Superfund Reauthorization Issues in the 105th Congress II

CONTENTS FOR THIS SECTION

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

Superfund Reform Issues

Relieving the Burden of Retroactive Liability

The most controversial element of CERCLA is its broad liability scheme. The generators of the hazardous substances, the transporters who selected the site, and the owners and operators (both past and present) of the facility or property where the substance was released are all made liable. Liability is strict, joint and several, and retroactive, and defenses allowed by the act are few. While pervasive policy reasons support this approach (e.g., polluters should pay rather than the taxpayers), the program has run into implementation problems with certain groups of potentially responsible parties (PRPs). Given that it is common for a waste disposal facility to have received wastes from throughout the region in which it operates, it is not unusual for there to be several hundred PRPs liable for cleanup costs at some Superfund sites. That, coupled with the high cost of cleanup -- the average cost is currently around $30 million per site -- has led PRPs to try to spread the costs as much as possible. The result has been a tremendous amount of litigation, not only among waste generators, but also between them and their insurance companies, which frequently claim that the policies they wrote were not intended to cover the kind of pollution, or the kind of liability, encountered at Superfund sites.

The litigation (and other related transaction costs) is both costly and time-consuming, and for years business and industry groups, especially the insurance industry, have called for the repeal of CERCLA's liability regime. The jurisdictional committees examined the issue during the 104th Congress, and considered repealing retroactive liability for actions prior to CERCLA's December 1980 passage, or alternatively prior to 1987. The January 1, 1987, cutoff date coincides with the use of new insurance policy language, as well as the institution of stricter solid waste record-keeping requirements.

The Congressional Budget Office (CBO) said that repealing prior liability would reduce transaction costs and increase efficiency for the nation as a whole, but that the main trade-off is shifting responsibility for cleanup from PRPs to the federal government. To accommodate this shift without increasing the annual cost of the program would require some combination of cost savings, increased federal spending, and reduction in the pace of cleanup. Repealing liability for pre-1987 actions would save the nation as much as $1.1 billion annually in transaction costs, mainly from the private sector, according to CBO. The federal government would have a net increase in cleanup costs of $1.6 billion per year, plus a one-time cost of as much as $7.5 billion to reimburse PRPs for ongoing expenses under existing cleanup commitments, plus $6 billion for past costs. (A different set of assumptions would result in savings of transaction costs of $1 billion per year, an increased federal burden of $1.4 billion per year, and reimbursement costs of $6.5 billion for ongoing costs and $5.3 billion for past costs.)

If a cutoff date of December 31, 1980, is used, CBO said, private and federal transaction costs would fall about 50% and 30% respectively, compared with 90% under the 1987 cutoff. The shift in cleanup costs to the federal government would come to $1.3 billion per year, and reimbursing PRPs would total about $5.5 billion for ongoing work, and $4.4 billion for past work. These high costs prompted the committees to look for ways other than full repeal of retroactive liability to reduce the liability burden, particularly for small businesses, lenders, and municipalities.

Comprehensive Bills in the 105^th Congress. Five of the six comprehensive reauthorization bills introduced in the 105^th Congress shared two elements in their liability titles. First, they provided exemptions or limits to liability for certain groups and certain categories of waste. Second, they provided a fast-track allocation process to apportion liability shares among the responsible parties, performed by a neutral allocator. The sixth bill (H.R. 3262) did not provide for allocation, but did have liability limits and exemptions.

Liability Exemptions and Limitations. H.R. 3000 had the widest exemption: it would have excused all parties from liability for activities at an NPL-listed site that occurred on or before January 1, 1987, unless their wastes "contributed significantly" to the costs of response or the costs of natural resource damages, and provided they did not impede performance of the response action or natural resource restoration and they complied with requests for information gathering and access. EPA and others were concerned that the "contributed significantly" language would lead to extensive litigation and slow down the program.

