SPEAKERS CONTENTS INSERTS
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THE EROSION OF COMMUNITIES BY
LEAKING UNDERGROUND STORAGE TANKS
Thursday, September 12, 2002
U.S. House of Representatives,
Subcommittee on Housing and Community Opportunity,
Committee on Financial Services,
The subcommittee met, pursuant to call, at 10:04 a.m., in Room 2128, Rayburn House Office Building, Hon. Mark Green [acting chairman of the subcommittee] presiding.
Present: Representatives Green, Kelly, and Frank.
Mr. GREEN. [Presiding.] The hearing of the Subcommittee on Housing and Community Opportunity will come to order. Without objection, we will proceed, even though we do not have a quorum at this time. Our understanding is there may be a vote as soon as at 10:15. At least this way, we could get through our first panel and then go on to our second panel.
Without objection, all members' opening statements will be made part of the record. And the chair will recognize himself for five minutes for purposes of making a brief opening statement, before introducing our first panel.
Today, the subcommittee meets to examine the effects of leaking underground storage tanks on homeowners and communities. In 1980, the Environmental Protection Agency determined that this country was facing a very serious problem in that area.
Page 2 PREV PAGE TOP OF DOC Many of the more than two million underground storage tanks in the U.S. were nearing the end of their useful life expectancy and were expected to leak in the near future. With over half of the United States relying on ground water for its drinking water, the fact that leaking tanks were the leading source of ground water contamination made finding a solution all that more critical.
In 1984, Congress established a Leak Prevention, Detection and Correction Action Program to address this nationwide problem of leaking storage tanks. And in 1986, Congress created the Leaking Underground Storage Tank Trust Fund to help states cover the cost of cleanup.
Much progress has been made in the cleanup efforts. The EPA estimates that since the Federal Underground Storage Tank Program began, 1.5 million of the roughly 2.2 million petroleum tanks under the program have been closed. As of September 30, 2001, 419,000 releases have been identified; more than 279,000 cleanups had been initiated; and nearly 269,000 cleanups had been completed; with 150,000 sites awaiting cleanup.
Despite this progress, however, several important issues have emerged. With the implementation of the 1998 regulation, the workload for states has increased significantly. States and localities are looking to the federal government to provide additional resources to assist them in the cleanup and cost.
The discovery of the chemical MTBE at several of the underground storage tank sites and its detection in drinking water supplies has further complicated cleanup efforts and added to the initial cost of the original program. Finally, many of the affected communities are looking to the federal government to help them deal with the effects that leaking underground storage tanks have on public health and home values in their community.
While there is a program in place to assist with the cleanup of these sites, the federal government has no program in place to assist the innocent homeowners affected by these leaking underground storage tanks. Many of these communities will likely face the evaporation of home equity, a lack of buyers for the contaminated property and a scarcity of financial institutions that are willing to make loans in the contaminated areas.
Page 3 PREV PAGE TOP OF DOC We all remember the well publicized relocation actions in Love Canal and Times Beach that were taken under special federal order or through the Superfund Program. Because Superfund explicitly excludes petroleum pollution, the residents in the communities affected by these tanks have little recourse.
At today's hearing, we will begin to examine this problem.
I will place the rest of my statement in my record. And at this time, we will recognize our first panel and invite Mr. Kanjorski, the Honorable Paul Kanjorski, to begin with his testimony.
Mr. Kanjorski, welcome. Sorry to put you under the gun. But welcome. It is good to hear from you.
STATEMENT OF HON. PAUL E. KANJORSKI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA
Mr. KANJORSKI. First of all, I want to thank the committee for holding this hearing. It is an unusual problem. It is not unique to Pennsylvania. But I think the example that we will see in Laurel Gardens in Pennsylvania highlights some of the missing parts of the need for a federal program to address this issue.
I want to thank particularly Marge Roukema, the chairman of the subcommittee, for setting this hearing today and even under the
unusual and strange circumstances, to have that type of compassion for these people.
To address the nationwide problem of leaking underground storage tanks, Congress established, as the chair has indicated, various programs, starting with the act in 1984. And then in 1986, setting up the fund to help the Environmental Protection Agency cover the costs of cleanup with the various states.
Page 4 PREV PAGE TOP OF DOC Since then, a great deal of progress has been made, mostly taking the potential leaking tanks out and replacing them and the technology of double barreling the tanks and deviceselectronic devicessignaling leaking has certainly lessened the likelihood that leaking tanks in the future will have an impact.
But the impact that it has today is multi-sized. And the federal government's direction to this impact has only been to help the states and the communities do the cleanup. What we have left out is probably the most important issues, and that is the issue of the effect on the community, the economic impact, the community impact, the fear and the dread and the desire for people to use usually their only and largest source of equity to either rearrange their lives and relocate or to refinance their properties.
And if you have ever had the experience, as my constituents have in Laurel Gardens, when you go to the bank, there are very few banks that want to lend money on properties that are clearly located by the EPA in a hazardous waste site or a contamination site. And furthermore, the efforts made in cleanup are the type of efforts that cannot have an absolute, 100 percent certainty that cleanup has occurred.
So there is a wide range of citizenssome that accept what the government has done in cleanup and they are perfectly satisfied to remain and stay within the community; others that are in dead fear that the community cleanup has not been successful and, in fact, they may be exposed to severe hazards. One of the great hazards, of course, under gas spills is Benzene.
Now when we saw this effort in Hazleton, Pennsylvania, we moved very quickly to bring the EPA on board after the Department of Environmental Protection of the Commonwealth had been onsite for more than 10 years. They did not take swift action. They did not move to remedy the situation.
But in the year 2000, EPA did step in. And I was fortunate enough to convince the Coast Guard to provide, out of the Coast Guard fund, under the Oil Pollution Act, $25 million to direct toward the cleanup effort here, that otherwise could not have occurred. And of course, that occurred only because, by stretches of imagination, this oil spill would eventually get to the Susquehanna River, which was a navigable waterway. And the Oil Pollutions Act covers potential spills for navigable waterways.
Page 5 PREV PAGE TOP OF DOC But it was, nevertheless, an extreme stress and compassion, expressed by the Coast Guard and the federal officials, that opened up the federal purse of $25 million to address this problem.
Most recently, because we have had other less than satisfactory results in the cleanup, we have now convinced the EPA to do the entire collection system, sewer system, in the area to prevent any further leakage, if that is possible. Our problem is the land is saturated. There are still several homes whose levels of Benzene are a concern for chronic exposure.
There have been studies made recently that have indicated Benzene-related cancer and higher than average cases of lupus in the Laurel Gardens area. All of these health hazards have certainly contributed to the anxiety of the residents.
And they have asked a simple question. And they have asked it of me. They have asked it of other elected officials who testify today. It is basically this: ''Yes, we understand the response of the federal government, the state government, in cleaning up the hazardous area. But what do you do for us to allow us to get our lives back in order?''
