IB97025: Superfund Reauthorization Issues in the 105th Congress

Mark Reisch
Environment and Natural Resources Policy Division

November 23, 1998

CONTENTS

SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
Action in the 105th Congress

Comprehensive Bills
S. 2180
Hearings

Appropriations
A Brief Summary of the Cleanup Program
Superfund Reform Issues

Relieving the Burden of Retroactive Liability

Comprehensive Bills in the 105^th Congress

Cleanup Standards and Remedy Selection -- Concerns Over Expense and Delay
Should Natural Resources Damages Be Narrowed?
Giving States More Control of the Program

Accompanying Issues Related to Lower Priority Sites

Expanding the Brownfields Program
Aiding Voluntary Cleanup Programs for Lower Risk Sites

LEGISLATION
CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS
FOR ADDITIONAL READING

SUMMARY

For the third Congress in a row, there was a major effort to reauthorize Superfund. Chairmen of the three committees of jurisdiction introduced comprehensive reauthorization bills -- S. 8, H.R. 2727, and H.R. 3000; hearings were held on all three, S. 8 was ordered reported, and H.R. 2727 was approved by subcommittee. None of these bills was enacted.

The law's title is the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA, P.L. 96-510). As of September 1998, 18 years after the law's enactment, 535 sites (39%) placed on the Superfund's National Priorities List (NPL) had been removed to the Construction Completed List. The program has been accused of being slow, ineffective, and expensive. Many feel its liability system is unfair; the lack of agreement on new liability provisions has impeded congressional action.

CERCLA's broad liability scheme has been the most difficult reauthorization issue. The average cost of cleanup is about $30 million, a large enough amount to make it worthwhile for parties to pursue legal means to spread the costs rather than to settle. So at large sites, where it is not unusual for there to be over a hundred potentially responsible parties, there can be a commensurate amount of expensive negotiation and litigation. This has been especially burdensome on small businesses and other minor parties.

The law's cleanup standards and remedy selection procedures are also controversial. Requirements for treatment, permanence, and the application of both federal and state regulations have led to what some critics characterize as overly strict risk assessment, and increased costs and delay at many sites. Business interests want to limit the scope of natural resource damages that can be assessed against them by putting a cap on the amount of such awards.

A number of states want to have full delegation of the authorities in CERCLA, including remedy selection, control over CERCLA's monies, and the determination of what sites go on and off the NPL. The popular brownfields program, aimed at low-level contaminated sites with economic development potential, received increased funding for FY1998 and FY1999. Also state voluntary cleanup programs are popular.

EPA's FY1999 budget request (H.R. 4194), including $1.5 billion for Superfund, was signed by the President on October 21, 1998. The Superfund FY1998 appropriation was also $1.5 billion (P.L. 105-65). The authority to collect the taxes that support the trust fund ended in 1995; a General Accounting Office study said the outlook for the Superfund Trust Fund after FY 1999 is uncertain. In Superfund actions in the 105^th Congress, the Taxpayer Relief Act of 1997 (P.L. 105-34) included a $417 million tax break for cleaning up brownfields, permitting same-year deduction of cleanup costs.

MOST RECENT DEVELOPMENTS

The Superfund program's FY1999 appropriation of $1.5 billion, including $91.3 million for EPA's brownfields program, was signed by the President on October 21, 1998; the Administration had requested $2.1 billion.

The Superfund trust fund contained a sufficient balance for the program's FY1999 appropriation, but its future beyond that is uncertain, GAO said in an April 1998 report.

S. 8 was reported with amendments from the Committee on Environment and Public Works on May 19, 1998 (S.Rept. 105-192). H.R. 2727 was approved by the Subcommittee on Water Resources and Environment on March 11, 1998, and forwarded to the full Committee on Transportation and Infrastructure. The Commerce Committee held hearings on the other Superfund chairman's bill, H.R. 3000.

In the first session of the 105^th Congress, tax breaks for brownfields cleanup worth $417 million through December 31, 2000, were passed as part of the Taxpayer Relief Act of 1997 (H.R. 2014, P.L. 105-34).