The precise categories of exemptions in the other bills varied substantially. In general, the groups protected from liability included innocent parties (e.g., owners who inherited contaminated land, but did not cause or contribute to the release of hazardous substances), and small contributors at multi-party sites, such as municipal landfills. The broadest exemption in the other three bills was for small businesses. All three exempt small businesses from liability for their actions at NPL sites prior to the date of enactment (S. 8) or the date they were introduced (H.R. 2727 and H.R. 2750). They defined small business in similar, though not identical, terms -- generally, $3 million in annual gross revenues.

Parties contributing small amounts of waste were relieved of liability in all six bills. The Boehlert bill exempted generators and transporters of de minimis wastes, defined as any amount of municipal solid waste or municipal sewage sludge and "conditionally exempt small quantity generator" waste (i.e., small amounts of hazardous waste), as defined under the Resource Conservation and Recovery Act (RCRA, also called the Solid Waste Disposal Act). The other five bills exempted "de micromis" generators and transporters, contributors of up to 110 gallons or 200 pounds of hazardous materials, provided the material did not contribute significantly to response costs.

Other groups given protection from liability in one or more of the bills were: municipal owners and operators of codisposal landfills, innocent recipients of property through inheritance, owners of property contiguous to NPL sites, prospective purchasers of property, governments acquiring property through eminent domain, governments based on ownership of a road or the granting of a business license, the federal government when responding to a natural disaster, holders of pipeline rights of way or oil or gas leases, response action contractors, innocent construction contractors, recyclers, and owners of railroad spur lines.

Apportioning Liability. The second common element in five of the bills' liability titles was an allocation process to apportion liability fairly at multi-party sites. The allocation would have been performed by an allocator selected by the PRPs from a list provided by EPA. The allocator, who would be given information gathering and subpoena powers, would determine the shares of liability for each PRP and the Fund, and issue a report. Settlements could include protection from contribution suits and covenants not to sue. EPA, using CERCLA's joint and several liability could seek recovery of all outstanding response costs, including the Fund's share, from any allocation party that did not settle. There were numerous minor differences in the bills regarding such matters as deadlines, the powers of the allocator, and post-settlement litigation.

Cleanup Standards and Remedy Selection -- Concerns Over Expense and Delay

Cleanup standards have also been controversial. CERCLA section 121 states a preference for "treatment which permanently and significantly reduces the volume, toxicity or mobility of the hazardous substances, pollutants, and contaminants ..." (emphasis added). The section also emphasizes cost effectiveness by referring to it several times as a factor to be considered in selecting remedies.

In addition, section 121 also requires Superfund cleanups to meet "ARARs": any "legally applicable or relevant and appropriate standard, requirement, criteria or limitation" that has been promulgated under federal or state environmental laws. The ARARs include such things as the Clean Water Act's water quality criteria, the Solid Waste Disposal Act's land disposal restrictions, and some states' ground water anti-degradation provisions that require cleanup to background levels. EPA can waive the ARARs in some situations.

While these requirements (the preference for permanence and treatment, and the mandate to meet ARARs) have made Superfund a technology-forcing law, promoting research into new means of permanently eliminating contamination, they have also created at least three areas of concern. First, there is criticism that EPA's risk assessment process during the remedial investigation phase of response overstates the true risk posed to the vast majority of people. This phase is important because the assessment determines in large part what remedial actions might be appropriate for the site and how much they will cost.

Second, critics say Section 121 has led to increased expense and delay. Despite the "cost effective" language in the statute, many PRPs have complained that EPA has little regard for cost when selecting the remedies they must implement. They suggest giving cost greater weight, eliminating ARARs or the preference for permanence and treatment, and taking future land use into consideration when selecting the remedy.

Third, experience with the Superfund program has shown that some cleanups are too difficult to achieve. The 1980 enactment did not foresee that some types of wastes and some kinds of sites were not amenable to solution with current levels of technology. While EPA can waive ARARs due to "technical impracticability," the waiver has not been greatly used, in part because of concern over public reaction.

