H.R. 2500: Reform of Superfund Act of 1995

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H.R. 2500, REFORM OF SUPERFUND ACT OF 1995

THURSDAY, NOVEMBER 2, 1995

U.S. House of Representatives,

Subcommittee on Water Resources and Environment,

Committee on Transportation and Infrastructure,

Washington, DC.

    The subcommittee met, pursuant to notice, at 9:08 a.m. in room 2167, Rayburn House Office Building, Hon. Sherwood L. Boehlert (chairman of the subcommittee) presiding.

    Mr. BOEHLERT. The subcommittee will come to order.

    Let me start out by apologizing to the Administrator for being a couple of minutes late from our side. You were gracious enough to agree to come one hour early because of the crazy, mixed-up schedule all of us have, and we appreciate it. Apparently our notification hasn't caught up with some other members of the panel, but we will start.

    On our first panel this morning we are honored to have the EPA Administrator, Carol Browner.

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    Before I proceed with my remarks on Superfund, I would like to thank Administrator Browner and the distinguished members of this subcommittee for agreeing on very short notice to kick off today's hearing at 9 a.m. instead of 10 a.m.

    As I imagine all in this room are aware, the first order of business on the House floor today will be the consideration of a motion to be offered by Mr. Stokes and in my name instructing conferees to reject the House riders to the VA–HUD appropriations bill which, in effect, have 17 mandates on the Administrator which, in effect, say to her she can't do her job. This debate will, unfortunately, take me and several members of the subcommittee to the House floor. And even before that, at shortly after 10, I have to go to the majority conference to discuss this very subject to defend my position, which is defensible. I have no difficulty with that, but it is somewhat controversial.

    So I hope the Administrator will excuse my absence and remember my efforts on behalf of environmental protection when she is discussing the Reform of Superfund Act, a measure which I am an author of and an original cosponsor.

    I'm proud to be an author and original cosponsor of this act. I firmly believe that this measure is a significant step toward improving our Nation's most ineffective and inefficient, though well-intended, environmental statute.

    The current Superfund program is simply not serving the public well or the environment well. H.R. 2500 will clean up more Superfund sites in the next 5 years than have been cleaned up in the previous 15 years.

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    Frankly, I'm shocked and disappointed by the level of rhetoric that has surrounded the Superfund reform package. Telling the American people that H.R. 2500 is a budget buster that has fences and bottled water as its preferred methods of cleanup is just irresponsible.

    On the matter of funding, I take particular issue with the opponents of this legislation. In my road map to Superfund reform, which I issued last July—everyone else was issuing statements of principle. They had been to the top of the mountain. I was still at the foothills issuing a road map to reform. I pledged my commitment to only doing as much liability reform as can be realistically paid for. That is why we are not doing a full repeal of retroactive liability. Quite simply and bluntly, we can't pay for it.

    H.R. 2500 is entirely consistent with this principle and it is not one nickel over budget.

    I am also disappointed by the suggestion that this bill mandates Superfund cleanups consisting of fences and bottled water. Such cleanup standards are not acceptable to me, they are not acceptable to the States we hope to have running the Superfund program in the future, and, most importantly, a fences and bottled water approach to Superfund cleanups is unacceptable to the American people.

    The objective of title one is to set up a framework for selecting the most cost-effective and reasonable remedy from a menu of remedies that are all protective of human health and the environment. Let me repeat this: all of the remedies that we are looking at must first be protective of human health and the environment.

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    I'm completely open to suggestions from the Administration and anyone else who has ideas on how to clarify or perfect title one, but the time for catchy rhetoric is over. We need thoughtful input on how to make a good reform package better.

    Prior to today's hearing, I took the opportunity to review the road map to reform I issued last July. I was pleasantly surprised to see how much H.R. 2500 mirrors the principles I set out in July.

    On the issue of liability, my proposal called for the partial repeal of retroactive liability, providing full relief to PRPs at municipal landfills and recycling facilities. This is essentially the liability reform contained in H.R. 2500.

    On the issue of natural resource damages, my road map to reform provided for a $50 million cap on these damages. Again, this is the reform approach adopted in H.R. 2500.

    And finally, on the issue of State role, my principles called for providing States with flexibility and incentives to encourage their participation in managing the cleanup of Superfund sites. H.R. 2500 does this.

    In July, Administrator Browner thought my proposal was a sound one, and I would submit that the reform package we are considering today embraces much of what the Administration thought was sensible just three months ago.

    I have read Administrator Browner's statement carefully and noted that the lion's share of concerns raised are on the issue of remedy selection. In fact, the first 15 pages of the Administrator's statement are dedicated to title one.

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    I agree with her. Title one needs some fine tuning. But I believe the underlying goals of the title are sound.

    Upon reviewing Administrator Browner's statement and those of all our witnesses, I am more convinced than ever that we have essentially a sound bill that will only get better as the legislative process moves forward.

    Now, in a moment I'm going to recognize my distinguished colleague, the ranking minority Member, Mr. Borski. Mr. Borski and I have worked very well right from the beginning. We talk. We communicate on a regular basis. We don't let partisanship get in our way except occasionally on opening statements. But we are all big people around here. We understand how those things work.

    But I am confident that, working with the Administrator, as I have in the past and will continue to do so in the future, working with the minority, as I have in the past and will continue to do so in the future, that collectively we can craft a bill that's responsive to the health care and environmental concerns of the American people.

    With that, I'm proud to recognize my good friend, Mr. Borski of Pennsylvania.

    Mr. BORSKI. Thank you very much, Mr. Chairman.

    Let me say from the outset how much the Democratic Members appreciate this opportunity for a hearing on a specific bill. This should lead to a much better process.

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    I also want to give my utmost respect for you, Mr. Chairman. I do like working with you. We do work well together. I wish you all the success on the VA-HUD measure today, and I'll be there to help you wherever I can. But let me assure you that on this bill we respectfully disagree.

    In our earlier general Superfund hearings I said I have serious reservations about any plan that proposes to reduce the funding for the Superfund program leading to a reduced number of cleanups.

    Failing to protect the health and environment of the American people is not an option. The American people don't believe there is too much cleanup taking place. The American people don't want hazardous waste left in the ground for decades to come, threatening their water supplies and their health.

    Unfortunately, in my view H.R. 2500, the Republican leadership bill, fails to meet the basic standards of protecting the health of the American people. H.R. 2500 is weak on polluters, weak on cleanup, and weak on protecting the communities of our Nation. H.R. 2500 is strong in only one area: relieving polluters of their responsibility to protect the American people from the toxic poisons that threaten their homes and families.

    This bill has special treatment for special interests. We all agree that the Superfund program should be made to work better, but H.R. 2500 piles lawyers on top of red tape on top of litigation on top of reduced environmental standards to make sure that no cleanup ever takes place.

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    If H.R. 2500 is passed, we should no longer call it Superfund. This bill should be known as ''Puny-fund''—the Puny-fund bill for protection of special interests.

    What do we need to make sure the hazardous waste cleanup program works? Why do we have to make sure it works? We need a simplified process to get faster and cheaper cleanups. We must make sure that those who are responsible for only small amounts of waste are not drawn into Superfund legal tangle. We must reduce the legal tangle that has been a gold mine for corporate lawyers and has delayed cleanups for years. And we must make sure there are reasonable cleanup standards for the redevelopment of industrial sites in our urban areas and that potential lenders and purchasers must not be sucked into Superfund's legal quicksand.

    Somehow in the 104th Congress Superfund reform has gotten turned on its head. Instead of faster, cheaper cleanups which protect drinking water supplies, we are now proposing to replace cleanup of hazardous waste—with all due respect, Mr. Chairman—with fences, guard dogs, and bottled water, and delay after delay. Instead of simplifying the process for determining who pays, we're going to force taxpayers to pick up the tab for cleaning up the toxic messes made by corporate polluters. If they polluted it, the profited from it, they should clean it up.

    H.R. 2500 puts corporate profits ahead of the protection of the health and well-being of the American public. This approach is wrong.

    We've got to stop debating, stop delaying, and start cleaning up the toxic waste sites that litter this country and threaten the drinking water supplies of so many Americans.

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    The liability provisions of H.R. 2500 have been described as a compromise. It's really an extremist plan to get taxpayers to pick up the tab for corporate polluters. It goes too far and it costs too much.

    H.R. 2500 exempts a whole class of sites, municipal co-disposal sites, from liability.

    We would have the absolutely ridiculous spectacle of major corporations avoiding their cleanup responsibilities simply because some town may have put a few bags of household garbage in the same dump. Why should taxpayers be stuck with a bill to clean up the toxic messes made by corporate polluters?

    In my area, the big companies would get off the hook for cleaning up the Lipari Landfill in Pittman, New Jersey, the number one site on the national priorities list. And who would pay? The taxpayers. This is special treatment for the special interests.

    Where there is no municipal trash, corporations would be eligible for rebates of 50 percent of their cost, even for cleaning up waste as long as 7 years after the Superfund program became law. And who would pay? The taxpayers. This is special treatment for special interest.

    H.R. 2500 is the Republican recipe for environment disaster. It is a full employment act for corporate lawyers that will mean less cleanup of the toxic waste that threatens drinking water supplies. The American people will be the losers, especially the 50 percent of the American people who get their drinking water from groundwater.

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    H.R. 2500 means fewer safeguards to protect drinking water from toxic waste. It means more special treatment for special interests.

    Thank you, Mr. Chairman.

    Mr. BOEHLERT. Do I interpret from your remarks that we could mark you down as doubtful?

    [Laughter.]

    Mr. BOEHLERT. Mr. Ranking Member, Mr. Oberstar, I indicated initially that I've got a serious conflict, because I have to leave at 10:00 or shortly thereafter to go to Republican Conference to defend the honor of EPA, and you're very supportive of that activity, so I've requested that we refrain from opening statements unless there is something absolutely essential that has to be said. But, by virtue of your position, you're entitled to say whatever you want.

    Mr. OBERSTAR. I'm crestfallen, Mr. Chairman. I had this 40-minute statement I was going to make——

    [Laughter.]

    Mr. OBERSTAR.——to elucidate the whole history of this thing.

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    I just simply wanted to compliment you on the leadership you've taken. You have really distinguished yourself and this committee in the role that you have chosen and the path you've carved out leading us along the way to better, stronger laws to protect the environment.

    I want to compliment Mr. Borski on the partnership that he has demonstrated and the leadership he has shown on our side, with an unshakeable commitment to a cleaner environment.

    I introduced the first Superfund bill in 1979. I watched its evolution through 15 years. We are now at a point where cleanup can begin, has begun. There has been a great deal of work, including one of the most complicated sites in my District. We can make this law better and simpler. It isn't broke. I don't like that term except when a thing really is physically broken. It has some problems. We can make it better, and with your partnership we will.

    Mr. BOEHLERT. Thank you very much. I'm reminded of when you and I were good friends many years ago as young staff members when Lyndon Johnson was President. When people had differences, as there will be differences surfacing here, President Johnson was wont to say, ''Come, let us reason together,'' so I think that's the whole purpose of this gathering, and we've got a pretty good record with this subcommittee, and I think we can reason together.

    To help guide us on the correct path, it is my privilege now to recognize the distinguished Administrator, who should be Secretary of the Environmental Protection Agency, Ms. Browner.

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BROWNER, HON. CAROL M., ADMINISTRATOR, U.S. ENVIRONMENTAL PROTECTION AGENCY, ACCOMPANIED BY ELLIOTT P. LAWS, ASSISTANT ADMINISTRATOR, OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE

    Ms. BROWNER. Thank you, Chairman Boehlert, for the opportunity to be here today.

    Let me begin with a special thank you to you, Mr. Borski, Mr. Oberstar, for your efforts in defending the honor of EPA and your commitment to ensuring that we are able to make responsible decisions that result in increased public health and environment protections for the people of this country. We are very, very appreciative of your efforts of the last several months in this regard, and obviously later today. Thank you.

    We are, indeed, pleased to be here this morning before the subcommittee to discuss the Superfund program. The Clinton Administration has long recognized that some aspects of the Superfund law clearly need to be changed, clearly need to be fixed. We must reform Superfund so that it works faster, fairer, and more efficiently to clean up toxic waste sites and return the land to productive community use.

    I want to thank you, Mr. Chairman, for your efforts in introducing a Superfund bill this year, and we, too, look forward to a bipartisan process that will result in a reauthorized program this year.

    Improving the Superfund program has been a priority for the Clinton Administration from the start. We have no disagreement with those who criticized the early years of the program. It was a program, unfortunately, launched by top-level appointees—Gorsuch and Lovell—who cared more about lunch with the polluters than creating and running an effective program.

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    Over the past two and a half years, the Administration has worked to change the day-to-day management of the Superfund program, in addition to working with industry, environmentalists, and State and local governments to craft a legislative proposal which was introduced in the House last year and enjoyed broad bipartisan support.

    I'd like to begin, Mr. Chairman, by just briefly summarizing the administrative changes we have made in the last two and a half years, and we have provided a copy to each of the Members of the chart that is now up.

    There have been three rounds of reforms which we have undertaken. The result is a fundamentally different program than the program of the first 10 years.

    We have succeeded in removing more than 10,000 little parties from the Superfund net.

    We have removed more than 24,000 sites from the Superfund inventory—the brownfield sites across the country—allowing for economic redevelopment at these sites and for hope in those communities.

    We have accelerated the pace of cleanups, both in 1994 and again in 1995. We completed nearly as many Superfund cleanups in the course of 12 months as were completed in the entire first decade of the program.

    The chart now up reflects that, to date, 346 sites, one-quarter of the national priorities list of Superfund sites, have, in fact, been cleaned up. More than half, 196 of those have been cleaned up under this Administration in the last two and a half years. Since we took office, we have cleaned up more sites than in the first 12 years of the program.

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    Four weeks ago I announced our third set of reforms, which will remove even more small parties from the liability net, further reduce cleanup costs and litigation, speed the pace of cleanups, and promote greater State and community involvement in the Superfund program.

    Mr. Chairman, we believe that these are the last round of administrative changes that we can make under the current law. We have pushed the envelope of the law. We have gone as far as we can to improve the program through administrative reforms. To finish the job that we have begun, we need Congress to pass a new Superfund law that will protect public health and the environment, speed cleanups, and direct more money to cleanups and less to lawyers.

    I want to be clear that we believe that the new law must embody the principles that human health and environment be protected, and that those responsible for the worst pollution pay to clean up the pollution, pay to clean up the problem they created.

    These principles are embodied in H.R. 228, the consensus Superfund Reform Act of 1995, which has again been introduced this year by Congressman Dingell. We continue to support this bill. It is a bill which enjoyed bipartisan support and enjoyed the support of groups as diverse as the Chemical Manufacturers and the Sierra Club.

    We agree that H.R. 2500, does include some of the provisions embodied in H.R. 228, specifically protections for bankers, prospective purchasers, municipalities, and some small parties which we think is essential. We agree that cost should be a factor to be considered in deciding how to clean up Superfund sites, and that States and local communities should play a larger role in the Superfund program.

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    While we share these common goals, unfortunately we have significant problems with H.R. 2500.

    The chart now up, which you also have a copy of, is an effort to summarize our concerns with 2500.

    First, H.R. 2500, as introduced, does not adequately protect public health and our environment. Mr. Chairman, we take comfort in your commitment to public health and environmental protection; unfortunately, when we read the language in the bill we do not see that guarantee, we do not see those protections.

    H.R. 2500 mandates that cost be the most important factor in deciding how a Superfund site will be cleaned up, not human health. We believe that this, unfortunately, would lead again and a again to what we refer to as ''quick fix solutions,'' perhaps a fence rather than cleanup—cheaper in the short run, but dangerous and costly in the long run.

    H.R. 2500 also eliminates the current statutory preference that the most toxic contaminants found at sites actually be cleaned up.

    This Administration maintains that public health and environmental protection must continue to be the paramount concern in selecting Superfund remedies. The law should be explicit in providing public health protection for all health effects, not just cancer.

    I'd like to share with you an example—a site that we believe under H.R. 2500 would not be cleaned up. That site is Radium Chemical in Queens, New York. It is a one-story brick building that was used to store radium beginning in the 1950s. Twenty-seven thousand people live within one mile of that site.

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    EPA, under the current law, dismantled the building and decontaminated portions of the debris. Remaining radioactive waste was disposed of in a radioactive waste depository, and the rest of the debris was shipped to a solid waste landfill. The remedy cost $19 million, and the site can now be redeveloped.

    Under H.R. 2500, cost and exposure control provisions would have likely required a remedy that would have sealed the building, erected a fence, and hired a security guard. We would not, we believe, under this bill, have been able to remove the contamination, to remove the building, or to allow for the redevelopment of this site.

    We also believe that H.R. 2500 rolls back the current statutory goal of cleaning up contaminated groundwater, replacing it with exposure control provisions that ignore long-term cleanup and protection of actual and potential drinking water sources.

    We are concerned that the 50 percent of the American public that depends on groundwater for their drinking water supplies, for their tap water, will suffer the consequences; will, unfortunately, find that their drinking water is not protected in the way that it should be.

    One of the more perplexing provisions in the bill is the preemption of State cleanup laws and standards. I think many of us agree that States should have the right to adopt more stringent standards if they believe they are important to protect special parts of the State, to protect sensitive subpopulations, and valuable water resources. This bill would preempt the right of States to make those individual decisions.

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    It is the firm belief of this Administration that the purpose of the Superfund program is to protect public health and our environment; that a Superfund program that does anything less represents a breach of trust with the American people.

    H.R. 2500 also rolls back current measures to restore damaged natural resources, including such things as economically important fisheries.

    We have people here today from the Administration representing the trustees, and they will speak to this in greater detail.

    I will say that one of the disturbing provisions in this section of the bill, as we understand it, it would literally allow an ''Exxon Valdez'' carrying hazardous waste—not oil, hazardous waste—off the hook for natural resource damage.

    The Clinton Administration cannot support these provisions. We cannot support a roll-back of public health and environmental protections. Fencing off contaminated land, issuing deed restrictions, providing bottled water to exposed communities do not provide long-term public health protections for the one in four Americans who live near toxic waste sites.

    Remedies that fail to adequately clean up toxic waste sites not only pose a threat to public health and the environment, but also severely limit opportunities for economic redevelopment.

    We believe that H.R. 2500 would roll back the progress we have made in speeding the pace of cleanups. It would cause delays in cleanups of more than 700 sites across the country by allowing for the re-opening of virtually every cleanup decision.

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    This chart shows you all of the sites that we would now go to court and re-litigate decisions that have been made. These are sites, as you can see, moving close to, if not immediately ready for cleanup activities. We would not be able to move forward; instead, we would find ourselves in court litigating decisions that have been made and reexamining answers that have been found to the problems.

    Unfortunately, Mr. Chairman, we think more lawyers, not fewer lawyers, will now be a part of the Superfund program. I think all of us agree we need fewer lawyers. This, unfortunately, brings more lawyers in.

    We agree, Mr. Chairman, that H.R. 2500 does not totally repeal liability. Unfortunately, we think it unfairly shifts much of the cost of cleanup from the polluters to the treasury by creating a special liability rebate for polluters.

    Let me use an example, a site in Saltville, Virginia. The Olin Corporation operated a facility for more than 100 years in Sattville. It is a site contaminated with mercury that has forced a fishing ban and threatened surrounding communities. Mercury from the site's waste disposal ponds has contaminated soils and surface waters.

    The cost to clean up this facility and the adjacent river will exceed $40 million. I can't begin to understand how I will explain to the American people why $20 million of their dollars should go to clean up this site, why the company that caused the problem should not be responsible for paying to clean up the problem.

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    This is our understanding of the rebate provisions in H.R. 2500. Taken together, the provisions, the liability discounts, the exemptions in H.R. 2500 are more than we can afford under the EPA budget.

    We have made an effort to analyze the cost of the bill. We have not completed that. We have some preliminary figures that we would like to share with you. The reimbursement and exemption provisions, those alone will exceed a billion dollars annually. We are looking at the other costs and will provide those to you as soon as we have completed that.

    I would remind you that the House leadership with regard to the EPA budget for this year has only provided a billion dollars for the entire program, for everything we need to do under the program.

    We can obviously not afford a billion dollars to reimburse the polluters if all we have is a billion dollars to manage the program. The result would be that dozens of Superfund sites waiting for cleanup would be asked to wait yet again.

    Mr. Chairman, one in four Americans still live within four miles of a Superfund site. We believe that we can, working in a bipartisan manner, craft a sensible reform of the Superfund law that will allow us to do the job faster, fairer, more efficiently. We look forward to working towards that common goal.

    Mr. BOEHLERT. Thank you very much, Madam Administrator.

    With the exception of your comments on the luncheon activities of your predecessors, I'd like to compliment you for avoiding partisanship in the statement.

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    I think we've got a lot of room to talk and work together, and I think we can do so because I can assure you that the new majority is committed to this program to make it work. It is not working now. Mr. Oberstar said he doesn't like to refer to it as being broken, and I would agree with that. Let's say it is in disrepair. It's a mess is what it is. We need to do a lot.

    I compliment you on the progress you've made in the last couple of years. We're beginning to move in the right direction, but we need comprehensive reform. I don't think there is any question about that. There is no disagreement on either side of this podium, so we want to work toward that end.

    Let me point out to you that the standards in the bill on human health and the environment are floors and not ceilings—floors and not ceilings—so let me ask you: would it help address your concerns if we made that more clear in the statutory language?

    Ms. BROWNER. I think it would be extremely important in the bill to, one, make clear that if, in fact, they are only floors, that is the case; and, two, that all human health effects shall be considered and the public protected.

    One of the concerns we have, Mr. Chairman, is that the word ''cancer'' has now been added to portions of the bill. Under statutory construction, the fact that that word didn't appear in the first 15 years of the program and it now appears and other words were not added—will mean that we will litigate whether we are permitted to protect for other human health effects, of brain damage, neurological effects, birth defects. I think a clarification that all human health effects, not just cancer, is the purpose of the program, would be helpful.

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    Mr. BOEHLERT. Madam Administrator, we've just got our first area of major agreement. There is no disagreement with that. Let me stress to you we're talking about floors, not ceilings, so we will do our level best to clarify that so that you and I and people on both sides of this aisle will recognize it's not just cancer we're talking about. We're talking about a whole lot of other activities, and we will do our level best to make it unmistakably clear.

    Let me also add, your testimony indicates that, by specifying risk reduction benefits in the balancing test, we are somehow eliminating any consideration of community acceptance and long-term reliability. That is not our intent. I wish to assure you of that.

    Once again let me ask you: would it help to address your concerns if we clarify that all—and I underline ''all''—the benefits should be considered?

    Ms. BROWNER. You raise two issues, Mr. Chairman. The first is the appropriate role of communities. As I think you know, last year's bill guaranteed that those citizens who must live with the decisions with respect to a local cleanup activity would be part and parcel of that decision-making process.

    As we read the provisions in H.R. 2500, it is not the citizens who live next to the site; rather, it is the elected officials. And I in no way want to suggest that elected officials can't speak for the citizens, but we would strongly encourage you to include those in the actual neighborhood, not just the elected officials.

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    It is my personal experience that, at the vast majority of Superfund sites, if we had, in fact, included the citizens on the front end, many of the delays would have been avoided on the back end. These people have a sense of what the site means to their community, a sense of what they want the site to be in the future, and they should be guaranteed a seat at the table, a part of the decision-making on the front end.

    Mr. BOEHLERT. We're talking the same language. I don't have a great deal of difficulty with what you're saying. So I think we're well on our way to a nice productive working partnership.

    Ms. BROWNER. Mr. Chairman, I think it is fair to say that you and I probably do have the same ideas in mind; unfortunately, the bill's language can be corrected—and I'll just use this as an example—says ''elected officials.'' It doesn't say ''the community.'' It doesn't say ''the neighborhood.''

    We're more than happy to work through with you and your staff in each instance where we believe the language—it may have been intended in one manner; unfortunately, the specific details of the words we think would result in another effect.

    Mr. BOEHLERT. Okay. And I could monopolize this all day long, because this is a very important subject to me, as it is to you, but I'm going to adhere to the five-minute rule with everyone, including me, so I'll now turn to Mr. Borski. But I do have an interesting one for you later.

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    Mr. BORSKI. Thank you, Mr. Chairman.

    Superfund's basic purpose is protection of human health. Superfund is a program which keeps toxic waste out of the Nation's drinking water supply. At 82 percent of Superfund sites, drinking water wells exist within three miles.

    Will H.R. 2500 increase or decrease protection of human health and our drinking water supplies?

    Ms. BROWNER. We believe that H.R. 2500 will not allow us to clean up the groundwater, but, in fact, will, in many instances, require bottled water, will require at-the-tap solutions as opposed to groundwater solutions.

    We do have a chart demonstrating what we would do now at a groundwater contaminated site versus what would happen under the provisions of H.R. 2500.

    Mr. BORSKI. Madam Administrator, last year you performed what I thought was a next-to-impossible task in getting all interested parties together to come up with a bipartisan approach, not just Republicans and Democrats, but business and environmentalists, labor, corporate leaders, and you came up what I consider to be a very good bill.

    This year we have something completely different. Today the House is planning to go to conference on the EPA appropriations bill, as you well know, and that bill will drastically slash the budget for Superfund. When you combine that bill with the proposals in H.R. 2500 for new funding for corporate polluters, what will be the impact on the Superfund program? Will you be able to protect the health of the American people?

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    Ms. BROWNER. The 34 percent cut in the EPA budget adopted by the House will not allow us to do the job the American people expect. The public health and environmental protections that we worked to provide for the people of this country are put at risk. Superfund is just one example. The drinking water protections, the clean water program, the other responsibilities of EPA in terms of public health and environmental protections are put at significant risk with a 34 percent cut.

    The bill before you—we have a breakout, a preliminary breakout on the costs. The first bar of this chart shows you the appropriations for this year. The $1.43 billion is what Congress gave us to run Superfund this year. The red hatches are that portion which came from general revenue. The rest comes from particular taxes designed for the program.

    The House, in the EPA budget this year—we have no knowledge or understanding of why—chose not to use the tax specifically created for Superfund to fund the Superfund program. All $1 billion is coming from the general revenue, not from the Superfund taxes. That's what the second bar shows you.

    The third bar is what we believe H.R. 2500 would cost us, $2.6 billion.

    And then the next smaller bars are the cost of various components of the bill. Some sites fall into more than one category, so you can't merely add up those numbers, because if a site falls into one then it doesn't fall into another, but it shows you—it's our effort to break out the sections of the bill and what the cost would be.

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    Mr. BOEHLERT. Excuse me. May I interrupt just one second, take a privilege of the Chair.

    I find these numbers interesting, and I would appreciate if your staff would provide our professional staff with a briefing as to how you arrived at these numbers, because, in all fairness, we've been asking for detailed information since August.

    Ms. BROWNER. Right.

    Mr. BOEHLERT. So these figures are very interesting and we'd like to have some background at how you arrived at these figures.

    Ms. BROWNER. Right. Mr. Chairman, as I think you probably know, we got the bill 2 weeks ago. We have been working with OMB, and we are more than happy to give you what we have to date. For example, what will it cost EPA to run the rebate program, to do the audits, to issue the checks, to make sure that we haven't overpaid or underpaid somebody?

    We have not completed that assessment yet, but we will be more than happy to give you everything we can.

    Mr. BOEHLERT. I thank you. Mr. Borski, I'm not taking this out of your time. Don't be concerned about the red light.

    I stress that because I just want to make it absolutely clear to you that, while EPA can count on me as one of the strongest friends in Congress, this is not going to be a partisan endeavor.

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    Ms. BROWNER. No.

    Mr. BOEHLERT. We're going to work this thing out, because the American people are entitled to it. And so when we ask for information—I always found, one on one, when I ask you for information, I get it like that. I want that same courtesy extended to our staff by your staff.

    Ms. BROWNER. Certainly.

    Mr. BOEHLERT. We're going to work this thing out because it is too important not to, and I would hope that we could spare the partisanship. I will do my level best to spare it. I can speak in behalf of my colleagues. And I would ask the same consideration and indulgence from all parties to this. It is too damned important to monkey around with business as usual.

    Thank you.

    Ms. BROWNER. We agree.

    Mr. BOEHLERT. Mr. Borski, you have some more time.

    Mr. BORSKI. Yes, I really just want to get to the answer of my question, Mr. Chairman.

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    Madam Administrator, are you saying that H.R. 2500 in its current form is unaffordable?

    Ms. BROWNER. Yes. We cannot pay for H.R. 2500 in its current form under our budget request, and most assuredly under the budget adopted by this body.

    Mr. BORSKI. So there is no question in your mind that cleanups will certainly slow down, if not stop?

    Ms. BROWNER. Under the budget introduced by the House leadership for EPA—forget about 2500 and the cost associated with that. Under the budget today, we will not be at sites in January. We have notified all the Members of Congress which sites we will not be at. We have notified the States. We have notified the communities.

    There are sites across this country where people believed a cleanup was going to begin in this fiscal year. They have waited 10 or 15 years, and we will not be there.

    Mr. BORSKI. Thank you, Mr. Chairman.

    Mr. BOEHLERT. Thank you. Next up is Mr. Horn.

    Mr. HORN. Thank you very much, Mr. Chairman.

    A lot of discussion has occurred over the years we have held hearings here that the Superfund national priority list should only be cleaned up to the level of its intended use. What are your thoughts on that remedy selection? In other words, the old story of how clean is clean, how technology has advanced so we're counting particles that we couldn't count 20 years ago. How do you feel about that?

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    Ms. BROWNER. We absolutely agree that one of the most important factors in designing a cleanup plan is intended use. So, for example, if you have contaminated soils and you're going to put single residential homes out there and kids may be playing, you design one type of cleanup. If you're going to put a parking lot and six inches of asphalt, it is another cleanup plan. Equal protection, different plans shaped by the intended future land use absolutely needs to be a part of the decision.

    In our administrative reforms that we have made, we now take into account intended land use in developing the cleanup plan.

    Mr. HORN. As you looked over the actions of your predecessors, regardless of party, did you feel they had gone beyond intended use? Or how do you feel about what you inherited in that respect?

    Ms. BROWNER. Just in fairness of disclosure, I am the first Democrat to run the program. There hasn't been a Democrat running this program.

    The historical interpretations of the statute sent the program in a particular direction. We don't disagree with that. We have been able to find, within the existing law, as I just said, the ability to factor in intended land use so that we can make adjustments in the cleanup plan.

    The goal is public health protection. There may be different ways to get there, depending on what it is you're going to be using the land for.

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    I think that it is also probably fair to say that the 1986 amendments to the original law were, in part, a response to the early mismanagement of the program and some rigidity was embodied in that law which we have worked very hard to overcome in the administrative reforms.

    Mr. HORN. One of the issues that constantly comes up is the punitive compensable damages for the restoration of natural resources under the national resources damages program. It is emerging as seemingly very costly, according to a lot, and they feel that's some of the unfair provisions of the Superfund. Is it possible to restore that damaged land or groundwater to its precise physical chemical condition prior to the injury? And how would you propose calculating the cost of reparation? And should recovery for nonuse and lost use be involved?

    Ms. BROWNER. The issue you raise is quite frankly, an issue best answered by the representatives here for the trustees.

    EPA has a great deal of responsibility in the day-to-day implementation of Superfund, but when it comes to that portion of the bill, there are experts here who are far better able to answer the question than I am, and I think they're going to be called up as soon as I complete my testimony.

    Mr. HORN. Do you have any general feelings on it, without worrying about the specifics?

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    Ms. BROWNER. Without speaking to natural resource damage, you raise the issue of groundwater. In other provisions of the bill, as I said previously, we are extremely concerned that we will not be able to secure cleanup of groundwater. We think it is extremely important that we actually have the authority to clean up the groundwater, not merely to provide bottled water or to provide tap treatment, that we should be able, as this chart shows you, to clean up the groundwater. And we do have technologies that allow us to do that.

    Mr. HORN. Thank you very much.

    Mr. BOEHLERT. Mr. Oberstar.

    Mr. POSHARD. Thank you, Mr. Chairman.

    Ms. Browner, I want to compliment you on the job you have done of leading EPA in so many areas of the program, but particularly in the Superfund. Since you have come on board, there have been some $10 billion in settlements, 800 sites at which construction is underway or completed, about half of the actually designated sites on the NPL, 346 sites completed. A major one in my District is underway and well along the road to progress. You have settled out with 10,000 of the little guys. A story I've told over and over again is the poor widow of a gas station owner who had one quart of oil. We don't know if it was in the site or if she sold it for the delivery truck's engine, but she was threatened with $25,000. She's out, and many others like that are out.

    You've done a terrific job. If you had been there in 1981, we wouldn't have this problem that we're facing today.

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    There is a provision in the bill, against that backdrop, that I want to ask you about. That's section 201 on page 54 of the bill, with a fetching title, ''Retroactive Liability Discount,'' as though this were some sort of a supermarket and not Superfund, and we're going in for a little discount shopping here. Every dollar spent by the polluter gets $0.50 back, with the effective date of October 15, date of the introduction of the bill.

    What is EPA's estimate for the cost of that provision?

    Ms. BROWNER. We estimate that cost to be $719 million.

    Mr. OBERSTAR. That's not the only handy little give-away. We've developed a chart here on our side of the number of handouts in this bill that also include—the pink over there on the right is municipal co-disposal, municipal sites and private, for-profit disposers who get a liability exemption. Our estimate is that lets them off the hook for $517 million. Have you made an estimate of that figure?

    Ms. BROWNER. We would agree with that estimate. I think there is a shared goal here which the chairman spoke to in his opening comments, which is to get the little guys out, and to protect the municipal governments. I think there are provisions in H.R. 2500 designed to protect municipal governments.

    The problem that we have with the provision that you make reference to is that it goes beyond that. And what will happen, unfortunately, is that there are also sites that will fall under the definition where there may be one or two large polluters who should, in fact, be cleaning the site up.

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    We have no objection to the goal. We absolutely adhere to the goal of getting the little guys out, of protecting the municipalities, but I think this definition captures a lot more parties, and the result is $517 million in cost.

    Mr. OBERSTAR. If you have a municipal landfill and that landfill is on the national priority list, it is not there because it has got some harmless household garbage.

    Ms. BROWNER. Right.

    Mr. OBERSTAR. It is there because it has got some toxic substances which filter into the groundwater. I know those dumps. I used to go as a kid out to the old Chisholm Dump and we'd shoot bottles and rats and stuff, and that wasn't a very good thing to have, though.

    Ms. BROWNER. These sites, unfortunately, have very real problems. That is correct.

    Mr. OBERSTAR. People dumped God knows what out there——

    Ms. BROWNER. Right.

    Mr. OBERSTAR.——because it was there. And the city should have some responsibility for cleanup. It shouldn't turn that $500-plus cost over to the whole country and all the taxpayers, nor should the corporate polluters get a rebate, a discount, a handout from the taxpayer for doing what they're supposed to do—cleaning up their harm to the environment.

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    Ms. BROWNER. We agree.

    Mr. OBERSTAR. Thank you.

    Mr. BOEHLERT. Are you finished?

    Mr. OBERSTAR. It looked like a quick light, but that's all right.

    [Laughter.]

    Mr. BOEHLERT. A quick light because we had a quick change of heart, because I'm just reading from something that was brought to my attention where the Administrator called my proposal to eliminate two-disposal sites from retroactive liability a ''very attractive proposal.'' She said she would feel ''very comfortable with it.'' Because I think when she responded to that proposal back at the Atlantic Monthly Forum, I think you recognized, as I did, that what we want to do is stop having all the money go to lawyers and start having the money go to cleanup.

    If you eliminate these 250 landfills, you say to small communities across America, and essentially small businesses across America, ''We're going to get you out of the game. You don't have to worry about it. We're going to pay for it out of the trust fund. And sorry, Mr. and Mrs. Attorney across America, but instead of sending my checks to you—'' and my son's an attorney, so I'm not anti-attorney—''we're going to send our checks to clean up these things.''

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    That was an attractive proposal then. It's still a very attractive proposal now.

    Ms. BROWNER. Mr. Chairman, you and I have no disagreement over the goal, absolutely disagreement. What we have is a definitional problem, at a minimum. We believe that the way the section got written, it goes well beyond taking the little people out and protecting the municipalities.

    Unfortunately, the definition you have chosen for co-disposal picks up sites where there may be one or two very large polluters.

    Second, you use a term in the definition. You use the word ''authorized to accept household trash.'' We don't know what ''authorized'' means. We will be litigating that for months, if not years.

    So the goal of getting the little guys out, the goal of protecting the municipalities is something we absolutely share with you. When you brought forward your proposal at the Atlantic Monthly Forum it was in that vein. At least that's how I understood it. I continue to think doing everything we can in the bill to draw an absolutely bright line—who's in, who's out—is the right way to go, but that the largest parties must be held responsible.

    We're concerned that under your definition there will be sites that are not the kind of sites you and I both agree need to be resolved; rather, there will be sites where one, two, three very large polluters dumped very bad stuff, and now they have no obligation to pay to clean it up.

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    Mr. BOEHLERT. Is that agreeing to a site-by-site definition then?

    Ms. BROWNER. No. I think you can solve the problems that we have quite simply. I think if you look at the bill from last year, the definitions that were there, the lines that were drawn take the small parties out.

    Your bill includes provisions on municipalities, in keeping with the language from last year. What we're concerned about is creating a whole new set of terms, a whole new set of definitions that nobody knows, quite frankly, what they mean and how the courts will interpret them.

    What does ''authorized to accept household trash'' mean? Who was it authorized by? Who made that decision?

    We will work with you on the shared goal of setting out the little parties and municipalities. I think we have a definitional problem that can be resolved.

    Mr. BOEHLERT. We can work on the language, but the bill does say ''authorized by the State or local government.'' I think that's fairly specific.

    The point is that the people ask me—they talk about having English as the official language. Maybe we ought to advance that legislation, although I've never been enamored with it, because it looks like most of our problem is in interpreting what we're reading.

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    I tell people I don't speak English, I speak American and some English, but we'll work together on trying to get a clear understanding——

    Ms. BROWNER. Of what's meant.

    Mr. BOEHLERT. Okay.

    Ms. BROWNER. Okay.

    Mr. BOEHLERT. Mr. Latham.

    Mr. LATHAM. I thank the chairman.

    I am going to have to leave here to go to the conference, but I am very, very concerned about the process and what appears to be making a very big political issue out of this.

    The last time you testified here, I asked to work together with you as far as small business, those people. I have heard nothing from your office. The chairman just stated that he has not gotten cooperation for information from you. This is going to have to be a bipartisan effort, and if you continue to politicize the whole thing I think it is going to be very, very difficult.

    Ms. BROWNER. Right. I have worked diligently over the last two and a half years to change the program. I apologize if a commitment was made to you to work on small businesses which was not followed up on. We will immediately follow up on that.

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    I have not sought to politicize the Superfund program over the last two and a half years. I have tasked my people to change the way the program operates.

    We have, unfortunately, some disagreements over a bill. They are not partisan in nature. They have to do with our ability to run the program.

    Mr. LATHAM. It is very difficult if—you know, your commitment to work this out, and then we hear nothing. The chairman said he cannot get information from your staff. How——

    Ms. BROWNER. We got the bill 2 weeks ago. I apologize.

    Mr. LATHAM. He asked for other numbers back in August.

    Ms. BROWNER. I have always worked with the Congress in a bipartisan manner. I don't appreciate being told that right now I am working in a partisan manner to change a law when I had both Democrats and Republicans last year cosponsoring and voting for a bill. We will do that again. But to say that, because we didn't respond to a series of questions which we believe were designed to essentially attack us, as opposed to having an honest, valid dialogue about how to change this program, is just simply not fair.

    We are now completing the analysis of the bill given to us two weeks ago and we will provide them to every member of this committee.

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    I don't come here trying to politicize a program that was politicized not by Democrats but Republicans in its inception. I come here to ask you to work with me to fix the law so I can build on the changes I have already made, so instead of 10,000 little parties it will be 50, 60, or 70,000 little parties; so that instead of reducing cleanup from 12 to 8 years for an average—it will be 4 years.

    We can change this program by working together. We are willing to sit down, as we are doing in the Senate, and go through the bill line by line explaining why we read it one way, listening to the staff why they read it another way. We are available to do that.

    Mr. BOEHLERT. Madam Administrator, just let me point out that the information I was referring to and Mr. Latham is referring to was a request in August for baseline information on the cost of the program to date. It had nothing to do with the date of introduction of this bill.

    Second—I just don't want anybody to get their temperature elevated beyond a reasonable level—I was here when Mr. Latham made his request to have somebody contact his office to work with——

    Ms. BROWNER. If we didn't do that, we apologize.

    Mr. BOEHLERT.——because he has special concerns for the interests of small business, as I do, and I know you share some of those concerns.

    Ms. BROWNER. Right.

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    Mr. BOEHLERT. So let's not get—fine.

    Mr. LATHAM. I couldn't agree with you more. I want to work with you.

    Ms. BROWNER. Right.

    Mr. LATHAM. But you just said that you chose not to answer requests to questions. Is that the proper role of any agency not to respond——

    Ms. BROWNER. There are two——

    Mr. LATHAM.——to legitimate questions of Members of Congress?

    Ms. BROWNER. There were two sets of questions, apparently. One set we have responded to, which is baseline information, the information that the chairman spoke to. Another set of information, which may not have been from this committee, was absent a bill. We now have a bill. We are responding. You will have the information. We brought preliminary information today.

    There is no effort here to withhold anything. Absolutely not.

    Mr. LATHAM. And I want to tell you once again, I would love to work with you, but it has got to go both ways.

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    Ms. BROWNER. I agree.

    Mr. LATHAM. That's all I'm saying. Thank you.

    Ms. BROWNER. Thank you.

    Mr. HORN [assuming Chair]. The gentleman from Illinois, Mr. Poshard, is recognized for 5 minutes.

    Mr. POSHARD. Thank you, Mr. Chairman.

    Welcome to the committee, Madam Administrator.

    Let me ask you a couple of questions. I've got a few here, so if I could I'd like a quick response on some of them.

    It used to be that the Superfund sites did not go to cleanup because we got mired down in studying and controversy over the sites. Is that changing?

    Ms. BROWNER. We are moving to cleanup much more quickly now. Under our administrative reforms, we have reduced the time from 12 to 8 years. We believe that, with some of the changes we've proposed in the law, we could further reduce that.

    Mr. POSHARD. Are there sites right now ready to go to construction?

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    Ms. BROWNER. Yes, there are.

    Mr. POSHARD. Are those sites waiting for funding? Is that what——

    Ms. BROWNER. Some of them are waiting for funding. We believe approximately 100 sites will be affected by the budget cuts put forward by the leadership.

    Mr. POSHARD. So under this bill, H.R. 2500, being partisan, as is being implied, is it your professional judgment that more sites or fewer sites would go to construction?

    Ms. BROWNER. Unfortunately, fewer sites. Let me explain why. Let me ask them to put a different chart up.

    There is a provision in H.R. 2500 that allows what we would call the ''reopening'' of decisions that have been made, the litigation of decisions already made.

    The red box around this pipe shows you where different sites are. Every site sitting in that red box, which is literally every site where we have not completed the cleanup, can now be litigated under this bill. We can go into court and argue it all over again.

    Mr. POSHARD. Which leads to my question of specificity with regard to my District. I have, four miles from my home, the Crab Orchard National Wildlife Refuge site. Now, I have two questions about that site.

