determines that there may be an imminent and
substantial endangerment to public health, welfare, or the
environment.'' This memoranda sets out the baseline criteria which EPA
will employ until a permanent guidance document is issued.
Question 10. (a) Does EPA believe that brownfields and/or voluntary
cleanup programs ought not to include NPL or NPL-caliber sites? (b)
Does EPA believe that brownfields cleanups should meet NPL-caliber
cleanup requirements? (c) Does EPA believe that liability relief (that
is, assuming an acceptable scheme that contains a re-opener of sorts)
is appropriate for lenders, developers, and innocent purchasers of
brownfields? Does EPA believe that brownfield site owners should be
entitled to liability relief?
Answer a. The decision regarding the scope of sites covered by an
MOA concerning State voluntary cleanup programs is a complex issue that
the Agency has not yet resolved. Points under consideration include the
following related to the level of cleanup and public participation, and
the State preparedness to assume costs and responsibilities. CERCLA and
its regulations, particularly the National Contingency Plan (NCP),
contain certain provisions concerning sites on the NPL. For example,
under the NCP, the Superfund cannot be used to pay for remedial actions
at non-NPL sites. (See 40 CFR 300.425.) CERCLA and its regulations set
out certain site cleanup requirements and provide for public comment on
proposed remedies at NPL sites (see CERCLA 121 and the NCP); thus,
consistent with these requirements, Federal remedial actions, which are
usually taken at NPL sites, must: be ``protective of human health and
the environment,'' utilize ``permanent solutions and alternative
treatment technologies or resource recovery technologies to the maximum
extent practicable,'' be ``cost-effective,'' attain applicable and
relevant and appropriate requirements (ARARs) and provide for
meaningful public participation. CERCLA and its regulations also
provide funding for technical assistance grants (TAG) to certain
parties to help ensure meaningful community involvement at sites on the
NPL. These resources and opportunities are important to many
stakeholders who live near sites.
Thus, EPA plans to seek comment from affected stakeholders prior to
finalizing guidance that addresses the scope of sites to be included
within an MOA on State voluntary cleanup programs. In the meantime,
Regions and individual States will discuss their respective approaches
to addressing sites, and their respective resources, and negotiate
whether it is appropriate to include NPL-caliber sites within the scope
of an MOA for a specific State voluntary cleanup program.
Answer b. EPA has made no determination on this issue.
Answer c. Yes. As part of the Omnibus Consolidated Appropriations
Bill for Fiscal Year 1997, signed by the President on September 30,
1996, Congress enacted the ``Asset Conservation, Lender Liability, and
Deposit Insurance Protection Act of 1996'' (the ``Act''). The Act
supercedes EPA's Policy on CERCLA Enforcement against Lenders and
Government Agencies that Acquire Property Involuntarily. As part of the
Omnibus Consolidated Appropriations Bill for Fiscal Year 1997, signed
by the President on September 30, 1996, Congress enacted the Asset
Conservation, Lender Liability, and Deposit Insurance Protection Act of
1996 (the ``Act''). The Act includes lender and fiduciary liability
amendments to CERCLA, amendments to the secured creditor exemption set
forth in Subtitle I of RCRA, and validation of the portion of the
CERCLA Lender Liability Rule that addresses involuntary acquisitions by
government entities. These amendments made by the Act apply to all
claims not finally adjudicated as of September 30, 1996, which include
all cases that are in the process of being settled.
While EPA's Lender Liability policy outlined its use of enforcement
discretion with respect to the pursuit of lenders and government
entities who acquired contaminated property involuntarily, that policy
did not prevent third party contribution claims against these entities.
The ``Act'' now clearly outlines the circumstances under which these
entities are protected against enforcement actions by the U.S.
Government for CERCLA liability and for third party contribution claims
arising under CERCLA.
Finally, EPA is encouraged to see legislation which addresses
``bona fide'' prospective purchasers from CERCLA liability and the
requirements that must be met to assert an innocent landholder defense.
The Agency has noted with approval the inclusion of provisions on
prospective purchasers and innocent landowners in S. 18.
Question 11. Please describe the MOAs into which EPA has entered
regarding State voluntary cleanup programs. Are the terms of these
uniform? Do they provide for releases of Federal liability? If so, how
are those releases executed? Has your November 14, 1996, Interim
guidance hastened or slowed execution of MOAs?
Response. EPA has entered into MOAs with ten States--Minnesota,
Illinois, Indiana, Wisconsin, Texas, Colorado, Michigan, Missouri,
Rhode Island and Maryland. The terms of these programs are not uniform
and instead have varying characteristics in terms of organization,
funding, scope, level of cleanup required, controls, long-term
monitoring, public participation, and assurance of relief from future
State liability. These MOAs vary depending on the provisions of each
State program.
The MOA is a work planning tool for Regions and States. It defines
respective roles and responsibilities within the current law. The MOA
provides volunteers information about how EPA and a State are
coordinating their efforts to address sites in a complementary manner.
EPA believes that the ten Memoranda of Agreement between States and
the Agency concerning voluntary cleanup programs offer private parties
(volunteers) some comfort that subsequent Federal action under CERCLA
will not be taken except under limited conditions, such as imminent and
substantial endangerment to the public health, welfare, or the
environment. As the Interim Approach for Regional Relations with State
Voluntary Cleanup Programs states ``generally EPA does not anticipate
taking removal or remedial action at sites involved in this Voluntary
Cleanup Program unless EPA determines that there may be an imminent and
substantial endangerment to public health, welfare, or the
environment.''
EPA does not believe that the November 14, 1996, Interim Approach
has slowed the pace of MOAs. Since November, two States Rhode Island
and Maryland have signed MOAs and eight other MOAs are now in
negotiation.
______
Prepared Statement of James M. Seif, Secretary, Pennsylvania Department
of Environmental Protection
Mr. Chairman, my name is Jim Seif As Secretary of the Pennsylvania
Department of Environmental Protection, I am proud to present
Pennsylvania's Land Recycling Program as you begin to consider changes
to the Federal Superfund program.
Land recycling is the most significant environmental innovation
developed in the last decade--an innovation pioneered by States in
response to unrealistic Federal policies that actually encourage the
abandonment of contaminated properties.
Returning properties to productive reuse free from environmental
liabilities has not only obvious environmental benefits but economic
benefits as well. And by encouraging businesses to locate on old
industrial sites in towns and cities, land recycling may also turn out
to be a major factor in reducing sprawl development and preserving open
space and farmland.
To see just how successful our program is, you only need to look at
the numbers. In the short time since Governor Ridge signed our Land
Recycling Act into law in May 1995, over 195 sites have begun the
formal process toward redevelopment and a total of 64 have been
completely remediated.
Compare that to the Federal scorecard for cleaning up contaminated
sites in Pennsylvania under the Comprehensive Environmental Response,
Compensation and Liability Act (``CERCLA'' or ``Superfund''). In 16
years, only 8 of Pennsylvania's 103 Superfund sites have been cleaned
up and removed from the National Priority List.
Pennsylvania's Land Recycling Program is a major environmental
success story for the Ridge Administration and has been selected as a
national model by the American Legislative Exchange Council. Superfund,
while good intentioned, is universally recognized ads the least
successful Federal environmental statute in history.
Today I want to outline the key elements of our Land Recycling
Program and tell you why it's working so effectively. I will also
discuss the efforts Pennsylvania and its sister States are taking to
promote redevelopment of old industrial sites in the Great Lakes region
through Governor Ridge's chairmanship of the Council of Great Lakes
Governors. In addition, I want to give you my perspective on the
Federal/State relationship at land recycling sites and to tell you what
States need from the Federal Government to maximize the effectiveness
of our land recycling programs.
pennsylvania's land recycling program
Pennsylvania, like many other States, has learned from its
mistakes. Past environmental cleanup laws and policies often encouraged
property owners to ``take a walk'' and simply abandon a site, rather
than deal with the contamination.
The Federal Government and the States erected four barriers which
effectively prevented the cleanup and reuse of old industrial sites.
<bullet> First, cleanup requirements often used ``Garden of Eden''
or background standards, regardless of whether the site was to be used
for a daycare center or steel mill. These standards ranged from
expensive to simply impossible.
<bullet> Second, there was never-ending liability for responsible
parties, and everyone who touched the land was ``responsible''.
Government would not provide releases of cleanup liability to anyone,
even after a site had been made safe.
<bullet> Third, consider the now-legendary delays in approving
cleanup plans. The adversarial, lawyer-dominated review process could
take years to approve cleanup plans, making it unpredictable. This
uncertainty worked against normal timetables for arranging financing
for redevelopment.
<bullet> Finally, lenders and redevelopment authorities did not
want to become enmeshed in this problem by loaning money to
redevelopment projects. Lenders simply stopped making loans to persons
wanting to acquire or improve contaminated property.
For 3 years, the Pennsylvania General Assembly worked hard, in a
bipartisan way, to address these problems. It held numerous hearings,
and heard from dozens of witnesses all pleading for changes that would
put some common sense back into the process of redeveloping old
industrial sites. Finally, on May 19, 1995, Governor Tom Ridge signed
into law a three-bill package, which created Pennsylvania's Land
Recycling Program. He did so at the then abandoned, but now being
redeveloped, USX National Tube Works in McKeesport, Pennsylvania.
The Land Recycling Act applies to all contaminated sites in
Pennsylvania, existing and future, and covers both voluntary cleanups
and enforcement actions. The Act sets cleanup standards based on health
and environmental risks. Land use is also incorporated into the cleanup
standards, allowing different cleanup levels for residential and non-
residential sites.
The statute provides maximum flexibility to persons performing
cleanups by allowing them to choose from three cleanup standards--
background, a statewide health-based standard, and a site-specific
standard.
Persons choosing to meet background or the statewide health-based
standard need no prior approval from the Department of Environmental
Protection (``DEP'' or ``Department'') to get to work. They simply file
a notice of intent with DEP to remediate, perform the cleanup, and then
file a final report with the Department showing that they in fact met
the standard. There is also notice to the community and to the general
public, but no required hearings or meetings.
Both the background and statewide health standard represent pre-
approved standards adopted by the General Assembly itself or by
regulation after full scientific and public review.
Persons choosing to meet the site-specific standard, on the other
hand, must submit at least three reports--remedial investigation, risk
assessment, and cleanup plan--to the Department for review and
approval. In addition, a public participation plan is required when the
host municipality requests it. This may include public hearings,
meetings, or door-to-door canvassing of local neighborhoods as a means
of obtaining community input on the cleanup and reuse plans for the
contaminated property.
The Land Recycling Act creates special incentives for redeveloping
abandoned sites for which no financially viable party is available to
perform the cleanup and sites in State designated enterprise zones. For
these ``Special Industrial Sites'' a developer is only required to
perform a baseline environmental assessment and cleanup any direct and
immediate threats to persons who will be on the property using it for
its intended purpose.
DEP signs an agreement with the developer outlining specifically
what contamination he is and is not responsible for, giving him the
assurance he needs to proceed. So far we have signed 8 agreements, and
we have another 25 Special Industrial Area sites moving through the
system.
To address the perpetual liability problem, the Act gives a full
statutory release of liability to any person who meets one of the three
cleanup standards. The release covers the current owner or occupier of
the property, the developer, successors, assigns and anyone who
participates in the cleanup. The release also includes contribution
protection and protection from citizen suits under Pennsylvania (not
Federal) law.
To make the Department more responsive to persons submitting plans
for the reuse of contaminated property, the Land Recycling Act sets up
a clear process to regularize approval of cleanup plans and imposes
fixed deadlines. For example, the Department has 60 days to review a
site remediation plan. If the Department fails to review the plan
within that deadline, it is deemed approved, and the person gets the
release of liability. That has not happened yet, and I don't expect it
to. The point is that the DEP now has real live deadlines that cannot
be avoided.
Pennsylvania's Economic Development Agency Fiduciary and Lender
Environmental Liability Protection Act is the second of the three bill
package. It frees lenders, development authorities, municipalities and
fiduciaries from cleanup liabilities unless, of course, they are the
direct cause of contamination at the site. This protection covers all
routine commercial lending practices, including taking ownership or
control of a property after foreclosure. Even if there was a release of
hazardous substances on the property prior to and continuing after
foreclosure, the lender will not be sucked into the liability loop.
The message is simple--we have no interest in suing lenders. Our
real objective is to put money in the hands of people who can put
industrial sites back into productive use.
Finally, Pennsylvania's Industrial Sites Environmental Assessment
Act, the third law in the package, provides $2 million in grant money
to cities and municipalities to finance environmental assessments at
industrial sites. In addition, the Land Recycling Act offers $15
million in grants and loans for assessment and cleanup.
Pennsylvania's Community and Economic Development Department
already has over 90 projects lined up for State funding it has approved
funding for 40 projects at a total cost to the Commonwealth of $4.3
million in grants and loans. The largest grant, close to one million
dollars, was given to a reuse project in the city of Pittsburgh in
which the old abandoned Hays Army Ammunitionsite was turned into a hot
dip galvanizing facility that now employs over 80 people.
implementation of our land recycling program
There were 60 days between the time the Land Recycling Act was
signed and when it became effective. In that period, an internal
workgroup comprised of people from DEP headquarters and our six
regional offices put together a 200 page technical guidance manual, 10
fact sheets, and a citizen handbook that were made available to the
public.
That effort showed that there are very creative, energetic
scientists and engineers working in the Department, who simply needed
to be freed from the old perpetual liability mindset. Our bureaucracy
was indeed responsive. We have engaged in extensive outreach efforts,
including seminars and conferences throughout the Commonwealth, to
educate the public, local government, developers, property owners,
attorneys, bankers, and the environmental consulting community, and
provide a step-by-step understanding of how to move a property through
the Land Recycling Program. We have also utilized our award winning
weekly newsletter ``The Update'' and our worldwide web site (http://
www.dep.state.pa.us) to provide information on the program to tens of
thousands of people.
After 20 months experience with the program, I can say emphatically
that it is working.
It is working at the 2.45-acre former Thonet site in the city of
York, Pennsylvania. That property contained a furniture manufacturing
facility that suffered a catastrophic fire in 1993. It sat vacant and
unused due to environmental contamination, including soil and
groundwater containing lead and benzene. Gur Land Recycling Act brought
new life to the site. In February 1996, a private developer and DEP
signed a Special Industrial Area Site Agreement. The cleanup included
the removal of paint, drums, and debris from the fire, asbestos
remediation, and capping the contaminated soils, and was completed the
following month. The new operator of the site, The Wolf Organization of
York, built a 37,000-square-foot state-of-the-art facility on the site
to manufacture countertops. Tom Wolf, the president of the company,
said that without Pennsylvania's Land Recycling Act the project would
not have happened. He told Governor Ridge that the plant ``would not
have been built without it.'' ``Without the Act, the plant would have
been built on five acres of land at some greenfields site outside of
the city. We would have plowed under five acres of agricultural land.''
It's also working at the former Johnson Bronze site in New Castle,
Lawrence County, Pennsylvania. That site was home to a ball bearing
manufacturing facility until 1978, when it was abandoned, leaving a
site contaminated with lead and PCBs. No financially viable past owner
would take responsibility for remediating the eight-acre downtown site,
so the city of New Castle took possession. Both the city and county
were anxious to redevelop the property, but prospective buyers were
unwilling to commit because of the liability and health issues posed by
site contamination. With the help of Pennsylvania's Land Recycling Act,
the site was remediated as a Special Industrial Area site. The cleanup
took 9 weeks and was completed in February 1996. The city and the
Lawrence County Economic Development Corporation recently found two
companies to purchase tracts on the property. One is a ceramics company
that will be expanding its operations and adding new jobs, and the
other packages frozen food and will employ between 35 and 80 people.
Our Land Recycling Program is working because we have a statute
that brings common sense and private sector resources to the process of
redeveloping old industrial sites. Moreover, the Department is willing
to meet with anyone, anytime, to discuss redevelopment of any site,
free from the ``Gotcha!'' mentality of the past. We have built into the
system enough flexibility to allow for creativity, innovation and
common sense in addressing the unique problems that arise at old
industrial sites.
But the main reason why our Land Recycling Program is working is
because there are people out there--in local government, the private
sector, the redevelopment authorities and others--with the vision for
taking the promise of our new legislation and turning it into reality.
Without their hard work to identify sites, bring together buyers and
sellers, and raise the necessary capital, we wouldn't have close to 200
sites in the system, and we wouldn't be so optimistic about the future.
success is spreading
I urge the Subcommittee's members and its staff to critically
examine all of the State land recycling laws and voluntary cleanup
programs that now exist all across the country. At latest count over 30
States had developed such programs. What you will quickly see is that
while State land recycling programs vary, there are many similarities.
The common elements are (1) cleanup standards based on risk and
land use; (2) liability protection, in the form of a statutory release,
a covenant not to sue or no further action letter given to persons
meeting the cleanup standards; and (3) a reliance on private funds to
pay for the vast majority of land recycling cleanups, with limited
State funds available in the form of grants, low interest loans, and
tax credits for site assessments and cleanups.
These land recycling laws and State voluntary cleanup programs are
all designed to promote site cleanups by providing clear standards and
offering liability protection. They are not meant to provide ways for
parties to avoid undertaking cleanups. In fact, once a cleanup is
completed, all the State and Federal laws and regulations governing
site operations and pollution control continue to apply.
Last year, Governor Ridge began a 2-year term as Chair of the
Council of Great Lakes Governors and made land recycling his top
priority. His choice reflects a recognition on the part of all eight of
the Governors on the Council that the ongoing transformation of our
region from a mass production economy to a high performance economy
depends, in large part, on the success of our State voluntary cleanup
programs. (The Great Lakes States include Illinois, Indiana, Michigan,
Minnesota, New York, Ohio, Pennsylvania, and Wisconsin). In discussions
with the Great Lakes Canadian provinces of Quebec and Ontario the
Governor personally, and the Council, have discovered that similar
problems exist there, that similar solutions apply, and that the
world's most productive industrial powerhouse can and will renew itself
on all shores of the Great Lakes.
Each of the Great Lakes States has worked very hard to develop
State land recycling laws and voluntary cleanup programs that are
environmentally sound, and respond to the needs and interests of local
government, the business community and the public.
In just a short time, our individual State programs have produced
real results--hundreds of old industrial sites cleaned up, countless
acres of open space protected from sprawl, and the creation of family
sustaining jobs--all while protecting the health and safety of our
citizens and the environment.
As a way of building on these successes, the Council adopted a Land
Recycling Action Agenda at its annual meeting in Detroit last July. I
have included a copy of that Agenda with my testimony. The Council
plans to form regional SWAT teams of land recycling experts and to
establish a clearinghouse of information on remediation and cleanup
technologies that will allow our States to share individual approaches
and solutions to our common problems.
states play a lead role
The land recycling activity occurring throughout Pennsylvania
provides a useful illustration of the role that the State and Federal
Government currently play in the process of redeveloping old industrial
sites.
Old industrial sites that present good redevelopment opportunities
are first identified by local government, local redevelopment
authorities, or the private sector. If there are environmental
concerns, any notices, site characterization reports or other studies
are typically analyzed and reviewed by the appropriate regional office
of the Pennsylvania Department of Environmental Protection.
My staff meets with local officials, developers and others to
provide technical support and guidance during redevelopment activities.
In addition, local government and the redevelopment community look
primarily to the State for funding. While the Federal Government has
offered some limited funding for land recycling projects in
Pennsylvania, the State currently has made more dollars available and
has funded 10 times the number of projects supported by the Federal
Government in our State. That is both a reflection of limited Federal
resources, and the fact that these really are local, community projects
that draw more attention from State and local representatives.
When all the cleanup work is done at a site, DEP provides the
critical review of all the technical data and provides the final sign-
off and State liability protection. As you can see, Pennsylvania has
all the personnel, resources and other tools necessary to handle all of
the land recycling cleanups from start to finish, and given that the
actual cleanup work is done privately, we have had no need for
additional staff resources to administer this program.