And I think that is the plea that will be made here today. These people live in a contaminated area. Their pricevalue of their home has significantly plummeted, if not disappeared entirely. They cannot get refinancing to reduce their mortgages, even though the rates are significantly lower, because no institution wants to provide that.
They cannot get a home equity loan, even though they had built up equity in their home over a period of years. They cannot even get a loan to take care of medical expenses, because of some of the illnesses that are least suggestively traced to this spill.
In effect, we have taken care of the cleanup for the general public. We have stood in for the bankrupt company that caused the damage. But the people that feel the effectthe homeowners in the communityhave really not received any type of lenient treatment by the federal or state government in the nature of allowing them to get their lives back in order and on place.
Page 6 PREV PAGE TOP OF DOC As a matter of fact, further complicated with that, because we do not have an organized system, the Luzerne County, which is the base county for taxing purposes, in order to provide relief, did provide that relief and made the assessment zero. But what that caused is it took away any semblance of trying to find out what the financial value of these properties would be. So that even in the help of reducing the tax burden on the homeowners, it took away their capacity to argue what value or equity they had in their homes and how they could refinance to either leave, improve themselves or treat their diseases with the monies necessary from the mortgage or refinancing operation.
What we have here are a number of homesmore than 200that have been affected, a number of people that are satisfied to remain, have gone back and reconstructed their lives, but a small portion of people that either are still getting very positive readings of Benzene and other pollutants. And they really want to have the capacity to relocate their families and take them out of harm's way. And we do not have a federal or state program that allows that to happen.
What I have presented in draft form to many of my colleagues and have circulated to the executive agencies of HUD and EPA is a draft form taking the concept of creating a master and then creating a program, whereby the federal government, under HUD, would insure the loans made by financial institutions to people in designated areas such as this. So that while lawsuits are pending, while situations are occurring that the people have to wait for their redress over a period of years, they can nevertheless refinance and relocate themselves and their families into a situation to allow them to get on with their lives.
I think it is absolutely essential that the Congress address this issue. It is not only a special issue that occurs in Hazleton, Pennsylvania, but is occurring throughout the United States. And as witnesses that will testify here further today will indicate, this is just the tip of the iceberg as to what will and is going to occur in the very near future. So we need a remedy.
Page 7 PREV PAGE TOP OF DOC Also today, Mr. Chairman, we will have the advantage of having testimony by two great public officials: a friend of mine, the Luzerne County Commissioner, Stephen Urban and Pennsylvania State Representative, Todd Eachus, who have both committed themselves to this program and have worked very hard with this neighborhood over the years to try and solve this problem.
Both gentlemen are expert in the field, as one could classify a political leadership as being expert. But they certainly are.
What I think we have to do together is to recognize that we can no longer ignore the plight of the people that are impacted by hazardous waste spills, such as leaky tanks. In order to do that, while they are waiting for whatever remedy the law allows, I think it is most essential that we create a program. And as a result, the Solid Waste Disposal Act to authorize the Housing and Urban Development to guarantee loans to homeowners living with the effects of leaky underground storage tank contamination has been circulated. I think it is one of the many remedies. I look forward to others.
Mr. GREEN. Mr. Kanjorski, I do not mean to cut you off. We have now five minutes remaining for you and I to get over and vote.
Mr. KANJORSKI. Okay.
Well, Mr. Chairman, I will ask that my remarks be admitted as part of the record.
Mr. GREEN. Without objection.
Mr. KANJORSKI. I urge the committee seriouslyand I appreciate your attention to this. It is an issue that needs to be attended to. And the appreciation of this community and myself to this committee for taking it up at this time.
Page 8 PREV PAGE TOP OF DOC [The prepared statement of Hon. Paul E. Kanjorski can be found on page 32 in the appendix.]
Mr. GREEN. Thank you, Mr. Kanjorski. We will reconvene immediately after this vote. Thank you.
Mr. GREEN. Call the subcommittee back to order. And we will introduce the next panel of witnesses.
Our panel includes the Honorable Todd Eachus, who has represented the 116th legislative district of Luzerne County in the Pennsylvania General Assembly for the past six years. He is a member of the Aging and Older Adult Services Committee, the Insurance Committee and the Labor Relations Committee.
Next, we have the Honorable Stephen Urban, who was elected in January of 2000 to the Luzerne County Board of Commissioners. Previously, he had served 24 years in the U.S. Army. Lt. Colonel Urban is a veteran of both the Vietnam and Persian Gulf wars.
Third, we have Mr. Charlie Bartsch, who is a senior policy analyst at the Northeast-Midwest Institute, specializing in economic development issues, including federal and state, technical and financial assistance, tax incentives and industrial site reuse. He has appeared before congressional committees in the past on the issues of economic development and recovery.
Mr. William Harvey is here today on behalf of the Appraisal Institute. He has been an appraiser in the Washington, DC metropolitan area for over 20 years and is the president of William C. Harvey and Associates. He is both a certified general real estate appraiser and a certified instructor for the Virginia Real Estate Appraisal Board.
Ms. Patricia Tomsho comes to us from the Laurel Gardens Community in Luzerne County, which has been affected by leaking underground storage tanks. Since 1985, she has served as the executive director of United Charities and the United Children's Homes.
Page 9 PREV PAGE TOP OF DOC Without objection, the written statements for each of our witnesses will be made part of the record. You will each be recognized for a five-minute summary of your testimony.
It is my understanding that the lights on your end do not work, in terms of notifying you as to when your time is running short. I will try my best to do that gently and let you know it is time to summarize your testimony. But again, your full written statement will be made part of the record for those of us on the subcommittee.
So without further ado, we will recognize Todd Eachus at this time.
Mr. Eachus, welcome.
STATEMENT OF TODD EACHUS, STATE REPRESENTATIVE, 116TH LEGISLATIVE DISTRICT (PA)
Mr. EACHUS. Thank you, Chairman Green. And I would like to thank Chairman Roukema for calling this committee before the Committee on Housing and Community Opportunity and allowing me to submit my testimony for the record.
I would personally like to thank Congressman Paul Kanjorski for his efforts on behalf of the citizens affected in my legislative district in the Tranguch gasoline spill and others nationally who are adversely affected by petroleum spills.
More than a decade ago, a minimum of 50,000 gallons of gasoline leaked into the Laurel Gardens neighborhood in my district, affecting about 400 homes and 1,500 residents. For more than 10 years, the residents of those homes have been living in a virtual nightmare. The government, both on and federal government, has continuously downplayed the severity of the situation, trying to reassureor mislead, depending upon how you look at itthe people that there is nothing to worry about.