All six of the 105^th Congress comprehensive bills would have required selection of a remedy that protects health and the environment and is cost-effective. H.R. 2727 and H.R. 3000 added that remedies also must provide "long-term reliability at reasonable cost." The broad preference for treatment was replaced with a preference for treatment of "hot spots." H.R. 3000 offered greater flexibility on this matter and directed EPA to select a remedy that considered effectiveness in achieving source control. All bills eliminated the relevant and appropriate language of ARARs and expanded EPA's use of risk assessment.

Under all of these bills, groundwater remedies had to take into account future use and the timing of that use. If the use were drinking water, they had to meet Safe Drinking Water Act (SDWA) standards if technically practicable. If not achievable, then S. 8 would have allowed point-of-use treatment or other measures; under H.R. 3000 an alternative water supply would have been provided. The five House bills would have required the remedy to meet SDWA standards at points of compliance determined by EPA. S. 8 and H.R. 2727 both adopted one of EPA's administrative reform ideas, establishing remedy review boards to reexamine previous remedy decisions and to recommend a new one if significant savings were possible.

Should Natural Resources Damages Be Narrowed?

CERCLA requires parties responsible for a release of hazardous substances that causes "an injury to, destruction of, or loss of natural resources" to reimburse the U.S. government and/or the appropriate state government for the costs of restoring the resources, or acquiring the equivalent of the natural resources injured by the release.

Four of the 105^th Congress bills eliminated claims for lost use activities that occurred prior to December 11, 1980, and the House bills eliminate non-use damages. (Non-use values are those a person places on a resource that are unrelated to the person's actual use of it to date. Examples are the "option value" of hiking or fishing in a place one hasn't been to, the "existence value" of whooping cranes one hasn't seen and doesn't intend to, and the "bequest value" of passing a resource on to future generations.) Using different wording, S. 8 allows the consideration of the "unique intrinsic values" of a destroyed or lost resource provided the incremental cost of restoration is reasonable. They also encourage coordination between remedial action and restoration activities, requiring that they not be duplicative or inconsistent. The bills allow damages to be recovered for reasonable costs of restoration, for loss of use by the public (all but H.R. 3000), and for reasonable costs for assessing injuries to natural resources. S. 8 requires new natural resource injury and restoration assessment regulations to be written that identify procedures for determining the reasonable cost of restoration, and that require consideration of natural recovery as a restoration method, and the availability of replacement or alternative resources.

Giving States More Control of the Program

States have been lobbying for greater control over the Superfund program, and most parties agree they should have it. At present, EPA and states enter into cooperative agreements on a site-by-site basis that authorize the states to undertake most of the cleanup activities the Agency would perform. But this does not include remedy selection.

Under the three chairmen's bills (the Barcia-Dooley bill did not have a title on state role) states could have received full or partial delegation of CERCLA authority on either a statewide or site-by-site basis, with EPA's role limited to financial auditing and a narrow authority to take power back from the states if they did not carry out the law. States accepting full delegation could have applied their own remedy selection laws, and carried out allocations of cleanup costs among the responsible parties. The only authorities that could not have been transferred were providing grants, and conducting research and development. S. 8 and H.R. 2727 allowed EPA to take action in the event of an emergency, but H.R. 3000 only allowed EPA intervention if the state requested assistance. To carry out the additional duties, facility-specific and non-facility-specific grants to delegated states were provided for.

With the exception of H.R. 2750, states would have been given the power to veto EPA-proposed listings on the National Priorities List (NPL), though H.R. 2727 allowed EPA to act if the state didn't ensure action at the site within 24 months; and to remove all or part of a facility from the NPL. The NPL-veto authority was law for a brief period of time. EPA's FY1996 appropriation act (P.L. 104-134) contained a provision, valid only until the end of the fiscal year, requiring the concurrence of a state's governor before a site in that state could be placed on the NPL. The requirement ended on September 30, 1996, because the FY1997 appropriations act contained no such language. The National Governors Association and several Senators expressed concern to EPA about the change, and the agency issued a memorandum to its regional headquarters directing them to determine the position of the governor on sites being considered for placement on the list. Legally, EPA has final authority on listings.