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    Number one, we began work on that years ago, as you know. We're at a point now where we are ready to move an incinerator in and clean it up.

    Ms. BROWNER. Right.

    Mr. POSHARD. First question with respect to the rebates in this bill: the polluter has agreed to pay for the cleanup of this site. Now, if this bill passed, would that polluter then be expected to get 50 percent of their cost back for cleaning up this site?

    Ms. BROWNER. If it is pre-1987 waste.

    Mr. POSHARD. Which it was.

    Ms. BROWNER. As we understand it, they would be eligible for a 50 percent rebate. Yes.

    Mr. POSHARD. Okay. So we have sites ready to go to construction. We don't have enough money for them. We have a site here where everything has been completed except moving the mechanism in to clean it up, and we're going to give money back to the polluter for cleaning up the site?

    Ms. BROWNER. That's right. There are two problems with your site. Let me just mention the second problem. It's in this red box.

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    Mr. POSHARD. Right. And that's the next question. So would this site then lend itself to a reopening of the ROD?

    Ms. BROWNER. It could be reopened. That option, that opportunity would exist under this bill for some part. We don't think there is a prohibition on who can the decisions to reopen and further delay the cleanup.

    Mr. POSHARD. And what is indigenous to my site may be extrapolated to other sites all over the country?

    Ms. BROWNER. Right. There are approximately 700 sites represented in that red box where you have construction underway, so they've already begun to build whatever facility is going to be used for the cleanup, where the design is underway, where the remedy has been selected. In each of those instances, a lot of work has taken place. Progress is being made. We can reopen all of that under this bill.

    Mr. POSHARD. Thank you, Madam Administrator. Thank you, Mr. Chairman.

    Mr. HORN. Thank you very much. The gentleman from New Jersey, Mr. Franks, is recognized for 5 minutes.

    Mr. FRANKS. Mr. Chairman, thank you very much. I'm going to be very brief.

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    Ms. Browner, I have heard a lot of concern this morning over the issue of reopening these records of decision. I'm just wondering how far apart we are on this issue.

    Would you maintain that under no circumstance should we permit the reopening of these decisions? And if that's not the feeling, could you illuminate us on it?

    Ms. BROWNER. In fact, we agree that in some situations it is appropriate to reopen. Our administrative reforms include a provision, but with a threshold. It doesn't say everything. It says if you can demonstrate that there are certain cost savings, if you can demonstrate certain technology advances.

    We agree that in an informed and wise manner there will be times when it is appropriate. The problem with the bill is it throws everybody into the same pot. There is no threshold. There is no floor.

    Mr. FRANKS. I know that your administrative reforms do call for an ability to reopen these decisions on occasion.

    Ms. BROWNER. Yes.

    Mr. FRANKS. Talk to me about, under your administrative reforms, the role that cost savings play under your program.

    Ms. BROWNER. I'm going to ask Mr. Laws, the assistant Administrator for the program, to speak specifically to that reform.

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    Mr. LAWS. Mr. Franks, under our reforms what we are doing is we are reopening and taking a narrow look back within the context of the ultimate cleanup result that was originally selected. So if what happens is we have a ROD—where you're pursuing a particular remedy, we can look back and see if there were new technologies that have been developed, new approaches that have been developed over the years. It might get us to the same point, but in a more cost-effective or more efficient manner.

    We are now allowed to go back and look and see if there is something else. If a PRP believes that we can get to your endpoint in a much cheaper way and can make that demonstration, then that's the type of thing that we're looking back toward achieving. We are not changing what the ultimate cleanup result should be, but the approach to get that.

    Under the bill, as we read it, once rod is reopened it is then thrown into the new remedy selection process under the bill. We have major problems with where we think the results of those will come out.

    Mr. FRANKS. Is there any circumstance under which the endpoint should be renegotiated?

    Ms. BROWNER. The endpoint, from our position, is public health and environmental protections. And, as I said earlier, if there is another way to get there, if there is more than one way and you can show a cost savings, we're more than happy to look at that and to revisit the decision.

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    The problem with the bill, as we see it, is it doesn't provide the public health and environmental protections we think the program should provide, so when you throw these sites back in, when they re-emerge it will not be a cleanup plan, a program that protects the public health in the way it should.

    Mr. LAWS. Mr. Franks, what you're posing is a situation where we made a decision assuming, for example, a certain land use, assuming that this property was going to be a day care center, of residential homes, and since that decision has been made different things have happened—maybe an economic development agency has come in and rezoned and they've got a commercial or industrial development plan—then that's clearly the type of thing that we think is appropriate to go back and see if there are changes that we can make to facilitate that.

    Another round of administrative forums is directing the regions to look at what the anticipated future land use is so we can narrow our range of options up front.

    Mr. FRANKS. Thank you, Mr. Chairman.

    Mr. HORN. Thank you very much. I now recognize the gentlewoman from Missouri, Ms. McCarthy.

    Ms. MCCARTHY. Thank you very much, Mr. Chairman.

    Good morning. As I am a brand new member to this subcommittee, I find it very appropriate that the first subject be this issue and working with you, which I did very closely in my prior life as a member of the Missouri House of Representatives and president of our National Conference of State Legislatures.

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    I want to commend you, first of all, for always being there in a bipartisan way for the National conference of State Legislatures and working as a partner with the States on these key environmental issues.

    So my question to you this morning has to do with what this will mean to the States, because you have mentioned in some detail how H.R. 2500 would result in cleanups that are less protective and would severely slow down the pace of cleanups.

    So what about a State such as my own that has a strong cleanup law of its own, which I handled and worked on very hard in the Missouri House? What will it mean to those States? What can they do then, because this bill, as I understand your testimony, really does preempt State laws.

    It is ironic to me, in a Congress that is turning back programs and authority to the States—something which I, by the way, believe very much in—a Congress that is trying to eliminate Federal unfunded mandates—something which I support—that this bill seems to go in the opposite direction, and I do have some concerns and would welcome your thoughts on this point.

    Ms. BROWNER. I think there are several problems for the States under H.R. 2500. You made reference to the preemption. You're exactly right. The law that you crafted in your State would essentially be preempted. It would not apply at Superfund sites. The States who have taken the time to think through these problems, to craft perhaps stronger standards because they believe there is a valuable resource within their State that they want to see protected, those standards would not be applied at Superfund sites.

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    Also, there is a provision in the bill, as we understand it, that would cap the number of sites that could be cleaned up under the Federal program, and I think there is a limitation on how many sites can be added to the NPL, 125. That would then leave the States responsible for all of the other sites.

    What we have found—and certainly my experience as a former State director—is that there are some sites where States want to and can quite successfully manage the cleanup. There are others where, quite frankly, we at EPA have more experience. It is far better for the Federal Government, the EPA, to play that role.

    With the capping of the NPL at 125, it is almost as if there is going to be a mad rush and then the doors are going to close, and our ability to manage what we think is approximately 600 Superfund-caliber sites in an intelligent and wise manner in a partnership with the States won't be there. The States will be left holding the responsibility for those sites.

    Ms. MCCARTHY. I know we will be hearing from others who will testify on this point, and I look forward to that, but I very much appreciate your forthrightness in exposing this dilemma for us in the Congress—we in the Congress who have to grapple with this.

    I am concerned about the site-specific cleanup requirements, for example. It seems to me, those of us who are concerned about the attorneys and the lawyers, I find this provision will most likely become one of the primary subjects of judicial review, as you point out in your testimony, as well.

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    I think all of this gives us pause for concern.

    If I might also ask you about the impact of H.R. 2500 on the availability of safe drinking water supplies for our children and grandchildren, I would like your thoughts on that, as well, as you are a mother and we are all concerned about what the future will bring.

    Ms. BROWNER. Our concern with the provision on groundwater is the disregard for treatment and resolution of the actual contamination. In place of treating the groundwater, of actually cleaning up our children's drinking water supplies, we will, instead, be providing bottled water or perhaps, if the resources are available, some sort of treatment at the tap.

    Fifty percent of the American public count on groundwater for their drinking water, and we think it is important that we not pass on to our children contaminated groundwater.

    We would be essentially closing a large number of sites in terms of their future use as drinking water supplies.

    Mr. HORN. Thank you very much.

    We'll next yield 5 minutes to the gentleman from Ohio, Mr. LaTourette.

    Mr. LATOURETTE. Thank you very much, Mr. Chairman.

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    It is a great pleasure to hear your testimony this morning, Madam Administrator.

    I would like to follow up a little bit on dialogue you were having with Mr. Franks, whichever of you feels more appropriate, and that has to do with revisiting—and I know your criticism of the bill relative to going back and reopening the decision-making process, but I understood you to say that already there is a program or a plan in place to go back and revisit those sites that are already underway to make sure that the remediation or the solution is the best, based upon the circumstances.

    Am I to understand, then, that the EPA does not presently maintain a provision that says no backsliding when it comes to Superfund?

    I'll tell you what the example is, and then it sort of crosses over into some water permits.

    We have a situation back home where a number of years ago certain limits were set for zinc in a particular wastewater treatment facility and included in the permit. Obviously, science has progressed in the last 30 or 40 years, and now we have, ten miles from that site, two additional sites that feed to other wastewater treatment facilities where the zinc levels are higher.

    Well, we go back then and we say, ''How come we can't adjust that permit based upon the science that now exists in 1995?'' The answer is that the Ohio EPA and also USEPA has a ''no backsliding'' provision.

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    Ms. BROWNER. That's in the law. In the Clean Water Act there is a ''no backsliding'' provision. There is not a similar provision in the Superfund law.

    In developing the three rounds of administrative reforms, what we did is work with the stakeholders—parties most affected by Superfund. As we looked at the problems they had, it became clear to us that there were, in fact, sites where it would be important to revisit the cleanup plan, that new decisions could be made, new technologies were available.

    It doesn't change the level of public health and environmental protections that will be afforded those communities, but it does allow us to take advantage of new technologies, as Mr. Laws said, to account for, perhaps, changed land use.

    Mr. LATOURETTE. And I certainly endorse and agree with that principle. That isn't the subject of the hearing, but if we have backsliding in the Superfund area, I suppose that you wouldn't criticize the opening up of other permits to permit backsliding when science supports it. Is that in the clean water area?

    Ms. BROWNER. Are you asking me my position on backsliding in the Clean Water Act?

    [Laughter.]

    Mr. LATOURETTE. No, I guess I'm not.

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    Ms. BROWNER. Okay.

    Mr. LATOURETTE. I had understood earlier in the year, back in July, before this bill was drafted—and maybe I misread the observations, but somewhere I thought that it was either your position or the Administration's position that there should be a repeal of retroactive liability in co-disposal sites.

    Ms. BROWNER. The Chairman and I had a discussion about it. I will try and summarize the discussion. His counsel is here to ensure that I do so properly.

    The goal of removing small parties from the Superfund liability net, of protecting municipal governments, is something we share with the chairman—with, I think, probably every member of this subcommittee. In fact, we have done a lot to take the small parties out. We need Congress' help to complete that. Similarly, municipalities need protection.

    The problem with the co-disposal provision in the bill may well be one of definition. The language, as we read it, would pick up sites that are not the kind of sites you are probably thinking about. It would include sites where maybe you only have two, three, or four large parties who cause the pollution, and now it's coming over into the Federal program for Federal dollars to clean it up.

    Again, we share the goal of getting the little guys out—the mom and pops, the pizza parlor who sent their garbage to the local landfill. They shouldn't find themselves in any way, shape, or form trapped in Superfund. We've taken steps to get them out. We need Congress to finalize that in the law, but we are very concerned with the co-disposal definitions in the proposal in H.R. 2500.

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    Mr. LATOURETTE. Mr. Chairman, could I just follow up one second? Thank you very much.

    I'm very interested in the mom and pops, as I think every member of this committee is. Do you mean ''by taking the mom and pops out,'' the De Minimis or De Micromis individual, that they're out-out?

    The reason I ask this question is we have a Superfund-supervised Ohio EPA site. The way that they're getting out now is pay $10,000 and you won't be in. While $10,000, obviously, is much less than the potential cost of litigation, $10,000 to a mom and pop operation operating on the margin is a lot of money.

    Do you mean out-out, no contribution? If we can agree on a definition of De Minimis or De Micromis——

    Ms. BROWNER. That's exactly what needs to happen in the law, and that's what I mean when I say you need to draw a very bright line as to who's in and who is out.

    What we have been able to do administratively is get the tiny, tiny, tinies out. Then there is the group of sort of the tiny, as opposed to the tiny, tiny. There we have a process to get them out, but it is a process. We would like Congress to resolve that, to draw a bright line.

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    Just to briefly share with you the process, what we have to do is actually get them to pay $1 so that we can provide the legal protections against defending them against other larger parties.

    So we couldn't agree more with you on the need for there to be a very bright line in the statute.

    If I just might for one second, Mr. Chairman, on the co-disposal sites, my staff has provided me with, I think, an example of why we have this definitional problem.

    As we read the definition in H.R. 2500, there are sites owned by private firms—not local governments, owned by private firms—that took chemical waste. That's what they were designed to do. We believe under this definition they are out, they are exempt, and they do not have to pay to clean up the problem they caused.

    Perhaps it is a definitional problem that we can resolve, but as we read the current proposal it is picking up many sites that I don't think we intend to pick up.

    Mr. LATOURETTE. Thank you. Thank you for your indulgence, Mr. Chairman.

    Mr. HORN. My understanding of the bill is we're talking 1 percent or less they are out and there are no fees to be paid.

    Ms. BROWNER. That's a slightly different issue than the co-disposal issue. If I might, Mr. Chairman, explain our concern with that, in order to determine if a party—and it goes to some of the questions we just had—is at 1 percent, they have to go through the allocation process.

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    Why not just say, ''One barrel, two barrels, you're out''? But to drag someone through an allocation process to determine the 1 percent can be a costly undertaking.

    I understand what the thinking was behind the 1 percent. I think, unfortunately, it doesn't achieve the goal in terms of that bright line, who's in, who's out.

    There are many sites. Mr. Oberstar made reference to Arrowhead. At Arrowhead you had a lot of parties who would have been at or below 1 percent, but it represented an awful lot of the waste.

    Again, we would recommend what we would refer to as a ''volumetric definition'' in terms of a bright line of who's in and who's out, and we'll be more than happy to work with the staff on that.

    Mr. HORN. The gentleman from New Jersey, Mr. Menendez, is recognized for 5 minutes.

    Mr. MENENDEZ. Thank you, Mr. Chairman.

    Good morning, Madam Administrator. Let me welcome you, as well.

    Let me just, on an aside, say that you look so radiant when you're angry.

    [Laughter.]

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    Mr. MENENDEZ. But I understand why you are angry, and certainly this is an important topic. Superfund is Clean Water's cousin. And to New Jersey, which I represent—and I know, as well, to many parts of the Nation, as I saw one of your maps up there that have the different color schemes of where people live, one in four Americans living within several miles of an NPL site—this is an extremely important topic, and so we are all aggressively involved in it.

    I just want to pick up on something that you responded to Mr. Horn on. I didn't really think of it in that context. You're the first Democrat, you said, to have, in fact, administered this program. So, to the extent that there are those who are discontent with its administration and regulation up until this time, for the most part it has not been administrated by someone who is of the Democratic party.

    Ms. BROWNER. Right.

    Mr. MENENDEZ. In that respect, I'd just like to get a sense, before you came and since you've been the Administrator. What's the difference in the amount of cleanups? Is there a difference?

    Ms. BROWNER. We have completed under this Administration 196 cleanups. That is more than all of the cleanups completed in the first 12 years of the program. That's one example.

    We have taken 24,000 little sites off of the list—the brownfields—and we're seeing those cleaned up and redeveloped across the country. We've taken more than 10,000 little parties out.

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    I came here being very familiar with Superfund, having run a large State agency, knowing that we needed to change how the program works. It is a fundamentally different program today than it was two and a half years ago.

    Mr. MENENDEZ. Which brings me to my next question of concern, and that is: as I heard your testimony and as I read this bill, it would seem to me—and I'm referring to the rebate provisions now—it would seem to me—and I'd want you to tell me whether my categorization of this is a fair one—that what we have here is an entitlement program that, in fact, uses a reimbursable credit to pay polluters for having polluted.

    Ms. BROWNER. We were told at another hearing on this bill that, in fact, this would be off-budget. I don't know what this subcommittee's position is on that. We were surprised when we were told that.

    You're right, I think, that we are, in essence, creating an entitlement for the polluter.

    Mr. MENENDEZ. Because, as I understand it, if, in fact, you meet the criteria, you are eligible for 50 percent of that money which you paid—and some would argue for having cleaned up, but I would argue for having polluted, because you wouldn't be eligible for it in the first place if you hadn't consented to or been found a responsible party. Is that a fair characterization?

    Ms. BROWNER. That's correct. You will get 50 percent back.

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    Mr. MENENDEZ. When you said before $2.6 billion is what H.R. 2500's cost would be, over what period of time is that?

    Ms. BROWNER. That's annual.

    Mr. MENENDEZ. That's annual?

    Ms. BROWNER. Yes.

    Mr. MENENDEZ. And that is compared to presently in terms of your cost?

    Ms. BROWNER. This year—our last year's appropriation was $1.4 billion. The EPA budget that is being currently debated is $1 billion. It is a reduction.

    Mr. MENENDEZ. So we're talking about creating a vehicle by which polluters get an entitlement, and that entitlement is going to cost the taxpayers of the United States another $1 billion?

    Ms. BROWNER. Right.

    Mr. MENENDEZ. This book contains all of the known contaminated sites in New Jersey. Unfortunately, it is much bigger than I, as a New Jersian, would want to see. There is the number one hazardous waste site in the Nation, unfortunately, on the NPL list is in New Jersey. In that respect, a consent decree was entered into in which that site, in part, was cleaned up by a company that was spending $12 to $15 million, representing—actually, they spent anywhere between $24 and $30 million.

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    My understanding is that, under this bill, this same scenario, the number one site in the Nation on the NPL list, that half of that money would go back to the company that, in fact, created the pollution?

    Ms. BROWNER. Half. Right. The polluter would be allowed to collect $0.50 on every $1 spent. And if that site is not yet completed, all of the decisions could be reopened.

    Mr. MENENDEZ. That's outrageous.

    Thank you, Mr. Chairman.

    Mr. FRANKS [assuming chair]. Go ahead.

    Mr. ZELIFF. Administrator Browner, just to clarify what was said; this bill creatres an entitlement for polluters, and you don't agree with that?

    Ms. BROWNER. We are creating a funding mechanism that we were told in the Commerce Committee last week would be off budget. We were surprised by that. That is what we were told.

    Mr. ZELIFF. With regards to in the reform of Superfund, CERCLA was passed and signed by President Carter and President Reagan signed in SARA into law 1986 SARA. We've got a mess on our hands, by admission of many of your folks as well as ours, that was created by Congress.

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    In my judgment, this is the most flawed law in our books. It's a disgrace. It's un-American. It's wrong. Under this law we're holding people responsible for things they did legally before the law was passed. That's not really what we in America are very proud of doing.

    Would you agree that this is the most flawed law on our books, or at least one of the most flawed laws?

    Ms. BROWNER. I have always said that this is a law that needs to be changed, that this is a program that needed to be fixed.

    Mr. ZELIFF. And I want to congratulate you on this point, just so you'll know where I'm coming from. I've worked with you and Region One on this issue in the past. We had a task force that worked for 4 years on Superfund at the University of New Hampshire. The 35 folks, who were not even reimbursed for mileage, contributed their hard work, resources, and efforts.

    This task force accomplished a lot. New Hampshire has the fourth highest density of Superfund sites in the country Londonderry alone has three sites. New Hampshire is a small State, and at $30 million a site, that's a lot of money that's not going into education, or into fire or police protection.

    In Sommersworth we fought hard—and admittedly over great resistance initially by EPA, but eventually we were allowed to introduce new information, new technology. At Towan Road we opened up a record decision. Again, initially there was a lot of resistance, but ultimately in the end we worked together.

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    Bill Holman from EPA was part of our task force. We made great progress. We worked with the highest levels of EPA last year, and we ended up with the two last pieces of reform—full retroactivity reform, and joint and several reform. All of the sudden we went our separate ways, which I think is too bad.

    We are still arguing this debate here today.

    We collect roughly $1.5 billion in taxes? Is this correct?

    Ms. BROWNER. Yes.

    Mr. ZELIFF. How, then, can we justify putting a budget together of $1 billion?

    Ms. BROWNER. It wasn't our decision.

    Mr. ZELIFF. I guess that's one question. And if there was enough money in the fund to pay for retroactive cleanup, would you be for that?

    Ms. BROWNER. Two points. The Administration didn't seek $1 billion for the program. That was a decision made by the Republican leadership in the Congress.

    Mr. ZELIFF. Right.

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    Ms. BROWNER. The tax does generate approximately $1.5 billion a year. In addition to that money, there is another $1.2 billion being spent by the responsible parties.

    Mr. ZELIFF. Right.

    Ms. BROWNER. So if you are going to remove the obligation that the polluter pay to clean up the problem they caused, to maintain the current pace of cleanups, you have to retain the 1.5 plus the 1.2.

    Mr. ZELIFF. My problem here is the rhetoric of the subsidy to polluters verus the fairness of holding people normally responsible for things they did that were legal before the bill was passed.

    I just ask you: morally, do you agree that it's wrong to hold people retroactively liable for previously legal activities?

    Ms. BROWNER. I believe that those who caused a problem do have the responsibility to solve the problem.

    Mr. ZELIFF. So you believe that there is no problem with retroactive, no liability. If you did something that was legal before the law was passed. It's you tough luck and we're going to hold you responsible no matter what. We have no moral obligation to change the law to be fair.

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    Ms. BROWNER. In looking at how to craft a toxic waste cleanup program that makes sense for the country, there are a lot of issues. It is not just one issue, unfortunately.

    The issue of when someone did something, if that becomes the focal point, then I believe all we will have done in this program is changed the nature of litigation rather than getting on with getting the lawyers out and doing the cleanups.

    We'll all be arguing for years whether something happened on January 1, 1987, or January 1, 1985.

    The goals are several. One is to make the program fairer. You and I, I think, agree on that. We come to it in different ways. I agree the program should be made more fair. Under our proposal last year, we proposed an allocation system with the orphan share, and PRPs were only asked to pay their fair share. We agree with that.

    Mr. ZELIFF. Right. Retroactivity, and the other piece of it is that we're collecting $1.6 billion and we should be spending that money on cleanup. We need to do that. We need to be fair. We need to do it right. We've got to get the 50 percent of the available resources that are currently going to the lawyers to cleanup.

    We've made it up 80 percent of the road of reform, but what is going to happen, if we don't change joint and several and we don't get back to full reform of retroactive liability? We're going to be back here a year from now trying to fix it up again. Let's just do it once and do it right. That's my plea.

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    Thank you.

    Mr. FRANKS. Mr. Zeliff, thank you.

    Ms. BROWNER. Mr. Franks, if I might just say something very quickly, on the issue of lawyers I agree with Congressman Zeliff that when you look at all of the monies being spent—not just the Government money, all of the money being spent—on Superfund, far too much is going to lawyers. It is important to understand that it is not 50 percent of the Federal money going to lawyers. It is when you look more broadly. I think you're making reference to the Rand Report.

    Mr. ZELIFF. Right. Thank you.

    Ms. BROWNER. Thank you.

    Mr. FRANKS. I'd like to inform the members of the committee there are about 5 minutes left on the floor for the vote.

    Ms. Browner, thank you very much. We would ask you, if you would, to wait for a few minutes until we return.

    Ms. BROWNER. Certainly.

    Mr. FRANKS. There are a few more questions that we'd like to pose. Thank you for being generous with your time.

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    Ms. BROWNER. Certainly.

    Mr. FRANKS. We'll reconvene immediately after the vote. I'd ask the Members to hurry to the best of their ability. Thank you.

    [Recess.]

    Mr. HORN [resuming Chair]. The hearing will resume. Mr. Barcia is recognized for 5 minutes.

    Mr. BARCIA. Thank you very much, Mr. Chairman.

    I'd like to thank Administrator Browner for her appearance on the panel this morning on a very important issue that I know affects the entire country and that I have a special interest in because of a landfill located in the middle of the Saginaw River on an island called the Middlegrounds Landfill, which was a municipal landfill operated throughout the 1950s and 1960s and was, I believe, closed late in the 1960s.

    During the early 1950s, that landfill received several PCB-laden transformers from a local manufacturing concern, and since that time has been leaking PCBs and polychlorinated biphenyls and other heavy metals and toxic wastes into the Saginaw River, into the Saginaw Bay, and basically polluting Lake Huron.

    While I want to compliment the Administrator on her personal leadership of the agency—I've always felt very comfortable with the job that you've been doing, Administrator Browner—we are very disappointed in the performance of your staff relative to the quest that we've had for—well, going all the way back to 1981 when my predecessor—yes, I know that you weren't there, but some of the staff perhaps was.

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    Ms. BROWNER. I was in college.

    Mr. BARCIA. I know Congressman Traxler worked on the issue for at least a dozen years before he left Congress in 1992, and I know that one of the first meetings I had as a new Congressman from the Fifth District back in February of 1993 in your office—and we brought local officials down to talk about the importance of moving that landfill site on the national priority list.

    Ms. BROWNER. Right.

    Mr. BARCIA. Now, as a result of changes that were contained in the recent recisions appropriations bill that we adopted last summer—which I didn't support—now we have a requirement that Governor Engler of Michigan must sign off on that list.

    The Middlegrounds Landfill is the fourth most toxic site in the State of Michigan, and there is tremendous disappointment—in fact, I'd say bordering on utter disgust—by community leadership and especially the sport fishery groups and others who fish in the Great Lakes, Saginaw Bay, and Lake Huron region because of the continuing pollution from that identified source.

    We have had, throughout my time representing the Fifth District, almost unanimous consensus that we should move to put that site on the NPL list. Now, with the change in the city management—we've got a new manager, as well as new members of the city commission—the support for putting the site on the NPL list is starting to dissipate, as well as a great reluctance by the governor's office to move ahead on placing that site on the list.

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    I only mention that just to say that, had we had more responsiveness from your staff—and I don't want to criticize you personally, because you've always been responsive, but we've called almost weekly since 1993 and cannot get a response or a positive response out of the staff of trying to resolve that issue.

    So now it appears that, with the new changes and things, it may be many, many more years before that site will be considered to be placed on the list.

    I do have one question.

    Ms. BROWNER. Can I say something about the site, just so you know? You are correct that under current policy we do need a letter from the governor of the State. We have contacted the State Environmental Agency. We suggested to them that it would probably be advisable to send us letters with respect to three sites in your State. They did send us letters with respect to two sites—unfortunately, not to this site.

    I don't think we have a disagreement with you about the appropriateness of this site being on the list. We do need the letter from the governor. We have asked the State for the letter, and they did not respond on that site. They responded on the other two, unfortunately.

    Mr. BARCIA. Yes. I think we're going to meet formal resistance now. I think, having talked with several individuals in State government and the local community, that there is some fear about the perception, I guess—the public and the tourists and the fishermen—in terms of utilizing those waters, and now I think we're starting to see the consensus which we had for many years start to dissipate, and it is going to be a major battle even to get our municipality, as well as the governor's office, now to go along with listing that site, although I think we all agree it is a major source of pollution in Lake Huron.

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    Ms. BROWNER. Right.

    Mr. BARCIA. But on to another subject.

    I'd just like to say the criterion, I think, in the bill for landfill exemption is an arbitrary date set in the bill. You've already commented that the language allows non-municipal liability exemptions. No matter what level a municipal liability is ultimately agreed to in the new Superfund reform language, I believe that this bill also excludes municipalities with legitimate arguments for exemption. Is that your understanding?

    Ms. BROWNER. As we understand the bill, there is a cap for municipalities that were generators and transporters of municipal solid waste. It is capped. Their liability is capped at 10 percent.

    There is also an exemption for residential homeowners that generated municipal solid waste.

    The real issue at these co-disposal sites, if I can sum it up in one sentence, is: rather than merely saying certain sites are now going to be handled in a particular way, why not say ''certain parties.'' I think we can get to the same place and get there more cleanly and more accurately if we focus on the parties that we all want to protect—the small business owner, the homeowner, the municipal governments.

    Mr. BARCIA. You just answered the next question I had. I want to thank you very much for your response.

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    Ms. BROWNER. Thank you.

    Mr. BARCIA. We look forward to continuing to work with you to see if we can't, at some point in the future, get that landfill on the NPL list, because with the estimated $100 million cost on cleanup, I think it will be a phenomenal challenge for the local municipality to attempt to clean up that site with the approximately $20 million municipal annual budget that the city of Bay City has.

    I guess that's all that I have. Thank you.

    Ms. BROWNER. Thank you.

    Mr. HORN. The gentleman from New Jersey, Mr. Franks.

    Mr. FRANKS. Thank you, Mr. Chairman.

    Ms. Browner, I can't resist the temptation but to ask one parochial, localized question.

    Ms. BROWNER. That's fine.

    Mr. FRANKS. There is, as you know, a significant problem in Newark Bay and the Port of New York/New Jersey from dioxin contamination that has spread throughout our bay. It has complicated even our maintenance dredging activities, and currently severely threatens our port.

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    For more than 10 years the agency has identified Diamond Shamrock upstream on the Passaic River as the likely source of the dioxin contamination. There are, I understand, some upstream surveys now ongoing through EPA, but none downstream as it relates to the port contamination issue.

    I'm wondering if you have considered a Natural Resources Damage Act relating to Diamond Shamrock, their pollution of our bay, which has frustrated our ability to find a location to dispose of contaminated dredged sediments.

    Ms. BROWNER. We would be more than happy to ask the trustees to look at that. I think they are agreeing that they would be more than happy to look at the natural resource damage issues that may be associated with the contamination of the bay.

    This is obviously a very difficult site, and we have tried to work with all of the parties on both the dredging issues and the contamination issues, and certainly would like to work with you if there are some particular things that you think we could be doing there in terms of the downstream studies. We'd be more than happy to talk to you about that.

    Mr. FRANKS. My conclusion is simple, and that is that it is going to be an expensive remedy, whatever the ultimate disposal option that is the choice of the EPA and the State agencies.

    Ms. BROWNER. Yes.

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    Mr. FRANKS. It does appear to me to be a very appropriate mechanism through natural resources damage claim to ask that entity, which was responsible for contaminating the dredged sediment, to help share in the cost of trying to alleviate this horrendous problem at our port.

    Ms. BROWNER. We will certainly take a look at it under the current law. You might want to ask Lois Schiffer from the Department of Justice, who is really the expert on this, what H.R. 2500 would do in terms of a natural resource damage claim at a site like this. It may have some effect.

    Mr. FRANKS. I understand that it may, but it is just astonishing to me that, having identified this particular facility as having been at least predominantly responsible for having created the problem, no one has brought any action.

    Thank you, Mr. Chairman.

    Mr. HORN. You're quite welcome. I now yield to the gentleman from Pennsylvania, Mr. Borski.

    Mr. BORSKI. Thank you very much, Mr. Chairman.

    Ms. Administrator, let me commend you on your years of service here, your years of service in the State of Florida, and your testimony and performance here today.

    I read your testimony before the Commerce Committee. I listened intently to you today in discussing this bill, H.R. 2500.

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    My question to you is: if this bill were to pass the Congress in its current form, would you recommend a veto to the President?

    Ms. BROWNER. Yes. I do not believe that the bill, in its current form, would allow us to provide the public health and environmental protections that a toxic waste cleanup program should provide for the people of this country. I would recommend a veto.

    Mr. BORSKI. Thank you very much. No further questions, Mr. Chairman.

    Mr. HORN. The gentleman from Minnesota, Mr. Oberstar.

    Mr. OBERSTAR. Thank you, Mr. Chairman.

    Thanks for staying with us, Madam Administrator.

    Earlier I asked a question about the funding shortfall and so forth. In response to that question, you said that the retroactive liability discount that industry would be rebated was $1 billion, but I didn't think that number sounded right. The number that we have developed is $719 million. I just wonder if you weren't including——

    Ms. BROWNER. I apologize.

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    Mr. OBERSTAR.——an additional number with that.

    Ms. BROWNER. Right. I apologize if I misunderstood the question in terms of the cost.

    As I think the chart that we distributed reflects the correct amount. We have calculated the discount at $719 million.

    Mr. OBERSTAR. Thank you. That's the number that our staff has developed. I just wanted to be sure we were on the same page and the same line.

    Ms. BROWNER. I had included other provisions in my original statement.

    Mr. OBERSTAR. Okay. That's the amount of the retroactive liability discount. What a curious term. Anyway, this is not supermarket discounting. We're talking about lives and health.

    I want to understand better who goes first on this funding again, under the retroactive liability discount. Is the Government required to pay, under this bill, polluters first, before cleanup gets underway? Or does cleanup have priority?

    As we read the bill, we're not clear on this side just who has priority. And if it is unclear to us—I think we're pretty good at reading this legislation—and should that become law, it will be a prime area for litigation.

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    Ms. BROWNER. We would certainly agree. As I understand your question, you're asking me, if there are adequate funds to do the cleanups that the Government is doing when there is no responsible party—they're bankrupt or they're gone. If there are not funds to cover both that case and the rebate. What do we do first? Which commitment is honored first?

    The bill, as we read it, is very, very ambiguous on that, and I think if we didn't pay the 50 percent rebate to the polluter, that we would probably end up in litigation. There is an ambiguity.

    Mr. OBERSTAR. You mean the bill, not the law.

    Ms. BROWNER. I'm sorry. I meant to say the bill. You're right.

    Mr. OBERSTAR. The bill. God forbid it should become law in its present form.

    [Laughter.]

    Mr. OBERSTAR. So polluters would be getting money, likely, before cleanup takes place?

    Ms. BROWNER. That is possible. Yes.

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    Mr. OBERSTAR. That's certainly a possibility.

    Ms. BROWNER. Yes.

    Mr. OBERSTAR. Unless some language is advanced to clear that up.

    Ms. BROWNER. Right.

    Mr. OBERSTAR. What about municipal co-disposal sites? Will they have priority over other types of sites under this bill?

    Ms. BROWNER. As we read the bill, it does not set priorities in terms of the money that has been appropriate-. It doesn't say, ''First you do this, and if you have enough left over then you do that.'' It just puts everything into the same pot.

    Mr. OBERSTAR. Again, there is no clarity over priority, and there is a likelihood that some sites will simply sit there and not be cleaned up.

    Ms. BROWNER. That's very likely, including some of the co-disposal sites.

    Mr. OBERSTAR. CBO has provided information that the PRPs—potentially responsible parties—over the last 5 years have contributed the equivalent of $2 billion annually toward cleanup. That number would decline under H.R. 2500. What is your estimate of the number to which that would decline?

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    Ms. BROWNER. We believe it would decline to approximately $800 or $900 million.

    Mr. OBERSTAR. That would be about a 58 percent reduction.

    Ms. BROWNER. That is correct.

    Mr. OBERSTAR. One final question that causes me great concern. On page 11 of the bill, section 121, the language is, under 121.B.2, ''actual human ingestion.'' ''Remedies shall prevent or eliminate any actual human ingestion of drinking water containing any hazardous substances''—the operative language I'm concerned about. By ''ingestion'' we normally mean drinking it.

    Ms. BROWNER. That's right.

    Mr. OBERSTAR. But there are other ways that contaminants can enter the body. From experience I have had in two benzine-infected drinking water sources, for two separate communities in very geographically different areas in my District—Askov and Ogilvie—benzine can get into your body through your skin, bathing, can get into your lungs while breathing the droplets from a shower.

    Ms. BROWNER. Right.

    Mr. OBERSTAR. Those come from the drinking water.

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    Ms. BROWNER. Right.

    Mr. OBERSTAR. That's not just—benzine in toxic amounts can be cancerously toxic, but in subtoxic amounts it can cause skin disease, it can cause——

    Ms. BROWNER. Nausea.

    Mr. OBERSTAR.——joint diseases, it can cause lung problems. Why should the standard be limited to carcinogens, threshold or non-threshold, as the bill provides, or limited to risk of cancer? It looks to me like this bill is going to turn EPA into a kind of insurance company, a bunch of actuaries.

    I can't even understand this language that's written in this bill. It doesn't make any sense.

    Ms. BROWNER. We share your concern with the language in terms of whether the intention was to merely cover cancer effects as opposed to cancer and non-cancer effects. I think there was an effort earlier on the part of the chairman to suggest that they intended to cover both.

    We think the statute has to be very clear, that the bill needs to be clarified so that it is abundantly clear on the face of it that this is a program designed to protect the public's health from cancer and non-cancer health risks.

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    Mr. OBERSTAR. We have a body of evidence from testimony gleaned in hearings I conducted as Chair of the Investigations and Oversight Subcommittee on toxics and Superfund and the clean water program that showed that people get all sorts of maladies from noncancerous elements that are in water.

    Ms. BROWNER. Yes.

    Mr. OBERSTAR. And, finally, Mr. Chairman, if I may, on page 10, subsection 5, I hope you can help the committee clarify this language. ''A remedial action shall be deemed protective of the environment if, based on the actual reasonably anticipated future use of land, water, or other resources, it will protect against realistic and significant risks to ecological resources that are necessary to the sustainability of a significant ecosystem and will not interfere with a sustainable functional ecosystem.'' Whoa. I hope you don't have to be around to administer that language. God only knows what lawsuits will result from this one.

    Ms. BROWNER. We are very, very concerned about this provision. There are phrases and there are words that we do not understand the meaning of. They have not previously been included in the Superfund law.

    Mr. OBERSTAR. It sounds like someone turned the dictionary into a Waring blender and just spun it around and out came these words.

    Ms. BROWNER. I would say that there are a lot of subjective qualities to this. A ''significant ecosystem''—what you think is significant, someone else might not think is significant. There is no scientific mechanism for resolving of the disputes that will inevitably arise over this language.

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    Mr. OBERSTAR. I think our chairman, who was a college president and professor, would have given a failing grade to anybody who wrote that kind of language.

    [Laughter.]

    Mr. HORN. Well, I'll tell you, the first failing grade on some of the language you've mentioned will have to go to the ranking Democrat on Commerce, Mr. Dingell, because in H.R. 228 we have, on page 203, ''prevention or elimination of any actual human ingestion of drinking water containing any hazardous substance, pollutant, or contaminant at levels in excess of the maximum contaminant level or non-zero maximum contaminant level,'' etc.

    Mr. OBERSTAR. Let's flunk them both.

    Mr. HORN. So I merely say to my colleague you ought to have a discussion with your colleague.

    I have now given my dear friend and good friend, Mr. Oberstar, 20 times more time than he gave me when I was on the Subcommittee on Aviation, but I'm delighted to do it.

    We're going to have to wind it up to get to the other witnesses. I don't want to shut anybody off, but this is a good example. There are going to be some questions coming toward you, not only from Members of the minority, but Members of the majority who, unfortunately, because of a conference call, because of what is going on on the floor right now, that we will—if you wouldn't mind responding to them in writing. Mr. Bateman had an important question, and so forth and so on.

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    I do want to thank you for appearing and your usual high level of articulation, but I want to make it very clear, if EPA is going to be helpful on this, we need that legal language line by line. If you don't like ours, the question is: what's yours? So we can look at it, we will need it by at least—well, it would be nice to have it by the 11th, but certainly by the 12th and 13th of November.

    Ms. BROWNER. Mr. Chairman, if I might suggest that we are more than happy to sit down in a bipartisan form with the staff. If you want language, the language we would recommend to you is last year's bill. If you want a dialogue, which is what I think is necessary if we are going to craft a responsible reform, we are available at whatever hour for however many hours to work through these issues with both the Republican and Democratic staff of the committee.

    Mr. HORN. As I say, some of this comes from H.R. 228, so maybe you won't have much problem with that.

    Anyhow, I'd enjoy calling you ''Madam Secretary'' as you left, but those of us that endorsed that bill, co-sponsored it, got it out of committee, sent to the Democratic leadership, which never brought it up on the floor, that's their problem and we regret that action wasn't taken simply because a bipartisan amendment on risk assessment and scientific analysis was added in committee. Otherwise, we'd say ''thank you, Madam Secretary.'' We do say thank you, Madam Administrator.

    Ms. BROWNER. Thank you, Mr. Chairman.

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    Mr. HORN. You're quite welcome.

    Mr. BOEHLERT. We now have Assistant Attorney General Schiffer, if you will come forward, and Mr. Hall of National Oceanic and Atmospheric Administration, NOAA.

    Mr. LaTourette, if you would come and preside I'd be grateful. I'm only 25 minutes behind in my appointment schedule.

    Mr. LATOURETTE. I'd be happy to.

    In our second panel this morning we're honored to have Ms. Lois Schiffer from the Department of Justice, and also Mr. Douglas Hall from NOAA. Welcome. We look forward to your testimony this morning.

    Ms. Schiffer, we look forward to your opening remarks.

TESTIMONY OF HON. LOIS J. SCHIFFER, ASSISTANT ATTORNEY GENERAL, ENVIRONMENT AND NATURAL RESOURCES DIVISION, U.S. DEPARTMENT OF JUSTICE; AND DOUGLAS K. HALL, ASSISTANT SECRETARY FOR OCEANS AND ATMOSPHERE, NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION, U.S. DEPARTMENT OF COMMERCE

    Ms. SCHIFFER. Thank you, Mr. Acting Chairman and members of the subcommittee.

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    The American people want and deserve a Superfund program that gets hazardous waste sites cleaned up quickly, responsibly, and with reduced litigation. They also want a system that is fair and gets the small contributor and person with no money out of the system early. H.R. 2500 hampers rather than enhances those goals.

    In my short time today, I will focus on five serious problems in the liability system of H.R. 2500.

    I might also say that, in light of the changes that have been made in the program under Administrator Browner, which she calls the fundamental differences of reforms, it is particularly important that the legislative changes be changes that improve the program rather than taking it backward.

    Today I'm going to mention just five of what I think of as the fundamental problems in this bill.

    First, the 50 percent payback to polluters for cleanup costs they incur for hazardous waste they disposed of, even after RCRA and Superfund became the law, would turn Superfund from a program to clean up hazardous waste sites to a program to pay polluters. I might add there has been some discussion today of this being just rhetoric, but actually it's a statement of fact of what the bill would do.

    This huge payback will cost hundreds of millions of dollars—over $700 million has been estimated—and yet will not buy one more ounce of environmental protection or health protection for the American public or for the environment.

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    Moreover, a vast amount of additional resources will be consumed in administration of this provision and in litigation—that is lawyers—over reimbursement claims that inevitably will follow.

    In addition, because it provides for payback of people who start paying for cleanups from here on out, it disadvantages those companies that stepped up to the plate and have already completed their cleanups. That isn't fair.

    Second, cleanups will be slowed or stopped in their tracks. Administrator Browner had a chart with stop and go signs that showed that. That will happen by at least three provisions of the liability system.

    First, lifting the bar on pre-enforcement reviews so that companies can sue instead of cleaning up and use lawsuits to slow down their cleanups.

    Second, permitting the reopening of all existing RODs—and I mean all existing RODs—so that ongoing cleanups would be stopped as the remedy is reexamined, and by the provisions that so limit the authority of the Administrator to order companies to clean up that companies will not do the work but get 70 percent of sites where they now do the cleanups cleaned up more quickly and efficiently.

