<DOC>
[106th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:61041.wais]
PROBLEMS WITH EPA'S BROWNFIELDS CLEANUP REVOLVING LOAN FUND PROGRAM
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
OVERSIGHT AND INVESTIGATIONS
of the
COMMITTEE ON COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SIXTH CONGRESS
FIRST SESSION
__________
NOVEMBER 4, 1999
__________
Serial No. 106-86
__________
Printed for the use of the Committee on Commerce
U.S. GOVERNMENT PRINTING OFFICE
61-041 CC WASHINGTON : 2000
COMMITTEE ON COMMERCE
TOM BLILEY, Virginia, Chairman
W.J. ``BILLY'' TAUZIN, Louisiana JOHN D. DINGELL, Michigan
MICHAEL G. OXLEY, Ohio HENRY A. WAXMAN, California
MICHAEL BILIRAKIS, Florida EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas RALPH M. HALL, Texas
FRED UPTON, Michigan RICK BOUCHER, Virginia
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
PAUL E. GILLMOR, Ohio FRANK PALLONE, Jr., New Jersey
Vice Chairman SHERROD BROWN, Ohio
JAMES C. GREENWOOD, Pennsylvania BART GORDON, Tennessee
CHRISTOPHER COX, California PETER DEUTSCH, Florida
NATHAN DEAL, Georgia BOBBY L. RUSH, Illinois
STEVE LARGENT, Oklahoma ANNA G. ESHOO, California
RICHARD BURR, North Carolina RON KLINK, Pennsylvania
BRIAN P. BILBRAY, California BART STUPAK, Michigan
ED WHITFIELD, Kentucky ELIOT L. ENGEL, New York
GREG GANSKE, Iowa THOMAS C. SAWYER, Ohio
CHARLIE NORWOOD, Georgia ALBERT R. WYNN, Maryland
TOM A. COBURN, Oklahoma GENE GREEN, Texas
RICK LAZIO, New York KAREN McCARTHY, Missouri
BARBARA CUBIN, Wyoming TED STRICKLAND, Ohio
JAMES E. ROGAN, California DIANA DeGETTE, Colorado
JOHN SHIMKUS, Illinois THOMAS M. BARRETT, Wisconsin
HEATHER WILSON, New Mexico BILL LUTHER, Minnesota
JOHN B. SHADEGG, Arizona LOIS CAPPS, California
CHARLES W. ``CHIP'' PICKERING,
Mississippi
VITO FOSSELLA, New York
ROY BLUNT, Missouri
ED BRYANT, Tennessee
ROBERT L. EHRLICH, Jr., Maryland
James E. Derderian, Chief of Staff
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Oversight and Investigations
FRED UPTON, Michigan, Chairman
JOE BARTON, Texas RON KLINK, Pennsylvania
CHRISTOPHER COX, California HENRY A. WAXMAN, California
RICHARD BURR, North Carolina BART STUPAK, Michigan
Vice Chairman GENE GREEN, Texas
BRIAN P. BILBRAY, California KAREN McCARTHY, Missouri
ED WHITFIELD, Kentucky TED STRICKLAND, Ohio
GREG GANSKE, Iowa DIANA DeGETTE, Colorado
ROY BLUNT, Missouri JOHN D. DINGELL, Michigan,
ED BRYANT, Tennessee (Ex Officio)
TOM BLILEY, Virginia,
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Ahern, Thomas P., Senior Project Manager for Brownfields and
Industrial Development, Boston Redevelopment Authority..... 98
Fields, Hon. Timothy, Jr., Assistant Administrator, Office of
Solid Waste and Emergency Response, U.S. Environmental
Protection Agency; accompanied by Linda L. Garczynski,
Director, Outreach and Special Projects Staff.............. 6
Foss, Darsi, Wisconsin Department of Natural Resources....... 111
Malloy, Hon. Dannel P., Mayor, City of Stamford.............. 104
Material submitted for the record by:
Fields, Hon. Timothy, Jr., Assistant Administrator, Office of
Solid Waste and Emergency Response, U.S. Environmental
Protection Agency, undated letter to Hon. Fred Upton,
enclosing response for the record.......................... 127
(iii)
PROBLEMS WITH EPA'S BROWNFIELDS CLEANUP REVOLVING LOAN FUND PROGRAM
----------
THURSDAY, NOVEMBER 4, 1999
House of Representatives,
Committee on Commerce,
Subcommittee on Oversight and Investigations,
Washington, DC.
The subcommittee met, pursuant to notice, at 9:40 a.m., in
room 2123, Rayburn House Office Building, Hon. Fred Upton
(chairman) presiding.
Members present: Representatives Upton, Burr, Blunt,
Bryant, Bliley (ex officio), McCarthy, and DeGette.
Staff present: Mark Washko, majority counsel; Eric Link,
majority counsel; Amy Davidge, legislative clerk; and Edith
Holleman, minority counsel.
Mr. Upton. Good morning, everybody. Thank you for coming.
Today, the subcommittee will examine the EPA's Brownfields
Cleanup Revolving Loan Fund Pilot Program. EPA created this
program in 1997, selecting 21 local governments and three
States to receive grants totaling more than $8 million for the
purpose of setting up revolving loan funds that would help
finance brownfield cleanups.
Despite the fact that not a single one of these original
pilots has been able to successfully make a loan under this
program, EPA expanded the program fourfold in 1999--granting
more than $30 million to an additional 45 pilots. To date, only
one loan, for $250,000, has been made to facilitate cleanup
under this program, and that loan was made just last month by a
1999 pilot city, Stamford, Connecticut, whose Mayor will
testify today.
In simple terms, this program, which now accounts for more
than a third of all EPA brownfields spending, is not achieving
the desired results as quickly as anyone, including EPA, has
imagined it would. While it is too soon to judge the
performance of the 1999 pilots, it is certainly not too soon to
begin an examination of the problems that so obviously are
plaguing the original 24 pilots, so that we can make sure that
the 45 new pilots have a greater chance of success. This
hearing is all the more important in light of EPA's plans to
double the number of pilots again next year, with an additional
$35 million in grants.
Today's hearing hopefully will shed some light on why this
program so far has not had any measurable effect on brownfields
cleanup and redevelopment, and how the program can be improved
to speed progress.
Clearly, EPA did not do an adequate job of ensuring that
its initial pilots had both the capability and commitment to
run such a program, something that EPA now admits. Further, and
as now EPA concedes, the Agency was more interested in getting
the original grants out the door than making sure that it had a
sound program in place to begin with. The result of the
Agency's failures in these areas was that, and I quote from
EPA's own testimony, many communities were uncertain as to the
best way to proceed, end quote. Based on the record so far and
what we will hear today, that could certainly be viewed as an
understatement.
This program also clearly suffers from the fact that it is
tied procedurally, substantively, and financially, to the
Superfund program. I am pleased to note that this committee is
moving to address the statutory concerns in its recently passed
Superfund reform legislation, which de-links brownfields from
the Superfund trust fund and its many onerous and unnecessary
restrictions and requirements. But the administration opposes
the bill; thus, we cannot count on these changes to improve the
program in the short term.
That is why this is an oversight hearing, to examine how
this program operates under current law and ways that it can be
improved within the existing framework. Let's all remember that
EPA created the program on its own, without statutory
authorization or any mandate from the Congress. EPA always has
had the power to modify its Superfund regulations for
brownfields programs such as this one, if it had chosen to do
so. As EPA staff now admit, EPA must take its own steps to
streamline the rules and regulations it has chosen to impose on
these grantees to ensure that cleanups are not delayed by
unnecessary requirements. It is troubling that EPA did not do
so prior to showering grantees with tens of millions of
dollars, virtually all of which remains idle due, in part, to
this failure.
Let me just say that I think that all of the members here
want to improve the program so that these moneys result in real
achievements for the American people. I look forward to the
testimony today, and I yield to the chairman of the full
committee, Mr. Bliley.
[The prepard statement of Hon. Fred Upton follows:]
Prepared Statement of Hon. Fred Upton, Chairman, Subcommittee on
Oversight and Investigations
Today the subcommittee will examine the Environmental Protection
Agency's Brownfields Cleanup Revolving Loan Fund Pilot Program. EPA
created this program in 1997 in order to facilitate the cleanup of some
of the estimated 450,000 brownfield sites across the country. The
Agency selected 21 cities or counties and three States to receive
grants totaling more than $8 million for the purpose of setting up
revolving loan funds that would help finance cleanups and lead to the
redevelopment of brownfields.
Despite the fact that not a single one of these original pilots has
been able to successfully make a loan under this program, EPA expanded
the program four-fold in 1999--granting more than $30 million to an
additional 45 pilots. To date, only one loan, for $250,000, has been
made to facilitate cleanup under this program, and that loan was made
just last month by a 1999 pilot city, Stamford, whose Mayor will
testify today.
In simple terms, this program--which now accounts for more than a
third of all EPA brownfields spending--is not achieving the desired
results as quickly as anyone, including EPA, had imagined it would.
While it is too soon to judge the performance of the 1999 pilots, most
of whom have just received the EPA grant money, it certainly is not too
soon to begin an examination of the problems that so obviously are
plaguing the original 24 pilots, so that we can make sure that the 45
new pilots have a greater chance of success. This hearing is all the
more important in light of EPA's plans to double the number of pilots
again next year, with an additional $35 million in grants.
Today's hearing hopefully will shed some light on why this program
so far has not had any measurable effect on brownfields cleanup and
redevelopment, and how the program can be improved to speed progress in
these areas.
Based on the Committee's review of this matter so far, there appear
to be several key reasons that explain why the 1997 pilots have not
made any loans to date. The first reason is that EPA did not ensure
that the pilots it selected had the necessary legal, technical, and
administrative capability to establish and administer a brownfields
cleanup revolving loan program. In other words, EPA did not rigorously
apply its own criteria and standards--something EPA has admitted in
meetings with Committee staff. For example, a common source of trouble
among pilots has been acquiring the necessary legal authority from
either State or other municipal entities to run such a program, while
another has been identifying and funding a manager to oversee the loan
fund. But both of these are threshold criteria under EPA's own
selection guidelines, which means that if they were not satisfied, no
grant should have been awarded in the first place.
Second, and as EPA apparently concedes in its own testimony today,
the Agency was more interested in getting the original grants out the
door than making sure it had a sound program in place to begin with.
Thus, EPA admits that the administrative manual for this program--which
details the program requirements and other important specifics about
loans and cleanups--was not finalized until eight months AFTER the
initial pilots were awarded. And it was not until October 1998--a full
year after EPA awarded the grants--that EPA provided the pilots with
model terms and conditions regarding further specific requirements of
the program. The result of the Agency's failures in these areas was
that, and I quote from EPA's own testimony, ``many communities were
uncertain as to the best way to proceed.'' Based on the record so far
and what we'll hear today, that certainly is an understatement.
Indeed, several 1997 pilots have told us that EPA had to encourage
them to apply because the pilots themselves did not understand the
program requirements or thought that they could not properly run such a
program. EPA simply told them to apply, and that all the specifics
would be worked out later. Notably, the EPA Inspector General issued a
report in March 1998 that made a similar finding, but in a letter to
Chairman Bliley earlier this year, EPA denied having to encourage any
pilot to apply for the grant.
Other 1997 pilots have told us that the program is simply not a
priority for them, that they have other funding sources available for
brownfields cleanup from both the State and Federal levels and are
utilizing those programs. In such cases, I see little reason for EPA to
permit the continued tie-up of the Agency's scarce brownfields funds,
and the Agency should take action to de-obligate these monies.
It's been more than two years since these initial pilots were
awarded, and while some have made substantial progress toward making
their first loan, many others still are struggling just to get off the
ground. EPA promises further workshops and conferences to assist these
pilots better understand the program requirements and what needs to be
done. But it seems to me that a well-thought-out program, from the
beginning, would have provided these communities with sufficient
information up front, and would have screened out those without the
capability or commitment to run such a program.
Finally, the program clearly suffers from the fact that it is tied,
procedurally, substantively, and financially, to the Superfund program.
Most of the pilots--including Boston, who is here today--have blamed
this fact for the delays in establishing an approved program, and
finding appropriate sites and willing borrowers. While some of the
substantive restrictions imposed on these grants--such as the bar on
using Superfund money for the cleanup of petroleum-contaminated sites,
for example--originate in statute, many of the onerous administrative
and procedural requirements imposed on grantees and borrowers under
this program are the result of EPA's administrative decision to apply
its comprehensive National Contingency Plan regulatory regime virtually
lock, stock and barrel to this very different program area.
I am pleased to note that Congress, and this Committee in
particular, is moving to address the statutory restrictions that impede
the redevelopment of brownfields. In particular, the bill recently
passed by the full Committee--H.R. 2580--would de-link brownfields from
Superfund funding, and its accompanying restrictions and requirements,
thereby eliminating the requirement that parties comply with the
National Contingency Plan to qualify for a grant or loan. But the
Administration opposes this legislation, and we thus cannot count on
these legislative changes to improve the program in the short-term.
That is why this is an oversight hearing--to examine how this
program operates under current law, and ways it can be improved within
the existing statutory and regulatory framework. We should all remember
that EPA created this program, on its own, without statutory
authorization and without any mandate from Congress. EPA certainly has
always had the power to modify its Superfund regulations for
brownfields programs such as this one, if it had chosen to do so. As
EPA staff recently acknowledged, the Agency must take its own steps to
streamline the rules and regulations it has chosen to impose on
grantees under this program, in order to ensure that cleanups do not
continue to be delayed by inapplicable and unnecessary requirements. It
is troubling that EPA did not do so prior to showering grantees with
tens of millions of dollars, virtually of which remains idle due in
part to this failure.
Today, the Subcommittee will hear from EPA and representatives of
two pilot cities--Boston, which received grants in both 1997 and 1999,
and Stamford, which received only a 1999 grant. We also will hear from
one State's brownfields manager, a woman with experience in both State
and Federal brownfields programs. I look forward to their testimony.
Unfortunately, the Subcommittee will not hear from any other 1997
pilot since several of them refused our invitations--particularly those
that have done virtually nothing since being selected as a pilot more
than two years ago. I must say that, while I can understand their
reluctance to come before this Subcommittee and be held accountable for
their lack of progress, I find it astonishing that recipients of
taxpayer monies would refuse to appear before a Congressional committee
conducting oversight of their grants.
Finally, let me just say that I think all of the Members, on both
sides of the aisle, want to improve this program so that these tens of
millions of dollars result in real achievements for the American
people.
Chairman Bliley. Thank you, Mr. Chairman.
Earlier this year, I released a report from the General
Accounting Office on this administration's overall brownfields
effort. This report found that, while the administration was
good at handing out hundreds of millions of dollars for various
programs designed to spur the cleanup and reuse of brownfields,
the government was not good at tracking whether this money was
being put to productive use. Even by the EPA's own numbers, the
rate of progress has been painfully slow, and the Agency
recently was forced to admit that even those meager numbers
were probably inflated.
One of the programs surveyed in the GAO report was the
program we are here to discuss today, the Brownfields Cleanup
Revolving Loan Fund. This program, which began in 1997, is one
of roughly 10 brownfields-related programs that EPA has created
on its own initiative over the past several years. It is now
the largest single brownfields program run by the Agency, and
the largest one that provides funding for actual cleanup of
contaminated brownfields sites. Unfortunately, it appears that
this program is suffering from the same flaws that continue to
impact the administration's overall brownfields effort.
The goal of this program is simple and worthy of praise.
The Agency provides funds to local governments, which in turn
use that money to make loans to private or public entities
interested in cleaning up brownfields in their communities.
The problem with this program, however, is that virtually
none of the roughly $40 million obligated by EPA so far has
made its way to the people in these communities who are
actually working to clean up and redevelop these sites.
There will always be some startup problems in new programs,
and many of the 1999 pilots just received funding several
months ago. But none of that explains why not a single 1997
pilot has been able to successfully make a loan in more than
2\1/2\ years, and I am concerned that EPA expanded this program
so dramatically and so quickly, before any of its original
pilots had successfully made it off the ground.
I will be interested to hear why the American people should
be more confident that this new, larger round of pilots, and
the proposed doubling of pilots for next year, will meet with
greater success than their predecessors. I also want to hear
how EPA plans to make sure that this growing pot of money is
getting into the hands of people who will use it and actually
get the job done.
The cleanup and redevelopment of brownfields can provide
many economic, social and environmental benefits to
communities. However, when the Federal money given to support
these efforts sits idle, tied up for years without any
productive use, more brownfields sites also remain idle, and
other opportunities for progress are lost.
I want to thank you, Mr. Chairman, for holding this hearing
so that we can explore the reasons for the lack of progress in
this important program. Hopefully, we can make the program work
better for the thousands of American communities marred by
brownfields sites.
I want to thank all of the witnesses for their appearance
here today, and I look forward to their testimony.
Mr. Upton. Thank you, Mr. Chairman.
Mr. Bryant.
Mr. Bryant. Thank you, Mr. Chairman. I, too, would commend
you for holding this hearing.
I first want to associate myself with the remarks, both
your remarks as well as our full committee chairman's remarks,
and ask unanimous consent that any statement that I might want
to submit be allowed, any written statement.
Mr. Upton. Without objection.
I would note that all members will have the right to submit
their full statement as part of the record.
Mr. Bryant. Let me just quickly wind up, because I think we
are all very interested in hearing from these witnesses and
having some of these questions that have been raised in the
opening statements answered. I, too, am very interested in
hearing the answers to these questions. But I think we have,
again from the perspective of the EPA, the ability to respond
to these questions and, also, those witnesses on the second
panel who are out in the field, so to speak. I really look
forward to hearing their testimony.
I yield back the balance of my time.
Mr. Upton. Thank you, Mr. Bryant.
Mr. Fields, welcome again to the subcommittee, as they say
in Ann Arbor, the Big House. As you know, as you have testified
before, we have a long tradition of taking testimony under
oath. Do you have any problem with that?
Mr. Fields. No, sir.
Mr. Upton. Also, under both committee rules and House
rules, you are entitled to counsel if you so desire. Do you
wish to have counsel?
Mr. Fields. No, sir.
[Witness sworn.]
Mr. Upton. You are now under oath; and, as you know the
rules, your entire testimony will be made a part of the record,
and if you would so kindly limit your remarks to about 5
minutes with this little light that is down there and summarize
it, that would be terrific.
The time is now yours. Thank you.
TESTIMONY OF HON. TIMOTHY FIELDS, JR., ASSISTANT ADMINISTRATOR,
OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, U.S.
ENVIRONMENTAL PROTECTION AGENCY; ACCOMPANIED BY LINDA L.
GARCZYNSKI, DIRECTOR, OUTREACH AND SPECIAL PROJECTS STAFF
Mr. Fields. Thank you, Mr. Chairman, and members of the
subcommittee. I am pleased to present this testimony today
about a very important part of EPA's brownfields agenda, the
Brownfields Cleanup Revolving Loan Fund Pilot Program.
Virtually every community in the country, no matter what
the size, is grappling with the problem of how to clean up
brownfields. And, the Clinton administration has stepped
forward. The brownfields assessment pilots have been very
successful. More than 307 communities have leveraged $1.6
billion in cleanup and redevelopment dollars, and more than
5,000 jobs. We want to emulate that success in the Brownfields
Cleanup Revolving Loan Fund.
The U.S. Conference of Mayors, in a report last year
pointed out that the lack of support for cleanup is the No. 1
impediment to redevelopment. It has been estimated that
redeveloping brownfields could bring as much as $1 billion to
nearly $3 billion in tax revenues annually as well as create
jobs and preserve green space, forests and farmland. In that
vein, just more than 2 years ago, EPA began the Brownfields
Cleanup Revolving Loan Fund Program as yet another way to help
cities and communities to meet brownfields needs across
America. The Revolving Loan Fund program builds upon the
success of the assessment pilots by being a second stage
brownfields pilot program.
Mr. Chairman, 45 pilots were awarded in 1999, so now we
have 68 of these pilot programs in place. The first round
delays in issuing loans have been for several reasons: changes
in personnel, the newness of the program, the fact that
assessments takes 2 or 3 years, and getting personnel in place
to implement this program. All new programs need startup time,
and the Revolving Loan Fund program is not alone in that
regard.
We believe, though, that as people have gained experience
through the assessment process, they have learned more about
Superfund, and more about our national contingency plan
regulations. The market conditions are now ripe. We believe we
are now at a point where we can begin to look at getting
borrowers, developers, committed Mayors like Mayor Malloy and
others together to make deals happen.
EPA believes we have turned a corner with this very
important program. We are optimistic that more communities will
be making loans in the very near future. In fact, as we will
hear from Mayor Malloy this morning, he has been successful in
making the first loan. We hope that this experience will be
instructive for many other pilot projects and will serve to
demystify the process of making loans under this Revolving Loan
Fund.
The Stamford pilot is also instructive because it shows how
one pilot alone with one loan is going to leverage more than
$50 million in private sector investment, more than the entire
amount of dollars we gave out for revolving loans for fiscal
year 1999.