Accompanying Issues Related to Lower Priority Sites

Because Superfund emphasizes the "worst first" in prioritizing cleanup, some lower risk sites not on the NPL receive little attention. Connected to reauthorization efforts are two popular programs which seek to expand cleanup of such sites.

Expanding the Brownfields Program

The brownfields program for cleaning up less serious industrial and commercial hazardous waste sites has been popular, and Congress has appropriated increasing amounts for it: $36.8 million in FY1997, $85 million in FY1998, and $91.3 million for FY1999. The program targets idle or underused facilities where redevelopment is complicated by potential environmental contamination. It is an administrative initiative by EPA, done under Superfund's authority, but not specifically authorized in CERCLA. At least 21 bills with brownfields provisions were introduced in the 105th Congress.

The Senate chairman's reauthorization bill, S. 8, would have authorized $75 million a year in grants to state, tribal, and local governments for assessment of facilities, performance of response actions, and establishment of revolving loan funds in states for cleanup. H.R. 2727 would have authorized $20 million annually for the assessment program, and $65 million for revolving loan funds. The brownfields title in H.R. 3000 was actually directed at state voluntary response programs. It directed EPA to provide technical, financial, and other assistance to establish and enhance these voluntary cleanup programs, but authorized no funds. Instead it removed the threat of federal enforcement, permitting only a state to use CERCLA's authorities at a site being addressed under a state voluntary cleanup program. H.R. 2750 had no provisions on brownfields or voluntary cleanup.

The Taxpayer Relief Act of 1997 (H.R. 2014, P.L. 105-34) adopted a limited version of the Clinton Administration's brownfields proposal (S. 235/H.R. 505). It allows developers to fully deduct from their taxes the costs of environmental cleanup at brownfields in the same year that the expenditures are incurred. Eligible facilities include the 76 sites announced by EPA prior to February 1997; empowerment zones and enterprise communities; and census tracts with a poverty rate above 20%, and adjacent commercial and industrial areas. The $417 million tax break expires after 3 years, on December 31, 2000. The Administration proposal would have been worth $2 billion over 10 years.

The Taxpayer Relief Act of 1998 (H.R. 4579, H.Rept. 105-739) would have extended the brownfields tax breaks in the 1997 tax law (along with other tax incentives) to 20 "renewal communities," areas to be selected by the Secretary of Housing and Urban Development where there is "pervasive poverty, unemployment, and general distress." The bill passed the House on September 26, 1998, but proceeded no further.

Aiding Voluntary Cleanup Programs for Lower Risk Sites

The Superfund program and state hazardous waste cleanup programs have focused on sites posing the greatest threat to human health and the environment. However, there remain many low- and medium-risk sites. For them, 44 states have initiated voluntary cleanup (or response) programs in which the owner or developer works cooperatively with the state, as opposed to an often confrontational, enforcement-driven program. Rededication and certification of cleanup can take less time, and many states offer such additional benefits as technical assistance, financial support, and importantly, liability assurances. H.R. 2727 and S. 8 offered $25 million annually in grants to states to establish and expand voluntary programs. As noted above in the brownfields section, H.R. 3000 provided no money, but prohibited federal enforcement at sites participating in a state voluntary program.

LEGISLATION

Comprehensive Reauthorization Bills (see text above for discussion)

H.R. 2727 (Boehlert)
Superfund Acceleration, Fairness, and Efficiency Act. Introduced October 23, 1997; referred to the Committees on Commerce, Transportation and Infrastructure, and Ways and Means; forwarded by Subcommittee on Water Resources and Environment to full Committee on Transportation and Infrastructure, amended, March 11, 1998 (18 - 12 vote).