    There is a chart to my right that shows, from the ROD reopener provisions, if all of the RODs were reopened, how we would go from a system where we're moving quickly toward getting more cleanups to a system that drives it backward.

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    Third, the small contributor will be kept in the system, not let out, through a combination of the De Minimis provisions, which are comparative rather than absolute, and the workings of the allocation system that is more like an adjudication than a mediation. And I might add, with joint and several liability not explicitly retained, it is not so likely that people will be encouraged to settle in that system.

    Fourth, incentives to settle, as I've indicated, are seriously reduced by failure of the bill explicitly to retain joint and several liability and effective and prompt administrative order authority. This means the fund and the American taxpayer will have to pay a lot more for cleanups, and we will spend more, rather than less, time in court. There will be a flood of litigation from this bill, not a tide that is stemmed.

    Finally, the natural resource damages provisions are so flawed that many natural resources will simply not be restored for the American public. For example, a single fisherperson or fisherman could sue to be compensated and settle a place where there was natural resources damages, and that would inoculate the company that had caused those damages, perhaps over many years, against paying any costs to other cost to restore the resource. That is not fair to the American public that does not want to live with those natural resource damages.

    I thought it was particularly telling that in the earlier discussions Congressman Franks did indicate that he has a site where he would be interested in seeing those tools used. Those tools will not be available if H.R. 2500 passes.

    These provisions, too—the natural resource damage ones—will turn the program into a litigation program rather than what it currently is at most sites, a settlement program.

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    In short, you've asked us to work with you, and I would be very pleased to work with this committee on real reform to the Superfund program that moves it forward rather than backward. But a person who works for Governor Wilson in California told me recently, ''You don't work to make a bad bill better, you have to start with a good framework.'' I would submit that H.R. 228 is a much better framework to start from than H.R. 2500, which is so fundamentally flawed.

    I would be very pleased to answer questions after Mr. Hall makes his statement.

    Thank you.

    Mr. LATOURETTE. Thank you very much, Ms. Schiffer.

    Mr. Hall, we now welcome you to the committee. I have just a brief observation about NOAA.

    I had the privilege during one of our recesses to be on vacation down in North Carolina. I told my family after we worked hard we'd go on a nice family vacation, and, as we did, Hurricane Felix decided to visit North Carolina at the same time, and we benefitted greatly from NOAA's weather broadcasts, and I want to thank you on behalf of my beleaguered family for keeping us up to date.

    My dad sat at the table like a young Marconi listening to a short wave, and we didn't want to hurt his feelings by telling him that we went upstairs to watch the Weather Channel and sort of got the same information, but we appreciate your endeavors and look forward to your statement.

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    Mr. HALL. Thank you, Mr. Chairman. At a time when we're looking at Government and what's important and what's not, we've had more hurricanes this year than at any time in history, and we have now just passed the record number that was previously set in 1933.

    Mr. MENENDEZ. Mr. Chairman, if I may, isn't NOAA under a hurricane, itself, in this budgetary process.

    [Laughter.]

    Mr. HALL. That's another story, Congressman.

    Thank you for the opportunity to talk about the natural resource damage assessment program. I'm here today on behalf of NOAA and the Departments of Interior and Agriculture to discuss H.R. 2500.

    NOAA, Interior, and Agriculture, along with the States and Indian tribes, serve as trustees in natural resource damage cases under Superfund and the Oil Pollution Act.

    I commend the committee for your efforts to address the need for reform of the Superfund program. This Administration, led by Administrator Browner, has implemented a number of administrative reforms to address some of the major concerns about the program. We also worked in a bipartisan effort last year to develop major and comprehensive legislative reform of the program.

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    In the area of natural resource damage assessment, the Administration has continually sought to improve the process. The Administration recently proposed regulations for assessing natural resource damages from oil spills that has been widely viewed by industry and other stakeholders as a major step in addressing the most difficult issues facing this program.

    However, the changes proposed in H.R. 2500 would cripple the natural resource damage assessment process. A number of these provisions would make it impossible to restore natural resources at the most severely degraded sites in the Nation. The responsibility would be shifted from those who caused the injury to the taxpayers.

    Assistant Attorney General Schiffer and Administrator Browner have addressed a number of specific concerns, so I'll only talk about the two that are the most troublesome to our agency and that would be the most damaging in our attempt to restore these resources.

    First, H.R. 2500 redefines the double recovery provision of Superfund to include any recovery under any law if there is a connection with any natural resource injury or loss, regardless of the petitioner or the purpose of the recovery.

    If a single fisherman settles a claim for lost fishing profits, the public would be denied its right to seek restoration of the degraded fishery resources.

    This provision would terminate the Bunker Hill case in northern Idaho and deny the Federal trustees and the Coeur d'Alene Tribe the right to pursue remaining claims. This is an area in which 1,500 square miles of area is severely contaminated, and we would be unable to restore those resources.

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    Second, H.R. 2500 unreasonably caps natural resource damage liability at $50 million for all parties, all facilities, and all cumulative releases at NPL sites and for the entire contiguous area for sites not on the list.

    The number of massively-contaminated sites is limited, but $50 million is simply not enough to restore the most severely degraded areas in this country.

    A number of the other provisions in H.R. 2500 would weaken and undermine the natural resource damage assessment program. The restoration of these sites should be the responsibility of the polluter, not the taxpayer. We look forward to working with you and other members of the committee to ensure that the passage of new legislation does not prevent us from reaching that objective.

    Thank you.

    Mr. LATOURETTE. Thank you, Mr. Hall.

    As I look around, I guess I'll begin this round of questioning. I have a couple of questions for you, Assistant Attorney General Schiffer, if I can find my notes.

    In the written testimony that you provided earlier to the committee—and I was talking to Administrator Browner about this—obviously, of great concern to me and a number of the other Members that I'm conversant with on this issue—she called it the ''mom and pop'' question. As I had understood your testimony—and maybe you could correct me—you would favor or at least have expressed an opinion that it is worse to exclude De Minimis parties from liability rather than to have them eligible for a De Minimis settlement. Is that a correct observation of your written testimony?

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    Ms. SCHIFFER. This is what my thinking is about De Minimis settlements. We absolutely share the view that we need to get, as Administrator Browner called them, the ''moms and pops'' out, the people who brought small amounts of waste to the site, people who are actually small like mom and pops, people who don't have an ability to pay, of whatever size. We all agree we want them out of the system.

    What H.R. 2500 would do, however, is not achieve that result, and it wouldn't achieve that result for several reasons. One is that it defines De Micromis as these people who make a very small contribution and exempts them, gets them out of the system, and we favor that. We think that's the right way to go.

    But the second thing it does is that it defines De Minimises as people who brought 1 percent or less of waste to the site. That's a comparative standard. In order to know whether you qualify for that, you have to know the entire amount of waste at the site, which is something that you don't necessarily know at the outset of the litigation or of the allocation process.

    In addition, because it exempts them rather than saying if they brought less than 1 percent you can settle them out, it means that, even when you get way down the road, another potentially responsible party can come in and say that guy who got out wasn't qualified for the exemption because he actually had 1.5 percent not 1 percent, and you're back to the races of litigating.

    So we share the goal of what this approach is trying to do, but because of the way it does it—of defining De Minimis as an exemption and a comparative exemption—it is just not going to accomplish the result. What it is going to mean is it leaves the little guys in and it is going to be more litigation.

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    Mr. LATOURETTE. I think in the Administrator's testimony she talked about one particular site where 1 percent may be 200,000 gallons, or some such thing, and so I understand your comparatives.

    If the language is adjusted or massaged for a new definition of De Minimis, and there is also a provision that then puts the burden on those who would complain of those who are released under the new definition if it is not a 1 percent, one-size-fits-all definition of what De Minimis is—for instance, if we required a party who sought to sue to include or seek damages from someone who had been the subject of a De Minimis release, that they would have the burden of paying the cost of litigation, attorney fees, don't you think that would go a long way towards addressing the concerns that you have?

    Ms. SCHIFFER. We think a number of steps are necessary to address my concerns. I think an effective piece of that would be to say that if other PRPs drag into the system somebody who really should be out of the system, that they pay the burden of paying the lawyer's fees of the person they wrongly dragged in. I quite agree with that.

    But I do think that there is a fundamental problem in using a comparative standard with an exemption if what we want to do is get them out, and I would invite you to take a look at the provisions of H.R. 228, which we think gets to what sounds like a common goal that we have in a more effective manner.

    Mr. LATOURETTE. If you're willing to work with the staff of the committee, I'm sure they're willing to work with you on achieving that middle ground, if you will.

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    Mr. Hall, I want to turn to you for just a second because something that I had read prior to this hearing in your proposed written testimony concerned me, and that had to do with your discussion of the double recovery prohibition which is contained in H.R. 2500.

    I think I understood you to say that if you read the applicable section of this bill to indicate that if a fisherman receives a damage award for a single fish or a small award, that somehow precludes all others from engaging to seek recovery.

    As I have read the bill, I think the language to which you refer—and maybe you can tell me if I'm looking at the wrong section or we're just disagreeing on the structure or the definitional portions, but I think the provision occurs on page 175, line 21, and it reads: ''There shall be no double recovery under subparagraph C of subsection A for destruction of or loss of natural resources, whether for damages, natural resource damage response cost, or otherwise, including assessment costs under this act or any other law.''

    Is that the sentence that bothers you and has caused you to reach the conclusion?

    Mr. HALL. Yes.

    Mr. LATOURETTE. I don't know how we come to that conclusion based upon that sentence. Is that your opinion also, Ms. Schiffer?

    Ms. SCHIFFER. Perhaps I can address it because I share Mr. Hall's view of how this is written in this extremely over-broad fashion, and that is it talks—I'm embarrassed to do this now—at the bottom of page 175, which is—you tracked through the section number or something. That's always hard to do. But it talks about natural resources, not natural resources, by this particular release at this particular site, and it uses such loose language as ''response cost or otherwise having been paid.'' ''Otherwise,'' of course, could include the payment to one fisherman, as Mr. Hall indicated.

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    So it is written in the extremely broad fashion to ''preclude double recovery'' that would really mean that we wouldn't be able to get natural resource damages for restoration of the natural resources.

    We would suggest that the provision that is in the current act, actually, on double recoveries for natural resource damages is a perfectly workable system. It has done very well so far. This is really something that isn't broken and doesn't need to be fixed.

    Mr. LATOURETTE. Thank you.

    Mr. HALL. Congressman, I'd just like to add that there is a provision in the current law that prohibits double recovery, but this law is now—would be so broad that we wouldn't be able to pursue a lot of the major sites around the country.

    In Idaho, we have a situation where the State of Idaho has settled for $4 million, a claim at the Bunker Hill site. It is one of the largest sites in the country, and the cost to restore injured natural resources at the site is estimated to be about $1 billion. So when this provision because of this prior claim that was settled several years ago, any future claims to address these restoration costs would be terminated.

    Mr. LATOURETTE. Thank you very much. It is now my pleasure to yield to Mr. Menendez of New Jersey.

    Mr. MENENDEZ. Thank you, Mr. Chairman. I'd like to welcome both of you, as well, to this great debate.

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    Ms. Schiffer, let me ask you—Mr. Zeliff I think took a little umbrage of my categorization of the program with Administrator Browner about the section on the rebate, and I'll get to that in a minute, but he also posed questions regarding whether it is morally appropriate to hold someone liable for activities that may have been legal at the time.

    My question is: is Superfund unique in that regard? Aren't there other situations where Congress has, in fact—well, the courts have held persons responsible for the damage they create, even though their actions may have been legal at the time?

    Ms. SCHIFFER. You're exactly right, Mr. Menendez. In saying that—and I want to elaborate on it a little bit—I don't mean to agree that people who put hazardous waste in places were ''acting legally at the time,'' because there is a long history of laws that go back, including the Resource Conservation and Recovery Act of 1976, the Clean Water Act of 1972, nuisance laws, Rivers and Harbors Act, which is an 1899 statute which addressed the idea of where you put waste. So it isn't so easy to say, ''Was somebody was acting legally or not legally?'' They were putting waste there.

    In addition, this is what is called a ''strict liability statute.'' That is, we don't look at fault. What we do is we say, ''There are wastes there. You brought wastes to the site. We want to get them cleaned up.'' That's an approach which is fair. It is the approach of most of the pollution statutes, actually, and it is an approach which saves litigation. Rather than spending a lot of time discussing whether you are at fault or not at fault, it says, ''You brought your waste there. Let's go on and get it cleaned up.'' It seemed to be fair.

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    I would also say that the Supreme Court has addressed this question in the context of the black lung program, and I'll have to supply you the name at the case because I'm not great at case names. There, people who operated mines were obligated to pay for black lung disease that was incurred by people who had been mining for years. A statute was passed in the early 1970s, and the Supreme Court said that's a completely appropriate use of the Government's authority. It is, in effect, perfectly fair. So I think that it is something that certainly happens.

    In addition, I might say that, since 1980, we have gone down the road of holding people responsible for wastes they brought to the site even if they were generated earlier, and to change it now would be very unfair, because it would mean that people who had stepped up to the plate as companies that had said, ''All right. We understand. We have an obligation. We're going to do our cleanups,'' would be very disadvantaged vis a vis those companies that lay in the weeds and didn't come forward and now would come in and say, ''Oh, well, we didn't pay before and now we're off the hook.'' That is not fair.

    Mr. MENENDEZ. Now, returning to the rebate question which I characterized a certain way, going back to the same example I used with the Administrator I want to use with you as the Justice Department. The Lipari Landfill in New Jersey——

    Ms. SCHIFFER. I'm glad to know how to pronounce it. I've been mispronouncing it for several years.

    Mr. MENENDEZ. Number one, unfortunately, on the hazardous waste site of the NPL. Under the provisions of this bill, the company that is involved here in a consent decree will have spent anywhere between $24 and $30 million. They would receive a rebate check of anywhere between $12 and $15 million under this proposal; is that correct?

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    Ms. SCHIFFER. That's exactly right. How that would work is Lipari Landfill in New Jersey was the number one site on the NPL. Rohm & Haas and other potentially responsible companies entered into a consent decree—that is, an agreement with the Government that is filed in court—saying they would clean it up. They knew and expected that they were going to do a cleanup that was estimated to cost about $42 million to clean up groundwater and surface waters that were contaminated by their industrial wastes.

    They have started that cleanup, but from October on out, which is what this H.R. 2500 would take as the date, there remains to be spent $25 to $30 million. Under H.R. 2500, those PRPs would be reimbursed half of anything they spent after October, 1995; that is, they would get a rebate of $12 to $15 million. That's money that can't be used by the Superfund to pay for cleanups at other sites. It is money that would go back to these people who have already agreed by a consent decree to do this cleanup without such a rebate.

    Mr. MENENDEZ. So you have the same position as the Administrator does on this.

    Let me just follow up with one last question, since I see my time has run at this point. Do you have—I mentioned Lipari because I'm very interested about what's happening in New Jersey as it relates to Superfund. It is very important to New Jersey, the successful renewal of this program. Do you have another real-world example like Lipari or something similar, in fact, in which rebate checks would be issued under this so it's not just a specific one, just to show that this is not just an aberration?

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    Ms. SCHIFFER. Let me just give you a few other examples.

    Mr. MENENDEZ. A few of them. Fine.

    Ms. SCHIFFER. These are really just a few of what would be an enormous number of examples.

    At the Whitmoyer Labs site in Pennsylvania, it is a company that makes animal vitamins and was owned and operated successfully by some big laboratories, then was bought by Rohm & Haas and another company called Smith-Klein Beecham. They disposed of arsenic sludge—already sounds awful, right?—in unlined lagoons on-site during this time, resulting in contamination of groundwater and drinking water wells with arsenic.

    The PRPs recently started——

    Mr. MENENDEZ. I'm sorry. Groundwater and drinking wells?

    Ms. SCHIFFER. Yes. And the groundwater and drinking water, that's right. The PRPs there recently started a $120 million cleanup. They've spent about $10 million, which means they have to go, from October on out, about another $110 million.

    That means, under H.R. 2500, they'd get back a check for about $55 million.

    I might add, Congressman Menendez, that there was some discussion with Administrator Browner about whether there is any priority in the fund; in other words, whether, if somebody asked for a rebate, the rebate would come first or the cleanup costs or other costs would come first.

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    There is nothing in the bill that talks about priorities, so the payback costs could come first. But what there is in the bill is something that says the paybacks, the rebates, are supposed to be made immediately upon receipt of the bill by the Government, which means that, in effect, in order to meet the ''immediately upon receipt'' terms, they would have implicit priority, if not—the payback would have implicit priority over cleanups.

    Another site that I might just briefly mention is a site, the Olin site in Saltville, Virginia, which was a plant that discharged mercury wastes that contaminated a stream so much that there was a fishing ban in the stream for 20 years. The plant closed in 1972, and that's a case where the company testified in Congress that it agreed it should have some obligation for paying for cleanup of that site.

    The remedy was recently selected by EPA. It is going to cost about $40 million to clean it up. Under H.R. 2500, Olin would get back a check for $20 million, so this is a very expensive program that buys no environmental or public health protection for the American public.

    Mr. MENENDEZ. Thank you, Mr. Chairman.

    For those of us who are concerned about safe and clean drinking water, your examples are pretty shocking.

    Thank you, Mr. Chairman.

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    Mr. LATOURETTE. Thank you, Mr. Menendez.

    Mr. Borski, do you have any questions?

    Mr. BORSKI. Thank you, Mr. Chairman.

    Mr. Schiffer, I want to start with the question on liability rebate. I know my colleague started on that, and I'd like to clean up one particular point on it, if I may.

    The liability rebate is available to parties undertaking cleanup after October 18th, 1985, under this bill; is that correct?

    Ms. SCHIFFER. It's a date in October. Right.

    Mr. BORSKI. Would these parties be entitled to rebates regardless of whether the parties knew that the actions they were taking could result in risk to human health, even if the actions were illegal?

    Ms. SCHIFFER. They would be entitled to rebates if they knew what they were doing when they put wastes into the waste site.

    There is an exemption from the rebates for so-called ''illegal activity'' as it is defined in the bill, but the way it is defined in the bill, to the best of our ability to read it, it requires that a court have determined that that activity is illegal and that it has done it within a statute of limitations.

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    What we basically think that means is you're talking about a very, very small, little window of exemption. So basically there would be a lot of people who hadn't necessarily been complying with the law when they put those wastes into the landfill and, nevertheless, they would get the rebate.

    In addition, we'd spend a lot of time litigating, i.e., using lawyers, over whether that illegality provision had been met. So it is both not fair and not efficient.

    Mr. BORSKI. And you've testified before this subcommittee in the past, as numerous other people have throughout the years. A couple of the most-heard complaints of Superfund, I guess, are that too much money is spent on lawyers rather than cleanup and it takes too long to clean up these sites.

    You've testified that in H.R. 2500 that would create numerous new opportunities for litigation. I'm very concerned that these provisions will result in more money for lawyers and less cleanups.

    I'd like you to elaborate on the impact that some of the bill's new opportunities to litigate will have on the pace of cleanup.

    First, elimination of the current ban on pre-enforcement and judicial review of remedies prior to their implementation—will that slow down or speed up cleanups, in your view?

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    Ms. SCHIFFER. Will slow it down and it will be a lawyers' relief act. I'm a lawyer, so I always hesitate to make this criticism, but, in fact, we do want to get the lawyers out of this system.

    That pre-enforcement review bar—in other words, it's saying that when EPA picks a cleanup, nobody can go to court to challenge the cleanup until they complete doing the cleanup or until EPA completes doing the cleanup, was put into the act in 1986. The purpose of it was to be sure that cleanups got going, that people couldn't go to court and get cleanups stopped or slowed down while a court took its time deciding that we'd move ahead with cleanups.

    Taking out that provision, which H.R. 2500 does, would slow down cleanups and increase the number of lawsuits and lawyers.

    Mr. BORSKI. When people complain currently about too many lawyers, are they mistakenly believing that it's Government lawyers involved in this?

    Ms. SCHIFFER. I think they're quite mistakenly believing that it's Government lawyers. Now, I certainly have lawyers who work on those cases, though I have to say the vast number of our cases we settle, and it's our lawyers working on getting settlements in these cases.

    But what is true is I think of it as three different parts of what goes on now: the Government goes to the potentially responsible parties and says, ''We want you to do the cleanup or we want to recovery costs.'' That's the first tier.

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    Then the potentially responsible parties sue each other for contribution costs. That's the second tier.

    And then the third tier is the PRPs look to their insurance carriers to reimburse for cleanup costs, and that's a third tier which has a lot of litigation costs in it.

    The first tier, which is the Government against the PRPs, is quite efficient and is not the lawyer-intensive piece of this. The contribution piece is more lawyer-intensive, and I think that the approaches that we've taken toward improving Superfund, both administratively and by H.R. 228, are designed to fold together those first and second tiers, and, by doing that, to significantly reduce lawyer costs. But the big lawyer costs are not the Government going after PRPs. That's an efficient part of this system.

    Mr. BORSKI. The new requirement that EPA revisit over 1,000 cleanup decisions at more than 700 sites—will that slow up or speed up the cleanup process?

    Ms. SCHIFFER. It would sure slow up the cleanup process. I think that the chart to my right that we've shown shows what would happen if all of those rods were reopened by litigation. You would go from the pipeline that moves a lot of sites toward the end of the pipeline, which is what Administrator Browner has done, to a pipeline that sucks them all back to the litigation stage rather than the moving ahead toward cleanup stage.

    Mr. BORSKI. Mr. Chairman, I don't know how you want to proceed. I have a few more questions. Are there other questions at this point that I should yield to?

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    Mr. LATOURETTE. I think we'd like to move on to the next panel, but if you have a few more minutes and you can wrap it up we'd appreciate that.

    Mr. BORSKI. Thank you. I appreciate that.

    Third, the new cleanup standards, such as that remedies protect against risks that are realistic and significant through cost-effective and cost-reasonable means, that the incremental cost of a remedy be justified and reasonably related to the incremental risk reduction benefits of the remedy, and that, for the cleanups of the environment, remedies protect against realistic and significant risks to ecological resources that are necessary to the sustainability of a significant ecosystem and will not interfere with a substantial, functional ecosystem. Will that slow down or speed up cleanups, in your view?

    Ms. SCHIFFER. There is an expression in the law of res ipsa loquitur, which means ''the thing speaks for itself.'' I think the fact that it took you a while to read it that long makes clear that lawyers would have a field day with that language. It would take a very long time to get people to be clear about what it meant, and it would be the basis for people to litigate time after time about whether the cleanup standards met the statute.

    Mr. BORSKI. Fourth, the new exemption for so-called ''municipal landfill sites,'' I know that is well-intended but, again, will that slow down or speed up cleanups, in your view?

    Ms. SCHIFFER. Again, it will slow them down, not speed them up. It is well-intended, and, as Administrator Browner indicated, we would look at a carve-out for legitimate, real municipal landfills, which is what people are really getting at. However, as it is defined in H.R. 2500, it talks about municipal landfills that are authorized by a State or local government, and we don't know what that means. We think that what it could well mean is, where a municipality sent waste there, it would be seen as authorized. That will lead to some pretty startling results.

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    It means, for example, at the Lipari Landfill, which I discussed with Mr. Menendez, that because there was some municipal waste at that site, that entire site, which was, after all, a site with a lot of industrial waste brought there, it could well be exempted.

    What it means to be exempted is it would have to be paid for by the Superfund, not by the polluters.

    Another surprising example that could fall in because of the breadth and lack of clarity in this definition is, believe it or not, Love Canal, the site that actually started the whole Superfund process. The reason for that, again, is at Love Canal there were some municipal wastes that were brought there.

    So we think that the way the carve-out has been done will lead to a lot of litigation and could well mean we just don't have the money to pay for those cleanups that might be covered by it.

    Mr. BORSKI. Are there any other provisions that you'd like to very briefly mention that will affect the amount of litigation on this bill?

    Ms. SCHIFFER. Let me just——

    Mr. LATOURETTE. If we can have it, it will be very briefly. If it's going to be a lengthy dissertation, maybe you could supply it in writing to the committee. If it is a brief thing we'd love to hear it.

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    Ms. SCHIFFER. If I——

    Mr. BORSKI. I beg the Chair's indulgence. You've been very generous of it, and I just have one final question real quickly, so you if want to submit that in writing, this is a very important question that I will even interrupt myself for.

    Would you recommend, at this point, if this bill were to come before the President, would you recommend a veto?

    Ms. SCHIFFER. I would recommend a veto of a bill that passed in the form of H.R. 2500 because I think it slows down rather than speeds up cleanups. It is a lawyers' relief act. It's very expensive. It is not accomplishing for the American public what a strong and effective Superfund program should accomplish.

    Mr. BORSKI. And Mr. Hall?

    Mr. HALL. Yes. Commerce Department would also recommend a veto. This would shift the cost away from the polluters and into the taxpayers.

    Mr. BORSKI. Mr. Chairman, I thank you very much for your indulgence, and I thank the witnesses.

    Mr. LATOURETTE. Thank you, Mr. Borski, and thanks to the panel very much.

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    Now I'd like to call up our third panel for this morning. Next joining us this morning will be: Mr. James C. Colman, who is the assistant commissioner in the Bureau of Waste Site Cleanup in Boston, Massachusetts; Mr. Randolph Wood, the director from the National Governors Association, director of the Nebraska Department of Environmental Quality located in Lincoln, Nebraska; Mr. Gary Spielmann, executive deputy commissioner of the Department of Environmental Conservation from the State of New York; Mr. Michael A. Kahoe, deputy secretary of the EPA in the State of California; and lastly, Mr. Alan C. Williams, assistant attorney general, representing the National Association of Attorneys General from the State of Minnesota.

    Gentlemen, thank you very much for joining us this morning. We look forward to your opening remarks. If we could, we'd like to start with Mr. Wood.

TESTIMONY OF RANDOLPH WOOD, DIRECTOR, NEBRASKA DEPARTMENT OF ENVIRONMENTAL QUALITY, LINCOLN, NE, ON BEHALF OF THE NATIONAL GOVERNORS' ASSOCIATION; JAMES C. COLMAN, ASSISTANT COMMISSIONER, MASSACHUSETTS BUREAU OF WASTE SITE CLEANUP, BOSTON, MA, ON BEHALF OF THE ASSOCIATION OF STATE AND TERRITORIAL SOLID WASTE MANAGEMENT OFFICIALS; GARY L. SPIELMANN, EXECUTIVE DEPUTY COMMISSIONER, NEW YORK STATE DEPARTMENT OF ENVIRONMENTAL CONSERVATION, ALBANY, NY, ACCOMPANIED BY DAVID STERMAN, DEPUTY COMMISSIONER FOR ENVIRONMENTAL QUALITY; MICHAEL A. KAHOE, DEPUTY SECRETARY, CALIFORNIA ENVIRONMENTAL PROTECTION AGENCY, SACRAMENTO, CA; AND ALAN C. WILLIAMS, ASSISTANT ATTORNEY GENERAL, STATE OF MINNESOTA, ST. PAUL, MN, ON BEHALF OF THE NATIONAL ASSOCIATION OF ATTORNEYS GENERAL

    Mr. WOOD. Thank you, Mr. Chairman.

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    For the record, my name is Randolph Wood. I'm director of the Nebraska Department of Environmental Quality. The testimony I'm presenting today is on behalf of the National Governors Association. My boss, Governor Nelson of Nebraska, serves as vice-chair of the Natural Resources Committee of the National Governors Association.

    Over the past months, NGA has been following the Superfund reform legislation, and we've been attempting to represent the collective interests of the States. We'd like to express appreciation to you and to the staff for the fact that States have been consulted on an intensive basis as H.R. 2500 was drafted and would like to continue to work with you.

    We recognize the interest of the States and we think that, as H.R. 2500 goes forward, we can provide to you some perspectives and some thoughts that will help it address our concerns.

    I want to address about six particular issues very quickly in H.R. 2500.

    The first is remedy selection. The remedy selection provisions of CERCLA are an important concern for the State. The States believe it is essential to have the flexibility to implement their own remedy selection as a part of the delegation process proposed in H.R. 2500.

    The National Governors Association has consistently supported offering the States the option of authorization or delegation because, in most cases, State remedy selections tend to be far more streamlined than the Federal process.

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    Governors agree with the use of cost/benefit analysis and risk assessment to achieve these goals, as long as they are based on generally-accepted and uniform procedures, including public participation, and so long as they acknowledge both non-quantifiable as well as quantifiable benefits and cost.

    The overall long-term cost and benefits of the remedy need to be considered. The language in H.R. 2500 on cost-effectiveness should not preclude choosing remedies that represent permanent solutions or that do not call for treatment of contaminated material if those options are considered to be cost-effective and protective of human health and the environment not only for today but in the future.

    The second issue is the preemption of State standards. The provisions of H.R. 2500 dealing with the preemption of State-applicable standards represents one of the biggest concerns that States have. States adopt standards which are designed to be State-specific, looking at the geographic and climatic conditions, and to provide necessary protection of the public health and the environment. State standards are applied consistently at State or non-NPL priority sites, and there is no reason, in our mind, why NPL sites within a State should be treated differently or involve remedies which are less protective of human health and the environment than the State has determined to be appropriate in that State.

    I would point out that differential treatment is a significant equity issue. We have non-NPL sites that would be meeting one set of standards and NPL sites meeting another set.

    The third problematic area that we'd like to address is the pre-enforcement judicial review and the possible reopening of records of decision where the remedial action has been completed.

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    By allowing judicial review to occur after a ROD is signed, potential responsible parties would be encouraged to sue in order to delay the start of cleanup. In the meantime, no remedial progress is made on these sites until the cases are settled in courts.

    In general, we believe this provision will lead to the dismissal of many appropriate and cost-effective remedy decisions for alternatives that are less costly but perhaps not as permanent or as desirable to the communities near the site.

    The fourth issue is liability. Governors realize that the issue of liability has been a contentious area in Superfund reform proceedings, and we support a repeal of retroactive liability at municipal landfills. We believe that addressing the liability of De Minimis and De Micromis parties, lenders, and prospective purchasers and municipalities is a positive step, and we agree that relief of those parties reflects a sense of equity and would minimize transaction costs and extensive litigation.

    The fifth issue is brownfields and voluntary cleanups. We appreciate the efforts made to provide incentives for brownfield redevelopment, and we believe that providing a release to voluntary parties from Federal liability when they remediate non-NPL sites will facilitate the cleanup of thousands of sites that would never receive Federal funding.

    The States see no need for the U.S. Environmental Protection Agency to review and approve the contents of State brownfield laws.

    The sixth issue is the State role. The governors appreciate the efforts that have been made to give States the opportunity to handle parts of the Superfund program. Many States have developed strong programs to implement practical and cost-effective solutions to hazardous waste problems. I'd like to emphasize the importance of changes that may be made to other parts of the statute, especially with respect to liability and remedy selection. Changes in these areas would greatly influence State decisions on whether to take authorization. In addition, changes in the Federal program may have ramifications on non-NPL sites.

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    As I mentioned earlier, the preemption of State law is likely to discourage States from pursuing authorization.

    In conclusion, H.R. 2500 does include some very important and favorable measures for the States, and we'd like to continue to work with you as you move forward.

    I'd be happy to answer any question.

    Mr. LATOURETTE. Mr. Wood, thank you very much for your observations.

    I would remind all of the witness to observe the lights as best as possible and the 5 minutes. All of the texts of your remarks will be included in the record in full. No one will be deprived of the opportunity to have that opportunity.

    Mr. Colman, we'd like to hear from you.

    Mr. COLMAN. Thank you, Mr. Chairman and committee members.

    I'm James Colman, assistant commissioner for Waste Site Cleanup in the State of Massachusetts, and I'm here testifying this morning on behalf of the Association of State and Territorial Solid Waste Management Officials.

    We appreciate the opportunity we have had over the last several months to work with your staff and the openness shown by them.

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    As a general matter, we believe that H.R. 2500 can be implemented and can provide for continued protection of human health and the environment, although, as we say in our written testimony, we don't share all the goals that are embodied in that bill.

    I'd like to hit six major points.

    The first is remedy selection. We recognize and agree with the need to contain costs and streamline the remedy selection process. To that end, we had advocated a remedy selection process based on national standards which uses a disproportional cost test formula rather than the more time-intensive cost/benefit analysis. Nonetheless, we believe the five factor test can be implemented as long as the cost of benefits are arrayed over the life cycle of the site and as long as the balancing factors are considered prior to the commencement of the cost/benefit test.

    There are two provisions of this title which we believe will, unfortunately, lengthen the cleanup process. They have been discussed a lot already this morning. The first is judicial review of RODs and the second is reopening of old RODs.

    In Massachusetts we have RODs that are up to 12 years old. I think it would be a disservice to the communities in which those RODs have already—a lot of work has already been done to reopen and to reopen all the anxiety and all of the issues and angst that goes along with that, so we think that's really broad and will create a lot of problems for a lot of our citizens.

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    Our most important concern about this title is the preemption of applicable State cleanup standards. Over 20 States have promulgated cleanup standards which apply to all sites in their State except, under this title, national priority list sites.

    For example, in Massachusetts we are going through a very extensive public process now to determine which areas of groundwater should be protected for future drinking water supplies versus those which do not need to be protected. The problem we would have is, once the State decides that and says this particular area should be protected for future drinking water supplies, we would make every State site and the responsible parties for those sites clean up to drinking water standards.

    One national priority list site in that area which did not have to clean up to drinking water standards would wipe out all the work and all the money that had been spent at those State sites, which we think would be extremely unfortunate.

    Liability—as State waste managers, our principal concern is ensuring timely and effective cleanup, and that takes money. The current liability scheme does provide that funding, but we agree it is not entirely equitable. Therefore, we, in general, agree with adjustments you have made in this bill; however, we do think it should be explicitly stated that States will not be required to cost share any retroactive liability reimbursements if that stays in this bill.

    Brownfields and voluntary cleanups—we like this title for two main reasons: first, it would provide funding to States to develop and expand voluntary cleanup programs; and, secondly, it would provide a way to remove one of the major obstacles to redevelopment in Brownfield areas, the specter of Federal liability which cannot now be removed by the State.

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    This title would take care of this problem and would, overall, support the very creative and innovative actions that States across the country are already taking.

    Natural resource damages—in general, while H.R. 2500 places restrictions on trustees, it will still enable trustees to continue to provide a level of primary restoration to injuries for natural resources.

    We have three recommendations which we think would improve this title. One is to clarify the statute of limitations to give sufficient time to trustees to fulfill their responsibilities and to give certainty to PRPs; second, to provide trustees with access to fund money to perform assessment so trustees have the resources to do their job in a timely and effective manner, which serves everyone's interest; and, third, to clarify definitions of cost-effective and cost-reasonable to make sure they are only applied to restoration alternatives which have already been screened to ensure they are effective and to make sure they include the full range of lost benefits, including, for example, benefits which continue to be lost until restoration is completed.

    The fifth point is State role. We like this title. We think that the delegation process shows that Congress has recognized that State capabilities have grown enormously over the last several years. We believe the new cost share formula would remove the tension between up-front construction costs and long-term O&M.

    We do have a couple of concerns that it does not include authorization and that we do not agree that NPL list should be capped. We think there may be up to 1,700 more NPL-caliber sites out there which will warrant Federal resources.

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    Finally, we like the title nine, remediation waste. We believe that remediation waste can be adequately managed by Superfund site managers without the imposition of burdensome rules.

    We look forward to continuing to work with you and your staff, and we trust, as these reforms take shape, we'll be able to find this bill implementable, and we look forward to it.

    Thank you.

    Mr. LATOURETTE. Thank you very much, Mr. Colman.

    Mr. Spielmann.

    Mr. SPIELMANN. Good morning, Mr. Chairman. Actually, good afternoon.

    Members of the committee, I want to thank you for providing me with the opportunity to testify today as New York's representative on the pressing issue of reauthorizing CERCLA. Your intent to incorporate into this process many of the lessons learned from implementing the present statute is certainly warranted.

    Accompanying me today is David Sterman, our deputy commissioner for environmental quality and remediation.

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    I would like to briefly summarize the message that Governor Pataki asked me to bring to you today.

    We believe that CERCLA is in need of a thorough overhaul, and we greatly appreciate your efforts to improve this statute. We need a revised CERCLA that assures flexibility, adherence to strict performance standards, a greater role for the States, and adequate funding.

    We need to more effectively address the fairness issue created when responsible parties are required to pay more than their fair share of cleanup costs through use of mechanisms to allocate liability, De Minimis settlements, and increased access to the trust fund to pay orphan shares.

    I want to note for the record that New York also has its own Superfund program. Governor Pataki believes that our program is one of the best in the Nation at remediating hazardous waste sites.

    Launched in 1978 to deal with the emergency of Love Canal in western New York, our hazardous waste remedial program has matured into a Statewide effort to clean up more than 750 sites that threaten the health of our people, our economy, and natural resources. To date, our department has succeeded in remediating 222 of these sites. Our efforts in New York have provided us with a wealth of information on how to achieve an effective, well-managed hazardous waste remedial program.

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    One of our key concerns is that Congressional changes to CERCLA can create pressure for similar revisions to State law. That makes your decisions on CERCLA even more important to us.

    I won't address my comments specifically to any one proposal before Congress, but instead will focus on the most important issues and concerns in the current law and areas where we believe changes are most urgently needed.

    The first is retroactive liability. We recognize that many Members of Congress believe that retroactive liability should be repealed, either for actions that occurred prior to 1987 or 1981. We cannot share this believe because of equity issues and because of the tremendous potential financial implications for States such as New York.

    Repeal of retroactive liability would benefit those who either intentionally or unintentionally disposed of hazardous substances improperly but have not yet assumed their responsibility for the cleanup.

    The benefit that these polluters would receive should be balanced against the actions that many others have taken to address hazardous substance sites and who would not be unfairly penalized by a repeal of retroactive liability.

    In New York we estimate that private companies have spent $1.7 billion on site cleanups.

    Furthermore, States such as New York would likely assume an enormous financial burden if retroactive liability were to be repealed. In New York State, alone, the liability just to remediate responsible party NPL sites could approach $60 million. If Congressional repeal of retroactive liability leads to efforts to similarly repeal it on the State level, then our exposure could reach as high as $5 billion. These costs, given the many other demands on New York's financial resources, could not be sustained.

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    We believe, however, that Congress should consider a targeted repeal limited to specific categories of sites. For example, there are municipal landfills in New York which have suffered from disposal of hazardous substances from a variety of sources. For these sites, an individual responsible party cannot be singled out, and applying retroactive liability simply results in protracted lawsuits that make cleanup efforts longer and more costly.

    We also strongly support the concept of fair share or apportioned liability to ensure that the liability of PRPs is tied to equitable factors such as the amount of hazardous substances for which the party is responsible.

    States' role and costs—one of the most legitimate complaints about Federal Superfund is its slow pace in cleaning up inactive hazardous waste sites. One way to enable quicker cleanups would be to facilitate EPA's delegation or authorization of Superfund to the State governments. In New York we have elected not to assume the lead because the national contingency plan places too many restrictions on us, including Federal retention of ultimate remedial decision-making authority.

    Flexibility is essential to State assumption of Federal Superfund site remediations. Delegations and authorizations should be structured to minimize the jurisdictional and functional overlap between EPA and the delegated State agency.

    Along with full or partial delegation or authorization, Congress must provide the States with adequate funds to remediate sites. New York simply does not have the funds to assume the full burden of remediating Federally-delegated sites, given the number of sites already being remediated by our State Superfund. State cleanup of Federally-designated sites would be cheaper and faster than occurs now.

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    Our department recommends including in House CERCLA legislation a provision to establish 2-year program grants to States for administration, site assessment, and listing enforcement and emergency removal activities.

    Voluntary cleanups is another issue. Deciding the intended use of a remediated site must be included as part of the process for establishing site-specific cleanup standards. Many Superfund sites are located in industrial areas, and site remediation efforts should not be expected to meet unrealistic land use expectations.

    Under Governor Pataki's direction, New York has embarked on a program to create incentives for recycling brownfields and tapping their latent economic development potential. This initiative, which is still in the formative stage, will foster remediation of brownfields and will reduce encroachment on the remaining unspoiled areas of the State.

    We encourage Congress to establish a mechanism that provides assurance to volunteers that such remediated sites will not fall under any Federal remedial program at some later date, and thereby necessitate further and possibly redundant site assessment and remediation projects.

    The department strongly supports amending CERCLA to authorize a Federal voluntary cleanup brownfields program that would complement rather than duplicate or encumber State efforts.

    Natural resource damages—many Members of Congress have shown an interest in capping NRD claims at $50 million and in eliminating retroactive liability for pre-1980 disposal sites. In New York State the highest NRD settlement that we have made to date was $15 million; however, the department believes that it's conceivable that damages in excess of $50 million could occur as a result of large-scale future releases of hazardous substances.

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    If Congress chooses to limit NRD claims to $50 million, such limits should only apply to past disposal events.

    Remedy selection—as a starting point for setting site-specific cleanup standards, a single national risk exposure goal should be developed for all States. Such a goal would enhance the predictability and consistency of the remedy selection process and lessen the debates that currently encumber remedy selection. It would also level the playing field between New York and other States.

    We encourage Congress to authorize cleaning up a site to unrestricted use conditions only when the costs to do so are reasonably equivalent to other measures.

    In line with this recommendation, with some qualification we support removal as the preference for permanent remedies. If Congress approves such an approach, you must give consideration to the cost share that States will pay for operation and maintenance of an NPL site after remedial activities end. The department advocates limiting this amount to 10 percent of the operation and maintenance costs. We strongly object to a requirement that States pay the incremental cost of meeting any State standard that is stricter than Federal standards.

    Finally, New York State strongly opposes reopening RODs to determine if lower-cost remedies could achieve the same result. The proposal could easily result in so much litigation at substantial cost to the States that remedial actions would not occur.

    As you work to improve the Federal Superfund program, bear in mind the importance of States like New York to this program. Governor Pataki believes that the role of the States should be encouraged and strengthened in a reauthorized CERCLA statute.

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    Along with a reinvigorated role for the States, Congress should augment legislation to ensure that it includes proposals such as a limited repeal of retroactive liability, improved remedy selection process, program delegation to the States in a manner that enhances their roles, and encourages voluntary cleanup brownfield programs. Cost consideration should play a significant role in this effort.

    I appreciate the opportunity you've given the State of New York to discuss this issue with you today, and encourage you to continue your dialogue.

    Thank you.

    Mr. LATOURETTE. Thank you, Mr. Spielmann, and thanks to Governor Pataki.

    Next we're going to hear from Mr. Kahoe, deputy secretary of the EPA in California.

    Mr. Kahoe.

    Mr. KAHOE. Mr. Chairman, on behalf of Governor Wilson, I appreciate the opportunity to give the State's views on H.R. 2500.

    Overall, we see this as a very significant step in reforming CERCLA. The bill begins to bring together a number of the right elements into a framework to provide comprehensive reform to this program, but the question in our mind is: does this particular framework—will it, in fact, work?

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    Really, there are three questions that we want to address. The first is: will it reduce total cost? Will it speed cleanups? And third, will it place an eventual end to the Federal role and empower States to run this program as originally intended? At this point we really question whether the bill, as it is particularly written, will, in fact, give us an affirmative answer to all three questions.