We will be doing more to encourage that type of commitment
in other pilots. We have already heard from several of the
original pilots, as well as one of the new pilots, that they
are discussing and thinking about loans. We believe that there
will be an increase in loans given out in this program during
fiscal year 2000. To the extent we can, the Agency is making
every effort to assist the pilot cities, and to demonstrate
flexibility within the constraints of the existing program.
The Clinton administration strongly supports the passage of
brownfields legislation. We believe that legislation like H.R.
1750, for example, which we have said we support, and which
would help to make this program work in a more flexible and a
faster way. In particular, one provision that we have supported
in H.R. 1750 would modify the requirements under the National
Contingency Plan regulations under which we conduct our
Superfund and brownfields programs. It would change the
requirements of the National Contingency Plan for brownfields
to the extent these requirements are relevant and appropriate
to the program. We think this type of provision has
considerable merit. This provision would remove yet another
barrier to the redevelopment of distressed properties in cities
across America.
We at EPA are confident that the Brownfields Cleanup
Revolving Loan Fund will be moving forward to make loans for
brownfields cleanup, like the loan in Stamford, in many other
pilot communities in the very near future. We are encouraged by
the focus that Congress has given to this issue and to this
program, and we remain committed to working with you to remove
impediments, to make this program more efficient faster. We
want to get cleanups done and, therefore, redevelopment
occurring at many more of these brownfields properties. New
brownfields legislation can help, and we want to work with
Congress in that regard.
I thank you for your time. I will be happy to answer any
questions on the brownfields program you might have.
Mr. Upton. That was perfect timing. We appreciate--I am
sure you rehearsed that all night long.
I will say, too, I very much appreciate you sending up the
testimony in advance and complying with the committee rules. A
number of witnesses over the years have not done so, and it
makes it a lot easier for us to prepare.
[The prepared statement of Hon. Timothy Fields, Jr.
follows:]
Prepared Statement of Hon. Timothy Fields, Jr., Assistant
Administrator, Office of Solid Waste and Emergency Response, U.S.
Environmental Protection Agency
introduction
Good morning, Mr. Chairman, and Members of the Subcommittee. I am
pleased to have this opportunity to appear before you today to discuss
the Brownfields Economic Redevelopment Initiative and, in particular,
the Brownfields Cleanup Revolving Loan Fund Pilot program.
brownfields economic redevelopment initiative
Today, through the Brownfields Initiative, EPA continues to promote
the assessment, cleanup, and 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 brownfield sites exist in the United States.
Virtually every community in the country, no matter what the size, is
grappling with the challenge of problems associated with recycling
older, mostly industrial and commercial properties. The presence of
these properties fuels urban sprawl, luring investment and job
development farther from city centers and inner suburbs.
The Administration believes that environmental protection and
economic progress are inextricably linked, and what is good for the
environment is also good for the economy. Cleanup of sites is only half
of the equation. It is best pursued in tandem with redevelopment, to
maximize community benefit both publicly and privately. The Brownfields
Initiative exemplifies an effort to bring all parties to the table. The
Initiative provides a framework which encourages stakeholders to seek
common ground on a range of challenges--environmental, public health,
economic, legal and financial, and it is a worthy challenge. The
Agency's multifaceted brownfields initiative represents a significant
step forward by the Administration and, according to Renew America,
represents ``a new paradigm in locally-based environmental protection
that forges public-private partnerships, promotes innovation, and
relies on market incentives and private sector actions.''
To stimulate redevelopment and attract private-sector interest in
the redevelopment and reuse of brownfields, there continues to be a
need for government initiatives like the Brownfields program. According
to the U.S. Conference of Mayors (USCM), our cities, towns and urban
centers are sitting on hundreds of thousands of acres of brownfields.
The Conference of Mayors surveyed 200 cities and determined that ``the
lack of cleanup funds'' for brownfields is ``the most frequently
identified impediment'' to the cleanup of brownfields. The report,
Recycling America's Land, (Volume II, April 1999) estimates that
developing brownfields could bring in almost $1 billion to nearly $3
billion in tax revenues annually, create nearly 700,000 new jobs, and
take some of the development pressure off of our farms and forest
lands.
EPA's brownfields assessment pilots are making a difference in
shifting the balance of current incentives away from greenfields and to
brownfields investment. Increasingly, private investment opportunities
are being attracted to sites assessed by the pilot program. As the
Agency has learned, to attract and leverage greater private investment
to a broader spectrum of sites so that they, too, can become more
marketable, support from the government beyond providing site
assessments to fund support for cleanup is needed. In a recent study
funded by EPA, the Council for Urban and Economic Development (CUED)
reviewed 107 brownfields projects across the country. The projects
examined involved both public and private sectors. The report concluded
that for every $1 the federal, state, and local governments put into
revitalizing brownfields, $2.48 in private investment is attracted.
Stamford, Connecticut, while not a part of the CUED study, illustrates
the report's point. Stamford recently made its first loan in the amount
of $250,000 from the Brownfields Cleanup Revolving Loan Fund to a
private developer. This loan will leverage a $30 million investment.
As part of the Brownfields Initiative, the Brownfields Cleanup
Revolving Loan Fund pilot program is one aspect of a nationwide effort
to grapple with the challenges associated with cleaning up abandoned or
underutilized, and contaminated properties. It is an effort taking
place in both rural and urban communities.
Let me briefly describe what we have accomplished in the almost
five years since the initial Brownfields Action Agenda was announced on
January 25, 1995.
Brownfields Assessment Demonstration Pilots
The Brownfields Assessment Pilots have served as an essential and
important tool in a comprehensive strategy to promote the sustainable
reuse of brownfields. Pilot activities are directed toward
environmental response activities preliminary to cleanup, such as site
assessment, identification, characterization, and site response or
cleanup planning and design. To date, EPA has selected 307 pilots in
states, communities and tribes, funded at up to $200,000. These two-
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. In charting
their own course toward revitalization, we are seeing many positive
results. The assessment pilot effort, combined with our targeted state
and EPA property assessment efforts, has resulted in the assessment of
1,174 brownfields properties. Our assessment pilots have reported the
related cleanup of 134 properties, and determined that more than 575
properties do not need additional cleanup. This has led to known
redevelopment of 51 properties. The assessment pilots have provided
information that they have leveraged more than $1.6 billion in
redevelopment funds and have been the catalyst for support for more
than 5,000 jobs as a result of the EPA program.
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, and
leverage financing, while actively demonstrating the economic and
environmental benefits of reclaiming brownfield sites. The Brownfield
pilots enable recipients to take a unified approach to site assessment,
environmental cleanup, and redevelopment, an approach that stimulates
economic activity and the creation of jobs.
Stakeholders tell the Agency that many Brownfields redevelopment
activities could not have occurred in the absence of EPA efforts. For
example:
<bullet> In Chicopee, Massachusetts, an older manufacturing community,
EPA funded an assessment on a 3.75 acre site which had become a
haven for criminal activity. Combined with funds from the HUD
Community Development Block Grant, the city demolished the old
building on the property. A subsidiary of CNBC has begun
construction of a state-of-the-art digital broadcasting station
that is expected to leverage 100 new jobs.
<bullet> In Birmingham, Alabama, efforts are underway to transform a
run-down industrial area into a 150-acre industrial park, with
75 acres reserved for heavy industry, a 50-acre distribution
center, a business park, and a full-scale retail center. Work
on the distribution center is already underway, and by the
project's completion, more than 2 million square feet of
industrial and commercial facilities could be in place.
Planners believe that ultimately the area will see the creation
of more than 2,000 jobs.
<bullet> In Somerville, Massachusetts, the construction of a $14
million assisted living and neighborhood health center by the
Visiting Nurses Association is being built as a result of the
brownfields assessment grant and a combination of other federal
funding support.
The Brownfields Assessment Demonstration Pilots have helped to lay
a foundation for revitalizing communities. We speak often about
involving key stakeholders, but for many communities, the first step is
often from within, calling for interdepartmental coordination and
collaboration among such entities as the city's redevelopment and
environmental, public health, legal, business and finance departments
and offices. This infrastructure and institutional modeling is critical
to a sustainable community-based brownfields solution.
Brownfields Cleanup Revolving Loan Fund Pilots
As EPA worked to implement a comprehensive brownfields strategy, it
became clear that we needed to build upon our experience with the
assessment pilots through a ``second stage'' brownfields pilot award.
The Brownfields Cleanup Revolving Loan Fund (BCRLF) pilots reflect this
staged approach. To EPA, the previous award of an assessment pilot
serves not only as one of EPA's possible pilot eligibility factors, but
it also is a useful indicator of both the experience and the commitment
a community has made to address its brownfields problems.
Through capitalization grants from EPA, the BCRLF pilots enable
communities and coalitions of communities to fund the safe cleanup and
sustainable reuse of brownfields through revolving loan funds. EPA's
goal for these pilots is to develop revolving loan fund models in
communities that can be used to promote coordinated public and private
partnerships for the cleanup and reuse of brownfields.
Brownfields are not alike; instead they fall on a continuum. At one
end are properties for which the market is strong enough to overcome
environmental or other liabilities. Those sites are the proverbial
``low hanging fruit,'' ripe for picking by developers and among the
most easily supported by investors and lenders. Those sites that will
not draw private redevelopment quite so easily are the very properties
that we believe will benefit most from the BCRLF. These marginally
viable properties are often characterized by weaker marketability,
unknown or potential environmental contamination, and, often by
location in distressed neighborhoods where property values are low and
other social problems persist. For the transactions involving these
properties to succeed, some measure of government intervention usually
is required.
In fiscal year 1997, EPA used $10 million of its brownfields budget
for the award of BCRLF pilots at up to $350,000 each. Twenty-three
pilots are now in various stages of development. It is true that none
of these original BCRLF pilots has made a loan to date. I am confident
that will soon change. Although EPA awards the BCRLF through
cooperative agreements, the day-to-day operations and activities
relating to loan applications are the responsibility of the BCRLF
recipient. Many of the pilots have been delayed not only because of the
newness of the program itself, but also because of such things as
personnel turnover. Prior to making a loan, communities must develop
the infrastructure necessary to ensure that loans will be in compliance
with the Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA); the National Contingency Plan (NCP); and cross-
cutting Federal authorities. The development of such an infrastructure
requires a real commitment from pilot communities, as well as
considerable sophistication and understanding. The importance of such a
commitment cannot be overlooked in this equation. For some pilots,
infrastructure development, requiring the establishment of both site
manager and fund manager roles, has proven to be a difficult task. For
others, the more difficult task is finding an eligible borrower.
EPA is working to overcome BCRLF pilot program start-up delays.
Indeed, the establishment of these initial pilots in October 1997
preceded the publication of the BCRLF Administrative Manual (May 1998)
by eight months. The Manual details the appropriate infrastructure to
sustain, account, and report on loans and cleanup. It is intended to
assist not only the pilots but also EPA regions in developing
cooperative agreements and overseeing BCRLF pilots, as well as
providing program participants with a description of the program
requirements. In addition, the Agency also published in October 1998,
model terms and conditions to further aid the understanding of the
pilots regarding specific requirements of the BCRLF pilot program.
Without the descriptions and explanations these materials could provide
to the pilots, many communities were uncertain as to the best way to
proceed. To further assist pilots, the Agency has planned a separate
BCRLF Pilot-to-Pilot session to precede the Brownfields '99 Conference,
December 6-8, in Dallas, Texas. This pilot session will be held on
December 6th and is designed to provide opportunities for all of the
BCRLF pilots to learn from one another, interact and network, and raise
issues for discussion.
Finally, the Agency has been working on providing supplemental
support for the BCRLF program in EPA Regions through the establishment
of an Interagency Agreement with the U.S. Army Corps of Engineers.
Through this agreement, the EPA will provide budget support for use of
Corps personnel in each EPA regional office for a twelve-month period.
Developing a new program is not done in an instant. It is an
evolutionary process, as we have discovered. Better understanding of
the program has emerged from this process. We have educated ourselves
as to the needs of our pilots, and the pilots have educated us as well
as themselves as to the requirements of the program. We have stretched
our capacity to the fullest to assure communication and education
continue. As each piece of the puzzle has fallen into place, we find
progress being made. A synergy has emerged from this effort that has
already been evidenced by the quality, and quantity of applications
received for the award of the 1999 BCRLF pilots. Representing more than
65 communities as single pilot communities or as coalitions of states
and communities, forty-five (45) new BCRLF pilots were announced just
this past May. In ten of the new pilots, states like Massachusetts,
Illinois, Arizona, and California will assist cities in carrying out a
variety of activities under the BCRLF. We were extremely pleased to see
in the applications an increased level of understanding of program
parameters and needs, as well as a sophistication in infrastructure
planning. In addition, as a result of the dialogue with the first round
of pilots, the Agency has determined that recipients of the most recent
pilots would benefit from an increase in capitalization grants to
$500,000 per community.
The period following the announcement of this latest round of BCRLF
pilots has been a busy one for both EPA regions and the new pilots.
Over the last several months, pilots developed formal cooperative
agreement application packages. The information in the BCRLF pilot
proposals formed the basis for the cooperative agreement application.
However, the cooperative agreement application requires, in most cases,
more detailed information, including standard budget forms and a formal
workplan. The 45 BCRLF pilot cooperative agreement negotiations were
just completed on September 30, 1999. Since that time, each pilot is
proceeding with the establishment of its BCRLF loan program, and
procedures for day-to-day management of loans. The specific
responsibilities of the cooperative agreement recipient include both
environmental and financial management components of operating a loan
fund. Two key roles must be in place prior to loans being made, the
BCRLF site manager and the fund manager. In addition, loan documents
and properties must be identified and processed.
Since my appearance before the Commerce Subcommittee on Finance and
Hazardous Materials in August, I am extremely pleased to be able to
report that the first BCRLF loan has been made. The loan was made on
the 1st of October in Stamford, Connecticut, and will be used to help
clean up the Stamford Harbor waterfront property. The $250,000 loan was
awarded by the City of Stamford to the Southfield Associates, LLC,
through its managing member, Clearview Investment Management, Inc.
Clearview Investment, which specializes in the management of waterfront
redevelopment, will use these funds to restore the harbor area to a
major economic and recreational resource. Restoration of the harbor
will also provide a much-needed economic boost to Stamford's two
lowest-income neighborhoods, Waterside and South End, which are located
within a State Enterprise Zone. Waterside's population is 71% minority
residents, with 25% of families living below the poverty level, while
South End's residents are 80% minority residents, with a 16% poverty
rate.
The 15.1 acre project area, which includes both the 2.88 acre
Northeast Utilities Site and the 12.31 acre Hoffman Fuel Site, will be
developed into a residential shore front community, called Southfield
Harbor. The development will include approximately 320 residential
units and a marina facility with approximately 68 boat slips. The
development will also include an extensive boardwalk system, which will
include seating areas, educational signs, and a public fishing pier.
The BCRLF loan to Stamford is expected to leverage $30 million
dollars of private development funds. The loan also is expected to
generate between 100 and 200 construction jobs and 12 full-time,
permanent administrative jobs.
Mayor Malloy from the City of Stamford is here today to share his
perspective on the BCRLF, but let me tell you why I think Stamford was
successful in making the first BCRLF loan. The Stamford pilot
represents a very personal commitment by the Mayor to revitalize his
city. He visited me in Washington several months ago and said at that
time that it was his intention to make that first loan. I have no doubt
that Stamford benefitted from the program development, education,
outreach, and communication EPA has undertaken. The guidance manuals
and materials are instructive and the efforts in EPA's regional offices
are commendable, but the Mayor's energy and commitment to the program
must not be overlooked or underestimated.
Building on the Stamford pilot experience, several of the new
pilots have tentatively identified loan recipients, and we therefore
anticipate that loans will be forthcoming from these pilots in the near
future.
Within the next few weeks, the Agency will be publishing in the
Federal Register a notice that applications are being accepted for a
third round of BCRLF pilots. Applications will be due in February and
grant recipients will be announced next Spring. EPA will again be
awarding pilots to both individual entities and to coalitions. Because
coalitions of varying numbers and funding needs are anticipated, it is
somewhat difficult to predict the number of pilots that will be
awarded. Awards will again be up to $500,000 per eligible entity.
Other Brownfields Initiative Activities
Job Training Pilots--EPA initiated a third brownfields
demonstration pilot program in 1998 to help local citizens take
advantage of new jobs created by assessment and cleanup of brownfields.
The Job Training and Development Demonstration Pilot program provides
two-year grants of up to $200,000 to applicants located within or near
one of the existing assessment pilot communities. Colleges,
universities, non-profit training centers, and community job training
organizations, as well as states, Tribes and communities, were eligible
to apply. Today, 21 job training pilots are in place. The first 11 were
awarded last year, and the most recent 10 pilot awards were announced
in May.
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 National Association
of Development Organizations (NADO), the National Governors Association
(NGA), the National Association of Local Government Environmental
Professionals (NALGEP), the Conference on Urban Economic Development
(CUED) and the U.S. Chamber of Commerce.
EPA continues to work closely with States and Indian Tribes as key
partners in the cleanup and redevelopment of contaminated properties.
The Administration supports the continued growth of the State and
Tribal regulated and voluntary programs which have greatly expanded the
number of sites cleaned up to protect human health and the environment.
To date, 44 States have established voluntary cleanup programs.
Recognizing the important role that State environmental agencies have
in encouraging economic redevelopment of brownfields, EPA has provided
$28.6 million in funding to States and Tribes to support the
development of these programs since FY 1997. EPA will provide $10
million, in FY 2000, 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 is also pleased with
the progress it has made in signing MOAs with States. Twelve States
have now signed MOAs with EPA regarding sites to be cleaned up under
voluntary cleanup programs. The most recent state to sign an MOA with
EPA is Oklahoma in Region 6. One additional MOA is now close to
signature.
Brownfields National Partnership--Early in the development of EPA's
Brownfields Initiative, the Agency realized that it needed to find ways
to further identify, strengthen, and improve commitments to
brownfields, while continuing efforts toward a comprehensive,
community-based approach to clean up and redevelop contaminated
property. We recognized the important contribution of many of our
Federal partners to brownfields through their participation in the
Brownfields National Partnership. Through the partnership, Federal
departments and agencies can offer special technical, financial, and
other assistance that can be of great benefit to brownfields
communities. More than 20 national partners are committing resources
and assistance to brownfields. The Federal Home Loan Bank Board, for
example, is exploring ways to bring more private investment to
redeveloping brownfields properties and, along with the U.S. Conference
of Mayors, has selected 50 cities to participate in a project to
research opportunities, impediments, and successes by both cities and
lenders to address brownfields.
Showcase Communities--The Brownfields Showcase Communities project
is an outgrowth of those early partnership efforts and now forms an
important component of the Brownfields Initiative. It represents a
multi-faceted partnership among federal agencies to demonstrate the
benefits of coordinated and collaborative activity on brownfields in 16
Brownfields Showcase Communities. For example, through the Showcase
Community in Glen Cove, New York, a revitalization plan to convert
brownfields and Superfund sites into tourist destinations has been
completed. State, Federal, and local agencies have played a crucial
role in securing $18 million in grants from various agencies. In
addition, a prospective purchaser agreement was signed between EPA and
the Glen Cove Industrial Development Corporation for the Li Tungsten
and Captain's Cove Superfund sites. Proceeds from selling the property
will go toward repaying response costs.
Redevelopment Barriers--Addressing Liability Concerns--The Agency
also committed to addressing the fear of liability and other barriers
impeding the cleanup and redevelopment of brownfields. Over the past
several years, 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.
The Agency also is pleased to see the inclusion of innocent and
contiguous landowner defenses and protection for prospective purchasers
as common elements of most brownfields legislative proposals. We
believe these liability relief provisions--innocent landowner,
contiguous landowner and prospective purchaser--will provide a great
deal of certainty to homeowners, buyers, and developers involved in the
purchase and sale, and cleanup and redevelopment of brownfields
properties.
Lessons Learned
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. 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. Brownfields cleanup under the BCRLF
pilot grant program, in particular, is a tool to help leverage
opportunity for the revitalization of communities.
EPA recognizes that more must be done to provide flexibility to the
brownfields cleanup and redevelopment process. As we hear from many of
our pilots, and as I am sure Mayor Malloy would echo, compliance with
the National Contingency Plan regulations when using Superfund Trust
Fund monies while substantially less complex than those provisions
applying to the Superfund remedial program, are nonetheless daunting to
many.
Brownfield 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 for bona fide prospective purchasers, innocent
landowners of contaminated property and contiguous property owners,
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.
legislation
The Clinton Administration strongly supports the passage of
brownfields legislation and views it as an important step toward
restoring hope, opportunities, and jobs to local communities and
neighborhoods that are being held back by the presence of abandoned
industrial sites. Through three rounds of administrative reforms, the
Superfund program has made significant progress in cleaning up
hazardous waste sites, protecting public health and the environment, as
well as in the assessment and cleanup of brownfields sites.