H.R. 2750 (Barcia and Dooley)
Superfund Cleanup Acceleration and Liability Equity Act. Introduced October 28,1997; referred to the Committees on Commerce, and Transportation and Infrastructure.

H.R. 3000 (Oxley)
Superfund Reform Act. Introduced November 9, 1997; referred to the Committees on Commerce, Transportation and Infrastructure, and Ways and Means.

H.R. 3262 (Pallone)
Children's Protection and Community Cleanup Act. Introduced February 25, 1998; referred to the Committees on Commerce, Transportation and Infrastructure, and Ways and Means.

H.R. 3595 (Manton)
Introduced March 30, 1998; referred to the Committees on Commerce, Transportation and Infrastructure, and Ways and Means.

S. 8 (Smith)
Superfund Cleanup Acceleration Act of 1997. Introduced January 21, 1997; referred to Committee on Environment and Public Works; ordered reported March 26, 1998 (11-7 vote).

Brownfields Bills

H.R. 523 (Coyne)
Allows the use of an environmental rededication tax credit, and tax-exempt redevelopment bonds for brownfields cleanup. Introduced February 4, 1997; referred to Committee on Ways and Means.

H.R. 873 (Greenwood)
Allows only a state to enforce CERCLA and RCRA at a voluntary cleanup site and waives federal permitting requirements. Protects innocent landowners and prospective purchasers from CERCLA liability. Introduced Feb. 27, 1997; referred to Committees on Commerce and on Transportation and Infrastructure.

H.R. 1120 (Dingell)
Provides grants for redevelopment and state voluntary cleanup plans and provides some liability protections. Introduced March 19, 1997; referred to Committees on Commerce and on Transportation and Infrastructure.

H.R. 1206 (Visclosky)
Gives states that meet federal certification requirements final liability authority at sites and the power to waive certain permits under the approved program. Introduced March 20, 1997; referred to Committees on Commerce and on Transportation and Infrastructure.

S. 18 (Lautenberg)
Brownfields and Environmental Cleanup Act of 1997. Provides grants to inventory and evaluate sites and to capitalize low-interest loan programs. It limits the liability of prospective purchasers and clarifies the innocent landowner defense. Introduced January 21, 1997; referred to the Committee on Environment and Public Works.

Other Bills

H.R. 1157 (Frelinghuysen)
Requires the U.S. Army Corps of Engineers to conduct contract oversight at Superfund- financed remedial actions sites. Introduced March 20, 1997; referred to Committees on Commerce and on Transportation and Infrastructure.

H.R. 1158 (Frelinghuysen)
Restricts CERCLA liability of local education agencies. Introduced March 20, 1997; referred to Committees on Commerce and on Transportation and Infrastructure.

H.R. 1195 (Schaefer)
Waives government sovereignty at federal facilities, requiring them to comply with CERCLA in the same manner as private entities. Introduced March 20, 1997; referred to Committees on Commerce and on Transportation and Infrastructure.

S. 1317 (Lautenberg)
Environmental Health Protection Act. Requires ATSDR and EPA to work with state and local health officials. Introduced October 24, 1997; referred to Committee on Environment and Public Works.

S. 1497 (Lautenberg)
Equity and Public Involvement in Superfund Act. Increases community participation in Superfund cleanups, exempts homeowners and small parties from liability, and limits liability of larger businesses and municipalities. Introduced November 9, 1997; referred to Committee on Environment and Public Works.

S. 2180 (Lott and Daschle)
Superfund Recycling Equity Act. Absolves recyclers of scrap paper, plastic, glass, textiles, rubber, and batteries of Superfund liability if certain conditions are met. Introduced June 16, 1998; referred to Committee on Environment and Public Works.

CONGRESSIONAL HEARINGS, REPORTS, AND DOCUMENTS

U.S. Congress. House. Committee on Appropriations. Hearings, 105th Congress, 1^st Session. April 1997. VA-HUD-Independent Agencies, Pt. 7; and Testimony of Members of Congress and Other Interested Individuals and Organizations, Pt. 8.