    While most of the individual elements of H.R. 2500 make sense, California's experience with Federal implementation of good legislative intentions leaves us far from assured that the reforms this Congress seeks will materialize in the form of more efficient and cost-effective site cleanup. Really, the answer we would see is it would dramatically improve those three questions, as was mentioned by some of the previous witnesses, which is to include the concept of State authorization.

    Given the State's current experience and the fact that, at its foundation, Superfund is a land-use decision-making program, State authorization we feel really provides the best guarantee that Congress will get the reform it seeks in practice.

    The first question: will this bill reduce costs? While we have some questions on the specific wording of title one, the elements of remedy reform really track closely with our views regarding what is necessary to move sites through the cleanup process.

    While liability clearly remains a concern, our experience with our voluntary programs and other reforms really demonstrate that many responsible parties will come to the table and start financing cleanups if they are certain of three things: single point of decision; how and, more importantly, when decisions will be made; and, third, a liability that will end once the approved remedial actions are in place.

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    California and other States now provide these assurances under our State programs. H.R. 2500 offers the same assurances, but the current provisions will not immediately result in real-world cost savings.

    As with any other Federal program, regulations will have to be promulgated. Given the contentiousness of the Federal rule-making process, this likely will be a long period, during which little progress at NPL sites is likely to occur.

    H.R. 2500 also asks EPA to provide these assurances by taking what the States are already doing now and then revising these practices into a consistent national protocol. Again, our experience with EPA in this arena has been less than reassuring. National consistency is a worthy goal, but it works best when the Federal Government sets the standards and leaves it up to the States to decide how best to achieve them.

    We have too many examples of where the Federal Government has chosen to tell us not only what to do, but how to do it, as well. The end result generally has been procedures that apply the lowest common denominator with greater overall costs. If the lower costs are the intended results, then the answer is: don't redo it, use the reform States have already put in place.

    The second question: will H.R. 2500 speed cleanups? Clearly, once the provisions of this bill are in effect, cleanup decisions likely will be expedited. They use a lot of the reforms the States are already doing. But, again, the question is when this will happen. The history of Federal environment legislation is not exactly marked by timeliness. Through State authorization, reforms can be implemented next year.

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    By meshing NPL decisions with functioning State remediation programs, Congress can avoid the procedural delays involved in the Federal rule-making process. More importantly, it can also avoid indirect delays of action on both NPL and, as we're finding now, in non-NPL sites as responsible parties wait to see what the rules will be.

    It also forestalls final cleanups in its treatment of State standards, as mentioned the need to address State-applicable standards. Given the current treatment, the end result is not that hard to see. H.R. 2500 reforms will complete the paperwork of removing sites from the NPL but will not clean the sites and return them to productive use if, in fact, under applicable laws the site retains its toxic stigma.

    H.R. 2500 does deal with State standards when applied to Federal facilities. We think this is a model that should be looked at at other NPL sites, as well.

    The final question: does H.R. 2500 put an eventual end to the Federal role? This is the area that we see the bill is weakest. Just four points on this.

    States are able to take NPL sites over under a delegation agreement, but only if they agree to run the program according to the Federal rules. This means that for most States, like California that's running two programs—one for NPL sites and one for the others—and the added costs and complexity means, at least for California, we would not choose delegation.

    Cost reimbursement proposal further is a disincentive to take on delegated sites in that costs are reimbursed only as they occur. This is pretty much asking the States to assume money will be there when they come in. It does not allow for long-term planning.

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    More importantly, the funding structure will retain USEPA oversight of individual sites. Although the bill removes oversight on the program end, the requirement that costs have to be reimbursable based on the Federal regulations mean the oversight will be returned on the fiscal end to EPA.

    Title three of this bill, voluntary program brownfields, probably provides for the most direct expansion of the Federal role. What we see of primary value in this title is the release of Federal liability for sites handled under State programs, but this is something we're working out administratively with region nine under the existing statute.

    Instead of applying this measure voluntarily or as a matter of State right, title three would exact a price of Federal review over State laws that are now solely within the purview of the States, and we oppose this expansion of Federal authority.

    Finally, on this issue of whether the Federal role will end, the bill does allow for additions to NPL. We really wish to raise the issue that this would be a place to start looking at ending the Federal role, as California and other States have gone the route of trying to keep sites of the NPL simply because we want to expedite the cleanup.

    Rather than placing additional future demands on the fund, we would prefer to see the bill support the States that have, in essence, already taken on NPL-quality sites by redirecting those resource to other issues of concern such as State standards, State liability, and State cost shares.

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    Finally, again, what we really prefer to see as an addition to the bill is a true State authorization. When faced with the proper placement of responsibility in the other environmental statutes, Congress consistently has come to the same conclusion: implementation needs to be by the States and, wherever possible, by local governments to ensure that the programs are responsive to community concerns and to ensure direct accountability for performance.

    CERCLA is the primary exception to this rule and, given the fundamental land use nature of this statute, stands out as an aberration among the environmental laws. The Clean Water Act and Clean Air Act have both shown tremendous progress precisely because they are implemented by the States and local governments.

    The full answer to cutting costs, speeding decisions, reducing the Federal role is the same one this Congress has found in other areas: basically, give this authority to the States and do it through authorization realized in existing State programs.

    Thank you.

    Mr. LATOURETTE. Thank you very much, Mr. Kahoe.

    Mr. Williams, before we hear from you, there is a vote out on the floor. We're going to call a short recess and get back to you and look very much forward to hearing your remarks and Minnesota's experience when we return.

    The committee will be in recess for 20 minutes.

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    [Recess.]

    Mr. BOEHLERT [resuming Chair]. I apologize to all of our witnesses who have traveled far to be here, but this is the way this system works. We've been engaged in very important legislative activity on the floor, and I was totally and personally involved in it, so I'm just back here in the chair and we're waiting for a couple of other colleagues to be here. They should be here momentarily.

    Mr. Colman, I understand you've got some time constraints?

    Mr. COLMAN. Yes, I do.

    Mr. BOEHLERT. Do you have to leave?

    Mr. COLMAN. Any minute now.

    Mr. BOEHLERT. You can go. We've got your testimony, which we appreciate. We can follow through with some written questions to you if Members so desire. I think you can trust your colleagues to be as concerned as you are about what we're about.

    Mr. COLMAN. I sure can.

    Mr. BOEHLERT. All right. Thank you.

    Mr. COLMAN. Thank you very much.

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    Mr. BOEHLERT. We'll get going just as soon as—they'll be here momentarily.

    Mr. Williams, you may start. Of course, your full statement will appear in the record in its entirety. I would hope you would be responsive to any written questions we might choose to send you following your testimony.

    Mr. WILLIAMS. By all means.

    Mr. WILLIAMS. Thank you, Mr. Chairman, and thank you for the opportunity to testify today.

    I'm here to speak for Minnesota Attorney General Humphrey, as well as the National Association of Attorneys General to the extent that NAAG has taken positions on specific issues or principles.

    I want to make clear at the outset that State Attorneys General and NAAG support reform of Superfund. We recognize there have been problems with the program that need to be fixed. We have also, however, seen a lot of success in Superfund, especially under strong State Superfund programs like those in New York, California, and Minnesota, and we think these programs can serve as a model for positive change.

    We think H.R. 2500 contains important steps toward reform; however, our overall evaluation of the bill is that it does not make cleanup speedier or more effective, nor would it create a fairer system for spreading the cost of cleanup. Therefore, as currently drafted and without some major revisions, we believe H.R. 2500 does not pass the test for successful Superfund reform.

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    From the State Attorneys General perspective, the bill falls short in several major respects.

    On the liability issue, 43 State attorneys general reaffirmed their support for retaining so-called ''retroactive liability'' in CERCLA in an April, 1995, letter to Senator Smith. While we understand that H.R. 2500 does not repeal retroactive liability, it does shift a large portion of the cost of cleanup attributable to pre-1987 activities away from those who are connected to the contamination and makes those costs a public responsibility.

    We think that is an unfair shift of cleanup costs to the public, and we think that shift is based on a faulty understanding of liability law.

    The flaw in the argument on retroactive liability is the underlying premise that all actions prior to 1980 or 1987 that led to releases of hazardous substances were legal when those actions occurred. This premise is faulty, in particular, for facility owners and operators.

    Long before the passage of Superfund, these parties were subject to legal sanctions under State common law and statutory law if pollution on their property injured the rights of their neighbors or the public. CERCLA properly imposes liability for this past pollution, and it is unfair to shift that liability to the public, especially if the shift is financed, as we fear it may be under H.R. 2500, by reducing the effectiveness of cleanups.

    This leads to our comments on remedy selection, and this is the issue which we thinks goes to the heart of Superfund reform.

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    The remedy selection provisions of H.R. 2500 are objectionable to State Attorneys General for a number of reasons, most importantly because they preempt State environmental standards.

    The bill essentially exempts NPL sites and other sites where EPA is taking action from cleanup standards under all existing State and Federal laws that now regulate the quality of ground and surface water and that would govern the construction and operation of a remedy.

    Instead of reform, H.R. 2500 creates a new highly-complex and very confusing approach to remedy selection that we think will lead to more legal disputes at all levels, beginning with the adoption and challenge of new EPA regulations and ending with judicial review of specific remedies—both the newly-selected remedies and already-selected remedies—under the reopener provisions.

    This will certainly delay and create additional litigation, and that delay and litigation is virtually guaranteed by the provision in H.R. 2500 that, for the first time, opens the door to court review of remedy selection before a remedy is enforced.

    Finally, State AGs are very disappointed in the State provisions of H.R. 2500 because, in addition to preempting State cleanup standards, the delegation of remedy selection to the States under H.R. 2500 really imposes a Federal straightjacket on the States instead of freeing them to apply their streamlined processes and to promote innovative cleanup methods at NPL sites.

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    My written testimony goes into more detail on these and some other concerns—major concerns that State Attorneys General have with this bill. Without major revisions, we believe that the bill does not meet the test for successful Superfund reform. We are prepared, however, to work with you and your staff on the changes that are necessary to refocus the Superfund reform effort on the fundamental goals of the program; that is, speedier, more-reliable cleanup that protects our communities and puts these sites back to productive use, and an overall fairness in spreading the cost of cleanup.

    Thank you.

    Mr. BOEHLERT. Thank you very much, Mr. Williams. I've been around here long enough to know that I'm—the first draft, and that's what we have before us really with H.R. 2500—no bill dealing with a very contentious issue as significant as Superfund is ever what ends up to be the final product, and with good reason. We have open hearings like this. We listen to the expert testimony of people like you, and we evaluate what you say. Some of it we agree with wholeheartedly, and others we think are all wet, but the process works as it was designed, and so I thank all of you for appearing.

    Let me go to the first question, which I'll ask Mr. Williams. You know, Minnesota's law provides for State cleanup of all municipal landfills, similar to H.R. 2500, and it also requires the PRPs to assign their insurance claims to the State. It is my understanding that the attorney general was then to look at the viability of pursuing these claims. Can you tell us about the status of that review?

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    Mr. WILLIAMS. Yes, I can.

    Mr. BOEHLERT. Will the State be pursing claims against the insurance companies?

    Mr. WILLIAMS. Mr. Chairman, our legislation calls in the first instance for a kind of settlement, a kind of global settlement between the State and the insurance companies, and that's what we intend to pursue as our first priority.

    Litigation—pursuing these claims by the attorney general in the litigation forum is certainly not our preference. We think that there will be a way to resolve those claims short of litigation, and the law actually provides one mechanism for that. Our office is in the process of studying other potential mechanisms to do that, and we are including insurance companies in those discussions.

    Mr. BOEHLERT. Am I correct that your testimony indicated you are opposed to partial repeal of retroactive liability?

    Mr. WILLIAMS. Yes. We think it just is an unfair spreading of the cost of cleanup. We think that retroactive liability really—the arguments about retroactive liability ask the wrong questions.

    Mr. BOEHLERT. You don't want us to be consistent with what's being done in Minnesota, then?

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    Mr. WILLIAMS. We would applaud your being consistent with what we do in Minnesota because we have really three different kinds of programs, depending on what we're trying to accomplish.

    We have a strict liability with retroactive liability scheme that works for our major, high-priority industrial and commercial Superfund sites. We have a separate program that's very carefully tailored to our permitted municipal solid waste sites that have been closed, are no longer accepting waste, and our legislature did not decide to take money out of our existing Superfund to take care of this sites. They passed legislation that will raise $250 million in new revenue in just the State of Minnesota over the next 10 years to do that.

    There are a lot of other things in our program that are different from the way it is being proposed here.

    Mr. BOEHLERT. I hope you appreciate what the objective is for partial repeal of retroactive liability. I have been among those who have been arguing with my colleagues who have been all for repeal of retroactive liability completely. I think it's unworkable and we can't pay for the program. But I do recognize there is some validity to the argument that at least partial repeal will do a number of things.

    One, take the small communities off the hook, 250 landfills, a lot of small business people across the country. That eats up a disproportionate share of the funding and transaction costs.

    We're trying to be reasonable and have a program that's tailored in different phases to different needs.

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    Let me ask some of the others what you feel about—and I don't have the advantage of reading your testimony, so I apologize to that. And I do want to say to Mr. Spielmann, thank you so much for coming. I know the governor wanted to come, and I know Mr. Legatta, the commissioner, wanted to come. In both instances they are in New York city beaming as proudly as you and I are right now because we've resolved the crisis in the New York City watershed.

    Mr. Oberstar, you'll be so happy to hear that.

    They brought together the governor and the mayor and the watershed towns and the environmental community. Everybody has worked long and hard, and finally we're able to announce today a resolution of that problem.

    Mr. OBERSTAR. And it only cost $1 billion.

    Mr. BOEHLERT. That's not much.

    Mr. OBERSTAR. It would have cost them $5 billion.

    Mr. BOEHLERT. That's exactly right. Mr. Oberstar makes a good point. Instead of spending $5 billion, we're going to spend maybe $1 billion to accomplish the same thing. Looks like a pretty good deal to me, wouldn't you agree, Frank? Thank you.

    Now, does anyone have any questions? First of all, may I get a comment on your reaction to the portion of the bill that deals with partial repeal of retroactive liability? Mr. Kahoe?

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    Mr. KAHOE. Yes. I think the whole question of the unfairness of the current retroactive liability scheme has been an issue that my Secretary has raised before in prior testimony. I think that we recognize the same situation—there are a lot of cleanups that are stalled simply because of the need to bring a little more fairness to this. We don't see this necessarily as getting away from the ''polluter pays'' principle, but getting more to a more fairness question of people. If they have polluted, they should continue to clean it up, but certainly if somebody has the money available that you simply don't go after it a as a pure funding mechanism.

    It is also a similar type of situation that we looked at when we were reforming our State laws last year. California actually has a proportional liability scheme that's non-retroactive that applies to State sites. Really, what we found in our case was people were really concentrating more on the question of remedy reform: getting quicker decisions, getting more certainty in what they would cost, and getting raps that were a little more reasonable instead of going after every little molecule.

    I think, again, that's kind of the focus that we've found, even though going into our reforms we kind of assumed that liability reform was going to be the big issue. In fact, we found it was just speedier decision-making and getting the costs down to where people can understand what they're going to be liable for and can make that as part of their decision process.

    Mr. BOEHLERT. Mr. Wood?

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    Mr. WOOD. Mr. Chairman, as you are probably aware, the National Governors Association, the governors of the country, have proposed a partial repeal of retroactive liability. Specifically, the issue dealing with municipal landfills that you talk about is an issue that the governors have felt represents an equity issue. The cities and the towns that have those landfills didn't actually generate the problem, the problem was generated by the wastes that they dealt with, and that represents, we think, an appropriate place to use Superfund monies to clean up something that is a general good.

    The De Minimis and the De Micromis, the appropriate apportioning of the liability that's proposed in the bill, is consistent with what the governors have proposed. The inequities that have been generated by that program are well-known, and the governors are concerned that we have a program which recognizes both equity as well as liability.

    Mr. BOEHLERT. Thank you very much. I appreciate that. Were you somewhat surprised by—did you hear Administrator Browner's testimony this morning?

    Mr. WOOD. Mr. Chairman, I wasn't here in time to hear her testimony.

    Mr. BOEHLERT. Okay. We'll get you a copy to read. She is less enamored with that partial repeal than she was a couple of months ago when she waxed rather enthusiastically in support of it, but we're working well together and I think that, with the Governors Association and all of us on a bipartisan basis working constructively, I think we can get something.

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    Mr. Spielmann.

    Mr. SPIELMANN. Mr. Chairman, I think it is important to point out that in New York we have spent about $3.5 billion to clean up hazardous waste sites from all sources. Of that, 74 percent has been paid by the responsible parties. For us to knock out retroactive liability essentially tells that 74 percent of those responsible parties, ''You did the wrong thing.'' We don't think they did the wrong thing. We think they did the right thing.

    Mr. BOEHLERT. And I agree, and I don't want to have complete repeal, but how about partial repeal?

    Mr. SPIELMANN. Partial for municipal we believe is the way to go. We indicate early in our testimony that we believe it's the way to go, and the apportioned liability should be a fair way to proceed.

    Mr. BOEHLERT. Thank you. Thank the commissioner very much for his deep and continuing interest, and also the governor.

    Mr. Borski.

    Mr. BORSKI. Thank you, Mr. Chairman.

    Let me follow up right where we just left off, if I can, with Mr. Spielmann and Mr. Wood, because I don't think there's any argument with municipalities being exempted, or let off the hook, if you will. But should large private for-profit companies get off the hook with the municipalities?

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    Mr. SPIELMANN. Well, we prefer to keep it at the municipal level.

    Mr. BORSKI. Yes. That's the problem with——

    Mr. SPIELMANN. Right.

    Mr. BORSKI.——the provision that the chairman has talked about and which Administrator Browner talked about this morning. I don't think there's any argument with letting the municipalities go. There is a huge problem with a private large for-profit company getting the same exemption because a municipality happened to drop some trash at a site where they were trying to get rid of their waste.

    Mr. SPIELMANN. Absolutely.

    Mr. BORSKI. So we need to be clear and understand the language that we're talking about. Municipalities are one thing, but you don't think the large for-profits should get the exemption.

    Mr. SPIELMANN. Not at all.

    Mr. BORSKI. And Mr. Wood, same question.

    Mr. WOOD. Mr. Borski, the governors are concerned about an equity issue, a shift of liability. If you have a private party which is responsible for a contamination, they're concerned about the shift of the cost of cleanup from that private party who, presumably, achieved some benefit by the activity to the public sector.

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    We believe that there is an equity issue. We don't agree that—I think in that situation that liability should go away.

    Mr. BORSKI. So you believe that a for-profit company should pay their fair share for cleaning up pollution that they created, even if it is commingled with municipal trash?

    Mr. WOOD. I think the operative words are ''their fair share.'' That's correct.

    Mr. BORSKI. So they should pay for their fair share but you don't think they should be packaged in the same relief from liability just because they're at the same spot, do you, automatically?

    Mr. WOOD. Mr. Borski, not automatically. Obviously, if you had a municipal landfill that there was, in essence, only one contributor to it, just because it had the name of ''municipal landfill,'' I think that seems to be stretching the point. But if you have a—and we have municipal landfills in the State of Nebraska that we're dealing with those kinds of issues, and in our situations it is a general use landfill and there is not what I'll call a major, top-of-the-line contributor that is an industry that is—even though there is industrial waste there, it is, by and large, the large portion of it is municipal waste that has come from the general citizen like you and I. In that case, it is a difficult issue. It is a difficulty to decide what was an industry's proportional share.

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    But I can see where, in some situations, that wouldn't occur.

    I think it is crafting that dividing line that's probably the difficulty. You can throw the baby out with the bath water one way, you can throw the baby out with the bath water the other way.

    Mr. BORSKI. Yes. I guess a follow-up to that is the 50 percent retroactive liability discount or rebate. Again, Mr. Spielmann, let me come back to you because you mentioned that New York certainly opposes the repeal of retroactive liability. What about this 50 percent rebate to companies who have perhaps already agreed to a cleanup and now they would be rebated up to 50 percent of their cost?

    Mr. SPIELMANN. It really comes down to costs, and I don't really think we could afford something like that.

    Mr. BORSKI. You're generally happy with the liability provisions as they exist?

    Mr. SPIELMANN. Correct. And, as I indicated, our experience has been we have 74 percent contribution. Something has worked.

    Mr. BORSKI. That's the same all over the country, as I understand it.

    Mr. SPIELMANN. Yes.

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    Mr. BORSKI. Mr. Williams, you mentioned in your testimony the letter signed by 43 attorneys general and yourself urging the preservation of the Superfund liability. Do the AGs continue to support the liability provisions of current law over the provisions of H.R. 2500, with the possible exception of municipalities?

    Mr. WILLIAMS. Mr. Borski, the NAAG has also said, in addition to saying that they support the retention of the core CERCLA liability provisions, that they do think that there is reason to make some adjustments to the liability provisions to try to be more fair to parties such as lenders, innocent owners, prospective purchasers, De Minimis parties, and that it does make sense to do some things to make the system work more fairly for the large multiple-party sites. So it is not an inflexible position, by any means.

    Mr. BORSKI. And I don't think there is any argument on that. The small mom and pop pizza pie boxes that we always hear about should certainly be excluded.

    Mr. WILLIAMS. Mr. Spielmann, in his testimony earlier, said something that we would strongly agree with about the retroactive liability changes—that if Congress were to make those kinds of changes in the Federal law, we would expect that States would be put under very great pressure to make similar kinds of changes in State laws.

    Thirty-five States, or about that number, have State Superfund liability laws. Those laws are the key to us cleaning up our own sites—-not the national sites, but the State sites—so this could have a very bad spill-over effect.

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    Mr. BORSKI. Mr. Chairman, I have more questions, but I know the time is late and we have Members waiting. I yield back.

    Mr. BOEHLERT. Thank you very much. Mr. Horn?

    Mr. BORSKI. Mr. Chairman, can I ask unanimous consent that this letter referred to by Mr. Williams from the——

    Mr. BOEHLERT. Without objection, so ordered.

    [The letter referenced by Mr. Williams follows:]

    [Insert here.]

    Mr. BOEHLERT. Mr. Horn.

    Mr. HORN. Thank you, Mr. Chairman.

    Mr. Kahoe, I thought I'd just bring a subject up that I know your department is pioneering. I think it would be good for the committee if we shared some of that.

    A few weeks ago in my Committee on Government Management, Information, and Technology, I happened to have some of the industry who was working on electronic form reporting with your agency. I wonder if you could tell us a little bit about how successful that has been and what kind of time that has saved everybody in both EPA and the local industries involved.

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    Mr. KAHOE. Yes. As far as electronic information, that's for following basic monitoring reports. That pilot is now under development primarily in northern California. It is significantly reducing the amount of time and money people have to pay for getting this information to the agencies.

    It is a similar type of measure that we've applied in the site remediation where, instead of the previous situation of responsible parties having to deal with a number of agencies, probably one of our most popular reforms is people can come to us, we designate one agency to implement all applicable laws. That's one of the similar types of provisions that we saw in H.R. 2500, which really takes a State reform and applies it on a national level.

    Mr. HORN. Thank you for that statement. We are putting a bill in to do this nationwide with EPA. I would hope my colleagues would join me on that.

    Mr. BOEHLERT. Mr. Oberstar.

    Mr. OBERSTAR. Thank you very much.

    Mr. BOEHLERT. We have 12 minutes and 40 seconds.

    Mr. OBERSTAR. I just want to address one issue which I think is the central issue in this matter, and that is the liability. All of you have addressed liability. You've addressed the cleanup problems of Superfund. But when we get down to the issue in subcommittee and full committee and on the House floor or in conference, it is still going to be the matter of retroactive liability.

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    Mr. Williams, your testimony—I was going to say your brief, because it really is a very thorough legal brief—says that: ''The underlying premise of H.R. 2500 is that most, if not all, activities that created contamination prior to the law's enactment were legal at the time and should not form the basis for cleanup liability.'' You go on to say that ''property owners are not free now, nor were they ever prior to this act, to pollute or to injure or cause injury to their neighbors or to the general public.''

    So if there is a legal duty not to pollute, then why should liability of what you previously did in injury to the land be excused now?

    Mr. WILLIAMS. Mr. Chairman, Congressman Oberstar, we obviously think it should not be excused.

    Mr. OBERSTAR. If the Federal Government removes the responsibility for or the imposition of retroactive liability, what is likely to be action by big industries within your respective States?

    Mr. WILLIAMS. Mr. Chairman, Congressman Oberstar, I would fully expect very strong pressure on the Minnesota Legislature to make changes very similar to whatever Congress does on the retroactive liability issue, and I think it will be very difficult to resist it.

    Similar to New York's situation, in Minnesota, over the 12 or 13 years of our State Superfund program, about 80 percent of the cost of all the cleanups that have been done in our State have been funded by parties who are responding to the liability scheme. There would be very little cleanup that would occur if that scenario came to pass.

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    Mr. OBERSTAR. Mr. Spielmann, what do you think would be the case in New York State?

    Mr. SPIELMANN. As I've indicated, we've had fair compliance already by private polluters, and I would—as I indicated, it is not fair for those that have stepped up to resume the responsibility to be told at a later date, ''You should have waited.'' We don't think that was the intent of the original legislation, and that's why we really oppose a broad repeal of retroactive liability. It would have a chilling effect on private willingness to comply. Believe me.

    Mr. OBERSTAR. Thank you. One final question. While much of this legislation purports to turn over authority and responsibility to the States, it seems to me that there is still Federal preemption; that States are not allowed, under this legislation, to be more restrictive than the Federal Government on national priority list sites. Is that your—do any of you concur on that analysis?

    Mr. WILLIAMS. Yes, I would definitely concur on that analysis.

    Mr. SPIELMANN. Yes. It is, again, our major issue that what's needed to make this program work is to provide an authorization as opposed to delegation. I think the issues you raised on liability are a good example.

    What we see in a lot of the other bills—H.R. 228—is carving out specific examples for retroactive liability for municipalities, De Minimis, De Micromis, what have you.

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    The issue there seems to be more to get rid of retroactive liability. Well, we want the program to work instead of providing an overall approach that really gets these things moving.

    Again, we would respectfully submit that, if we are talking about making decisions on what industry is in and what industry is out; municipalities are the ones to be exempted; States, however, are still liable under retroactive—that's a best judgment for States because we're looking at the broader issues, not simply looking at retroactive liability as a funding source.

    Mr. OBERSTAR. Thank you very, very much. Also, I'd like you to comment in writing, because time is out—we have to run to the floor and vote—on the increased likelihood of litigation under this legislation, which purports to reduce but, in effect, it seems to me, to increase. If you would, specify which areas, because you have all alluded to that, that it would be more, not less, litigation. I would appreciate that. Thank you very much.

    Mr. BOEHLERT. Thank you very much, Mr. Oberstar.

    I want to thank the panelists. We have a vote on now. This panel is dismissed, and we will be back in 15 minutes to go to the fourth and final panel of the day.

    Once again, let me do what I have done before many times. A number of you have not been exposed to this. I'd apologize for the system. We are victims of the system. When the bells ring we are obligated to vote. We owe it to our constituents. But I am somewhat disturbed by the fact that we're keeping you sort of sitting on your hands, and you're very important people with busy schedules. So understand we're all in the same bind, trying to do the people's work.

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    [Recess.]

    Mr. GILCHREST [assuming Chair]. The subcommittee will come to order.

    We're anxious to get started. I understand the witnesses have not eaten lunch yet. I have a little bit here if anybody wants an apple or a few Graham crackers.

    We will hear from: American Communities for Cleanup Equity, Mr. Chris Jeffers; National League of Cities, Honorable James Naugle; Conference of Mayors, Honorable Henry Henderson, Chicago, Illinois—the Cubs will do better next year, I think.

    Mr. HENDERSON. Says who? We always are hoping.

    [Laughter.]

    Mr. GILCHREST. I'm an Orioles fan. Also, the National Association of Counties, Honorable Beulah Coughenour.

    Ms. COUGHENOUR. All right.

    Mr. GILCHREST. Is that correct?

    Ms. COUGHENOUR. That's right.

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    Mr. GILCHREST. Thank you for coming to testify. I apologize for the makeup of the day, but it has been very active on the floor.

    I think we can start with Honorable Beulah Coughenour.

TESTIMONY OF BEULAH COUGHENOUR, CITY-COUNTY COUNCILLOR, INDIANAPOLIS/MARION COUNTY, INDIANA, ON BEHALF OF THE NATIONAL ASSOCIATION OF COUNTIES; HENRY HENDERSON, COMMISSIONER OF ENVIRONMENT, CHICAGO, IL, ON BEHALF OF THE U.S. CONFERENCE OF MAYORS, MUNICIPAL WASTE MANAGEMENT ASSOCIATION; JAMES NAUGLE, MAYOR, FORT LAUDERDALE, FL, ON BEHALF OF THE NATIONAL LEAGUE OF CITIES, ENERGY, ENVIRONMENT AND NATURAL RESOURCES STEERING COMMITTEE; AND CHRIS JEFFERS, CITY MANAGER, MONTEREY PARK, CALIFORNIA, ON BEHALF OF AMERICAN COMMUNITIES FOR CLEANUP EQUITY

    Ms. COUGHENOUR. You took me off guard there. I thought I was going to be last.

    Mr. GILCHREST. Ladies first, if that's all right.

    Ms. COUGHENOUR. That's fine. Mr. Chairman and members of the committee, I am Beulah Coughenour, city/county councillor from Indianapolis/Marion County, Indiana, and I serve as chairperson of the National Association of Counties' Steering Committee on Environment, Energy, and Land Use.

    I'm testifying today on behalf of NACO and the over 3,00 counties that we represent.

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    The Superfund program is of great significance to local governments across the Nation. Frequently, counties, cities, and towns find ourselves in an extremely difficult predicament. On the one hand, we are host communities for some 1,200 sites on the national priorities list, as well as thousands that rate cleanup at the State and local level. As elected officials responsible for protecting the public health of our citizens, we've been extremely concerned about the slow pace and the ineffectiveness of the program in recent years.

    At the same time, we're increasingly on the receiving end of private party lawsuits and notices of potential liability, experiencing firsthand the process that is often bizarre and unfair.

    We commend the chairman for the cosponsorship of H.R. 2500. We believe it makes significant progress toward reducing the liability of local governments that did no more than deliver or accept ordinary garbage and trash at municipal solid waste landfills.

    While other members on this panel are specifically addressing the liability provisions in the bill, we want to add our voice in urging you to maintain the approach that you have taken. Dealing with hundreds of co-disposal sites on the NPL is an affordable and reasonable method of getting the sites with the highest transaction costs and number of responsible parties off the list.

    If that provision is maintained in the bill and ultimately becomes law, we believe there will be a clear demonstration to the country that Congress can tackle an environmental problem and solve it, and the clamor that this Congress has heard about Superfund from governments, small businesses, and the citizenry will be substantially reduced.

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    We want to focus our primary remarks today on the provisions in the bill regarding participation by local governments in the Superfund process.

    Local governments are unanimous in our position that we want local elected officials to have a strong and meaningful role in every significant phase of the Superfund decision-making process. As I mentioned earlier, every single site on the NPL, industrial as well as municipal, is within the boundaries of some city, county, or town.

    We, as local elected officials, are the ones who get the angry phone calls about polluted water and unsightly or unsafe locations in our community. We're directly accountable to the citizens about their children's health and the protection of the environment. We should have a strong voice and influence over the cleanup decisions that will affect the concerns of our people, and we hope that this legislation will be responsive to that request.

    H.R. 2500 has taken some very positive steps in this direction. However, we think the bill can be improved in a variety of areas to accommodate increased participation by local government.

    Counties and cities support and encourage increased involvement by citizen groups and others in the Superfund process. While we don't oppose the creation of a community assistance group, we do object to it being the only ongoing formal method for local elected officials to obtain information about the site, and apparently the only means for participation in the decision-making about remedial actions at Superfund sites.

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    Under section 104 of title 1, representatives of local government are only one of ten categories that are members of the CAG. An elected official like myself, for example, would be given the same status as an individual homeowner, an environmental advocacy group, or an employee of Superfund site owner. Under this section, it would be possible for county commissioners, mayors, and council members to be absolutely outnumbered, even though we have been elected by the citizens to represent them on such critical issues as health and safety.

    We'd like to request two revisions to this section of the bill. First, that local governments have an independent route separate from the CAG to be provided relevant information, have our views solicited, and be given an opportunity to comment, with the assurance that those views would be considered. Second, we think that any recommendations and comments from the CAG should be reviewed by elected officials of the affected local government before those recommendations are forwarded to the Administrator or the State, as the case may be. Our reactions to those recommendations should be considered with equal weight as those of the CAG.

    If you wish me to finish out here, I will skip the next couple of pages that I had and just say that we offer these suggestions for revision in a spirit of partnership with you. They're not meant to minimize in any way the giant steps that this bill takes in making Superfund program work, and we want to work with you to make this a bill that can gain our unqualified support, and we look forward to close cooperation toward that end.

    Thank you.

    Mr. GILCHREST. Thank you very much.

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    Mr. Henderson.

    Mr. HENDERSON. Thank you very much.

    My name is Henry Henderson. I'm commissioner of environment for the city of Chicago. I'm here today representing Mayor Daley, as well as the U.S. Conference of Mayors, of which Mayor Daley is the vice president; and also the affiliate organization of Conference of Mayors, the Municipal Waste Management Association, of which I am a trustee.

    I'm pleased to participate in today's panel because of the issue of brownfields, in particular, which is addressed within the draft bill.

    I would like to address specifically the issue of why brownfields is an appropriate consideration within the context of Superfund reauthorization and Superfund reform, whereas my colleagues will be addressing other issues with regard to specific liability structure and other aspects of the bill.

    Brownfields is a particular issue for municipalities within the United States of America, and I've submitted written comments to the record, along with a brownfield study report as a result of a year-long study with 140 business groups, bankers, investors, developers, environmental and community groups, as well as the State, local, and Federal regulators that were affected with this issue within the Chicago area.

    The issue of brownfields I think is profoundly affected by the existence of Superfund. In fact, a great deal of the issue of brownfields, which are abandoned industrial sites within the urban core, come about and remain abandoned in large part, I believe, because of the effect of Superfund liability structure.

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    The liability structure presents such a potential crushing burden of liability and risk that many bankers and lenders, as a matter of course, will not lend for the redevelopment of such former industrial sites. The American Bankers Association, in a recent review of small-and medium-sized banks, found that 80 percent of the respondents, as a matter of course, would not lend to former industrial sites because of fear of environmental liability.

    This, in fact, is working a disinvestment within the urban core. These are perceptions, as well as realities. Many of the perceptions result from a belief that industrial sites are, per se, the kind of Superfund sites that are the extraordinary kind of contaminations that led to the formation of Superfund to begin with; that a former steel mill, for instance, will be essentially like Love Canal.

    Our experience is that this is not the case, and that what needs to be done within the context of Superfund reforms is provide the means whereby government—which cannot clean up all these sites and, in fact, should not clean up all these sites—can create the incentives and remove the impediments for private sector reinvestment.

    Part of that removal of impediments relates to reform of the liability structure. There is such a reform suggested in H.R. 2500 in the form of recognition of State environmental cleanup programs that are voluntary and provide a State-based relief for the cleanup, a State procedure which is recognized by the Federal Government whereby a cleanup can take place and Federal liability will not be visited upon that site as a result of that. That provides a degree of certainty that the private sector is looking for.

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    What we suggest is that recognition of a voluntary cleanup program also be extended to local governments, which, in the situation of the city of Chicago, representing three million people, has the ability to formulate a voluntary cleanup program such as has been recognized or suggested within H.R. 2500 and can help move toward greater certainty with the release of liability.

    In addition, we need to present the conditions whereby the private sector can enter into redevelopment. A lot of the sites within the city of Chicago and other cities, such as the city of St. Louis, are ripe for redevelopment, but the perception of contamination deters investment.

    We have, in the city of Chicago, five brownfield sites which have been completed in terms of a cleanup and have been sent back to the private sector and are being developed. We had a $2.1 million general obligation bond fund to do cleanup. We anticipated we could do one site. We have now done five sites, and we have not yet spent $1 million. Part of that is that the perception was there would be a great deal of cleanup expense. It, in fact, is more a perception than a reality.

    I think that having a fund whereby local governments can characterize the sites within their regions can help give certainty for private sector investment.

    In addition, another inducement that Mayor Daley has suggested and sought is a tax benefit so that a private investor taking over contaminated industrial property gets a pro rata share of the cleanup costs off his tax rolls so that you do not have the government entering into the issue of paying for the cleanup at all. It is, in fact, an inducement to bear the cost of cleanup.

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    Finally, we are interested in the possibility of a revolving loan—some of the Superfund money set aside as a revolving loan fund for local governments to help them get the seed money to do the actual cleanup in publicly-owned property themselves, and thus reduce reinvestment after they have taken on the burden of doing the cleanup.

    Those are things which I think need to be looked at in Superfund because Superfund, itself, has had an effect of deterring reinvestment by the private sector.

    With that, I'd like to thank you for the opportunity to comment on this important effort.

    Mr. GILCHREST. Thank you very much.

    Mr. Naugle.

    Mayor NAUGLE. I'm Jim Naugle, Mr. Chairman and members of the committee. I'm mayor of Ft. Lauderdale and a member of the National League of Cities' Energy, Environment, and Natural Resources Steering Committee. I'm here today to testify on behalf of the National League of Cities and the 15,000 cities and towns across the Nation that we represent on reauthorization of the Comprehensive Environmental Response Compensation and Liability Act.

    While I will limit my remarks to the issues involved in the remedy selection provisions, speaking on behalf of all local governments, NLC generally shares the perspectives of my colleagues testifying here today on the questions of liability reform, relationships among levels of governments, and brownfields. I would like to address four issues briefly this afternoon: remedy selection, land use concerns, ROD reopeners, and remedy review.

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    On remedy selection, options and cleanup standards are very clearly significant to local government officials. We share your concerns that the Superfund program needs to be reformed, and, at the same time, cleanups need to be done quickly and effectively. We are not certain the proposed language will accomplish those goals, and would like to, therefore, suggest improvements so that the proper balance is struck and we achieve our objectives.

    We are particularly concerned with language in H.R. 2500 stating that final remedies for sources of drinking water need only ''prevent or eliminate any actual human ingestion of drinking water containing any hazardous substances.''

    As we interpret this language, it could mean that point-of-use treatment devices or provision of bottled water would be acceptable remedies for sources of drinking water. We are concerned that this provision may mean that drinking water supplies will not have to be cleaned up.

    If this is, indeed, the case, we believe it is inadequate. Our concern stems not only from potential restrictions such a strategy would have on local future growth, but also from experiences some municipalities have faced with the need to seek alternative and/or additional sources of drinking water to meet current needs because of annexation or unanticipated growth.

    We believe these provisions should be strengthened to ensure the availability of drinking water both now and in the future. What the bill should require is the most cost-effective remedy that protects health and the environment, rather than a remedy that is simply cost-effective.

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    On future land uses, while the remedy selection provisions require taking into account reasonably anticipated future uses of land, water, and other resources at a site, in our opinion the bill fails to give adequate deference to the land use, zoning, and future land use plans of local government.

    A local government comprehensive land use and growth management plan addresses the central and most important aspects of a community's social and economic stability. How cities and counties use land within our borders affects our ability to accommodate development, protect valuable natural resources, minimize pollution, preserve the cultural and historic character of our communities, provide facilities and services, and maintain a high quality of life for existing and future residents.

    For those reasons, we believe that a long-range land use plan, if adopted by a community after meeting the public participation requirements of State law, should be given deference as a reasonably-anticipated future land use for the site.

    Local decisions should be respected in a Superfund cleanup, and the land use plan should take precedence over other factors in determining future use.

    On reopeners of records of decision, as local elected officials we are also concerned that the provisions allowing records of decision to be reopened are too broad. We believe the provisions have the potential to affect virtually all RODs, to halt cleanups that are already underway or about to commence, or to unravel years of delicate negotiations, holding cleanup and restoration in abeyance while litigation accelerates.

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    We recommend you consider limiting reopeners to extraordinary cases where there is more than a reasonable justification for such action, and only where quick resolution can be accomplished.

    On remedy review, H.R. 2500 authorizes pre-enforcement challenges to cleanup remedies. We believe the current law structure provides adequate legal protections by disallowing such challenges until the remedy is implemented, permitting reimbursements if the remedy is not in conformance with the national contingency plan.

    In conclusion, on behalf of the National League of Cities, as well as my colleagues testifying today, I want to thank the committee for your efforts in developing and proposing significant revisions to the Superfund law. I also appreciate the opportunity to present our views today.

    Thank you very much.

    Mr. GILCHREST. Thank you, Mr. Naugle.

    Mr. Jeffers.

    Mr. JEFFERS. Thank you, Mr. Chairman and members of the subcommittee. I am city manager for the city of Monterey Park, a California city of 64,000 located just east of Los Angeles.

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    I'm pleased to be here today to testify on local government liability provisions to H.R. 2500. I am here representing American Communities for Cleanup Equity, but I'm also presenting this testimony on behalf of other national organizations testifying on this panel, as well as the National Association of Towns and Townships, the National School Boards Association, and the National City and County Management Association.

    ACCE also endorses the testimony that you have heard from the other panel members today. Collectively, our organizations represent thousands of cities, towns, counties, and school boards across the U.S.

    H.R. 2500 provides a comprehensive solution to liability problems confronting local governments. In recent years, we have been saddled with millions of dollars of liability and legal costs simply because we owned or operated municipal landfills or sent garbage or sludge to landfills that were used by generators and transporters of hazardous waste.

    We know of over 640 local governments and 200 school districts that suffer from this problem. For example, industrial generators deposited 200 million gallons of liquid hazardous waste on top of a municipal solid waste of operating industry Superfund site located in my city, Monterey Park.

    Recently, as a result of that, 29 California cities, including Monterey Park, expended approximately $8 million in defense costs and assumed a liability of approximately $34 million to settle litigation over the cleanup of that site. To pay for those costs, cities have had to reduce police and fire activities and personnel; cut library, parks, and recreation budgets; coupled with increases in taxes and fees to accommodate that settlement.

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    Our citizens should not have to bear such cost. Local governments are in a unique situation and deserve relief.

    First, waste collection and disposal is a governmental duty. We make not profit from it. California law, in fact, dictates that we become the owners of waste we collect.

    Secondly, the toxicity of municipal solid waste and sewage sludge is significantly lower than hazardous waste.

    H.R. 2500 will substantially relieve our liability problems and provide significant savings to local governments. Elimination of liability at co-disposal sites will provide relief at facilities where most of the future liability, transaction costs, and uncertainties confronting us are located.

    Also, there are often sites with large numbers of parties and highest transaction costs. Resolving liability questions at these sites will significantly reduce those costs.

    At co-disposable sites, the 10 percent cap on aggregate liability of all generators, transporters, and arrangers of municipal solid waste and sewage sludge will provide local governments with some relief from third party suits for recovery of costs incurred before the date of the introduction of the bill.

    Today, hundreds of local governments are in the midst of this type of litigation. Tens of millions of dollars are at stake. This is a significant burden to those governments where $1 or $2 million can make the difference between solvency or deficit.

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    The 10 percent cap will also apply at non-disposable sites and sites that are added to the NPL in the future. This will be of great benefit to those local governments that may have put municipal solid waste or sewage sludge in a site not included on the co-disposable list.