BACKGROUND AND ANALYSIS

Despite great effort by all parties, reauthorization of the Superfund program in the 105th Congress was not accomplished. The Senate Environment Committee held hearings on the Chairman's mark of S. 8 in September 1997, and ordered it reported with amendments on March 26, 1998; the House Transportation and Infrastructure Subcommittee on Water Resources and Environment held hearings on H.R. 2727 in October 1997, and forwarded the amended bill to full committee on March 11, 1998; and H.R. 3000 was the subject of a House Commerce subcommittee hearing on March 5, 1998.

Superfund is the principal federal program for cleaning up inactive hazardous waste sites and protecting public health and the environment from releases of hazardous substances. The establishing law's formal title is the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA); comprehensive changes were made by the Superfund Amendments and Reauthorization Act of 1986 (SARA). The Superfund trust fund, created primarily from excise taxes on petroleum and specified chemical feedstocks and a corporate environmental income tax, raised about $1.5 billion per year before the collection of taxes expired on December 31, 1995. The law requires responsible parties to pay for cleanups, and the fund is used where a financially viable party cannot be found. The fund also is used for the Environmental Protection Agency's (EPA's) enforcement, management activities, and research and development.

Since the taxes that support the fund expired on December 31, 1995, the only revenues now coming into the fund are amounts recovered from responsible parties, interest on the fund's investments, fines, and penalties. An April 1998 study from the General Accounting Office (GAO) states that while there is sufficient money in the trust fund for the FY1999 appropriation, the fund's subsequent status is uncertain. This lack of taxes creates pressure to reauthorize the law, since Ways and Means Chairman Bill Archer has said that the taxes will not be restored until there have been fundamental changes in the act, particularly its liability regime. GAO also said that there is nothing in CERCLA or the congressional budget resolution to prevent the appropriation from being funded completely from general revenues.

EPA does not have unfettered access to the Superfund trust fund. Congress annually appropriates monies from the fund to EPA, and in most years adds a contribution from the general fund of the Treasury, usually $250 million, the maximum authorized in CERCLA.

On May 6, 1998, the Senate defeated Amendment No. 2340 proposed by Senator Robert Kerrey that would have reinstated the Superfund taxes and used them as part of a package of offsets to fund the Internal Revenue Service reform bill, H.R. 2676. The IRS reforms are expected to result in reduced tax revenues of $18.5 billion over 10 years, and the bill therefor needed an equivalent funding component under the budget pay-go rules. But if the Superfund taxes were dedicated to that purpose, they would be unavailable later to pay for Superfund reauthorization.

Stakeholders have criticized the Superfund program over the years. Citizens are dissatisfied with the slow rate of cleanup, 12 years on average. The polluting companies and their insurers complain that they are required to pay for "gold plated cleanups." Further, they say the law's retroactive nature is unfair in reaching back to activities that were legal before enactment. And thousands of small businesses, social organizations, school districts, municipalities, and others have been drawn into Superfund's liability web for disposing of small amounts of waste -- and have regularly paid their attorneys as the Superfund cleanup process dragged on. States desire an expanded role in making decisions about sites within their boundaries. Environmental groups are especially concerned about changes to natural resource damage provisions.

While many parties have desired Superfund reform for several years, the lack of agreement on reforming the liability provisions appears to be the key reason impeding congressional action. Three other major Superfund reform issues are whether cleanup standards need modification, natural resource damage coverage should be narrowed, and state roles expanded. In addition, there are two ancillary issues related to lower level, low priority sites. Many seek expansion of both the popular brownfields program, which encourages cleaning up mostly urban, lower risk sites that have economic development potential, and voluntary cooperative programs in which owners and states address low to medium risk sites.