In the past, the Administration supported brownfields legislation
within the framework for comprehensive legislative reforms to the
Superfund program. In light of the progress being made, the ever
increasing need to meet and assist communities in their revitalization,
as well as the apparent bi-partisan, and broad-based public support for
brownfields reform, the Administration now supports a targeted
legislative approach which addresses brownfields cleanup and
redevelopment, and specific liability provisions necessary to support
brownfields. In addition, EPA strongly supports legislation that would
reinstate the expired Superfund taxes. These funds are needed for the
ongoing Superfund cleanup effort and the brownfields program.
Among the legislative approaches introduced in this session, H.R.
1750, the ``Community Revitalization and Brownfields Cleanup Act of
1999,'' was introduced by Representative Towns and is co-sponsored by
170 Members of Congress. As Administrator Browner stated in her letter
of May 10, 1999, ``this brownfield redevelopment legislation is an
important step toward restoring hope, opportunities and jobs to local
communities and neighborhoods that are being held back by the presence
of abandoned industrial sites.'' Accordingly, Administrator Browner
expressed the Clinton Administration's strong support for the approach
taken in HR 1750, which would promote brownfields cleanup and
redevelopment by providing grants and loans, and providing appropriate
liability protection to prospective purchasers, contiguous property
owners and innocent landowners; and preserves critical safeguards for
communities by ensuring EPA has authority to protect human health and
the environment.
A June 4, 1999, letter from President Clinton to the Honorable
Deedee Corradini and the Nation's Mayors echoes the sentiments
expressed in Administrator Browner's letter. Administrator Browner's
letter notes the broad consensus of Congressional and public support
enjoyed by brownfields reform proposals, and requests the opportunity
to continue to work with Representative Towns on appropriate resource
levels and other refinements to the bill. President Clinton's letter
likewise remarks that HR 1750 offers the best prospect for broad public
support, because it focuses on those proposals that reflect substantial
consensus in Congress and among communities; and confirms his
commitment to continue to work with Representatives Boehlert and
Borski, as well as Senator Baucus, to achieve truly bipartisan
brownfields legislation.
EPA has identified several provisions of H.R. 1750 that are of
particular merit. The bill provides $500,000 for brownfields assessment
grants and $500,000--up to $1 million--for grants for the
capitalization of revolving loan funds. Unique to the legislation,
however, are provisions which (1) ensure grant funding support for
local governments, consortiums, and regional councils; (2) provide
opportunities to support projects and programs with particular
significant environmental and economic benefits; (3) make awards to
states as determined necessary to facilitate receipt of funds by one or
more local governments and (4) simplify the grant application and
review procedures conducted by the Agency.
H.R. 1750 also limits the procedural requirements of the NCP in
brownfields ``to the extent that those requirements are relevant and
appropriate to the program . . .'' To that end, the Agency would seek
to continue to apply those provisions of the NCP that address the need
for fully protective cleanups in compliance with State and Federal
regulations. Refinements to the brownfields program, such as the
provision in H.R. 1750, reflect and express the insights and experience
we have gained from our brownfields pilots. H.R. 1750 removes yet
another barrier to the redevelopment of properties in distressed urban
areas and small towns. Other pending legislation does not address the
procedural issues of Superfund and the NCP as they relate to
brownfields. We look forward to working with the Congress to address
specific provisions and resources issues in this bill.
conclusion
The federal attention directed at brownfields assessment, cleanup,
and redevelopment over the past five years reflects a growing
realization that yesterday's eyesore is today's opportunity. For EPA
and the federal government, it is an opportunity to demonstrate that
environmental protection can also promote economic development. For
communities and cities, it is the opportunity to return a wasted asset
to productivity, job creation and revenue generation. For local
contractors and developers, brownfields redevelopment is an opportunity
to expand their work, to clean up sites and to build new facilities.
For local lenders, it is the opportunity to meet their community
reinvestment needs, often at much less of a credit risk than they might
otherwise anticipate. But the biggest opportunity is for the people who
live with brownfields sites every day. Eyesores are cleaned up.
Frequently, potential threats to health are substantially reduced, if
not altogether eliminated The value of property increases. And often
brownfields redevelopment provides the neighborhood's residents with a
new sense of hope.
We are confident that the BCRLF program has caught hold and will be
moving forward to make more loans for brownfields cleanups in the
future.
Finally, EPA is encouraged by the focus that Congress has given to
the problems engendered by brownfields. We remain committed to working
with you to generate a broad consensus among a variety of local, state
and private sector stakeholders on brownfields legislation that can be
enacted and signed into law.
Thank you. I would be happy to answer any questions on the
brownfields program you may have.
Mr. Upton. What we will do at this point is, as you know,
is have 5 minutes of questions for each of us here on the
subcommittee. I guess my time comes first.
As I look at the number of pilots that were initiated, I
think what, 24 pilots the first year, this was, in essence, a
3-year program--24 the first year, 45 the second, and you are
planning to almost double that again in the third year.
What has been most troubling to many of us is the fact
that, despite this program getting out and starting up, that
now, as we are just started into this third year, only one has
been funded, the Stamford, Connecticut, project. And we are
delighted to have the Mayor testify on the second panel. We are
also delighted, too, that you are able to stay for the second
panel to answer questions.
But I noted that, in listening to your testimony, you,
quote, ``would make every effort to reduce the impediments.''
you want to make this more flexible and to make sure that it
really works. It is probably not a terrific track record that
only one project has actually been funded as we now are
beginning the third year.
As I looked at the testimony from the gentleman from
Boston, who will be testifying on the second panel, and I quote
from his testimony on page 4, ``In fact, we have discussed the
program with developers of two specific sites recently. The
reality is such that if there are other opportunities, even if
it is private lending at twice the rate for financing the
cleanup without incurring CERCLA regulations, the developers,
more times than not, will take the more expensive route. It
just isn't worth the hassle.''
That seems to be the problem with actually getting these
funded. Would you not agree?
Mr. Fields. It is one of the issues. Complying with the
Superfund and National Contingency Plan regulations is one of
the impediments, that is correct.
Mr. Upton. But it is my reading of your authority that, in
fact, that these can be de-linked, that you have the right and
authority to write the regulations, not us, not Congress, and,
therefore, you have the power and ability to change the
regulations that were in place when this program was unveiled.
Here we are now in the third year, and only 1 percent of the
money has been obligated. The cities--we are going to hear from
two cities later on this morning, but as we talked to a number
of cities around the country that were unwilling to come and
testify today, it seems to be the problem that they all raise,
as they indicate, it is just not worth the hassle.
What concrete steps are you thinking about taking to try
and reduce some of these regulations that otherwise mar what I
think would be a pretty good idea, solving something on
brownfields that we see support on both sides of the aisle for?
Mr. Fields. We agree with you 100 percent. You have to keep
in mind, Mr. Chairman, that this program is only 2 years old.
The first 23 were awarded in September 1997, 2 years ago. For
the first 2 or 3 years of this program committee were focused
on assessment. It took 2 or 3 years on the average to get the
assessment job done. Now pilots are looking at cleanup. And, we
think there will be a greater focus in many more cities like
Stamford, Connecticut, on the cleanup process now that many of
these brownfields properties have been assessed.
There was also a chilling effect and a legal cloud
established during 1998, the second year of this program,
because Congress had appropriation language that said that they
didn't believe EPA had the legal authority to issue Revolving
Loan Fund grants. Some of the 23 cities were concerned about
whether or not Congress was going to continue to support this
program.
In spite of that, we have agreed to provide 20 new Corps of
Engineers personnel to our regions to assist these cities and
brownfields. We have expanded eligibility coalitions with the
States so that to help the States can help manage the revolving
loan funds and service as the site manager for the local
communities and cities in many of these pilot communities. We
are providing training for all of our regions on how revolving
loan funds can work better. We have heard from five or six
cities, for example, among the 23 original that they intend
very shortly to begin to issue loans under their Revolving Loan
Fund. It took time. When the Clean Water Act Revolving Loan
Fund was initiated in 1988, the first year of that program,
only three loans were issued.
It takes some time to get these programs going, and for
that momentum to begin. We believe that is going to occur. If
the loan program does not work, we will fix it. But, right now,
we believe that people are just beginning to focus on the
cleanup part of this. The first several years of the
brownfields initiative, which began almost 5 years ago, was
primarily focused on assessment. We believe pilots will be much
more focused on the cleanup now that the assessment process has
been completed.
Mr. Upton. Weren't these assessments, though, conducted
before the cities applied and were given the brownfields
status? Wasn't most of that work done before they were
selected?
Mr. Fields. No. The pilots who have the brownfields cleanup
revolving loan funds are typically cities or communities who
have an existing brownfields assessment grant. The first
several years of that effort were devoted to conducting the
assessments of contaminated properties or brownfields in those
cities. That job typically takes 2 or 3 years. Now that that
assessment job is completed, many of these communities,
including particularly, the first 23, now are beginning to
focus on cleanup. We are looking at ways we can work together
with the States to focus on cleanup and issuance of loans to
private entities who would be involved in cleanup in that
community.
The Revolving Loan Fund part of this program has only been
around for about 2 years, and only funded in fiscal year 1997,
and again in fiscal year 1999. It was not funded, as you know,
in fiscal year 1998.
Mr. Upton. I will come back to you. My red light is on.
Ms. McCarthy.
Ms. McCarthy. Thank you very much, Mr. Chairman; and Mr.
Fields, thank you for coming before us today on this very
important issue.
My district of Kansas City has designated a number of
sites, and we have applied once for help and not received a
positive response, in part due to the biState nature of the
Kansas City area and that difficulty, and we will try again.
But I appreciate your willingness and your remarks today to
consider changes to the law.
I wonder if you would reflect with me a little bit on the
versions that are before this committee, not today but,
hopefully, soon, House Resolution 2580 and House Resolution
1750, and give us some thoughts of how you would craft the
ideal bill as we proceed as a subcommittee to do this in the
future.
H.R. 1750, by the way, I am a cosponsor of, and it has a
grant program that is freestanding. It is not an amendment to
Superfund, unlike other bills on this subject, and I would like
your thoughts on that as well as H.R. 1750 does contain
language which de-links the NCP with the grant program. And, to
my knowledge, this is unique in all of the bills that we would
be considering, the only bill to do this. We share, of course,
some of the same program changes like money from general
revenues rather than the Superfund with other vehicles.
But would you, for this subcommittee's sake, give us some
thoughts on provisions that you would absolutely like to see,
and also clarify, as the chairman was pursuing with you, what
you can do on your own so that we don't get in the way of that
or in some ways undermine those activities which we know need
to happen?
Mr. Fields. On the first part of your question, yes, we
definitely support the types of provisions in H.R. 1750. The
administration has endorsed that bill, as you know, and it does
provide the type of flexibility and support for brownfields we
would want. It de-links the National Contingency Plan from
brownfields in terms of cleanup. It takes the dollars out of
general revenues, as you point out. H.R. 1750 has a provision
which allows the Agency to determine which requirements in the
National Contingency Plan are not relevant or not appropriate
for the brownfields program, we don't have to comply with them.
Those types of elements in H.R. 1750 would really help us
create a more flexible and better approach to deal with cleanup
under the Revolving Loan Fund program. And, that type of
language is not in H.R. 2580 or H.R. 1300, or any of the other
bills that are being discussed in the House right now.
H.R. 1750 is definitely the type of legislation that would
help us achieve what we all want to achieve for the Revolving
Loan Fund program.
In terms of things that we are doing to make this program
work better, we are trying to make sure that it operates under
the existing flexibility under the National Contingency Plan.
We are trying to make sure that we prepare a very short
engineering evaluation/cost analysis, and an action memo. We
are trying to minimize those types of requirements under
existing Superfund regulations so that they are palatable and
flexible for cities like Stamford and Boston and towns in
Wisconsin that you will hear about later on the next panel.
We are trying to make sure that we provide support,
resource support through the Corps of Engineers and through
State coalitions who are operating the Revolving Loan Fund on
behalf of communities within their States. We are trying to
provide training on flexible ways in which people can comply
with the Revolving Loan Fund provisions. Those are all steps
EPA has taken to make this process work better.
We believe that, just like any program that is new, there
are startup problems, and I am committed that we are going to
make that Revolving Loan Fund program just as successful as the
brownfields assessment program has been. But the brownfields
assessment program has been around for 5 years. This program
has only been around for 2 years.
Ms. McCarthy. May I pursue, Mr. Chairman, since the time
has not expired?
Mr. Upton. Yes.
Ms. McCarthy. I am aware--and I am glad you told us that
the President has endorsed H.R. 1750, and it is my
understanding that that is the only bill that the
administration has endorsed.
Mr. Fields. That is correct. H.R. 1750 is the only bill
that the administration has endorsed among those that are
currently being discussed by the Congress.
Ms. McCarthy. Thank you very much.
Thank you, Mr. Chairman.
Mr. Upton. Mr. Bryant.
Mr. Bryant. Thank you, Mr. Chairman.
Mr. Fields, welcome. Tell me again for the record, what is
your official relationship with this program, the Revolving
Loan Fund program?
Mr. Fields. Yes, sir. I am the Assistant Administrator for
Solid Waste and Emergency Response, and I am responsible for
all the waste management and programs for EPA. The brownfields
cleanup program is one of my responsibilities, it is one of
seven offices that I have responsibility for at EPA, including
Superfund, RCRA, hazardous waste management, underground
storage tanks, et cetera.
Mr. Bryant. How long have you been operating in this
capacity with regard to the revolving loan program?
Mr. Fields. Since its inception, yes, sir.
Mr. Bryant. One of the concerns I have, and I think it
perhaps mirrors my chairman's concerns, I understand that there
are always startup problems, but I don't understand why this
program was started and apparently some of this money was put
out without any guidance. In particular, this Revolving Loan
Fund Administrative Manual, which describes the management
standards, the recordkeeping and reporting requirements, was
not put out until May 1998, which was about 8 months after the
pilots were awarded; and the second document, the Model Terms
and Conditions, was not issued until October 1998, more than a
year after the first pilots were awarded.
What guidance did you expect the people to follow during
this time? And it would to me and wouldn't it to you have made
sense not to do the funding until you had guidance out there?
It just seems like there was a rush out there to get this money
out. It seemed like you made the situation even more
complicated and difficult.
Mr. Fields. In hindsight, Congressman, you are right. I
would have preferred to have the administrative manual out
before we began to issue or award the initial 23 Revolving Loan
Fund grants. We did not have all of our guidance in place for
the brownfields assessment program when we initially began
either. It evolved over time.
We must keep in mind that other Federal agencies do have
programs like this. The Economic Development Administration
within the Department of Commerce has operated a similar type
of program that gives grants, and then they issue loans under
those grants. So a lot of cities have experience with the
Economic Development Administration model of implementing
revolving loan funds for redevelopment activities.
Mr. Bryant. And that is the guidance you assumed they used
during this period?
Mr. Fields. No. We worked with those cities, helping them
prepare their applications, helping them get revolving loan
funds established. That was our role. We provided a major
technical assistance role with communities prior to the
administrative manual coming out 8 months after the initial
awards.
Mr. Bryant. Wasn't the EPA concerned at that time that you
were tying up $10 million on a program you weren't sure what
would happen with?
Mr. Fields. We were not concerned. We felt the money would
be well spent. It is money that is still available, and it is
money that has been obligated in grants, but the money is still
there to issue loans.
We believe, Mr. Congressman, that the $10 million that was
given out in September 1997, will be money well spent, and
there will be multiple millions of dollars in private
investment that will result from loans issued under those
programs.
I know of at least 5 or 6 of those 23 now who are thinking
about issuing loans, and I believe that those loans will
leverage many millions of dollars in private sector investment.
So I think that money will be proven to be well spent.
Mr. Bryant. Let me ask you about a statement that was
contained in some correspondence to Representative Oxley back
in October, really just a couple of weeks ago. You listed 11
pilots that were not close to making loans. I have the list.
Since they are not close to making a loan, what does the EPA
plan to do with those? Is there a provision, a policy to extend
the 3-year period for these 1997 pilots, or do you plan to
deobligate the funds for nonperformance? What do you have in
store for those?
Mr. Fields. The grants that were awarded in 1997 were
actually 5-year grants. The money is only being drawn down to
the extent loans are made.
We will look, Mr. Congressman, at those cities if they do
not aggressively move out this year and begin to take action as
necessary to facilitate issuing loans. We will look at whether
we deobligate money under some of those pilot projects where no
activity has occurred as we have communicated to Congressman
Oxley.
But, that is something that I am encouraged about. I am
having a meeting with all 68 of the brownfields Revolving Loan
Fund pilot cities on December 6 in Dallas where we will be
talking about how they can get their programs jump-started, how
they can benefit from the lessons learned from Mayor Malloy in
Stamford, Connecticut. And, I am hopeful that some of these
cities like Detroit, like Baltimore, will start moving forward
and working with developers, issuing loans and getting the job
done. If they don't do so, we will look at taking the money
back and reusing it for another purpose. But, I am optimistic
that, just like the water program and which built on 16 years
experience it started with three loans, it soon got up to 78
loans, and then later got up to 236 loans a year. I believe
that the brownfields revolving loan program, although starting
slow, will begin to pick up momentum now that we have gotten
the effort started in Stamford, Connecticut; and I am hopeful
that these 23 this year will begin to issue loans just like
Stamford, Connecticut.
Mr. Bryant. If I might just close with a statement.
Again, I appreciate very much the fact that you will have
this meeting, and I am accepting your assurance that at that
meeting you will build the appropriate fire under these people
and to let them know that they need to begin moving quickly or
else they are at risk for losing these obligations in one way
or the other. I thank you for that commitment.
Mr. Fields. I thank you, Mr. Congressman, and I assure you
that is my commitment.
Mr. Upton. Thank you.
Mr. Burr.
Mr. Burr. Thank you, Mr. Chairman.
I apologize, Mr. Fields, for coming late. I have had an
opportunity to read your testimony. If I cover ground that has
already been gone over, let me apologize for that.
Is this a successful program?
Mr. Fields. The brownfields Revolving Loan Fund program?
Mr. Burr. Yes, sir.
Mr. Fields. I would not characterize that portion of the
program as being successful. I would say that the brownfields
assessment grant program has been successful with $1.6 billion
in private investment, and the creation of more than 5,000
jobs.
Mr. Burr. Aren't we here talking about the Revolving Loan
Fund?
Mr. Fields. Right. I am talking about how I measure
success. I measure success by what has been achieved under the
assessment program. I do believe though, Mr. Congressman, as I
said before, that the revolving loan program will soon
demonstrate the same type of success as has been demonstrated
under the assessment program.
Mr. Burr. Let me assure you, Mr. Fields, my wife and I
measure success in different ways; and I go home euphoric some
weeks when I think we have done something good, only to face
the realities of somebody who judges success in a different
way, a way that really more of America judges success than we
have a tendency to in this town.
How many sites have you cleaned up under the Revolving Loan
Fund?
Mr. Fields. We have only issued one loan, which Mayor
Malloy will soon talk about. No cleanups have been done under
the Revolving Loan Fund program.
Mr. Burr. No cleanups.
Mr. Fields. No cleanups to date under the Revolving Loan
Fund program.
Mr. Burr. Why do you think that is? Critique the program
for me.
Mr. Fields. Right. I think that there are several reasons
this program got off to a slow start. There was turnover in
city personnel. There is the newness of the program, it's only
2 years old. There are natural startup problems for any new
program.
Mr. Burr. Did people come to you and beg you to participate
in this program or did you go to people and beg them to
participate in this program?
Mr. Fields. Once we awarded those assessment pilots
beginning in 1995, the Mayors came to us and said the No. 1
priority need they had, was for brownfields, cleanup dollars to
help facilitate cleanup of these properties that are being
assessed. So the Mayors came to us.
We then tried to provide a vehicle, which turned out to be
the Brownfields Cleanup Revolving Loan Fund, and that is the
program we got started. I will be quite honest with you. There
was a legal cloud established by the appropriations language
that we got from the Hill. Congress passed appropriation
language in 1998 which said they didn't believe we had the
legal authority to issue those grants--those 23 grants to
establish revolving loan funds. Many of those 23 cities came
back to us and said, we are concerned about the legal
authority. Fortunately, Congress, in 1999, in the appropriation
language, endorsed these brownfields revolving loan funds and
encouraged EPA to award more of those grants, which we did do.
Mr. Burr. And now we are to the point where we are
assessing success, aren't we? Or is it too early?
Mr. Fields. I think for the Brownfields Cleanup Revolving
Loan Fund, it is too early to assess success.
Mr. Burr. When do we do that?
Mr. Fields. I would say a year or 2 from now. We did not
achieve early success with the assessment program either. We
didn't have more than 5,000 jobs. We didn't have $1.6 billion
in private investment. That is something that just began to
occur in the last year.
Mr. Burr. Shouldn't we wait to see the success of those
before we expand?
Mr. Fields. No.
Mr. Burr. The Mayors understandably want brownfields
cleaned up.
Mr. Fields. Yes.
Mr. Burr. I think I would get a nod if I knew which ones
they were in the room. They want to clean brownfields up and
pursue development.