Page 10 PREV PAGE TOP OF DOC The reality for these citizens is quite different. Their homes are virtually worthless. They fear for their health. If they had the financial means to leave the neighborhood, I have no doubt that they would have done so.
Because a program to help people affected by environmental disasters is not included in the Oil Pollution Act, Congressman Kanjorski's legislation to provide low-interest loans to affected residents so that they may escape the pollution that cripples their health and the quality of their life is a good concept and one that is long overdue.
As you move forward in discussing its merits, I ask that you keep in mind the citizens that this legislation is designed to assist and protect. I have a few observations and recommendations and I urge the committee to consider on behalf of the residents of the spill that I represent, as well as people who are living in this country who are victims of gasoline spills, leaks and other environmentally related hazards.
As the concept of the low-interest program progressed, it was determined that the Department of Housing and Urban DevelopmentHUDwould be the best equipped to administer these loan programs, as well as the forgiveness provisions within this bill. In addition to being an impartial party in this process, HUD is better equipped and has the knowledge necessary for this kind of assistance. I strongly urge the committee to keep HUD in this process.
Additionally, I believe the loan program should be available to everyone affected by environmental hazard, not based on family income. The spill in my district did not distinguish between rich and poor. It did not decide which families it would harm. Every family affected by this spill has suffered substantial hardship. Every family should qualify for assistance.
I also have some concerns in the bill's language relating to the low-interest loans. Although the bill puts the final decision on loan rates in the hands of the Secretary of HUD, who is expected to ensure the loans be at the lowest interest rate, the bill does not guarantee the rates will be at the lowest rate. Under the bill, the rates of the loans are agreed upon by the borrowers and the lenders and found reasonable by the secretary. However, it also says that the rate cannot exceedquote''the generally charged rates in the area for home mortgage loans not guaranteed or insured by any agency or instrumentality by the federal government.''
Page 11 PREV PAGE TOP OF DOC Since these loans under this legislation are loans that are guaranteed by the federal government, why shouldn't the cap be based on rates generally charged for federally guaranteed loans? Those rates definitely would be lower than loans that are not guaranteed by the federal government.
Also under the bill, the borrower can obtain a loan to buy or lease new property or use the equity in the home for whatever purpose they chose. While the bill is clear that the loan amount can be 100 percent of the pre-release value, I would recommend clarifying that for loans based on the equity in the property as described on page three, line 12 of the bill, the equity is also determined based on the pre-release value. I also say that the market valuethe equity in these homesmay be, at this point, zero.
Mr. GREEN. Mr. Eachus, if you could summarize your testimony?
Mr. EACHUS. I sure can.
Mr. Chairman, I say to you that the citizens in my district have been aggrieved by this process. And even though something is being done today, something done is better than nothing at all. And not only that, I say to you not only by providing residents of my district a relief from this horrible situation that has faced them for 10 years, but also for other Americans facing the same tragic situation. And I urge the committee's action.
[The prepared statement of Todd Eachus can be found on page 45 in the appendix.]
Mr. GREEN. Thank you, Mr. Eachus.
STATEMENT OF STEPHEN URBAN, LUZERNE COUNTY (PA) COMMISSIONER
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Mr. URBAN. Thank you.
Thank you, Chairman Green and other distinguished members of the House Financial Services Housing and Community Opportunity Subcommittee. Thank you for the opportunity for appearing before you to discuss our concerns in Luzerne County and specifically how leaking underground storage tanks located in Laurel Gardens, Hazle Township and Hazleton City have eroded the home values.
In my written testimony, I provided a brief description of the underground storage leak in the Hazleton area. This was described in a Hazle Township health effect study that was provided by the University of Pittsburgh Graduate School of Public Health.
I will go right to my personal experiences in dealing with the problem, since this is in the written remarks.
In January 2001,the Luzerne County commissioners were informed through public meetings presented by the U.S. EPA that more than 400 residential properties were affected by the Tranguch gas spill, caused by leaking underground storage tanks. Upon notification of the magnitude of the gasoline spill, we also learned that very little immediate help was available for homeowners living in the spill site.
My immediate concerns were for the health and safety of our residents living in the gas spill and to determine if funds were available from the federal or state governments to assist homeowners to relocate outside the spill area. Through work with federal and state agencies, I learned that funds were not available for homeowners to move permanently outside the spill area.
I believe residents in the community are in favor of establishing a program to allow homeowners the opportunity of recovering the equity of their property. Over the past two years, my office has received numerous phone calls and letters from homeowners residing in the Tranguch gas spill site asking for help in gaining equity in their homes or to relocate outside the spill area. Also, in public meeting's with homeowners, many impacted homeowners asked for help in relocating from the spill site.
Page 13 PREV PAGE TOP OF DOC Many residents have cited health and safety concerns as a primary reason for wanting to leave the spill site and because fear of the unknown. Residents do not know how long the underground storage tanks have been leaking. Residents do not know the length of time that they were exposed to Benzene or other toxic byproducts of the gas spill. The government does not have data that can accurately predict what effect low dose, long-term exposure to Benzene and other toxic byproducts of gasoline will have on the health of people living in an area contaminated with gasoline. And the time period for cleanup of the Tranguch site is unknown.
Based upon a history of the Tranguch spill site, underground storage tanks were probably leaking as early as 1991, when homeowners first began smelling gas fumes. In my opinion, the health and safety of our homeowners should be of paramount concern and homeowners should be allowed to receive equity from their property and be given the opportunity to move on with their lives and live in a more safe and healthy environment.
Homeowners residing in the Tranguch site have not been treated fairly. Compare the magnitude of the Tranguch site spill 50,000 to 900,000 gallons of gasoline that traces its origin to 1991 and another oil spill that occurred in Jackson Township, Luzerne County in 2000.
In January 2000, a 5,500-gallon oil spill erupted in Jackson Township, Luzerne County. Of the 17 homes impacted by the 5,500-gas spill, all residents were offered buyouts. Of the 17 homes impacted, nine were settlements involving tenants who chose to stay on the property and eight were settlements that resulted in buyouts of property owners.
In addition, all impacted property owners received a minimum inconvenience payment of $50,000. And impacted tenants received a $10,000 payment. In addition, homeowners that chose to stay and live in the impacted homes were awarded a maximum of $95,000 in return for the release of claims, except personal injury, at the end of a five-year period.
In Jackson Township, Luzerne County, a responsible oil company made the right decision and provided equity to homeowners impacted by the oil spill. The oil company offered equity in the form of a buyout to homeowners.
Page 14 PREV PAGE TOP OF DOC Homeowners residing in the Tranguch spill site deserve the same type of treatment from the government as the homeowners in Jackson Township received from an oil company. Homeowners residing in the Tranguch site deserve the option of receiving equity from their homes because they are victims of this environmental disaster.