    However, the cap does not apply to local government owners or operators, yet they operated their facilities as a public service, and many were required by State law to accept commercial industrial waste as well as residential waste.

    We are not sure how many of those local governments may be left without protection. We are in the process of collecting that information and will certainly pass it along to the staff of the subcommittee.

    One of the other issues of significant liability is the problem confronting local government, owners and operators of public sewer and related treatment systems. Local governments operate these systems as a public duty and cannot completely control what is deposited, yet we have been held liable for releases of hazardous materials that were improperly or illegally discharged into the systems.

    We have a number of suggestions on how to correct this problem and would look forward to working with the subcommittee on this matter.

    The increased De Minimis threshold of retroactive liability discount will also benefit local governments, as will provisions of expedited settlements.

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    In conclusion, local governments hope that the subcommittee and Congress will move ahead quickly on Superfund reauthorization. We need and we merit relief before we spend millions of additional dollars and are forced to curtail more vital, basic public services. H.R. 2500 provides substantial and comprehensive relief to those local governments.

    We commend you for your leadership on this issue and look forward to working with the subcommittee as this process moves ahead.

    Thank you.

    Mr. GILCHREST. Thank you, Mr. Jeffers.

    I appreciate your patience throughout the day, and your testimony I think is an important part of the process of working through some of the still-remaining controversial issues with the bill. It is always very useful to hear from people in your capacity in local government describing some of the reforms that you think would be helpful to all of you.

    I'd like, if we could start with—Ms. Coughenour, you mentioned a more-direct route for local government in the site cleanup, and I think that you meant—what I would like is each of the other panelists to respond to your recommendation that a homeowner not have the same status or same voting power or same input as someone who represents a county council, county commissioner, or a mayor of a town, or whatever.

    If you could just briefly restate that, I'd just like to see how each of the other panelists respond to that.

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    Ms. COUGHENOUR. Well, we think that, because of our elected status and our duties to be the guardian of some of these health issues and some of the things that are the results of Superfund sites, we feel like we should have at least a little stronger vote than just the ordinary person that just sits on there, some of whom we even regulate. And we also feel that States need to talk to us before they decide to take somebody off or put somebody on these lists. I didn't get that said to you when I was speaking, but that's one of the issues that we're concerned about. And also that States have the ability and the capacity to do this cleanup.

    Mr. GILCHREST. Mr. Henderson.

    Mr. HENDERSON. Thank you. I fully associate myself with those comments. We deal on a daily basis with issues of environmental control, cleanup, and enforcement actions. We have, within the City of Chicago—I have an environmental hazardous waste group that responded in 1994 to over 1,000 incidences of hazardous waste being illegally dumped within the city. We have a responsibility of responding to that, the tax dollars expended to fund that effort, and the need to have the recognition that local government has not only the capacity but is expected, for a lot of these emergency and hazardous situations, by the Federal system, itself. The Federal Emergency Management Agency recognizes local government repeatedly as a key element in the site-specific response to a lot of these hazards.

    Local government reflects a broad-based official recognition by the populous, by the community, of who is to represent them in these matters.

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    I think that conceiving of local government as simply an interest group among others that has to be weighted by other people who are part of the regulated community, or even a single homeowner, rather than a representation of the entire electorate, undercuts the institutional integrity of what is really protection of the public interest.

    So I associate myself completely with the need to recognize the representative nature of what the community, itself, has voted to put forward as representing its public interest.

    Mr. GILCHREST. Thank you. Mr. Naugle, you're really on the line because I have some relatives in Ft. Lauderdale.

    Mayor NAUGLE. All right. We're known as the Venice of America, the Yachting Capital of the World. Our beaches are known as America's Riviera. But we are also known for having two Superfund sites in Ft. Lauderdale, too, so I agree with the statement completely.

    You know, sometimes a citizen, a single citizen on a CAG, may not have the views of the entire neighborhood, but the elected officials are selected by the citizens in the community. If they make the wrong decisions, they're going to get voted out of office.

    Maybe a better plan would be for the CAG to submit its plan to the local government, have the local government forward it on to the EPA, or something like that. But I think that we need to have a greater input than is envisioned in the bill at this time.

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    Mr. GILCHREST. Thank you. Mr. Jeffers.

    Mr. JEFFERS. I can only echo the comments that the other three have done. I think the local elected official has the unique situation of a much more rounded vision of a community and its needs, whereas other individuals bring much more narrow concept to the table. Elected officials are going to make their living by that community standard and acceptance, and so they really need to be in the forefront of any discussion of how their community is going to be treated in a Superfund issue.

    Mr. GILCHREST. Mr. Jeffers, you made a comment about State law in California which went something like, ''We become the owners of the waste we collect.'' I'd like to know what the law is in each one of the other States in your areas.

    And, Mr. Jeffers, you also made a comment about a 10 percent cap on haulers of trash. I'm not sure—what was that in reference to?

    Mr. JEFFERS. Liability.

    Mr. GILCHREST. So that's something that you would agree with, then?

    Mr. JEFFERS. Yes. We agree with the 10 percent cap that's in the current bill, H.R. 2500.

    Mr. GILCHREST. And could you clarify what exactly you mean when you say, ''We become the owners of the waste we collect''? That's a community? A municipality? Any entity of local government?

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    Mr. JEFFERS. I can only speak in California. In California there is State law that says that we—regardless of how it is accomplished, whether it is through the issuance of a business license, a franchise agreement, or so forth, municipalities are—local government is the ultimate responsible transporter or arranger of trash. In addition to that, there is case law.

    Mr. GILCHREST. Does that mean, whether it is a municipal landfill or a private landfill, that you've agreed——

    Mr. JEFFERS. That's correct. There is no distinction.

    Mr. GILCHREST. Is that public and private landfills in each one of the other areas?

    Mayor NAUGLE. In Ft. Lauderdale one of our Superfund sites is a municipal landfill, so I guess we became the owners of the trash by owning the landfill.

    I think he also mentioned, in the case of your sewer system, when people put pollutants in down the drain, so to speak, he ends up with them and had no control over their being deposited there but had a responsibility by law to provide sewer services.

    Mr. HENDERSON. In Illinois the local government is not responsible for the waste if it does not pick up, haul, or dispose of it, unless, of course, it gets illegally disposed in a public way, and then we are held responsible for that by the State. But it tracks basically Federal law with regard to what a PRP would be with regard to waste. If we pick it up, haul it, even if we did not generate, we become responsible for its ultimate fate.

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    Ms. COUGHENOUR. Yes. In Indiana, as soon as people put their waste out to the curb and we either pick it up or have it contracted to be picked up, we have the liability. It is our waste at that point.

    Mr. GILCHREST. Some of you mentioned a revolving loan fund, a State revolving loan fund. Could you clarify what your—if you agree—and apparently a couple of you mentioned that—with the idea of a State revolving loan fund, would it be in the same—do you envision it the same type of revolving loan fund that we have now as far as sewage treatment plants are concerned or things of that nature? And how much money do you think would be necessary to appropriate a State revolving loan fund for the purpose of Superfund sites? And do you see any down sides to that, other than there might not be enough money in the budget?

    Mr. HENDERSON. May I comment on that?

    Mr. GILCHREST. Yes.

    Mr. HENDERSON. What we were envisioning with regard to a revolving loan fund would be assistance not to the States but directly to local authorities. Much of what we are seeking out of a revolving loan fun——

    Mr. GILCHREST. Could I just stop you for a second?

    Mr. HENDERSON. Yes, sir.

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    Mr. GILCHREST. A loan fund not to the States but to the municipality?

    Mr. HENDERSON. To the municipality. Direct to the municipality.

    Mr. GILCHREST. And you would bypass the State organization completely?

    Mr. HENDERSON. Yes, specifically for brownfields. Not necessarily for Superfund sites, themselves, but for the type of sites that we have been identifying that are not the $20 million cleanup, but more that are tens to hundreds of thousands of dollars of cleanup, but have a definite market interest, the type of things we are doing in Chicago with regard to doing cleanup.

    We are looking at section 108 money from HUD as a model for this where you get an advance loan, and we would have to pay it back from the proceeds that we generate, for instance, from the tax rolls that would be reactivated by having these abandoned properties productive again.

    Mr. GILCHREST. So this is not necessarily for a Superfund site? This is for what might be categorized as a brownfield site for economic development purposes?

    Mr. HENDERSON. Yes, sir. Tied to economic development purposes.

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    Mr. GILCHREST. Are you saying it would be—you are suggesting that we ought to put that in this Superfund legislation?

    Mr. HENDERSON. Correct. What we'd be interested in seeing is some of the Superfund dollars segregated for specific attention to brownfield remediation by local governments so that we have—for instance, in the city of Chicago we have sort of the worst of all possible worlds. We have the shadow of the liability——

    Mr. GILCHREST. Two baseball teams, right?

    [Laughter.]

    Mr. HENDERSON. That's absolutely right. We have the shadow of liability cast by Superfund, but, because of the way the sites are scored for fund attention, dependent so much upon use of groundwater as drinking water, and we have Lake Michigan—we do not use that groundwater, so we do not have the benefit of the fund, itself, but we have people being deterred from reinvestment because of fear of liability.

    That has cast a shadow over a whole range of properties that will never become Superfund sites and, in fact, are not that terribly contaminated, but are owned, for instance, by us through condemnation or liens, tax liens. Having a revolving loan fund whereby we could use that money to do the characterization of the sites, cleanup of the sites, and get them back into the private sector and then reap the benefits of that reinvestment and use that to repay the loan would be very useful.

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    We contrast this, for instance, to the way that Superfund is focused on highly-contaminated sites that, in many instances, will never become productive again. A site in the city of Chicago, which is deemed the most hazardous in Illinois—the State spent $6 million, did not fully clean it up. It is surrounded by two illegal landfills and a former hazardous waste incinerator. It is fenced off and will never be used again.

    If we had had that $6 million to spend on a range of the many sites that are in the public sector already that we have gotten through condemnation in taking the buildings down to do reinvestment in, there would be more jobs, back on the tax roll, helping keep people off welfare. And we think it would be a way of cleaning up the environment at the same time that we're understanding the environment in the broader sense of quality of life in the urban core.

    So we're looking at some seed money to do that with within local government so we can take responsibility to get it back into the private sector.

    Mr. GILCHREST. I think the brownfields concept has a tremendous amount of potential. It's something that ought to be taken very seriously, especially by Members of Congress, and continue to become more informed about what the potential is out there.

    Does anyone else want to comment on the revolving loan fund?

    [No response.]

    Mr. GILCHREST. I would ask if there are any other Members that have questions, but maybe there is a staff person that has a question that I can read for them? Does anybody else want to make any comments from the panelists?

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    [No response.]

    Mr. GILCHREST. You've raised a number of concerns. We have your testimony. I know there are some concerns about minimal standards for drinking water and some other things. We'll take all that into consideration.

    We just got this from Energy and Commerce—this whole package. While there are not too many Members here today—and I know we sort of came and went throughout the course of the day—Superfund is one of the most critical pieces of legislation that will pass through Congress, so you have our full—you should have a sense of security that Members of Congress are going to look at this very, very closely because it is a very high-profile piece of legislation. So the absence of Members today doesn't mean that there is an absence of sincere concern. We have just been pretty darned busy the last few weeks. But now this will be one of our priorities.

    Mr. Naugle.

    Mayor NAUGLE. I just wanted to add that this is a very important issue for us. I think that you're on the right track, and with some refinements and taking into consideration some of the comments here today I think it's something that would be a tremendous help to cities and towns and counties across the country.

    Mr. GILCHREST. So if you run into any Gilchrests down there in Ft. Lauderdale or Pompano, even, tell them I said hi. I haven't been down there since 1985.

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    Mayor NAUGLE. I think if you come down you'll see we've changed a lot. I hope you come for a visit soon.

    Mr. GILCHREST. I was there in 1985. Prior to that I think it was like 1960, and boy did it change. It seemed like the whole area was filled with soccer fields.

    Mayor NAUGLE. You won't recognize it now.

    Mr. GILCHREST. Now I'm going to read this. ''Earlier today Administrator Browner referred to several charts during her testimony. Without objection, copies of those charts will be placed in the record following her testimony. Hearing no objection, it is so ordered.''

    Thank you so much. Have a good time in Washington and a safe trip home.

    [Whereupon, at 3:45 p.m., the subcommittee was adjourned, to reconvene subject to the call of the Chair.]

    [The witnesses prepared statements follow:]

H.R. 2500, REFORM OF SUPERFUND ACT OF 1995

WEDNESDAY, NOVEMBER 8, 1995

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U.S. House of Representatives,

Committee on Transportation and Infrastructure,

Subcommittee on Water Resources and Environment,

Washington, DC.

    The subcommittee met, pursuant to recess, at 10:06 a.m. in room 2167, Rayburn House Office Building, Hon. Sherwood L. Boehlert (chairman of the subcommittee) presiding.

    Mr. BOEHLERT. Good morning and welcome to the Water Resources and Environment Subcommittee. Today's hearing will focus on those industries and individuals who are on the front line on the Superfund debate. We must listen carefully to those who have been working for the last 15 years to clean up the over 1,200 Superfund sites that now dot the Nation. The past is prologue.

    We have some very distinguished and diverse panelists today. Though there are some areas of disagreement among the members of the first panel, for example, one strong message is found in each of their statements. We must have Superfund reform this year.

    I share this strong feeling. The environment, the public and industry can all benefit from the Reform of Superfund Act. As I see it, there is nothing but winners, some win more than others, some don't win as much as they would like. But it is a win, win, win situation.

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    I think we have a good product that is only going to get better as the legislative process moves forward.

    On the second panel, we have some representatives of the environmental community. And to those I would like to make one very important point. A great deal of rhetoric has surrounded the introduction of H.R. 2500, including assertions that fences and guard dogs and bottled water are the cleanups that would be permitted by this bill.

    Cleanups consisting of fences, guard dogs and bottled water are unacceptable to me. They are unacceptable to the states and they are unacceptable to the public. The intention of H.R. 2500 is to select among the menu of cleanup options, all of which must be protective of human health and the environment. Let me repeat: all of which must be protective of human health and the environment.

    Among protective cleanup options, we are seeking the one that is most cost effective and cost reasonable. If this point needs to be further clarified, I can assure you we will do it. Remedy selection is one area of the bill that obviously needs more attention.

    I look forward to all of today's testimony, and am particularly glad to see our colleague Mr. Geren here. Because on panel one there is a very good friend of all of ours, Ms. K.C. McKee, who is the Legislative Representative of the National Federation of Independent Business, and she was very effective when she served on Capitol Hill in training Mr. Geren. So I'm glad to see you here, and I'm glad that she's here also.
    [The prepared statement of Mr. Poshard follows.]

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    [Insert here.]

    Mr. BOEHLERT. I'm pleased to now introduce the subcommittee's distinguished ranking member, Mr. Borski.

    Mr. BORSKI. Thank you very much, Mr. Chairman.

    And again, I want to thank you for holding these hearings. They are a valuable way for members of the subcommittee to assess the bills that are before us. I'm sure that we can agree, Mr. Chairman, that last week's hearing was very helpful.

    The testimony at last week's hearings from three Federal agencies and from the states demonstrate that H.R. 2500 is a recipe for economic disaster. And while I agree, Mr. Chairman, that Superfund should be reformed this year, I wanted to remind you that each of the agencies said they would recommend a veto of H.R. 2500 in its current form.

    H.R. 2500 will lead, in my view, to more delay in cleanups, more litigation, more lawyers and continued threats to drinking water from toxic waste. H.R. 2500 favors the special interests at the expense of the public interest. Polluters would get off the hook for cleaning up their toxic waste, and the taxpayers would be forced to pick up the tab. Our goal should be to make Government work better to help people, not to give special treatment to special interests. H.R. 2500 would not protect the American people from toxic wastes that threatens their drinking water. Instead, it will allow those threats to remain with little or no hope of cleanup.

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    Instead of H.R. 2500, we should have a bill that speeds up cleanup and gets the lawyers and the delays out of the system. The Republican bill will lead to more lawyers and less cleanups. It won't help small businesses, and it won't help people who are threatened by toxic waste in their drinking water. It will help the special interests who know how to work the system from the inside. The result is H.R. 2500 is a bad bill.

    Thank you, Mr. Chairman. I appreciate the time.

    Mr. BOEHLERT. Is there anyone else? Mr. Geren, do you have any comments? And welcome.

    Mr. GEREN. Mr. Chairman, I appreciate your extending me the opportunity to sit in on this hearing. And I do want to welcome K.C. McKee. It's been a pleasure for many years to work with her, and I'm proud to see her in this position on that side of the podium. But welcome to her, and again thank you for letting me sit in. I appreciate it.

    Mr. BOEHLERT. Thank you very much.

    It's very obvious from Mr. Borski's opening statement that there are some areas of disagreement. And frequently, when I'm at town meetings or back home in my district, people say to me, why don't you people agree more. You seem to disagree all the time. And the answer is, what would you expect?

    Of course, since we're dealing with such sensitive legislation, there are going to be areas of disagreement as we start the process. But we have some common ground, and we have some common objectives. And I would suggest to one and all that we're adults, we're concerned, and we have the ability to work well and reason together.

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    And in the final analysis, I am convinced that this subcommittee, the full Committee and this House can produce a product that will be worthy of the mandate from the American people for us to be responsive to the problem and responsible in dealing with it.

    And I would like to further suggest that it will be at some future date the privilege of Mr. Borski and I to lead the House in passing this legislation because we know it needs to be done. And there's going to be some accommodation on both sides.

    As I indicated in my opening statement, I have some particular concerns in the area of remedy selection. Mr. Borski has identified some concerns that he has. But in the final analysis, the work we are about is too important to be left unattended.

    So we're going to go forward. And I would like to think we could do it by the end of this year. That's an ambitious schedule. And the reality of it is that we might not be able to finish it by the end of this year, although we're going to have that as our goal. But we're going to go forward, and we are going to have Superfund reform.

    Now it's my privilege to introduce panel one. Representing the National Federation of Independent Business, Ms. Kathryn McKee, K.C. From the Pennsylvania Chamber of Business and Industry, Mr. Robert M. Cox., Jr. Representing the Chemical Manufacturers Association, Mr. Bernard J. Reilly. Representing Lockheed Martin and the Electronic Industries Association, Ms. Mary Morningstar. And from the Automobile Manufacturers Association, Ms. Lynn Buhl. And finally, from Superfund Reform '95, Executive Director, Mr. George Baker.

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    And I want to welcome all of the panelists. And before we proceed with the testimony, I want to thank all of you for the very valuable input. You've spent a lot of time, you have a lot of talent, you've shared your points of view with us. You haven't always agreed with each other, as your testimony will reveal. But I think this is the way the process should work, and you have every right to be proud of your performance. And we are proud to associate with you.

    And I would also like to say, Mr. Borski, I think you'll indulge me in this privilege, people say to me all the time, you know, those lobbyists down there in Washington, got to get rid of them. And I say, that's about the last thing in the world we want to do. We have lobbyists that are valuable resources, that provide us with valuable information from different perspectives. And that's what's very healthy in the process.

    The only problem develops when those of us on this side of the witness table listen to only one side of the story. You will reveal divergent points of view. You are assets, you are resources. And I thank you for taking the time to help educate us so that in the final analysis, we can produce a good product.

    Let's go in the order in which the panelists were introduced. First, Ms. McKee.

TESTIMONY OF KATHRYN MCKEE, LEGISLATIVE REPRESENTATIVE, NATIONAL FEDERATION OF INDEPENDENT BUSINESS; ROBERT M. COX, JR., ON BEHALF OF THE PENNSYLVANIA CHAMBER OF BUSINESS AND INDUSTRY; BERNARD J. REILLY, CORPORATE COUNSEL, DUPONT, ON BEHALF OF THE CHEMICAL MANUFACTURERS ASSOCIATION; MARY P. MORNINGSTAR, ASSISTANT GENERAL COUNSEL, ENVIRONMENTAL LAW, LOCKHEED MARTIN CORPORATION, AND ON BEHALF OF THE ELECTRONIC INDUSTRIES ASSOCIATION; LYNN Y. BUHL, SENIOR STAFF COUNSEL, CHRYSLER CORPORATION, ON BEHALF OF THE AMERICAN AUTOMOBILE MANUFACTURERS ASSOCIATION; AND GEORGE BAKER, EXECUTIVE DIRECTOR, SUPERFUND REFORM '95

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    Ms. MCKEE. Thank you, Mr. Chairman.

    Good morning. My name is K.C. McKee, and I'm a legislative representative for the National Federation of Independent Business. NFIB is the Nation's largest small business advocacy organization, representing over 600,000 members in all 50 states. The typical NFIB member has five employees, and grosses $250,000 in annual sales. Our membership reflects the general business profile in that we have the same number of retail, service, manufacturing and construction businesses that make up the Nation's business community. NFIB sets its legislative positions based on regular surveys of its membership.

    I want to thank you, Mr. Chairman, for inviting NFIB to testify before this committee. I commend you for dedicating this hearing to what the White House Conference on Small Business voted as the fifth highest reform priority, Superfund reform. I would like to touch on three areas in my testimony today. First, small business and their attitudes towards Superfund; second, the biggest problem for small business under the Superfund law; and third, solutions that are out there, including H.R. 2500.

    First, small business owners wear many hats. One of those hats is citizen in the community. They breathe the air, they drink the water, their children play in the community. They want a healthy and safe environment for both themselves and their children.

    Another hat they wear is that of small business owner. In wearing that hat, they expect the Government to treat them fairly and responsibly. Unfortunately, that has not been the case under Superfund law. It has caused anger, distress and even despair among many small businesses when they have to deal under the Superfund.

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    This leads me to my second point. What is small business's biggest concern under the Superfund? No question, it is the liability system. Our members identified three major problems. First, Superfund encourages litigation. It's the nature of the statute. When one PRP gets named, it's in their best interest to drag as many other parties into the process as they can. This slows cleanup and increases the transaction cost.

    Second, there is no quick, fair or easy way to get out from under Superfund if you are a minor or innocent party. You are often trapped in litigation for as many as 8 to 10 years paying thousands of dollars. Nothing is gained, either for the economy or the environment, when businesses are forced to close their doors due to lack of quick and reasonable settlements.

    And third, what our members find most unfair and unbelievable is the retroactive strict joint and several liability scheme. The fact that today they can be forced to pay 100 percent of the costs when their actions were legal at the time is un-American and unfair. Several proposals have been discussed on how best to discuss small business problems with Superfund. Our members believe that the best solution is to eliminate retroactive and joint and several liability. It is the cleanest and fairest solution.

    However, there are funding problems with this. Short of full appeal, as you mentioned in your statement, Mr. Chairman, it is essential that we have Superfund reform this year. Our members want to get out from under the horrendous liability scheme that plagues current law. H.R. 2500 contains some excellent reforms. The elimination of liability at co-disposal sites, and the inclusion of a municipal solid waste exemption will help many NFIB members. Additionally, the elimination of liability for small or de minimis contributors and the expedited settlement provisions in H.R. 2500 are other good elements in the bill.

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    Two weeks ago, we testified before Chairman Oxley's subcommittee. We offered several suggestions on how H.R. 2500 could be improved for small business, including exempting recycling sites from liability and adding protections to keep innocent and de minimis parties from being dragged into the system.

    Yesterday, Chairman Oxley, along with yourself, Mr. Chairman, and Chairman Bliley, unveiled a small business amendment that includes these provisions. If these amendments are accepted today during the Commerce Committee markup, H.R. 2500 would address most of our members' concerns, and we would fully support it. It would dramatically reduce unnecessary litigation, ensure that money will go towards its intended purpose, and most importantly, ensure that sites would be cleaned up in a timely manner.

    Again, thank you for the opportunity to appear before you today. I would be glad to answer any questions.

    Mr. BOEHLERT. Thank you very much. There's a pro on Capitol Hill. The green light was on all during your session. You used the allotted time wisely.

    And I want to advise all the panelists that we'd like you, if you could, to restrict your comments to five minutes. And if you go over a little bit, the subject matter is so important, we won't get nervous about it. But your statements, in their entirety, will be included in the record for all to read and absorb.

    Mr. Cox.

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    Mr. COX. Thank you, Mr. Chairman.

    Good morning. My name is Bob Cox. And I'm testifying before you today on behalf of the Pennsylvania Chamber of Business and Industry, an organization that represents 4,600 small, medium and large size businesses throughout the State. We are the fastest growing chamber in the country. Through local chamber networks, we represent 80,000 businesses.

    The Chamber Superfund Task Force, which I participated in in 1993, has been discussing reform on Superfund legislation since then. We are the first state chamber in the country to testify before Congress in June, advocating comprehensive Superfund reform. I thank you on behalf of the Chamber for the opportunity to return to the committee and give you our thoughts on H.R. 2500, the Reform of Superfund Act of 1995 as the legislative process moves forward.

    Pennsylvania's experience with Superfund has been an extremely frustrating one. Superfund has simply not worked for our State. We have over 100 NPL listed sites in Pennsylvania, and less than 10 have been cleaned up or deleted from the priority list. Our members, and I have first-hand experience on this, have spent hundreds of millions of dollars directly and indirectly in support of this cleanup program. Yet it has yielded very poor return indeed.

    In addition to the tremendous amount of money that we've spent on non-related cleanup activities, Superfund's failure to clean up the sites has had a negative effect on the State's economy. I know that first-hand, there's a lot of companies that feel trapped. The Chamber believes that unless Congress fundamentally reforms this hazardous waste cleanup program this year, the drain on the State's economy will only worsen.

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    Let me give you a first-hand experience that I went through Superfund with my company, the old Gilbert Spruance Company, of which I'm a former CEO and owner. We used a hauler in the 1950s, 1960s, 1970s, by the name of Marvin Jonas. Marvin Jonas testified under implied immunity in 1984 that he had hauled waste for Dupont and he had hauled waste for many large companies, including Gilbert Spruance. Once Spruance, was mentioned with Marvin Jonas, including Dupont, Hercules, CBS, Texaco there was just, the events became a nightmare for Spruance in Superfund. It was/is a juggernaut, it was/is a trap, it was/is a nightmare, we couldn't get out of it.

    What happens with Superfund is, once you're in, you cannot get out. We were, Jonas used 10 sites in New Jersey. With the joint and several liability and the retroactivity in one site, you're in them all. Gilbert Spruance spent over $300,000 in legal fees trying to get this thing corrected and defend ourselves, and nothing happened. We offered, (when the money was at $100,000), I came down and asked the EPA to take the money we were spending on legal fees and put it toward cleanup. Nothing happened.

    What happens to Gilbert Spruance, and what happens to a lot of small businesses, if you can visualize this, is a small business, you need to raise capital. Superfund does not allow you to do that. It drains capital.

    Furthermore, when you're in a Superfund site, no lending institution will lend you any money at all, because of the fear of what will happen. And I think, from an entrepreneurial standpoint, from a small business standpoint, when you have an inability to raise capital, all of a sudden your interest, direction, your drive, all of the things that make a business viable becomes negative. And what happens is, you look for an exit plan.

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    So that's what happened to us. To cover the costs that were going through with Superfund, and we were small, $3.5 million to $5 million in sales, maybe in a good year we made 7 or 8 percent before tax profit, we had to put 50 cents to a dollar a gallon on our wood finishes that we were selling to our customers to try and keep abreast of Superfund.

    So what happened was, I wound up in the situation where I could either, I either had to declare bankruptcy or sell it. And therefore, a business that had been in the family since 1906 was no longer and 75 people, 50 to 75 people, were let go. And they don't have any jobs.

    That's the capital side. With Superfund liability, it just prohibits you from raising capital. The psychological side is that three generations of Coxes in Gilbert Spruance felt as though we were treated as polluters when we had not done anything incorrectly.

    So certain parts of it are good, this law. Certain parts of it are very good, the remedy selection. We're just asking that you consider doing more with the liability repeal. We have a good start. We have some of it; 20 percent of it carved out. Let's see if we can do more. That's my message.

    Mr. BOEHLERT. Thank you very much. In very personal terms, you've told us exactly why we need the reform that we're about right now. I would observe that you wouldn't have been in the bind you are in, dragged into the situation, if the law we are proposing now had been enacted. You would have been exempt. So we're moving in the right direction.

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    Mr. COX. I think the exempt part is difficult, because our waste went to a transfer station. So maybe we were under 1 percent, maybe were not. No one ever connected the Spruance wastes with any Jonas site, specifically.

    Mr. BOEHLERT. Right.

    Mr. COX. But we weren't sure we were, because it's a transfer station.

    Mr. BOEHLERT. But you went to a co-disposal site, and we're exempting them. So we'll talk some more about it.

    Mr. COX. Okay, maybe I don't understand, Mr. Chairman.

    Mr. BOEHLERT. Okay. Next, from the Chemical Manufacturers Association, Mr. Reilly.

    Mr. REILLY. Good morning, Mr. Chairman.

    My name is Bernie Reilly. I'm an attorney with Dupont. I welcome this opportunity to testify in behalf of CMA, the Chemical Manufacturers Association.

    Mr. Chairman, for the past two weeks, H.R. 2500 has been subjected to a barrage of criticism from many points on the spectrum. Some say the bill goes too far, others say it does not go far enough. It has been lampooned, mocked, and distorted beyond recognition. Mr. Chairman, this bill is getting a bum rap. It is not a perfect bill, it can be improved. We do have concerns with parts of it.

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    But on balance, H.R. 2500 is responsible legislation. Your support and leadership is positive proof that this is a serious piece of environmental legislation. It deserves to be taken more seriously.

    H.R. 2500 acknowledges that you can't have what you can't pay for. Full repeal of retroactive liability is a worthy goal, but not if it means that it's undermining the pace of cleanups. This bill faces the facts. It does not shortchange the cleanup program.

    More importantly, the bill lays a foundation for a more productive, more effective Superfund program. It mandates remedies that are safe and protective, reliable and cost effective, and that are acceptable to the community. It takes steps to address the crushing inequities in the current program. It allocates responsibility fairly. It untangles many from Superfund's liability web. It calls for as much liability reform as the system can afford. It is, in short, a major improvement over the status quo.

    Still, the critics are having a field day. They say it pays the polluter. We know that's nonsense. We all know who pays for the Superfund program. Industries like mine pay for Superfund, and will continue to pay for cleanups. Responsible parties who receive a discount are receiving reimbursement from a fund that is paid for by taxes on industry. Again, these are taxes on industry, not the taxpayer.

    In fact, we pay so much in taxes that the Superfund trust fund has accumulated a surplus of $3 billion. That surplus helps to offset the cost of other Government programs, like the space station. Why didn't the critics complain about that?

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    Those who say the bill doesn't go far enough to fix the liability system are equally mistaken. They want full liability repeal, but won't help pay for it. They want to get something for nothing, and that's irresponsible.

    Mr. Chairman, we believe this bill is a major step in the right direction, a dramatic improvement over the status quo. But there is room for improvement. We'd like to see stronger groundwater protection, more clarity on the cause test, more involvement by the community beyond merely the elected officials, and a more workable system for reviewing cleanup decisions. Our goal always has been a faster, more effective cleanup program. We do not want changes that result in delay.

    We also have concerns with changes being made in the liability title. Small share parties should receive a quick exit from the system. That is only fair. But it must be done carefully. It is important that we have a workable allocation process. Relief for small shares should not come at the expense of the parties remaining in the site.

    Mr. Chairman, Superfund reform is long overdue. The Nation is pouring more than $10 million a day into this program, and getting far too little in return. H.R. 2500 corrects many of the most pervasive problems with Superfund today.

    But we also issue a word of caution. Your efforts to repair the Superfund program will be wasted if the Superfund taxes are reauthorized in budget reconciliation. I'm not a budget expert. But the budget experts tell me that passing Superfund tax extensions as part of budget reconciliation will mean that those revenues will not be available to pay for Superfund reform. If the Senate version of budget reconciliation passes, Superfund taxes will be diverted one more time to pay for other programs.

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    I urge this committee to protect the future of the Superfund program. Superfund taxes should be extended, but only as part of the Superfund reform package.

    In closing, CMA supports your efforts to pass a serious, responsible Superfund reform. We will continue to work with you to perfect a bill that can be passed and signed into law as soon as possible.

    Thank you.

    Mr. BOEHLERT. Thank you very much, Mr. Reilly. You say this H.R. 2500 deserves to be taken more seriously. It would suggest it's being taken very seriously. A lot of attention is being paid to this. And the fact that we're getting shot at from both sides indicates that maybe we're onto something here.

    The next witness, from Lockheed Martin Corporation and the Electronic Industries Association, Ms. Mary Morningstar.

    Ms. MORNINGSTAR. Thank you, Mr. Chairman.

    I would like to thank you and the other members of the committee for the opportunity to present the views of Lockheed Martin Corporation and the Electronic Industries Association on H.R. 2500. My name is Mary Morningstar, I'm Assistant General Counsel, Environmental Law, for Lockheed Martin.

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    Over the past year, Lockheed Martin and EIA have been working closely with members of Congress, Congressional staff and other stakeholders in search of Superfund reform that is more efficient, less litigation driven, and less bureaucratic than the current program. We believe that H.R. 2500 achieves these ambitious goals by improving the Superfund process and successfully integrating the needs of communities, businesses and the environment.

    Superfund currently imposes strict joint and several retroactive liability on potentially responsible parties. This uncompromising liability system imposes tens of millions of dollars of cost on industry, based on disposal activity that was perfectly legal, or even state of the art, at the time it occurred. In practice, this draconian liability scheme has slowed the progress of cleanups. Since the enactment of Superfund in 1980, only a small number of Superfund cleanups have been completed, despite the filing of thousands of lawsuits and the expenditure of billions of dollars.

    While there is widespread recognition that retroactive liability is wasteful and inherently unfair, it is clear that sweeping elimination of retroactive liability is not a viable solution. Without new or increased taxes, funding is just not available to repeal retroactive liability completely and still clean up the Nation's worst hazardous waste sites. Moreover, a full retroactive liability appeal at this point would penalize those companies who have followed the law, funded cleanups and undertaken continuing legal obligations, while rewarding other companies who decline to participate in Superfund cleanups.

    H.R. 2500 develops creative means of providing as much retroactive liability relief as existing taxes can support. The retroactive liability discount would provide a 50 percent discount for liability attributable to a party's status or activity prior to 1987. While not eliminating fully the burden of retroactive liability, the RLD does provide some relief for parties in current cleanup costs at certain sites.

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    At municipal landfills, the application of retroactive liability has proven particularly unworkable. The large volume of municipal or commercial waste mixed with smaller amounts of hazardous waste at these sites results in cleanup costs that are unusually high in relation to the opportunity for risk reduction. Fair liability allocation at these sites is extremely complex, and only complicated by the use of a litigation-based allocation process.

    To address these shortcomings, H.R. 2500 repeals retroactive liability for disposal of waste at all municipal landfills. This reform will lead to a fairer, more effective application of the Superfund program, and result in a significant reduction in the program's overall transaction costs. H.R. 2500's focus is on the elimination of municipal landfill retroactive liability provides the appropriate balance between equity and Superfund's financial viability.

    H.R. 2500 also establishes a number of simple reforms that rein in the expanding scope of the Superfund program and enhance efficiency at minimal cost. The bill provides liability relief for de minimis and de micromis parties, caps liability for disposal of municipal waste, reinstates lender liability limitations, and establishes a long overdue framework for industrial site redevelopment.

    These changes affecting the scope and application of liability, while extremely valuable, do not address all of the inequities and inefficiencies in the current system. The current Superfund program's reliance on joint and several liability at NPL sites has resulted in expanding waves of litigation as named PRPs legitimately seek contribution from additional parties. Moreover, the current liability system results in delays in cleanups due to complex liability allocation battles and unfair imposition of substantial orphan share liability on solvent parties.

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    To address these problems, H.R. 2500 creates a proportional allocation mechanism that establishes each PRP's liability by a neutral allocator. Cost shares allocated to parties receiving liability relief in the bill would become part of the fund reimbursable share and be assumed by the trust fund.

    While this allocation mechanism does much to ameliorate the effects of joint and several liability, ambiguity in the fund reimbursable share provisions could frustrate reform of the current system. Clarification of both the cost shares allocated to unknown parties and the cost shares allocated to insolvent or otherwise unavailable parties are part of the fund reimbursable share would ensure greater fairness and provide more definitive guidance to future allocators.

    H.R. 2500 could also be improved by addressing the imposition of Superfund liability on Government contractors arising from their operation at Federal facilities. Under this bill, Federal facilities do not receive the same substantial benefits of liability reform extended to non-Federal facility sites.

    This has the effect of penalizing companies that operate Government facilities. These Government contractors would be singled out for continued treatment under the existing unfair Superfund liability system while non-Government contractors are relieved of these unfair conditions by H.R. 2500's reforms.

    It is understandable that you desire to prevent the Federal Government from receiving the same liability discounts and exclusions private entities do in this bill. But the bill excludes Federal facilities, not just Federal entities. Rather than disadvantage the one sector of the industrial community that operates at Federal facilities, Congress should treat Government contractors at Federal facilities like all other private entities, and extend to them the valuable reforms of H.R. 2500.

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    Lockheed Martin Corporation and EIA believe that the reforms in H.R. 2500 are realistic, workable improvements to the Superfund program. Superfund reform has been a topic of debate over the past several years, and the program is long overdue for improvement. We urge Congress to act now to end the inefficiency and inequity in the current program and reform Superfund this year.

    Thank you, Mr. Chairman.

    Mr. BOEHLERT. Thank you very much.

    From the American Automobile Manufacturers Association, Lynn Buhl.

    Ms. BUHL. Good morning. My name is Lynn Buhl. I am Senior Staff Counsel for Chrysler Corporation.

    I welcome the opportunity to present the views of the American Automobile Manufacturers Association. AAMA is the trade association representing Chrysler, Ford and General Motors.

    First, I want to congratulate the Chairman and the other co-sponsors of H.R. 2500 for their efforts toward meaningful reform of the Superfund program this year. I am sure you have all heard from many different constituents that the current Superfund program simply doesn't work well, doesn't give Americans their best bang for the buck. It is punitive, wastes private and public resources, and discourages redevelopment of previously used sites.

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    While administrative reforms have attempted to correct these inequities, it is clear that statutory requirements, namely the absence of any realistic cost consideration and remedy selection, driven by the preferences for treatment and permanence, and the strict joint and several liability scheme are at the root of Superfund's problems. AAMA believes that the most significant problem in Superfund is remedy selection. H.R. 2500 addresses a number of our concerns about the current process.

    First, it clarifies that the goal of the program should be to protect human health and the environment from realistic and significant risks through cost effective and cost reasonable means. This is a critical shift in focus. Cleanup should focus on exposure to unacceptable risks, rather than assume that contamination must be completely eliminated. This concept is important to brownfield redevelopment, where the cost of remediation to pristine levels discourages the re-use of urban industrial sites.

    Second, the bill repeals the preference for treatment and permanence, and cites numerous types of remedial technologies that are potentially acceptable. Third, realistic land use considerations are incorporated into the remedy selection process. The auto industry has insisted that land use be an essential first step in establishing appropriate cleanup standards.

    Fourth, the proposal includes a requirement that the President certify that the selected remedy represents a cost effective risk reduction. This is necessarily direct. Our 15 years of experience with this program has convinced us that absent specific statutory direction, it is entirely likely that cost will again get shorted in the Superfund program.

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    Finally, I want to applaud the sponsors of this bill for bringing due process back into the Superfund program, allowing remedies to be judicially reviewed is a significant step towards ensuring that cost effective remedies are selected in the first place. Denying PRPs their right to meaningful review of unwise remedial decisions and enforcement tactics has not expedited cleanups.

    I have a few comments on the liability provisions. Like almost everyone caught in the Superfund web, we would like to see an end to Superfund's strict joint and several retroactive liability scheme. Despite Congressional intent, Superfund is not and never has been a polluter pays program. However, we realize that given current budget constraints, it is unrealistic to expect full retroactive liability repeal. This proposal would target and remove from the liability process the sites that currently give rise to the most complex and resource intensive disputes. This should allow more resources to be devoted to actual site remediation.

    AAMA also supports an across-the-board reimbursement of cleanup costs attributable to pre-1987 wastes, as proposed, as well as its fair share allocation approach. We are particularly pleased to see the ban on Federal enforcement or private party actions at sites that are subject to remediation under a state program.

    While AAMA supports the overall approach to liability reform contained in the bill, there are three minor issues that we think deserve further attention. First, we're concerned about the mandatory litigation risk premium. It may serve as a disincentive to settlement. This premium penalizes those who step forward and agree to assume their share of liability, and should instead be charged to non-settling parties.

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    Second, we'd like to see statutory provisions for extinguishing liability. It would be helpful for the statute to contain clearly marked exit signs, with appropriate reopeners in the event of remedy failure. This change would help PRPs satisfy the concerns of their lenders. Third, although the bill provides some protection of privileged documents, we see a need for clearer language in this area.

    In conclusion, we believe H.R. 2500 takes a major step toward ensuring that the American public is protected against unreasonable risk, while requiring that protection be accomplished in the most cost effective manner possible. We all have a stake in making the Superfund program work. AAMA is prepared to step forward and participate in a constructive debate, whose goal is to see Superfund reform enacted this year.

    Thank you.

    Mr. BOEHLERT. Thank you very much.

    And now from the Superfund Reform '95 Coalition, Mr. George Baker, the Executive Director.

    Mr. BAKER. Hello, Mr. Chairman, Mr. Borski.

    My name is George Baker, and I have the privilege of serving as the Executive Director of Superfund Reform '95, the broadest based coalition testifying here today. S.R. '95 has well over 1,200 members, representing hundreds of thousands of small businesses, 300 municipalities, 330 local chambers of commerce, trade associations, insurers, environmental professionals and concerned citizens who have banded together for one common purposes: comprehensive, integrated, structural reform of the horribly broken and wasteful Superfund program in 1995.

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    Your bill, H.R. 2500, Mr. Chairman, adopts very many of the recommendations we originally made to you back in February. For example, in the area of remedy selection, natural resource damages, risk assessment, devolution of authority to the states, the RCRA interface with Superfund, voluntary programs. We strongly applaud these non-liability provisions of H.R. 2500.

    But H.R. 2500 does not yet get the reform right on liability, the issue which is clearly the heart and soul of true reform. If you don't reform the liability regime, you haven't done much for many of the innocent victims unfairly trapped in the Superfund nightmare. You don't get the lawyers out of the system and put the engineers and health professionals in charge. You don't cut the wasted $1 billion a year in transaction costs spent on lawyers, consultants and other sycophants preying like vultures on this program at the expense of cleanup. You don't streamline the bloated, wasteful and entrenched bureaucracy down at EPA. And most important, however, you will not accelerate the pace and volume of cleanup.

    I want to emphasize that H.R. 2500 does exactly the right thing with regard to liability at municipal co-disposal sites. You eliminate the retroactive liability completely. So, too, we are pleased to hear that you have now agreed to extend similar relief to all recycling sites. We view this as progress wholly consistent with our S.R. '95 principles for those lucky 26 percent of the sites involved.

    But what about the rest of the similarly situated multi-party sites which comprise about another 35 percent of the NPL? Why don't they deserve the same relief? For those unlucky sites for which relief is not made available, the battle over money and who pays for it remains. The much ballyhooed proportional allocation system that's the core of H.R. 2500's liability provisions perpetuates the delays, wastes and inefficiencies so clearly evident in the existing program for multi-party sites.