U.S. Congress. House. Committee on Commerce. Federal Barriers to Common Sense. Hearings, 105^th Congress, 1^st Session. Feb. 14, March 7, 1997. (105-6)

----. Operation of the Superfund Program. Hearing, 105^th Congress, 1^st Session. September 4, 1997. (105-41)

____. Status of the Superfund Program. Hearing, 105^th Congress, 2^nd Session. February 4, 1998. (105-92)

U.S. Congress. House. Committee on Government Reform and Oversight. Operation of the Superfund Program. 105th Congress, 1^st Session. February 13, 1997. (105-15)

U.S. Congress. House. Committee on Transportation and Infrastructure. Superfund Reauthorization. Hearings, 105th Congress, 1^st Session. March 5, March 12, April 10, 1997. (105-8)

----. Superfund Reauthorization and Reform Legislation. Hearing, 105^th Congress, 1^st Session. October 29, 1997.

U.S. Congress. Senate. Committee on Environment and Public Works. Liability and Resource Issues. (Brownfields) 105th Congress, 1^st Session. March 4, 1997. (105-42)

----. Superfund Cleanup Acceleration Act. Hearing on S. 8, 105th Congress, 1^st Session. March 5, 1997. (105-60)

----. Superfund Reform and Reauthorization. Hearing on the proposed substitute amendment to S. 8, 105^th Congress, 1^st Session. September 4, 1997. (105-315)

FOR ADDITIONAL READING

Kriz, Margaret. "The Superfund Saga," National Journal, October 21, 1995. p. 2592-2596.

----. "War Over Wastes," National Journal, May 11, 1996. p. 1042-1046.

U.S. Congressional Budget Office. The Total Costs of Cleaning Up Nonfederal Superfund Sites. January 1994. 46 p.

U.S. Environmental Protection Agency. Superfund Administrative Reforms Annual Report, Fiscal Year 1996. December 1996. 56 p.

U.S. General Accounting Office. Superfund: Outlook for and Experience with Natural Resource Damage Settlements. April 1996. 42 p.

---- . Superfund: Barriers to Redevelopment. June 1996. 15 p.

---- . Superfund: Integrated Site Assessments May Expedite Cleanups. July 1997. 22 p.

---- . Superfund: Times to Complete the Assessment and Cleanup of Hazardous Waste Sites. March 1997.

---- . Superfund: Times to Complete Site Listing and Cleanup. February 4, 1998.

9 p. plus 2 appendices (10 p.)

Superfund Trust Fund. April 16, 1998. 5 p.

U.S. Conference of Mayors. Recycling America's Land: A National Report on Brownfields Redevelopment. January 1998. 46 p.

The Urban Institute, et al. The Effects of Environmental Hazards and Regulation and Urban Redevelopment

---- . Superfund: EPA's Use of Funds for Brownfield Revitalization. March 1998. 28 p.

---- . Superfund: Status of the. (Prepared for U.S. Dept. Of Housing and Urban Development, and U.S. EPA) February 1998. 86 p.

CRS Reports

CRS Report 97-914 ENR. Superfund Cleanup Standards Reconsidered. 24 p.

CRS Report 96-774 E. Taxes to Finance Superfund. 10 p.

CRS Report 97-312 ENR. Superfund Fact Book. 46 p.

CRS Report 97-397 ENR. Superfund: Summary of S. 8, The Superfund Cleanup Acceleration Act of 1997. 13 p.

CRS Report 97-731 ENR. Superfund and the Brownfields Issue. 15 p.

CRS Report 97-953 ENR. Superfund and the States. 17 p.

CRS Report 98-136 ENR. Superfund Act Reauthorization: Liability Issues. 20 p.

CRS Report 98-257 ENR. Superfund: A Brief Comparison of the Chairmen's Bills (Updated). 10 p.

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