In response to the large number of families affected by the Tranguch spill, the Luzerne County commissioners implemented several measures to help homeowners in responding to the case of environmental contamination. On March the 7th, the Board of Commissioners adopted a resolution declaring a state of emergency within the city of Hazleton and Hazle Township, Luzerne County, Pennsylvania.
Our resolution stated that homeowners residing in the City of Hazleton and Hazle Township, Luzerne County are impacted by a gasoline spill, which has entered an underground mine in that section of the county. Luzerne County recognized that a potential serious health risk exists in the Tranguch gas spill area, caused by the exposure to Benzene and other toxic byproducts of the gas spill.
Also, our resolution supported a buyout of the affected residential real properties. This state of emergency still exists today.
On February 7, 2001,the Board of Commissioners, at a public meeting, unanimously approved a resolution requesting the Luzerne County Board of Assessment Appeals to requests to reduce to zero the value of realty properties of those real estate properties affected by the gas spill, as determined by the federal government for the period January 1, 2001 to December 31,2002.
In our resolution, the County Board of Commissioners again recognized that homeowners are subject to the potential serious health risks which exist due to the exposure to Benzene, as well as other toxic byproducts.
Mr. GREEN. Mr. Urban, if you could summarize, please. Thank you.
Page 15 PREV PAGE TOP OF DOC Mr. URBAN. What I am really here to say, Mr. Chairman, is that the citizens of Hazleton really need help. And we need the help of your committee. There is no legislation that is out there today that will offer buyouts or will create equity for homeowners living in this gas spill site. And the people of our community ask for your help.
Thank you, Mr. Chairman.
[The prepared statement of Stephan Urban can be found on page 62 in the appendix.]
Mr. GREEN. Thank you, Mr. Urban.
Welcome, Mr. Bartsch.
STATEMENT OF CHARLIE BARTSCH, EXECUTIVE DIRECTOR, NORTHEAST-MIDWEST INSTITUTE
Mr. BARTSCH. Thank you. Thank you for the opportunity to testify today.
The institute has worked closely with the bipartisan Northeast-Midwest Congressional Coalition, which is currently co-chaired by Representatives Jack Quinn and Marty Meehan. And I know that both of them have worked with the subcommittee, on different bills that have explored the relationship between environmental contamination and community development. And I think this is a natural next step.
My comments are going to focus on the broader aspects and concepts related to this bill, focusing more on some of the cleanup and reuse aspects. But clearly, these are important to owners because you need to do these activities to set the stage to restore value.
Page 16 PREV PAGE TOP OF DOC These comments are based on the findings of two recent reports that I have worked on. One is ''Recycling America's Gas Stations.'' And the other one is ''Using State Voluntary Cleanup Programs to Support Residential Redevelopment,'' done in cooperation with the National Association of Homebuilders.
Both of these really get at the question which is the focus of this hearing, and that is: how significant is the problem of leaking underground storage tanks or LUSTs? And what is its impact on communities?
There is no question that the sheer number of single and multi-family housing units affected by real or potential LUST contamination is unknown. But given the age of so many of these structures and their utility systems, there is no question that it is significant, potentially hundreds of thousands of units.
And Mr. Chairman, you gave us numbers in your statement that really convey the magnitude of this. And like other contaminated sites, LUST sites need to be addressed in a comprehensive way, in which contamination is not only detected and contained, but also where sites are cleaned up and put back into use. And this requires access to affordable resources.
My longer statement discusses in detail some of the specific issues that tank problems raise relative to housing and community developmentconcerns like local capacity for technical and financial support to help carry out LUST site activities, the lack of needed incentives, legal and situational constraints, such as the problems of applying existing federal and state resources to LUST cleanup and site reuse, and HUD's policy, which largely prohibits use of housing program resources for any residential project which includes institutional controls.
So what is currently being done to address the LUST issue? Well, states and communities have taken some limited, but important initial steps to address problems posed by UST sites. I just want to mention three quickly.
Page 17 PREV PAGE TOP OF DOC These initial actions, though, could play an important role in a HUD-driven homeowner-focused effort to grapple with housing site contamination. From an operational standpoint, some communities are starting to work to incorporate UST project approaches into various parts of their local government community development processes. This has led to some general site cleanup, new housing and commercial development and restoration of property values to increase tax ratables.
And in terms of federal programs, cities in several statesnotably those in places like Wisconsin and New York and New Jersey have suggested that it would be really important to bring a variety of federal program resources to bear on these projects. They require packaging. And you need to bring more programs into the mix. Programs offered by HUD and EDA and other agencies, which are targeted to distressed areas or markets, capital market imperfections, have the potential to play in a key role. And the bill under consideration by the subcommittee would enhance this.
A second approach is informational. We need to get information to private partiesboth owners and lendersto show them how to overcome the barriers, to instruct them about the economic benefits of cleaning and reusing these sites and about the various public incentives and private tools, such as environmental insurance, that can really help tie these projects together and minimize stigma and enhance site value.
And clearly, the third thing that is being done, slowlyand it is clearly the most critical, as the proposed bill suggestswe need financial support. It is a key activity. It is just now starting to be considered. A small but significant number of states and communities have started to address the LUST issue and its impact on housing through initiatives of their own.
Again, my statement talks about a number of these initiatives. But these are efforts that would really be enhanced by additional federal action.
Page 18 PREV PAGE TOP OF DOC There is no question that more needs to be done. In my recent work on tank sites, several states and cities urged an UST field connection to HUD, similar to the one that now exists for brownfield efforts, which is in fact a link which this subcommittee worked to put into place.
And I think in the case of expanding and clarifying ways in which HUD could encourage things like financing tank cleanup and restoring distressed properties to productive use, these are activities that really fit within HUD's basic mission. And this really gets to the heart of what this proposed legislation would do.
In establishing a HUD loan guarantee program
Mr. GREEN. Mr. Bartsch, if you could summarize for us. Thank you.
Mr. BARTSCH. I will just close by pointing out that I think the bill is a good one. I would suggest a couple of minor modifications, including a finding that makes it clear that cleanup and reuse of housing, unused or abandoned because of LUST contamination, should be a clear goal of HUD.
I would allow public housing agencies to delegate the authorities that this bill gives them to other capable local agencies or non-profit organizations that might be better suited to deal with some of the management issues related to properties that are acquired through program. I would provide an additional incentiveperhaps a 100 percent guaranteeto lenders that agree to provide financing for cleanup of the original housing property as part of the financing package.
I would allow the guarantee to be extended to mixed-use properties that include commercial uses, as well as housing, because this is a good way to get value back into communities. And I think finally, I would direct HUD to allow appropriate and protective institutional controls to be used in conjunction with its other housing programs. HUD does not allow this very often now. And I think this could limit the effectiveness of this proposed bill.
Page 19 PREV PAGE TOP OF DOC I think this bill sets in motion the prospects of a really productive public-private partnership between homeowners, lenders and communities and HUD to make some of these properties better.