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    It was once said in criticism of the Warren Commission report that the only way you could believe it was not to have read it. Well, we've read H.R. 2500. And with regard to multi-party sites, we still can't believe that anyone can seriously entertain the notion that it will be more efficient, less lawyer intensive, less larded with transaction costs, and more equitable than the existing Superfund quagmire.

    Let me illustrate, please, by a few of my graphics. What we've done here, Mr. Chairman, is we've got three graphs. Today, H.R. 2500 and hopefully what would be a better reform proposal. This is the existing situation under the existing Superfund law. Each red dot represents a place in this crazy, nutty system where lawyers and consultants disputes occur. You want to know why you're not cleaning up sites? Take a look. It looks like the St. Valentine's Day Massacre with all these red dots on it. Well, this is what your problem is today. We're transactioning, we're lawyering this thing to death.

    We've taken a look at H.R. 2500. And H.R. 2500, just put it next to it, Peter, so we can make a comparison. This is your allocation system. Nothing on this chart talks about the selection of remedy. This is all pre-remedy selection, pre-fistfights over remedy. This is a system designed to figure out who's going to pay for it.

    Now, down the middle you've got your regular allocation system. On the left hand side, you've got your special exemptions. On the right, you've got your expedited program. Now, this, all the red dots here are where the lawyers, consultants and fistfights occur in this system. We don't think this makes sense. This is 3 years before you talk about who gets to decide and pay for remedy.

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    Let's go for another example. This is our program, Mr. Chairman, where you eliminate 80 percent of the sites, 80 percent of the sites are out of the deal, no lawyers, no mess, no fuss. You've got about 20 percent of the sites here on the right where there's four bullet points where there are discussions and lawyers and lawyering with respect to what you're going to do on remedy. The point is, you go immediately in most sites to cleanup. That's what we should be doing. And you're on the right route with what you did the other day.

    We don't believe, Mr. Chairman, there is a so-called funding gap. We've given you reasons and mechanisms to get there, with your proposal. But if after all avenues are fully explored and exhausted, you've come to the conclusion there is only a limited amount of money available for liability reform, we'd strongly urge you to continue on the path you started yesterday to eliminate liability first at multi-party sites, which represent the largest number of sites, the largest number of litigants, the largest number of transaction costs, the largest number of small and medium size businesses.

    On behalf of our entire membership, let me just reconfirm Superfund '95's total commitment to helping you and your colleagues find technical and political solutions to getting true reform enacted into law this year. And let me thank you very personally for the opportunity to present our views today.

    Mr. BOEHLERT. Let me ask you first, Mr. Baker, just about all the members of your Superfund Reform '95 signed onto last year's bill, which came that close to being passed. This year's bill is infinitely better, I think, that almost everyone agrees with that. And yet the opposition. What changed?

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    Mr. BAKER. Mr. Chairman, I don't want to be contentious, but it would be an enormous error of fact for me to agree with your statement that virtually everybody in our coalition signed on to it last year.

    Mr. BOEHLERT. I didn't say virtually everybody.

    Mr. BAKER. No, even large numbers. And I'll tell you why, because this is important. You've asked an important question.

    We've got 1,200 members. We've got local governments, we've got chambers of commerce, all these people. None of them, none of them signed onto this bill. There's members of our coalition from Texaco, Southern Pacific, large companies that are in our group. Virtually none of them signed onto last year's bill.

    We were the group, that consistently said, in league with the NAACP, that you needed to fix retroactive liability form in a far different fashion than last year's program approached it. We see last year's bill, H.R. 3800, mirrored on much of the allocation system you have here, which is our continuing objection.

    So just as a matter of fact, I want to make sure you understand. We're not the group that signed on last year and is now opposing this year.

    Mr. BOEHLERT. Okay, let me ask you, I see a lot of similar names, it may be coincidence.

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    Mr. BAKER. Give me the names, because I don't know them.

    Mr. BOEHLERT. We will be glad to provide that.

    Mr. BAKER. I understand.

    Mr. BOEHLERT. All right. Now, let me ask you this. Are you now saying that Superfund reform is for eliminating multi-party sites but not for full repeal of retroactive liability? Are you adjusting your position on that?

    Mr. BAKER. Let me be very clear. It is our strong position that full retroactive liability reform for activities prior to 1987 should be eliminated in order to facilitate cleanup, if we're talking about a political realm here, a real-world situation. You have come to the conclusion, with your colleagues on the Democratic side, that you've only had so much money to spend on this, contrary to what we believe to be the case.

    It would be the best policy, it would be the best politics for getting a bill done this year for you to apply what monies you have available to eliminate liability at the most number of sites with the most litigants, the most small business. You've heard NFIB's testimony, you've heard Mr. Cox's testimony. That makes the most sense.

    So, yes.

    Mr. BOEHLERT. What makes the most sense from my perspective is that we have a bill we can pay for.

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    Mr. BAKER. Right.

    Mr. BOEHLERT. Because I am offended by the proposition that we have a $5 trillion national debt——

    Mr. BAKER. Right.

    Mr. BOEHLERT.——which requires us to spend $800 million a day just in interest, which doesn't feed anybody or clothe anybody or educate anybody or clean up any sites. So, Mr. Reilly, talk to me a little bit about the affordability of full retroactive liability. I noticed you didn't support full retroactive liability, because I think you've come in real terms to the conclusion that it's not affordable. Mr. Baker and you have somewhat different points of view, so I'd like to hear a minute or two from each one of you on whether or not it's affordable.

    Mr. REILLY. Yes, Mr. Chairman. And of course, right now, we don't even know how much money we're talking about for reform. I know the bill suggests we might have $1.9 billion a year. We know that appropriations right now are $1 billion a year. We hope that if the law is reformed in a way that makes it more politically a better bill, that the funding will be there.

    Mr. BOEHLERT. Billion, not a million.

    Mr. REILLY. I'm sorry. Lost a couple of zeros.

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    There is an issue around affordability. We've taken a look at what full repeal of retroactive liability would cost within the Chemical Manufacturers Association. We estimate it would take about $2.5 billion a year and that, we're just nowhere near that money.

    And so the Chemical Manufacturers Association cannot support repeal of retroactive liability, full repeal, until there's that much money available. And it doesn't seem to be there. We've taken a look at what H.R. 2500 would cost, and it looks like it would cost about what the staff has estimated, $1.8 billion or $1.9 billion a year. That seems to be affordable.

    I think if you then go up the chart and try to, say, carve out other categories of sites, like all multi-party sites, it seems to me you're probably somewhere between the $1.8 billion and the $2.5 billion. Pick a number, say $2.2 billion. That money just doesn't seem to be there. So we don't see where you could afford to go much beyond the co-disposal sites, based upon what we understand the numbers are.

    Mr. BOEHLERT. Ms. Morningstar, I see you shaking your head. Do you agree with that?

    Ms. MORNINGSTAR. Yes, Mr. Chairman. Lockheed Martin and EIA have been concerned from the beginning about the feasibility of doing full retroactive liability repeal, mostly because of the money. We just don't see that the money is there. There have been several studies done by different organizations, including the Business Roundtable. And everybody has basically concluded the same thing, that it would take somewhere between $2.2 billion and $2.5 billion a year. And at this stage, we don't have nearly that much in taxes.

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    Mr. BOEHLERT. I was particularly impressed with the Business Roundtable study. We asked for it. And, Mr. Baker, were you impressed with that study?

    Mr. BAKER. It's an interesting model. As all models, a model represents a streamlined, simplistic—I don't mean that negatively—view of the world. It doesn't represent the world. So what your assumptions are going in, are critical to as to how you view it, how you analyze it.

    We have serious concerns and differences of opinion with respect to the methodology used. Assumptions with respect to what is necessary in the core costs to run a reform program, for example.

    Mr. Boehlert, if I may have just 30 seconds.

    Mr. BOEHLERT. Sure.

    Mr. BAKER. We're having an important discussion here, and you asked for it.

    Mr. BOEHLERT. You're right.

    Mr. BAKER. You asked for us to discuss. Our view is that we were the ones who were first concerned, if anybody, back in November when we started out on this project, to how you could fully fund a full retroactive liability reform. I mean, we were the ones who were most concerned.

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    So when we came up with our program, we worked hard on that. I know you know, because we've given them to your staff and everybody, we went out and got two major accounting firms, Price Waterhouse, Peat Marwick, certainly no slouch operations, to really push us around and grill us on what the assumptions were in our numbers and validate our numbers, etc., and so forth. And they both came up with the conclusion that even without remedy reform, which you have an enormous amount in your bill, our program to do full reform at the $2.3 billion level is reasonable.

    Now, you ask, why is that different from the BRT program? It has to do with the assumptions about how big your core program is, how expeditious your cleanup, what you do. Your bill itself, I don't believe you've taken enough credit for the reforms in your bill in terms of the monies available.

    For example, you exclude, as we would applaud, it was our position, too, criminal and civil violators of the law from the liability relief, well, I don't think you've claimed the dollars available for that deal. I don't think you've claimed, for example, in the Federal facilities reform. You spent $7 billion a year over at the Federal facilities. And remedy reform there is going to free up money. Can there not be $100 million to fill a perceived gap there?

    Those are the kinds of reforms, Mr. Chairman, which is the difference between our approach and the BRT numbers, in terms of really a probing review of what real reform is. So that's the difference.

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    Mr. BOEHLERT. Thank you. And I appreciate that. And the red light's on for me.

    But I do note that in the Price Waterhouse report to which you refer, this is an exact quote, the overhead management cost reductions assumed in the S.R. '95 proposal are very aggressive. The report's conclusion that reforms could be financed at current budget levels are ''as a result of savings measures assumed by S.R. '95.'' You know the old story about when you assume things.

    Mr. BAKER. Yes, but Mr. Chairman, to be fair to the report, you have to read the whole report. That is a disservice, that is a misreading of the conclusion of the report. Because if you look on page nine, what they said was, as they do on Wall Street, the doomsday scenario, which is if all your assumptions go to the most conservative, okay, what happens to the validity of your report. So they did this report without any remedy savings.

    And what the conclusion is on page nine is, if it all went to hell in a handbasket, with only 5 percent of the remedy savings, you'd still make your number. Now, that was done purposefully. Because with 35 percent remedy reform, you would have that kind of a cushion for the conservative, all the assumptions going to that conservative marker.

    Mr. BOEHLERT. I just want to assure you we do have the report, and we do read it.

    Mr. BAKER. I know you do.

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    Mr. BOEHLERT. Thank you. I mean, two people can look at the same thing and see something quite different.

    Mr. BAKER. Well——

    Mr. BOEHLERT. Thank you. Appreciate it.

    Mr. BAKER. I say go with the whole report.

    Mr. BOEHLERT. Now we go to Mr. Borski.

    Mr. BORSKI. Thank you, Mr. Chairman.

    Mr. Reilly, can EPA absorb the increased responsibilities of H.R. 2500, such as rod reopeners, site specific risk assessment, judicial review, primary responsibility at co-disposal sites, with the reduction in its operating budget at the same time?

    Mr. REILLY. That will be a challenge, sir. Certainly not with the reduction in the core program that's being suggested by Mr. Baker. We're suggesting that the core program right now, which is basically what EPA does not spend on cleanups, is about $800 million a year. We're suggesting that maybe they could tuck that into $600 million.

    But there's no question it would be a challenge to do all the reforms that are necessary that we're saying like, revisit bad RODs, re-do the national contingency plan, there's no question the agency would have its hands full. We think it would be busy. We think that with $600 million a year, hopefully a lot less money going into enforcement, it would work.

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    Right now, $232 million a year goes into just enforcement. We'd like to think that a lot of that money could be turned into other program materials, especially if we've got a reformed way to allocate shares at the sites.

    Mr. BORSKI. The Administrator of EPA last week, by the way, suggested that there is no way she could handle these responsibilities.

    Let me explore the concept of retroactive liability discount with you for a minute, Mr. Reilly. Are there any checks upon who gets a check? For example, do single owner sites receive a rebate of the cleanup costs?

    Mr. REILLY. As we understand the bill, sir, if it's on the National Priority List and you incur costs, you could, you ask the fund for a 50 percent reimbursement. And by the way, of course, just defining what is a single party site is no small challenge. Some of the mining sites, you know, have been worked for 150 years and all that. So in our view, the true single party site that's on the National Priority List is the exception, not the rule.

    Mr. BORSKI. But Dupont could have a site that it owned and generated, and get a rebate, is that correct?

    Mr. REILLY. Yes, sir. We don't happen to have one, but in theory, yes.

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    Mr. BORSKI. The same would be true, I guess, regardless of how many parties are responsible for a site, a site owned by two or more large companies could also receive this rebate?

    Mr. REILLY. That's the way we understand the bill, yes, sir.

    Mr. BORSKI. Isn't it more important that the pace of cleanup be increased, and the remedy reforms be implemented?

    Mr. REILLY. Well, there's an issue here of a pipeline. Right now, it's our understanding that EPA is working just as fast as it can, the PRPs are cleaning up sites just as fast as they can, there's no shortage of money, there's no problem. You basically can't go any faster than we're going right now, given the NPL. So we think as long as the funds are there, as envisioned in this bill, that adding extra money really is not going to increase the pace of cleanups.

    So therefore, if you say decrease the retroactive liability discount, and put that money into cleanups, we don't think you'd get any bang for that.

    Mr. BOEHLERT. Excuse me, Mr. Borski. I don't want to take any time away from you. I have to go to a meeting, not to name drop, but with the majority leader. What we're going to do is, after this panel, because we have a number of members here who want to ask questions of this panel, and the Chair will be liberal in giving the time because of the importance of the subject matter. But after this panel, we're going to have an adjournment until 1:00 o'clock. So the second panel will be on 1:00 o'clock. I'm just giving notice there so you can plan your time accordingly. And Mr. LaTourette will take over.

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    Thank you, Mr. Borski.

    Mr. Emerson apparently will take over.

    Mr. BOEHLERT. Mr. Emerson, my distinguished colleague from Missouri.

    Mr. BORSKI. Ms. Morningstar, let me ask you a question or two if I can. Proponents of the bill refer to the removal of liability for the co-disposal sites as intending to assist municipalities. Wouldn't this provision also provide relief to a large number of privately owned sites which just happen to have household waste at the site?

    Ms. MORNINGSTAR. Yes, sir, actually it would. The way that a municipal landfill exemption is written is that it would be for sites that were duly permitted at the time that they accepted solid waste versus what is now defined as hazardous waste or industrial waste.

    Mr. BORSKI. Is that a good idea?

    Ms. MORNINGSTAR. Sir, the idea behind the co-disposal landfill exemption was to take out the sites where you have the most litigation, the most contentious disputes, and to ensure that those sites would be cleaned up faster and more efficiently.

    According to studies we've done, there is enough money in the fund to pay for those cleanups through the fund, through the taxes on corporations and the chemical and petroleum feed stock taxes. And in fact, that would pull out those sites where there are hundreds of parties, and every time you have a PRP meeting, you have to rent out an auditorium for all the parties and their lawyers.

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    And what happens is, you have 10 years of litigation and discussion and negotiation about who's responsible for what, and those sites end up not being cleaned up. And we believe that by pulling those sites out of the system, having them paid for by the cleanup, you would end that litigation immediately and the sites would be cleaned up much more quickly.

    Mr. BORSKI. Does that create inequity among industrial disposers?

    Ms. MORNINGSTAR. Sir, that's an excellent question. I'm not sure, to be honest. I could certainly look into that and get back to you.

    Mr. BORSKI. Let me just follow up one other point here. A privately owned site, which had accepted primarily industrial waste but also accepted some amounts of household waste, it would receive the exemption, would it not?

    Ms. MORNINGSTAR. Yes, sir, it would.

    Mr. BORSKI. Is Love Canal——

    Ms. MORNINGSTAR. Well, pardon me, sir. I'm sorry. As long as it was permitted by the local authority to receive solid waste. From my understanding of the bill. And it also needs to be on the National Priorities List.

    Mr. BORSKI. Is Love Canal an example of the type of site where the Federal Superfund would be left to pay for the costs of cleanup under this proposal in H.R. 2500?

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    Ms. MORNINGSTAR. I don't think so. I'm not sure, sir, if it would be.

    Mr. BORSKI. I believe EPA has told us it was.

    All right, thank you, Mr. Chairman.

    Mr. EMERSON [assuming Chair]. The gentleman from Oklahoma, Mr. Brewster.

    Mr. BREWSTER. Thank you, Mr. Chairman.

    I think that my statements that I'd like to be fairly general on, I've noticed and been fearful over the last several years that all we've done is spend a heck of a lot of money and get nothing cleaned up. I'm fearful at this point that both sides are operating from the extremes. I think we've got to find some middle ground out there that will put some money into the process to do the cleanup. We've got to eliminate a lot of the process to get to the final analysis, or once again, we get nothing solved.

    Hopefully after this hearing and in the next week or so, we'll do a markup on this bill, and hopefully in the Energy and Commerce Committee, we can come up with a bill that we can pass and that the President will sign. We accomplish nothing if we put together a bill that we can't pass and the President won't sign any part of it. So we're at a critical hour as far as cleaning up some sites. And hopefully all sides can give a little to make the thing work out, and we end up with a process that is workable.

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    Everybody's heard all the horror stories out there. I have some in my district. We've got to eliminate those. We've got to make sure those who did the polluting do actually have to pay. But those who did not, and were not part of it, shouldn't be hung into it. So hopefully we can come up with a process over the next week or so that can be conducive to making the thing work.

    I heard all the testimony except Ms. McKee. I know her, she worked for Congressman Geren, she has very good thoughts on these ideas. Hopefully we can work with the environmental community as well to make some things work out, and end up with a bill that will truly clean up the problems in this country.

    Thank you, Mr. Chairman.

    Mr. EMERSON. The gentleman from Ohio, Mr. LaTourette.

    Mr. LATOURETTE. Thank you, Mr. Chairman.

    Last week, we had a hearing, we were lucky enough to hear from the Administrator of the EPA and also a representative from the Department of Justice. And one of the discussions that was ongoing during that hearing had to do with the reopening of the RODs. And I took away from that hearing the sense being expressed by the Administration that that was a horrible idea.

    And I think I'd like to inquire of anyone on the panel who has a thought as to whether or not, as H.R. 2500 is presently written, the opening of the RODs is considered to be a good thing, and whether or not the fight that we now see ourselves embroiled in on either side of this issue is really winnowing down a procedure for when we should have a reopening or when we should not, as opposed to just a blanket, those would say that it's never a good idea.

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    Mr. Baker, I see you nodding your head.

    Mr. BAKER. Congressman, that was one of the points that we included back in our February proposal, our blueprint for reform. And why? At one level, I witnessed last week's discussion over at the Commerce Committee and the attack on this provision. But Mr. Reilly and Ms. Morningstar are absolutely correct on this point. These RODs that are written now are crazy. They're committing people to do ridiculous remedies at ridiculously high costs, with very little marginal benefit.

    Now, the reason we came to the conclusion similar to theirs was a little bit different. But we came to the conclusion which is, if EPA was fully funded to do cleanups, and they were spending their money in terms of picking the remediation, something which the environmental community has wanted for a long time, to get the PRPs out of the business of selecting remedies, so they have more ''credibility,'' then it would be up to EPA's fully informed discretion to reopen a rod. Because they were spending the money and presumably they'd have a credible reason for a different remedy at a lower cost.

    In our program, where we're talking about, for example, the multi-party situation, if they want to reopen a rod, they're spending their money, in effect, what does a PRP care, unless there isn't a PRP to worry about it. But Mr. Reilly, Ms. Morningstar, are correct on this point.

    Mr. LATOURETTE. It was interesting last week, we heard, and we've heard I think today some examples. I know the woman from the Department of Justice talked about this site and that site, an the site in New Jersey was mentioned, we've heard Love Canal mentioned again for I think the second hearing in a row. We've heard the Valdez mentioned.

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    Do any of you have any examples of RODs that should be opened, based upon your experiences, that now science or technology or rethinking remedies would make it appropriate? Any of you aware of situations that exist somewhere in the real world that it would be a prudent thing to do?

    Mr. REILLY. I believe the record of decision as Aspen still is hanging out there, isn't it, which was a record of decision to dig up all the soil in a community to protect the folks from lead. And you can measure lead in a body, and nobody was tracking out the lead. And so the citizens revolted and said, you're not going to dig up our neighborhood to deal with this lead situation. And I don't see anybody from EPA today. But the last I saw EPA had yet to back off from that decision, despite the fact that you can monitor lead in bodies, and the citizens weren't taking it up.

    Also, the last time I looked, the New Bedford incinerator ROD had issued, that is, they were going to burn the sludge and soil at New Bedford harbor. And the citizens basically blocked the trucks coming in with the parts to build the incinerator. So again, there's a situation where a record of decision needs, there's a serious need to revisit it.

    I don't think that you're going to see RODs being revisited at the 1200 situation being cited by the Administrator. Most of those RODs are already done. You're not going to reopen a ROD that's already done. A lot of them are almost through. I think there's going to be a very small subset of records of decision where it really is an unwise decision, the decision was forced by bad ideas that were in SARA of 1986. And it's going to be fairly straightforward to change that, and you're going to get a quick remedy, because you're going to get to it.

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    Mr. LATOURETTE. I'm glad you mentioned the words quick remedy. Because one of the arguments advanced last week was that if we have a vehicle to reopen RODs somehow it's going to add, and take Mr. Baker's chart with the dots representing lawyers, we're going to add 50 or 60 more dots, somehow, and make a protracted mess out of something that's over, final and settled.

    It's my understanding in H.R. 2500, and I've attempted to understand it to the best of my ability, that there is no stay provision upon a review or a reopening of a ROD, that it proceeds, unless someone can come up with that level of proof that would be akin to a preliminary injunction that basically says, we're going to have a reasonable chance of success. Did all of you read H.R. 2500 in that same way? Or do some of you see the argument that in fact, allowing us to revisit the ROD situation would in fact cause unnecessary delay and excess litigation?

    Mr. REILLY. I think if the agency says we're not going to overturn the ROD, that's the agency's final decision. You're going to have to still do the ROD. Now, you can litigate on your own time. But there's no reason why the agency can't order you to do that cleanup in the interim.

    Now, if it's such a bad decision by the agency that it merits a preliminary injunction by the courts, then probably the agency should be caught short on that. But we don't see that as a delay.

    Mr. LATOURETTE. Okay, thank you very much. Thank you, Mr. Chairman.

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    Mr. EMERSON. The gentleman from Illinois, Mr. Poshard.

    Mr. POSHARD. Thank you, Mr. Chairman.

    Mr. Reilly and Ms. Morningstar, if you could just answer this, is it the position of the Electronic Industry Association and the Chemical Manufacturers that we need only to treat contaminated groundwater at the so-called point of use, at the tap? Could you answer that? I'm a little confused about where each of your industries stand there.

    Mr. REILLY. Absolutely not. Nor do we read that to be what H.R. 2500 says. As we read H.R. 2500, one piece of it says, you can't drink groundwater that's contaminated. Well, I don't think anybody's going to disagree with that. Or contaminated above BMCLs.

    But also, H.R. 2500 says, the remedy has to protect public health and the environment, it's got to be reliable, and it's got to be accepted by the community. And I don't think the community would accept a situation where you just completely write off aquifers.

    Mr. POSHARD. So you don't agree with the point of use remedy, then?

    Mr. REILLY. We do not agree that it's the only criteria for protecting groundwater, yes, sir.

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    Mr. POSHARD. Okay. And Ms. Morningstar, very quickly?

    Ms. MORNINGSTAR. Yes, sir. I agree with the Chemical Manufacturers Association position, and also state that the groundwater cleanup provisions are first and foremost supposed to be protective of human health and the environment. And that is the first test. And if it can meet that test, then that will be the cleanup that will occur. We're concerned about cleanups that do not in fact reduce any exposure, reduce any risks, that are done simply because there's a ROD that states they should be done. And that is our concern.

    Mr. POSHARD. Thank you.

    Ms. MORNINGSTAR. Thank you.

    Mr. POSHARD. Mr. Reilly, why is it your opinion that allowing only elected officials, local officials to participate in the remedy selection decision represents giving, your quote, the community a real voice in the remedy selection process?

    Mr. REILLY. Sir, I know that there's a little bit of a land mine there. We want the remedy——

    Mr. POSHARD. I'm just asking. I'm not trying to put you on the spot.

    Mr. REILLY. Yes, sir. We want the remedy to be accepted by the community. We're not sure you really should be limiting it solely to the elected officials. I hope I'm reading your question right. We want it accepted by the community that's probably going to include some elected officials, probably the citizens advisory groups and anybody else that comes to the public hearing. And we think that probably could use a little bit of improvement in the bill.

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    Mr. POSHARD. Okay, so you wouldn't limit it necessarily just to locally elected officials?

    Mr. REILLY. Correct, sir.

    Mr. POSHARD. Okay. To Ms. McKee and to Mr. Baker, if both of you could maybe comment on this. I share your views, I serve on the Small Business Committee, on the de minimis contributors waste, that small business people should be able to get out of the Superfund web quickly and cheaply. But under H.R. 2500, a small business won't know whether it qualifies for the 1 percent de minimis exemption until after the entire allocation process has been completed. And in many cases, that could take 2 years or more.

    Do you agree that this is a tremendous burden on small businesses who will probably have to hire attorneys and so on during that entire period of time, and the extra burden that will cause them to do that? Do you have any estimate as to the cost of small business with respect to H.R. 2500 going through this process?

    Ms. MCKEE. In reading H.R. 2500, I disagree that they are going to have to go through the entire allocation process. When a small business gets the initial letter from the EPA, it states exactly how much evidence, or what the evidence is that the EPA has againist the small business. It will say, Joe Small Business, three barrels. It will inform the small business that, because it is less than 1 percent, these exemptions are available to Joe Small Business.

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    So I think they will know immediately whether or not they are 1 percent or not. The only problem we may have is if someone feels like they have more records to prove that the small business contributed than 1 percent. For example, they have truck driver testimony that says, I went to this guy's place of business 100 times. He had to have contributed more.

    And that's one of the reasons that we worked with Chairman Boehlert and Chairman Oxley in trying to insert some sort of cost shift provision. If an innocent or de minimis party is dragged into the liability, then the party that dragged them in will be responsible for their part.

    Mr. POSHARD. But there are times when EPA will not know how much waste at the site is contributed by small companies and so on. So that may beg the solution that you're——

    Ms. MCKEE. The way we read the bill, they have to identify what type of waste, what the amount of waste is that they found. So if they found nothing, they can't list that small business.

    Mr. POSHARD. Okay. May I ask Mr. Baker, Mr. Chairman, to just comment on that, real quickly?

    Mr. BAKER. Mr. Chairman, we take a slightly different view. That's a very important question. Small business, 1 percenters, shouldn't be in this process, period. That's a policy choice, which you're going to have to face. Our graphs indicate that if you're in the soup, it could be short, it could be long, but you don't know.

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    The point is, when you get the letter, if this happened to you, you'd feel the same way as all the other people getting it. It's not a matter of personality. You've got to report it to your bank, your bank credit goes south. If you wanted to sell that property, you can't. If you wanted to retire, you can't. As long as you're in the soup.

    Now, you have an expedited program. You're at the mercy of the EPA, and the allocators judgments with respect to this. You may or may not have records. Why is this fair? Why is this a good use of your time and effort if you're trying to clean up the site? It's not.

    My point is, the kind of solutions, you get these kinds of folks out of the program, and you tell EPA, take the money, select a remedy, go clean it up, expedites cleanup, eliminates this collateral bond damage on all these other innocent people. And if you're a 1 percenter or not, why is that worth the effort?

    Ask yourself the question. Why is it worth the effort? You've got a $25 million site, right, let's assume that, the average site. One percent is how much, $250,000. You think that's a great day at the beach, to get a 1 percent share of that if you're a small business? You're wiped out. In fact, you're wiped out when you got the letter. Because you've got to hire the lawyer, the consultant, and hope to heck you can convince the guy on the record that you're out.

    Now, there's another piece of this, you're onto it, which is, you have this plead for mercy provision in here, inability to pay. How do you feel as a small party, small citizen, that you've got to hope some bureaucrat makes a decision after introducing into all your records, Aunt Millie's trust fund and everything else, that you can't afford to pay? They can stretch out the payment for you, if you want. That's a very hostile small business provision which has the trappings of, the appearances of, being pro small business, small party.

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    I would ask you, how many would want to deliver to the EPA or the Government a whole box of your financial records to prove your inability to pay? My point is, get them out, get them out.

    Mr. POSHARD. Thank you, Mr. Baker.

    Mr. COX. I agree 100 percent with that. My experience was terrible in that situation. You're a de minimis player, you feel like you can get out, but you really don't, reasonably. You have people judging your numbers who really aren't qualified to understand your business. And furthermore, the longer the process goes, the more the bank looks at you and says, hey, Gilbert Spruance, or hey, small business, what's going on here.

    Mr. POSHARD. Thank you. Thank you, Mr. Chairman.

    Mr. EMERSON. The time of the gentleman has expired. The lady from Missouri, Ms. McCarthy.

    Ms. MCCARTHY. Thank you, Mr. Chairman.

    Mr. Baker, I very much appreciate your thoughts this morning, and I wanted to pursue a couple of them with you, because I come to this issue as one who has worked on it at the state level, as you know, for a number of years. And the bill, on the one hand, includes many provisions that preempt state laws. I am concerned, of course, some states have stepped up to the plate very well in this area, and others have not.

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    But I'm not sure I understand what the preemptions will mean with regard to health protection, and whether it's really necessary to preempt state standards specifically applicable to toxic waste cleanup. And on the other hand, and you mentioned this in your written testimony, states get delegation of this program. They get no substantial funding and no resources for those high priority state sites.

    We're going to cap the National Priority List no longer for Federal funds. Do you consider this what we call an unfunded Federal obligation imposed on the states by placing this cap there on the NPL, and having the states worry about these high priority Superfund-caliber sites to clean up?

    Mr. BAKER. May I just divide your question into two?

    Ms. MCCARTHY. Yes, please.

    Mr. BAKER. I would have loved to had you at our table last November when we figured this out. Because those are the concerns which our program, the S.R. '95 program, went right to the heart of.

    Ms. MCCARTHY. And I appreciate that, because I was watching it as President of the National Conference of State Legislators.

    Mr. BAKER. There it is. I mean, why do we have the Conference of Black Mayors supporting our point of view? That's a bell ringer. There's something there.

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    My point is, on the issue of the standards, some states don't do the kind of dopey program you've got at the Federal level, with all the parallel contractors, the excessive costs, and yet they do it much more effectively, efficiently. But in the selection of the remedy, the standard, why isn't it fair to say, if you want something in excess of, in excess of the Federal standard, you can have it.

    But you've got to pay, you've got to find a way to pay for it. We think that's the fair approach. Our program created $400 million, about $500 million in year 5 or 6, to give to the states, as cash, to do these high priority sites.

    The reason you can do it in year 5 or 6, everyone will agree to this, I think even the BRT approach would agree with this, the costs of the program start declining, they start declining. You start pulling sites off the NPL, remedy selection kicks in full-bore. You start getting sites off, you start doing administrative reforms. And you create a surplus of about $500 million in year 5.

    If you can get there, our program says, that's exactly the kind of approach, not a preemption approach, preemption never appears in our program. And I'm not sure the bill actually preempts things. I think it empowers states to do more if they wish to do more on their own hook, on their own hook.

    I think that's fair. You say to the polluters, hey, you should pay for what you did. Well, why isn't it fair for the states to say, well, you should pay for what you impose above the Federal standard. I think that's a parallel thing that makes sense there.

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    Ms. MCCARTHY. Without the changes you propose, the concept of an unfunded Federal obligation remains in the bill?

    Mr. BAKER. I don't view it as an unfunded. I don't think that's a fair reading of the bill, that this is an unfunded Federal obligation. Remember, this Superfund business came out of a Federal law which the states mimicked at their own level. I mean, you've got your own law. But they all came out of, they sort of copycat what the Feds did. And you've got parallel systems. We're trying to bring this to some rational basis and harmonize it under a new reform. I really don't see it as an unfunded mandate.

    Ms. MCCARTHY. Can you help me understand, then, where the states will find the funds for these priority state sites, high priority sites, that are, when we cap the National Priority List, where are those funds?

    Mr. BAKER. Under our program?

    Ms. MCCARTHY. Under the bill as currently before us.

    Mr. BAKER. Congresswoman, I can't tell you where they come from. What I'm telling you is that we have a solution, a very particular and very real solution for the problem from the S.R. '95 program which is not yet in the bill. That's what I'm trying to say.

    Ms. MCCARTHY. I appreciate your——

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    Mr. BAKER. I'm not trying to be coy.

    Ms. MCCARTHY. No, no. I appreciate your clarifying that. And thank you, Mr. Chairman.

    Mr. EMERSON. Mr. Menendez.

    Mr. MENENDEZ. Thank you, Mr. Chairman.

    Good morning, ladies and gentlemen. I'd like to spend most of my time with Mr. Reilly. And in that respect, Mr. Reilly, just before I get to the heart of what I want to talk to you about, in response to Mr. LaTourette about opening up the decisions of record, you suggested that you really didn't see that as much of a problem.

    And your response, as I heard it, has, I think, one fallacy to it. Isn't it true that in a multiple party site, if simply one party wants to open it, they will be able to pursue that reopening? And in doing so, doesn't that, I mean, the others may not seek to do it. But one party can simply do it.

    Mr. REILLY. I think it's got to be a party with a significant interest, or words to that effect. But if it's a bad record of decision, or maybe you can do the job better, I mean, EPA acknowledges that some of its records of decision right now didn't incorporate science as we know it. In fact, the agency is revisiting some records of decision right now in its reform. So I think even the agency acknowledges that some records of decision should be revisited.

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    Now, let's take the situation which I think you're concerned about, which is, it's a defensible record of decision. But some PRPs just got an attitude problem. So they got to the agency, and they say, we want this record of decision overturned. And the agency tells them, I'm sorry, it's a good record of decision, go away.

    That doesn't slow down the cleanup in the least. The cleanup proceeds apace. This person's got a cause of action, they can bring the agency to court, yes, it will be some transaction cost on the part of the agency to defend it, and that's unfortunate.

    But it doesn't slow down the pace of cleanups. And so I really don't see that we're going to risk any public health or the environment by having a provision for a ROD reopener that hopefully will be abused very rarely.

    Mr. MENENDEZ. Well, whether it's an attitude problem or not, the person can seek to reopen the case, and therefore, the other multiple parties would be brought in after that, would they not?

    Mr. REILLY. Well, what we've done at the multiple party sites, I mean, are you just concerned about extra lawyers in there, sir?

    Mr. MENENDEZ. Well, I'm concerned about what the chain reaction of all that is, extra lawyers, litigation costs, transaction costs, and as well as, I do believe that there are some cleanup problems in the process, in terms of slowing it down.

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    Mr. REILLY. Normally PRP groups now are organized in a way that they've got a single leader. And that single leader generally has got the charge to get this site behind us. Very often there are free riders, and there are people with a bad attitude that are out there rustling around and do stupid things like file lawsuits without merit.

    I'm not sure we can really prevent that. I guess again, I'm reasonably optimistic that the main PRP group where there is a responsible ROD will just continue apace, and this sideshow over here won't basically have anything to do with getting the remedy done in a timely fashion.

    Mr. MENENDEZ. Well, let me go to the heart of what I do want to discuss with you, and that is, you raise concerns in your written testimony about a raid on Superfund and the Senate reconciliation bill. I want to raise questions about another raid I believe exists on the Superfund fund, and that's the 50 percent reimbursement or refund. In essence, don't you believe that the RLD rebate as well as the co-disposal reimbursement, are entitlement programs for the PRPs?

    Mr. REILLY. Well, I'm not sure if entitlement is a word that I've got the ability to completely defend or refute. I guess the assumption is that if the bill passes we're going to get our money, if there's a 50 percent discount. Because my understanding of the 50 percent retroactive liability discount was an effort, basically, to take away some of the gross unfairness of retroactive strict joint and several liability.

    Now, last year in the bills that were considered in the last Congress, there was a fair share thing that was trying to deal with the same issues, trying to deal with joint and several liability. I see this as a variation on that theme. Everyone recognizes that it's an unfair program. Maybe 50 percent is not affordable. If it's not, let's find a number that is.

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    Mr. MENENDEZ. I appreciate your trying to categorize it in the best light. But isn't it a fact that as the bill is written, it creates a mandatory spending authority, and you pay the rebate out of that mandatory spending? And would you be willing to testify here that if in fact this bill went through as it is, that your industry would not sue the Government if you met the criteria outlined in the bill, and the Government failed to write you a co-disposal reimbursement or RLD rebate check?

    Mr. REILLY. Well, hopefully we wouldn't get to that, sir. I mean, this is our money, this $3 billion extra in the fund. It's not like we're tapping the Federal Treasury.

    Mr. MENENDEZ. But you haven't answered my question.

    Mr. REILLY. I'm sorry?

    Mr. MENENDEZ. Hopefully, none of us will want to get to these points. But as long as it exists in legislation, the fact of the matter is that there is an avenue for your industry, or for that fact, anyone else sitting at the table and those not sitting at the table to pursue. The fact of the matter is that this bill, and tell me if I'm wrong, let's go through piece by piece, this bill creates a mandatory spending authorization.

    Mr. REILLY. That's my understanding, yes, sir.

    Mr. MENENDEZ. Okay. And secondly, could you not, I know you're a counsel for Dupont, could you not sue the Government if you met the criteria outlined in the bill, and the Government failed to write you either a co-disposal reimbursement check or a rebate? You met the criteria.

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    Mr. REILLY. I'm not an expert in this area. I don't know if we do. I do know that right now, the Government owes me a fair amount of money for my old Department of Energy sites and Department of Defense sites. And they say they don't have any money, and I'm not suing them. I don't know what the other parties would do, sir.

    Mr. MENENDEZ. Well, we're glad you're not suing them. But that doesn't take away your legal authority or right to do so. Don't you have the legal authority or right to do so in this case if you meet the criteria?

    Mr. REILLY. I'm over my head, sir, on that one.

    Mr. MENENDEZ. Let me just simply say, I see my five minutes is up, let me just simply ask you, if you met the criteria, your understanding, you meet the criteria, you did the cleanup, you had an expenditure. Let's say for argument's sake it was $10 million. Do you not believe, here as a representative of your industry, that in fact you would be eligible and in fact entitled to receive half of that expenditure?

    Mr. REILLY. I would hope the Federal Government would honor its obligations. And I guess I'm not sure whether I'd sue if the Government didn't.

    Mr. MENENDEZ. I didn't even ask you about suing this time. I'm taking you a step lesser than that. Do you not believe that you have the right to receive 50 percent of that which you invested in the cleanup?

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    Mr. REILLY. That's my understanding, yes, sir.

    Mr. MENENDEZ. Thank you, Mr. Chairman.

    Mr. EMERSON. The gentleman from Tennessee.

    Mr. WAMP. Thank you, Mr. Chairman.

    Quick question for Ms. McKee, and then two questions for Mr. Reilly. Ms. McKee, we've had a difference of opinion stated about small business and how Superfund reform may in reality affect or hopefully favorably impact small business. Do you think that the exemptions to co-disposal landfills and de minimis liability exemption and the oil and battery recycling sites will really favorably impact small business, in reality?

    Ms. MCKEE. Yes, sir, Mr. Wamp. I think that gets, a vast majority of our members out of the Superfund problem up front.

    Mr. WAMP. Thanks.

    Mr. Reilly, are site specific standards a better way to address risk instead of the ARARs remedies? Particularly—also a follow-up there. Share with me, I'm a representative of a nuclear cleanup area, Oak Ridge, Tennessee, and kind of define as well, the difference between, from your perspective, how we should address ARARs on nuclear sites versus just traditional Superfund private sector sites.

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    Mr. REILLY. Well, I guess my view is, the view of the chemical industry is that if you base your cleanup decision on risk, then you will take a look at the situation that is, what is the land use, what are the potentials for exposures to humans, if there are contaminants how do the contaminants get to humans.

    And you would then do a remedy that is fully protected, based on what you see as the risks to humans. And it could be in some cases you've got to dig stuff up and haul it somewhere else. It could be in some cases, you've got to burn it. In some cases, you may be able to cap it. That's generally the solution for a landfill.

    The problem we normally have with ARARs is that they don't have anything to do with risk at the site. Like we're burning a site in New Jersey, EPA's burning a site in New Jersey. They found one sample with 50 parts per million PCBs in it. They couldn't find another one after that. They've got a reg on the books that says today if you generate 500 parts per million PCBs, polychlorinated biphenyls, you've got to burn it. They used that one sample to burn an entire site.

    That's silly. That's a silly use of an ARAR. The Government's now spent over $200 million. I might note it is an oil recycling site. Over $200 million on a very foolish investment. We think if they had done a risk assessment, they would have spent a lot less money and the public would be just as well off.

    Mr. WAMP. Quick follow-up. In Section 121, in reality, how is the EPA actually implementing that section? Do you actually see out there that they're selecting a treatment remedy because they have to, or because it makes sense?

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    Mr. REILLY. In a lot of cases, it's because they feel they have to. We've got sites where no one's drinking the groundwater, very minimally, we don't even have a productive aquifer there. Everybody's got drinking water, say, from a reservoir system 20 miles away.

    And the agency feels as though it is compelled to require a pump and treat remedy, even in a situation where there's not a whole lot you can do. This one site I'm thinking of was shut in 1965, the groundwater is going nowhere. The agency imposed a pump and treat remedy, we understand, because it felt it had to impose treatment. And also because it said, gee, someone could sink a well here and drink the groundwater.

    Nobody's going to do it. Nobody needs a well. Somebody could, and if they did, yes, they would be drinking unacceptable water. They use that sort of logic loop to say, well, you've got to pump and treat. And so we've spent, I don't know, $8 million on that site and no one is any better off for it.

    Mr. WAMP. Since I have a minute, I'll go back to Ms. McKee. In my district, we have three NPL sites now, thankfully. One is obviously Oak Ridge, big nuclear site. And the other is Chattanooga Creek, which was just added last month, or in September, to the NPL listing. And then we had another one, which was a very small, small business problem.

    And this one small business spent about a million dollars in legal fees. And now they're going to be taken off of the National Priorities List. I saw yesterday where there's a proposal to reimburse small business people for legal fees, when I guess they're taken back off the list, if they really didn't have a significant violation. Where should that threshold be left where small businesses can get some legal relief from these problems?

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    Ms. MCKEE. The language that we've suggested, under H.R. 2500, will say that if at any time during that allocation process, a business is determined to be innocent or a de minimis contributor, contributed less than 1 percent defined under the bill, that they would be eliminated from the liability and their attorney's fee would be paid by the party that brought them into the process. And I don't know any small business that can afford a million dollars in attorneys fees and still remain a viable small business.

    Mr. WAMP. I don't, either. Thankfully, this one is still in business.

    Thank you, Mr. Chairman.

    Mr. EMERSON. The gentleman from Louisiana.

    Mr. HAYES. Thank you, Mr. Chairman.

    It would be interesting if this hearing were on C-SPAN to see people turn in at an instant rather than watch it through its entirety, which is the way most people watch television. And what they would see is, delving into the intricacies of a statute, and they would never see the basic point that ought to be reiterated over and over and over again.