Action in the 105th Congress

Comprehensive Bills. The chairmen of the three subcommittees with jurisdiction each introduced comprehensive Superfund reauthorization bills. Senator Bob Smith (Environment and Public Works Subcommittee on Superfund, Waste Control, and Risk Assessment) introduced S. 8 on January 21, 1997. Representative Sherwood Boehlert (Transportation and Infrastructure Subcommittee on Water Resources and Environment) introduced H.R. 2727 on October 23, 1997; the subcommittee forwarded the amended bill to full committee on March 11. Representative Michael Oxley (Commerce Subcommittee on Commerce, Trade and Hazardous Materials) introduced H.R. 3000 on November 9, 1997. In addition, Democratic members have offered three comprehensive bills: Representatives James Barcia and Calvin Dooley introduced H.R. 2750 on October 28, 1997, Representative Frank Pallone introduced H.R. 3262 on February 25, 1998, and Representative Thomas Manton introduced H.R. 3595 on March 30, 1998.

The Administration did not submit a reform bill to Congress, but Assistant Attorney General Lois Schiffer said that the Manton bill was very close to what the Administration wanted. She also said that the Administration opposed the reported version of S. 8. On May 7, 1997, EPA released its Superfund legislative reform principles, saying that amendments must be narrowly targeted and that polluters must pay their fair share. The principles call for liability limits for very small volume waste contributors, generators and transporters of municipal solid waste, and prospective purchasers. Regarding remedies, groundwater should be restored where practicable, the law's preference for treatment should be retained for highly toxic and mobile wastes, and the preference for permanence should be modified to emphasize long-term reliability. Cleanups should continue to comply with the applicable requirements of other federal and state environmental laws, but CERCLA's mandate to comply with relevant and appropriate requirements should be eliminated. The role of states should be increased, but EPA's authority to respond to environmental or health threats should not be limited.

The Taxpayer Relief Act of 1997 contained a tax break for brownfield cleanups. It is discussed in the Brownfields Program section. Also, the Omnibus Appropriation bill (H.R. 4328, P.L. 105-277) contains a provision having to do with the tax treatment of a company's environmental remediation costs (10-year net operating loss carryback rules).

S. 2180. Senate Majority and Minority Leaders Trent Lott and Tom Daschle introduced S. 2180 on June 16, 1998, a bill to protect legitimate recyclers of certain materials from Superfund liability. The leaders' sponsorship fueled speculation that the bill, if it moved, would attract a number of amendments, becoming the vehicle for a narrow reauthorization measure. Ultimately, Senator John Chaffee, chairman of the Environment and Public Works Committee refused to take up the bill because it would only move the liability burden from one set of responsible parties to another, an amount that could reach $700 million over 10 years, according to an "informal" CBO estimate. There was an effort to include it in the Omnibus Appropriations bill, H.R. 4328, in the closing days of the 105th Congress, but the effort was unsuccessful.

Hearings. On April 15 and 16, 1997, the House Appropriations Subcommittee on Appropriations' Subcommittee on VA-HUD-Independent Agencies held hearings on Superfund. The House Commerce Committee held hearings on February 14, March 7, and September 4, 1997, on federal barriers to cleanup and views of Members of Congress; another hearing was held March 5, 1998, on H.R. 3000. Two subcommittees of the House Government Reform and Oversight Committee held hearings on February 13, 1997, focusing on the General Accounting Office's findings on the Superfund program. The House Transportation and Infrastructure Committee held hearings on March 5 and 12, and April 10, 1997, on lessons from the states, and views of EPA and stakeholders; on October 29, 1997, the Water Resources and Environment subcommittee focused on H.R. 2727. The Senate Environment and Public Works Committee held hearings on March 4-5, 1997, that focused on the federal-state Superfund relationship, brownfields, and cleanup standards; and on September 4, 1997, on the revised "chairman's draft" version of S. 8.