Mr. Fields. Yes.
Mr. Burr. Do they want to do it under Superfund
regulations, or would they rather do it some other way? Because
the way that you fund the Revolving Loan Fund, they have to
fulfill all the requirements of Superfund, don't they?
Mr. Fields. They obviously have to comply with the
Superfund law.
Mr. Burr. But they are not required to unless they use the
Revolving Loan Fund, am I correct?
Mr. Fields. Yes, when they use our Revolving Loan Fund
functions under the removal authorities of the Superfund
statute. We have tried to make those procedures very flexible
in terms of how we implement them. We don't require what we do
for a regular Superfund site.
Mr. Burr. Have you ever heard a witness come in here and
tell us we were flexible under Superfund regulations? I don't
think you have, and I don't think I have, so we can quit
fooling ourselves on that.
Mr. Chairman, just 1 additional minute, if I could.
What timeframe do you need to come to this committee and
say, here is the proof, this works? Is it 6 months? Is it 12
months? Is it 2 years? What is it?
Mr. Fields. Mr. Congressman, I believe it is going to be
about 2 years. To be very honest and frank with this committee,
it will be about 2 years.
I expect that we will see several more cities like
Stamford, Connecticut, issue loans this year. And we know Las
Vegas, Trenton, and Sacramento, are cities out there now who
will be issuing loans. But I don't think we will see the big
payoff until 2 years from now, just like we did with the
brownfields assessment program. Two years from now, we will be
able to see the jobs, the cleanups, the redevelopment that will
be really occurring from this Revolving Loan Fund program.
Mr. Burr. Is that how you would define success, cleaned-up
sites, development, jobs? Anything short of that?
Mr. Fields. Those are tangible measures of success.
Mr. Burr. Do we have to have something tangible for----
Mr. Fields. No, I don't think that is the only measure. I
think there is great success when people, like this committee,
are focused on the topic of brownfields, and are taking every
step possible to try to find ways to assess, clean up and
develop these properties. I think the focus of Mayors, the
focus of the Federal Government, the focus of State government
on this issue, is going to pay dividends.
The measures I gave you just now were some of the
quantitative measures of success. I think there is great
success when people are working together to try to resolve
these issues, looking at how we can work together to issue a
loan and how we can resolve the impediments in these program.
Those are all measures of success. But what I was giving to you
were quantifiable dollars and jobs as measures.
Mr. Burr. Coming out of the business world, I would assure
you that those do spell success for me. And I think that from
the standpoint of the oversight responsibility that we have,
one of the jobs is to make sure that, in fact, by design of
your program, those who underperform or lack to perform, that
rather than sit and say, we have done our job, we have supplied
somebody a revolving loan, if they don't use it, so be it.
Now, it is also important for us to look further into it
and see how long did it take you to approve their plan. There
are a number of steps that require participation from you after
the commitment to be a partner. Unfortunately, one-half of the
partnership can't move without your okay.
It is my understanding you are going to stay around and
allow us to ask some additional questions after the next panel.
Mr. Fields. Yes, sir.
Mr. Burr. With that, I will await anxiously.
Mr. Upton. Your time has long, long expired.
We are going to have a second round. I know that a number
of us have additional questions, and we will start that second
round now.
I have to say, from my own district and the knowledge that
I have, I am a very strong supporter of Superfund reform,
brownfields. I have talked with a number of Mayors even
yesterday and with some conversation about this as well. I have
talked to sponsors of all of the different bills that we have
had in the House as well--Mr. Boehlert, obviously Mr. Bliley,
Mr. Oxley.
It is my understanding that the bill that we passed in
committee 2 weeks ago here, in this committee, the Commerce
Committee, that we de-link completely the brownfields grant
program from the Superfund trust fund. And as I look at the
testimony and anticipate questions and thoughts by my
colleagues and the folks that are testifying on Panel II, that
is their big concern. That is why they think that this program
is not working to the full utilization that it could, because
of the regulatory burden that EPA is imposing with this
program. When you talk about flexibility, we will see with
questions to them how flexible they think EPA has been.
But our legislation that we passed here and is now waiting
for the full debate on the House floor does take that firewall
out completely, it de-links the two, which would empower the
EPA to deregulate this entire program so that we can see more
success. Is that not your understanding?
Mr. Fields. That is not our understanding, Mr. Congressman.
We have not read H.R. 1300 that way. The only bill we see that
de-links Superfund requirements for brownfields is H.R. 1750.
You are talking about H.R. 1300, I am sure, right? H.R. 2580,
that bill does not--we don't read H.R. 2580 to de-link the
Superfund response requirements from brownfields. We would be
happy to look at that again, but that is not the way we read
it. The only bill that has the provision in it that we are
referring to that creates that de-linkage is H.R. 1750.
Mr. Upton. Well, we will provide you our analysis of H.R.
2580 showing that, in our view, it does de-link it, and we will
look forward to your response on that.
Mr. Fields. I will be happy to respond.
Mr. Upton. In your response last month to Congressman
Oxley, and we have a copy of this letter here and we will put
it into the record as well, you listed 11 pilots that were not
close to making loans.
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Mr. Upton. The cleanup Revolving Loan Fund administrative
manual at page VIII-3 clearly states, and I quote. It says,
``Each cooperative agreement has 3 years from the cooperative
agreement start date,'' so that is September, 1997, for most of
the 1997 pilots, ``to obligate all funds awarded. The schedule
of obligation should be no less than 50 percent of the amount
awarded with 18 months, 80 percent within 2 years, and 100
percent within 3 years.''
Will any of the 11 pilots that you listed make a loan
before the 3-years lapse? In other words, where are we with
those 1997 pilots? I guess the terms of the agreement were that
they were supposed to do this.
Mr. Fields. Right. By September of 2000.
Mr. Upton. Two thousand.
Mr. Fields. That is why we are going to have this meeting
on December 6 that I talked about. I am not aware of any on
that list that are issuing loans right now. There are others
among the 23, as I mentioned earlier, like Sacramento, Trenton,
Birmingham, Louisville, and Boston, that are thinking about
loans. But, regarding the ones you list there and the ones that
I provided my written response on, I am not aware of their
consideration of loans.
We will try to as I mentioned to Congressman Bryant
earlier, we will try to light a fire under those that are not
currently negotiating or discussing loans and try to see what
we can do to get others to issue loans. If they don't do so, we
will have to consider deobligating funds, as I said earlier.
Mr. Upton. Okay.
Ms. DeGette, I will yield to you.
Ms. DeGette. Thank you, Mr. Chairman.
To follow up on one issue that was just being discussed, I
thought I heard the chairman saying that H.R. 2580 was de-
linked, but I guess I would like you to comment on how that
could happen if, in fact, it is an amendment to the Superfund
statute.
Mr. Fields. Well, as I shared with the chairman, we don't
read H.R. 2580 as de-linking the requirements from Superfund
for brownfields cleanup.
Ms. DeGette. And why is that, Mr. Fields? I know you said
that.
Mr. Fields. The way we read H.R. 2580, it would require
that the response provisions of the Superfund statute and the
National Contingency Plan be complied with in conducting
brownfields cleanups. The only bill we have seen that has
specific language which says that the cleanup provisions of the
National Contingency Plan could be modified would be H.R. 1750.
It is the only legislative vehicle we have seen that has that
type of language. We are willing to look at H.R. 2580, but we
don't read it to have that de-linkage.
Ms. DeGette. And you may have said this before I got here,
and I apologize. I had another meeting, and this hearing was
moved to 9:30, too late for me to change this other meeting.
But why is it important that these concepts be de-linked?
Mr. Fields. You will hear more of this from the next panel.
We think it is important to create flexibility. Right now, the
cities that issue loans have to prepare an engineering
evaluation and cost analysis. They have to prepare an action
memo. They have to have a governmental employee to serve as the
site manager. We believe some of those requirements could be
changed by statute.
The language in H.R. 1750 says that you don't have to
comply with those requirements if they are not necessary to
doing brownfields cleanup. We believe that language in H.R.
1750 is what we need here, and that would allow Mayor Malloy
and others to do things in a much more flexible way. They don't
have to prepare a decision document. They don't have to do an
engineering evaluation cost analysis. Those requirement could
be eliminated with the language that is in H.R. 1750.
Ms. DeGette. Right, okay.
Now, I think you pointed out, at least in your written
testimony, that some problems exist right now with the
Revolving Loan Fund because it is still in its infancy; and, in
fact, the majority in this Congress has prohibited the EPA from
making any grants in fiscal year 1998, which was only the
second year of the program. Of course, funding still remains
tenuous.
I guess my question to you would be, has the uncertainty of
funding and the history in the last couple of Congresses
inhibited the success of the revolving loan funds? In other
words, do you think there is a chilling effect on cities to
move forward under this program because they are not sure it
will still be around when the cleanup time comes?
Mr. Fields. That is a good question, Congresswoman DeGette.
There was definitely a chilling effect on the initial 23. When
the 23 were awarded in September 1997 and then Congress in the
fiscal year 1998 appropriations said we do not believe the
legal authority is there, I heard from several cities and
several Mayors that they were concerned about whether they
would be able to continue the Revolving Loan Fund under the
grants we had answered. When Congress in 1999 came back and
said we endorse and support the revolving loan funds being
awarded, that removed some of that legal cloud.
But during fiscal year 1998, that whole year, there was a
legal cloud created because of the appropriation language that
came from Congress in the budget about the legality of awarding
Revolving Loan Fund grants to municipalities. It definitely had
an effect. I believe it is one of the factors, not the only
one, that has caused some slowness in the initiation of the
Revolving Loan Fund program.
Ms. DeGette. Okay. I am wondering if, based on that cloudy,
as you said, experience, you can let us know what you think the
prognosis for success of this program is and what you think the
future holds.
Mr. Fields. I believe that the prognosis for the Revolving
Loan Fund is very good. I have said it for several reasons. The
success we have had in the assessment program, which has been
around for almost 5 years now, in creating jobs and leveraging
$1.6 billion in investment is one reason. I have heard from 6
or 7 cities now, in addition to the great effort that is led by
Mayor Malloy in Stamford, that intend to issue loans in the
very near future. And, third, this program has now reached a
stage where the 2- or 3-year phase of assessment is done, the
Mayors and community leaders are now beginning to focus on
cleanup. Finally, the legal cloud has been lifted by the fiscal
year 1999 appropriation language which clearly said Congress
supports and gives us the mandate to do this job of
implementing cleanup through the revolving loan funds. That is
what gives me an optimistic prognosis that the future is good
and that we will see a great expansion in the number of loans
issued under this program in the very near future.
Ms. DeGette. Thank you.
Thank you, Mr. Chairman.
Mr. Upton. Thank you.
I would just like to make, before I yield to Mr. Bryant,
three quick points with regard to our interpretation of H.R.
2580.
One, there is no requirement in the bill to tie the program
to the National Contingency Plan. It is our belief that we de-
link the program from the National Contingency Plan by the use
of general revenues rather than Superfund dollars. In that
provision, the bill says there is authorized to be appropriated
and carried out in this section such sums as may be necessary.
Such funds shall remain available until expended.
It is my understanding that H.R. 1750, in fact, allows EPA
to require the use of the National Contingency Plan when it
wants to. So in terms of a clear reading of de-linking, H.R.
2580 goes much further than does H.R. 1750.
Mr. Fields. I will go back, Mr. Chairman.
Mr. Upton. I will be anxious to get your formal response
from your legal counsel in terms of whether we are right or
not. But as we talked to the authors of the bill and to our
counsel, it is our belief that there is a greater distinction
of de-linking in this bill than in H.R. 1750. We will be
anxious to hear back from you.
Mr. Fields. We will respond in writing. We will go back and
read that again. That is not how we had read it, but we will go
back and look at it and give you some written comments on that
point. We see a clear de-linkage in H.R. 1750. We will go back
and look at H.R. 2580 again and give you our written response
as to whether or not we think a clear de-linking from the
Superfund response requirements is provided in that bill.
Mr. Upton. You may be right on your first point that you go
toward that, but I think our bill goes further.
I yield to Mr. Bryant.
Mr. Bryant. Mr. Fields, thank you.
Would you clarify in my mind a statement you made about
there being a 5-year commitment involved here? Because when our
chairman questioned you before in follow-up to what we were
talking about, these 11 cities, he referenced the
administrative manual, Roman numeral 8-3, which states that
each cooperative agreement recipient has 3 years from the
cooperative agreement start date, and it goes on and talked
about that.
Am I talking apples to oranges here? Is it 3 years or 5
years?
Mr. Fields. No, it is a 5-year grant that we issue. We
award the grant for 5 years.
What is reflected in the administrative manual that you are
reading from is that they have 3 years to draw down money. We
give a $500,000 grant under the cooperative agreement to a city
or a municipality or a State. They have 3 years under our
guidance to begin to draw funds down out of that grant. That is
the commitment that is made in the administrative manual. We
want to provide some impetus, as the chairman said, to
encourage people to try to move out quickly and begin to issue
loans. But the actual award is a 5-year grant.
Mr. Bryant. Okay. So for those 11 cities that haven't
really done anything and are not likely to do anything, unless
you can again get them excited during December----
Mr. Fields. They will get excited, I assure you. This is a
high priority for us, and we are not going to just let money
sit there if communities and cities are not taking action to
move forward to implement the Revolving Loan Fund grant we have
given them. We are not going to wait 3 years. We want to start
action right away to encourage people to take action as
necessary to begin to issue loans. Otherwise, we need to be
taking the money back, as you said earlier.
Mr. Bryant. To sort of change direction here, in some
written testimony, Ms. Foss from the Wisconsin Department of
Natural Resources advocates letting the Revolving Loan Fund
participants conduct their cleanup in accordance with the
respective State's own voluntary cleanup regulations instead of
the National Contingency Plan. Would the EPA seriously consider
such a change? And if not, why not?
Mr. Fields. We cannot make that change now under the
current statute. Under the Superfund and the regulations
thereof, the National Contingency Plan, these brownfields
cleanup actions are done as non-time-critical removals. We
don't have the flexibility now to deviate and say that we will
allow these cleanups for brownfields to be done under a State-
voluntary cleanup program that ignores the NCP when we give
them dollars, Federal dollars to do that work.
I support what Ms. Foss is saying. I support the fact that
we want a more flexible construct for these cleanups. We don't
think that we should do these brownfields cleanups the same way
we do the Superfund or national priorities list sites.
So, I support what Ms. Foss is saying. We need a more
flexible cleanup approach, and that is why we support
legislation that would allow us to exclude or eliminate certain
parts of the National Contingency Plan requirements from
brownfields cleanups. We don't think you should have to prepare
an action memorandum. You should not have to prepare an
engineering evaluation and cost analysis for brownfields
cleanups.
We support those things being eliminated. But under the
current statute, the way we read it, we don't have a choice but
to at least require some modified version of those types of
elements.
Mr. Bryant. All right. Mr. Fields, how do we get from here
to there on those issues? Is it our job as Congress to give you
that flexibility, or is it your job to change the regulations,
or is it your job to come to us to ask for that? That is common
sense, I agree with you. How do we do that?
Mr. Fields. We have supported some legislation that has not
been voted out of committee. H.R. 1750 has some language that
would create that flexibility. It says very clearly that those
parts of the National Contingency Plan that are not relevant do
not need to be complied with for brownfields cleanups. That is
the type of legislative provision that we would support, and
that is how Congress could help us legislatively.
In the meantime, on the administrative front, I am trying
to do things with the policy and guidance under the current law
to provide cities and States more flexibility to be able to do
this in a more flexible way.
Mr. Bryant. So specifically on those areas you have
enumerated that there could be more flexibility, you are
assuring me that only we have the authority as Congress to
change that, and these are not regulations that belong to EPA
that EPA can in and of themselves change? Those items you
mentioned?
Mr. Fields. No, no. Let me be very specific. Your question
was, how can Congress help us? Well, you can pass some
legislation that would allow changes to be made in the law.
Mr. Bryant. On those you enumerated previously, can in fact
EPA change its own regulations?
Mr. Fields. EPA could change its regulations. We are
exploring that option. We would hope that Congress would pass
legislation. We think that would be a lot faster. If Congress
does not pass legislation, we will have to examine making
changes to the National Contingency Plan regulations to
eliminate some of those requirements that currently apply to
brownfields cleanups. That process is likely to take at least 2
years. But, if legislation is not enacted in an expeditious
fashion, the Agency will have to consider regulatory
modifications to effectuate those types of changes.
Mr. Bryant. So you say regulation changes would take longer
than legislation?
Mr. Fields. Well, I think Congress could pass new
legislation. I know it has been 6 years, but Congress can pass
legislation.
Mr. Bryant. I have been up here 5 years, and I know better
than that.
Mr. Fields. To do it by regulation, we estimate will take
about 2 years.
Mr. Upton. Ms. McCarthy.
Ms. McCarthy. Thank you, Mr. Chairman.
Mr. Fields, I very much appreciate your last remarks,
because I too think that taking up H.R. 1750, which has such
broad-ranging, bipartisan support, and the administration's
support would be the way to go. The other attempts that are
being made are slower and more tenuous, particularly when we
get into Superfund reform. So I hope your wishes are carried
out, and I support them.
In anticipation of the second panel, those of us who have
read the testimony from the witnesses, in particular Stamford,
Connecticut, I think we are going to be very pleased with the
progress being made there. They loaned money almost
immediately, as you know, and I wonder if you would just share
with the committee why you think they were so successful and
whether or not other cities will learn from this very positive
experience.
I am not sure that everyone on the committee is aware that
the money is not transmitted to the city. I heard concerns by
members that--what about this money that is sitting around,
but, rather, it is a letter of credit that is given to the
city.
Mr. Fields. Right.
Ms. McCarthy. And the letter or the grant expires after 5
years, so the money is not forever lost if the city doesn't use
it immediately, and I think that is an important point to make.
And I wonder if you would just reflect on the success of
Stamford and what we might expect in the future, because I
think there is a very positive story going on there.
Mr. Fields. I can't tell the story like Mayor Malloy is
going to tell the story in a moment, but Stamford has been a
great success. When you asked me why I believe it has been a
great success, I think it is because of Mayor Malloy
personally; having a Mayor who is committed, who is dynamic,
and who is very concerned about brownfields. Where
redevelopment cleanup issues in his city are a critical
element, having a developer who is ready, willing and able to
participate in the program with him like Seth Weinstein, the
chairman of Clearview Investment Management, Incorporated, and
having property that is very viable and that has great
redevelopment potential is also major factors.
I hope that we can use that effort in Stamford and the
property redevelopment that will be occurring through the loan
as a great springboard for many more cities. I hope more cities
will use that example to look at how they can issue loans and
leverage millions of dollars in private sector investment in
their communities as well.
I think Stamford is a great example. I think it will help
break the logjam of getting more revolving loan funds fully
implemented and more loans being issued. When we look back on
the history of this program and we begin to measure success, we
may see Stamford, Connecticut, and the work of Mayor Malloy as
what really got this program going.
Ms. McCarthy. I thank you very much.
I will await the Mayor's testimony.
Thank you, Mr. Chairman.
Mr. Burr [presiding]. The gentlewoman's time has expired.
The Chair would recognize himself, though he did say he
would wait until the next panel. You have stimulated some
additional questions in my mind.
Mr. Fields. Sure.
Mr. Burr. Mr. Fields, how many brownfields sites are there
in the United States?
Mr. Fields. We use the estimate of the General Accounting
Office. They estimate that there are more than 450,000
brownfields sites across America. We have seen estimates as
large as 600,000, but somewhere in that ballpark, 450,000 to
600,000 brownfields sites exist across America.
Mr. Burr. And we have only cleaned up one of them?
Mr. Fields. No. We have only made one loan under the
Revolving Loan Fund. Many more brownfields have been cleaned
up.
Mr. Burr. There were brownfields that were cleaned up
without the use of the Revolving Loan Fund?
Mr. Fields. Yes, sir.
Mr. Burr. How were those done?
Mr. Fields. They were done through private sector
investment and other public sector investment.
As I indicated, the brownfields assessment program has been
around for more than 4 years now. It has leveraged $1.6 billion
in private sector investment for cleanup and redevelopment. The
private sector is coming forward. For example, $50 million has
been leveraged cleanup in Dallas, Texas, and throughout
America. The private sector has come forward, and put up
cleanup dollars to get properties developed and some of those
properties have been assessed through the EPA brownfields
grants.
Mr. Burr. They have been successful?
Mr. Fields. Yes. But there are many other properties that
don't have the private sector coming forward, and that is what
the Brownfields Cleanup Revolving Loan Fund program is designed
for. There are other properties that you need a public sector
seed to be planted to help facilitate cleanup. We think that is
what the Revolving Loan Fund program is designed to do.
Mr. Burr. You said that one of the reasons that we might be
slow at experiencing success was that actions of Congress had a
chilling effect on these participants.
Mr. Fields. That is one of the 5 or 6 factors, yes.