    And that is that we're dealing with a statute that has forgotten its purpose to begin with. We have a statute that was intended to clean things up that doesn't clean up anything. And the reason it does not do that is really best expressed, Mr. Reilly, by you.

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    You referred a moment ago to an effort to take away some of the gross unfairness of the liability system. Now, that has been described on other occasions in this room by your Administrator as polluter pays attempting to be repealed. Well, no wonder people have no faith in Government or the system. Because you know damned well it is an incredibly, grossly unfair system that you pursue and administrate, and that you characterize during election years for whatever convenience for whatever political party.

    It would be interesting to see Mrs. Robinson's point of view, she's in the audience, she's dead on from her perspective, some of which I agree with, and not just because she's from Baton Rouge, near my Congressional district.

    All of her concerns are at the other end of it, get this place cleaned up and have a subsequent generation of children not have any risk of health, and don't give me the same kind of Government nonsense on evaluating the process, determining whether or not they're actually at risk that you're giving me when you get in the front end of the system. It's for that reason that we are going to have to, in any legislation that is ever going to work, go after the basic unfairness. Only then will we cut down on gigantic litigation.

    Because I don't know how to tell you this, let me give you two examples. I used to be an assistant district attorney. If I prosecuted a hundred cases after we investigated, we would have fewer trials than if I selected a hundred random people to be defendants for various criminal charges. They are going to hire lawyers in greater number if they didn't do anything. It's one of those oddities about human nature that Government has not yet figured out.

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    I also don't believe that if I charged three people with a capital case, none of whom had any evidence whatsoever they were near it, except perhaps that it was near a highway and they all owned cars, and then I told one of them, I'm going to let you out, they really wouldn't consider that a big improvement in the system.

    That's why when we start talking about this legislation, and its amendments, and that's why all of us who may disagree on some of the nuances we've talked about in subsequent testimony and discussion, we've got to begin with the basic principle of fairness. Because otherwise, we are never, ever, ever going to reach the road by which Ms. Robinson and friends of hers who live near these sites are going to have any faith or confidence in their view of Government.

    I'm sorry I won't be here this afternoon. The reason I mention that is that I would like to talk to Mrs. Robinson on some occasion, either here or in Baton Rouge or in my office in Lafayette about some of the ideas that we'll be developing ongoing. Because I would like to have groups like that more aware of onboard and understanding where provisions come from. After that, agreement or disagreement seems far more substantive than it does in the context in which it's here today.

    I do want to ask one or two questions of Mr. Baker, whose testimony I heard. We all talk about litigation costs. Just give me a number based on the amount of information you've got of what litigation costs are. And let's divide it, if we can, into single sites which can be either single user, single owner, and then into multiple sites. What percentage are we talking of the process ongoing, of the budget, that it goes simply into litigation points?

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    Mr. BAKER. Well, you've got about a billion dollars a year that we consider to be transactional costs, collectively, a billion dollars a year. At single party sites, the transaction costs are probably maybe about 30 percent of the total costs, that is about 5 percent of the total costs, whereas in multi-party sites they're about 30 percent. So you can see where the transaction costs are in terms of their gross impact.

    Mr. HAYES. Let me also ask you as a matter of housekeeping if you could put those charts in a form to which it could be added to your testimony. Because I noticed that it wasn't in a form to be added to the statement. I think it would be valuable to have those to look at later, as we're going along.

    Mr. BAKER. Well, remember, Yogi Berra said you can observe a lot by just looking. Well, these enable you to look through 100 pages of the bill very quickly, because it's a graphic. We'd be happy to do that.

    Mr. HAYES. All right. I see my time is up. Mr. Chairman, thank you for your indulgence.

    Mr. EMERSON. Ms. McKee, I represent a district of small business. I'm probably familiar with every problem we've got in my district, mainly because I know the people who have the problems, and they come to me for some assistance and want to know why their Government is so oppressive and so punitive.

    And I know cases where peoples' health has been broken, not from any adverse effect from a cleanup site, but because of the stress and the strain on their being, on their finances. Some of these cases going back long periods in time, 15, 20 years, where things come up out of the past that they didn't know they were going to have to deal with.

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    So the retroactive liability issue is just, from my perspective, a terrible one from a standpoint of small business. I suppose, no prejudice intended here, that major companies and corporations have the ability to withstand some of this better than small business. I'm sure there are those at the table who would dispute that.

    But I mean, when you're talking about someone who's worked all their life and built a business and find it wiped out, often, oh, yes, technically perhaps, but technically correct by some standard or definition, but in reality, arbitrarily so. I'm interested in the issue of eliminating retroactive liability. And I know that—do you still support fundamental reform and the elimination of retroactive liability prior to 1987 as the best way, the best way to reform Superfund, and to eliminate the problems that it causes for small businesses?

    Ms. MCKEE. We do, Mr. Chairman. That is by far the best solution for our members. But having had the Transportation Committee and the Commerce Committee look at those options, go over those options, they've come to the conclusion that it's not possible at this time. Now, I know they're still looking for ways to find funding to be able to do it, and we support their efforts in that, and want to help them to do that.

    But in the meantime, the most important reform for our members is just to make sure that there's some sort of reform this year. We cannot wait 5 years, for retroactive liability. If we can accomplish good relief for most of our members today, it is very important rather than waiting 5 years in the hopes that we might be able to get full repeal.

    Mr. EMERSON. So what you're saying is, if full reform cannot be achieved, and Congress moved toward a solution, progress, toward a solution that eliminated liability at all multi-party sites, that you would support that solution?

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    Ms. MCKEE. We would definitely be willing to look at that. We feel that the progress we've made so far gets the majority of our members out of Superfund liability, and your suggestion would probably go a step farther.

    Mr. EMERSON. Mr. Cox.

    Mr. COX. Mr. Chairman, my experience indicates to me that while it is a noble goal to try and do this, my experience, up front and personal with it, in all areas, is that by not eliminating retroactive liability for small businesses caught in this net that you're shifting costs and you're shifting burdens.

    And you still have carve-outs. And as long as we have that, it still seems to me that a small businessman, as was the case with me and Gilbert Spruance, is going to get hammered in this process. That's been my experience. It's nice to carve out and do certain things.

    But it almost has to be total and universal, in my opinion, for small business to feel as though it's fair. And for a company like Gilbert Spruance to feel as though they could have survived this thing in the future, which we certainly didn't in the past.

    Mr. EMERSON. Mr. Reilly.

    Mr. REILLY. Sir, I think there's one value here we don't want to lose sight of, and that is, there's no question that big companies can clean these sites up better and quicker than EPA can. And so one concern we just have to keep our eye on is, if you were ever able to find the money to give to EPA and turn this whole program over and make it a public works program, you do create some problems as you solve some problems.

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    So one reason we're enthusiastic about H.R. 2500 is it keeps the big parties in there doing the cleanups effectively, and hopefully we'll get the little parties out of there.

    Mr. EMERSON. Thank you. Does anyone else want to comment? I see my time has expired. Mr. Baker.

    Mr. BAKER. Thirty seconds, Mr. Chairman. Simply this. Mr. Reilly brings up a very good point. We hear this canard laid on about retroactive liability form that you'd be creating a public works program. And he didn't do it, but the issue comes up from EPA's side.

    You have an EPA public works program today. If you are a PRP and you try to pull some action without getting EPA's approval, and you don't have a consistency under the NCP, you're not going to get paid back. Every decision, meaningful decision, is made with EPA's judgment, consideration.

    And moreover, if you fail to see the composite of the overall environmental program with your Federal facilities, where you spend $8 billion a year on a pure public works program, then you're missing the point. You have a public works program today, which is so grossly ineffective that if you were in the public sector, you would be fired.

    And so we've got to get on with, as Mr. Hayes said, something that really works and cleans up.

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    Mr. EMERSON. Thank you, Mr. Baker.

    Mr. Oberstar.

    Mr. OBERSTAR. Thank you, Mr. Chairman. I apologize for not having been here at the beginning of this panel. I had a number of constituent groups in my office to talk to on other subjects.

    Mr. Chairman, I had an opening statement. I would ask unanimous consent it be included in the record at this point.

    Mr. EMERSON. Without objection.
    [Mr. Oberstar's prepared statement follows.]

    [Insert here.]

    Mr. OBERSTAR. I had your testimony last night and I read through it, virtually all of you are opposed to retaining retroactive liability. And Mr. Reilly, let me start with you. Why should you not be responsible for toxic substances dumped in a site that pose or actually have caused human health problems.

    Mr. REILLY. We've got, I guess, a couple of answers. One is as long as the fund is completely supported by taxes on industry, whatever the number might be, $2.5 billion a year, if you had that much money and it was all industry's money, and you could get the sites cleaned up more efficiently, then it's really not like we're walking away from the problem. That's the way we view it.

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    The other thing is if there's not enough money, which is where we find ourselves right now, the chemical industry, you can count on us, if we've made a mess, we're going to be back in there, we're going to be cleaning it up. And I think that's where we find ourselves right now.

    Mr. OBERSTAR. Does that mean that you're not for repeal of liability?

    Mr. REILLY. If there is not enough money, we are not for it, sir. And right now, I think that's where we find ourselves. Our estimate is you'd need about $2.5 billion a year. The bill is looking for $1.9 billion a year. And of course, you know, appropriations right now is about $1.0 billion a year. So when the money is not there, then you're going to have to keep the PRPs in there doing the work, because the fund isn't big enough to appeal retroactive.

    Mr. OBERSTAR. But then why, with the limitation on funds, and we know there's not going to be any substantial increase in monies over the next few years of deficit reduction, why should there be a rebate? Shouldn't all of the money be going to cleanup?

    Mr. REILLY. Well, there's a pipeline issue here, sir. We think that right now the program is not cash starved. There's plenty of money to do the cleanups right now. If you had extra money right now, the cleanups would not go any more rapidly.

    And again, we've taken a look at the program, H.R. 2500, and it seems as though you'd have more money than is necessary for the cleanups, by the estimate that we agree with here, that would leave some money to give back to the parties to deal with unfairness. So we don't see it as a slowing down of the cleanups. We don't think you could go any faster.

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    Mr. OBERSTAR. Shouldn't the priority be, even if that language survived, and I hope it doesn't, but if it does, there ought to be a prioritization. That rebate should be paid only after cleanup has been accomplished. Isn't that the priority? In the order of concerns, you've got a site, whether it's Arrowhead Refinery, whether it's Stringfellow Pits, whether it's Love Canal, whether it's the huge discharges of Union Carbide up near Buffalo that I've seen, that travel thousands of feet and get into the aquifers and they're adversely affecting health. Shouldn't that be cleaned up first before any dime is paid out of the Superfund site to something else?

    Mr. REILLY. I agree with you, sir, if there's a shortage of resources that is slowing down cleanups, we would support their money going to getting the cleanups going before we got our rebates. It just happens that we think that the math is right in this bill, and there really would be enough money to pay the rebate.

    Mr. OBERSTAR. Well, I'm not convinced the math is right. But I really am convinced that the cleanup needs to proceed. I think we've gone through all the litigation, unfortunate as it was, and the complexity of joint and several liability provisions in the original Superfund Act and the way it was administered created a retirement program for lawyers. We've gone through that phase.

    I think from this point on, there's been more cleanup accomplished in the last 3 years than over the previous 12. And we're now on track to getting those sites cleaned up, as we are with the Arrowhead Refinery in my own district. I'm glad to see that happening.

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    But I don't think that any of the companies who discharged in that area want to see money coming back to them until the site is cleaned up. Are you all agreed on the de minimis and de micromis provisions, the little guys, however they're described, should remain in the bill?

    Mr. COX. No, Mr. Oberstar, my experience on that from a de minimis standpoint, it's a really good idea. The problem is, as I was alluding to earlier, we had waste that went to a transfer station. From that transfer station, we do not know, based upon that hauler's records, where our waste wound up.

    So therefore, we get into a fistfight or a legal fight about whether or not we're de minimis in a site. Our records show waste going to a transfer station. The hauler's records are inadequate. So therefore, if you get into a PRP and a liaison counsel situation, now you're in a fistfight about whether you're de minimis or not.

    Mr. OBERSTAR. What should be de minimis? Help us with that. A barrel? A quart? A gallon?

    Mr. COX. I think the 1 percent is a good number. It's a question of how do you determine in a lot of cases what is 1 percent. And if you let the PRPs, the way the system is now, fight over it between lawyers and liaison counsel, then nothing gets cleaned up and you wind up without any money, as we did.

    Mr. OBERSTAR. Your suggestion of a percentage—Mr. Chairman, if I may pursue for a moment—is a very good one, very useful.

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    Mr. COX. Because right now, the process of a de minimis situation is, and I would do the same thing, if I was a big de maximis person, I would try to go after the small guys as much as I possibly could and extract as much money as I could to cut my losses. And that's where the arguments come. And as long as the liability structure is such, that's where the lawyers fight it out.

    Mr. OBERSTAR. And the cross-suing that proliferated, from 1980 on, has been a nightmare. We had in the Arrowhead Refinery site a widow whose husband owned a gas station for which there was a record, one little slip of paper in the truck driver's pile of papers that said one quart of oil, such and such gas station. Nobody knows whether he bought a quart of oil or he picked up a quart of oil. But somehow, it was associated with this site.

    This poor widow got sued, all she had were a few pennies, and was facing a $25,000 lawsuit. She was in tears. She said, what am I going to do? I said, don't do a thing. They'll have to get at me before they get at you.

    Mr. COX. Well, good for you. And a little more people like that would help a lot.

    Mr. OBERSTAR. So I want to get the little widows out, I want to get the little people out of this thing and stop the suing, and use the fund and clean up the messes. If that's all done and there's some money left over, then fine, you guys can have a rebate, but I don't think there will be any left over.

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    Mr. REILLY. Sir, H.R. 2500 does inject a neutral in there that we don't have right now. Don't forget, once this allocator is picked, that allocator can deem people out of there. So I think that the bill deals very well with the issue of——

    Mr. OBERSTAR. Help us find a way to get over the cross lawsuits and agree upon a threshold of what is de minimis. Thank you, Mr. Chairman.

    Mr. REILLY. There is a payment obligation in this bill until the allocation process is complete. And we certainly applaud that.

    Mr. EMERSON. By previous agreement, the subcommittee is going to recess at noon until 1:00 o'clock. I think we can finish up this panel, unless anyone wants to go to a second round of questions. We've got about six minutes for Mr. Horn, who is next to be recognized. Does anyone—if we have time, we'll take some extra questions.

    The gentleman from California.

    Mr. HORN. Thank you, Mr. Chairman.

    I just have one question. In cooperation with industry, the California EPA has agreed to electronic reporting of various types of reports. The national EPA is also interested in that. Are you all familiar with that California process, now that you can file electronically?

    Well, let me ask you this. Would the permits you seek and the reports that you file on various sites, with which your constituency is involved, would they be improved and more helpful for both sides if those permits could be sought, reports could be filed electronically? Do you have any reaction to that?

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    Mr. REILLY. Sir, New Jersey is doing the same thing, and we completely agree. Get rid of a stunning amount of paper. It's the right way to go.

    Mr. HORN. Yes, some people say at least 30 crates full on a typical little site. Any reaction for your clients, Ms. McKee?

    Ms. MCKEE. As I said in my opening statement, most of our members have five employees. They don't have high powered computer systems. They don't have access to that type of information. I think computers are great and it's helpful to have good record keeping. Unfortunately, a lot of our members aren't going to be able to keep that type of record keeping on their computers, because they simply don't have them and can't afford them.

    Mr. HORN. Yes, well, they probably have computers somewhere in their business, don't they?

    Ms. MCKEE. Not all of them.

    Mr. HORN. Have you surveyed that, your membership? Because it would be interesting I think it would be less expensive for them if they just had a normal computer that maybe cost somewhere between $900 and up. But you might want to check that, because it would be very helpful to us.

    Mr. Reilly, you apparently are happy with that in New Jersey, and any experiment like that.

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    Mr. REILLY. Yes, sir. And the regulators like it, too because they're drowning in paperwork themselves.

    Mr. HORN. Right.

    Mr. REILLY. And you can find something if it's stored electronically. You can't find it if it's in a back room with a million other cartons. So it's the wave of the future.

    Mr. HORN. Right. Ms. Morningstar, any feelings on that?

    Ms. MORNINGSTAR. Yes, sir. We actually are in agreement with that. As you know, we have quite a few operations in California, and we've applauded this effort and have worked with the California EPA on this effort.

    Mr. HORN. Good. How about you, Ms. Buhl?

    Ms. BUHL. We don't have any experience, as Mr. Reilly does. The states where we are primarily haven't instituted that. But I agree, I suspect that's the wave of the future, and I think that might make the whole communication process move a little faster.

    Mr. HORN. Mr. Baker.

    Mr. BAKER. Simply this, Mr. Chairman, I'm shocked that EIA would be for using computers.

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    [Laughter.]

    Mr. BAKER. But the fact of the matter is that it's fine on a going forward basis, where people have records. But Mr. Oberstar had his finger right on it. Where you don't have records, a computer is like having two thumbs on your left hand, worthless. These people don't have the records to do this. Going forward, great. Going back, that's the inequity. Your card for membership in S.R. '95 is enroute as we speak. You've made the case for why we really do need that kind of reform. You're exactly correct.

    Mr. HORN. Well, obviously records have to back up any report if you're asked a question as to the date, the volume involved and so forth. And that would be true whether it's a written report or one filed electronically. This simply speeds up the process, and as was mentioned, is easier on data search, when you're trying to go back and make comparisons.

    Thank you very much.

    Mr. LATOURETTE [assuming Chair]. Thank you, Mr. Horn.

    We've successfully completed a full round of all members interested. A couple of members have expressed an interest in asking some additional questions. And the Chair would recognize Mr. Borski.

    Mr. BORSKI. Thank you, Mr. Chairman. I appreciate that.

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    Ms. Morningstar, I want to follow up on a statement you made earlier regarding the groundwater cleanup provisions. Are you saying that the cost effectiveness requirements of H.R. 2500 do not override the community acceptance criteria?

    Ms. MORNINGSTAR. Mr. Borski, I believe that the way it is worded, the remedy selection provisions, is that first and foremost, you look at the protection of human health and the environment. And cost effectiveness is a factor to be used in deciding then what the remedy will be. But first and foremost, you look at the risk, at realistic risk, exposure. You do realistic risk assessments and you determine, based on those, what the revenue should be. And cost is certainly a factor at that point.

    Mr. BORSKI. Let me ask you this. Do cost effective and cost benefit tests override the five selection criteria, or does that need to be clarified in the bill?

    Ms. MORNINGSTAR. That's an excellent question. I have a feeling it needs to be clarified in the bill. From my reading of the bill, it appears as if cost effectiveness is a factor, but not necessarily an overriding factor. But that should be clarified in the bill. I believe it should be.

    Mr. BORSKI. Mr. Reilly, my understanding from EPA is, in fiscal year 1995, they had a $230 million shortfall. That is, the 20 sites that were ready for cleanup were not funded.

    Mr. REILLY. I'm not familiar——

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    Mr. BORSKI. I don't know if that needs a response.

    Mr. REILLY. We've seen some of the agency's press releases. And they're taking some sites where we're doing the work and we said we're going to do the work. And the agency is saying, well, we can't let the PRPs clean it up, because we can't oversee them.

    So again, I'm a big fan of the Environmental Protection Agency. But I think they're waxing a bit hyperbolic on the slowdowns right now. But we do not support slowing down cleanup, sir.

    Mr. BORSKI. Thank you, Mr. Chairman. Thank you.

    Mr. LATOURETTE. Thank you, Mr. Borski.

    Mr. Menendez, did you have a question?

    Mr. MENENDEZ. Yes, thank you, Mr. Chairman. I just want to pursue something again with Mr. Reilly in our discussion. You suggested to me several times when I was asking you about the whole question of rebates that it's our money. Yet in fiscal year 1996, a Superfund program gets a billion dollars appropriated out of general revenues. Now, that truly is our money, not your money in terms of just the industry alone. And my question, other than recognizing the fact that there's a billion dollars of taxpayers money, not industry money, is, isn't it a fact that this rebate is tax free?

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    Mr. REILLY. Well, first, as far as whether it's taxpayer or our money, I mean, it does sound as though indeed the $1 billion a year next year is coming out of general revenues. But let's not forget that $3 billion in overpayments are sitting in some account somewhere. And I don't pretend to know why you don't reach into the Superfund account and pay for Superfund, or whether you leave the $3 billion in that kitty, and you pay for it out of general revenues. I can't explain those.

    Mr. MENENDEZ. I assume those are obligations of those looking into the future, and they can't tap into those obligations. In either case, they're in the trust fund, are they not?

    Mr. REILLY. They're——

    Mr. MENENDEZ. They're in the trust fund?

    Mr. REILLY. They're not available.

    Mr. MENENDEZ. Okay. But they're in the trust fund?

    Mr. REILLY. On paper. They're money we've paid and have not gone into Superfund, and as we understand it, never will go into Superfund.

    Mr. MENENDEZ. Nevertheless, there is a billion dollars worth of appropriations in this fiscal year 1996 bill that is for general revenue. I hope we're not going to dispute that that's the taxpayers' money.

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    Mr. REILLY. That's the way that Congress has put this thing together, sir. Again, I cannot explain why——

    Mr. MENENDEZ. Can you tell me about the tax? Is the rebate tax free or what?

    Mr. REILLY. I don't know the answer to that, sir. It's not clear.

    Mr. MENENDEZ. It seems to me that the rebate is tax free, and that in addition to that, you get a deduction for your expenditures for a cleanup. That's one hell of an entitlement. I mean, you get, you have the taxpayers out there with a billion dollars, in addition to what the industry is responsibly contributing. But then you get a rebate that's tax free, as I read the legislation. And you get a deduction. That's a hell of a good deal.

    Mr. REILLY. I guess we'd have to work the math. Right now, when we clean up a Superfund site, it's a business deduction. And, you get a 35 percent, essentially you get a 35 percent tax credit if you want to look at it that way.

    Mr. MENENDEZ. Well, based on the way that this is described in terms of the rebate, I don't see how it's taxable. And if it's not taxed and you get 50 percent back and you get a deduction, that's one good entitlement program.

    Thank you, Mr. Chairman.

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    Mr. LATOURETTE. Thank you, Mr. Menendez.

    Are there other members who would choose to ask a few more questions? The ranking member, Mr. Oberstar.

    Mr. OBERSTAR. Thank you very much, Mr. Chairman.

    Mr. Cox, I'd like to come back to you and, gleaning from your testimony a real sensitivity to the problems of the small participant in the Superfund, and the de minimis issue, you're familiar with the LePari landfill in New Jersey, I'm sure.

    Mr. COX. LePari, yes.

    Mr. OBERSTAR. Rohm and Haas was the principal contributor. And our records show that they have agreed to pay somewhere in the range of $24 million to $30 million for cleanup of a major portion of the site.

    Now, under the pending legislation, when they do their work, taxpayers would be sending them a check for $12 million to $15 million, about half the cost they've agreed to spend.

    Mr. COX. You're talking about Rohm and Haas, now?

    Mr. OBERSTAR. Yes.

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    Mr. COX. Okay.

    Mr. OBERSTAR. Now, why should they get a rebate when little guys like yourself don't?

    Mr. COX. That's an excellent question. I don't really have an answer for that, per se, other than to say to you that it seems to me that again, the small guy is getting squeezed here and nobody's speaking for him or her. And that's the problem with the retroactive liability structure as it is. And you know, my experience with LaPerre has been that yes, we got out for $180,000, and then it was reopened, and I was charged another $150,000. And it's like never ending. So I can't directly respond to your question.

    Mr. REILLY. But I thought that de minimis parties are out under H.R. 2500. So he doesn't need a rebate. He hasn't spent any money if he's the de minimis party.

    Mr. COX. Well, again, that comes down to, how do you prove waste that went to a transfer station, how do you prove whether 1 percent of it or 2 percent of it went somewhere? How do we prove that as a small business?

    Mr. OBERSTAR. First of all, you spent $180,000, I thought you said.

    Mr. COX. Yes.

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    Mr. REILLY. But Rohm and Haas won't get any credit. If they had spent money in the past, this is only for future costs that H.R. 2500 covers, as I understand it.

    Mr. OBERSTAR. Well——

    Mr. REILLY. By the way, I think EPA cleaned up LaPerre and Rohm and Haas is paying the agency back for work that EPA did.

    Mr. COX. I will say, yes, we contributed $180,000, and it was reopened, and we were asked to pay another $150,000. That much I can say. So I thought this thing was cleaned up, that we paid $180,000, and God bless us, we did the right thing. And then we were told 6 years later that we owe another $150,000.

    So how that process was arrived at, which a small business has no control over, is just amazing to me.

    Mr. OBERSTAR. From whom did you get the notice, Mr. Cox, that you owed another $150,000?

    Mr. COX. From the liaison counsels in the LaPerre process. It was reopened and——

    Mr. OBERSTAR. Counsels for whom?

    Mr. COX. Counsels for the creditors in the sure, I guess. Liaison counsel, lawyers from the big companies, I mean, Rohm and Haas was trying to reopen that for a long time. Not just Rohm and Haas. But a lot of people were trying to reopen Lepari. And what happens is, bingo, we get asked for another $150,000 6 years after the fact that we were told was our de minimis position.

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    Mr. OBERSTAR. Wouldn't your experience be that if, from the outset, using your suggestion of percentage, 1 percent contributor or less to the site, were taken out, pay whatever that 1 percent represented, if you agreed to it, that you would have avoided 6 years of litigation, avoided all the lawsuits, avoided all this stuff?

    Mr. COX. And the company would still be viable, I think.

    Mr. OBERSTAR. Yes. Well, that's what I'm trying to get at.

    Mr. COX. Yes.

    Mr. OBERSTAR. That's what I think we need to do with this legislation, and not make it more litigious, but less.

    Mr. COX. Oh, absolutely. And I guess my only concern is, okay, if you say I'm 1 percent, let's make sure we don't stand around and fight about it and wind up spending $300,000 worth of legal fees like I did, with nothing to show for it. Nobody wanted the money to go to cleanup. It kept going to lawyers. If $150,000, half of that 300,000 would have gone toward cleanup. I would probably still be in business today.

    Mr. OBERSTAR. And you certainly shouldn't have to go through all that experience and then 6 years later, get hit with another request for money.

    Mr. COX. Absolutely.

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    Mr. OBERSTAR. It ought to be done and over with and out.

    Mr. COX. And that's where the process mystifies me and scares me to death, still.

    Mr. OBERSTAR. Well, if we had in this legislation an exemption that required small business to incur the, whatever the fees are, the allocation process for their contribution, or that gives de minimis parties a certainty that they would be exempted, lets them off the hook without attorneys fees and without transaction costs, which way do you go?

    Mr. COX. What you just said is perfect. If you can get rid of attorneys fees and transaction costs, and all that money could have gone toward cleanup, if we would have done that earlier, I think Gilbert Spruance would maybe still be alive today.

    Mr. OBERSTAR. Well, help us craft the language to get there.

    Mr. COX. Okay.
    [The information received follows:]

    [Insert here.]

    Mr. OBERSTAR. Thank you. Thank you, Mr. Chairman.

    Mr. LATOURETTE. Thank you, Mr. Oberstar.

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    And not to drag it on, but one question. My understanding, following up on Mr. Oberstar's question, that is, H.R. 2500 as presently written doesn't have the 1 percent de minimis party paying a fee to get out. And I would assume we'd prefer that. Because I think you, Mr. Baker, made the suggestion that 1 percent of a $2.5 million site is $2,500, whatever. I'm not good at math. But at home, the suggestion was that a PRP could get out for $10,000. To the mom and pop on a margin, $10,000 is a hell of a lot of money.

    Mr. BAKER. But you know, the point that was discussed here is a very interesting one. The way I heard Mr. Cox say it, though, he still asked the question, why the heck am I even in this, because I did what was right. I gave my garbage to a licensed hauler, or gave it to a licensed transfer.

    And that's the relationship between his situation, Mr. Oberstar's question, and what you're asking. We don't think the person who did what was right, gave stuff to a licensed arranger, transporter, etc., should be in this. Don't call them. Don't send a letter. Don't make them hire the lawyer in the first instance. That's the true efficiency I think collectively we can get to. And that's the better of the policy choices.

    Mr. LATOURETTE. I want to thank this panel very much for their testimony this morning. I'm sure the committee has benefitted from it.

    As previously discussed, the committee will stand adjourned for one hour and will reconvene at 10 minutes after 1:00 o'clock, and hear from panel number two. Thank you.

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    [Recess.]

    Mr. BOEHLERT [resuming Chair]. Now, to panel two. I'm sorry for the delay, but such is the way of the House.

    Ms. Karen Florini, from the Environmental Defense Fund. From the Natural Resources Defense Council, Ms. Sarah Chasis. Velma Smith, from Friends of the Earth. And from the North Baton Rouge Environmental Association, Ms. Florence Robinson. And she's also with the Louisiana Environmental Action Network and the Communities at Risk Network.

    First, let's go to Ms. Florini.

TESTIMONY OF KAREN FLORINI, SENIOR ATTORNEY, ENVIRONMENTAL DEFENSE FUND; SARAH CHASIS, SENIOR ATTORNEY, NATURAL RESOURCES DEFENSE COUNCIL; VELMA M. SMITH, EXECUTIVE DIRECTOR, FRIENDS OF THE EARTH; AND FLORENCE T. ROBINSON, ON BEHALF OF THE NORTH BATON ROUGE ENVIRONMENTAL ASSOCIATION, LOUISIANA ENVIRONMENTAL ACTION NETWORK, AND COMMUNITIES AT RISK NETWORK

    Ms. FLORINI. Thank you, Mr. Chairman, for this opportunity to testify.

    Mr. Chairman, the Environmental Defense Fund has long admired and applauded your leadership on environmental issues. Within recent months, your efforts on EPA appropriations issues and on the Clean Water Act have been particularly outstanding. And we thank you very profoundly.

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    Mr. BOEHLERT. Thank you very much.

    Ms. FLORINI. That's the good news. The bad news, Mr. Chairman, is that I'm afraid you also have our bewilderment over your support of H.R. 2500. Although I will say that I was very glad to hear you say in your opening statement this morning that you recognize that there are problems in the bill as it stands now, and you are looking to address them. There is a lot to be done.

    While we believe that Superfund can and should be significantly improved, we believe that H.R. 2500 makes this imperfect program worse in many important regards. Among the bill's most glaring flaws are provisions for new corporate welfare and greatly expanded opportunities for litigation, and provisions that would essentially amount to the Superfund Slowdown Act.

    The bill would also produce cleanups that would fail to return communities' land and water resources to beneficial use in many instances, and probably would not adequately protect health and the environment. I know you have said that that is not your intention, but you have a lot of work to do to make the bill reflect what your true intentions are.

    Let's start with the corporate welfare elements. But first, I would like to commend you for resisting the call of many others and maintaining instead the basic structure of the polluter pays liability system. That system provides not only an adequate funding base, but also vital incentives for voluntary cleanups at tens of thousands of non-Superfund sites around the country. It's not just our view that the liability structure creates those incentives; many others, including the Ohio EPA, have recognized those incentives as well.

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    At the same time, we strongly oppose the polluter rebate provisions. The rebates would divert hundreds of millions of dollars annually away from cleanup and give those dollars for polluters for half the expenses they incur in cleaning pre-1987 sites from now on. The bill as written appears to give the polluter rebates first dibs on available funds generated by the dedicated Superfund taxes. We strongly and vehemently oppose any provisions under which the historical rate of site cleanup would shrink. It's too slow already, it needs to be accelerated.

    In addition to offering new forms of corporate welfare, the bill also opens vast realms of litigation. Everyone involved in this program, except perhaps some counsel in private law firms, wants to see the role of lawyers reduced. This bill would not take us in that direction. Perhaps the most obvious ''lawyers' dream'' features here are those that abolish the current ''clean up first, sue later'' rule, along with new opportunities to reopen literally hundreds of existing cleanup decisions.

    There are many other features that also create new grist for the litigation mill. For example, Mr. Chairman, please imagine the fun that lawyers will have with the requirement to use, and I quote, ''the most plausible assumptions in risk assessments.'' Instead of just using plausible assumptions, which is the appropriate public policy outcome, EPA and states will have to spend endless hours assembling documentation that all of the potential alternative assumptions are less plausible than the one that they are actually using. And not just once, but for each of the numerous assumptions that goes into a risk assessment.

    Similarly, think about the games that lawyers will play with the bill's proviso that the environment is deemed protected if a cleanup would address ''risked ecological resources that are necessary to the sustainability of a significant ecosystem.'' Each of these terms offers endless scope for creative lawyering.

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    Ecology is too young a science to provide definitive data. As one of the world's most eminent biologists, E.O. Wilson, has noted, scientists have identified at most 10 percent of the species on the planet. And he also notes, ''of those already discovered, over 99 percent are known only by a scientific name, a handful of specimens in a museum, and a few scraps of anatomical description in a scientific journal.''

    We know next to nothing of the role of most species in the ecosystems in which they live. And just which ecosystems, Mr. Chairman, shall we write off as insignificant?

    Similarly, the bill provides that future land uses are to be taken into account only if they have ''a substantial probability of occurring.'' Imagine the lawsuits over whether a particular future use is substantially probable. Will we be seeking to admit crystal balls into evidence?

    How about litigation over whether the cost benefit analysis is ''quantified to the maximum extent practicable,'' and uses present net values ''to the extent feasible'', which means literally discounting the future? These and many other provisions are unworkable in a context where decisions can be taken to court, as well as bad policy. They will either lead to innumerable lawsuits or to bad cleanup decisions, as agencies seek to duck these issues. Either way, the public and taxpayers lose.

    Mr. Chairman, these and other features are as unnecessary as they are harmful. Polluter rebates have no place in a legitimate Superfund reauthorization bill. Appropriate flexibility and cleanup decisions can be created without compromising protection of health, the environment as meaningfully defined, or the often overlooked goal of restoring communities' ability to use their land and water resources to the greatest extent practicable. We believe you can and should go back, create a better bill, and we would look forward to working with you in that process.

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    Thank you.

    Mr. BOEHLERT. Thank you very much. I'm not saying we're going to go back. We will start from this point forward. We will take your wise counsel and give it the consideration it warrants. And we will try every single day to in some way or other improve the bill. But we're going forward. We're not going to go back. Thank you.

    Ms. Chasis.

    Ms. CHASIS. Mr. Boehlert, we would also like to thank you for all your good work on fighting the EPA riders and on Clean Water. And we're very pleased to be here today.

    I'm going to address specifically Titles IV and Titles VIII, the reform legislation. And those concern natural resource damage recoveries under both CERCLA and the Oil Pollution Act. The current provisions of law are based on the principle that the polluter should pay for the harm it causes, and that the public should be made whole for the damage it suffers.

    The legislation that is the subject of today's hearing would change this basic approach and exempt major polluters from whole categories of damages, and make public recovery of damages to natural resources very difficult, if not impossible in many cases. And Mr. Chairman, we have prepared a chart here which is attached to the testimony and is up on this easel to illustrate for you the additional hurdles and difficulty that are posed, difficulties that are posed as a result of legislative changes.

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    Mr. BOEHLERT. Is that chart in your testimony? Does that chart accompany your testimony?

    Ms. CHASIS. Yes, it does.

    Mr. BOEHLERT. Okay.

    Ms. CHASIS. Not only would environmental degradation of valuable resources go unredressed, but important financial incentives to polluters to operate in a responsible fashion would be removed by these changes.

    Our major concerns with the legislation are the following. First, it would allow the worst sites to go unrestored. It would leave the most contaminated ocean, coastal and river areas unrestored by revising and greatly expanding the current $50 million cap on polluters liability under CERCLA. The cap would apply in aggregate to all responsible parties for cumulative releases from all facilities, for any area of contamination listed on the NPL, or the contiguous area of contamination at non-NPL sites. This legislation would transform the cap into a $50 million max per NPL site or per contamination area.

    The proposal would unfairly subject to the same cap damages from an isolated event and harm resulting from the knowing actions of a polluter over decades covering a huge area. The public's compensation for sites such as Clark Fork, Montana, the Palos Verdes shelf off the Southern California coast, the Coeur d'Alene Basin, Idaho, or the Hudson River in New York, where massive damage has occurred, far in excess of the $50 million, would be arbitrarily cut off.

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    This is a classic special interest provision. A few major companies, such as ASARCO, Arco, General Electric, ALCOA, Montrose Chemical and Westinghouse would benefit from those provisions. And the public would be the big loser.

    Mr. Chairman, we know there is in Title X a provision for access to the fund. But we do not see this as a substitute for the cap for two reasons. The first reason is, other causes will exhaust the fund and we're concerned as to whether there would be any monies realistically available to cover damages in excess of the $50 million cap. And secondly, the $50 million per year and then the $100 million per year that theoretically would be made available are not enough in any event to cover the very extensive damage at the major sites that I've just referenced.

    Two, the legislation favors natural recovery over active restoration, thereby letting the polluter off the hook entirely in many cases. The legislation defines restoration to include natural recovery. This definition, combined with the heavy emphasis on costs in the selection of the restoration alternative, creates a strong presumption in favor of doing no active restoration. This is underscored by the fact that while the restoration measures chosen are supposed to achieve restoration in a timely way, the proposed definition of timely in the bill is to take into account both cost effective and cost reasonable criteria, thus seriously undercutting the value of this requirement.

    The bill favors natural recovery, since that is the cheapest alternative of all. The result under this legislation is that the polluter will in many cases be able to avoid paying anything.

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    Third, the legislation exempts important natural resources from restoration by precluding the Federal Government from recovering damages to a whole series of important natural resources, including ocean fish of recreational and commercial importance, whales, dolphins, migratory birds, bald eagles and salmon. This is because the bill disallows claims for damages to natural resources managed or controlled by the United States, claims allowed under current law.

    Many if not most species of fish and wildlife are not owned or held in trust by the United States. In some instances, the states have no jurisdiction over these resources. For example, if they are outside the state's three mile seaward boundary, or no ability to address the overall harm to species, such as migratory birds and salmon that cross state lines. The proposed legislation leaves such natural resources either totally or substantially unprotected.

    Fourth, the legislation eliminates whole categories of damages that have provided significant recoveries in the past. It would eliminate a whole category of damages for the value people place on maintaining a pristine wilderness or population of sea otters for future enjoyment and the use of those resources by their children and grandchildren. Had the currently proposed legislation been law when the Exxon oil spill occurred, the public would not have been able to recover anything close to the $900 million that Exxon paid.

    Fifth, the legislation restricts the public's ability to recover for damages that flow from small spills and releases by appearing to preclude the use of simplified, streamlined assessment techniques. In addition, the legislation would limit natural resource damages to measurable and ecologically significant injuries, making it difficult for trustees to recover for a series of injuries which individually may not be ecologically significant, but cumulatively are significant.

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    And finally, the legislation imposes numerous new hurdles that our chart illustrates, making it harder for trustees to recover. And in every instance, every instance, favoring the polluter.

    Mr. Chairman, this is not a reform bill. This is a bill that protects polluters and harms the public. We ask that you make significant revisions to these titles before reporting this bill out.

    Thank you.

    Mr. BOEHLERT. Thank you very much.

    Now for Velma Smith, from Friends of the Earth. Welcome, Friend.

    Ms. SMITH. Thank you. Thank you, Mr. Chairman, and we certainly know that you have been a special friend to the Earth.

    I would like to begin by echoing the comments of my colleagues. Friends of the Earth thanks you and lauds you gladly and loudly for your leadership on Clean Water and the EPA budget. Unfortunately, however, our respect for you cannot change our reading of H.R. 2500. H.R. 2500 is a bad bill, a very bad bill. It breaks faith with the communities who await cleanup. It cripples what has been an effective program to reform the management of waste in this country. It destroys the program's liability-driven incentives for voluntary cleanup. It saddles generations to come with an enormous toxic deficit.

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    H.R. 2500 abandons the notion of restoration, not just when technical complexities make restoration unachievable, not just when the cleanup costs for one site would imperil cleanup elsewhere. But in each and every case, it removes the imperative to restore beneficial uses of land, water and air. Under this bill, brownfields redevelopment will not be expedited. In fact, abandonment could become an accepted so-called protected land use.

    H.R. 2500's driving policy can be characterized as ''use it or lose it'' for the burden falls on the affected community to show what uses they have made of resources or what they will likely make. The message to the community? If you want clean land and clean water, stake a claim and be prepared to defend it. H.R. 2500's drafters have stricken the law's requirements to ''at a minimum protect human health and the environment'' and replaced this with a standard for protection against ''realistic and significant risk.'' And to this new standard, they have also appended a new requirement entitled, ''certification of cost effectiveness,'' that in fact reads as a cost benefit balancing test, answering the question of how clean is clean with the question, how cheap is it.

    H.R. 2500 deletes the law's requirement for remedies to achieve compliance with other Federal environmental laws, and with more stringent promulgated state standards, saves state standards on point source discharges. With this deletion, the bill effectively deletes the requirement to clean up or even to control groundwater contamination, keeping it from spreading to uncontaminated areas.

    If you doubt that this is a problem and a mistake, then I ask you to visit the San Gabriel Valley, where uncontrolled contamination has driven many feet deep and square miles wide. Apparently Mr. Reilly and the CMA agree with our reading on this provision.

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    For this cleanup requirement in current law, which has netted, by the way, enormous advances in groundwater science that will be halted under H.R. 2500, the bill substitutes a requirement to prevent or eliminate consumption of contaminated drinking water. The bill deletes the law's current preference for permanent treatment, placing natural attenuation, institutional controls, point of use treatment and alternate water supplies on par with treatment. Coupled with the overriding cost test and the mandate to reduce the value of future costs and resources with net present value calculations, these changes drive decision makers to the pennywise, pound foolish options.

    Under H.R. 2500, we let groundwater, the source of drinking water for 97 percent of rural households, remain basically an unmanaged sewer, and let future generations cope with finding clean reservoirs for growing water needs. Under H.R. 2500, we ignore the fact that groundwater is a dynamic, moving resources, vulnerable to toxic contamination, and that predictions of future needs are enormously difficult. We paint the rotten timbers of the house, put a bucket under the leaky roof, and let somebody down the road cope when the cleaned-up house collapses.

    I know these are harsh words. But I don't believe that this is rhetoric. I firmly believe that this is reality. If you doubt that we are right, I urge you to sit down and to look at the specifics of remedy debates in the field now. Meet with EPA groundwater experts. Meet with citizens. Look closely at specific cases and then look again at H.R. 2500. I'm sure you will agree then that H.R. 2500, though it will declare sites clean faster, won't really clean them.

    H.R. 2500's, Superfund approach is wrong, not only because it is not fair, but also because ultimately it will not work. Mr. Chairman, we urge you to use your position of leadership and influence to press not minor amendments, but a major rewrite. We urge you to go forward by dusting off the fruits of last year's painstaking and long negotiations to at the very least challenge your colleagues to explain specifically how those compromises fall short.

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    I appreciate again the opportunity and your leadership, Mr. Chairman. I look forward to your questions and to working with you and your staff. Thank you.

    Mr. BOEHLERT. Thank you, Ms. Smith. And as I think you know, I'm not unwilling to challenge people on occasion.

    Ms. Robinson.