[The prepared statement of Charles Bartsch can be found on page 35 in the appendix.]
Mr. GREEN. Thank you. Thank you, Mr. Bartsch. Very interesting.
Mr. Harvey, would you please testify for us? Thank you.
STATEMENT OF WILLIAM C. HARVEY, PRESIDENT, WILLIAM C. HARVEY AND ASSOCIATES, INC., ON BEHALF OF THE APPRAISAL INSTITUTE
Mr. HARVEY. Mr. Chair, members of the subcommittee, thank you for the invitation to testify.
I am William C. Harvey, MAI. And I am here to address the issues of valuing pre-contaminated property and the effect of contamination from leaking storage tanks on the housing market.
Appraising contaminated property in its pre-contaminated condition requires that the appraiser invoke a hypothetical condition that the property is free of contamination and clearly indicate such in any report. Three categories of effective appraisal datesretrospective, current or perspectivemay then be used, according to the purpose and function of the appraisal assignment.
Page 20 PREV PAGE TOP OF DOC A retrospective appraisal occurs when the effective appraisal date is prior to the date of the report. This type of appraisal is most commonly developed for purposes of estate administration, condemnation proceedings and litigation to recover damages. Since a retrospective appraisal is complicated by the fact that the appraiser already knows what has occurred in the market after the effective appraisal date, it is critical that the appraiser establish a logical cut-off date for the consideration of subsequent data that no longer reflects the relevant market.
While this can be a difficult determination to make, studying the market conditions as of the effective appraisal date will aid the appraiser in judging where to make this cut-off. The effective appraisal date should be considered as the cut-off date for data considered by the appraiser, absent evidence that data subsequent to the effective appraisal date were consistent with the market expectations at that time.
Once the context of the appraisal is established, a retrospective appraisal is developed like any other appraisal through the proper development of the applicable approaches to value that are typically used to value vacant land and improved property. The reliability of an appraisal relates to the extent to which the valuation process yields the same results on repeated trials. To that end, retrospective appraisals can be as reliable as any other appraisal, so long as a complete appraisal process is utilized.
In developing a complete appraisal, the appraiser will use all applicable valuation procedures. And the value conclusion will reflect all known information relative to the subject property, market conditions and available data. By contrast, in a limited appraisal, the appraiser and the client agree before the commencement of the assignment that the appraiser will not use all applicable valuation procedures or that the value conclusion will not reflect all known information about the subject property, market conditions and available data.
Thus, to ensure the highest level of reliability, the process should involve a complete appraisal.
Page 21 PREV PAGE TOP OF DOC On the issue of the impact on the affected housing market, my personal experience in appraising properties affected by environmental contamination varies from a single residence with minor onsite releases to communities comprised of hundreds of homes sitting atop large plumes of hazardous materials. Notwithstanding the differences in the case studies, the effects on value generally follow what has become known as the Detrimental Condition Model. This model, a copy of which is attached to my written statement and appears in demonstrative form to your left, graphically illustrates the fundamental effects that environmental contamination can have on housing markets.
While the DC Model recognizes all possible stages, each detrimental condition must be analyzed on a case-by-case basis because of the potential for a variety of impacts on value during the property's life cycle. The first step with any detrimental condition analysis is to consider the unimpaired value of the property as if there is no detrimental condition. This is reflected as Point A on the model.
Upon the occurrenceor more likely, the discoveryof the detrimental condition, the value may fall to Point B if the facts and market data support such a decline. The value during this period is often the lowest. And in some instances, the value is unmarketable until the magnitude of the detrimental condition can be ascertained. Nevertheless, in a retrospective appraisal where all assessment, remediation and ongoing issues are studied, a reliable determination of Point B can be made.
Mr. GREEN. Mr. Harvey, if you could summarize your testimony for us? Thank you.
Mr. HARVEY. While the DC Model suggests an orderly process, each detrimental condition must be analyzed on a case-by-case basis due to the variety of impacts on value. Although my experience has shown no two cases are alike, the analysis of environmental contamination should begin with the DC Model.
Page 22 PREV PAGE TOP OF DOC Thank you for the opportunity to testify.
[The prepared statement of William C. Harvey can be found on page 48 in the appendix.]
Mr. GREEN. Thank you.
Now if we could hear from Ms. Tomsho. Welcome.
STATEMENT OF PATRICIA TOMSHO, RESIDENT, LAUREL GARDENS COMMUNITY, LUZERNE COUNTY, PA
Ms. TOMSHO. Thank you for having me. On behalf of the residents of Laurel Gardens, Hazleton City and Hazle Township, Luzerne County, Pennsylvania, I thank you for allowing us the opportunity to express our serious concerns. I speak not only for our community, but also for the many other communities across the United States which are similarly affected.
In fact, in review of the EPA's web site on Leaking Underground Storage TanksLUSTsthey cite 418,918 leaking underground storage tanks across the country. And these are confirmed releases.
That averages out to about 80,500 per state. Clearly, our group is not the only affected group or residential area. And therefore, the work you are doing here is so important to all of us.
What I am trying to do is give you the personal side of this. That is my role. And that is what I do on behalf of our community.
Gasoline contains benzene, which is a known carcinogen, as well as toluene, ethyl benzene, xylene. They are called BTEX. And they are volatile organic compounds.
Page 23 PREV PAGE TOP OF DOC Also found in unleaded gasoline is MTBE, which is known to be hazardous to health and is extremely water soluble. The effects of MTBE are not stillthey have not been widely tested, so they are not well known. However, benzene is well known.
We have the map up there, which shows you the plume across our neighborhood, the soil contamination. And underneath, it shows you the entire neighborhood.
The black crosses are the deaths from cancer, gentlemen and ladies. The red crosses are people who have cancer illnesses. And the green crosses are people who have other kinds of illnesses, like the autoimmune diseases.
Clearly, our area is loaded with cancer deaths and cancer illnesses. You will note the yellow outline. That is the mine that underlies our property. And that makes our particular spill more unique than any other in the country. We looked and we could not find another in the country that had an underground mine.
And it is a low point, so all the ground water goes into that underground mine. And the gasoline migrated there as well. And depending on the amount of rain, the gasoline fumes will go up and down and affect the homes.
So the remediation has been challenging.
In Hazleton Township, as Mr. Urban and Mr. Eachus have noted, we have completed a study from the University of Pittsburgh. And what they found is that we are 10 times more likely to contract leukemia, eight times more likely to contract stomach cancer and three times more likely to contract prostate cancerprovided we are males, of course.
And the Hazleton part of the group is completing the study now.
Additionally, we challenge the national average of lupus. Usually in the nation, there is one case in 1,000 people. We have five in 250 peoplefive cases of diagnosed lupus.