Appropriations

The FY1999 appropriation for the Superfund program is $1.5 billion, the same as the FY1998 appropriation; EPA's budget request was $2.1 billion. The bill, H.R. 4194 (P.L. 105-276, October 21, 1998), included $1.0 billion for response actions, $155 million for enforcement, and $91.3 million for brownfield activities. Similarly to FY1997, an additional $650 million is made available on October 1, 1999 (FY2000) if CERCLA is reauthorized before August 1, 1999. The appropriations bill also deletes the sunset provisions in section 119, in order to make it possible for cleanup contractors to more easily obtain surety bonds for new cleanup projects. The bill's report asks EPA to review other means of funding the brownfields program and to report to the Appropriations Committees by April 1, 1999. It also directs EPA to "explore aggressively" the home buyout option at the Agriculture St. NPL site in New Orleans, and to report back to the Appropriations Committees by January 15, 1999.

Congress approved $1.5 billion for the Superfund program for FY1998, $106 million more than FY1997 (P.L. 105-65, H.R. 2158). For FY1997, Congress appropriated $1.394 billion, the level requested by the Clinton Administration (P.L. 104-204). Recent annual appropriations have been ($ billion): FY1996 -- $1.313; FY1995 -- $1.431; FY1994 -- $1.497; and FY1993 -- $1.602.

A Brief Summary of the Cleanup Program

The National Contingency Plan (NCP, codified at 40 CFR 300) provides a blueprint of how EPA is to respond to hazardous substance releases. It covers methods for discovering and investigating hazardous waste sites, the roles of federal and state agencies, the appropriate level of response activities, and other subjects. The Hazard Ranking System and the National Priorities List (described below) are appendices to the NCP.

There are two types of Superfund response: short-term "removals" to mitigate emergency situations, and long-term "remedial actions" to clean up sites that have been placed on the National Priorities List (NPL). The term "Superfund site" generally means a site on the NPL. After a potential site has been identified, a preliminary assessment is conducted to determine if a site inspection and ranking is warranted.

EPA had 12,657 active sites in its CERCLIS site tracking database at the end of FY1996. From January 1995 to September 30, 1996, 28,008 CERCLIS sites were archived, and categorized as "No Further Removal Action Planned" (NFRAP). This removal from the list has become important because the stigma of being associated with Superfund has often prevented sale or development of CERCLIS-listed property -- even if it was never contaminated in the first place.

Sites receiving a sufficiently high score under the Hazard Ranking System are placed on the NPL. As of the September 1998 listing, there are 1,194 sites on the NPL, of which 153 are federal facility sites; another 66 are proposed for listing, of which 9 are federal facility sites. Proposed and final NPL sites total 1,260. Through FY1996, EPA and the Coast Guard had also conducted 4,592 removal actions, 1,423 of them at NPL sites. (The Coast Guard is the lead agency in coastal areas.) There are or have been Superfund sites in all 50 states, as well as in American Samoa, Guam, the Northern Marianas, Puerto Rico, the Trust Territories of the Pacific, and the Virgin Islands.

After listing, the next step is the remedial investigation, a detailed examination of the site and the wastes present, which is followed by a feasibility study that examines alternative cleanup approaches. (These two steps are frequently referred to together as the "RI/FS.") EPA decides which alternative to pursue, and the Agency or its designee -- frequently the U.S. Army Corps of Engineers -- prepares specifications and drawings for the selected remedy. Cleanup construction may be followed by a requirement to operate, maintain, or monitor the site for several years. The Congressional Budget Office has estimated that the average cleanup time for the first 1,249 NPL sites will be at least 12 years. EPA deletes sites from the NPL when no further action is appropriate. As of September 1998, 535 sites (39% of the 1,370 total listed since inception) had been placed on the Construction Completion List; 176 (13% of the 1370) of those sites and portions of 11 others have also been deleted from the NPL. At House Government Reform hearings, the General Accounting Office (GAO) presented a draft report (released in March 1997, and updated in February 1998) that said for sites listed in 1996, it took EPA 9.4 years to go from site discovery to final listing on the NPL, compared to 5.8 years in the 1986-1990 period. Actual cleanup times increased from 3.9 years to 10.6 years for those completed in 1996, and to 11.5 years for those completed in 1997.

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