Mr. Burr. But isn't the truth that those 23 original
participants receives their grants? They are not in line for
any additional grants? So it is not a question of whether they
were going to be approved or get their money, they had already
been approved and had their letter of credit. How could our
actions have a chilling effect on those 23?
Mr. Fields. Well, I assure you, Mr. Congressman, it did
initially. It does not now because in fiscal year 1999 Congress
changed their position.
Mr. Burr. Why would they be concerned with what we did if
they had their letter of credit, they had their approval?
Mr. Fields. They had their letter of credit. They were
concerned about whether or not this program was going to be
abolished in fiscal year 1998 when Congress said we don't think
the EPA has the legal authority to do this, and they thought
their money would be deobligated.
Mr. Burr. That seems like that would have stimulated them
to move quicker rather than to delay in fear that we would
revoke it.
Mr. Fields. My staff tells me, for example, that when the
fiscal year 1998 appropriation language came out, several
cities indicated that they feared they would be required to
send their money back to EPA because they were concerned about
the legality of even being able to implement this program.
Mr. Burr. Share with us or your staff share with us which
cities those were, would you, please?
Mr. Fields. I don't know the names.
This is Linda Garczynski, who works on my staff.
Mr. Burr. And if you would, you alluded to earlier that you
said several Mayors expressed concern. I would like to know
which Mayors those were.
Ms. Garczynski. We heard from the city of Dallas staff. We
also heard from the Assistant to the Mayor of the city of
Detroit. We heard from the city of Bridgeport staff. We heard
from a number of the cities.
Mr. Burr. Share the rest of them with us, if you would.
Ms. Garczynski. I can't remember them all by heart, but we
had a lot of telephone calls.
Mr. Burr. Would you be kind enough to submit that list to
the committee in writing?
Ms. Garczynski. Yes.
Mr. Fields. We would be happy to do that.
Mr. Burr. Let me ask you, Mr. Fields, the EPA Inspector
General issued a report in March, 1998--and I would ask
unanimous consent to enter that report into the record. Without
objection, so ordered.
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Mr. Burr. They reviewed several of the EPA brownfields
initiatives. They interviewed several of the pilot programs for
the report. And the report basically stated that several--that
city representatives told them that they did not want to get
involved in the pilot program. In a few instances, the IG said
the EPA had to encourage cities to apply for the pilots.
Now, I know I talked about did you encourage earlier; and
you said, no, you didn't. And I know that on April 20, 1999,
the chairman of the full committee, Mr. Bliley, sent a letter
to the EPA, which I would also ask unanimous consent to enter
into the record. That is the EPA response.
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Mr. Burr. And in that, the chairman asked you if, in fact,
pilots had been encouraged, and the response to that, dated May
17, 1999, was that the EPA is aware of no instances in which it
had to encourage cities to apply for pilots. I would give you
one new opportunity to tell me, did the EPA have to encourage
any of the participants of this revolving fund?
Mr. Fields. Mr. Chairman, our response stands as it is.
Mr. Burr. Have you seen the IG's report?
Mr. Fields. Yes.
Mr. Burr. Did you sit down with the IG and express any
concern over the conclusions that he found?
Mr. Fields. My staff did discuss the IG's draft report with
the IG's staff. I did not talk personally to the IG about this
report.
Mr. Burr. Did the IG revise their report based upon their
conversations with you or your staff?
Mr. Fields. Well, they made some modifications, but they
reflected on our comments in preparing their final report.
Mr. Burr. So if any one of the 21 participants in the
program that were interviewed by the staffs of this
subcommittee suggested that the EPA had encouraged them in any
way to participate in the fund, they would be lying to us?
Mr. Fields. Well, I can't say that the IG is lying. I am
just telling you, Mr. Chairman, that the extent of my knowledge
and what I was told by my staff, I am not aware of us
encouraging pilots to apply.
I think you have to be careful about the word and how
``encourage'' may be interpreted. For example, and you will
hear this from the next panel, we work all the time with cities
to help them to apply. We provide technical assistance. We work
with them to help fill out applications, to fill out government
forms. Some could say that that is encouraging them. I see it
as providing technical assistance.
When a community calls you, or a Mayor or a city calls you
and says, can you help me prepare an application for this
government assistance, we do that in a lot of our programs, not
just brownfields. I don't see that as ``encouraging'' someone
to apply. You are helping someone to fill out the government
paperwork who has an interest in applying for Federal
assistance.
Some would read that as encouragement. I read it as
providing technical assistance. And, we do that in lots of
communities across America. We provide technical assistance to
those who have an interest in applying for brownfields
assessment grants, revolving funds, and training grants. That
is done every year.
We have many more applications for this program than we
could ever respond to. We can't give people all of the
assistance they need. We are not out there trying to beat the
drums and say please apply for this program. We have many more
people who are applying than we could ever fulfill the need. We
do help them when they call upon us to assist them in figuring
out how to comply with the government application procedures.
That is done all the time.
That is the only thing I am aware of.
Mr. Burr. Trust me when I tell you that this Congress
understands that there are two meanings for every word. We have
learned that this year for the first time.
You alluded to earlier that we just haven't had enough time
for this revolving fund to be successful. I took the
opportunity to look back at the Drinking Water Revolving Loan
Fund. It was created--or appropriated in September 1996 for the
fiscal year 1999. From April 1999 through June 30, 1999--excuse
me, April 1997 through June 1999, there had been 637 loans for
a total value of $1.3 billion. We have had one for $250,000.
What is the difference?
Mr. Fields. Well, I think that there are differences in
these programs. The brownfields Revolving Loan Fund program is
complex, and is used for hazardous waste removal situations.
Brownfields may have many chemicals. You are focused on
providing loans to private entities primarily who are involved
in trying to clean up brownfields.
Mr. Burr. Most of this stuff you have talked about is
structural.
Mr. Fields. Right. There are great differences. There has
been an infrastructure there for a much longer period of time
under the Safe Drinking Water Act Fund or the Clean Water Act
Revolving Loan Fund. The infrastructure has been around for
many years.
The Brownfields Cleanup Revolving Loan Fund has only been
around for 2 years, since September 1997. That is when we
started this program. I don't think you can measure a program
that has been around for a much longer period of time and say
that this program has been given a fair shake. When someone
comes back and talks to you 2 years from now, I think we will
begin to share with you the same kinds of results that we are
achieving for the brownfields assessment program. Many jobs,
many private cleanup investment dollars will be provided.
Mr. Burr. I think you misunderstand the intent of this
committee and the members on it. I think that, in fact, we are
going through, hopefully, a thorough process of determining
what it is we should use to evaluate success.
Mr. Fields. I agree.
Mr. Burr. Clearly, the tools at hand are minimal today,
because we have only had one loan. When you compare nothing to
nothing, it is very difficult to assess whether that is
success. I would expect most individuals who participate in a
program where the seed money exists and where we have a liberal
administrative reimbursement, I think it is 25 percent under
your program that can be used for administrative--am I correct?
Mr. Washko. Fifteen percent to the grantees and 10 percent
to the borrowers.
Mr. Burr. Which is a total of 25 percent, I think.
Mr. Fields. Okay.
Mr. Burr. That will set your staff into a little bit of a
disagreement. Clearly, we would like to know in the future what
we should compare it to for success. Clearly, you have said it
is unfair to compare it to the Drinking Water Revolving Fund.
If success is these 23 initial participants actually having
cleaned up sites 2 years from now, which is the timeframe that
you gave us, so be it. It doesn't mean that this committee
won't look at the process along the way, suggest and offer our
help, look for new ways to streamline and make it more
successful. Because I will assure you on both sides of the
aisle of this committee, our interest is in one thing: Cleaning
up brownfields. And given that more of them have been cleaned
up outside of this revolving fund than inside this revolving
fund, personally, if there is a pot of money, I would like to
see it seed the outside effort versus the Revolving Loan Fund,
just simply because of the success, and success defined as
sites cleaned up.
The Chair at this time will adjourn the first panel.
Mr. Fields. Thank you very much.
Two quick points in closing, Mr. Chairman.
Mr. Burr. Yes, sir.
Mr. Fields. On the points you have just made the cleanups
that have been done outside of this program, keep in mind, many
have been through or, as a result of the brownfields assessment
program.
Second, look at one brownfields loan under this program in
Stamford, Connecticut, there a $250,000 loan is resulting in
$50 million in private investment. That is just one loan, and
many more will be issued during fiscal year 2000, and 2001.
That $50 million that Stamford is getting in private sector
investment from that one loan is in excess of the $35 million
we gave out for all of the Revolving Loan Fund grants in fiscal
year 1999 alone, one loan. That just tells you the magnitude of
the success someone will be reporting to you 2 years from now.
Mr. Burr. Well, I look forward to not only the other 23
coming before us and talking about the size of it, but I am
anxious to hear the gentleman from Connecticut, because he has
done an amazing thing of leveraging a mere $250,000 into a huge
amount of development, and I wish him nothing but success and
look forward to his testimony.
Thank you, Mr. Fields.
Mr. Fields. Thank you.
Mr. Burr. The first panel is adjourned.
The Chair would take this opportunity to call up the
participants of the second panel.
The Chair would like to welcome all three of our witnesses
on the second panel and make everybody aware of the fact that,
for the question-and-answer portion, I think we have made
arrangements for you to be joined again by Mr. Fields so that
we will have an opportunity to ask everybody.
At this time, the Chair would like to pass over Mr. Malloy
in hopes that Mr. Shays, who has asked to introduce you, can
make it back from the vote.
The Chair at this time would introduce the Senior Project
Manager for Brownfields and Industrial Development of the
Boston Redevelopment Authority, Mr. Thomas Ahern.
TESTIMONY OF THOMAS P. AHERN, SENIOR PROJECT MANAGER FOR
BROWNFIELDS AND INDUSTRIAL DEVELOPMENT, BOSTON REDEVELOPMENT
AUTHORITY
Mr. Ahern. Thank you, Mr. Chairman.
My name is Thomas Ahern, and I am the Senior Project
Manager for Brownfields and Industrial Development for the
Boston Redevelopment Authority. We are the city's planning and
economic development agency.
I am here today to talk about what Boston is doing on
brownfields development under the leadership of Mayor Menino,
what programs we use to spur development and cleanup of
contaminated property, and to share our thoughts about the
Revolving Loan Fund and its efforts.
Boston is a compact city with few developable acres
available for new growth. Since we cannot grow new land, we are
required to look to sites such as brownfields for new
development opportunities. While Boston grows into the new
millennium, we are also faced, like many northern industrial
cities, with cleaning up the by-products of our 20th century
economy.
Since 1987, over 1,400 spills of oil or hazardous material
in Boston have been reported to our State Department of
Environmental Protection. Many of these spills have been
cleaned up, yet many still continue to pollute our soil, our
groundwater and our neighborhoods.
What is Boston doing to assist with private brownfields
development? Under Mayor Menino, Boston has tried to develop a
``menu'' of options for developers, community development
corporations, nonprofits and private property owners to solve
their brownfields problems. A typical approach to developing a
financing plan would be to ``cherry pick'' at several different
city, State and Federal initiatives and attempt to combine them
with private financing or developer equity.
We use city initiatives such as tax abatement, public
takings of property, community development block grant funds
and debt financing through agencies like the one I work for,
the Boston Redevelopment Authority.
We offer assistance in gaining access to State initiatives
such as the new, in-State Massachusetts brownfields law
program. This State effort, which just recently began after
passing the legislature in August 1998, provides tax credits
and $30 million in loans and grants toward the cleanup of
brownfields. The law also provides new liability protections
for lenders, tenants and new innocent owners. Because this
program is relatively new, however, it is difficult to
accurately assess its effectiveness at this time. However, we
believe it will be a critical tool in the future.
The City and the BRA also seek Federal assistance for
brownfields through redevelopment. Some of our neighborhoods
hard hit by brownfields are located in an Empowerment Zone,
which can bring significant financial assistance. Tax credits
are also available for projects located in the Zone. The City
can also elect to use some of its Section 108 loan guarantees
to help with the development, something Boston is doing right
now to encourage development in areas of economic hardship.
We are also using the HUD Brownfields Economic Development
Initiative, which awards grants for cleanup along with
additional Section 108 loan guarantees for redevelopment. We
recently received an award of $7 million under this program for
our top brownfields site, the Modern Electroplating facility in
Roxbury. An additional Federal incentive is the Federal Home
Loan Bank, which provides financing, letters of credit and
financing for brownfields projects that are having trouble
locating capital.
Boston was selected for a Brownfields Pilot Assessment
under the EPA in 1995, for which we received a $200,000 grant.
The funds were used to hire a brownfields coordinator and to
identify brownfields sites in several neighborhoods of the
city. The City worked with numerous community organizations in
a 3-year effort to identify, map and assess brownfields
development opportunities in the community. Today, 4 years
after the grant was awarded, Boston is well on its way to
cleaning up and developing three of the primary sites that we
identified through this grant.
In 1997, we were awarded a $350,000 Revolving Loan Fund by
the EPA. The intent of the program was to continually offer a
financing mechanism for cleaning up brownfields sites. One of
the main impediments to successful redevelopment has been the
lack of money available for cleanup work. This program has
offered Boston the opportunity to finally provide access to
critical funds.
However, a funny thing happened on the way to the landfill.
The more we learned of the program, the more problematic it
became to administer the funds.
From the time the City agreed to accept the funds in
October 1997 through January 1999, we were engaged in the
process of negotiation with EPA Region One regarding several
difficult issues.
Among the primary concerns we had were:selection of an on-
scene coordinator to oversee the cleanup activities;
development of an application packet; CERCLA regulations; the
requirement that the City secure a site if a loan is defaulted
upon; and the types of properties and contaminants for which
the funds could be used.
Without a doubt, the two most difficult issues for the City
have been CERCLA regulations and the OSC requirements. These
factors have been major impediments to carrying out the RLF
program in Boston.
May I continue, Mr. Chairman?
Mr. Upton. As you know, your statement is made complete in
the record, but if you could summarize it, it would be fine.
Mr. Ahern. I would like to.
What we are trying to do in Boston is use the Revolving
Loan Fund to help spur cleanup of our most problematic sites.
The program has been difficult to administer over the last 2
years, but, recently, we received an application to use these
funds. We are very excited about making a loan sometime within
the next few months on one of our top brownfields sites. And I
believe that one of the sites, actually, that we could be using
this loan money for within the next 6 to 8 months is actually
one of the sites that we used our EPA Brownfields Pilot
Assessment money for.
So, as Mr. Fields mentioned, the money is being used, at
least in the city of Boston. We are planning on using it as the
natural projection line, the pilot assessment which we received
in 1995 now through 1997.
But we have had difficulty with the program, although we
believe we are in a position to now be making a loan sometime
within the next 6 to 9 months.
[The prepared statement of Thomas P. Ahern follows:]
Prepared Statement of Thomas P. Ahern, Senior Project Manager for
Brownfields and Industrial Development, Boston Redevelopment Authority
Mr. Chairman and members of the Committee: My name is Thomas Ahern,
and I serve as the Senior Project Manager for Brownfields and
Industrial Development at the Boston Redevelopment Authority (BRA). The
BRA operates as the City of Boston's planning and economic development
agency, responsible for overseeing development in both our downtown as
well as our neighborhoods. Within this structure, the City has also
placed the responsibility for developing and carrying out an aggressive
brownfields strategy. I am here today to talk about what Boston is
doing on brownfields development under the leadership of Mayor Thomas
Menino, what programs we use to spur cleanup and revitalization of
contaminated property, and to share our thoughts about the EPA
Revolving Loan Fund and its role in our efforts.
Boston is a compact city with few developable acres available for
new growth. Since we cannot grow new land, we are required to look to
sites such as brownfields for new development opportunities. While
Boston grows into the new millennium, we are also faced, like many
northern industrial cities, with cleaning up the by-products of our
20th Century economy.
Since 1987, over one thousand four hundred spills of oil or
hazardous material in Boston have been reported to the Massachusetts
Department of Environmental Protection. Many of these spills have been
cleaned up, yet many still continue to pollute our soil, groundwater
and neighborhoods.
The Boston Approach--
What is Boston doing to assist with private brownfields
development? Under Mayor Menino, Boston has tried to develop a ``menu''
of options for developers, community development corporations, non-
profits and private property owners to solve their brownfield problems.
A typical approach to developing a financing plan would be to ``cherry
pick'' at several different city, state and federal initiatives and
attempt to combine them with private financing or developer equity.
We use city initiatives such as tax abatements, public takings of
properties, Community Development Block Grant funds and debt financing
through city agencies like the BRA.
We offer assistance in gaining access to state initiatives such as
the new Massachusetts Brownfields law program. This state effort which
just recently began after passing the Legislature in August of 1998,
provides tax credits, loans and grants towards cleanup of brownfields.
The law also provides new liability protections for lenders, tenants
and new innocent owners. The law will not only open up new
opportunities for private parties to purchase brownfield sites, but
will also encourage banks to open up their lending practices to
contaminated sites. $30M was set aside for loans and grants towards
assessments and cleanup and an additional $15M was appropriated to
purchase environmental insurance for these sites. Because this program
is relatively new it is difficult to accurately assess its
effectiveness at this time, however we believe it will prove to be a
critical tool.
The City and the BRA also seek federal assistance for brownfields
redevelopment. Several of our neighborhoods hard hit by brownfields
issues are located in an Empowerment Zone, which can bring significant
financial assistance. Tax credits are also available for projects
located in the Zone. The City can also elect to use some of its Section
108 loan guarantees to help with the development, something Boston is
doing right now to encourage development in areas of economic hardship.
Boston is also using programs like HUD's Brownfields Economic
Development Initiative, which awards grants for cleanup along with
additional Section 108 loan guarantees for the redevelopment. Boston
recently received an award of $7M under this program for our top
brownfields site, the Modern Electroplating facility in Roxbury. An
additional federal incentive is the Federal Home Loan Bank, which
provides low-cost financing, letters of credit and bridge financing for
brownfields projects that are having trouble locating capital.
Boston and EPA Brownfields Programs.
Boston was selected for a Brownfields Pilot Assessment in 1995, for
which we received a $200,000 grant. The funds were used to hire a
brownfields coordinator and to identify brownfields sites in several of
the neighborhoods of the city. The City worked with numerous community
organizations in a three-year effort to identify, map and assess
brownfields development opportunities in the community. Today, four
years after the grant was awarded, Boston is well on its way to
cleaning up and redeveloping three of the five primary sites selected
through the grant.
In 1997, Boston was awarded a $350,000 Revolving Loan Fund by the
EPA. The intent of the program was to continually offer a financing
mechanism for cleaning up brownfields sites. One of the main
impediments to successful redevelopment of brownfields has been the
lack of real money available for cleanup work. This program offered
Boston the opportunity to finally provide access to these critical
funds.
However, a funny thing happened on the way to the lined landfill.
The more we learned of the program, the more problematic it became to
administer the funds.
From the time the City agreed to accept the funds in October 1997
through January of 1999, we were engaged in a process of negotiation
with EPA Region One regarding several difficult issues. Among the
primary problems were:
<bullet> Selection of a ``On-Scene Coordinator'' (OSC) to oversee the
cleanup activities;
<bullet> Development of an application packet;
<bullet> CERCLA regulations;
<bullet> Requirement that the City ``secure'' a site if a loan is
defaulted upon;
<bullet> Types of properties and contaminants for which the funds could
be used;
Without a doubt, the two most difficult issues for the City of
Boston have been the CERCLA requirements and the OSC requirements.
These factors have been major impediments to carrying out the RLF
program in Boston and elsewhere.
A typical Boston brownfield is not a Superfund site. In fact,
Boston does not have any sites currently operating under CERCLA.
However, if a developer secures a loan under the EPA Revolving Loan
Fund, their cleanup is now governed under CERCLA regulations, which are
immeasurably more onerous then the Massachusetts regulations. It has
proven to be extremely difficult to convince private property owners
and developers that it is in their best interest to willingly subject
themselves to these additional regulations. Some attorneys will say
that the requirements, in practice, are not terribly difficult.
However, perception is reality in this case.
Some of the developers of larger brownfield sites, which may fall
under the strictest of cleanup regulations under the state law, will
consider the program. In fact, we have discussed the program with
developers of two specific sites recently. The reality is such that if
there are other opportunities, even if it is private lending at twice
the rate, for financing the cleanup without incurring CERCLA
regulations, the developers more times than not will take the more
expensive route. It just isn't worth the hassle. In the case of a
typical site owner, I can not see a reason why they would take this
loan, under these conditions, unless every other resource has been
exhausted.
Massachusetts employs a privatized cleanup system, whereby an owner
hires an environmental professional to assess the site, report it to
the state regulators, then undertake a cleanup effort within a certain
period of time. To administer the EPA Revolving Loan Fund, the City is
required to employ an On-Scene Coordinator to oversee the cleanup
efforts. This employee must, according to regulations, be a public
employee, meaning that the City can not contract with a private
individual to perform these services. While the BRA employs many
individuals who specialize in planning, development, design and
finance, we do not have a person who could satisfy the requirements of
an OSC. Imagine what smaller cities and towns must be faced with.