There really is no reason to seek the Federal Government's
involvement at a land recycling project in Pennsylvania. We do advise
people who want to redevelop a site that is on the Superfund National
Priorities List (NPL) or subject to a RCRA corrective action order to
contact EPA's Regional Office in Philadelphia. We recognize the Federal
Government's interest in maintaining oversight and control over those
site cleanups.
If someone was interested in puffing one of those sites through our
Land Recycling Program, we would contact EPA to see if it would be
willing to allow the site to be handled through our State system, and
indeed that would be our preference.
Of the approximately 200 sites that have entered our Land Recycling
Program to date, none is an NPL site, and it is a rare occasion when
EPA expresses any interest in one of the non-NPL sites in our State
system. The land recycling sites being redeveloped in Pennsylvania are
sites where EPA readily acknowledges they have neither the time,
resources nor interest to deal with.
recommendations for federal legislation
For land recycling to really succeed, the Federal Government must
undertake common sense reforms similar to the States. There have been
numerous ``brownfields'' bills introduced in Congress over the past few
years. Unfortunately, most of them have not addressed the three key
things that the States need from Congress to complement our land
recycling and voluntary cleanup programs and allow them to reach their
maximum potential for environmental cleanup and economic
revitalization. These key items are: (1) a release of Federal liability
at State land recycling sites, (2) a waiver of Federal permitting
requirements at State land recycling sites, and (3) the authority for
Governors to veto proposed NPL listings. S. 8 does address the three
items.
Our No. 1 priority is to amend the Superfund law to provide a
release of Federal cleanup liability to any person who completes a
cleanup at a land recycling site in accordance with applicable State
law.
These land recycling sites simply do not belong under the shadow of
Superfund liability. I hope we can all agree that Superfund was not
written to address these sites; it was written to address a limited
number of highly contaminated sites that presented emergency
situations, imminent hazards and significant threats to human health
and the environment, and where no private resources were available.
This is generally not the case with land recycling sites. If they
presented emergency situations, the State or EPA would have responded
accordingly. It's unfortunate that Superfund, the Federal statute with
the heaviest enforcement hand--strict, joint, retroactive liability--is
applied to the environmental problem where the concerns are mostly
local in nature. While someone could, no doubt, point to a case where a
land recycling site impacts more than one State, the local issues these
sites present are very different from the issues of air and water
pollution that have obvious multi-state and national implications.
We need a Federal release of liability at State sites to combat the
lingering perception by developers that Federal liability is a real
concern at the typical State land recycling site--one that is not on
the Superfund list and has no outstanding RCRA corrective action order.
As a former EPA Regional Administrator, I have tried to reassure
the people who want to redevelop old industrial sites that EPA is
unlikely to take any judicial or administrative action at sites that
are being handled in the State system.
While this is comfort to some, there can be no assurance that EPA
will not second guess the State's decision. There are also no
assurances that they won't be subject to a third-party suit under
CERCLA. Only Congress can provide local government, lenders, and
redevelopers of contaminated property the Federal statutory protection
that they seek. In asking for this, we aren't alone. The Great Lakes
Council of Governors, the Council of State Governments, the National
Governors Association, the Association of State and Territorial Solid
Waste Management Officials and others are all asking Congress to give
releases of Federal liability to persons that cleanup sites in
accordance with applicable State law.
Second, there needs to be a waiver of Federal permitting
requirements at land recycling sites being addressed under a State
voluntary cleanup program. Our General Assembly gave DEP the authority
to waive State permits at sites being handled by our Land Recycling
Program, but only Congress can waive the requirement to obtain Federal
permits. These are the same permitting requirements that EPA has
authority to waive at the much more seriously contaminated sites it has
captured under the Superfund program.
In asking for this waiver, be assured that discharges to the air
and water are fully regulated by our State regulatory program, and
persons cleaning up sites in our State system have to meet all of our
applicable emission and discharge limitations, both during cleanup and
thereafter.
Finally, Congress should reinstate the opportunity of Governors to
veto proposed Superfund listings. The impacts associated with Superfund
sites are borne primarily at the State and local level. If a Governor
believes that a site is more appropriately handled in the State system,
he or she should be able to protect the community from the Federal
Superfund program.
Last year, when we had such opportunity, Governor Ridge concurred
on adding two sites to the NPL, but did not concur on two other sites.
His reasoning was simple: the two sites that he allowed to be added to
the NPL were former waste disposal sites with no potential for
redevelopment, while the other two sites each presented reasonably good
opportunities for redevelopment under our Land Recycling Program.
Had these sites been added to the NPL, based on Superfund's dismal
track record in Pennsylvania, it would be virtually impossible to
convince anybody to redevelop the property. Most people now see
Superfund as a slow moving, lawyer feeding, black hole that sucks the
redevelopment potential out of any site and scares away local
government and the development community.
We are confident that private parties can cleanup these sites
through our Land Recycling Program much more quickly than they would
get cleaned up under Superfund and provide the same level of protection
to the local community.
At the two sites where we did not concur with the proposed NPL
listing, we recognize the interest of EPA to be kept informed of the
status of the State's cleanup efforts. We have also advised the private
parties doing the cleanup that if they fail to move forward on a timely
basis to remediate the site in accordance with our State cleanup
standards that we will recommend to EPA that those sites be re-listed.
final point
In Pennsylvania, Governor Ridge, the members of our General
Assembly, and others that worked so hard to develop our Land Recycling
Program are at a loss to understand why anyone in Washington would
argue that a person who meets the requirements of Pennsylvania's Land
Recycling Act and receives a release of State liability after cleaning
up a site should not also be entitled to a release of Federal
liability.
Pennsylvania is more than willing to work in partnership with the
Federal Government regarding the cleanup of Superfund sites, RCRA
corrective actionsites, and even sites proposed for listing on the NPL.
But we hope that Congress recognizes that it is the States that carry
the responsibility for identifying the needs and interests of their
citizens as they relate to the cleanup and reuse of old industrial
sites and addressing those local concerns through the adoption of State
laws and programs.
As evidenced by a November 1996 EPA memorandum regarding State
voluntary cleanup programs, it appears that the Administration still
believes there is a need for the Federal Government to develop criteria
for the review and ``approval'' of State land recycling programs.
Unfortunately, it seems EPA may be building a Washington-driven program
that looks a lot like Son of Superfund, with all its downsides.
I have not been able to identify any Federal statute that directs
EPA to develop criteria for approving State land recycling programs.
What I can tell you is that Pennsylvania, and many of its sister
States, spent years developing our individual State land recycling
laws, and did so without the benefit of or need for Federal
intervention or support. I have heard the argument that supporters of
Federal baseline criteria put forward--that without Federal oversight
and approval and minimum requirements the States will engage in a
``race to the bottom'' to develop the weakest cleanup laws to attract
new business.
As I said earlier, before you put EPA in the position of reviewing
and approving State land recycling laws, I urge you to take a very
careful look at the land recycling laws already being applied by the
States. You will see that there has been no ``race to the bottom.'' It
is pure fiction.
Indeed, the States that have adopted land recycling laws and
developed voluntary cleanup programs have gone to great lengths to
ensure that the environment is not sacrificed at the expense ofjob
creation. These State land recycling laws were enacted by State
senators and representatives that are directly accountable to their
constituents, the people that live, work and play in the communities
that host the land recycling sites. To say that these State elected
officials can't be trusted to protect the needs and interests of their
constituents is offensive, and it smacks of the kind of paternalism
that has no place in our Federal system of government.
It is clear that some matters are best left to the States to handle
and the reuse of old industrial sites is a perfect example.
EPA is clearly playing catch-up in land recycling. While we are
grateful for the financial support for specific projects, it would be
much more helpful for the Administration to devote its energies to
promoting real reforms instead of seeking to building a bureaucracy to
approve State programs.
We look forward to working with the Subcommittee on legislation
that will help complement our land recycling program and allow it to
reach its full potential.
______
ATTACHMENT
Land Recycling In Great Lakes States A New Opportunity to Extend the
High Performance Revolution
introduction
Over the last 25 years, global shifts in the location of
traditional manufacturing industries have not only resulted in economic
and social changes in the Great Lakes States, but in thousands of
vacant or under-used industrial sites. The persistent ``Rustbelt''
image of this region was created by these changes.
At the same time, increasingly stringent environmental laws adopted
by Federal and State governments established cradle-to-grave liability
for hazardous wastes.
The unintended consequence of these laws was to discourage the
redevelopment of vacant industrial sites by fixing cleanup liability on
any person who had an interest in a site, whether or not they were
responsible for its contamination. Unrealistic cleanup standards
required the cleanup of these sites to near pristine conditions in all
cases even if they were to be reused for manufacturing, thus creating
another disincentive to reuse.
In the last 10 years, the Great Lakes region has seen an economic
transformation from a lagging, de-industrializing area to a high-tech,
higher wage manufacturing and industrial economy.
This change has taken place in many areas without taking advantage
of a key resource--vacant or under-used industrial sites that many
times already have built-in transportation access, utilities, a nearby
work force and other advantages over new, greenfield sites.
Promoting the reuse of industrial sites in the Great Lakes States
through an aggressive Land Recycling Program achieves several important
objectives for the region----
<bullet> Promote the development of already urbanized areas so they
are more economically and environmentally sustainable.
<bullet> Help to retain and expand existing manufacturing in the
region.
<bullet> Save farmland and open space from development to improve
the quality of life.
<bullet> Improve the environment by eliminating hazardous
conditions in communities.
<bullet> Change the image of the Great Lakes region from
``Rustbelt'' to ``High Performance.''
keys to land recycling
There are many factors that go into a business location decision--
transportation facilities, tax policy, work force skills and even
global economic conditions. Environmental concerns are only one part of
that decision, but they are often viewed as a significant barrier to be
overcome.
In order to overcome these barriers and have used industrial
properties actively considered as an option for business expansion, a
successful Land Recycling Program includes several key elements----
<bullet> Encourage the reuse of all commercial and industrial
sites, not just a narrow category of sites.
<bullet> Cleanup standards used in the program must be clear and
based on risk and sound science, preferably offering a choice of
solutions, so that a property owner or developer can reliably estimate
the cost to clean up a site.
<bullet> Provide a straight-forward, timely process for reviewing
cleanup plans and giving agency approvals.
<bullet> Provide finality with regard to clean up liability so that
meeting a cleanup standard ends the liability for further cleanup,
except under clearly specified conditions.
<bullet> Provide cleanup liability protection for financial
institutions, economic development agencies, fiduciaries, non-profit
organizations and local governments that did not contribute to
contamination on a site so they can act as a catalyst for redeveloping
sites.
<bullet> Resolve potential cleanup liabilities under Federal
environmental laws.
<bullet> Provide financial and other incentives to conduct
environmental assessments and cleanups and locate in special areas like
enterprise zones.
great lakes states move ahead
In keeping with a long history of performance and leadership at the
national level, the Great Lakes region of eight States is once again at
the forefront of a major policy initiative--industrial sites reuse.
The Great Lakes States are the nations leaders in Land Recycling
programs. Aggressive Land Recycling Programs are helping to transform
the persistent Rustbelt image of old into one which exudes the vibrant
economy of today. High-tech, higher wage manufacturing and industrial
jobs are on the rise in the region. Innovative State Land Recycling
Programs complement this economic revitalization and continue to offer
a dynamic new approach to distressed urban areas.
All eight States in the Great Lakes region have Land Recycling
Programs. Individual legislation differs throughout, but each State is
moving to implement practical, smart industrial sites reuse programs.
Three States--Illinois, Minnesota and Wisconsin--have entered into
a Superfund Memorandum of Agreement with the U.S. Environmental
Protection Agency. These agreements allow States to maintain the role
of overseeing the cleanup of sites and officially clearing the owner of
future liability.
Illinois has built upon its voluntary cleanup program of 1991 which
offers a No Further Action letter upon completion of a site cleanup
project. Recently, Illinois EPA has prepared draft rules incorporating
a tiering system based on risk, land use and progressed levels of site
information, establishing uniform cleanup objectives and methodology
for all site cleanup programs.
The Minnesota Superfund Memorandum of Agreement expanded on the
States Voluntary Investigation Program, better defining roles and
responsibilities for the cleanup of sites. This agreement encourages
partnerships between U.S. EPA, Region V; the Minnesota Pollution
Control Agency; other State and local governmental agencies and
external stakeholders.
In addition to Wisconsin's Superfund Memorandum of Agreement, the
State has recently created the Bureau of Remediation and Redevelopment
within its Department of Natural Resources. Wisconsin has streamlined
the cleanup process by creating various grades of uniform soil
standards, relieving lenders, cities or counties and innocent
purchasers of liability for contaminated property and has implemented a
Brownfields pilot program with the U.S. EPA.
Indiana established a Voluntary Remediation Program in 1993. This
program provides a mechanism for site owners or operators to
voluntarily enter an agreement with Indiana's Department of
Environmental Management to clean up contaminated property. A Covenant
Not to Sue is issued upon successful completion.
Michigan amended its Natural Resources Environmental Protection Act
to create an owner-pays liability scheme only when that owner
contaminated the site; offer a series of grant and loan programs for
prospective site cleanups; create a task force to speed up cleanups in
Detroit and a Brownfields Coordination Team to customize similar action
on other cities; and create a Brownfields manual for guidance. Michigan
offers two grant programs--Site Reclamation Grants and Site Assessment
Grants to encourage redevelopment
Ohio created a Voluntary Action Program which relies upon private
parties to investigate and cleanup contaminated sites; allows the
cleanup to be tailored to the future use of the land; limits the
property owners legal responsibility for future cleanup; encourages
public input; and audits at least 25 percent of properties cleaned up.
The Ohio EPA certifies professionals to oversee cleanups. Ohio offers
low interest loans, tax abatements and a grant program.
New York has a voluntary cleanup program that requires volunteers
to investigate a site, remediate contamination to agreed-upon levels,
and eliminate sources of onsite contamination that cause offsite
impacts. When the cleanup levels are met, the New York Department of
Environmental Conservation issues a ``no further action'' letter.
Pennsylvania Example
In May 1995 Pennsylvania adopted three new laws creating a State
Land Recycling Program. In the past year 100 sites have participated in
the program and cleanups have been completed at 35 of those sites.
This record compares favorably with Pennsylvania's Hazardous Sites
Cleanup Program, which has cleaned up only two sites permanently in 8
years, and the Federal Superfund Program, which has resulted in
removing eight sites from the National Priority List in 26 years in
Pennsylvania.
The cleanups completed so far under the Land Recycling Program
include large and small projects that resolve long.standing
contamination problems, put abandoned industrial sites back into
productive use, allow existing businesses to clean up their own sites
and continue operations, and give hope to ``land-locked'' cities that
now, for the first time in years, have potential industrial sites to
show businesses seeking to expand. They include----
<bullet> the Frameisi USA Inc. site near Pittsburgh that was able
to expand its operations after cleaning up a portion of its property
<bullet> a former kitchen appliance manufacturing site closed since
1990 near Reading that was put back into productive use as a site for a
warehousing operation
<bullet> a long-vacant manufacturing site in Harrisburg that will
soon be home to a new 200-employee business
<bullet> the former Johnson Bronze manufacturing site in New
Castle, abandoned in 1978, that will be cleaned up and available for
new businesses
<bullet> a multi-site cleanup agreement with a State electric
utility that requires the evaluation and cleanup of 134 different sites
around the State
<bullet> a site that was part of the State Hazardous Sites Cleanup
Program that was taken over, given its final cleanup and will be reused
by a private company.
A quick summary of each of the new laws forming Pennsylvania's Land
Recycling Program follows:
Act 2--The Land Recycling and Environmental Remediation Standards Act
Act 2 establishes environmental remediation standards to provide a
uniform framework for cleanups. Land recyclers have a choice of three
types of cleanup standards: background standards, statewide health
standards or site-specific standards. Special industrial area standards
are available for certain sites and certain persons. This framework
provides new direction for a more reasoned, scientifically based
blueprint for site remediation.
The act describes the submission and review procedures to be used
at sites using each of the three types of cleanup standards, thus
providing a uniform process for all sites statewide.
Act 2 provides releases from liability for owners or developers of
a site that has been remediated according to the standards and
procedures in the act.
Act 3--The Economic Development Agency, Fiduciary and Lender
Environmental Liability Protection Act
Act 3 extends liability protection to financiers, such as economic
development agencies, lenders and fiduciaries. Under Act 3, these
parties cannot be held responsible for contamination at any site unless
their actions directly caused the contamination. Engaging in routine
commercial lending practices, including foreclosing on contaminated
property, will not trigger liability. These provisions are intended to
reduce the liability concerns that may inhibit involvement with
contaminated or abandoned sites.
Act 4--The Industrial Sites Environmental Assessment Act
Act 4 authorizes the Department of Community and Economic
Development to make grants to municipalities, municipal or local
authorities, nonprofit economic development agencies, and similar
agencies. The grants help finance environmental assessments of
industrial sites located in municipalities that the Department of
Community and Economic Development has designated as distressed
communities. Certain cities are eligible for grants to conduct
environmental assessments and remediation activities.
A detailed report on the first year of Pennsylvania's Land
Recycling Program is available.
recommendations
While Great Lakes States have become national leaders in adopting
land recycling programs, these efforts are not yielding the full
economic and environmental benefits they could for the region. Great
Lakes States should learn from each other about how to promote land
recycling. There are also issues involving the Federal Government where
increased levels of cooperation are needed to deal with cleanup
liabilities under Federal law.
The Great Lakes States will act together to promote Land Recycling
Programs throughout the region by taking these steps:
1. Form a regional ``SWAT Team'' of land recycling experts who can be
called upon to offer technical assistance on individual
industrial site reuse projects.
These experts could meet periodically to discuss what is working
and what is not working in the individual State programs. In addition,
when issues arise concerning the application of specific cleanup
technologies or statistical methods of analysis, these experts could be
consulted to share individual State approaches and solutions.
2. Establish a regional clearinghouse of information on remediation and
other land recycling techniques, including an Internet website
to provide quick access to information.
Remediation techniques and technologies are advancing quickly as
more and more companies are seriously looking at reusing industrial
sites. Keeping up-to-date on these technologies is a difficult task.
Identifying existing sources of reliable information and tapping into
the expertise available in State environmental agencies would be a
tremendous regional asset Making that information available through the
Internet, 24-hours a day, 7-days a week would allow the Great Lakes
States to move quickly on cleanup issues.
3. Develop a template of ``best practices `` that highlight the most
effective techniques States can use to encourage land
recycling.
No one State has the ideal set of programs to encourage the cleanup
and reuse of industrial sites. States also have their own experiences
to share about the effectiveness of programs they have adopted.
Capturing the ``best of the best'' for each element of a land recycling
program--approach to clean up standards, reviewing cleanup plans,
releases from liability, financial incentives--would enable the Great
Lakes States to put together a set of ``best practices'' that each
State could use to make improvements in their own programs.
4. Explore opportunities for the Great Lakes region to develop a
private sector mechanism to help encourage investment in the
reuse of industrial sites.
There seems to be clear evidence that regulatory action and grant
programs alone may not always provide sufficient incentive to attract
investment to industrial sites. On a region-wide basis there may be
opportunities to stimulate investment by lowering risks and costs to
banks and lending institutions. A bank pool which operated as a form of
guarantee or secondary market, for example, may lower the cost of
capital and increase the number of projects attracting investment. A
regional approach to such a mechanism offers the potential for both a
broader range of participating institutions and a more diverse
portfolio of sites.
5. Initiate discussions between Great Lakes States and the U.S.
Environmental Protection Agency on a uniform memorandum of
understanding that clarifies Federal cleanup liabilities
related to State Land Recycling Programs.
In the absence of legislation that releases parties who complete
brownfield cleanups from Federal liability, it may be appropriate for
the Council to pursue a basin-wide Memorandum of Understanding (MOU)
with EPA that will clarify the Federal Governments role at State
brownfield sites.