I am testifying today to convey to all of you the fear and the hopelessness and mostly the loss of control and personal choice that we as victims feel. We have to confront a spill on a daily basis.
Page 24 PREV PAGE TOP OF DOC And I would like to give you just a few case examples to help you understand. One such case is a family who started to build a home in the spill zone. The frame was completed, but the bank stopped the mortgage. It is now a skeleton of rotting wood, a visible reminder of property loss. When you live in a gasoline-impacted neighborhood, the loss of freedom and control, on which this great country is founded, is absolute and very real.
There are areas over which we have no controlover our health, the use of equity in our property and the sale of our property. All of these have a financial impact on us. Health care is a primary concern. One week of chemotherapy costs $15,000. The cost to employers for healthcare for lost workers is great.
People who have small children who cannot leave their homes are really very traumatized. They are frightened for their children. Mine grew up in that area. I am very happy that they live out now. But it is traumatic for a mother to watch her children live in a known zone.
I am moving along.
Mr. GREEN. Thank you.
Ms. TOMSHO. There is a heart-wrenching case of a grandmother with MDS Leukemia who had to leave her home, but had to leave her son and her grandchildren living there. I do refer you to the booklets that we prepared. They are very well documented. It shows you many of the traumas that we went through.
But I want to finish by telling you that the legislation you are considering is crucial to us. It should be across the board and not income-related. The spill has been non-discriminatory, affecting young and old, rich and poor.
In cases like ours, it is very important to specify the forgiveness aspect and who will make that decision. In our experience, we have had to become adversarial with EPA in order to affect a serious cleanup. And then, that agency having control over forgiveness would be frightening to us.
Page 25 PREV PAGE TOP OF DOC All I can tell you is, please refer to the personal letters that are in the booklets and some of the information. And I thank you for your time and attention.
[The prepared statement of Patricia Tomsho can be found on page 60 in the appendix.]
Mr. GREEN. Thank you, Ms. Tomsho. I thank all the witnesses. That map and chart you have over there is truly astounding.
In terms of questions, Mr. Bartsch, I found your testimony and the written statement particularly interesting. You have listed some of the state programssome of the state and local programs that have emerged in this area.
I would invite you to supply some additional documentation to the committee. I think we would be very interested to see, even in a more comprehensive way, what some of the states are doing. Because obviously, that is useful information to us.
Mr. BARTSCH. I can do that.
Mr. GREEN. So I would appreciate it if you could do that for us.
And I guess along that line, let me ask you, Representative Eachus, has the state of Pennsylvania taken a look at legislation in this area? And has it passed any legislation? And if not, why? What have been the forces of resistance?
Mr. EACHUS. Well, Chairman Green, we have not addressed the housing perspective of residential spills. But I did provide the committeeboth minority and majority staffa summary of all of the legislative framework in the state of Pennsylvania.
We do have an indemnification fund. But since this was an OPA site and the state handed the role over to the federal regulators to do the cleanup, they have been less than cooperative in taking financial responsibility for any aspect outside the agreed upon issues between the folks at EPA, the Coast Guard and the Department of Environmental Protection.
Page 26 PREV PAGE TOP OF DOC And I think that is an inhibitor. In these cases, the state was on the site from late 1989, 1988, when they first started to get concerns from citizens, but really did nothing except study the spill until 1999. In 1999, both myself and Congressman Kanjorski began to make inquiries. And all of a sudden, EPA came in, took over the site under OPA, made it an OPA site. And then the state folks from DEP were unwilling either to make this an emergencya state of emergencywhich we urged them to do and try to bring PEMA funds in for these citizens or use any of our tank indemnification fund with regard to dealing with housing or buyouts or any other kind of relocation strategies.
That is the problem. Once this is turned over to the federal government, I believe the states are going to take a walk with regard to responsibility.
Mr. GREEN. Yeah, I fear you are right. That is one of the reasons I posed that question.
In terms of our trying to get a more thorough understanding of the scope of the problemand I do not mean in terms of the number of sites. I think we have some documentation with respect to that. And obviously, there are some programs that deal with these issues in the abstract.
What I think would be real interesting for us is to try to get a handle on the loss of value, try to measure some of the more human aspects that we have had testimony on, on a national level.
Do any of you have any suggestions as to how we can begin to accumulate that information, because I think it would be useful for us?
Mr. HARVEY. Mr. Chair, you are talking about a very broad database of properties and communities.
Mr. GREEN. I understand. I understand.
Mr. HARVEY. But by illustration, a local community here that has been a predecessor to this entire process is the Mantua community in Fairfax. To give you an idea of the loss in value, that spill, which affected 400 homes from a leaking storage tank at a tank farm, occurred in late 1990. And the full recovery of those home values took 12 years.
Page 27 PREV PAGE TOP OF DOC It was augmented by a private property value protection plan, introduced by the responsible party, who took liability for the cleanup. Your legislation parallels in pretty good form the attributes of that private property value protection plan.
Absent such a return of value, it is likely to be so far extended that it just turns the American dream of home ownership into a nightmare for the residents. So I think it is such a pervasive problem that you would be astounded by the numbers.
But I will be happy to introduce that request to my association to see what we could provide this committee.
Mr. GREEN. I think that would be helpful.
Mr. EACHUS. Yes, Chairman Green. I have one other issue. And that is relating to the issue of guaranteeing the loans under the Kanjorski bill, there is a requirement that 10 percent be guaranteed by either mortgage premium insurance or other state agencies or community programs.
I am unaware of anything at the county which would help to guarantee those kinds of properties, as well as the Commonwealth. And what I am concerned about is that if the committee can find out if the mortgage premium insurance industry, the guarantee sources, are available for these kinds of properties, I am unaware of any in the Commonwealth of Pennsylvania that would help to guarantee properties that would be contaminated under these sites. So I am concerned about that.
Mr. GREEN. Mr. Bartsch, can you help us find that information as well?
Mr. BARTSCH. I can help with that. And I think that raises a good issue.
Just in the senseI mean, I understand the need that you do not want to have a full guarantee because you set the stage for projects that may not be so well underwritten. But clearly, there is a gap here that may need to be explored.
Page 28 PREV PAGE TOP OF DOC I know that there has been a lot of advances in environmental insurance. And I also know that the states are going to have access to some resources under the new brownfield law to promote environmental insurance. But again, I think there is going to be a lot of demands on those. And I would be glad to see what I can find out.
Mr. GREEN. Great. Much appreciate that.
The chair recognizes the ranking minority member, Barney Frank, for any questions he might have.
Mr. FRANK. It just strikes me, as we talk about that last thing, since we have passed legislation getting people out from under private mortgage insurance that they have been obligated to pay for when they do not need it, maybe we can find something more useful for that industry to do now that they are not insuring people who do not need the insurance and do not want it.