EPA Region One, to their credit, identified that this would be a
serious impediment to making loans. They suggested an innovative
approach: have the EPA contract with the state DEP to serve as the OSC,
paid for with a portion of each Massachusetts Pilot's funds. A great
idea, except for one problem. Again, under the more progressive state
privatized cleanup system, an owner of a site hires his or her own
environmental professional. The state DEP does not oversee or approve
of cleanup plans except for the most contaminated properties. We would
be forced to require a private property owner to accept a state
regulator as their On-Scene Cleanup Coordinator, essentially negating
the concept of a privatized cleanup system. As you might imagine, the
BRA saw this as creating one impediment to solve another, and we
declined the offer.
Recently though, the City of Boston hired an individual who can
satisfy both the state and federal requirements of a cleanup
coordinator. We hope that this effort on the City's behalf will solve
this problem. But one must again consider what many of the smaller
cities and towns must do to satisfy this requirement.
A Better RLF--
So, what can be done to reform the brownfields programs, most
specifically the Revolving Loan Fund, to best suit to the needs of
cities like Boston?
First, the time has come to finally pass meaningful brownfields
legislation which separates the Superfund regulations from programs
like the Revolving Loan Fund. The City of Boston has a host of programs
and options to help bring about a successful assessment, cleanup and
redevelopment of a contaminated site without having to resort to over-
regulation. The truth is that I do not recommend the RLF program to the
vast majority of people who come to us looking for help because it
simply has shown to be more trouble than it is worth. Additionally, the
RLF is competing with other debt programs in the market. My rate may be
lower, but on a $25,000 loan amortized over five years, is it really
worth the lower rate when I have to hire three new attorneys just to
ensure I am satisfying the regulations?
Legislation, modeled upon many recent efforts at the state level
such as Massachusetts and Pennsylvania, which creates specific cleanup
guidelines for brownfields sites, and recognizes the wisdom of
liability protections for innocent owners, will help us to better
administer these programs.
Secondly, sites which are primarily contaminated with oil products
need to be eligible for this program. In Boston, a recent review of all
brownfield sites found that over 70% were contaminated with oil. Each
of these sites would have a difficult time passing current regulations
under this program. A developer of one site, upon finding out that the
RLF program can not be used for oil sites, had his environmental
professional go back out and take further samples to see if they could
find any other problems. They actually were hoping to find something
worse. Luckily for them, they did, as lead and other hazardous
materials were found on the site.
We also need to recognize that market conditions, which today allow
for private construction financing of some brownfields cleanups, will
not always be as favorable to difficult brownfield projects. Many of
the brownfields projects in Boston currently underway are financed
primarily through construction loans. This is due in part because the
state passed lender liability reform in its brownfields bill. But as
the market changes, so too will the availability of private capital. In
two years time, this program may be critical not only to the toughest
projects, but to the typical ones as well. Cutting off the RLF program,
rather then reforming it to suit the needs of the cities which manage
the funds, will eliminate an important tool out of our menu of options.
Lastly, I would like to make the case for more direct grant
programs like the HUD Brownfields Economic Development Initiative.
Without the BEDI grant Boston recently received, our top priority site,
Modern Electroplating, would be nothing but a faint dream. The
economics of the project just do not support having a private developer
pay the assumed $5M cleanup cost for a property valued at $500K. The
grant will pay for 35% of the cleanup, with the developer responsible
for the additional equity. The additional $5M in Section 108 loans will
finance 35% of the development costs. State and federal tax credits and
the possible access to state funds may pay for an additional 25% of the
cleanup costs.
Now, where we once said, ``Wouldn't it be great if . . .'', the
community is saying, ``Isn't going to be great when . . ''.
Mr. Chairman, you may be asking why we continue to pursue the RLF
program in light of all the other incentives that are available to us
and developers. I would like to call to your attention two critical
brownfields projects that, without the infusion of RLF funds, would not
be able to succeed.
The first is a development whereby a local arts organization will
partner with a local developer to construct 100 new units of housing,
two new performing arts theaters, artist work space and galleries and
specialty retail shops. It is a proposal at this stage, and the
finances of the project are complex, without adding in the difficulties
I have discussed. But for this project, there are no other options. The
menu of options has been exhausted, with many of the tools being
utilized for this project.
The cleanup costs are $1.8M, of which $500K is coming from the
developer and $500K will come from the new state brownfields fund.
$300K is presumed to come from equity in the property in the form of a
price break in the purchase price. Tax credits do not work because the
arts agency is a non-profit, and has no tax liability. It is not in the
Empowerment Zone, and other City CDBG and Section 108 funds have been
exhausted on other projects. While, the EPA Revolving Loan Fund is the
option of last resort in this case, without the funds, the project will
die.
Another project is the aforementioned Modern Electroplating
project. Although up to 60% of the cleanup costs may be covered by the
HUD grant, tax credits and the Massachusetts brownfields program, we
will still be saddling a developer with at least $2M in cleanup costs.
This price may be even higher after testing on groundwater is complete.
The use of the EPA Revolving Loan Fund could well be a deciding factor
in our ability to attract qualified developers. Again, most of the
other options have been exhausted, and we will still face a shortfall.
This property is not in an area where bankers come running to lend on
severely contaminated sites, so we must be there to ensure the success
of the project.
The menu approach to brownfields redevelopment works if the right
tools are available. Today, with our menu of options from the state and
federal government, we are on the right track. But much more can and
should be done. EPA programs like the Revolving Loan Fund can be
catalysts in moving a project from dream to the reality. But only if
the program can shed its unnecessary regulatory restrictions.
I ask that as you examine this and other EPA-administered programs
that you consider the effects of combining Superfund with brownfields,
and the restraints it places on cities like Boston. We need the
Revolving Loan Fund, just as we need the EPA Pilot and Assessment
programs, the HUD programs and the state-sponsored programs to make a
difference. But we also need Congress to finally pass meaningful
brownfields legislation that creates its own set of rules and
unshackles the sites from continued community blight.
Thank you, Mr. Chairman, for this opportunity.
Mr. Upton. Thank you very much.
For purposes of introduction, I would like to recognize my
colleague, Mr. Shays, from Connecticut.
Mr. Shays. Thank you, Mr. Chairman.
Mr. Chairman, it is really nice to be in front of this
committee. As Mr. Bryant said to me as I came in, he said,
welcome to the Big Leagues, so it is nice to be in the Big
Leagues.
Mr. Upton. We refer to it as the Big House, too.
Mr. Shays. But I did notice that on the mike it says,
``switch forward to activate, switch off when not in use.'' We
didn't feel in our committee we needed an explanation of the
switch.
I just wanted to say to you, Mr. Chairman, and to members
of the committee, that it really is a very sincere honor to be
given the opportunity to be in your committee to welcome Dannel
Malloy, who is the Mayor of Stamford, and, frankly, just an
outstanding Mayor.
For those of you who don't know, Stamford is a community of
about 105,000 to 110,000, depending on which census we use, and
is an extraordinarily successful city. It ranks second only to
Chicago in terms of the number of corporate headquarters. There
are 11 economic bases in the city, in large measure due to the
work of this Mayor. In other words, we don't just have banking,
we have a large insurance industry, and the list goes on.
It is just an amazing place, but it is also a place that is
an old-time city. The Mayor was instrumental in helping to
rebuild the City's public housing and attracting businesses. He
also acknowledged we have a lot of old industry that has left,
and he took the initiative to be a part of the brownfields
program. It is really the only city to date that has moved
forward with the Revolving Loan Fund application. I think you
turned it around, Mayor, the next day.
He anticipates problems before they occur, he plans for the
future, and I consider it the best-run city in the country with
an outstanding Mayor. It is wonderful to have you here.
Mr. Malloy. Thank you, Chris.
Mr. Upton. Thank you very much. You are welcome to 5
minutes as well. Thank you for coming before the subcommittee.
TESTIMONY OF HON. DANNEL P. MALLOY, MAYOR, CITY OF STAMFORD
Mr. Malloy. Thank you, Mr. Chairman. Particularly thank you
to my Congressman and my friend, Chris Shays, for his
introduction.
Good morning to all of the members of the subcommittee. I
am Dannel Malloy, Mayor of Stamford, Connecticut, as you have
heard.
Today I will describe how Stamford has sparked a
revitalization of brownfields on its waterfront and explain why
Federal assistance and resources for these efforts, including
through the Brownfields Cleanup Revolving Loan Fund, has been
important to our initiatives. I will also point out some areas
of the EPA brownfields loan program that Congress should
streamline to make the tool more viable and workable for local
communities and the private sector.
I hope that you understand from my testimony that the
brownfields problem requires the contribution and resources of
many partners, including the Federal Government, and that
programs like the brownfields RLF program should be continued
and improved.
The city of Stamford is located on Long Island Sound, just
35 miles from New York City. While Stamford is an old
industrial city settled in 1641, most of the historic
manufacturing companies have left Stamford, leaving behind
their contaminated industrial sites. We call them brownfields.
The South End and Waterside neighborhoods of Stamford along
the community's waterfront are blighted with several large
brownfields sites. Stamford is leading innovative efforts to
revitalize brownfields with the support of the Federal
Government under the Brownfields Showcase Community Initiative
and with the assistance of the State of Connecticut and the
private sector. However, many barriers remain to our
revitalization, and more help is needed in Stamford.
One tool that has made a difference in Stamford is the U.S.
EPA Brownfields Cleanup Revolving Loan Fund, or RLF program.
Stamford recently obtained $500,000 EPA funding to capitalize a
RLF. Stamford is the first community in the Nation to make a
loan to a private sector developer that will help turn
waterfront brownfields into new housing, new jobs, new
recreational opportunities and new life for Stamford's south
side neighborhoods.
Stamford developer Seth Weinstein has borrowed $250,000 in
low-interest bridge funding for the Stamford RLF to redevelop a
12.6-acre former fuel oil depot and an adjacent 3.3-acre
parcel, a former location of a shipbuilding operation. The
proposed Southfield Harbor Residential Community will be a
waterfront development consisting of approximately 320 rental
apartment units, a 68-slip marina, and a publicly accessible
harbor walk, next to a city park. The development will bring
over $50 million of private investment and is expected to
generate 200 construction jobs, 12 full-time permanent jobs.
This development is cleaning up a former industrial site,
creating housing and opening up the waterfront to the City's
residents for the first time in more than 60 years.
This project shows that the EPA's brownfields RLF program
can work for communities. Stamford's staff has set up an
effective program that meets the EPA criteria and developers'
needs. Indeed, developer Seth Weinstein has reported that the
loan arrangement was as simple, straightforward and reasonable
as any he has seen in the development financing industry.
I am also happy to report that Stamford is now in
discussions with a motorcycle dealership that wishes to locate
on a Stamford brownfields site and is seeking RLF funds to help
that deal. In fact, we anticipate loaning them $200,000.
It is nice being first, but I will be second as well, if
need be.
At the same time, I can tell you that local governments
have concerns about several aspects of the EPA brownfields RLF
program which stem from its unnecessary connection, unnecessary
in my opinion, to the Superfund program and which this Congress
can fix easily. Because EPA RLF funds are taken from Superfund
moneys, these funds are tied to the requirements of the
Superfund National Contingency Plan, many of which are quite
burdensome and inappropriate for brownfields' redevelopment.
For example, brownfields' RLF funds cannot be used to
address contamination from petroleum or remediate buildings
contaminated with asbestos or lead paint. However, these
contaminants are the cause of a vast number of brownfields,
including a large number in my community.
In addition, the Superfund restrictions on the brownfields
RLF program requires that cities designate a government
employee as a site manager to oversee the cleanup at particular
brownfields sites. Many cities do not have qualified staff who
can serve this role. In our case, the State of Connecticut was
not able to provide--may I continue?
Mr. Upton. Go ahead. If you could summarize.
Mr. Malloy. It will move quickly--to provide this service,
and we were forced to turn to the Army Corps of Engineers. The
nearest office where we could obtain this help is Portsmouth,
New Hampshire. And, quite frankly, we should be allowed to hire
a licensed professional to oversee this aspect of the project;
and we could hire that person in Stamford. We wouldn't have to
be paying a government employee to drive from Portsmouth, New
Hampshire.
I have other examples which I would be happy to share with
you.
In conclusion, cities like Stamford are demonstrating that
tools like the EPA brownfields RLF program are making a
difference in revitalization of our communities. I would like
to work with Congress to help streamline this program and make
it a stronger program for the future. Thank you very much.
[The prepared statement of Dannel P. Malloy follows:]
Prepared Statement of Hon. Daniel P. Malloy, Mayor, City of Stamford
Good morning Mr. Chairman and Committee Members. Thank you for the
opportunity to speak before you today in reference to the U.S. EPA
Brownfields Cleanup Revolving Loan Fund (BCRLF) Program, and the City
of Stamford's successful participation in this program.
This morning, I plan to focus on three areas. First, I will talk
about how the City of Stamford is successfully using Brownfields
Cleanup Revolving Loan funds to facilitate the cleanup of a former
industrial site that has been a serious blight on the community for
many years. Our first BCRLF loan is helping to transform the site into
a $50 million private development that is creating new housing and
jobs, and opening up our waterfront to City residents for the first
time in 60 years.
Second, I will talk about how the BCRLF Program is helping to fill
the critical, ongoing need of local governments for federal brownfields
cleanup funds. Finally, I want to urge Congress to work closely with
EPA to make critical changes needed to streamline this BCRLF program so
that localities can more easily set up RLFs and get the funds to the
private borrowers who will clean up and redevelop these sites.
background on stamford revitalization
The City of Stamford is located on Long Island Sound, just 35 miles
from New York City. Its diverse population consists of 111,000 people.
We have a strong corporate base, with four corporations from the
Fortune 500 and thirteen Fortune 1000 corporations headquartered in
Stamford. While Stamford is an old industrial city, settled in 1641,
most of the historic manufacturing companies have left Stamford,
leaving behind their contaminated industrial sites.
The brownfields problem calls for creative approaches by local
governments, and the partnership and resources of federal and state
governments and the private sector. Stamford has demonstrated how local
leadership can result in revitalization and, as described below, why
the contributions of federal, state and private sector partners are so
critical.
Stamford has shown that it is a city that works in community
revitalization. A Mayor's job is to bring funding and new programs to
his City. I am a Mayor who makes things happen in my City. I feel it is
not enough just to bring grant funds to Stamford, but to make those
funds work by committing staff and resources to make these programs a
part of the City structure that produces results.
I have made changes in City government to provide a more citizen-
friendly organization and have established and maintained open lines of
communication between myself and Stamford citizens as well as between
myself and over 3,000 City employees. I maintain open office hours and
have established a Citizen's Services Bureau to handle citizens'
complaints on an ongoing, daily basis. I also hold a monthly Mayor's
Night Out to give citizens an opportunity to meet with me to discuss
issues important to them. Through these avenues, I have been able to
understand the concerns of Stamford residents, and have been able to
find programs and funding that will provide solutions.
I have worked closely with the U.S. Department of Housing and Urban
Development to reconstruct various areas of our City. Stamford was
awarded a $26 million Hope VI grant to redevelop a blighted public
housing complex in the Waterside neighborhood, the area with the
greatest level of poverty in the City. This is also the neighborhood in
which our first Brownfields Cleanup loan was made.
The City of Stamford is seeking Congressional support for $17
million in Federal Transit Administration appropriations, which has
been authorized for the design and construction of the Stamford Urban
Transitway. This Transitway is necessary to open up Stamford's South
End to brownfields redevelopment, and alleviate traffic in and around
our Transportation Center, the second busiest rail station in the
Northeast--second only to New York's Grand Central Station. Our
Transportation Center is undergoing a $100 million expansion.
In 1998, the City of Stamford became one of 16 communities
nationwide to be designated a Brownfields Showcase Community. This EPA
designation is in keeping with my plans for revitalization of older,
industrial areas, and the preservation of open space for our community.
In addition, it furthers my efforts to partner with federal and state
agencies on projects to benefit the citizens of our City.
However, there are still areas that continue to need funding in
order to see this revitalization effort through to completion. One of
those areas of need is the clean up and redevelopment of contaminated
sites, especially in our South End and Waterside neighborhoods. South
End has a population that is 80% minority, with 18% living below the
poverty line. Waterside has a population that is 71% minority, with 25%
living below the poverty line.
stamford's first rlf loan
In 1999 Stamford applied to EPA for an allocation under the
Brownfields Cleanup Revolving Loan Fund Program. On June 1, 1999 EPA
announced that Stamford received preliminary approval of a $500,000
allocation to establish a Revolving Loan Fund. In October, 1999,
Stamford made its first brownfields cleanup loan to a private
developer, who will borrow $250,000 in low interest funding to support
the development of housing on Stamford's waterfront. Let me tell you
why I think the City of Stamford succeeded in making the first loan in
the country under the Brownfields Cleanup Revolving Loan Fund Program.
I am proud to say that with my strong staff in my Grants Office, I
was able to bring the Brownfields Cleanup Revolving Loan Fund to
Stamford. With the committed support of the experienced staff in my
Community Development Office, Stamford developed its Brownfields loan
program. The Stamford Community Development Office, which routinely
handles loans to property owners developing housing using HUD's CDBG
and HOME funds, used their experience in HUD loan programs and housing
development to establish the Stamford's Brownfields loan program in an
expedient manner.
The months of July and August were devoted to preparing a
cooperative agreement application, model loan documents and creating
the loan process. The loan documents were designed to meet all
obligations of the EPA program but at the same time be fair to
participating developers.
First and foremost, any proposed site cleanup and redevelopment
must be economically feasible. The brownfields loan must be repaid to
the revolving fund so that the dollars may be reused to clean up other
sites. Stamford has a strong economy and real estate market so that the
cost of environmental cleanup can usually be supported by the land
value once a site is clean.
However, the economic feasibility and the after-cleanup land value
do not necessarily mean that a project can proceed without assistance
of the Brownfields Revolving Loan Fund. Private lenders are wary of
lending on a site that has environmental contamination. If the
Brownfields funds can be used as a bridge loan for the cleanup, private
lenders will commit to financing the redevelopment including repayment
of the Brownfields loan.
To provide an incentive to developers to use Brownfield loan funds
to remove environmental contamination, redevelop sites and quickly
repay the loans, Stamford structured its loan program as follows:
developers may borrow up to $250,000 for a period of up to 15 months at
an interest rate of 6%. If the developer repays the loan in 12 months,
the interest will be forgiven. If the loan is not repaid upon maturity,
the interest rises to 12%. Brownfields loans are secured by a first
mortgage.
To jump start the program, we did not wait until we had a signed
assistance agreement with EPA for the Brownfields Cleanup Revolving
Loan Fund before we marketed the program. In August, at the same time
that we were designing our Brownfields loan program documents, we
publicly advertised the anticipated availability of EPA loan funds for
the cleanup of redevelopment sites. The legal notice announced that
applications would be accepted on a rolling basis.
Stamford had a developer, Seth Weinstein, who was experienced in
brownfields redevelopment and has a keen vision of what brownfields
sites can become. We were well aware that he had been working for the
past two years on a plan to redevelop a 12.6-acre former fuel oil depot
and the adjacent 3.3-acre parcel, which was a former location of a
shipbuilding operation. Since the planned environmental cleanup of the
site met all of the requirements of EPA's Brownfields Cleanup Revolving
Loan Fund program, the City of Stamford encouraged the developer to
apply for participation in the program and potentially become the first
developer in the country to utilize a Brownfields loan.
The proposed Southfield Harbor Residential Community will be a
waterfront development consisting of approximately 320 rental apartment
units, a 68-slip marina, and a publicly accessible harborwalk. It is
adjacent to a City park and across the street from an affordable
housing condominium with 75 units. The development will bring over $50
million of private investment and is expected to generate 100-200
construction jobs and 12 full-time permanent jobs. This development is
cleaning up a former industrial site, creating housing, and opening up
this waterfront to City residents for the first time in over 60 years.
Prior to the announcement of the RLF program, the developer had the
subject property under contract for purchase. He had already completed
his Phase I and Phase II environmental assessments. His architectural
plans were complete. He had obtained most of his local approvals from
Stamford's land use boards. He had his development team assembled and
was putting his financing in place.
Since the developer had been in close consultation with the
residents of the neighborhood throughout his planning process, he had
already met many of the EPA requirements for community involvement. On
August 31st we held a public hearing in the neighborhood to discuss the
plans for cleanup and redevelopment of the site. Approximately 60
residents attended the meeting and showed support of the proposal.
In the month of September, Stamford completed its negotiation of
the final loan terms with EPA and the developer. On September 15th EPA
issued their Assistance Agreement to the City, which I signed on
September 23rd. On October 4th the developer and I signed the
Brownfields Loan Agreement.
It was through a dedicated team of city staff, working together
with EPA and a developer with Brownfields expertise, that my City was
able to issue the first loan. We are fortunate in Stamford to have a
developer who not only is astute in business matters, experienced in
brownfields redevelopment, but also is very aware of the need to engage
neighbors early in his planning process. The EPA's Region I and
headquarters staff are also to be praised for their hard work and
timely responses to the many and various questions posed by the City of
Stamford.