A basin-wide MOU would be negotiated between the Council and EPA
Regions 2, 3 and 5. If the Federal Government is serious about
increasing brownfield redevelopment, it should have a great deal of
interest in negotiating such a high profile agreement with the major
industrial States that comprise the Council. The benefit of taking a
basin-wide approach is twofold: it increases the bargaining power of
each individual State, and it ensures consistency among the three EPA
regions.
6. Support changes to the appropriate Federal environmental laws to
recognize State Land Recycling Programs.
The Council of Great Lakes Governors provides the perfect forum for
advocating Federal legislation that will allow our individual State
brownfield laws to reach their full potential. In this regard, there
are three elements that should be included in a Federal legislative
package: (1) a release of Federal liability to any person who completes
a cleanup at a brownfield site in accordance with State law; (2) a
waiver of Federal permitting requirements at brownfield sites being
addressed under State law; and (3) liability protection for lenders,
economic development agencies and fiduciaries.
The Council can present a common front on these Federal legislative
issues through the issuance of white papers-and direct lobbying of
State delegation members, especially those in leadership positions.
______
Responses of James M. Seif to Additional Questions from Senator Smith
Question 1. Mr. Seif, in your testimony you state that the
Pennsylvania Land Recycling Act applies to all contaminated sites in
the State and covers both voluntary cleanups and enforcement actions.
Why did Pennsylvania choose to have such an expansive cleanup system?
Has EPA been supportive of your efforts?
Response. In the past, Pennsylvania's environmental policies have
been a disincentive for the cleanup of contaminated sites. Both State
and Federal cleanup laws imposed full responsibility for a site cleanup
on new buyers, even though they have had no involvement in
contamination of the property, and imposed never-ending liability,
discouraged private firms, lenders and public redevelopment authorities
from getting involved.
The Land Recycling Program in Pennsylvania encourages the current
landowner, prospective buyer, redevelopment authority and lending
institution, to look more favorably at cleanup and reuse of
contaminated sites.
Our policy decision was to have one set of cleanup standards and
procedures that would apply to all contaminated sites. The reason was
that we wanted to address existing brownfields and not create new ones
by forcing them to deal with different standards. In addition, one set
of standards for all sites is easier for the Department to administer.
As far as I can tell, the components of the Land Recycling Program
have been supported by the Federal EPA. While we do not have a formal
MOA, there have been several contaminated sites that EPA has deferred
to Pennsylvania for cleanup under the Land Recycling Program at the
request of the property owner or prospective buyer.
Question 2. Would you say that the current liability system under
Superfund remains one of the biggest impediments that is keeping major
developers and owners from voluntarily cleaning up these sites in your
State?
Response. Yes. The current liability system under Superfund is a
major impediment to redevelopment efforts. There is still a lingering
perception that our releases of liability are not complete because
there is no release from Superfund liability.
The liability associated with Superfund provides no incentive for
site cleanup for current or future owners of contaminated property. As
a result, there is less cleanup and more legal entanglements that
increase costs and further impede redevelopment efforts.
Question 3. In Pennsylvania's attempts to encourage potential
investors and banks to clean up these sites, have you found that
liability uncertainty is the largest problem?
Response. Yes, but the liability concerns are not driven by State
law considerations. The liability uncertainty that impacts
Pennsylvania's Land Recycling program is the result of the liability
that remains with the Federal Superfund program. Sites cleaned up under
the State's Land Recycling Program receive a complete liability release
under State statutes and regulations. However, potential exposure to
Superfund liability remains under the Federal law creating uncertainty
for property owners.
Question 4. Mr. Seif, you state that there are no NPL-caliber sites
in your program right now and that EPA rarely expresses an interest in
such sites. If that is the case, why won't EPA give you final authority
concerning cleanup?
Response. There are currently no NPL ``listed'' sites or NPL-
caliber sites that have formally entered our Land Recycling Program.
Nevertheless, we believe that we have all of the tools necessary to
handle all of the contaminated sites in our State system, including
NPL-caliber sites. With regard to why EPA won't give us final
authority, you'd have to ask them. EPA's November 1996 memorandum on
State voluntary cleanup programs seems to imply that the agency does
not want to sign MOA's covering NPL or NPL-caliber sites.
Question 5. Mr. Seif, some people say that if States control their
voluntary cleanup programs there will be a so-called ``race to the
bottom.'' Has Pennsylvania or any other State that you know engaged in
a ``race to the bottom?''
Response. As I stated in my testimony, there has been no ``race to
the bottom.'' It is pure fiction. You simply have to read the 30-plus
State laws that have been enacted to see that. Pennsylvania's Land
Recycling Program takes a health-based approach to cleanups that
incorporates risk associated with current and future use of the site
and surrounding property, and produces cleanups that are safe and
protective.
Question 6. In your testimony you state, ``we need a Federal
release of liability at State sites to combat the lingering perception
by developers that Federal liability is a real concern at the typical
State land recycling site.'' How do you answer critics that are
concerned that States will approve ``crummy cleanups,'' or that the
taxpayers may get stuck with the bill if they aren't done
appropriately?
Response. The remediation standards established under the Land
Recycling Program require compliance with one or a combination of the
following three environmental standards: (1) background standard; (2)
statewide health standard; and (3) site-specific standard. The
protection levels for human health and the environment that are
associated with these three standards assure the public that ``crummy
cleanups'' cannot and will not be approved.
While it is true that limited tax dollars will be spent to assess
and cleanup abandoned sites, the dollars spent will be recovered in the
future as revitalized sites will bring in local tax dollars, increase
employment and preserve agricultural land.
Question 7. In your testimony, you state that Federal and State
cleanup requirements often used ``Garden of Eden'' or background
standards regardless of whether the site was to be used for a daycare
center or steel mill.'' In order to provide the tools you need to fix
brownfields, isn't it necessary to modify the cleanup requirements
under Superfund to inject some common sense into the system?
Response. Yes, the modification of cleanup standards under
Superfund should be pursued to complement the common sense approaches
being taken by the States at brownfield sites. Having cleanup standards
that include a common sense approach by allowing for a combination of
health based standards or risk based standards associated with the
current and future use of the property is essential.
Question 8. In your testimony you state that there were two
potential Superfund sites in Pennsylvania that Governor Ridge vetoed
from being added to the NPL based on, as you state, ``Superfund's
dismal track record in Pennsylvania--that would make it virtually
impossible to convince anybody to redevelop the property'' if it were
to be added to the NPL. Could you expand on your comments in this area?
Response. It's pretty simple. To developers, property owners, and
lenders, placing a site on the NPL is a kiss of death. We can move a
site through our program much faster than it can move through
Superfund.
Two sites that were proposed for NPL listing were vetoed by
Governor Ridge because there were responsible parties volunteering to
participate in State cleanup efforts who wanted to avoid being forced
into the Federal program. Their willingness to commit to meeting our
State standards is proof that the regulated community would rather work
with the State than take their chances with an NPL listing.
Question 9. In your testimony you state, ``if someone was
interested in putting one of those sites (Superfund or RCRA) through
our Land Recycling Program, we would contact EPA to see if it would be
willing to allow the site to be handled through our State system, and
indeed that would be our preference.'' Given this statement, is it your
view that these NPL or RCRA caliber sites would get cleaned up a lot
faster under your authority rather than under EPA's?
Response. Yes. The cleanup of contaminated sites under
Pennsylvania's Land Recycling Program will easily out-pace similar
efforts under the Federal program.
Responses of James M. Seif to Additional Questions from Senator Chafee
Question 1. I am sure you would agree that EPA's Brownfields
Initiative is accomplishing some positive results. Can you comment on
EPA's testimony on the needed elements of Brownfields reform?
Response. The common elements needed to drive a successful
Brownfields program are: (1) cleanup standards based on risk and
current/future land use; (2) liability protection in the form of a
statutory release or covenant not to sue for persons meeting those
cleanup standards, and release for lending institutions and fiduciaries
overseeing finances; and (3) lender protection and funding available in
the form of grants, low interest loans and tax credits for site
assessment and cleanup in combination with private funds. Those are
actions that each State needs to take.
With regard to Federal reforms, the thing that is absolutely
essential to Brownfields reform is the release of Federal liability.
EPA must recognize that, and work with Congress to that end. If EPA
can't see the importance of that, then they have not done a good job of
listening to the States.
Question 2. Last year, the President delegated authority to issue
section 106 cleanup orders to a number of Federal natural resource
trustees. By the Executive Orders terms, the trustees may only exercise
this new authority at State-led sites, then only with the concurrence
of EPA. In your opinion, will this new delegation of authority have a
chilling effect on Brownfields cleanups in Pennsylvania?
Response. While we have some concerns about the Executive Order, I
do not anticipate the delegated authority to Federal natural resource
trustees to significantly impact Brownfield cleanups in Pennsylvania. A
typical Brownfield sites occurs in an urban/industrial location where
natural resource damages are generally of secondary concern. Should
natural resource damages become a factor of concern at a Brownfield
site, cooperation of both government agencies and their natural
resource trustees must occur and the State's interests need to be
considered.
Response of James M. Seif to an Additional Question from Senator
Lautenberg
Question. You describe several State programs in the attachment to
your written testimony, and speak of releases of liability thereunder.
Are you referring to releases of State or Federal liability? Also, you
describe two programs that limit owner liability. Please describe how
these work, whether the limitations result in any shortfall, and if so,
who pays the deficit?
Response. Pennsylvania's Land Recycling Program provides for a
release of liability under State law only. A major concern and
deterrent at State cleanups under the Land Recycling Program are the
liability uncertainties that remain under Federal law for the
responsible parties and prospective buyers of contaminated sites. I
have emphasized in my testimony the need for Congress to provide a
Federal liability release when cleanup efforts occur under State law.
The Land Recycling Program provides a release of State liability
only after the remediation standard has been achieved. The release
covers the current owner or occupier of the property, developer,
successor, and assigns. All of our standards are designed to be safe
and protective of human health and the environment. Accordingly, there
should be no ``shortfall'' by way of environmental cleanup at any site
where one of our three standards is attained.
The State program also creates incentives for the development of
abandoned sites for which no financially viable party exists and for
sites in designated enterprise zones known as ``Special Industrial
Sites.'' On these special industrial sites, a developer is only
required to perform a baseline assessment and abate any direct or
immediate threat to people who will be using the property. If
additional long-term remediation for offsite contamination is required,
State funding from our Hazardous Sites Cleanup Fund is available. We
have more than enough money in our HSCA fund to deal with those
situations. To date, we have not had to use any State money to address
offsite impacts at any of the 33 SIA sites in our program.
______
Statement by Mayor Chris Bollwage, Elizabeth, NJ, on behalf of The U.S.
Conference of Mayors
Mr. Chairman, Members of the Committee, I am Chris Bollwage, Mayor
of Elizabeth, NJ. It is a pleasure for me to testify today on behalf of
The U. S. Conference of Mayors, which represents about 1,050 cities in
our Nation with populations over 30,000.
The Nation's mayors have been at the center of our national debate
on the redevelopment of brownfield sites and the need for comprehensive
Superfund reform. In 1994, Louisville Mayor Jerry Abramson, as
President of the Conference, formed our first Brownfields Task Force.
St. Louis Mayor Freeman Bosley, Jr. was appointed as chair of this task
force. The work of the Conference's Brownfields Task Force resulted in
a Mayors' National Brownfields Action Agenda that called on Congress
and the Administration to develop a national brownfields strategy that
included, at a minimum, the following:
(1) Liability Protection for Lenders, Innocent Third Party
Purchasers and Redevelopers of Brownfield Sites;
(2) Development and Expansion of EPA's Brownfields Initiative,
Including Funds for Preparation and Implementation of Local Brownfield
Redevelopment Strategies, Including Funds for Site Assessment and
Characterization;
(3) Development and Capitalization of Local Revolving Loan Funds
for Brownfield Clean Ups;
(4) Targeted Tax Incentives for Brownfield Redevelopers;
(5) Expedited Cleanup Strategies and Cleanup Standards Based on
Future End-Use; and
(6) The Availability of Tax Exempt Financing for Redevelopment of
Brownfield Sites.
Mr. Chairman, we are now revising this agenda and I would like to
submit for the record a further elaboration of these principles for a
national strategy once it is finalized.
The mayors of this Nation want to thank the members of the
Committee for realizing the importance of developing a national
strategy for cleaning up the hundreds of thousands of brownfields that
can be found all across the Nation.
We believe that it is preferable that brownfields be a major part
of Superfund reform and reauthorization process and it is also critical
that we move on brownfields during this Congress. Why? Two of
Superfund's greatest accomplishments are: (1) a dramatic national
reduction in the generation of hazardous waste; and (2) a much safer,
national hazardous waste management and disposal system. But along side
these tremendous public benefits is a horrible, unintended consequence
of the Superfund program--the fact that the private sector would not
invest in hundreds of thousands of non-NPL, contaminated properties
because of the fear of being caught in the Superfund liability web.
These properties are now commonly called brownfields.
Mr. Chairman, contamination of industrial property was not caused
by local governments or the citizens who now must live with the
consequences of lost jobs, an eroded tax base and abandoned or
underutilized properties that denigrate communities. In large measure,
this unintended, negative consequence of our Federal Superfund policies
has been the price for achieving the Superfund program's national
benefits. This unfortunate situation simply must be addressed in an
aggressive way. We must undo the unintended harm that Superfund has
imposed upon our communities.
Last year The U.S. Conference of Mayors released at its Winter
Meeting a 39-City Survey on the Impact of Brownfields on U.S. Cities.
Of the cities surveyed, 33 cities with brownfield sites said that more
than $121 million is lost each year in local tax revenues--using
conservative estimates. More than $386 million is lost each year, using
more optimistic estimates, suggesting that the more than 20,000 cities
and other municipalities nationwide could be losing billions of dollars
each year in local tax receipts due to the existence of brownfields.
The survey also found that cities of all sizes, small and large, had
brownfield sites which were extremely diverse in terms of size and
configuration. I would like to submit the Survey findings for the
record.
I would also like to give you an example of how brownfields impact
my community. To date, we have identified 56 brownfields in the city of
Elizabeth, NJ, alone. For me, these sites represent 56 possibilities to
create new industry, jobs, housing, and more tax ratables. We have been
able to focus our resources on rehabilitating several of these
properties--and our successes have been monumental. On one property we
built an IKEA store, which has become the chain's best performing
store, and a Toys R Us Superstore, the largest of its kind in the
chain. Both businesses provided hundreds of new jobs, more than $1
million in annual tax revenues and more than $2 million in Urban
Enterprise Zone revenues.
Nearby we cleaned up a former municipal landfill, and soon hope to
use the land for a 250-store Mega Mall project on 166 acres of land.
The project will create as many as 5,000 jobs. As part of our ongoing
efforts in rehabilitating these and other contaminated properties, we
have applied for designation as one of EPA's brownfield demonstration
pilots.
I have provided to the Committee a report, ``Inventory of
Reclaimable Sites,'' which was prepared by the Regional Plan
Association of New Jersey. I would ask that this report be included in
the record. I have also provided information pertaining to the OENJ
Development Project.
Mr. Chairman, all of this information supports our claim that we
need Federal help to develop and implement strategies reclaiming
brownfields sites. When these sites were previously flourishing with
manufacturing, commercial or other uses, the Nation shared in this
prosperity, including all governments in the form of tax receipts and
other economic activity.
What is important to note is that for each tax revenue dollar that
is generated, local governments realize about 15 cents. More than 80
cents of each dollar accrues to Federal and State governments in the
form of income taxes and other revenues. This explains why local
governments can't do it alone, and we need your help. We can't expect
the level of government who realized the smallest share of the
prosperity to absorb the largest share of the cleanup, remediation and
redevelopment costs.
Mr. Chairman, we are pleased that the brownfields issue has the
bipartisan support of this Committee. The bills that have been
introduced, both S. 8 and S. 18, are good starting points launching a
more detailed deliberation on the brownfields problem and the need for
a comprehensive national strategy. The Conference of Mayors President,
Mayor Richard Daley, has indicated that brownfields legislation is one
of the Conference's top priorities, and we want to work with you to
further refine your proposals.
We are pleased, for example, that both bills make efforts to
address many of the issues we have laid out as our principles. We are
pleased that funds will be made available for site characterization and
assessment work on brownfield sites, although these funds are, quite
frankly, too modest compared to the damage that has been done to our
communities. Likewise, we are very pleased that both the EPA pilot
program and your bills call for the capitalization of local revolving
loan funds for the ongoing, bureaucratic-free cleanup of brownfield
sites, although again the effort is too modest compared to the
magnitude of the problem. These funds should be used for local programs
and not be given to State bureaucracies, unless such State programs are
targeted to smaller jurisdictions that would be unlikely to administer
their own local revolving loan programs.
We believe both bills need to address brownfield sites that are in
the hands of public entities, either through tax default or acquisition
for economic development purposes. Not only must liability protections
be extended to such public entities, but direct grants should be
available for the cleanup of properties in neighborhoods of
disinvestment and in properties that have negative value due to more
significant contamination.
We also want to commend the Committee for addressing the need for
liability protections for redevelopers of brownfield sites. It will be
important to strike a balance between giving redevelopers certainty
that they will not be thrown back into the liability web after having
invested in cleanups, and at the same time protecting the public
against future contamination of these sites.
We believe the Committee should seriously address the need to give
local governments the flexibility to clean up properties with
brownfield redevelopment funds that are free from many of the arcane
rules and regulations of the Superfund program. We need the flexibility
to bring common sense to clean ups. This is not only the case with the
issue of cleanup standards based on end-use, but in the definition of
brownfields. We believe there are too many exclusions to the
``brownfields facility'' definition. For example, many abandoned
industrial sites will have both removal and remediation needs. These
sites are typical brownfield facilities which require a removal of
immediate threats and a less urgent remedial process to restore the
property to a useful purpose. The bill would exclude all of these
facilities from any funding under this program. We would be glad to
provide examples to the Committee.
It is also important for the Committee to address the relationship
between State Voluntary Cleanup programs and local brownfield cleanup
initiatives to effectively address the brownfield problems in
communities. We have talked to several State voluntary cleanup program
administrators who indicate that their voluntary programs tend to focus
on projects that are close to being NPL sites, not those brownfields
that are less contaminated but still suffer from the Superfund stigma.
While we believe there may be an appropriate link to State voluntary
cleanup programs, we should not assume that they will expedite
brownfield cleanups or that they are the panacea for brownfield
cleanups. Again, we believe local governments are best equipped to
expeditiously cleanup certain sites and to work with the private sector
in the redevelopment of brownfields, albeit in some form of partnership
with State agencies.
Mr. Chairman, as a result of your efforts and those of the
Administration to support brownfields redevelopment, communities are
finally having some success in cleaning up less contaminated
properties, which is allowing us to get these sites redeveloped and
back on the tax rolls. More complicated cleanups or NPL-caliber sites
do create some misconceptions about the nature of the bulk of the
inventory of sites, which we commonly refer to as brownfields.
Mr. Chairman, many other issues remain to be addressed and we will
be supplementing our comments with further technical comments on the
drafts of both bills. But let me again commend the Committee for
beginning a bipartisan debate on brownfields. We support your efforts
to address brownfields in the 105th Congress and we look forward to
working with you this year to enact legislation. We cannot afford to
let another Congress go by without enacting a comprehensive national
program that will lead to thousands of brownfields cleanup, job
creation, and sound local economies.
Finally, Mr. Chairman, while it is not in the jurisdiction of this
Committee, we believe it is extremely important for the Congress to
enact tax incentives that help companies redevelop brownfield sites. We
have worked closely with the Administration on the development of their
proposal and would welcome the opportunity to work with the Senate as
they consider this year's tax bill.
Again, we thank you for the opportunity to appear before you today.