I am going to pass on to Mr. Kanjorski. I just want to acknowledge the fact that this iswe are here because of him. This is a subject which he has brought to our attention. He has made a very convincing case.
This hearing is a result of his efforts. And so I am going to yield to him.
I want to thank the witnesses and particularly Ms. Tomsho. I am always impressedit does not happen a lotwhen a citizen such as yourself becomes not just interested, but as knowledgeable as you are.
And my inference is that you gave yourself a late post-graduate chemistry and medical course. And the results are very impressive. And I thank you for the seriousness with which you have shared that.
And with that, I am going to yield my time, which would be in addition to his own time, to Mr. Kanjorski, because he really is the driving force on this.
Page 29 PREV PAGE TOP OF DOC Mr. KANJORSKI. Thank you very much, Mr. Frank.
I want to bring to the committee members an observation that I have made. And Pat, I am going to direct the question to you.
When this all started off, there was great sympathy in the very broad community of Hazleton and Hazle Township and some sort of an identification between all the residents and then the impacted residents. But over the course of years, I have sensed a narrowing of support from the unaffected community and sort of a feeling like the affected community is asking for something that they are not entitled to.
And Pat, do you sense that? And maybe you can shed some light on the idea ofsince the people that live in Laurel Gardens had nothing to do with this spill, gained nothing economically from this spill, were totally innocent parties, why is it that, at some point, some of the rest of the community starts looking at the affected community with annoyance, if you will?
What is that dynamic that is out there? And do you sense it? Am I making an observation that is correct? And what is it?
Ms. TOMSHO. Actually, I have seen a dichotomy in that. Some people are very invested and still supporting us. But they tend to be the quiet majority.
What I would say is whatand this is my field. I am a social worker by trade. And what you are seeing is the victim phenomenon. When people are victimized, people think poorly of them and therefore, begin to dislike them. And then they resent them for what they get.
And I think that is an issue that Americathat is a broader issue America maybe needs to study. But it applies even on a small issue like ours. People resent victims. They resent what victims get. And even if it is hard won and hard fought, they resent it.
Page 30 PREV PAGE TOP OF DOC Mr. KANJORSKI. One of the observations that we made and I want to draw to my colleagues' attention is that this is a process that has occurred over 10, 12, 14 years. And up until EPA's involvement in 2000, really nothing occurred, not even addressing the fix-up of the remedy situation.
I mean, for all intents and purposes, this was going to be solved by attrition, which probably is the least sympathetic methodology I could think of solving this problem. But over the course of the several years that I have been dealing with Mr. Eachus and Mr. Urban and Pat's group, it became eminently clear to me that tort law recovery for negligence or other remedies, which may be built into the law, just do not lend themselves to victims who are living in a community and have most of their assets or equity in their homes. They are literally prisoners to live in harm's way, subject tohopefullythe cleanup process.
And if the cleanup process is not complete, they will have to carry the burden for the rest of their lives of the exposure to their children. I ran into so many families that are saying, ''You know, if it were just me alone, I would stay and take the risk. But every time I look at my young children, I realize that it is my inadequacy to go out and buy a new home and to relocate and take them out of harm's way, that if they should get sick or if something happens to them in the future, it is my fault.''
And that is a terrible burden to put on parents or grandparents. And that is occurring in this neighborhood because it is a neighborhood of extended families. And very often, you will have two or three generations living in the same household or within the same neighborhood.
It is quite apparent, really, the solution to this is very simple. Let those people who are in great fear and anxiety find a way to recover their equity so that they go out and can relocate. And find a methodology, not through the long process of condemnation and acquisition that we all experience in redevelopment, but by putting in the special master, really adopted out of the concept of the World Trade Center, someone who could move very quickly, establish cost and expenses and have very broad latitude to give these people the appraised value of their equity so that they can move on.
Page 31 PREV PAGE TOP OF DOC And then allow the normal processes of the law to carry on for recovery or for cleanup. But they are in a situation where they are damned if they do and damned if they do not. And they are stuck there until all the federal and state agencies and county agencies and local municipal agencies take their time at bat and usually do not hit a home run.
But the people here are the ones that are scored against. They are the ones that lose.
I see Mr. Eachus wants to add to that.
Mr. EACHUS. I think Congressman Kanjorski is on the mark. But from a public policy perspective, I really see these gasoline spills as something that have to do with pre-regulation and post-regulation.
In Pennsylvania we have forced everybody who is business today selling either petroleum or gasoline products to put new tanks in that meet modern standards and federal standards. The releases that are the most egregious in our region are ones that are pre-releases due to a lack of regulation by the federal and state authorities.
So I really see some of these spills as we are in a time where the 1960s, 1970s and 1980s tanks that were installed are leaking and having an impact on communities, but the new tank technologynot to say that it will not be spilledit is less likely that there will be spills. Plus, they have stronger indemnification requirements that put money in place to back up some of these spills, which could be used as a match toward housing credits or other kinds of things.
So I think we are in a unique time between pre-and post-regulation of gasoline tanks.
Mr. BARTSCH. And could I add one thing to that, too? Just getting at again, the issue of, again, as you suggested, ultimately cleanup and reuse. I think that this country has a long history of helping people in need. Clearly, this is the same situation.
Page 32 PREV PAGE TOP OF DOC And at the same time, I think what I like about the bill proposal is that you really set the stage for, you know, sort of ultimate reuse and cleanup of these things. I mean, you are not just moving people out and creating sort of uninhabitable wastelands, but you are setting the stage for cleanup.
And to that extent, you can really look at the resources in this bill as really an investment. And these investments will be recoverable as these homes are cleaned up and reused, as these sites are cleaned up and reused. So it is an investment and not just a subsidy.
Mr. KANJORSKI. I have about three minutes, Pat. And since you are the person that has led this cause all the way through, I am going to ask you to, in your own words, spell out to the committee what you would like the Congress to do as a remedy for Laurel Gardens, but also for all the other Americans that are impacted, through no fault of their own, by leaky storage tanks.
Ms. TOMSHO. I would like the Congress to certainly pass a law or a bill, not my strong point, that will address the financial loss that all of our neighborhood has. I cannot explain in enough words how traumatic this has been for the neighborhood. And people truly have no choices.
They need to be able to access the equity in their homes and move if they feel unsafe. And at this point, we can do neither.
That is what we need. Thank you.
Mr. KANJORSKI. Thank you, Pat.
Mr. GREEN. Thank you.
The chair recognizes Mrs. Kelly for any questions that she might have.
Mrs. KELLY. Thank you very much. I will tell you, coming into this hearing, I was on the phone with my husband. And I told him I was coming to a LUST hearing. And he said, ''What are you doing in Washington?''
Page 33 PREV PAGE TOP OF DOC [Laughter.]