In bringing this loan program to life in Stamford, I am able to
make real things happen. We are able to complete the cleanup of a 15-
acre waterfront parcel, adjacent to a City park. We will bring a new
residential area to life, to be woven into an established and stable
residential area just across the street. We are tying communities and
people together and bringing long time residents back to Long Island
Sound through publicly accessible walkways along the waterfront.
I am happy to share with you that Stamford is now studying the
feasibility of its second loan under the Brownfields program. In this
case the developer, the proprietor of a motorcycle dealership, has a
contract to purchase the site. He has completed his Phase I, II and III
environmental assessments. He has received approvals from the land use
board, and his financing for the redevelopment is in place. The site
was a former machine shop and engraving operation which was the source
of contamination. The environmental cleanup will cost approximately
$200,000. He has had an initial meeting with the neighborhood, and the
residents support the proposal.
congress should streamline the bcrlf program
Having gone through the process of establishing a local RLF and
issuing our first brownfields cleanup loan, we believe that there is a
critical need for Congress to work with EPA to streamline the Program.
We understand that because RLFs are funded with Superfund dollars, EPA
believes that it must require all RLF-funded cleanups to meet the
requirements of the Superfund National Contingency Plan, many of which
are quite burdensome and inappropriate for brownfields sites.
For example, Superfund funds cannot be used for petroleum sites, or
the cleanup of buildings contaminated with lead and asbestos. However,
the lack of funding to remediate these contaminants is often an
impediment to the redevelopment of many brownfield sites.
Another burdensome requirement is that each participating City must
hire a Brownfields Site Manager to monitor the cleanup. The Brownfields
Program requires that the Site Manager must be a governmental agency
employee. In Stamford, like most cities of its size, we do not have
such on-staff expertise. This requirement forces us to engage the
Connecticut Department of Environmental Protection or the U.S. Army
Corps of Engineers to perform this function. The Connecticut DEP has
declined to serve as the Site Manager due to its own staffing issues.
Having no alternative, we have been forced to engage the Army Corps,
which has assigned personnel in the distant location of Portsmouth, NH
to provide the Site Manager services. We prefer to hire a private
licensed environmental professional to provide Brownfields Site Manager
services including daily on-site monitoring activities. The Program
requirements prohibit this. Instead, the law should provide that the
City is able to use an existing qualified staff person, or a qualified
private licensed environmental professional to fill this function.
Congress can fix these impediments to effective brownfields cleanup
loans by separating the BCRLF program from unnecessary Superfund
restrictions and requirements. These changes do not require
comprehensive legislative reform, but merely a technical fix that is
necessary to remove a barrier to the effectiveness of this program for
local communities.
conclusion
As I said in the beginning of my testimony, cities across the
country need resources to help fund the cleanup and redevelopment of
brownfields. The U.S. Conference of Mayors' recent report on the status
of brownfields sites in 223 cities nationwide indicates that the lack
of cleanup funds is the major obstacle to reusing these properties.
While EPA's Brownfields Cleanup Revolving Loan Fund Program has hurdles
to overcome, it is one program that attempts to address this critical
funding need.
In conclusion, while EPA has provided leadership on brownfields
issues, it is clear that the time has come for Congress to enact
brownfields legislation to ensure an ongoing source of funding for
brownfields cleanup and redevelopment, and to eliminate Superfund
requirements from the Revolving Loan Fund Program. Cities all over the
country need the commitment and financial support of the federal
government to help continue the cleanup of Brownfields sites. Cities
across America need public funds to provide the financing for the
higher risk cleanup phase. This will help leverage the private
financing needed for the redevelopment of Brownfields sites.
Thank you again for this opportunity to testify today. I will be
happy to answer any questions you may have.
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Mr. Upton. Thank you very much.
Ms. Foss.
TESTIMONY OF DARSI FOSS, WISCONSIN DEPARTMENT OF NATURAL
RESOURCES
Ms. Foss. Good morning and thank you for the opportunity to
be here, Mr. Chairman and members of the subcommittee. When I
woke up on Monday morning, this is not where I thought I would
be spending my Thursday, but I do appreciate the opportunity.
I am the chief of the Brownfields Section at the Wisconsin
Department of Natural Resources. I have been the chief point of
contact since we passed our first State legislation on
brownfields. I am working with the city Mayors, county
treasurers and a lot of local governments, lenders and private
developers to make sure their sites in Wisconsin get cleaned
up.
Today I find myself in a very changed situation. Tim Fields
and Linda Garczynski are the reason why our Wisconsin program
is where it is today, for their support and financial
assistance. But I am also here today to talk about a program
that I don't think has met all of our expectations, and I think
everyone in this room would like to make this a better program.
With those thoughts, I would like to talk a little bit
about my experience working with local governments, and how
that shapes the testimony I am going to give today. In my 5
years, we spent about 9 months critiquing our own State program
with the Mayors, businesses, environmentalists and provided a
report to our legislature, what was working well in Wisconsin
and what wasn't. So some of my experience was from that. That
comes into play. Wisconsin really thinks we need to increase
the amount of Federal money available for brownfields cleanup.
For the next 2 years, we will have $35 million in our State
alone, and we think the $40 million is a good start federally,
but I think there is a need for more money.
The second point I would like to make is the consideration
of the issuance of grants, especially to local governments. It
is very difficult for local governments on some of these
properties that the private sector is not interested in to turn
those over, and they can't do that oftentimes with loans
because they count against their public debt and they go
against their expenditure authority. So time and time again in
Wisconsin and other places I hear we need grants, and that is
what I have heard.
No. 3 is considering broadening the eligibility. It is
really hard for me to go to the little town of Stettin,
Wisconsin and look at their 40-acre, former EPA removal site
that no one is interested in and tell them why they are really
not eligible for these kinds of funds, where the city of
Milwaukee is eligible. So we think there is some real need out
there in all kinds of urban and rural communities.
I think, as mentioned before, and I think people are in
agreement, we need to streamline the technical cleanup
requirements on this program. I talked to a number of people
when we were considering as a State applying for this money,
and they really felt uncomfortable running through an NCP-type
process. Most of our consultants in our State are familiar with
our State regulations. They don't do EPA removal cleanups. That
is something that they just are not familiar with. Our Mayor
and our county treasurers and businesses are finally getting
comfortable with our State regulations, and I think that would
make the Federal funds more attractive.
Point five is consider the consolidation of the
administration of the program. I think what we heard from the
communities that were eligible for this money but did not
choose to apply is they really did not have the technical
expertise and the horsepower to apply and operate this kind of
program, but they felt like the State could do it, and we just
said we couldn't do that right now for them.
No. 6 is something we learned from our own State process
and our own State loan program, people really want you to,
``run it like a bank.'' We heard that time and time again.
Streamline the administrative requirements. What you are going
to find is there are several doors available to people who are
looking for money, and there will be local grants and State
grants and there will be lots of people standing in front of
that door. It is really hard to get people to stand in front of
the door for either a State or a Federal loan. The more
attractive and simple you make it, the more you are going to
have customers waiting to get those loans.
I think the last point is we need to provide more
flexibility to folks to make this work based on the needs out
there of the people that I deal with, to make this money
available and streamlined and simple and a process that they
understand. I think there is a real need, urban and rural, for
this money, and I look forward to working with you folks and
the folks at EPA to get these things going and improving the
program. Thank you.
[The prepared statement of Darsi Foss follows:]
Prepared Statement of Darsi Foss, Brownfields Section Chief, Bureau for
Remediation and Redevelopment, Wisconsin Department of Natural
Resources
introduction
Mr. Chairman and distinguished members of the Subcommittee, my name
is Darsi Foss, and I am the Chief of the Brownfields Section of the
Wisconsin Department of Natural Resources. The Wisconsin Department of
Natural Resources (WDNR) is the primary environmental protection agency
for brownfields in Wisconsin, and I have been working on Brownfields
issues for the Department since the inception of Wisconsin's
Brownfields Initiative in 1994. I am here today to talk about my
thoughts and experiences with EPA's Brownfields Initiative,
particularly focusing on the Brownfields Cleanup Revolving Loan Fund
program.
Brownfields continue to be a serious concern of many rural and
urban communities, and there is a significant need for public financial
incentives on the federal, state and local levels. The Wisconsin DNR
believes that EPA should be applauded for providing financial
assistance to States, such as Wisconsin, and local governments to
address this very real social concern. Without the EPA's assistance, we
could not have started our brownfields initiative, and would be several
years behind in the development and implementation of our brownfields
efforts if not for that support.
As the EPA may tell you, the State of Wisconsin has been very
creative in developing its brownfields initiative. We have been
involved with almost every EPA Brownfields initiative, with the
exception of the Brownfields Cleanup Revolving Loan Fund (BCRLF)
program. After much analysis and discussion, the WDNR chose not to
participate in this effort. However, our lack of participation in this
initiative should not be construed as non-support for EPA's efforts.
With some further flexibility on how the EPA can use this money, we
believe this could be a very attractive program.
Summarized below are the WDNR's recommendations for the type of
changes that could be made to the Brownfields Cleanup Revolving Loan
Fund program to improve its attractiveness to parties looking for
cleanup funds:
increase the money available.
We believe that the amount of money available nationwide should be
substantially increased to enhance the attractiveness of this
initiative. Currently, there is only $35 million available nationwide
for this program and the maximum grant amount is $500,000. It is likely
that a very small number of projects could be funded with this amount
of money. In contrast, the State of Wisconsin has $20 million in the
Land Recycling Loan program, a zero-interest loan program for local
governments for brownfields and landfill cleanups. This state program
is funded using money repaid to the state from the federal Clean Water
Fund Program (CWFP).
consider grants, not loans
The DNR believes that the purpose of the government providing
public funds for brownfields is to fill the gap left by the private
sector. Where the private sector is not interested in a brownfields
property, the public sector, such as a city or county will likely need
to play a major role in the initial or full revitalization of that
property. Local governments and private parties are looking for and
often need grants, not loans, due to the economics of that brownfields
project. Where a state has a brownfields grant program, you will likely
see diminished interest in any type of loan program, whether it is
state or federally funded loan programs.
broaden eligibility
The DNR estimates that there are approximately 10,000 brownfields
properties in Wisconsin. However, based on current eligibility
limitations, the DNR could not loan this money out to needy
communities, businesses or individuals in the state. We could only loan
it out in communities that have received brownfields pilot grants from
the EPA. Given this, DNR recommends that the loans be made available
more broadly, not just to pilot communities.
streamline cleanup requirements
The DNR recommends that the person receiving a loan be allowed to
conduct her or his cleanup in accordance with the state's voluntary
cleanup regulations, not the National Contingency Plan (NCP)
requirements for non-time critical removal. Using the state cleanup
approach will likely result in cost and time savings to the person
undertaking the cleanup. More parties may be interested in the loans if
the cleanup process is one that they and their environmental consultant
are familiar with, is less costly and saves them valuable time.
consolidate administration of program
The DNR recommends that the EPA consider the consolidation of these
loans into one administrative entity, such as a state agency or the
Regional Office of EPA. Efficiencies could be gained by having a
limited number of entities administering a larger number of loans, and
wider public outreach could be conducted to market these funds.
Presently, the recipient can use up to 15% of the funds for
administrative expenses. Based on our experience, that would not be
enough to manage the loan program, and for the technical oversight that
would be necessary for the long-term administration of this program.
The WDNR would need at least one full time employee annually for
several years to manage the financial side of this program
streamline administrative requirements
The simpler you make the loan program to apply for and administer,
the more attractive it will be. Especially where it is competing with a
local or state grant program. Presently, the administrative
requirements are daunting to many entities interested in some form of
brownfields financing.
provide epa flexibility
In order to most effectively use this money and make some of the
needed changes for this program, EPA needs greater flexibility on how
they can use these funds. It is no secret that the use of Superfund
moneys for this initiative is the one of the greatest challenges to
implementing an effective and efficient brownfields program.
In closing, I would like to thank you, Mr. Chairman and members of
the Subcommittee, in allowing me to present to you today some of the
recommendations we believe would help strengthen and improve the
attractiveness of the Brownfields Cleanup Revolving Loan Fund program.
We believe that there is a serious and demonstrated need for federal
funding for the cleanup of brownfields properties. The lack of activity
concerning the BCRLF program is not representative of the real need in
urban and rural communities for financial assistance with these
contaminated properties. This important initiative needs some fine-
tuning in order to make it more attractive to communities, businesses,
and individuals. We look forward to working with you and the EPA to
make this program a more effective tool to assist in the cleanup of the
estimated 600,000 brownfields properties nationwide.
Mr. Upton. Thank you very much.
I want to say a couple of things.
First of all, as with Mr. Fields, we appreciated getting
your testimony so that we could review it last night. That was
very helpful. Thank you very much.
Mr. Shays had the added--he bounced off of us on the House
floor during the last couple of days to encourage us that you
were coming.
Mr. Fields, we also appreciate your willingness to stay for
this panel, and if you would come back to the table. I
appreciate you being back at the table.
I appreciate all of your experiences and thoughts and
testimony. And really all of you have talked about flexibility
and the need to try and make this program accountable to your
own city and reflect, I think, common sense in a lot of ways.
I guess, Mr. Malloy, as I listened to your testimony as you
talked about the Corps of Engineers actually having to go to
New Hampshire--not to campaign for President--I know when I
went to New Hampshire, I flew to Boston to go there, so it
helped some friends up there.
But did you go back to the EPA to try and get some waiver
or some understanding with regard to this particular
requirement?
Mr. Malloy. I personally did not. I believe there was
discussion about it. But because of the link, as I understand
it and represent this to the best of my knowledge, because of
the link to the Superfund statute, it has to be a government
employee. Quite frankly----
Mr. Upton. There is nobody in Connecticut that can go to
some other place.
Mr. Malloy. Well, Mayors don't lend employees to one
another, and we don't have an employee on staff in Stamford who
met the requirements. We did ask the State, and the State
refused to participate, I think to their embarrassment at this
point. And I am hopeful that when we make the second loan, at
least in Stamford, if not nationally, that the State will then
provide that service to that applicant.
Mr. Upton. And what department from within the State would
you seek----
Mr. Malloy. We have a State EPA department. We asked them
initially. They refused to participate at the time. Again, I
think they were embarrassed by that, not because of these
proceedings, but it just doesn't make any sense when you are in
business to improve the environment not to participate and help
a municipality.
Mr. Upton. So do you view that as more of your own problem
with your own State, or EPA by not allowing----
Mr. Malloy. Well, I think the rule itself is silly. If we
go through a licensing process for a professional and we grant
a license, then why not allow me to hire the person that we
licensed for that purpose to oversee what is relatively a small
loan, a $250,000 loan? We have lots of people in our
community--in fact, we are engaged in a training program to get
people the license that would allow them to do this type of
work. So I think that that is an important change that could be
made.
Mr. Upton. As you know, you have the distinction of being
the only pilot that actually received and cashed the check
allowing this program to go. And as we reviewed the history of
your application, it looked like it was fairly quick order.
Mr. Malloy. Well, I don't apply for things for political
reasons or publicity. If I apply for something or authorize my
city to apply for it, I take it very seriously. And as we were
going through this application process, Mr. Weinstein's site
was one that we specifically indicated we would be desirous of
making a loan on. We had done our work. We had been working
with Mr. Weinstein for a series of years. This is a site that
had previously been sought to be developed in the last economic
boom, so we were ready.
On June 1, when we received the preliminary award that we
would participate in this, we moved, continued to move
actively. On August 31, before we had actually received the
final EPA contract, we held our public hearing. We had over 60
people attend that public hearing in this relatively difficult
neighborhood. September 15, I got the agreement forwarded to
me. On September 23, I signed the agreement; and October 4, we
made the first loan.
I am very proud of my people. I have good people working
for me. And if they are not good people, they don't work for me
much longer.
Mr. Upton. Mr. Ahern, you indicated in your testimony, and
I read part of it to Mr. Fields, at the beginning where you
write, ``it just isn't worth the hassle.'' Have you had some
discussions with EPA to try and alleviate some of these
regulations?
Mr. Ahern. A great deal. Actually, EPA Region One, which
covers New England, has been quite helpful to us, and they have
tried immeasurably to try to assist the city of Boston. And I
imagine from my discussion with other cities like Bridgeport,
actually, who I have spoken to about this program, that EPA has
tried very hard to try to find some ways around this problem.
The OSC problem, for instance, we tried to solve it in much
the same manner as Mayor Malloy did. And what happened is that
we have a system in Massachusetts of a privatized cleanup
system. And what would happen, if our State EPA, who, by the
way, our State agreed to participate and serve as the onscene
coordinator through a contract with EPA, not specifically
through the city of Boston.
But I was concerned because, under the privatized cleanup
system which many States have nowadays, you would have--I would
be put in a situation--the City would be in a position where we
would be telling a private property owner who would be
interested in taking this loan that I know you hired this
private person to perform your cleanup and do your assessments
and so on and so forth, but I am going to put a person from the
State Department of Environmental Protection on your site as
your onscene coordinator. And I spoke to several people who
were interested and who were looking for loans and who were
looking for help on this site, and several of them were like, I
don't think that is the way I want to go. I have a tier two
site. It is a simple process. If I can find the money, the guy
comes in, he does the assessment, he does the cleanup, he files
the paperwork, we are done. I don't need EPA--or, excuse me,
DEP on my site every day.
So for that purpose, we declined the offer of the State.
Now, recently, the city of Boston made a commitment and
hired a person to serve that role of OSC. The person is a
licensed waste site cleanup professional in the State of
Massachusetts. Our hope is that she will also satisfy the
requirements of the OSC. They are different, so it is not as
simple as just going and hiring a Massachusetts-licensed
professional as it would be in Connecticut, as well the same
thing. There are very different requirements that you have to
hit. So we are hoping that she will be able to serve that role.
But for all intents and purposes EPA was very helpful for
us. It is just that what they can do was not helpful for us.
Mr. Upton. Mr. Bryant.
Mr. Bryant. Thank you, Mr. Chairman.
Welcome again, Mr. Fields, back to the panel and our very
distinguished panel. As I described in my brief opening
statement, the people out in the field who I think bring a very
good perspective to this entire oversight hearing.
Mayor, welcome. Congratulations to you. I spent a long time
running a 15K there about 20 years ago in the streets of
Stamford when I was running in those days, but it is a
beautiful city.
Mr. Malloy. Thank you.
Mr. Bryant. I had a slow tour of it.
Mr. Ahern, let me apologize. I came in a little bit late
after voting and missed the majority of your testimony today.
But I wanted to ask you, in preparation for this hearing, you
talked to our committee staff here of this oversight
subcommittee in recent weeks. And during the discussions you
indicated there were several sites in Boston where your office
suggested to the parties who were redeveloping the sites that
they should consider the Revolving Loan Fund. In those cases,
the parties actually opted to obtain funding through private
loans instead. In your written testimony you say that this is
the case, even though the terms of the private loan are more
expensive. Can you explain to us a little bit more about why
those particular people you referred to selected the private
funding route over this EPA program?
Mr. Ahern. Primarily because of the restrictions and the
problems that we have described, all three of us, really, here,
and actually Mr. Fields as well.
Primarily it is an issue of CERCLA regulations, something
that I am sure that this committee has heard ad nauseam. But
for the people on the ground--and I will give you just one
example.
There is a gentleman in the Jamaica Plain neighborhood of
Boston. It is an up and coming neighborhood, but it is
primarily a working class neighborhood that has brownfields
located right next door to homes because, you know, you would
have foundries that were located for 50, 60, 70 years and up
around this neighborhood as it has grown, homes have grown.
And this one gentleman who, early in my tenure--and I
should add that I have been in this job since August 1998, so
some questions you may ask predate my involvement.
However, this gentleman, he was in dire need and has been
in dire need of specific funds to clean up a site because he
was building artists' lofts and artists' working space, and he
was taking this foundry down. He had TCE on his site, he had
PCBs, he had oil, lead, arsenic, you get the message. He pretty
much had everything you could find.
When we discussed this program, as we discussed--as I noted
in my testimony, we discussed really the menu of options. We
could go through the City, what the City can do, discussed what
the State program can do. We talked about tax credits, talked
about loans. Debt for him was something of a problem but
something that he could undertake. He was essentially eating up
his development budget with the cleanup costs because the
cleanup costs were skyrocketing. He was going to need more
money.
What he elected to do after we discussed this program and
after I gave him the application book that describes, you know,
what CERCLA is and what the program is going to require, he
elected instead to actually take the contamination and move it
to another portion of the site where he wasn't going to be
doing the development immediately, and he started with his
first part of his development on the portion that isn't as
contaminated. In fact, he just contacted me again the other day
through a letter and said, is the State program up and running
yet? Because I really need some more money to take care of this
problem.
Mr. Bryant. All right. Thank you, Mr. Ahern.