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Responses of Mayor Chris Bollwage to Additional Questions from Senator
Smith
Question 1. Mayor, the Orion Project that you mention in your
testimony involves the capping and redevelopment of a 166-acre
landfill. Included in this project was the filling of approximately 10
acres of wetlands, could you talk about your interaction with the
Federal agencies involved at this site regarding natural resource
issues. Were there any claims for natural resources damages raised by
the Fish and Wildlife service?
Response. No.
Question 2. Mr. Bollwage, I understand you are representing The
U.S. Conference of Mayors. I am aware that the Conference of Mayors
supports provisions in both S. 8 as well as S. 18 that would provide
grants and loans to localities attempting redevelopment brownfields
sites. What is the position of the Conference of Mayors on the issue of
finality? For example, after an individual or company has cleaned up a
site under State and local supervision, they could be liable for
additional Federal liability?
Response. On the issue of finality, it is important that there be a
mechanism for a property owner or prospective purchaser to be able to
know what level of cleanup is necessary, and once those objectives are
met, no further remediation will be required, unless there is some
imminent and substantial threat to public health or the environment.
With respect to brownfield sites, many States have well developed
voluntary cleanup programs that lead to ``No Further Remediation''
letters. The USCM believes that if a site has successfully gone through
a qualified State program, then there should be no additional Federal
liability attached to that site for the contaminants of concern. There
may be a need for a reopener clause, but it should be limited to cases
where (1) there is an imminent threat to human health or the
environment, and (2) either the State response is not adequate or the
State requests Federal assistance.
The USCM is looking for legislation that will make a bright line
distinction between Superfund caliber sites and brownfield sites that
have been for too long disadvantaged by the shadow of Federal
liability. If a State has the ability to evaluate and approve a
cleanup, then the issue of ``finality'' should also be delegated to
them.
Question 3. Is it the position of the Conference of Mayors that
comprehensive reform of the hazardous waste cleanup laws, including
liability reform, remedy reform, and increased State and local controls
are necessary to really ``do the job'' at many of these brownfield
sites? That is, does the Conference of Mayors believe that grants are
enough to deal with the problem or does more need to happen?
Response. Grants will provide municipalities with a tool for
brownfields redevelopment. They can provide the impetus for getting a
successful project off the ground. But for an issue as complex as
brownfields, grants are not enough. Successful redevelopment requires
incentives for companies to relocate in sometimes blighted areas,
transportation projects to improve site access, and opportunities for
job training to bring jobs back into the cities.
In addition to grants, liability protection for prospective
purchasers and municipalities which take title to brownfield sites for
the purpose of cleanup and redevelopment must be a component of any
national brownfields strategy. Without such liability protections,
brownfield redevelopers will still not invest in these properties.
From our perspective, the brownfields issue is not just about
cleanup, it is a full-scale recycling of our properties that will use
the already existing infrastructure to benefit both our economies and
our environment. Flexibility in the way public resources can be
leveraged with private investment is what we need most.
Question 4. One significant brownfield issue involves viable
companies that have the financial ability to clean up these sites, but
fear to do so because they may get caught in the Superfund liability
net. Rather than risk a liability problem, they prefer to fence large
industrial sites and let them lay fallow? Do you agree that this is a
problem? How would you propose to fix it?
Response. Idle, or mothballed properties are a problem in many
cities. There is almost no incentive for a company to initiate a
cleanup and develop a property if just securing the property and paying
the taxes are less expensive. This goes back to your earlier question
about ``finality.'' If a company knows it can negotiate reasonable,
risk-based cleanup standards, obtain certainty after it is done, and
perhaps get a tax incentive for initiating the cleanup, we are
confident that more companies will initiate their own, voluntary
cleanups.
It is not an acceptable outcome for companies to continue to
``mothball'' land that could and should be returned to productive reuse
and tax generating property.
______
Responses by Mayor Chris Bollwage to Additional Questions from Senator
Chafee
Question 1. On large projects, the dedication of resources from the
City, State and Federal Government can often make the difference.
However, not all projects are large enough to justify such a commitment
of resources. In your testimony, you note that you have identified 56
brownfield sites in Elizabeth. What are the characteristics of those
sites, in terms of the risks presented? Are they so-called NPL-caliber
sites? What changes do we need to make to Superfund to ensure that the
average site, and not just the exceptional site, is redeveloped?
Response. On the 56 sites in Elizabeth, I can't simply characterize
the risk on each, without providing detailed information on these
sites. Attached is a report which provides a full description of these
properties.
As a general statement, I would say that for most of these
properties are not NPL-caliber sites. Most of these properties are
smaller, less contaminated sites, which we typically consider
brownfields. I will have an updated inventory of these properties next
month, and I would be pleased to provide this report to the Committee
once it is available. Smaller, less contaminated, non-NPL sites need to
be taken out of the shadow of Superfund. We are asking for legislation
to clearly distinguish between Superfund and brownfield sites. The
liability and remediation standards should be delegated to States with
solid cleanup programs.
Question 2. On page 5 of your testimony, you advocate resolving the
relationship between Federal voluntary cleanup programs and
brownfields. You seem to imply that brownfields cleanups may best be
handled outside of State voluntary cleanup programs. Could you expand
on this, and do you believe that a brownfield cleanup that satisfies
State and local governments should be final with respect to Federal
liability, absent some extraordinary circumstance?
Response. Sites cleaned up under State programs should be final,
absent some extraordinary circumstance. One practical way to handle
this would be to limit further Federal action unless, at a particular
site, there is: (1) an imminent and substantial threat to public health
or the environment; and (2) either the State response is not adequate
or the State requests U.S. EPA assistance.
______
Responses of Mayor Chris Bollwage to an Additional Question from
Senator Lautenberg
Question. In your written testimony, you state that ``[i]t will be
important to strike a balance between giving redevelopers certainty
that they will not be thrown back into the liability web after having
invested in cleanups, and at the same time protecting the public
against future contamination of these sites.'' Please describe how you,
or how The U.S. Conference of Mayors, would strike such balance. Do you
envision a Federal role anywhere in the equation?
Response. Your question addresses the issue of pollution prevention
opportunities and ways to protect against recontamination. Much of the
brownfields contamination goes back to industry practices from the turn
of the century. We are much more sophisticated about environmental
issues today than we were when CERCLA was enacted. There are regulatory
and enforcement measures in place to limit the probability of
recontamination. It will be up to industries and environmental
enforcement agencies to strike the balance between industrial growth
and practical pollution prevention.
We believe finality on a site should pertain only to the
preexisting pollution and its subsequent cleanup activities. Pollution
caused post cleanup by the redeveloper should be subject to current
environmental laws.
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Prepared Statement of Lorrie Louder, Director of Industrial Development
for the Saint Paul Port Authority, Minnesota, on behalf of: The
National Association of Local Government Environmental Professionals
``NALGEP''
nalgep brownfields advisory committee
NALGEP would like to give special thanks and appreciation to our
Brownfields Advisory Committee. Comprised of 14 of the Nation's top
local government brownfields leaders, the Advisory Committee members
have provided critical leadership in the development and implementation
of this project and report. They devoted substantial time and energy to
developing the overall project game plan, the interview questions, and
the project findings. They offered invaluable guidance, reviewed and
commented on several drafts of the report and participated in numerous
conference calls to discuss the various aspects of the project
findings.
The members of the NALGEP Brownfields Advisory Committee are: Mark
Gregor, Manager, Division of Environmental Quality, city of Rochester,
NY; Joseph James, Director of Economic Development, city of Richmond,
VA; David Levy, Brownfields Project Coordinator, city of Baltimore, MD;
Judith Lorbeir, Environmental Coordinator, city of Tacoma, WA; Lorrie
Louder, Director of Industrial Development, Saint Paul Port Authority,
Saint Paul, MN; Lisa Maack, Deputy Director, Mayor's Office of
Environmental Affairs, city of New Orleans, LA; Richard Mendes, Deputy
City Manager, city of Cincinnati, OH; Douglas C. MacCourt,
Environmental Manager, Office of Transportation, Portland, OR, and
Director, Portland Brownfields Initiative; Beverly Negri, Brownfields
Liaison, Economic Development Department, Dallas, TX; Jacqueline
Ritchie, Brownfields Coordinator, Environmental Services Cabinet,
Boston, MA; Mary Beth Schmucker, Brownfields Coordinator, city of
Indianapolis, IN; Martin Soffer, Environmental Review Officer, Planning
Commission, city of Philadelphia, PA; Gary Stephens, Deputy Director,
Department of Natural Resources Protection, Broward County, FL; and
William Trumbull, Assistant Commissioner, Department of Environment,
city of Chicago, IL.
* * * * *
Chairman Smith, Senator Lautenberg and members of the Subcommittee,
the National Association of Local Government Environmental
Professionals, or ``NALGEP,'' appreciates the opportunity to present
this testimony on the views of local government officials from across
the Nation on the need for additional Federal legislative and
regulatory incentives for the cleanup, redevelopment and productive
reuse of brownfields sites in local communities. NALGEP represents
local government officials responsible for ensuring environmental
compliance, and developing and implementing environmental policies and
programs. NALGEP's membership consists of more than 50 local government
entities located throughout the United States, and includes
environmental managers, solid waste coordinators, public works
directors and attorneys, all working on behalf of cities, towns,
counties and municipal associations.
In 1995, NALGEP initiated a brownfields project to determine local
government views on national brownfields initiatives such as the EPA
Brownfields Action Agenda. The NALGEP Brownfields Project has
culminated in a report, entitled Building a Brownfields Partnership
from the Ground Up: Local Government Views on the Value and Promise of
National Brownfields Initiatives, which was issued on February 13, 1997
to the EPA and other agencies, congressional staff and the public. As a
result of this project, NALGEP is well qualified to provide the
Subcommittee with a representative view of how local governments, and
their environmental and development professionals, believe the Nation
must move ahead to create long-term success in the revitalization of
urban brownfields properties.
NALGEP's testimony will focus on the findings of its Building a
Brownfields Partnership from the Ground Up Report, particularly with
respect to liability, resource and other legislative opportunities to
promote brownfields renewal. The NALGEP Brownfields Report was
developed under the leadership of a 14-member Brownfields Advisory
Committee composed of local government brownfields officials from
Environmental Protection Agency (``EPA'') brownfields pilot cities and
other communities with established brownfields programs. NALGEP worked
with the Committee to develop a comprehensive brownfields interview,
which was conducted with numerous brownfields leaders across the
Nation. Based on these interviews and a series of collaborative
discussions with the Advisory Committee, NALGEP developed report
findings on:
<bullet> Clarifying and Limiting Liability to Promote Brownfields
Cleanup and Redevelopment
<bullet> Building a National Brownfields Partnership: The Next
Phase of the Federal Agenda from a Local Government Perspective
<bullet> Improving Communication Among Local, State, and Federal
Brownfields Officials
<bullet> Legislative Opportunities to Stimulate Brownfields Cleanup
and Redevelopment
The NALGEP Brownfields Report itself best conveys the views of
NALGEP and its Brownfields Advisory Committee on the opportunities for
the Federal Government to promote brownfields renewal. NALGEP therefore
attaches the Report to this testimony, and summarizes key points below.
The cleanup and revitalization of ``brownfields'' represents one of
the most exciting, and most challenging, environmental and economic
initiatives in the Nation. Brownfields are abandoned, idled, or under-
used industrial and commercial properties where expansion or
redevelopment is hindered by real or perceived contamination. The
brownfields challenge faces virtually every community; experts estimate
that there may be as many as 500,000 brownfields sites throughout the
country.
The brownfields issue illustrates the connection among
environmental, economic and community goals that can be simultaneously
fostered through a combination of national leadership, Federal and
State incentives, and the innovation of local and private sector
leaders. Cleaning up and redeveloping brownfields provides many
environmental, economic and community benefits including the following:
<bullet> expediting the cleanup of thousands of contaminated sites;
<bullet> renewing local urban economies by stimulating
redevelopment, creating jobs and enhancing the vitality of communities;
and
<bullet> limiting sprawl and its associated environmental problems
such as air pollution, traffic and development of rapidly disappearing
open spaces.
The Williams Hill Project provides an excellent example of how a
brownfields initiative is helping to revitalize Saint Paul, Minnesota's
local economy and environment. Williams Hill, which is a Federal
Enterprise Community Area, is a 30-acre site, formally owned by a
highway construction company, which contains an asphalt plant and
370,000 cubic yards of construction debris piled in 200-300 foot
mounds. The site has significant air quality problems associated with
this debris as well as some subsurface pollution problems. Prior to the
involvement of the Saint Paul Port Authority, the facility employed 16
workers and provided a $80,000 per year tax base.
The Saint Paul Port Authority, which recently acquired the site,
plans to remediate the pollution problems and redevelop the site into a
light manufacturing industrial park. Saint Paul expects the new
development to provide 25 developable acres and create 325 new, high-
paying jobs and $650,000 annually in taxes. This is an example of the
success stories that we can create through brownfields revitalization.
This year presents an exciting opportunity to build upon the
initial successes of EPA's Brownfields Action Agenda and establish a
long-term, sustainable Federal/local brownfields partnership. The
timing is especially good given that: (1) many communities are emerging
from the pilot stage of the EPA Brownfields program; (2) several
Federal agencies are preparing to expand the Administration's
commitment to brownfields redevelopment by launching the Brownfields
National Partnership Agenda; and (3) Congress is considering
opportunities for legislative solutions to address local government
brownfields needs.
Local government leaders are a key link in the success of
brownfields partnerships, for it is the environmental, health,
development and political leaders in our cities, counties and towns who
can best build a brownfields partnership ``from the ground up.'' The
NALGEP Brownfields Report represents the views of these officials from
communities actively involved in brownfields revitalization. Overall,
NALGEP's key findings related to legislative opportunities in the
brownfields area are that (a) EPA should delegate the authority to
limit liability and issue no further action decisions for less
contaminated brownfields sites to States with cleanup programs that
meet minimum requirements to protect public health and environment; (b)
local communities need increased funding to ensure long-term
brownfields success, including grants, loans, tax incentives and
public/private financing partnerships for brownfields assessment,
cleanup and redevelopment; and (c) the Federal Government should
identify and propose corrections for Federal laws and policies which
provide incentives to develop in ``greenfields'' rather than
brownfields.
i. clarification of superfund liability at brownfields sites
On the issue of Federal Superfund liability associated with
brownfields sites, NALGEP has found that the Environmental Protection
Agency's overall leadership and its package of liability clarification
policies have helped establish a climate conducive to brownfields
renewal, and have contributed to the cleanup of specific sites
throughout the Nation. It is clear that these EPA policies, and
brownfields development in general, are most effective in States with
effective voluntary or independent cleanup programs that have led to
the negotiation with EPA of ``State Memoranda of Agreement'' deferring
liability clarification authority to those States. Therefore, NALGEP
finds that Congress should enable the EPA to delegate authority to
limit liability and issue no further action decisions for brownfields
sites to States with cleanup programs that meet minimum requirements to
protect public health and the environment.
A strong delegation of EPA liability clarification authority to
approved States is critical to the effective redevelopment of local
brownfields sites. Such delegation will increase local flexibility and
provide confidence to developers, lenders, prospective purchasers and
other parties that brownfields sites can be revitalized without the
specter of Superfund liability or the involvement of Federal
enforcement personnel. Parties developing brownfields want to know that
the State can provide the last word on liability, and that there will
be only one ``policeman,'' barring exceptional circumstances.
At the same time, local officials are also concerned about
delegating too much cleanup authority too fast to States. States vary
widely in the technical expertise, resources, staffing, statutory
authority and commitment necessary to ensure that brownfields cleanups
are adequately protective of public health and the environment. If
brownfields sites are improperly assessed, remediated or put into
reuse, it is most likely that the local government will bear the
largest brunt resulting from any public health emergency or
contamination of the environment. NALGEP believes that the U.S. EPA has
a key role to play in ensuring that liability authority over
brownfields sites should only be delegated to States that demonstrate
an ability and commitment to ensure protection of public health and the
environment in the brownfields redevelopment process.
To foster expanded redevelopment of brownfields sites while
ensuring the protection of public health and the environment, NALGEP
finds that there should be three components to the EPA brownfields
delegation program. First, the law should clearly distinguish between
Superfund NPL-caliber sites and less contaminated sites that can be put
on a ``brownfields track.'' The delegation of liability authority to
States should focus on these non-NPL caliber sites. Putting non-NPL
caliber sites on a brownfields track will allow the application of EPA
and State policy tools specifically designed to foster expedited, cost-
effective brownfields redevelopment. Several of these brownfields track
tools are suggested by NALGEP in Report Section 1, Finding 4.
Second, NALGEP finds that EPA delegation of liability authority
over brownfields sites should be granted only to State cleanup programs
that meet minimum criteria to ensure protection of public health and
the environment. EPA should also have the ability to withdraw a State's
delegation if these criteria are not being met. In its report, NALGEP
suggests the following types of criteria for State delegation:
1. Standards to ensure adequate site assessments early in the
process. Good site assessments will help prevent unanticipated problems
from surfacing, and facilitate efforts to direct particular sites into
a ``brownfields track.''
2. Adequate State technical expertise, staff and enforcement
authority to ensure effective implementation of cleanup activities.
3. An adequate method to distinguish between NPL-caliber sites and
those less-contaminated sites that can be placed on a brownfields
track.
4. Use of risk-based cleanup standards, that can be tied to
reasonably anticipated land use, established through an adequate public
approval process.
5. Institutional controls such as deed restrictions, zoning
requirements or other mechanisms that are enforceable over time to
ensure that future land uses tied to certain cleanup standards are
maintained.
6. Commitment to establish community information and involvement
processes, and assurance that State and local brownfields activities
will consider community values and priorities.
7. Commitment to build the capacity, through training and technical
assistance, of local government health and environmental agencies to
effectively participate in the brownfields development process and
ensure protection of public health and environment.
8. Adequate mechanisms to address unanticipated cleanups or
orphaned sites where liability has been eliminated.
9. Ability of EPA to selectively audit State liability
certifications to ensure that the State program is fulfilling its
responsibilities to protect public health and the environment.
In addition, NALGEP has developed a finding with regard to EPA's
ability to reopen its involvement at a particular brownfields site in a
delegated State. An EPA reopener for particular sites is necessary to
ensure that EPA can become involved at any sites at which the State is
unable or unwilling to adequately respond to a substantial and imminent
threat to public health or the environment. At the same time, the
reopener must be sufficiently limited to permit the State to take the
lead role at brownfields sites, and to give confidence to developers,
prospective purchasers, lenders and local governments that EPA will not
improperly hinder or interfere in State liability decisions. Therefore,
in delegating brownfields authority for non-NPL caliber sites to the
States, NALGEP proposes that EPA should provide that it will not plan
or anticipate further action at any sites unless, at a particular site,
there is: (1) an imminent and substantial threat to public health or
the environment; and (2) either the State response is not adequate or
the State requests U.S. EPA assistance.
ii. ensuring adequate resources for brownfields revitalization
With regard to local government resource needs for brownfields
revitalization, NALGEP finds that to ensure long-term success on
brownfields, local governments need additional Federal funding for site
assessment programs, remediation programs and economic redevelopment.
The costs of site assessment and remediation can create a significant
barrier to the redevelopment of brownfields sites, if the local
government is not supported by the leverage of Federal and private
resources. In particular, the costs of site assessment can pose an
initial barrier that drives development away from brownfields sites.
With this initial barrier removed, localities are much better able to
put sites into a development track. In addition, the allocation of
public resources for site assessment can provide a signal to the
development community that the public sector is serious about resolving
liability issues at a site and putting it back into productive reuse.
Moreover, it cannot be doubted that the use of public funds for the
assessment and cleanup of brownfields sites is a smart investment.
Public funding can be leveraged into substantial private sector
resources. Investments in brownfields yield the economic fruit of
increased jobs, expanded tax bases for cities, and urban
revitalization. And the investment of public resources in brownfields
areas will help defer the environmental and economic costs that can
result from unwise, sprawling development outside of our urban centers.