He said, ''Are you sure you are doing your job?'' I said, ''Yeah, this is a serious situation.''
And it is a serious situation. In my area of New York, I have been working with a township next door to me where I have experienced firsthand with people a whole neighborhood that was contaminated by MTBE. And it went into their drinking wells from a nearby gas station.
Some of these people had little children. They were told they could not drink, could not cook, could not bathe and could not even smell the water. They were told not to turn on the taps in their sinks and their bathrooms. Flushing the toilet was not allowed because it put the MTBE in the air.
One of the serious things I think we have to look at with all of this though is the fact that there is not good scientific information on the environmental body contamination problems. It is just not well defined on what is in the environment and how it affects the body.
When I see a cluster like you have, this is terribly disturbing. It seems it really should be looked at further. And I am glad that we are having this hearing.
In another town near me, one also that I represent, there is a young mother who, when her husband died, moved in and altered the family bar so that she now has a convenience store and a gas station. And she is okay. Her gas station is okay.
But there is a gas station on the hill up above her. And that gas station has old tanks. It is leaking something down into hers. And now people think this mother, who is trying to clean up the neighborhood and make a better life for her kids, they have got a situation where their land is contaminated by the gas station up the hill.
And between the two gas stations is a farm. And the farmer is spraying that onit is a truck farm. That is going on the crops.
Page 34 PREV PAGE TOP OF DOC So we are having big problems with this. This is a serious situation.
And I just want to go to you, Mr. Bartsch, to ask you a couple of questions. What areasare doing the best job of cleaning up the LUST problem?
Mr. BARTSCH. Well, one of the cities that I am most familiar with that is doing that is Chicago. And again, it is because they have made a significant public sector effort to take on these sites. They aggressively take title to the sites.
Now this is more from a perspective of abandoned gas stations and less from the perspective of home heating tanks. And one of the things that they have done there that is an option that is not available to most places is they have basically just forbidden the use of ground water. You cannot drill a well. You cannot use any of it.
That is an option that is not available to most places. But I think what is important about what they have done therethey have done really good things in a couple of cities in New York that I am aware of, as well as, again, cities in Wisconsinis they have really made an effort to figure out the pieces and bring to bear all the different kinds of resources that are needed. Because it is a patchwork. You cannot deal with one of these sites with one source. You need to be able to pull from not only a HUD, but perhaps an EDA and perhaps some other resources as well.
The state of Ohio has done a lot of work with the State Clean Water Revolving Fund to do some pretty innovative financing. So there are some things that can be done. And a big piece of this is just getting the information out there and also educating the federal agencies about what they really can do. Because again, depending on where you go and who you talk to, some will allow these kinds of activities and some will think that it is not in the mission, which is why I suggested putting that direct finding into HUD so that it is crystal clear that this should be one of their objectives.
Mrs. KELLY. Have you found that the agencies, when they are dealing with each other, are talking about not just remediation, but are they talking about affecting areas when they are looking at the totality of the environmental concerns? Like an underground aquiferfor instance, I am north of New Jersey. A lot of the area I represent supplies water down into New Jersey.
Page 35 PREV PAGE TOP OF DOC Mr. BARTSCH. I think my impression would be that those kinds of conversations are hit and miss. But I think there does need to be more effort to coordinate that, for the simple reason that, again, everybody brings information and resources to the table. And it is an expensive problem.
We have someit is not only resources. It is also liability.
I know in the case of some of the gas station issues, you have some of the big oil companies that have really kind of chosen to basically mothball sites and not do anything because they are so afraid of what might happen should they start to take a good first constructive step. I think it is better to get some of these resources used in sort of clean up and reuse than litigation.
Mrs. KELLY. Are the CDBG funds being used? And if they are, perhaps we can take a look at maybe helping to coordinate these efforts? Are they being used to fund the LUST cleanups?
Mr. BARTSCH. They are being used in some cases. Probablyagain, to go back to the Wisconsin example, the state of Wisconsin, through its Small City CDBG, has funded some of these. Some entitlement cities have funded this. Again, it comes down to sometimes what your HUD area office decides is a good thing to do.
I have talked to people who really wanted to use the CDBG funds for something like this, but have decided that sort of the extra justification is justthey just cannot do it. They do not have the capacity. It is just easier to go rehab something than to try to take on something more innovative.
So again, I think that getting the body of case examples out there is a helpful way of making this happen.
Mrs. KELLY. I would like to ask unanimous consent. I had an opening statement. I was not able to be here. May I ask unanimous consent to put that statement in the record, please?
Page 36 PREV PAGE TOP OF DOC Mr. GREEN. Unanimous consent has already been granted.
Mrs. KELLY. Thank you.
[The prepared statement of Hon. Sue W. Kelly can be found on page 31 in the appendix.]
Mr. GREEN. Mr. Kanjorski, you were looking with great interest. Do you have something that you wish to add?
Mr. KANJORSKI. Ms. Kelly raised a very interesting question about using CDBG. Actually, you will find that it is not nearly significant enough in amounts to handle these problems. These problems are generally in the multimillions of dollars.
In communities like PennsylvaniaI say it with apologywe have 2,500 municipalities, 90 percent of which are under 3,500 in population. So they receive no direct CDBG money.
And the Commonwealth has a program of putting money out to these communities. But it amounts to sometimes $10,000, $50,000, at a maximum of $100,000.
Mrs. KELLY. If the gentleman would yield, I would respectfully say that we need to use every resource possible to do coordination and remediation. These people are stuck, especially if they are out there in rural communities.
I know Hazleton. I have known Hazleton for 40 years. And I know where it is.
And I understand that we have to do something. I am questioning how we can best position HUD and the monies that we have there to help in this problem.
This is a serious problem. And it is all across our nation.
Mr. KANJORSKI. Mrs. Kelly, the design of my legislation really is a public-private solution. Actually, we are not called upon here to put up all the money for relief. All we are really called upon is to put up some percentage of the money to allow these people to relocate and then to recover the real equity or value that they have in these homes.
Page 37 PREV PAGE TOP OF DOC I would tell you that my judgment is probably 20 percent of all of the money insured would ever be at risk from the federal government. The other 80 percent will be recaptured when the cleanup is done, when the people are adequately relocated and their lives started.
But our problem is we cannot find that 20 percent. And the private market cannot be expected to take that risk in a contaminated area.
So we are between the devil and the deep blue sea, if you will.
Mr. GREEN. Well, I think that is a real good place to wrap this up, between the devil and the deep blue sea.
Thank you to all the members of the subcommittee. And my great appreciation to the members of the panel. I think you have given us a lot of very useful information.
There may be members who have additional questions that we may forward on to you for response. And again, please, if there is additional information you would like us to see, you have leave to provide it to us.
And thanks again. Travel safely.
[Whereupon, at 11:37 a.m., the subcommittee was adjourned.]