Ms. Foss, I made a reference to you and one of your
statements in examining Mr. Fields earlier, but as I have
reviewed your testimony and State, you indicate that Wisconsin
chose not to participate in this program. And without casting
aspersions on it, you made some very positive suggestions
listed in your statement and you have testified those today.
Specifically, you mentioned one of the latter
recommendations being the efficiencies that could be gained by
having a limited number of entities administering a larger
number of loans such as a State agency or regional office of
the EPA. Is it your suggestion perhaps that EPA should award
these revolving loan funds to the States and that the States
could administer those--could administer this program better?
Ms. Foss. Well, I think one of the things we have heard
time and time again is the problem of people maybe not applying
who were eligible. And the communities that I work with said
the reason they didn't is they just did not have the horsepower
to get the application in and then to operate the program. But
they really looked to us to do that, because we had done it for
the Clean Water Fund and the Safe Drinking Water Fund money and
some other moneys. So, oftentimes, the local governments do
look to the State to do that and probably more efficiently than
them running the little grants.
So I don't know if this is a DNR recommendation per se, but
I think one of the things we are seeing time and time again is
folks are having trouble keeping the infrastructure going in
their communities, and it might be helpful to have it
consolidated.
Mr. Bryant. Thank you, Mr. Chairman.
Mr. Upton. Thank you.
Mr. Burr.
Mr. Burr. Thank you, Mr. Chairman; and welcome to each one
of you.
I have to say congratulations to you, Mayor, and I am sure
that not only the comments of Mr. Fields but the comments of my
colleague, Chris Shays, are very deserving, and I will share
with you that I would never run for Mayor. You might say, I
would never run for Congress. But you are certainly close to
the problem, and I think that that is why this panel is so
special.
I truly meant it when I said to Mr. Fields earlier that the
intent of everybody up here is to clean up sites, to develop
the property that is there, to make sure that by whatever means
we accomplish that as productive parts of the areas that we
come from, whether it is looking at it from a State standpoint,
like Ms. Foss, or the local, city of Boston or Stamford. I
guess the question that I have to ask you is, would this
project have gone forward without the involvement of the
Revolving Loan Fund?
Mr. Malloy. I anticipated that question. We were working
with this developer on a number of sites, so the answer might
be that it would go forward without this one, but another
project would have been put on hold that we are pursuing with
the same developer.
And when I applied for the Showcase Community designation 2
years ago, without this site having been designated as one of
the sites and without holding out to banks its designation when
it came in in March 1998, this project would not be moving
forward.
So if you are talking about a package of EPA benefits that
are available, I think the overall answer is that it would not
be moving forward. If you are talking about would this large
project, having moved through all of the approval process, have
gone forward, I think the truthful answer is it probably would
have, but other things would have been put on hold.
Now, my next loan is a motorcycle shop. I don't know
whether you have one, but the gentleman is going to sell hogs,
and he has to buy a building that is a former machine shop, and
the ground is contaminated with the residue of that process.
And I can give you my word that that project would not move
forward without this loan.
And I would say, finally, that many of these smaller sites
have to be cleaned up before a bank will loan to a guy who runs
a hog shop, because they are not going to make a loan based on
his good name or his existing business in a rental building to
a site that requires cleanup. It scares the bejesus out of
banks. And we have to help these people. This guy is going to
employ--this big complex is going to employ 12 people. This
little deal is going to employ four.
Mr. Burr. I think all three of you have expressed concerns
about the program as structured, that if you had a pen and a
blank sheet of paper and could design the Revolving Loan Fund,
it would look different.
I guess the first question--and I will let anybody answer
that would like to--is, have you shared that with Mr. Fields?
Did he listen?
Mr. Malloy. Well----
Mr. Burr. And what would it look like?
Mr. Malloy. Let me answer that.
I am not--I am pretty direct about my criticism of Federal
agencies. I have had run-ins with EPA. I have had run-ins with
HUD. I have to tell you that I have discerned in these
organizations a desire to reshape themselves and to work with
municipalities--I am talking the Mayor's side--municipal
government.
There are 222 municipalities in the United States with a
population of 100,000 or more, and I suspect that the Mayors of
those cities are getting a better listening to over the last
couple of years than we experienced prior to that time, and I
would say that EPA and HUD are two of the agencies that have
turned around most directly.
Having said that, why can't I use this to clean up
petroleum? Why can't I use this to clean up asbestos? Why can't
I use this to clean up lead? Why can't I hire an inspector?
When I have answers to those questions, then I think we
will have a package that makes a lot more sense.
Mr. Burr. Mayor, you and Mr. Ahern I think both alluded to
a concern as it related to the regulation of an on-scene
coordinator. That is a requirement. Now, who is that on-scene
coordinator and what do they do and how much does it cost?
Mr. Fields. I will start.
Mr. Ahern. Why don't you start?
Mr. Fields. The reason for the on-scene coordinator
requirement is that we want to have someone there to provide
oversight for cleanups at Superfund sites.
Mr. Burr. Who is that person? Is it a Federal employee?
Mr. Fields. It could be a Federal employee, State or local
government employee. It has to be a government employee.
Under the regulations for Superfund, it has to be a
governmental employee. It could be any level of government, but
it requires a governmental entity to oversee and assure that
environmental rules are complied with for cleanup.
Right now, that is the problem. We agree that there needs
to be some fixes, but, right now, that is why a governmental
person has to be there to oversee cleanup activity.
Mr. Burr. What does that cost, Mr. Ahern?
Mr. Ahern. In the State of Massachusetts, a newly licensed
waste site cleanup professional that is versed in the State
laws would cost $65,000 a year.
Mr. Burr. You don't need to have this person until you have
had a site approved; am I correct?
Mr. Ahern. That is correct.
Mr. Burr. Once you have a site approved and you are making
a loan to that site, then, out of the Revolving Loan Fund, you
can use up to 10 percent, 15 percent----
Mr. Ahern. Fifteen.
Mr. Burr. [continuing] to fund that individual and any
other administrative cost with the program, correct?
Mr. Ahern. That is correct.
Mr. Burr. Do you need that person?
Mr. Ahern. We need that person for a lot of different
reasons, not just for the Revolving Loan Fund. I mean, it is a
person who, from a city's perspective, could serve a lot of
uses.
However, for this particular project, I think it is in the
best interests to have somebody working for the city whose
responsibility it is to ensure the proper cleanup of the sites,
since we are effectively making the loan. However, does that
person need to be a government employee? I disagree. I don't
believe that it does. I believe that the Massachusetts'
system----
Mr. Burr. When they say onsite, does that just mean
somebody available to look at the progress that is being made?
Mr. Ahern. Yes. Somebody to oversee.
Mr. Burr. They don't have to be out there every day?
Mr. Ahern. No, sir.
Mr. Burr. Okay.
Mr. Malloy. Well, it is a little more technical than that,
because each plan requires--there are steps in each plan and,
frequently, each step has to be certified. So a person will
have to make multiple trips----
Mr. Burr. Certified by whom?
Mr. Malloy. By the individual who is required to be a
government employee. So, for instance, you have to reveal the
substance that has to be removed. Well, that process has to be
inspected. So there are a number of items, but it would be a
lot easier for me just to contract--I mean, I do it for city
work, so why shouldn't I be able to do it for this work--to
contract with a private entrepreneur who is licensed to do
that.
Mr. Burr. The chairman is getting a little impatient with
me. Let me ask one last question, because I see we have other
members here.
I want to understand the process, Mr. Ahern, that Boston
went through relative to their selection. I would take it that
you filled out an application, sent it to EPA. You wanted to
be----
Mr. Ahern. I do have to tell you, Congressman, that I came
to the Boston Redevelopment Authority in August of last year,
August 1998. So the actual application, in applying to EPA for
this program, predates my involvement with the program. I
worked for the Commonwealth of Massachusetts.
Mr. Burr. So by the time you got in, they had applied, they
had been approved, they were a participant in the program, you
would have had administrative manuals?
Mr. Ahern. By the time I started, sir, the administrative
manual had been released just a few months earlier, in May, and
I started in August. So I came on----
Mr. Burr. You came in August 199----
Mr. Ahern. 1998.
Mr. Burr. But the Revolving Loan Fund started in 1997.
Mr. Ahern. That is correct, sir.
Mr. Burr. And the administrative manual wasn't ready until
May 1998?
Mr. Ahern. That is correct.
Mr. Burr. Let me ask you, Mr. Fields, could people proceed
forward without an administrative manual?
Mr. Fields. Yes, sir, Mr. Congressman. We implement
programs without guidance sometimes. You don't necessarily have
to have guidance.
Mr. Burr. How does one know how to proceed without
guidance?
Mr. Fields. As I said earlier, in the National Contingency
Plan Regulators response activities. We use removal authority
to oversee and conduct brownfields cleanups. We have statutes.
We have regulations.
Mr. Burr. I just heard Ms. Foss talk about a larger scope
of brownfields cleanup, and I agree with you totally. Tell me
how that small town in Wisconsin, without an administrative
manual, could have proceeded.
Mr. Fields. Our people in Chicago at Region Five were
providing a lot of hands-on assistance to people, interpreting
our regulations, interpreting the law, and explaining how this
process would proceed. The administrative manual codified
evolved over several months' discussion about how this program
would proceed and that is not unusual.
Mr. Burr. I see the chairman is going to cut me off, but
with that much--with that much help from everybody in the EPA,
I am amazed that Mayor Malloy was the only one to actually make
a loan.
I would yield back, Mr. Chairman.
Mr. Upton. Well, before you yield back, I want to use 1
minute of your time----
Mr. Burr. I am happy to yield to you.
Mr. Upton. [continuing] before I yield to Mr. Blunt just to
ask this question.
As we explore further this onsite coordinator that you had
to take from New Hampshire to come down from Connecticut, we,
the Congress, didn't write these regulations, the EPA did. It
was EPA's requirement that that happened. Is there not a
provision, Mr. Fields, that you could write that would have
allowed some waiver or some agreement with some of the comments
made by both Mr. Malloy and Mr. Ahern that it doesn't
necessarily----
Obviously, you do have to have someone there. Someone that
the cities or the municipality trusts is going to make the
right decision. But it isn't us that passed down that
requirement, it was you all. And I would like to think as we
are all seeing on this flexibility page song sheet that you
would be in tune with everybody else, that we could get some
waiver or some agreement so that they don't have to go to this
pretty large expense to get someone to come down from New
Hampshire to go to Connecticut or from North Carolina to
Michigan.
Mr. Fields. There is two ways to fix this. One is to pass
the legislative provision, as I mentioned earlier, which would
allow us to only apply those things from the NCP that are
appropriate and relevant. That is something Congress can fix.
It is in H.R. 1750.
Second, as I indicated, we would have to go back and amend
our regulations that EPA has promulgated. We would have to
amend them to eliminate the application of an engineering
evaluation cost analysis, require an action memorandum, or the
12-month requirement for brownfields cleanup. There are things
we can do, but that would have to be done through regulatory
change on the EPA side.
Congress could also enact legislative fixes that would
solve some of the problems that have been pointed to by all
three of these speakers.
Mr. Burr. Reclaiming my time----
Mr. Upton. Would the gentleman yield further?
Mr. Burr. Is the gentleman from the EPA suggesting his
willingness to go back and change those administrative things
that he can address?
Mr. Fields. Congressman, we are hopeful that the Congress
and the administration can agree on appropriate legislative
change. We think that is faster. Regulatory change is going to
take a minimum of 2 years to make change. We will go back and
look at whether we can do some streamlined regulatory changes.
But, I think Congress can act faster than we could within EPA
to make those changes.
Mr. Burr. I have learned in the short life I have been
here, Mr. Fields, that the process that we go through is one
where we legislate and then agencies change the regulations to
reflect the intent of the legislation. And what you have done
is you have added a step in there. When you can change the
regulation within the process at EPA, why wait for us to pass
legislation that we all agree on for you to rewrite the
regulation, when you can do it to start with?
Mr. Fields. We will go back, Congressman, and look at that
option, particularly if the prognosis for legislative change
does not look like that is going to occur within a 2-year
window.
Mr. Burr. My hope is that we will judge it based upon our
outlook for possible cleanups.
Would the chairman like me to yield any more time?
Mr. Upton. The gentleman's time now has finally expired,
and I will yield to Mr. Blunt.
Mr. Blunt. Thank you, Mr. Chairman.
I want to apologize for not being here to hear the
testimony, but I have looked at the testimony submitted. And I
have a couple of questions, and they may even tend to be
repetitive, but I wouldn't know that. And if they are
repetitive, I guess you will know when you go back, Mr. Fields,
that these are issues that have some resonance here.
Really, the first question is, Ms. Foss in her testimony
indicated the significant ability to expand the cleanup effort
if you use the various State voluntary cleanup program
regulations instead of the national plan, and I want to ask Mr.
Fields to comment on that.
Ms. Foss, before he does, would you give me just a little
more of your thought on that? What would you see as the
expansion in Wisconsin? I mean, I am prepared to take the facts
you are most familiar with if, in fact, the voluntary plan
could be used as opposed to the national plan, the State
voluntary plan.
Ms. Foss. Thank you very much.
First of all, we have a brownfields memorandum of agreement
with EPA that recognizes our program as something that they
agree with and think does good cleanup. So I think that is one
of the strong points in our favor.
I think when we talked to our local governments and the
lenders and businesses, they are using this process on a daily
basis. This is what they feel comfortable with. It has been in
place since 1994. This is what the consultants in Wisconsin use
at any kind of site. Whether it is petroleum or hazardous waste
or just hazardous substances, they are using our one regulation
to clean up these properties.
I think it would make the loan program more attractive if
they had something that they felt comfortable with. It is one
less thing that they had to deal with. They could just go hire
the XYZ consulting firm to go out and do the cleanup and not
have to look around for somebody who is familiar with the
Federal regulations, because we just don't have that
familiarity in Wisconsin.
Mr. Blunt. Mr. Fields, do you want to comment on your sense
of whether or not we could move in that direction where you had
more flexibility but, obviously, some ability for input from
your Agency?
Mr. Fields. Yes, Congressman.
I agree that more flexibility needs to be provided. I agree
with Ms. Foss that we need to have a more flexible system than
the National Contingency Plan for brownfields cleanups. I
believe that certain requirements in the National Contingency
Plan should be eliminated as they apply to these types of
cleanups. We should not have to prepare an action memo, prepare
an engineering evaluation/cost analysis, or comply with the
Superfund specific grant regulations.
A lot of those elements should be eliminated, and I agree
with that. As I have said, we either do it through regulatory
change or through legislative change. Those are the two
options.
We are going to work with Congress to see if legislative
change can be effectuated. If not, we will have to pursue some
targeted, quick regulatory changes to make sure that we can
eliminate some of these hoops.
We will try to do it administratively, but we agree with
Ms. Foss that a more flexible approach for brownfields cleanups
is needed and that the National Contingency Plan does create,
we believe, unnecessary hurdles. But right now, under the
current statute and regulations, there are impediments in our
ability to deviate very much from those current requirements.
Mr. Blunt. Are the greater impediments in the current
regulations or in the current statutes?
Mr. Fields. Well, one of the issues that has been brought
up by both Mayor Malloy and Mr. Ahern was the discussion we had
about the on-scene coordinator being a government employee. The
statute requires that the on-scene coordinator be a government
employee. That is something in the law.
I can change by regulation the requirement to eliminate the
action memorandum, the engineering evaluation cost analysis,
the requirement to comply with Superfund-specific grant
regulations. I cannot change the requirement that the person
who oversees those cleanups be a government employee. That is
something that is in the statute, not in the regulations.
So there are some parts of this I can fix possibly through
regulatory change. Other parts of it Congress would have to fix
through legislative change.
Mr. Blunt. If you started fixing your part right now, how
long would that take?
Mr. Fields. We project that it would take up to 2 years. We
would try to go as quickly as we can.
The last time we changed the National Contingency Plan, it
took us 4\1/2\ years. Ms. Garczynski was the person who headed
up the last rewrite of the National Contingency Plan, and it
took almost 5 years to do it.
We would try to beat that and do something more quickly,
but, still, you are talking about a couple-year process.
Mr. Blunt. Is there anything in the current legislation
that is out there that would make these kinds of changes?
Mr. Fields. Yes, one piece of legislation that we talked
about earlier, I think before you came in. Language in H.R.
1750, one bill that has been introduced in Congress that the
administration supports for brownfields, would include a
provision that would say that the procedural requirements of
the national contingency plans, as applicable to brownfields,
would be limited to only those requirements that are relevant
and appropriate for brownfields. That type of language in the
statute, we believe, would allow EPA to have apply only certain
Superfund cleanup requirements to brownfields cleanups. That is
consistent with what I think Ms. Foss was indicating regarding
a more flexible, targeted type of approach for brownfields
cleanups as compared to Superfund cleanups.
Mr. Blunt. Ms. Foss, do you agree with that
characterization of where you think--where you are on this?
Ms. Foss. Absolutely. I do agree with Mr. Fields.
Mr. Blunt. And do you see a problem if we eliminate the
requirement for a government employee to supervise in these
defined brownfields areas?
Ms. Foss. You know, I don't, sir. Because the fact is, even
if somebody is cleaning up in the State of Wisconsin according
to the Federal requirements, the State of Wisconsin also has
its own law and is going to be interested in making sure that
they are going to follow our law. So they are going to have to
come in and either ask for some kind of no further action
letter at the end, or they may be going through what is called
our voluntary cleanup program, wanting some kind of liability
release where we would be reviewing the project anyway. But
they would have to comply with State law as well.
Mr. Blunt. Mr. Chairman, based on the time zone that Mr.
Burr was in, could I ask one more question, assuming the clock
continues to run in my favor here?
Mr. Upton. Go ahead.
Mr. Blunt. My other question would be on another point in
trying to broaden the efforts to get this done with greater
flexibility. It was the question about making loans to
communities that weren't in the pilot project category. Is
there any way to go back and do that, Mr. Fields?
Mr. Fields. We have--and I agree with Ms. Foss that we do
want to consider in terms of being eligible for Brownfields
Cleanup Revolving Loan Fund some communities who are not
brownfields assessment pilots, and we have done that. Some
communities in Massachusetts, some communities in Minnesota,
some in Indiana, they are part of the Brownfields Cleanup
Revolving Loan Fund program, but they did not have an existing
brownfields assessment grant. So I agree with Ms. Foss that--
and EPA has tried to expand the program beyond brownfields
pilots to include those communities where some targeted
assessment work has been done, either through a State or
through an EPA grant contract. So I agree that we don't
necessarily have to have a community that is a brownfields
assessment pilot to be eligible for brownfields cleanup
revolving loan funds.
Mr. Blunt. Are there examples of communities who didn't
have pilot programs who have gotten loan funds yet?
Mr. Fields. Yes, those I just mentioned. Communities in
Massachusetts and Minnesota and Indiana have gotten brownfields
Revolving Loan Fund assistance, even though they were not a
brownfields assessment pilot project.
Mr. Blunt. Are you aware of that in Wisconsin, Ms. Foss,
that that is possible?
Ms. Foss. I think the distinction Mr. Fields may be making
is those communities that got the Revolving Loan Fund did get
some Federal assistance, and it may have been through the
State. But it isn't, I don't think--and correct me if I'm
wrong, Mr. Fields--broadly applicable to all communities. It is
for those that got Federal funds somehow for brownfields, so it
is still I think a little limited.
Mr. Fields. She is correct. It does not include every
community across America, but it does go beyond the brownfields
assessment pilots to a universe of people who have had
assessment activities. We think that having assessment work
done does help facilitate identifying properties for a cleanup
by having that assessment phase done first.
Mr. Blunt. Thank you, Mr. Chairman.
Mr. Upton. Well, thank you. Those buzzers indicate that we
have a vote on the floor, which will coincide with the end of
this hearing.
I just want to say in conclusion that we appreciate all of
you coming to Washington and testifying today. Again, your
testimony is very helpful. We all have brownfields sites, and
we want a brownfields program that works, and we want one that
can be as flexible as possible to take the local input from our
Mayors and county and State officials so that we can assure the
taxpayers in fact that the work is getting done. We appreciate
your willingness to try, as we all do, to achieve that goal at
the end of the day.
And I guess just from my side here, it seems like there is
some frustration in that we all believe that you, Mr. Fields,
have more flexibility than you have shown.
I talked to Mr. Greenwood on this last vote on the floor,
who is the sponsor of H.R. 2850. We intend to get a letter to
you very soon pointing out that you do, in fact, have the
authority to move forward.
It would be nice to know, as we hear from cities both that
have received funds, maybe a city that has received funds, but
certainly others that expect to, that, in fact, you are willing
to bend over backwards to make sure that common-sense solutions
really can work. And the idea of someone commuting from New
Hampshire to Connecticut I would bet doesn't make sense in most
people's eyes. And if that is just one example, there have to
be others. And your willingness to proceed on that front I
think would be appreciated by all of us.
Thank you very much.
I might say that all members will have the opportunity to
provide questions for the record, and obviously you will
respond with regard to that one issue that we have raised.
Thank you very much.
[Whereupon, at 12:05 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
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