Federal funding for brownfields revitalization and reinvestment
should be provided from a variety of sources to meet the variety of
local government needs on this issue, including:
<bullet> Federal grants, such as the EPA Brownfields Pilot grant
program, economic redevelopment grants by the Department of Commerce,
Economic Development Administration, and funding for transportation
protects in brownfields through the Intermodal Surface Transportation
Efficiency Act. NALGEP endorses the Administration's intention to fund
additional brownfields pilot grants.
<bullet> Federal Technical Assistance from EPA for site
remediation, pollution prevention activities and the use of innovative
environmental technologies;
<bullet> Loans and loan guarantees, including through Department of
Housing and Urban Development Section 108 funds, and through Federal
funds to capitalize city and State Revolving Loan Funds for brownfields
site assessments and cleanup; and
<bullet> Tax credits and deductions for expenses related to the
assessment and cleanup of brownfields sites.
iii. correcting incentives that promote greenfields development over
brownfields redevelopment
With regard to the need to create Federal incentives to promote
brownfields redevelopment over development in ``greenfield'' areas,
NALGEP finds that the continued inactivity at urban brownfields sites,
coupled with development in non-urban ``greenfields'' areas, creates
environmental and economic distress for both cities and the regions
surrounding urban areas. Brownfields renewal can clearly provide urban
benefits including the cleanup of environmentally contaminated sites,
and the creation of economic vitality, jobs and a stronger sense of
community. At the same time, brownfields activities that reduce ex-
urban sprawl can also provide regional and ex-urban benefits, such as
reduced mobile source air pollution, reduced non-point and point source
water pollution, decreased pressure on infrastructure, protection of
valued natural areas, increased regional cooperation and the reduction
of urban problems (e.g., crime) that can affect areas outside of
distressed cities and towns.
Even with the Federal Brownfields Agenda and State and local
programs to encourage reuse of brownfields, there are a variety of
factors that encourage development in greenfields over brownfields.
These incentives for greenfields development include: transportation
infrastructure and incentives in non-urban areas, including Federal
transportation funding and policies that favor highways over mass
transit; lower quality of life and quality of schools in urban areas;
disincentives for urban development from the regulatory requirements
associated with pollutant ``nonattainment areas'' under the Clean Air
Act; and lack of regional-urban coordination.
Therefore, the Federal Government should identify Federal policies
that favor greenfields over brownfields and identify opportunities to
correct these disincentives, including:
<bullet> Expansion of ISTEA authority to include transportation
spending for brownfields revitalization, and increased overall funding
for mass transportation systems, including through ISTEA;
<bullet> The National Environmental Policy Act should reflect the
environmental and cultural benefits of brownfields redevelopment over
development in greenfields by requiring that environmental impact
statements consider alternatives that would promote brownfields
development over greenfields development.
<bullet> Inter-agency coordination in the use of Federal funding
for urban brownfields activities, in order to streamline and conform
the burdensome procedural requirements associated with different
funding sources and better allow the implementation of community-based
environmental protection. In other words, local governments with
comprehensive urban development programs should be better able to
aggregate various funding sources for the implementation of their
community environmental priorities, without the undue burden that can
result from divergent procedural requirements and standards associated
with different funding sources.
iv. conclusion
In conclusion, local governments are excited to work with the
Federal Government to promote the revitalization of brownfields,
through a combination of State delegations of liability authority,
increased Federal investment in community revitalization, and
innovative legislative and regulatory incentives designed to build a
brownfields partnership from the ground up. NALGEP thanks the
Subcommittee for this opportunity to testify, and looks forward to
working with you as the process moves forward.
______
Responses of Lorrie Louder to Additional Questions from Senator Smith
Question 1. Your testimony seems to indicate that we should take a
two track cleanup approach to separate those sites that are of NPL
caliber from brownfield sites. As you know, sometimes this distinction
can get rather difficult. If the State has the ability to conduct NPL
caliber cleanups in a voluntary cleanup program, shouldn't we allow
this if it gets the site cleaned up better?
Response. The National Association of Local Government
Environmental Professionals believes that States with approved cleanup
programs that meet minimum criteria to protect public health and the
environment should be delegated the authority to clarify and limit
liability at non-NPL caliber brownfield sites forthwith. Such non-NPL
caliber sites encompass the substantial majority of contaminated sites
affected with the burden of environmental contamination and potential
liability. NALGEP's two-track approach to State delegation is designed
to facilitate the delegation to States of authority over those sites
that clearly should be within the States' exclusive responsibility.
Delegation to States of authority for such non-NPL caliber brownfields
sites should not be slowed or hindered by the more difficult issues
associated with NPL-caliber sites.
However, NALGEP's approach would not preclude the delegation by the
U.S. Environmental Protection Agency (``EPA'') to approved States of
liability clarification and cleanup authority over those sites that,
while not on the CERCLA National Priorities List, are considered ``NPL-
caliber.'' Many States have the ability to facilitate the expedited and
effective cleanup of contaminated properties.
As explained in the NALGEP Brownfields Report, delegation by EPA of
brownfields authority over any types of sites should only be granted to
States with cleanup programs that meet minimum criteria to protect
public health and the environment. See NALGEP Report, Liability Section
1, Finding 5, bullets 3-5, pp. 11-13. Such delegation criteria would
certainly apply to delegation for NPL-caliber sites.
NALGEP agrees that drawing the distinction between ``NPL-caliber''
and ``non-NPL caliber'' sites can get rather difficult. For this
reason, NALGEP has found at p. 10 of its Report that the keys to
allowing such distinction are ensuring that State cleanup programs have
both a strong site assessment requirement and an adequate method to
make the distinction between the two types of brownfields sites.
Again, NALGEP believes that it is important to establish forthwith
a means by which States can obtain clear authority at non-NPL-caliber
sites. so that cleanups can begin and so that certainty and finality
can be achieved at such sites. If individual States can also
demonstrate to EPA the ability and commitment to take the clear lead
role for other, more contaminated, NPL-caliber sites, the NALGEP
approach would not preclude such delegation of authority.
Question 2. Ms. Louder, many of these brownfield sites are old
industrial locations which will continue to be zoned for industrial
purposes after cleanup. That being the case, would you agree that
cleanups of brownfields that are tied to risk-based standards based on
reasonably anticipated future use would help solve the Brownfields
problem?
Response. Undoubtedly. NALGEP strongly supports the use of risk-
based cleanup standards based on reasonably anticipated future use. In
fact, NALGEP has found that EPA delegation of brownfields authority to
States should be granted to those States whose cleanup programs (among
other things) use risk-based cleanup standards based on future use.
These State risk-based standards should be established through an
adequate public approval process. In addition, approved States should
require the use of institutional controls, such as deed restrictions,
zoning requirements or other mechanisms that are enforceable over time
to ensure that future land uses tied to certain cleanup standards are
maintained. See NALGEP Report at p. 13.
Question 3. Although you suggest a two track approach to separating
brownfields cleanups from Superfund cleanups, isn't it the case that
the fear of potential Superfund liability is what keeps parties from
moving forward to clean up these sites? How do we fix this? If
providing finality is one of the answers, should present owners be able
to receive liability finality from States?
Response. NALGEP agrees that the fear of potential Superfund
liability is a significant barrier to the cleanup and redevelopment of
brownfield sites. The specter of Superfund liability is associated with
both heavily contaminated, NPL-caliber type sites, and with those sites
with lesser or even no contamination that should be put on a
brownfields track. NALGEP has found that the one way to remove the fear
of Superfund liability from brownfields sites is to promote the
delegation from EPA to approved States of the authority to clarify and
reduce liability at non-NPL caliber brownfields sites. If a State has
the ``final word'' on liability at non-NPL-caliber sites, stakeholders
involved in the revitalization of brownfields can have greater
confidence and certainty that environmental liability will not attach
to them for cleanup or redevelopment activities.
At NPL sites and NPL-caliber sites burdened with a greater level of
contamination, liability issues may be more difficult to resolve and
therefore State and Federal mechanisms to ensure the protection of
public health and the environment, and the recovery of costs from
responsible parties, may be necessary.
The Senator is correct that finality is a key element of resolving
Superfund liability fears and promoting cleanup and productive re-use
of brownfields sites. Therefore, NALGEP supports the ability of
approved States to provide liability clarification and finality to
present owners of non-NPL caliber sites who meet the requirements of
the State voluntary or independent cleanup program.
______
Responses of Lorrie Louder to Additional Questions from Senator Chafee
Question 1. Your testimony advocates a ``Brownfields track'' that
seems to exclude NPL-caliber sites--sites that could possibly score
above the National Priorities List threshold of 28.5? I have 200 such
sites in Rhode Island alone, you must have many more in the NALGEP
cities. EPA will never put 200 more Rhode Island sites, many of them
with redevelopment potential, on the NPL. What should the fate of these
sties be--who should do what at such sites?
Response. NALGEP believes that States with approved cleanup
programs should be delegated the authority to clarify and limit
liability at non-NPL-caliber brownfield sites, which encompass the
substantial majority of contaminated sites affected with the burden of
environmental contamination and liability.
However, the Senator is correct that there exist many sites--like
the 200 in Rhode Island alone--which are kept in redevelopment
uncertainty because of their status as NPL-caliber sites. NALGEP sought
to recognize the importance of these sites when it found in its report
that ``the remediation and redevelopment of Superfund sites remains a
vital environmental and economic need in communities.'' NALGEP
Brownfields Report at 9, Finding 4, Bullet 1.
The NALGEP approach to delegation to States of non-NPL-caliber
authority would not preclude the delegation by EPA of authority over
NPL-caliber sites to approved States with cleanup programs that meet
minimum criteria to protect public health and the environment. Many
States have the ability to facilitate the expedited and effective
cleanup of heavily contaminated properties. Other States do not. If
individual States can demonstrate to EPA the ability and commitment to
take the clear lead role for more contaminated, NPL-caliber sites, the
NALGEP approach would not preclude such delegation of authority.
However, it may be necessary to create additional protections for the
delegation of authority over these more-contaminated sites, such as
stronger criteria for delegation, or a broader ``reopener'' provision
for EPA involvement in particular sites that pose a threat to public
health or the environment.
It should also be noted that, under current law and policy, States
are also precluded from taking action to clean up and redevelop sites
that are considered NPL-caliber. Although these more heavily
contaminated, NPL-caliber sites may not be free from potential
Superfund liability or EPA involvement, it is because the liability and
cleanup issues are more difficult and substantial, and because further
protections may be necessary to protect public health and the
environment, and ensure the recovery of costs from responsible parties.
Although it may be more time-consuming or procedurally burdensome for
States to take an active role in the revitalization of NPL-caliber
sites, nothing prevents a State from doing so.
Question 2. On page 8 of your testimony, you describe the condition
under which EPA should be allowed to reenter a State cleanup. Your
proposal is:
EPA should provide that it will not plan or anticipate any further
action at any site unless, at a particular site, there is (1) an
imminent and substantial endangerment to public health and the
environment; and (2) either the State response is inadequate or the
State requests EPA assistance.
Do you consider this standard to be more deferential than that EPA
now offers to States in its interim voluntary cleanup guidance?
Yes, NALGEP considers its ``reopener'' proposal for the reentry of
EPA at particular brownfield sites to be more deferential than the EPA
standard in its interim voluntary cleanup guidance. The need for
certainty and finality of liability determinations provided by States
at brownfields sites requires a very strong delegation of authority to
approved States. with reopener only in exceptional circumstances.
The NALGEP reopener proposal would require both of two specific
circumstances before EPA re-involvement at a particular site would be
warranted. First, there must be a substantial and imminent threat to
public health or the environment. However, even when such threat
exists, an approved State may well have the ability to adequately
respond to such threat. Therefore, the reopener also requires that EPA
not become re-involved at a site unless the Agency determines that the
State response to an imminent and substantial threat is not adequate.
Likewise, if the State desires and requests assistance from the EPA in
responding to an imminent and substantial threat at a particular site,
nothing in the brownfields delegation mechanism to that State should
prevent such EPA assistance from being given.
conclusion
On behalf of NALGEP and the St. Paul Port Authority, I wish to
convey my great appreciation to Senator Smith and Senator Chafee for
the opportunity to provide input on this topic of great importance to
local communities.
______
Prepared Statement of Peter F. Guerrero, Director, Environmental
Protection Issues, Resources, Community, and Economic Development
Division, General Accounting Office
Mr. Chairman and Members of the Committee: I am pleased to be here
today to discuss the Committee's efforts to support the cleanup and
redevelopment of hazardous waste properties across the country. Over
the past several decades, manufacturing has been declining in many of
the Nation's cities. When businesses closed, they often left abandoned
and idled properties, commonly known as ``brownfields.'' These
properties are sometimes contaminated with chemical wastes from
manufacturing processes. Partly to avoid the costs of assessing and
cleaning up these properties according to Federal and State
environmental laws, some new businesses have chosen to locate in
uncontaminated areas outside cities known as ``greenfields.'' These
decisions have led to the loss of tax revenue and employment in central
city neighborhoods.
The Congress has been interested in finding ways to help localities
cleanup and redevelop brownfields. This Committee asked us to provide
it with information on the (1) legal barriers that the Comprehensive
Environmental Response, Compensation and Liability Act, commonly known
as Superfund, presents for redeveloping brownfields and (2) types of
Federal financial support that States and localities would like to help
them address such properties. This testimony summarizes the major
findings from our June 1996 report on brownfield redevelopment and
information from an ongoing review for this Committee of States'
voluntary cleanup programs.\1\ These programs substitute incentives for
enforcement actions to encourage, rather than compel, private parties
to clean up contaminated properties. States are beginning to use these
programs to address brownfields because they are faster and less costly
than enforcement programs. This testimony also comments on how
liability and funding provisions in two legislative proposals pending
before this Committee respond to the legal barriers and funding needs
we identified in our work.\2\
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\1\ Superfund: Barriers to Brownfield Redevelopment (GAO/RCED-96-
125, June 17, 1996).
\2\ S. 8, the Superfund Cleanup Acceleration Act of 1997, includes
provisions that would (1) limit Superfund liability for prospective
purchasers; (2) clarify the circumstances under which landowners who
did not contribute contamination at a site (innocent landowners) may
avoid liability; (3) limit liability for property owners whose property
is contiguous to a contaminated site; and (4) limit liability at any
site subject to a State cleanup plan.
S. 18, the Brownfield Remediation and Environmental Cleanup Act,
also includes provisions that would limit liability for prospective
purchasers and would clarity liability for innocent landowners. Both
bills would establish grant programs and provide assistance for
brownfield redevelopment.
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In summary, we found the following:
<bullet> Superfund's liability provisions make brownfields
difficult to redevelop, in part because owners are unwilling to
identity contaminated properties and prospective developers and
property purchasers are reluctant to invest in a redevelopment project
that could leave them liable for cleanup costs. While brownfields are
usually not contaminated seriously enough to be listed as Superfund
sites, these parties still fear that they may be sued under Superfund
and State laws for cleanup costs if they become involved with a
contaminated property. In addition, most of the voluntary cleanup
program managers in the 15 States we surveyed judged that volunteers'
concerns about being held liable for a property under Federal Superfund
law, once a cleanup is complete, discouraged some of them from
initiating a cleanup. Both bills include provisions that would help to
address these concerns, including provisions to limit liability for
some prospective purchasers.
<bullet> To help promote the redevelopment of brownfields, States
and localities would like Federal financial support to cover some of
the costs of assessing these properties for contamination, cleaning
them up, and developing their voluntary cleanup programs. Over the past
few years, the Environmental Protection Agency (EPA) and the Congress
have provided some funds which States and localities have used for
activities such as developing an inventory of brownfield properties.
Funding provisions in the bills would continue and expand this support
and respond to the States' and localities' needs. For example, Senate
bills S. 8 and S. 18 would authorize EPA to provide grants to support
the characterization and assessment of brownfields. We determined that
the amounts of the grants proposed in the bills for these activities
would be sufficient to cover the costs for most brownfield properties.
Additional provisions in the bills for grants to fund some cleanup
costs and provisions in S. 8 to fund the development of State voluntary
cleanup programs should also promote brownfield cleanup and
redevelopment.
background
Under Superfund, EPA can compel the parties responsible for
hazardous waste contamination to clean up a contaminated property, or
pay for its cleanup, in order to protect public health and the
environment. Also, any party that contributed to the contamination,
even if this action was legal at the time, may be liable and may be
held responsible for the entire cost of the cleanup. The Federal
Government targets its enforcement and cleanup resources to properties
on the National Priorities List (NPL), a list of highly contaminated
sites. However, parties may be subject to Superfund's liability and
enforcement provisions even if a property is not on the NPL. Most
States have adopted similar liability laws and enforcement programs.
States find that these stringent liability provisions have provided
leverage to convince responsible parties to clean up the more highly
contaminated sites in the States' inventories. As we reported last year
in a separate study of the potential cleanup workload in eight States,
the program managers in these States pointed out that the threat of
having a site placed on the NPL and identified as one of the most
contaminated sites in the country created a moor incentive for
responsible parties to clean up their sites.\3\
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\3\ Impact on States of Capping Superfund Sites (GAO/RCED-96-106R,
March 18, 1996).
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Brownfields, however, are typically urban properties that are less
contaminated than NPL sites. EPA defines brownfields as abandoned or
underused facilities, usually in industrial or commercial areas, where
redevelopment is hampered by real or perceived environmental
contamination. While we identified no official nationwide count of
brownfields, the States estimated in a study conducted for EPA that
they may have about 85,000 potentially contaminated properties,
including brownfields, that need investigation and may need cleanup.\4\
The Federal Superfund program and similar programs in the States do not
have the capacity to address these properties. These programs have
limited resources, which EPA and the States target to small numbers of
highly contaminated properties. As a result, States and localities are
looking for alternative ways to address brownfields, including
voluntary programs.
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\4\ An Analysis of State Superfund Programs, Environmental Law
Institute under contract with EPA (1996).
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superfund's liability provisions raise a legal barrier to redeveloping
brownfields
Most brownfields are not likely to be added to the NPL because they
are not severely contaminated. However, investors are still wary of the
cleanup liability provisions of both Federal and State legislation
because these can apply to all sites, including brownfields. As a
result, developers who purchase properties may become liable for any
contamination later found there. Former property owners may also be
liable for cleanup costs if the contamination occurred while they owned
the properties. Thus, even the suspicion of current or prior
contamination may make developers hesitant to purchase brownfield
properties and owners reluctant to place their properties on the real
estate market.
The voluntary program managers in the 15 States we surveyed also
identified Superfund liability as a barrier to attracting volunteers to
accomplish cleanups, including those at brownfields. All but one of
these managers reported that their programs were addressing brownfields
so that they could be returned to productive use through redevelopment
and expansion. Twelve of the managers reported that the limits on State
liability that their voluntary programs provide are a good incentive to
attract volunteers. However, State officials judged that some potential
volunteers would still find Superfund liability a deterrent to
participation. Moreover, managers cited limiting Federal liability as
one of the more important ways the Federal Government could assist
voluntary cleanups.
The Congress has considered actions to help address some of these
issues. For example, because lenders had feared being named as
responsible parties if they foreclosed on contaminated properties, the
Congress passed legislation limiting lenders' liability at such
sites.\5\ S. 8 and S. 18 also include various provisions to help
address Superfund liability issues at brownfields, including limiting
the liability of prospective purchasers of these properties and
clarifying circumstances under which current landowners would not be
liable for past contamination.
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\5\ The Asset Conservation, Lender Liability, and Deposit Insurance
Protection Act of 1996, contained in the Omnibus Consolidated
Appropriations Act, 1997 (P.L. 104-208).
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federal funding can help support brownfield redevelopment
During our reviews of brownfields and voluntary programs, we found
that States and localities would like Federal funding support to help
them characterize, assess, and cleanup brownfields, and establish and
support voluntary programs. Most of the States in our ongoing review of
voluntary prngrams--even those States that levied fees on volunteers
that were high enough to cover their program costs-identified Federal
funding as a key way for the Congress to promote their programs. Some
States said they would use the funds to help municipalities cover the
costs of assessing properties where no parties had been identified as
responsible for the contamination or where the cleanup costs would
otherwise be too high to attract voluntary cleanups. One State sought
to use the support to establish a revolving loan fund to support
brownfield cleanups, similar to provisions in both the bills. Others
said they would use the funds to, for example, publicize the programs
or develop information systems to better manage and evaluate the
programs.
To date, both Federal agencies and the Congress have provided some
funds in support of brownfield cleanups and voluntary programs, and the
pending two bills would continue and expand on this support. In 1995,
EPA issued a ``brownfields action agenda'' which, among other things,
currently provides grants of up to $200,000 each to 76 State and local
governments to fund a wide variety of brownfield demonstration
projects. These include developing inventories of brownfields and
establishing policies to govern brownfield redevelopment. The
Department of Housing and Urban Development has also provided funding
to communities to redevelop brownfields once they have been cleaned up.
The Congress, in the House Conference report accompanying EPA's fiscal
year 1997 appropriations act, indicated that more than $36.7 million of
the current Superfund appropriation would go to support EPA's
brownfield activities and voluntary programs.
The two pending bills would provide substantial amounts of
additional funding that States and localities could directly use to
characterize, assess and cleanup sites. Specifically, the bills give
EPA the authority to provide Superfund grants of up to $200,000 per
property, to characterize and assess brownfields.\6\ Before these
properties can be redeveloped, an assessment must be performed to
determine the nature and extent of the contamination present. Because
the assessment requires research into a property's history and a
technical analysis of its conditions, a substantial expenditure may be
involved. For some brownfields, this expenditure may be significant
enough to discourage developers. We estimated that for most
brownfields, assessment costs could average $60,000 to $85,000 and for
some properties with groundwater contamination could exceed $200,000.
Therefore, the grant provisions in the bills to help fund property
characterization and assessment should be sufficient for most
brownfields.
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\6\ The grants would be provided out of the Superfund trust fund
which has been primarily financed from taxes on crude oil and certain
chemicals.
---------------------------------------------------------------------------
In addition to these assessment funds, both bills would give EPA
the authority to issue Superfund grants to pay for actual cleanup
actions at brownfields. S. 8 would also provide funds to assist States
in establishing and administering voluntary cleanup programs. Although
we asked the States for information on their costs to clean up
brownfield properties and to operate their voluntary programs, most
States did not yet systematically collect such data. Therefore, we
cannot offer a perspective on the sufficiency of the grants proposed
for brownfield cleanup actions or State voluntary programs.
Mr. Chairman, this concludes my prepared remarks. At this point, I
would be glad to respond to any questions you may have.
______
Responses of Peter Guerrero, General Accounting Office, to Additional
Questions from Senator Smith
Question 1. Did your research indicate that the States, given
sufficient funding, have cleanup programs capable of handling
brownfields cleanups?
Response. We reviewed voluntary cleanup programs in 15 of 34 States
that have these programs. These programs provide incentives for
volunteers to clean up contaminated sites, such as reduced
administrative requirements and controls on cleanups and some relief
from liability under State law. Because of these incentives, voluntary
programs can sometimes achieve faster and less costly cleanups than
enforcement-based programs. While the voluntary programs we reviewed
are not devoted exclusively to brownfield cleanups, program managers in
14 of these States said some voluntary cleanups accomplished under
their programs are resulting in economic redevelopment of brownfield-
type sites.
Question 2. Did your research indicate that the issue of limiting
Federal liability should only be provided to prospective purchasers? In
order to provide an incentive for current owners of these facilities to
clean up these sites, doesn't it also make sense for similar provisions
to be given to the current owners and operators?
Response. Managers of State voluntary programs told us that
limiting Federal liability for certain parties, such as prospective
purchasers, would facilitate additional voluntary cleanups. Most State
voluntary programs do not distinguish between different types of
volunteers, such as purchasers, owners, or parties responsible for the
waste. All of the voluntary cleanup programs we reviewed allowed both
property purchasers and owners to conduct voluntary cleanups. Twelve of
the 15 States allowed any type of party to volunteer, and then
certified that cleanup was complete, providing some assurance that the
volunteer was no longer liable under State law. Three programs provided
a less comprehensive liability release under State law for parties
responsible for the waste, which could include property owners.
Question 3. I understand that 34 States have some type of voluntary
cleanup program. Is funding a constraint on other States establishing
voluntary cleanup programs? Does S. 8, through its State program
funding provision, address any funding concern?
Response. Of the 15 existing voluntary programs we reviewed, only
two were financially self-sufficient based on the fees they charged
volunteers to participate. Nine programs had already used Superfund
cooperative agreement funds to develop or implement their voluntary
programs, and said that additional funds would be helpful for
activities like publicizing their programs, or helping local
governments pay for site assessments. Most States also used other State
funds to supplement their voluntary programs.
We surveyed States that did not have voluntary programs yet, and
they identified Federal financial assistance as an important component
in initiating a voluntary program.
Queston 4. In your testimony you state that ``the voluntary program
managers in the 15 States we surveyed also identified Superfund
liability as a barrier to attracting volunteers to accomplish cleanups,
including those at brownfields.'' I presume this was not merely limited
to prospective purchasers of this contaminated property, but also
current owners who feared to clean up the sites for the same reason?
Response. As we indicated in response to question #2, voluntary
programs have generally not differentiated between different types of
parties who would like to conduct a voluntary cleanup, including
property owners. Program managers indicated that it was desirable to
clarify the issue of Federal liability.
Question 5. In your review of State voluntary cleanup programs and
State brownfield programs, to what extent do you believe that these
programs are not fully successful because they are not able to waive
Federal liability when these sites are cleaned up to the satisfaction
of the States? Put more simply, how big a deal is finality to the
States and do you believe their claim has merit?
Response. Almost all of the voluntary program managers we
interviewed said that Federal liability relief could increase
participation in their programs to a higher level. Those voluntary
programs that had negotiated Memoranda of Agreement (MOA) with EPA to
reduce the likelihood that voluntary sites will be subject to Federal
liability said that even this assurance had been important in
attracting volunteers. For example, two of the programs that had these
MOAs, Minnesota and Illinois, currently have 800 and 600 sites
participating in their programs, respectively. On the other hand,
programs without MOAs also had significant levels of participation. For
example, the Pennsylvania program currently has 201 participants.
Few of these programs offer a ``final'' or ``blanket'' relief from
State liability. Twelve of the State program managers did report that
the State liability relief they grant volunteers is an important
incentive for participation. However, most programs include a
``reopener'' when they certify a cleanup as complete that explains
specific circumstances when the State could take additional action
against the volunteer. Examples include discovery of fraud during the
cleanup process, a failure of the cleanup remedy, failure to maintain
the cleanup, or a change in land use from that originally approved.
Question 6. Some people have expressed concerns that States will
engage in a ``race to the bottom'' if authority for cleanup is
delegated to them. Have there been any signs that States have
endangered their citizens in their running of their voluntary programs?
Response. We did not conduct a review of sites to identity any
instances where voluntary cleanups failed to protect human health in
our review of these programs. We do note, however, that most of the
programs are relatively new and have not had completed cleanups in
place for an extensive period of time. We also note that the voluntary
cleanup programs in our survey took a variety of approaches to
providing incentives for participation and managing cleanups. Some
programs significantly reduced the level of controls they placed on
cleanups, such as oversight, and long-term monitoring of sites without
permanent remedies. While all voluntary programs set minimum cleanup
standards to be protective of human health, they allowed volunteers
more flexibility in how they achieved these standards. Several of the
programs we reviewed recognized the differences among sites, and varied
the level of controls they placed on volunteer's cleanup according to
the risks and characteristics of the site.
States also have different resources that they devote to clean up
programs and face different cleanup challenges. As we reported in 1996,
some States still expect to discover a significant number of seriously
contaminated sites, while others believe they have already addressed
most sites. These differing resources and workloads could affect
States' abilities to monitor cleanups or correct failed remedies, for
example.
Question 7. How long does it take to list and cleanup Superfund
sites and what are the trends?
Response. In testimony on February 13, 1997, before the
Subcommittee on National Economic Growth, Natural Resources, and
Regulatory Affairs, House Committee on Government Reform and Oversight,
we reported that EPA took an average of 9.4 years from site discovery
to evaluate and process the non-Federal sites it added to the National
Priorities list (NPL) in 1996. While this is some improvement over
1995, it is longer than prior years. For sites listed from 1986 to
1990, it took an average of 5.8 years from discovery to listing.
We also said that it took 10.6 years from the listing of non-
Federal sites on the NPL to complete the cleanup projects that were
finished in 1996. This was also longer than prior years. From 1986 to
1989, cleanup projects were finished, on average, 3.9 years after sites
were placed on the NPL.
______
Responses of Peter Guerrero, General Accounting Office, to Additional
Questions from Senator Chafee
Question 1. What activities typically make up a brownfield site
assessment, and what do site assessments typically cost?
Response. Brownfield site assessments are similar to assessments
conducted for other potentially-contaminated sites and are typically
accomplished in two phases. In Phase I, the goal is to determine
whether any potential for contamination exists by reviewing the site's
historical records, interviewing employees and neighbors about former
activities at the site, and visually inspecting the site for evidence
of hazardous waste. A Phase I assessment generally costs between
$1000--$5000 for an average (10-20 acre) site and up to $10,000 for a
larger or more complex site.
If the Phase I assessment identifies potential contamination, such
as the discovery of an underground storage tank, or evidence that
certain chemicals were used at the site, then a Phase II assessment is
necessary. Phase II tests for actual contamination by sampling and
analyzing the site's structures, soil and groundwater. Phase II
assessments generally cost from 50,000 to $70,000 for an average site
and up to $150,000 for a large site, or a site with groundwater
contamination.
Question 2. Does S. 8 offer a solution to the Brownfields
redevelopment barriers you identified in the Brownfields and voluntary
cleanup studies you conducted for this and other Committees?
Response. S. 8 would help reduce Brownfields redevelopment barriers
by addressing concerns about Superfund's liability provisions and by
providing some Federal funds to assist States and localities in their
Brownfield redevelopment efforts. Superfund's liability provisions make
brownfields difficult to redevelop, in part because owners are
unwilling to identity contaminated properties and prospective
developers and property purchasers are reluctant to invest in a
redevelopment project that could leave them liable for cleanup costs.
S. 8 includes provisions that would help to address some of these
concerns, including provisions to limit liability for some prospective
purchasers.
In addition, States and localities would like Federal financial
support to cover some of the costs of assessing brownfield properties
for contamination, cleaning them up, and developing their voluntary
cleanup programs. Over the past few years, the Environmental Protection
Agency (EPA) and the Congress have provided some funds which States and
localities have used for activities such as developing an inventory of
brownfield properties. Funding provisions in S. 8 would continue and
expand this support and respond to the States' and localities' needs.
Question 3. We understand that you found some States are
accomplishing Brownfield redevelopment through their voluntary cleanup
programs. How many of these programs currently exist?
Response. Nationwide, 34 States have implemented these programs.
All of them have been created since 1988, and most within the past 5
years. Also, officials in some additional States expect their
legislatures to pass voluntary cleanup statutes this year. We collected
information on voluntary cleanup programs in 15 of these States in our
work for these committee.
Question 4. What are the characteristics of these programs that
lead volunteers to initiate cleanup of contaminated sites?
Response. Voluntary programs offer a number of incentives that are
not available from a traditional State Superfund program. First,
voluntary programs are cooperative--they allow volunteers to initiate
their own investigation and cleanup instead of waiting for a State
enforcement action. Second, these programs allow volunteers to choose
from cleanup standards the State developed for specific chemical
contaminants--and these are often based on the future land use at the
site, for example, industrial, commercial or residential. As a result,
volunteers can choose a cleanup standard appropriate for their site.
Third, voluntary programs streamline certain aspects of the cleanup
process. For example, they might require less oversight, long-term
monitoring of sites, and public participation than a cleanup conducted
under State or Federal enforcement. Some voluntary programs also offer
financial incentives, including tax abatements, low-cost loans, and
grants for site assessments.
Finally, once a cleanup is complete, voluntary programs either
certify that a cleanup meets program requirements, release the
volunteer from further liability under State hazardous waste law, or do
both. As a result, volunteers can be confident that their
responsibilities to the State for cleanup at these sites is complete.
Because of these characteristics of voluntary programs, participants
can often cleanup their sites relatively quickly and at low cost.
Moreover, they are able to predict the time and cost needed for
cleanup, making these sites less risky from a redevelopment
perspective.
Question 5. Have these programs been successful in cleaning up
brownfields? What are some examples?
Response. Yes, these programs have been successful in cleaning up
brownfields. In the States we reviewed, thousands of sites were cleaned
under the State voluntary programs, including some brownfield sites.
For example,
<bullet> Chicago's brownfield program cleaned up a closed wire
manufacturing facility in cooperation with the Illinois voluntary
cleanup program. The site contained underground tanks and vaults filled
with solvents and fuel oil that had to be removed. The city then sold
the property to an adjacent fuel pump manufacturing business,
Blackstone Manufacturing. Blackstone built a secured parking lot on the
facility, allowing the business to add an extra shift of workers and
increase production.
<bullet> The Cellular One corporation cleaned up several adjacent
lots in New Berlin, Wisconsin through the Wisconsin Land Recycling
Program. The lots had been used for a variety of businesses, including
those that repaired, maintained, and stored heavy vehicles. The ground
was contaminated with waste oil sludge, underground and aboveground
storage tanks, and miscellaneous debris. Now that the soil has been
excavated and treated and the tanks and debris removed, Cellular One
plans to build a warehouse and office building on the site.
<bullet> Occidental Chemical Corporation operated a facility in
Clarksviile, Indiana from 1950 to 1992. The facility made laundry
detergents, and produced sodium and potassium phosphate products and
phosphoric acid. Cleanup at the site was conducted under the Indiana
voluntary cleanup program and consisted of removal of over 25,000 cubic
yards arsenic and phosphorus-contaminated soil. Occidental then sold
the 26-acre property to a real estate developer alter receiving a
covenant not to sue from Indiana. A retail developer bought the site
and constructed a large retail shopping center
Question 6. What kind of liability relief or waivers have State
voluntary programs offered to volunteers, and have these waivers been
effective in increasing program participation?
Response. Our review of programs in 15 States showed that most
States offer a liability release from State hazardous waste laws to
their volunteers after cleanup, but they also reserve the right to
reopen the release in certain circumstances. We found covenants-not-to-
sue are used in 5 States. Covenants not-to-sue commit the State never
to take enforcement action related to the voluntary cleanup except in
unusual circumstances, like fraud. Other States gave certificates of
completion or no further action letters upon completion of the cleanup,
stating that the cleanup met State criteria. Some of these also
included a liability release. Several States took a combination of
approaches, based on the type of cleanup or volunteer. For example,
some States give a release from liability for cleanup that are
permanent and address all contamination and give a certification of the
cleanup without a liability release for non-permanent or partial
cleanups. Other States give a release for non-responsible parties but
give only a certification with no release for responsible parties.
Most States included ``reopeners'' in their liability assurances
that allowed the State to revoke the assurance in some circumstances.
States might have reopeners for the submission of fraudulent
information or for a change in land use that does not correspond with
the cleanup standard.
State managers in all 17 State programs we reviewed said that the
liability waivers they offer are important incentives for participation
because they give volunteers some certainty that their responsibilities
to the State are at an end once a cleanup is completed.
Question 7. You mentioned that States have estimated they have
about 85,000 sites that need to be assessed and potentially cleaned up.
Are these all brownfield sites? What is the estimate of the number of
brownfields in the U.S.?
Response. The 85,000 estimate, which is based on a survey of State
Superfund programs conducted for EPA by the Environmental Law
Institute, could include other types of sites such as NPL-calibre sites
or sites not located in central cities. No nationwide estimate of
brownfields exists. In fact, owners of contaminated property now have
little incentive to provide this information to State or Federal
Government. As a result, few inventories of brownfields have been
developed except at the local level.
Differing definitions of what a brownfield site is makes it
difficult to estimate the number of brownfield sites. We found that
definitions vary by size of site considered to be a brownfield (gas
stations vs. large sites that have significant redevelopment
potential), location (urban v. suburban), level of contamination
(actual vs. perceived) etc.
Question 8. Do the remediation grants proposed in both bills
provide enough funding to pay for cleanup at the average brownfield
site?
Although we asked the 15 managers in our State voluntary program
survey if they could provide us with data on the costs of voluntary
cleanups, they could not provide this type of information. We did not
identify any other source that could provide this data.
______
Prepared Statement of William J. Riley, General Manager, Environmental
Affairs, Bethlehem Steel Corporation on behalf of the American Iron and
Steel Institute
Bethlehem Steel Corporation, on behalf of the American Iron and
Steel Institute, appreciates the opportunity to provide testimony in
support of Brownfields/Voluntary Cleanup legislation, which deals with
an important environmental and economic issue: the redevelopment of
industrial sites. The committee leadership is to be commended for
addressing Brownfields legislation, which has been addressed in a
number of bills introduced in Congress, in particular S. 8 and S. 18.
These bills address some of the issues associated with Brownfields, but
we believe that legislation must address all of the key issues which
created the impetus for legislation in the first instance.
The steel industry has been a leader in promoting reasonable
Brownfields legislation at the Federal, State and local levels. At the
Federal level, we have been working with both the Congress and the
Administration. We led the efforts to include the Brownfields issue as
a major element in EPA's Common Sense Initiative. We have been involved
with a number of States, some of which have enacted Brownfields
legislation, while others are currently developing Brownfields
provisions. Today, we will address three principles that we consider to
be fundamental for Brownfields legislation.
The need for comprehensive Federal Brownfields legislation that
complements current and future State legislation has grown enormously.
Over the past two decades many large corporations, like Bethlehem
Steel, have significantly downsized to respond to a rapidly changing
global marketplace. Thousands of Brownfield sites exist throughout the
country, some of which continue to deteriorate in our urban centers.
These wasted assets, and the unnecessary despoiling of farmland and
other ``Greenfield'' sites, have spawned numerous State Brownfield laws
just within the last several years. Indeed, the States have taken the
lead on this issue through voluntary cleanup legislation and have
collectively developed a model framework that has achieved widespread
support. In particular, I would like to commend Governor Ridge of
Pennsylvania, who has been a strong advocate in the Great Lakes region
for Brownfields legislation. A wide variety of Brownfield sites can be
cleaned-up and redeveloped effectively and efficiently under existing
State programs if Federal legislation is enacted that promotes the
``one master'' concept: namely, that remediation under a State program
will satisfy Federal requirements.
There are basically two categories of Brownfield sites: abandoned
sites and underutilized sites. Usually abandoned sites are relatively
small in size and have been left deteriorating for a number of years.
As a result, the infrastructure associated with these sites has also
been deteriorating. Such abandoned sites are often municipally owned
and usually will require financial assistance for redevelopment.
Brownfield sites with a viable owner are far larger in size and, with
effective legislation, can undergo cleanup without the need for public
funds. Often these sites are underutilized or surplus portions of large
manufacturing sites which have ongoing adjacent operations. As a
result, the infrastructure associated with these sites is usually in
much better condition than that for abandoned sites, making them more
attractive to potential buyers. There are a growing number of these
sites in the United States, especially as a result of the restructuring
activities in industries such as steel that have been made and continue
to be made in response to intense competitive environments.
Federal legislation must address these properties directly. In
order to do so, there are three primary objectives that must be
addressed in comprehensive Brownfields legislation. They are: Federal
Finality, Certification of State Voluntary Programs, and Eligibility of
Sites. Each of these issues are summarized as follows:
1. Federal Finality--State voluntary cleanup programs provide
certain incentives to buyers and sellers of contaminated industrial
properties, and thus facilitate faster cleanup and redevelopment of
sites. However, to provide buyers and sellers sufficient incentive to
make the necessary investment in these properties, these parties need
assurances of ``finality,'' i.e., assurances that they will face no
further liability under Federal or State law for those sites, or
portions of sites, that are investigated and cleaned up in accordance
with a State voluntary cleanup program.
We support the provision in S. 8 that eliminates CERCLA liability
once a site has been cleaned up under a State plan. We are concerned,
however, that EPA could second-guess the cleanup through the RCRA
statutes and therefore need RCRA liability relief as well.
Due to the importance of Federal finality, perhaps a ``re-opener
provision'' would be appropriate, as contemplated in certain State
voluntary programs, that allows U.S. EPA to retain authority under
certain circumstances. Such a ``re-opener provision'' should provide an
appropriate balance of the property owner's interest in finality, the
State's interest in preserving the integrity of its programs, and the
Federal interest in assuring that all significant rights are addressed.
2. Certification of State Voluntary Cleanup Programs--To qualify
for Federal liability relief, a cleanup should be conducted pursuant to
a certified State voluntary response program. We believe that the
criteria set forth in section 102(b) of S. 8 would be appropriate
criteria for the certification of State voluntary response programs. In
addition, a State seeking qualification for its program could submit a
certification to the U.S. EPA that the State has in place a voluntary
response program and that the State has the legal authority,
organization, financial and personnel resources, and expertise to
implement that program.
3. Eligibility of Sites--In order to promote and accelerate the
cleanup and redevelopment of a wide universe of underutilized
industrial properties, ``Brownfields'' should be defined broadly. We
should be encouraging the reuse of all commercial and industrial sites,
not just a narrow category. In particular, we strongly believe that
RCRA sites, where cleanup has not yet commenced and where cleanup would
be accelerated by participating in a State voluntary cleanup program,
should be eligible. There are approximately 6,100 RCRA corrective
action sites. Less than 5 percent of these sites have completed
cleanup. The legislative principles being suggested today would
accelerate the cleanup for many of the remaining sites.
We would like to have the ability to clean up ``portions'' of a
facility under a State voluntary cleanup program and sell them to
potential buyers for economic redevelopment purposes. RCRA, which
triggers corrective action facility-wide, often precludes our ability
to redevelop these properties in a timely manner. Again, we are not
proposing to skirt our corrective action obligations, but merely
striving to accelerate cleanup for economic redevelopment purposes. In
addition, we are not seeking financial assistance or grant money to
clean up our facilities.
We applaud the Committee for addressing the problem of Brownfields.
Remediating Brownfields is a win/win for all stakeholders because:
<bullet> cleanups would be accelerated;
<bullet> unused or underutilized properties would be reused;
<bullet> property appearances and urban blight would be
ameliorated;
<bullet> environmental contamination would be remediated;
<bullet> jobs would be saved or created;
<bullet> tax revenues would be resumed;
<bullet> communities would be enhanced;
<bullet> valuable Greenfields sites--our forests and farmlands--
would be preserved; and
<bullet> litigation would be reduced.
In conclusion, we believe that Federal Brownfields legislation
should not be limited in scope, and should, as its primary goal,
stimulate and empower State voluntary cleanup programs.
The ``one master'' concept, whereby the State program satisfies all
cleanup requirements and results in comprehensive liability relief, is
the way to proceed.
______
Responses of William K. Riley, Bethlehem Steel Corporation, to
Additional Questions from Senator Chafee
Question 1. On page 4 of your testimony, you state that there may
be some limited circumstances under which EPA should be allowed to
reenter at a State cleanup. Earlier witnesses from NALGEP proposed the
following standard:
EPA should provide that it will not plan or anticipate any further
action at any site unless, at a particular site, there is (1) an
imminent and substantial endangerment to public health and the
environment; and (2) either the State response is inadequate or the
State requests EPA assistance.
Is this an appropriate standard for EPA reentry at a State site?
Response. We recognize that a re-opener provision may be necessary
to satisfy those who feel that EPA's intervention or assistance may be
needed in critical situations. Such a re-opener should provide an
appropriate balance between the property owner's interest in finality,
the State's interest in preserving its autonomy and the integrity of
its programs, and a carefully targeted Federal interest in assuring
that truly imminent and significant risks are addressed to alleviate
acute (rather than chronic) circumstances. In this context it should be
recognized that, in part, as a result of decades of Federal program
grant and technical support, most State programs do, in fact, possess
the requisite environmental expertise equivalent to that developed or
retained by EPA to address these matters. Hence the necessity for such
Federal oversight or intervention will most likely be infrequent.
Question 2. Often we try to think of Brownfields sites in terms of
risk--from low risk sites, to higher risk-NPL caliber sites, to sites
actually on the NPL. Your testimony on page 2 gives us another
interesting way to divide the potential Brownfields site universe--
between relatively smaller ``abandoned'' sites and relatively larger
idled sites with a viable owner that basically ``mothballs'' the
facility. Bethlehem is a responsible company and presumably does not
abandon its old sites, but can you explain why a rational, viable firm
like Bethlehem might choose to mothball a facility and not sell it to
someone for redevelopment?
Response. Many times we do not choose to ``mothball'' a site but
such sites become unsalable because buyers are concerned about the
perception of environmental liability. We do hold a limited number of
other sites, or portions of sites, which contain areas of potential
contamination that could create liability to Bethlehem if improperly
managed by others. We know of other companies that routinely ``moth
ball'' properties, presumably for the same reasons. These liability
concerns are created in large part by EPA'S traditional use of
unscientific, overly conservative ``off-the-shelf'' assumptions to
define required cleanup levels that resulted in overly expensive and
unnecessary remedies. It is generally agreed that the use of these same
techniques/criteria are what has caused excessive delays, high
transactional costs and a general slowdown in Superfund site cleanups.
If site specific, real world, scientific risk-based analyses were
adopted along with a streamlined administrative process, owners would
move more rapidly to redevelop sites rather than ``moth ball'' them.
Many of these sites could be reutilized if processed through a
Brownfields program that provided for land-use-based cleanup standards,
institutional controls, and liability relief.
Question 3. Your testimony raised RCRA sites as a Brownfields
issue--sites where RCRA's corrective action cleanup provisions apply.
What barriers does RCRA raise to redevelopment and do current
legislative proposals, S. 8 or S. 18, fix those barriers?
Response. The RCRA Corrective Action Program, as currently
constituted and administered by EPA, presents programmatic, timing and
flexibility impediments and barriers to effective site redevelopment.
It appears that the current legislative proposals do not contain
sufficient provisions to remove those barriers. There are at least two
specific RCRA issues that need to be addressed.
The first is a definitional matter that involves the eligibility of
RCRA sites in State and Federal Brownfields/Voluntary cleanup programs.
Where the Corrective Action process has already been initiated,
especially at a large facility, it makes sense if portions of that
facility which are surplus and available for redevelopment, were
expeditiously evaluated and remediated as necessary under a voluntary
cleanup program instead of waiting for the completion of a lengthy
Corrective Action process. RCRA Corrective Action procedures require a
very long time to complete, primarily because of programmatic
requirements which often do not affect the actual remedy. Moreover,
such programs often require the entire facility to be studied before
the ``site'' can be released from the program. We believe that the
preferred course of action is the endorsement of a faster remediation
regime under a State voluntary cleanup program designed to reutilize
the site and create jobs.
Second, RCRA Corrective Action Program barriers (e.g., permitting
and waste management requirements) exist at Brownfield sites. Separate
legislation such as that introduced last year by Senator Lott in S.
1274 should be considered to remove these impediments.
It is not clear from reading S. 8 if the definition of ``Brownfield
facility'' is meant to apply only to the Brownfields revitalization
title of the bill. If not, the definition would exclude RCRA sites from
liability relief provided for in the enforcement provisions of section
129. S. 18 deals primarily with financial incentives, and does not
address issues relating to the Landowner, such as liability relief in
exchange for remediation. Therefore, the above RCRA issues are also not
addressed.
______
Responses of William K. Riley, Bethlehem Steel Corporation, to
Additional Questions from Senator Smith
Question 1. Has Bethlehem Steel ever encountered any financing
problems with sites that it would like to redevelop, but cannot obtain
funding because a fear that Superfund liability may be involved? If
not, are you aware of other corporations that have had this problem?
Response. The perception of environmental contamination and the
associated CERCLA, RCRA and other liabilities attached thereto has been
a factor in many sales transactions. Although the fear of uncertain
liability is seldom the sole reason for a failed transaction, it has
been, on several important occasions, a major contributor to a lost or
significantly-delayed sale. Moreover, some of our properties have not
attained a higher use, commanded a fair price, or attracted quality
buyers because they were previously-used industrial sites.
Question 2. Both S. 8 and S. 18 provide liability relief for
prospective purchasers and innocent landowners. That's where S. 18
stops in this area, while S. 8 provides relief for those who are
covered by an approved State cleanup plan and are cleaning up the site.
Isn't it true that in order to have a purchaser there has to be a
seller and that relief for just a purchaser does not fix the problem? I
mean, why would a seller sell if there was a threat of future liability
for a site he no longer owns?
Response. The question is well stated and reflects an understanding
of the MAJOR problem for sellers with the reutilization of Brownfields
sites that are under private ownership. State Brownfields laws were
created to provide cleanup standards for owners to follow. In exchange
for owners coming forward voluntarily to clean up a site, the better
State programs provide the owner relief from State environmental
liability. Otherwise, few sites will come out of ``mothballs.''
Clearly, Federal CERCLA and RCRA relief should be provided if the site
is cleaned up as agreed upon!
Question 3. Your testimony indicates that the largest and most
financially attractive sites for economic growth are sites where there
is a viable owner. What are the major barriers that are preventing
these sites from being redeveloped?
Response. The primary environmental related barriers to
redevelopment of these sites are the liability scheme in the current
laws, the lack of a streamlined process and procedures for site
assessment, investigation and remediation and the RCRA Corrective
Action process which is slow, overly prescriptive and expensive. We
have already discussed two of the major issues which need to be
addressed and provided for: (a) risk-based, land-use based cleanup
standards, and (b) relief from environmental liability. Just as
important from a FINALITY point of view is to be sure that other
regulatory obligations are considered to be met as a result of
completing the voluntary cleanup. Thus, a voluntary cleanup should
satisfy the requirements, if any, under the RCRA Corrective Action
program.
Question 4. Our staff has been told that there are some relatively
large, virtually abandoned industrial sites out there that companies
like yours would be perfectly willing to clean up, but without some
assurances that they aren't going to get caught up in the Superfund
liability net, they do not want to clean up because the potential
liability might far outweigh any gain of developing these properties?
Response. That is correct. Especially with steel and other large
manufacturing operations, there are often portions of such sites which
are surplus or underutilized which are Brownfields sites sometimes
forgotten about when it comes to Federal Brownfields legislative
proposals. We know of one large manufacturer who will not sell any
previously used property until the owner can be assured that liability
relief is attainable. Once again, we emphasize that liability relief
under RCRA in addition to the Superfund statute (CERCLA) is important.
Question 5. Is it reasonable to expect an industrial site which is
zoned industrial and will stay industrial to have the same cleanup
standards as a residential area?
Response. No. Generally speaking, sites which have been industrial
for a long period of time could not reasonably be expected to achieve
residential cleanup standards. We do not view that as a problem for
reasonable future use considerations since such sites are zoned
industrial and intended to be used as industrial sites. If subsequent
purchasers choose to seek a higher use, they should bear the cost of
subsequent cleanup to the higher standard and process the site through
a voluntary cleanup program again.
Question 6. Can I take it from your testimony that we should allow
the States to clean up the broadest range of facilities under State
voluntary cleanup and Brownfield statutes? How do you answer the
concern that is likely to be raised by some that this will result in
``crummy cleanups?''
Response. Yes, eligibility under voluntary cleanup proposals should
be as broad as possible. For example, in Pennsylvania, no sites are
excluded. With respect to the ``crummy cleanups'' suggestion, we
believe that such suggestions or assertions are simply not true. Our
experience with voluntary cleanup programs has shown them to be quite
stringent when it comes to site characterization and remediation. They
have defined cleanup levels and streamlined procedures to get those
cleanups. Frequently local State environmental agency personnel
actively follow the progress of the site evaluation and remediation via
frequent on-site visits. As a result, these programs are frequently
more stringent than many Federal cleanup situations, but they are more
targeted and faster. Voluntary cleanup programs regulate some
contamination that might not otherwise be regulated under any other
program.
______
Prepared Statement of William K. Wray, Senior Vice President, Credit
Policy and Reporting, Citizens Financial Group, Providence, RI
Mr. Chairman and members of the subcommittee: Thank you for the
opportunity to address this important subject. My name is Bill Wray,
and I am a Senior Vice President of Citizens Financial Group. Citizens
is a $15 billion commercial bank holding company headquartered in
Providence, RI. We have over 230 branches throughout Connecticut, Rhode
Island, Massachusetts, and New Hampshire.
Please realize that I am not attempting to represent an
``official'' position on behalf of the banking industry or any of its
trade associations. In my role as manager of Credit Administration for
Citizens, I have seen first hand how environmental risk affects banking
at the community level. This testimony is a reflection of my personal
experience in that role.
From my review, both bills under review are similar in their
approach to the brownfields issue; although S. 8 also addresses a
variety of other needed reforms. Since my charter was to address the
brownfields subject, however, I will confine my comments to that: Let
me start by saying that we have a great deal of interest in seeing
``brownfields'' initiatives work.
As a secured creditor, we cannot succeed unless our borrowers
succeed. This means they must be able to quantify and respond to
environmental risk issues without incurring inordinate expense or
disproportionate liability.
We, in turn, have direct exposure to environmental liability
arising from our role as a secured creditor as well as an owner of
facilities.
Finally, as members of the community, we live and work alongside
our customers. We pass by abandoned industrial sites that have been
locked out of consideration for productive re-use because of the
chilling effects of unpredictable environmental liability. All of us
want to see these sites brought back to useful life, with the economic
and aesthetic benefits that will result.
We believe that these bills represent a substantive effort to
address many of the issues at hand, and it is an effort we welcome. We
know that this process can work--here is a real-life example:
About 18 months ago, Citizens made a presentation at a seminar
which had been sponsored by the Rhode Island Department of
Environmental Management. Our message was that brownfields projects
were a good business opportunity. We encouraged potential borrowers in
the audience to bring their deals to us for review. As a result of that
presentation, the owners of a company called Display World, Inc.,
contacted us about financing the purchase of the 13-acre Carol Cable
facility in Warren, RI, which had been idled for some time due to
various contamination problems. We were part of a team involving the
site owners, Display World, and State regulators. Today the facility is
again in operation and over 100 jobs have returned to Warren as a
result, with growth expected to continue.
So you can see that we believe in this process and we are
encouraged to see the attention it is receiving from this committee.
Let me address two specific provisions of S. 8:
First, I understand and appreciate the reasoning behind the
``windfall lien'' provisions in section 105; however, it is unclear
what precedence the proposed lien in favor of the United States would
have. If the intent is to have the lien be junior to all encumbrances
of record at the time the lien arises, this should be explicitly
provided in the bill. If the intent is otherwise, this creates a
difficulty for lenders because of the uncertainty associated with the
amount involved. As a practical matter it can be difficult to quantify
the increment to market value attributable to a response action, so
this provision as currently drafted could insert an unknown quantity of
unknown precedence into the credit underwriting equation. I recommend,
then, that the bill explicitly provide that the windfall lien is junior
to prior encumbrances of record. In any event, I ask that the intent of
this provision be made clear to avoid this being decided on a case-by-
case basis by the courts.
My second comment relates to section 106, which provides a ``safe
harbor'' for purchasers of real estate in certain circumstances. One of
those circumstances applies when the purchaser has made ``all
appropriate inquiries'' into the existence of environmental
contamination prior to purchase. We support the bill's direction to the
Administrator to provide clear standards for these inquiries. We would
ask in addition that the Administrator recognize that banking
regulators have also issued guidelines on appropriate inquiries for
environmental contamination, and that we are examined as to our
compliance with these guidelines. Our hope is that these two sets of
directives could be reviewed and synchronized so that lenders do not
receive direction from the Federal Government which is in conflict or
inconsistent on this issue.
If I may, let me close with a more general comment, again based on
my front-line experience:
All parties to this subject--legislators, regulators, community
groups, and private sector businesses--seem to agree that our goal is
to foster responsible reaction to existing environmental problems, and
to provide safeguards against future danger from contamination.
But the statutory and regulatory apparatus that has been created to
foster the attainment of our common goal can be bewildering. It is
especially difficult for ``grass-roots'' businesses--the small-scale
entrepreneur, or the community bank--to afford the legal and technical
analysis necessary to untangle the Gordian knot of environmental rules,
and to understand the myriad of potential liabilities that may arise
from them.
As a result, those grass-roots businesses must either take on these
liabilities blindly (which we must all agree is an undesirable
outcome); or, more commonly, forgo opportunities for desirable
redevelopment. Thus, many smaller sites will remain undeveloped and
unremediated, which otherwise could have been revitalized by the
energies of private-sector initiative. Again, I think that we must all
agree that this latter outcome is undesirable, even tragic. It is made
no less tragic by the fact that none but the best intentions have
underlain the legislative and regulatory initiatives in this area.
The bills we are discussing today are a laudable effort to further
our common goal as I have outlined it above, but they are limited to a
narrow section of the regulatory spectrum as it affects environmental
matters. I would hope that this constructive approach will be continued
and will be eventually broadened to cover a greater range of
environmental legislation.
Please realize that we are not asking for our risks to be
eliminated, or for our costs to be subsidized, or for protection
against the consequences of negligence on our part. We ask only that
our environmental risks be quantifiable, predictable, and reasonable.
This will allow us to evaluate environmental risk in context with
other business risks, rather than having it loom as a ``black hole'' of
liability that trumps all other issues when making a credit decision.
This will help our borrowers to succeed, which is the only way that we
as lenders can succeed.
Again, I applaud the tone and direction of these bills, and that of
other recent legislation in this area, and I appreciate the opportunity
to provide this testimony. Thank you for your attention.
______
Responses of William K. Wray to Additional Questions of Senator Smith
Question 1. How do the banking industry's guidelines for due
diligence inquiries differ from those set forth in S. 8 & S. 18?
Response. I have attached a copy of the FDIC's ``Guidelines for an
Environmental Risk Program'', dated 2/25/93. As far as I know, these
are the most current version of these guidelines, although I will do
further research in this area.
The guidelines are not specific in the area of due diligence other
than to require it when appropriate. Our recommendation would be that
the banking guidelines explicitly conform to or defer to any applicable
laws that bear on this issue, so that a single standard (e.g. ASTM) can
be established and followed by banks without fear of challenge. In
addition, the guidelines have not been revised to reflect recent
changes in secured creditor exemptions, as can be seen from the
sections on ``involvement in the borrower's operations'' and
``foreclosure''.
Question 2. Do you know whether other industries have produced
other types of guidelines?
Response. Within the banking industry, other regulators (e.g. OCC,
OTS) may have established guidelines similar to those of the FDIC (I
have not been able to research this yet but I will forward my
findings).
I do not know whether this has been done in other regulated
industries.
Question 3. Has the lender liability law worked for you?
Response. I am attaching an article from the Bankers's Roundtable
about the recent changes which discusses the pros and cons of the new
law.
Because of the exceptional reduction in troubled loans over the
last several years, this has become much less of an issue for banks
than it was during the peak years of loan workouts and foreclosures, so
we have little practical experience with the provisions of the new law
to date.
However, the changes do provide a needed clarity and certainty to
the process, and make it easier for banks to understand their potential
liabilities in cases where they have environmental contamination issues
affecting their collateral.
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Prepared Statement of J. Peter Scherer, Vice Chairman, Environmental
Policy Advisory Committee, National Realty Committee
introduction
Thank you Chairman Smith. My name is Peter Scherer and I am a
Senior Vice President with The Taubman Company. The Taubman Company is
a national real estate company specializing in the development and
management of regional shopping centers. I am speaking today on behalf
of the National Realty Committee. NRC represents the Nation's leading
real estate owners, builders, managers, lenders and advisors. As such,
the organization has focused extensively on the national policy issues
associated with the redevelopment of our Nation's brownfields
properties.
Several weeks ago I was here in Washington and had the pleasure of
meeting with Jeff Merrifield of the Chairman's staff and Scott
Slesinger from Senator Lautenberg's office. I left that meeting
encouraged and energized, and I am delighted to have the opportunity to
share with you today some thoughts on what the real estate industry
believes it will take to get our country's nonproductive, modestly
contaminated and, therefore, hopelessly idle, real estate back into the
Nation's economic mainstream.
Two very positive legislative proposals, S. 8 and S. 18, include
provisions which reflect a sophisticated understanding of how current
law can best be modified to encourage brownfields cleanup and re-
development. NRC is on record as supporting both these bills.
We are also on record as supporting the efforts made by EPA to
foster brownfields development, and while these efforts are
encouraging, much more can and should be done to achieve the economic
and environmental objectives of S. 8 and S. 18. As the sponsors of
these bills are aware and as EPA Administrator Browner has stated,
changes to the Superfund law are required to achieve significant long-
term impact in this area. Let me specifically mention some initiatives
taken by EPA that the real estate industry applauds. But, at the risk
of striking a more sober note, let me also explain why these well
intentioned initiatives will ultimately fall short of their intended
objectives.
During the past few years, the Administration has become more
creative in its efforts to locate potential buyers for properties
stigmatized by the specter of CERCLA liability. The Administration
seems to have been motivated, in part at least, by the need to market
its own growing inventory of brownfields, including those situated on
former military installations. Certainly, in the course of pursuing
that objective the government has gotten a taste of its own medicine.
And, like the private sector, it seems to have learned that absent some
new approaches to finding willing buyers for these kinds of sites, the
properties will remain idle and, therefore, unproductive for the
foreseeable future.
First of all, EPA has removed thousands of sites from the so-called
CERCLIS list and has issued guidance encouraging regulators to consider
realistic future land uses in determining the extent of cleanup
activities. If it's known that a particular property will become a
parking structure, then why force cleanup to the level required for a
day-care facility? This is a common sense approach which the business
community finds workable.
Second, EPA has issued guidance identifying the circumstances under
which it will enter into prospective purchaser agreements. These
agreements are intended to assure potential investors in contaminated
sites that the properties in which they are investing will not become
targets of a future enforcement action. Developers are willing to take
risks, but there are simply too many other opportunities available for
any successful developer to bet his balance sheet on a project with
unlimited environmental downside. Not to mention the difficulty in
obtaining financing!
Third, on the issue of migrating groundwater contamination, where
land otherwise suitable for development is situated above an aquifer
contaminated by external sources, EPA has issued guidance seeking to
reassure owners or purchasers that they will not be targeted for
cleanup actions. Again, an example of action on the Agency's part which
reflects the fact that new money will not go into a project where the
only certainty is uncertainty.
In each of these situations, EPA has set a course which my industry
believes is absolutely in sync with the national policy objective of
returning our country's brownfields to productive use. So why isn't
this enough? Let me tell you--specifically--in 50 words or less. At the
end of each guidance document is a disclaimer which reads as follows:
This policy does not constitute rulemaking by the Agency and is
not intended and cannot be relied on to create a right or
benefit, substantive or procedural, enforceable at law or in
equity, by any person. Furthermore the Agency may take action
at variance with this Policy.
As well intentioned as these policies may be, they fall short of
providing the kind of certainty necessary to attract private-sector
capital.
I come here today not asking for the creation of economic or
financial incentives to encourage brownfields development. Rather, in
this case, our industry is looking only for the removal of existing
disincentives. We are looking for you to level out the playing field
and, in doing so, create the kind of certainty that permits prudent
investment and intelligent risk assumption. So what is it that we think
is needed?
The recently adopted lender protections and the proposed protection
for the new purchasers are certainly positive steps, but many
brownfields will remain undeveloped unless Congress provides protection
from Federal and State enforcement actions for property owners who
successfully participate in voluntary cleanup programs.
While recently enacted legislation protects financial institutions
from undue liability under Superfund, lenders still have concerns about
the value of the underlying collateral and the creditworthiness of
their borrowers. If a property that undergoes a voluntary cleanup may
be the subject of further Federal and State enforcement action, a
lender may consider the property inadequate for the loan. Moreover, if
the borrower may be compelled to pay for the further cleanup after
having completed a voluntary cleanup, even if the borrower is prepared
to assume the risk, a lender may consider the borrower uncreditworthy
and deny the loan. Thus, without some degree of predictability and
certainty--and without the promise of finality after a successful
voluntary cleanup--many well situated and otherwise prime brownfields
will remain idle for want of willing and able developers and lenders.
A number of these concerns would be addressed in a meaningful way
by a provision contained in both S. 8 and S. 18. This provision creates
a new and eminently workable exemption for those who acquire property
in need of some environmental remediation. The so-called ``prospective
purchaser'' provision would look beyond the existing ``innocent
landowner'' defense to address the troublesome (and not uncommon)
scenario in which contamination is discovered during the course of pre-
acquisition due diligence.
To utilize this kind of defense, purchasers would be required to
undertake prescribed levels of environmental due diligence, including a
site assessment in accordance with a standardized protocol. They would
also need to take circumscribed steps to limit exposure to known
contamination; and cooperate with those responsible for the cleanup. In
return for meeting CERCLA's due diligence requirements, prospective
purchasers could move forward and acquire property without fear of
incurring the associated CERCLA liability.
Here's what happens in the real world: environmental due diligence
becomes a feeding frenzy for everyone involved, particularly lawyers
and consultants. And given the laws today, it's difficult to blame
them. When do you stop peeling the onion? When will that consultant or
lawyer provide, in writing, that all information is known or that there
is no risk associated with proceeding? More samples, more tests, more
lab results are recommended. More time, more money, more risk and
uncertainty until ultimately the project dies. You hardly ever have all
the information.
Successful business decisions are made when all necessary
information is known. My point is that the various amendments to CERCLA
I have referred today would (to a significant degree) replace the
uncertainty that kills many deals with the type of stability,
predictability and certainty needed for brownfields initiatives to
succeed. Notably, EPA has endorsed this reform and there is no doubt
its enactment would make a difference in the real world.
At the end of the day, our industry is asking for nothing more than
the kind of certainty and predictability that other Federal agencies
are authorized to provide. We ask you to empower EPA to provide the
equivalent of the ``no further action'' letters which can be obtained
from the Securities and Exchange Commission, or the private letter
rulings that the Internal Revenue Service regularly provides to parties
concerned with the consequences of contemplated activities. Certainty
inspires confidence, and with it, action.
These legislative proposals--S. 8 and S. 18--form a good base upon
which to work in this session of Congress to develop bipartisan reform
of CERCLA. In addition, EPA's continued focus on administrative reforms
should be encouraged. Agency reforms combined with legislative reform
hold the promise of reducing the stigma associated with these
properties by limiting the specter of Federal liability.
The National Realty Committee remains committed to the enactment of
policies that encourage reinvestment. Working with the other local and
national stakeholders represented here today, our members will continue
to help identify, analyze and advocate policies that will achieve the
goals I believe we all share.
Thank you.
______
Responses of J. Peter Scherer, National Realty Committee, to Additional
Questions from Senator Smith
Question 1. Do you believe that risk-based cleanups tied to
reasonable anticipated future use would improve the brownfields
situation?
Response. Yes. Over the last few years, the States have
successfully pioneered the use of risk assessments. In addition, they
have relied on realistic land use projections in the course of
developing effective strategies for addressing brownfield properties.
This approach allows for intelligent, environmentally protective and
cost-effective remediation, and promotes the return of brownfield
properties to beneficial use. In NRC's view, Congress should support
this approach.
By using risk assessments as a basis for cleanup decisions, States
and private parties are able to determine what problems a brownfield
may actually raise for public health and the environment and to focus
cleanup measures on those specific issues. This is much more effective
and efficient than the practice employed in earlier years of designing
a broad range one-size-fits-all, cleanup program to address all
hypothetical problems that might occur at a site. Also, private parties
and States are able to use risk assessments to more accurately
communicate to the public (i) whether or not a given site presents a
threat and (ii) if and when a threat has been adequately addressed.
Cleanups should also be tied to anticipated land use. It is clear
that a site that is returned to light industrial use need not be
cleaned up to the same standards as a site that is used as a day care
center. Moreover, the future use itself may sometimes provide a remedy.
One remedy that is commonly used to clean up soil contamination is to
construct an impervious cap to prevent the infiltration of rainwater
into contaminated soil. If the new use of the property includes the
construction of a building slab, a parking lot, a roadway, or some
other impervious surface, that surface may also function as a cap. In
this way, the development itself sometimes accomplishes a significant
element of the cleanup.
Question 2. Some of our witnesses might suggest that the States do
not have the sophistication to clean up more than just the simplest
brownfield sites. Do you agree with this characterization? Can States
be trusted to do the right thing?
Response. In our members' experience, States are fully capable of
administering voluntary cleanup programs as well as many other
environmental programs, and to oversee the cleanup of a range of
contaminated sites. For example, members of National Realty Committee
from the State of New Jersey have found that State to be among the
innovators (as opposed to the followers) in addressing hazardous
material releases. I am advised that New Jersey adopted its own Spill
Act some time before the Federal Government adopted CERCLA. Other
States, including my home State of Michigan, have lead the way in
developing effective voluntary cleanup programs to return brownfields
to productive use.
States also appear to have demonstrated their competence in this
area in the course of overseeing the cleanup of Federal facilities
within their borders. Although Defense Department and Energy Department
facilities represent some of the most complex environmental problems in
the country, States do not appear to have shied away from taking a
responsible role in directing their cleanup. Indeed, States have not
hesitated to offer vigilant and constructive criticism of the Federal
Government when the cleanup measures proposed by the Federal
authorities for their own properties have been inadequate. And States
have even been willing to pursue legal action against the Federal
Government over the cleanup of Federal facilities when they believed
that the health and welfare of their citizens was not being protected.
Surely, if States can aggressively supervise the cleanup of highly
contaminated Federal facilities, they can oversee the cleanup of less
contaminated brownfield properties.
Question 3. Some of our witnesses have alluded to the fact that if
we really want to fix brownfields, we need to conduct comprehensive
Superfund reform, not merely tinker around the edges. Do you agree with
this principle?
Response. We do not believe that Congress would be ``tinker[ing]
around the edges'' of Superfund reform if it were to provide protection
for prospective and innocent purchasers, protection for property owners
who perform voluntary cleanups, and protection for the innocent owners
of property that is contaminated by migrating pollutants from
contiguous sites. Any one of these reforms would provide a significant
enhancement to the process of redeveloping brownfields. All of them
together would maximize the capability of States, local governments,
and private parties to clean up and redevelop brownfields.
As described in greater detail in my response to questions nos. 4
and 5 below, we view the issue of brownfield reform as a continuum--
each separate reform measure is important, no one measure predominates.
Even without reform, some brownfields are being developed because
individual investors are willing to take risks. With each of these
reforms, more brownfields will be developed. If prospective purchaser
protection is adopted, more businesses would be willing to invest in
brownfield redevelopment because they would know that they would not
become liable for contamination that predated their purchase. This
reform by itself would substantially increase the number of brownfield
sites redeveloped. But, as discussed in more detail in response to
questions nos. 4 and 5 below, if Congress did not also adopt protection
for the current owners of brownfield sites who engaged in voluntary
cleanups, many potentially useful brownfield sites would remain
undeveloped.
Finally, protection of contiguous property owners is also an
important brownfields reform. The owners of property that is affected
by migrating contamination need to know that they will not be held
liable under CERCLA, and they need to be able to communicate the same
assurance to lenders, purchasers, and tenants. Also, the Superfund law
should not act to place a stigma on their properties. Otherwise, the
number of undevelopable brownfields will grow as contamination moves
off the original site.
Question 4. You mentioned in your testimony that ``without some
degree of predictability and certainty--and without the promise of
finality after a successful voluntary cleanup--many well situated and
otherwise prime brownfields will remain idle for want of willing and
able developers and lenders.'' You didn't mean to limit this to
prospective purchasers did you? In order to free these properties for
redevelopment, isn't it also appropriate to provide this finality to
current owners and operators?
Response. As indicated in my response to question no. 3 above, we
view brownfield reform measures as a continuum. Each of these measures
is separately important in increasing the redevelopment of brownfields.
Prospective purchaser protection is highly significant, and most
directly affects the National Realty Committee membership. With this
reform by itself, we would expect to see a substantial increase in the
number of brownfield sites developed.
However, prospective purchaser protection is not the only reform
measure that would enhance the redevelopment of brownfields. Clearly,
it is important to provide liability protection for the current owners
who either clean up property themselves under a State voluntary cleanup
program or who sell to prospective purchasers that put the property in
such a program. As described in my response to question no. 5 below,
right now there are significant economic incentives for these current
owners not to sell these properties or develop the properties
themselves. Providing protection to current owners who either
voluntarily clean up their sites under State programs or who sell to
purchasers who do so would lead to the redevelopment of even more
brownfield sites than just providing prospective purchaser protection.
Similarly, more brownfield properties would be developed if Congress
also protected the owners of contiguous properties from CERCLA
liability and removed the stigma associated with their properties by
including them as part of a designated CERCLA site.
Question 5. If we don't provide finality to the owners and
operators of large redevelopable sites, won't the most prime real
estate parcels be simply fenced off and kept off the market? In order
to fix this, don't we have to make some major changes in the Superfund
liability system?
Response. Providing protection to prospective purchasers would
clearly result in more brownfields being redeveloped, even if no other
reform is adopted. But to more fully promote brownfields development,
providing ``finality'' to owners and operators is clearly crucial.
Currently, the owners of many brownfield sites have several
economic incentives not to bring their properties back into productive
use. As long as their properties have not been designated for
investigation and cleanup by EPA or the States, many of these property
owners consider themselves better off simply putting a fence around
their property and waiting. As long as the owner leaves a property
inactive, it is not required to test or otherwise investigate the
contamination level at the property. Waiting defers any environmental
cleanup costs, and allows time for the level of contamination to be
reduced through natural processes such as dilution, attenuation, and
evaporation. Also, because the property is not productive, property
taxes may be reduced.
Also, there are numerous economic disincentives to developing
brownfield properties. An effort to develop the property will often
accelerate environmental remediation costs. To obtain permits from
governmental authorities and financing from banks, property owners
often have to test their properties and report contamination. Once that
happens, they may become subject to obligations to perform further
investigations and undertake cleanups. In many instances, the
development of a property is indefinitely delayed as a property goes
through the elaborate process of governmental investigation and
remediation. Thus, the environmental costs become due early, but the
economic benefit of development is deferred.
State voluntary cleanup programs were created to provide a
mechanism to bring brownfield programs back into productive use. They
serve the governmental interest in seeing that contaminated property is
cleaned up and the property owner's interest in providing certainty as
to the cost of cleanup and the amount of time cleanup will take. Once a
property owner is able to quantify the cost and time for cleanup, the
owner can make an informed decision about whether to go ahead with the
project. However, if an owner who completes a cleanup under a voluntary
cleanup program is not protected from further Federal or State
enforcement action, the cost and time to complete the project cannot be
accurately estimated. Without the ability to reliably estimate the cost
and time factors many property owners will continue to choose to wait.
The recently adopted lender protections and the proposed protection
for new purchasers are helpful in removing disincentives, but many
brownfields will remain undeveloped unless Congress provides protection
from Federal and State enforcement actions for property owners who
successfully participate in voluntary cleanup programs.
As indicated in my testimony, NRC welcomed recent legislation
limiting lenders' exposure to liability under Superfund. Nonetheless,
lenders involved in brownfields transactions will still have concerns
about the value of the collateral and the credit-worthiness of their
borrowers. If a property that undergoes a voluntary cleanup may be the
subject of further Federal and State enforcement action, a lender may
consider the property inadequate collateral for the loan. Moreover, if
the borrower may be compelled to pay for further cleanup after having
completed a voluntary cleanup, a lender may consider the borrower
uncreditworthy and deny the loan. Thus, without the promise of finality
after a successful voluntary cleanup, lenders may be reluctant to lend
to borrowers who wish to develop brownfield sites.
Prospective purchaser relief would only affect a potential buyer of
a brownfield, and not the current owner who is, of course, the
potential seller. If the current owner is not also protected by
finality at the end of a voluntary cleanup, that owner will often have
an economic incentive not to sell. An unprotected owner who sells
property to a prospective purchaser might become the principal target
of a governmental enforcement action. Therefore, selling the property
to a new developer might only accelerate the current owner's
environmental obligations. If the owner (or prospective seller) cannot
achieve a measure of certainty that once a voluntary cleanup is
completed it would not be subject to additional environmental
liabilities, that owner will often choose not to sell. As the number of
willing sellers decreases so will the number of prospective purchasers,
and, therefore, the number of successful brownfields projects.
Question 6. Are you aware of sites that your company, or other
members of the National Realty would have been willing to redevelop,
but did not do so out of a fear that you would be caught in the
Superfund liability net? Will the provision of some characterization
grants be sufficient to address this problem.
Response. Numerous transactions involving contaminated or
potentially contaminated properties have been avoided by our company
and members of NRC because of the risk of CERCLA liability.
Characterization grants are, of course, helpful insofar as they add
to existing information about the likely extent of contamination (and,
therefore likely cleanup costs) at prime development sites. This
information will often prove helpful to those communities trying to
attract outside investment in the redevelopment of these sites. As I
indicated in my testimony, business decisions can only be made
responsibly when all relevant information is available. If potential
sellers are able to provide prospective purchasers with sophisticated
(albeit preliminary) due diligence information this may prompt
otherwise anxious buyers to look more seriously at the property in
question. Needless to say, preliminary characterization efforts
(however funded) are not, by themselves, sufficient to overcome buyer
or lender anxiety about cleanup liability where the due diligence turns
up evidence of significant contamination.
______
Response of the National Realty Committee to an Additional Question
from Senator Chafee
Question. Page 4 of your testimony seems to imply even if we codify
prospective purchaser protections and contiguous property owner
protection; and even though we recently passed lender liability
protection last year; that more must be done on liability to make many
of these transactions work. Can you expand on this point.
Response. I am pleased to elaborate. As I described in my responses
to Senator Smith's questions, protection of current owners who either
cleanup properties under State voluntary cleanup programs or who sell
properties to purchasers who do so is important in promoting
brownfields redevelopment. Current owners should be encouraged in
redeveloping their sites. Also, current owners should be reassured that
if they sell their sites to new purchasers, they will not be increasing
or accelerating their own liability.
As described in my response to Senator Smith's question no. 5, the
current system creates disincentives for current owners either to
develop their properties themselves or to sell to buyers who will do
so. These disincentives need to be removed and replaced by incentives
to develop brownfields. Such incentives can be provided by protecting a
site owner who cleans up a site in accordance with a State voluntary
cleanup program from further Federal and State liability, and by
providing similar protection to a seller who sells the property to a
buyer who performs the voluntary cleanup.
Once again, we view these reforms as a continuum. Prospective
purchaser protection, in and of itself, will jump start the
redevelopment of brownfields. But providing finality to current owners,
as well as to prospective purchasers, would be even more effective in
promoting brownfields redevelopment. Protecting contiguous property
owners is also vital to restoring brownfields. Each of these reforms is
significant in its own right; together, they provide the best framework
for encouraging the redevelopment of brownfields.
(all)