    Ms. ROBINSON. Chairman Boehlert, and members of the Water Resources and Environment Subcommittee, thank you very much for giving me the opportunity to address this committee. And I would like to echo the comments of my colleagues here on your record, Mr. Boehlert, your leadership and your principle and commitment on past environmental issues. And as a community person, I implore you to continue with that leadership and that commitment and that principle to help us negotiate a sound and safe and effective Superfund law, of which H.R. 2500 is not.

    My written testimony, I think, provides adequate documentation of the positions that I will very, very present here. I'm a representative of people who live in communities with Superfund or CERCLA sites across the Nation. I see H.R. 2500 as fundamentally flawed, and as an affront to democracy. Because it violates the unalienable rights of life, liberty and the pursuit of happiness.

    And it does not afford equal protection before the law for all of its citizens, particularly those of us who live close to or on top of Superfund and CERCLA sites. This law is flawed, because it is predicated on three very unsound principles: risk assessment, cost to industries, and land use determinations and containment rather than cleanup.

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    I think it's very laudable that the goal of the bill is the protection of human health. But when one is using faulty tools, how will one every achieve that goal?

    Risk assessment is seriously flawed, because number one, there is inadequate scientific data to allow for accurate determination of risk. I can just see some bureaucrat somewhere down the line, probably upon our cataloging our desks, saying, oops. Let's look at little Daniel Robinette, whose baby formula was laced with vinyl chloride, even though the site is being cleaned up, even though he is no longer drinking that water, what are the long-term effects of that exposure on little Daniel Robinette? I don't see that the data is there to give him that.

    We citizens have been used unknowingly and unwillingly as guinea pigs, and this is simply unacceptable. If one is going to get the accurate data that one needs to do risk assessments, one must do serious clinical studies.

    Two, risk as used in H.R. 2500 does not consider the plethora of illnesses induced by a polluted environment, but only concentrates on cancer. Neural effects, reproductive effects, respiratory effects, effects on liver and kidney and immune system defects are not considered.

    Three, it assumes that it is all right for some few individuals in power to determine that it is acceptable for a given number of citizens to die for the benefit of corporate profits. That's exactly what risk says. You will have this number of excess deaths. Cost to industries is fundamentally flawed because, one, there is no way of assessing in dollars the cost to society if a site is not cleaned up. What are these long term health costs to our total society? What are the long term socioeconomic costs to this total society, brought about by children who were too sick to get an education?

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    Cost benefit analysis places a higher cost on industry's profits than it does on the life, liberty and pursuit of happiness of the citizens of the Nation. We have a right to a clean environment. We did not invite the industries into our communities to dump. We did not gain any benefit from it. But we are left holding the bag.

    Further, this bill would allow RODs to be reopened if an industry does not feel that the proper cost benefit provisions have been met. And this decision can then be litigated. And that's going to increase transaction costs and delay cleanups. And that's something that this bill claims it is against.

    Third, the tendency to soft pedal issues, liability issues, violates the principles of responsibility and accountability. And quite frankly, we citizens simply don't buy the argument that companies are being penalized for doing something that was legal. The toxic effects of chemicals have been known since antiquity. The ancient Egyptians knew about the toxic effects of heavy metals. Lucretia Borgia capitalized on the effects of organic chemicals. Sir Percival Potts, in 1776, identified the first occupational exposure, occupational disease from occupational exposure.

    Industries that have had the privilege of gaining profit by operating in these United States also have the responsibility to ensure that their operations do not damage the resources of the United States, that is, its lands, its waters and its people. Chemists worked with chemicals, wearing protective clothing, work with them under hoods. Then they brought them out in our communities and dumped them in unlined open pits. Those who did so violated the rights of others.

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    And now, they must be held accountable. You made the mess, don't just contain it, clean it up. Land use determination is fundamentally flawed, because number one, people who must live with the decisions about land use are not the people who will make those decisions.

    Two, a lesser cleanup standard for industrial zones leaves citizens with higher risk than because of the rather haphazard way in which industrial zones are assigned, citizens will be found living in industrial zones. The designation of a site as industrial with its lesser cleanup standard deprives that community of flexibility in land use planning, and makes it a permanent sacrifice zone.

    Four, land use designations necessitate institutional controls, which the past has repeatedly shown they simply do not work. Remember Love Canal? How about Carver Terrace? How about Rose Drive in Venecia, California? And there are numerous others. Institutional controls simply do not work.

    This bill denies the opportunity for the people most impacted by a Superfund site to have a meaningful voice in the Superfund decision making process. It proposes to continue to use citizens as guinea pigs in immoral experiments, while insensitive and inept agencies such as ATSDR continue to gather meaningless data that is inconclusive by design. It would push the Superfund program onto states that have neither the resources or the political will to protect the citizens.

    Here's a letter from Governor Edwin Edwards, asking EPA not to list the Oxy Chemical site in Bossier City on the Superfund list. Why? He says, number one, that Oxy has shown a willingness to clean up, and a commitment, when in fact Oxy Chemical has had to be dragged kicking and screaming every step of the way. He says that citizens don't want it, when in fact citizens are concerned about black gunk oozing up in their back yards where their children have to play. And he said the DEQ says it doesn't need to be a Superfund site, when in fact our local DEQ wrote to EPA and said, please take it over, we don't have the financial resources to manage it.

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    The fact, add to this the fact that H.R. 2500 wants to put a cap on things. And what they're basically saying is, if we bury our head in the sand and ignore the problem, maybe it will go away. In the interim, we, the 11 million plus citizens who live on top of, adjacent to or in the direct line of impact from these hazardous waste sites are being written off as the necessary and expendable costs of America.

    Our property is devalued, our health and quality of life declines, our neighbors and loved ones die, and our children's dreams are shattered because their bodies are so riddled with chemicals that they cannot realize their goals. We spend billions cleaning up contaminated sites, yet we do not clean up contaminated people.

    Superfund is a national emergency. Both citizens and resources of the future are being destroyed. We citizens have many years of first-hand experience with Superfund. Over the past several years we have developed a platform, which is a part of my written testimony. And we would be very happy to work with you on our issues to help develop a sound, safe and effective Superfund. Unless we take a very aggressive stand on Superfund today, I'm not sure that America will be worthwhile living in tomorrow. Thank you.

    Mr. BOEHLERT. Thank you very much.

    Let the record show that panel two is less than enamored with H.R. 2500 as presently constituted. But I want to assure all of you that on a bipartisan basis, this subcommittee will work with you. We will consider very carefully your observations. And I note particularly that you're focusing on remedy selection, which is an area, I think the greatest weakness in this bill is in remedy selection. So it ain't over until it's over.

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    Ms. Robinson, I want to point out, and we had to point this out to the Administrator, Ms. Browner, we're dealing with all risks, not just cancer risks. I just want to make certain you understand that we're not just talking about potential cancer risks. We're talking about all risks to public health.

    And Ms. Chasis, in your testimony, you stated that H.R. 2500 would allow the worst sites to go unrestored. But H.R. 2500 requires that if the damage to natural resources exceeds the $50 million cap, then we would pay the remainder of the cleanup out of the fund. So that's not leaving it unrestored. I mean, we've got a mechanism to do it. We just think that this is probably the best we can get under the circumstances.

    But I don't want you to think that if it's a site where there might be $80 million or $120 million required to do the job that we're only going to put $50 million, that's it, and we walk away from it. That's not the way the bill is developed.

    Yes?

    Ms. FLORINI. Mr. Chairman, I think one of the reasons that confusion may arise is the bill actually sort of divides the Superfund monies into two pots.

    Mr. BOEHLERT. Right.

    Ms. FLORINI. And competing for the same ''big pot'' money that would go to the over-$50-million NRD supplements are the polluter rebates, all the polluter carve-outs, EPA cleanups, state cleanups. And frankly, we don't think that by the time you do all that other stuff you're going to have any money left to make the additional NRD payments.

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    Mr. BOEHLERT. Pardon? Staff tells me we have an honest difference of opinion, because we've looked at the numbers very carefully and we think there will be some money. But we'll look at them even more carefully because of your admonition.

    Ms. CHASIS. We would very much appreciate seeing your analysis of those numbers so that we can understand that. There's also the issue that the bill says that the access to the fund for NRD will be $50 million for a number of years, and then $100 million. And a lot of the big sites are estimated to be several hundred millions each in terms of restoration costs. So there's a concern as to whether that amount would be sufficient in any event.

    Mr. BOEHLERT. All right. First of all, I don't think any of you have any quarrel, and if you do, I want to hear about it, with access to the staff, to sit down and talk over these issues in a calm, cool, collected manner. And so I don't want to hear any complaints, or no, I do want to hear complaints, if you have any. I haven't heard any to date. Because this is a very dedicated, committed staff that know a hell of a lot more about the subject matter than I do, quite frankly. And so I rely very heavily on them.

    But we will continue to be very receptive. As a matter of fact, I have a mind to set up something in the very near future, to which I will invite all four of you to sit down with us and discuss this in greater detail.

    Let me turn it over now to Mr. Borski and I will maybe come back with some questions. Mr. Borski.

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    Mr. BORSKI. Thank you, Mr. Chairman.

    Ms. Smith, let me start with you. You mentioned in your testimony last year's bill, which I thought was one of the most incredible efforts I've seen in my 13 years here, to get everyone together and to compromise on a measure that could move forward. Unfortunately it didn't, and we're not even discussing it yet at this point. But from your point of view, from the Environmental's point community's view, was that everything you wanted last year?

    Ms. SMITH. Not by any means was it everything we wanted. It was a long, excruciating, you know, I think right in this room, sitting for days and days in a row, negotiating, knock down drag out. But sitting down and listening to other points of view and trying to take, line by line, word by word, and to make things work, take all points of view into account.

    And there were, you know, some compromises which we didn't really like that much. But I think that there's a lot to work from there. And it's just a darned shame to let it go. I think early on, one of the first groups we sat down with were municipalities who were being hit with these third party suits. And we worked with them for weeks on end and hammered out an agreement. And we basically believe that the people who undertook garbage collection and disposal on behalf of their citizens shouldn't be stuck in the quagmire that they're in. And last year's bill dealt with that.

    We also agreed, and we worked out, we think, an option the little guy, the de minimis folks. We need to get those folks out. We don't even want them to have to be embroiled in a detailed allocation process. We want the little guys out. In last year's bill, we worked on making the process more accessible to citizens like Florence who live in these communities. But it all disappeared. Everybody pretends it doesn't exist.

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    Mr. BORSKI. Can you envision a compromise between last year's compromise and H.R. 2500 that would be acceptable to you?

    Ms. ROBINSON. I can't, Mr. Borski. And let me say a little bit about last year's bill. By no means was last year's bill all that we wanted, fell short in many ways. But what we saw was a total package. And what we bought into was a total package. Now, don't expect us to buy into little bits and pieces of last year's bill.

    Mr. BORSKI. You mentioned a little bit about the municipalities and the co-disposal liability exemption. Tell us your view of that.

    Ms. SMITH. Well, our view is that there's been a very effective campaign of third party suits, not necessarily to collect money, but to discredit the Superfund program. And clearly, we need to draw a halt to that. And we totally support a cap on the liability for municipalities. Karen Florini from EDF has looked in more detail at the specific liabilities and may want to add something.

    Ms. FLORINI. I do think it is difficult to understand the rationale for exempting not only the municipalities themselves, which are public entities providing a service, not only the generators and transporters, which have a relatively less direct connection to the site, and one that can involve us in an awful lot of litigation over tracking down relatively small amounts of money. But it makes no sense to me that you say that the private owners and operators of these facilities get off the hook. They were operating landfills in a way that made a hellacious mess. They were in business making money doing so.

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    Why are we taking them off the hook? And I'm afraid that the same would apply, Mr. Chairman, to the amendment that you announced to support yesterday with the small businesses.

    Again, recyclers of oil and of used batteries, it's one thing to say that the generators and the transporters have less direct connection, or you just think it's too much trouble, basically, to go after them. But why in the world let the people who owned and operated those sites in order to make money, and who directly made a hellacious mess, why let them out of liability? I just don't get it.

    Mr. BOEHLERT. If I may interject here, because she did appeal to me for some consideration, what we're trying to do is go forward with a program that will get about the business of cleaning up Superfund sites. That's what we're trying to do. We have had unmitigated disaster after disaster in the history of this program. We've spent far too much money on transaction costs. The Lawyers Enrichment Act is what it really should be renamed.

    And so it's give and take, it's some measure of compromise. But the fact of the matter is, I can read, you can read, you know the composition of this Congress. We can score a lot of points in terms of rhetorical exercises and not get anywhere, or we can try to make some adjustments, and I'm making some, and I would ask that maybe you consider making some, to get us where we want to get, that is, a bill that actually goes about cleaning up Superfund sites.

    Now, I'm not going to sell my soul for this, I want you to understand that. And H.R. 2500, as presently constituted, is not something that I stand up and shout about. But it's a good beginning. And I think we have to build upon it. And that's why I welcome your testimony. And I welcome your counsel. And quite frankly, on occasion, I even welcome your admonition. Thank you.

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    [Laughter.]

    Mr. BORSKI. Let's try and get a little more of the latter, Mr. Chairman, if we can for another few minutes.

    Let's stick with the liability piece of it for a minute. Tell me about this 50 percent rebate idea. Good idea? Bad idea?

    Ms. FLORINI. Well, as the Chairman said this morning, we're looking at a $5 trillion deficit. To me, adding a corporate welfare provision in this kind of fiscal situation makes no sense. And I also have to respectfully disagree with Mr. Reilly's statement that the program has all the money it needs now. It does not. And clearly, under the kind of appropriation that is being looked at for the future, it will not have nearly enough money to go forward.

    I also want to observe, if I could, that despite what some people have said, this program, though it has serious imperfections, has not been a failure. At 800 of the 1,300 Superfund sites, construction is underway. At almost half of those, construction is complete.

    That's not the sign of a failure. It's a sign of a program that hit a lot of roadblocks early on for which you EPA to develop new technologies and new methods of study. That very long incubation period is finally over and the program is actually accomplishing something. This is not the time to shut it down by diverting what EPA estimates would be $700 million annually to polluter rebates.

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    Mr. BORSKI. What about the rebates? Suppose it were changed in the bill so that people only received, or companies only receive the rebates if the pace of cleanup were not altered or changed? Would you support the rebate provision in that case?

    Ms. FLORINI. I think you also need to separately look at the related issue of how much money it is going to take to administer that kind of program. Let's image for the moment that it's 5 years into the future. If this rebate type of provision goes through, I guarantee there will be a GAO report that says, EPA delivers excess rebates to polluters all over the country.

    It's going to take a lot of EPA time and administrative resources to avoid paying fraudulent rebate claims. And I think one of the questions that needs to be very carefully looked at is, in light of the other added responsibilities that the agency is facing under this bill, is there any meaningful way for them to appropriately administer a rebate system? I have grave skepticism about that.

    Mr. BORSKI. Mr. Reilly this morning said industry money, not taxpayer money, would be rebated. Do you agree with that assessment?

    Ms. FLORINI. It is true that industry pays the taxes into the pot of money from which the polluter rebate would come. However, those taxes largely get passed along to the consuming public. So it's a bit of a question of how many steps are in the chain.

    And in any event, the fundamental purpose of the program is to clean up sites first. If you do have a mechanism for ensuring an accelerated pace of cleanup, and you can work out the administrative problems, which as I expressed before I've got grave concerns about, then it might be something worth considering further.

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    But those are absolutely essential prerequisites.

    Mr. BORSKI. What about the ROD reopeners? Again, Mr. Reilly this morning testified that it would have very little if any, impact on pace of cleanup or anything else. Is he accurate on that, or do you agree with that?

    Ms. SMITH. I believe, Mr. Borski, that the ROD reopeners are, one of the big flaws of this bill. When the agency has been struggling to get cleanups going, to have them now go back and reopen makes no sense, and this time for those RODs, there's no pre-cleanup litigation bar. That's dropped under this bill.

    So we'll go back, we'll rewrangle. And the agency will use enormous resources. They don't have, you know, extra folks in the regions sitting around waiting for cases to work on. And they'll be going backwards.

    And others will be affected, people like Florence, or, I got a call last week from an Indian tribe in Washington State. They have struggled for years, sitting down with the PRP and sitting with EPA. And they finally got things worked through, and they are right there, on the werge of a decision. And they're relatively happy. But now it could all disappear.

    And I think it will be a shame not only to waste EPA's resources, but to waste community resources that way, too.

    Ms. ROBINSON. May I add to that, please? There are over 33,000 sites that have already been identified, and probably some more that still have not yet been identified. For a citizen living in the shadow of one of those sites, he wants that site cleaned up yesterday. Now, we talk about this will not slow down the pace of NPL sites cleanup. What we need is to accelerate that pace, instead of just getting two more per state per year, we need to get these sites cleaned up. And if you start taking away money from the program, how is that going to happen?

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    Mr. BORSKI. Can EPA change a prior remedy decision currently under law?

    Ms. FLORINI. Yes, it can.

    Mr. BORSKI. And what's the purpose of this ROD reopener?

    Ms. FLORINI. This essentially lets people force the reopening, irrespective of whether EPA thinks there's any merit in it. Despite what Mr. Reilly said, it takes a lot of resources to deny a petition and then to go into court and have lawsuits—which do not now exist because such a cause of action does not now exist—to challenge a remedy that had previously been agreed to.

    Mr. BORSKI. Thank you very much.

    Mr. BOEHLERT. Thank you.

    Mr. LaTourette.

    Mr. LATOURETTE. Thank you, Mr. Chairman. I would just note for the record that although the panel doesn't appear to be big fans of H.R. 2500, they seem to be fans of yours. And I would just like to echo my respect for the Chair and my belief that you'll lead those of us who wander in the darkness sometimes on this side of the aisle to the right conclusion in this bill, and I look forward to that day.

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    I'd like to follow up on just what Mr. Borski was asking a minute ago, if I may, Ms. Florini. You certainly don't come before us today expressing the view that the EPA is infallible. And the observation, as I understood it before, about the reopening of the RODs, one, when Administrator Browner was here last week, she indicated that the agency is already going through a process of reevaluating some of their choices of remedies on certain sites. And I think that's an appropriate step forward.

    I'm not misreading H.R. 2500, I don't believe, when I reach the conclusion that even if there is a ROD reopener that that doesn't stay the process. There's no automatic stay unless the individual seeking the reopening can muster the same level of proof that would be required to move an independent magistrate to issue an injunctive relief. Do you disagree with that observation?

    Ms. FLORINI. No.

    Mr. LATOURETTE. So I guess I'm trying to get a sense of how far your thoughts are from the ROD reopener language in H.R. 2500. Should there never be a ROD reopener, or can we in this meeting that the Chairman is proposing perhaps wrangle out some language that we set up a list of standards that perhaps don't make you jump up with joy, but at least everyone can live with, that this would be an acceptable benchmark on which to judge whether or not a ROD should be reopened or not?

    Ms. FLORINI. The fundamental question, Congressman, is one of resources. You cannot set up a situation where all of the existing 700 records of decision can be reopened, or where people can file petitions seeking to have them reopened. It won't work, especially not if you are looking at any kind of budget along the lines that EPA is facing now, especially not in conjunction with all the other responsibilities that this bill imposes on EPA. For example, doing allocations for not just NPL sites, but also the thousands of additional sites, potentially, where emergency removals have been conducted.

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    So my basic answer to your question, I think, there needs to be a way for EPA to say, this game would not be worth the candle, and to not have to face litigation over that determination.

    Mr. LATOURETTE. So you don't see a need to balance scant resources with a situation that may be working a manifest injustice?

    Ms. FLORINI. I think PRPs already have the ability to go to EPA and say, this doesn't make any sense. For example, look at what we've learned about groundwater, and DNAPLs: we can pump and treat from now until the cows come home, and we're not going to clean up the situation.

    Meanwhile, we do need to do something to keep the contaminated plume that already exists from spreading.

    It is not at all clear to me that it would be worth forcing EPA to go through that kind of determination where they thought the petition lacked merit, or allowing a court challenge to proceed.

    Mr. LATOURETTE. Thank you for your answer.

    Ms. Smith, I made the observation during your question, either from the Chairman or Mr. Borski, that one of the things you liked about last year's bill, and not being here. know a little bit about last year's bill, but didn't participate in the negotiations, obviously, you want the little guy out.

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    And that's something I've been trying to ask everybody that comes. I think everybody should want the little guy out. So just your read of how effective getting the little guy out is going to be in H.R. 2500. Do we achieve that goal as well as last year's, and if not, why not?

    Ms. SMITH. I should be straightforward and say that I may want to supplement with a written answer, because I have concentrated this year primarily on the remedy selection pieces. But my sense is that it may not be as effective this year, because the little guy is still captured in the allocation. And it's not going to be in the interest of the little guy to sit at the table and not say boo during the allocation process. So last year, my recollection is that what we worked on, was to get some folks out entirely, so they didn't even have to come to the table. We helped them that way.

    Mr. LATOURETTE. If you would be so kind, if you have time to put something in writing and give us, I would very much appreciate reading it. And the opinion was expressed a little earlier, I don't know whether it was this morning or in our last hearing, that getting the little guy out meant, or equalled, paying a de minimis settlement.

    And I think I used the little example of back home, the little guy was offered by our state EPA, pay $10,000 and you can be on your way, which compared to the litigation costs of the third party suit is probably a good bargain. Compared to a small business where $10,000 is a lot of money anywhere in the country except perhaps in Washington, D.C., I'm not so sure paying anything is appropriate.

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    Just based on your recollection, was letting the little guy out saying, we can agree on a de minimis or a de micromis standard that they just don't pay anything, they just walk out?

    Ms. SMITH. De micromis, there were parties who walked away. I think it's difficult to figure out where to draw that line, whether to use percentages or numbers or exactly how to do it. But there were people in last year's bill who walked away.

    Mr. LATOURETTE. Okay, thank you very much. Thanks, Mr. Chairman.

    Mr. BOEHLERT. Thank you.

    Mr. Barcia.

    Mr. BARCIA. Thank you very much, Mr. Chairman.

    I have two questions. One, I'd like to begin with Ms. Smith. And then a follow up question for the entire panel. I want to thank you, Mr. Chairman, for these enlightening hearings today, and also for the participants in the panel this afternoon. It's been very enlightening.

    I am particularly concerned because of a local situation in my home town of Bay City, where we have a middle ground landfill, which was contaminated with PCB-laden transformers in the early 1950s. And that landfill site is leaking PCBs into the Saginaw River and the Saginaw Bay, and ultimately into Lake Huron.

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    And so one of the questions I'd like to ask, and we've had some difficulty in terms of, we had a consensus for the longest period of time in our community and among our local officials, to get that site listed on the National Priorities List. And as a result of the Rescissions Bill, which Congress passed last summer, we now have a requirement that Governor Engler of Michigan must sign off on that site. And Governor Engler has said he wants a directive now from local government, from the City of Bay City, my home town, as to whether or not they wish that landfill to be listed on the NPL site.

    And of course, our city being comprised of about 38,000 residents and having about a $20 million municipal budget, they're very fearful of the $100 million in estimated costs to clean up the landfill. So now our consensus is sort of being lost at the local level.

    But I guess the question to you, Ms. Smith is, I'm particularly concerned about community participation in remedy selection. Could you comment on how you feel the provisions in this bill would address this issue, in terms of the community participation in the process, in remedy selection? Well, I thought, yes——

    Mr. BOEHLERT. While you're deciding which one's going to answer, let the Chair state to Mr. Barcia that the Chair is very sympathetic to the situation you've outlined and wants to work with you to accommodate your concerns.

    Mr. BARCIA. Thank you, Mr. Chairman.

    Ms. SMITH. I'll take a quick stab, and I think Ms. Florini, as well as Ms. Robinson, have something to add. Under remedy selection, I believe, there are problems in there. One of the grievous problems which Florence mentioned in her oral statement is that on the key decisions about land use, about what would be the land use, it is only the elected officials views that are considered, and the opinion of the community of people is not given consideration.

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    The other problem I see is that in establishing these new community working groups, which I think is a fine idea, but the bill also then goes on to say that if a community working group—which is basically a dialogue group, a balanced group with industry folks, communities, citizens—only that group is eligible to receive a technical assistance grant. So that a little community group who's established themselves could not get technical help. And I think that will impair good participation by citizens.

    Mr. BOEHLERT. But they're just given a preference, but they're not the only one that can get some assistance. And I am very mindful of the fact that we need community groups participating. And that's perhaps an oversight in the bill as drafted. There are a few, I'll concede, and we're going to address them.

    Ms. SMITH. Okay.

    Mr. BARCIA. If Ms. Robinson could also respond, your nameplate was down toward the end of the table, so I apologize. I was actually directing the question to Ms. Robinson. But I appreciate the very thoughtful answer, Ms. Smith. Thank you.

    Ms. ROBINSON. We citizens have a lot of problems with lack of citizen participation in this bill. We feel that those citizens who live in the zone of highest impact should have an enforceable right to participate. It's one thing to talk about elected officials making these decisions. But they've made all the bad decisions in too many cases that put us in a Superfund community to begin with. Now they're going to turn around and make additional decisions about land use and about how clean the site is to be, when they don't have to live with those decisions. We're still there. Our homes are still there. Many of us have drinking water wells that are tapping into those contaminated aquifers.

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    Incidentally, community people can frequently tell you where the wells are, who still has the wells. It's not always listed. For example, on my street, we have a public water system, but there are still people on my street that have their own private wells and use them.

    Mr. BARCIA. Am I out of time, Mr. Chairman?

    Mr. BOEHLERT. Yes, a quickie.

    Mr. BARCIA. Just, if each panel member could respond very quickly. Does the panel believe that a community has a right to choose a less stringent remedy, for instance, given the limited resources that the program and the Government have, do you ever find containment to be an acceptable remedy? Does turning the cap site into a parking lot ever represent an acceptable remedy to any of you?

    Ms. ROBINSON. It's very important that community participation not be made community manipulation. And that's what I'm seeing too much of. It takes an informed community to be able to make these kinds of decisions. And I don't see that H.R. 2500 addresses this point at all, to help those people so that they are well informed and can make well informed decisions as to whether or not they want containment.

    Mr. BOEHLERT. Thanks. Can you make it short, because what we want to do is get Mr. Menendez and Mr. Bateman in, and then we'll go vote, and we can excuse this panel.

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    Ms. SMITH. The current law allows for containment. I've seen it used in many instances.

    Ms. CHASIS. I'm going to defer.

    Ms. FLORINI. I think if a fully informed community makes that kind of a decision, that's an acceptable outcome. But they must be fully and meaningfully informed, and it has to be a decision that is made primarily by the people who are most heavily affected by the decision.

    Mr. BARCIA. Thank you, Mr. Chairman, and also my colleagues.

    Mr. BOEHLERT. Thank you. Mr. Menendez.

    Mr. MENENDEZ. Thank you, Mr. Chairman. I'll be brief.

    About the natural resource damages, what effect would that cap have on Federal, state and tribal trustees' abilities to restore natural resources injured by hazardous substance releases?

    Ms. CHASIS. Well, in most cases, the damages, at least to date, have been well below that $50 million cap. So it shouldn't affect most polluters. But in the handful of cases where there's been very massive contamination and extensive natural resource damage, it would have a major impact in terms of impeding recovery by the trustees.

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    And we look at Clark Fork in Montana, that Arco's involved in, and the Palos Verdes shelf contamination with DDT off southern California, Montrose Chemical and Westinghouse. And you just go down the list of the major areas. And it's clear that what this cap would do is benefit a few large polluters at a few major sites. And we think that that's irresponsible.

    Mr. MENENDEZ. Can you give the committee a sense of some of the dollars that are involved in those?

    Ms. CHASIS. Well, I know that the State of Montana has filed a case on the Clark Fork River. And they are claiming damages on the order of $700 million. In the Palos Verdes Montrose case, the State and Federal Government have filed a joint lawsuit. The damages they are seeking, a conservative estimate, $300 million, ranging upwards. And I can provide more specifics on the other sites. But that's the order of magnitude we're talking about.

    Mr. MENENDEZ. If you'd provide that through the Chair to the committee, I'd like to see it. I think there's one where GE, the Hudson River watershed, that comes closer to my home, that's $100 million. And I don't particularly like to give a small handful of persons who are responsible, corporate polluters who are responsible, a free ride in that process.

    Let me ask the panel in general, earlier with another panel I raised the question about public policy. It seems to me, and tell me if you read this wrongly, on the question of rebates, that what we have here is a rebate that in fact is not taxable, for which the company gets a deduction in the first place, and then lastly, there is public dollars here, as I pointed out, fiscal year 1996.

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    Does it make sense, is it a good public policy from your perspective, that in fact we be giving an entitlement which is a rebate of 50 percent for people? I learned a simple lesson when I grew up. I think many of us did. And that is, if you mess up, you clean up. And the bottom line is, that's as American to me as just about anything else.

    The bottom line is, I have a real problem. And I'm trying to flush out whether it's only me, that you have a 50 percent rebate that's tax exempt, you have a deduction, and for the responsibility that you had in the first place, it seems like a hell of a deal. But maybe I'm missing something, or I'm reading it wrong. Any of the panelists are free to answer.

    Ms. FLORINI. Congressman, I think you've got it, dead on, exactly right. It makes no sense as a matter of public policy to say, we're going to start writing checks to people for half the money that they spend in cleaning up a mess that they made.

    Ms. SMITH. I believe it's not right. If somehow it were going to make the program work better, and move faster, if H.R. 2500 were going to get better cleanups, maybe you could swallow a little bit. But it won't. It's going to slow the program down. It's going to use resources for the rebate program. I'd rather see us go to the tax code and take away the tax breaks that we give people for fighting with their insurance companies, the tax breaks we give them for defending themselves from EPA.

    Mr. MENENDEZ. Let me just say, during the last, I was reading Ms. Robinson's testimony, and during the last hearing, we heard from one of our colleagues a strong comment about the immorality of retroactive liability. It occurs to me, Ms. Robinson, that you may have some comments on morality as it relates to not necessarily retroactive liability but of the cleanup program under H.R. 2500. Do you care to comment about it?

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    Ms. ROBINSON. I feel that legal is what the rich and powerful can manage to lobby into law. Whereas moral is being responsible to your fellow man and to your country. When you make damages, you're damaging your country, and that is lowering our ability to be sustainable.

    Mr. MENENDEZ. Thank you, Mr. Chairman. Thank you for your comments.

    Mr. BOEHLERT. Thank you very much, and I want to thank all the panelists. As Lyndon Johnson used to say, come, let us reason together.

    We will go over and answer the call of the House, and when we return, the next panel will be up and it will be our final panel of the day.

    [Recess.]

    Mr. BOEHLERT. The committee will resume.

    For those of you who care about such things, General Powell has just announced that he will not be a candidate. He is on CNN at this moment. If I had a television set, I would bring it out here, because I know there's a great deal of interest.

    Our third and final panel of the day consists of Jonathan Curtis, who represents the Hazardous Waste Action Coalition; Douglas Macmillan, from the Environmental Technology Council; Kevin McKnight, from the Coalition for Legislative NRD Reform; and Richard Smith, representing the American Insurance Association. Gentlemen, your statements will be part of the record in their entirety. I would ask that you try to condense your remarks to five minutes, And we will go in the order in which you were announced. Mr. Curtis, you're up first.

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TESTIMONY OF JONATHAN G. CURTIS, PRESIDENT AND CEO, CDM FEDERAL PROGRAMS CORPORATION AND HWAC MEMBER FIRM, ON BEHALF OF THE HAZARDOUS WASTE ACTION COALITION; DOUGLAS MACMILLAN, EXECUTIVE DIRECTOR, ENVIRONMENTAL TECHNOLOGY COUNCIL; KEVIN MCKNIGHT, MANAGER, ENVIRONMENTAL REMEDIATION PROJECTS, ALUMINUM COMPANY OF AMERICA, ON BEHALF OF THE COALITION FOR NRD REFORM; AND RICHARD D. SMITH, AMERICAN INSURANCE ASSOCIATION

    Mr. CURTIS. Thank you, Mr. Chairman.

    My name is Jonathan Curtis. I am one of the founding members of the Hazardous Waste Action Coalition, and a current member of the board and Chair of its Government Affairs Committee. I have more than 26 years of professional experience in the environmental field. I am currently President and Chief Executive Officer of CDM Federal Programs Corporation, an environmental engineering and consulting firm that provides significant hazardous waste studies, design and remedial services to EPA, DOE and DOD.

    I'm a registered professional engineer in 16 states. I'm a diplomate of the American Academy of Environmental Engineers. I hold bachelors and masters degrees in civil engineering and a masters in business administration.

    I've been involved with Superfund since 1984. I've been program manager and deputy program manager for response action contracts valued in excess of $250 million.

    With your permission, Mr. Chairman, I would like to insert my full statement for the record and summarize.

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    HWAC is the leading trade association representing approximately 100 firms that perform hazardous waste assessment and remediation services throughout the country. The membership includes firms of all sizes in the hazardous waste industry, from very large firms to medium firms to small firms, including minority businesses and women-owned businesses.

    HWAC was formed and operates under the umbrella of the 5,000 member American Consulting Engineers Council. For the past 10 years, HWAC has been actively involved in shaping Federal regulations and policies that impact hazardous waste cleanup services in all business sectors. Our membership reflects the multi-discplined approach necessary for hazardous waste cleanup, and includes traditional engineering firms as well as construction firms and technology firms, as well as design and construction firms.

    We employ more than 75,000 professional personnel in more than 600 offices around the country. These include highly skilled jobs important to the U.S. stature in the world economy. In total, HWAC represents 70 percent of the top design companies in hazardous waste management which perform more than 75 percent of this country's hazardous waste cleanup activities.

    Mr. Chairman, we appreciate your subcommittee's continuing leadership with regard to Superfund reform. You are now at the forefront of major change to the law to make it a more effective statute. And we applaud your continued foresight in seeking advances that create true change.

    We also strongly support your efforts to include as part of Superfund reform meaningful changes to the liability provisions affecting the firms involved in cleanup efforts. HWAC stands ready to work with the committee to address improvements to the law discussed throughout the rest of my testimony.

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    We strongly encourage this subcommittee to push for Superfund reform this year, to protect human health and the environment while assuring the wise expenditure of scarce resources. The law requires changes to realize quicker, cheaper and better approaches to health and environmentally protective cleanups. If there are unresolved issues, they need to be addressed quickly, so this opportunity is not lost.

    Regardless of which funding option is eventually selected, HWAC believes that it is absolutely essential to make sure there is a continuity of funding for the Superfund program during the reauthorization process. Appropriate program funding must be maintained to support all ongoing activities throughout the Superfund reauthorization process. Our Nation cannot afford to have a lapse of program efforts, as was the case during the reauthorization cycle in 1985 and 1986.

    Firms are already furloughing and laying off highly qualified staff due to uncertainties in the program and delays on specific projects. And we are concerned that, if Superfund reauthorization extends into next year, that problem will become more significant and those resources may be lost to the program.

    We also commend H.R. 2500 for addressing another critically needed Superfund reform, the reform of liability provisions facing the firms that perform Superfund cleanup work. Current law often treats cleanup contractors as if they were the original site polluters, and holds them liable for the waste they did not create. HWAC firms did not cause the waste to be present at sites. Yet the present law often holds us just as responsible as if we were the original site polluters.

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    We believe that we are uniquely qualified to address many of the complex issues posed by Superfund. No two sites are the same due to the variety and interactive effects of waste and other characteristics. We have also come to recognize that no single solution is applicable to all site conditions and a variety of measures and actions may be necessary and appropriate.

    Unfortunately, the current tools for investigating and cleaning up hazardous waste sites are limited and can be expected to remain so for some years. Progress on cleaning up sites is being hampered by the unavailability of well proven, cost effective technologies.

    I would like to refer the subcommittee to an engineering news record editorial that was issued just this week on November 6th. The editorial specifically notes, critics in Congress say Superfund is not living up to the high expectations envisioned by its original drafters. That is probably true.

    But it's because its progenitors, while recognizing we had a serious problem, had no scientific means of knowing just how horrendous it was. Superfund has not gone wrong, it has gone right after the incredible toxic mess, as intended, and found the cleanup to be far more complex and costly than originally thought.

    And in concluding, the editorial says, as legislators consider the future of Superfund, they should keep in mind that 15 years ago, we lived with pockets of filth threatening the well-being of virtually all citizens. Since then, many of the most serious violations have been eliminated. We know better how to do it. We still have many foul sites, and we should get on with the effort.

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    With your permission, I offer the full text of the editorial for the record.

    Mr. BOEHLERT. Thank you. And we will put that, as we will put the full text of your entire statement. I see the red light is on, so could you try to quickly summarize?

    Mr. CURTIS. Yes. In fact, in the area of remedy selection, we think, just several key points, that the bill will move to promoting the use of innovative technologies, increase flexibility and public participation, use the observational method in hazardous waste cleanups which will allow the information gained in one phase to be effectively transferred to subsequent phase of cleanup. It will promote the increase of voluntary cleanups, require reasonable risk assessments, and make remedy selection determinations based on considerations of future land use.

    And almost as important as all the others, establishes one regulator, either the state or EPA, that can make cleanup decisions without the authority of another regulator to second guess decisions. And we strongly support your efforts, and I appreciate the opportunity to appear before you.

    Mr. BOEHLERT. Thank you very much.

    Mr. Macmillan.

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    Mr. MACMILLAN. I'm Doug Macmillan, the Executive Director of the Environmental Technology Council. The Council is comprised of firms engaged in the commercial off-site recycling, detoxification and disposal of hazardous and industrial waste, as well as in the on-site cleanup of Superfund and RCRA corrective action sites. The Council's members have a dual perspective on Superfund, both as providers of on-site and off-site cleanup services, and on occasion, as identified Superfund PRPs, based on our off-site disposal of waste treatment and waste treatment residues in third party sites.

    We think that this dual perspective provides us some insights on the weaknesses of the current legislation as well as the potential real world impacts of the provisions of H.R. 2500. Like most other groups involved in Superfund, we recognize the need to expedite site cleanups, reduce site cleanup costs, and reduce the percentage of cleanup resources going to multi-year litigation or inconclusive studies. The Council supports a number of important concepts reflected in H.R. 2500, like varying site cleanup standards based on projected future land use, expanding the scope of effective short term Superfund removal actions, and limiting liability for de minimis disposal or co-disposal in true MSW landfills.

    However, given the short time available for oral statements, we will focus on the provisions we would like to see changed rather than on the provisions we support. We are, from a negative perspective, seriously concerned that some of the draft's current provisions would actually increase site cleanup litigation, block or slow many ongoing site cleanups, and leave private parties without protective, dependable, defensible site cleanup standards in some situations. Moreover, we fear that introducing Resource Conservation and Recovery Act amendments into the Superfund legislation threatens to open the flood gates to a piecemeal amendment of a complex RCRA statute and further complicate an already complex Superfund legislative process.

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    On the litigation front, and you've heard some of this already today, we are concerned about provisions that would allow pre-implementation judicial challenges to Government-approved site cleanup plans, and provisions that would allow any person ''with a substantial interest'' to legally challenge a final Government-approved cleanup plan, where the remedial action is already underway but is not yet completed.

    it is important to note that completion is defined to include not just completion of the actual construction and site mitigation, but completion of post-construction operation and maintenance which can go on for many years after the major activities at the site, have been finished.

    Under the provision permitting the reopening of final records of decision, regulators would be required to modify the original plan if still ill-defined ''realistic'' and ''significant'' risks were avoided. And there would be a projected cleanup savings of $1 million. These provisions in our opinion would create a significant new outburst of litigation.

    Some have argued, and those arguments have been made today, that nothing in H.R. 2500 requires the delay or termination of ongoing site cleanups. While a petition to reopen a final record of decision is being reviewed or a final revised remedy is being developed. We think that argument misses the mark, and that virtually any potentially responsible party should be able to secure an injunction to stop a cleanup.

    That is true, since H.R. 2500 has relatively variable and subjective site cleanup standards, including a risk range of 10 to the minus 4 to 10 to the minus 6, has no clear definition for ''realistic'' and ''significant'' risk, eliminates the preference or treatment or permanence, and is heavily dependent on inherently subjective site specific risk assessments and cost benefit analysis. We think it would be extraordinarily easy for virtually any PRP to convince a judge that they had a reasonable chance of prevailing on the merits and should be granted a preliminary injunction to stop a site cleanup. And we frankly think this would occur quite frequently at PRP sites where the majority of PRPs supported the completion of the current remedy, but one or two did not.

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    As indicated in our written testimony, we are concerned about heavy reliance on site specific risk analysis. Our own experience suggests to us that despite the efforts of the drafters of this bill, site specific risk analysis is still often subjective and fairly malleable. We think that it will be several years before site specific risk assessments can be completely relied upon and thus, we support the retention of some kind of hot spot concept for that percentage of the most highly contaminated waste, a relatively small percentage, we assert. We think that makes sense.

    On the remedy selection front, we believe that it's unwise to consider all remedies as being ''equal,'' both those remedies which actually detoxify and immobilize, on-site contaminants those remedies which merely block access or exposure. We also recognize that while one cannot require permanence and treatment in every case, we think there should be a rebuttable presumption that treatment and permanence are where you look first, a presumption that can be overcome by technical or cost balancing factors if that is necessary.

    Finally, we question the inclusion of RCRA provisions in this part of the Superfund bill. We think that this area of RCRA is being covered by a forthcoming rule that will be promulgated by EPA this year under the Hazardous Waste Identification Rule process. We think it is best left to that process, and that there are great dangers in reopening RCRA or opening RCRA prematurely in a piecemeal process.
    Thank you very much.

    Mr. BOEHLERT. Thank you very much.

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    Mr. McKnight.

    Mr. MCKNIGHT. Thank you, Mr. Chairman.

    I'm here on behalf of the Coalition for NRD Reform. Mr. Chairman, I'd like to thank you, your colleagues and your staff for the time you spent meeting with us and other parties in developing Title IV. The time is now to address the serious problems that exist in the NRD program. We commend you for recognizing that meaningful reform of the Superfund program cannot be achieved without a similar effort to restore the NRD program to its originally intended purpose.

    The Coalition is generally pleased with the direction in which Title IV appears to be headed. In particular, we're happy to see the clear abolition of non-use damages at long last. In addition, we're encouraged by several key objectives evident in the bill. The focus on restoration or replacement of injured natural resource services, the establishment of cost effectiveness and cost reasonableness requirements for restoration decisions, and the clarification of a firm $50 million cap and the role that lost use determination should play in the restoration decision making process. These objectives are sound, but we are concerned that without a few important amendments, the current language of Title IV will result in a program that may still be fundamentally broken.

    Before turning to these specific language issues, I'd like to register the Coalition's serious disappointment with the most critical aspect of the bill, its failure to explicitly reaffirm Congress' intent in 1980 that retroactive NRD liability is prohibited. The Coalition urges the committee to reaffirm that intent in order to stop the ever-increasing litigation over cases that Congress never intended trustees to bring in the first place.

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    Turning to the $50 million cap, the proposed language needs to be tightened to ensure that the cap applies to the entire area of injured resources. By focusing on how EPA happens to define a particular NPL site and an area of contamination as opposed to an area of injured resources, the proposed language will not prevent trustees from arbitrarily carving up an area into multiple pieces in order to evade the cap. We are not suggesting a nationwide cap here, but it is critical that the cap apply to the whole area of injured resources.

    I want to focus now on your objective to ensure cost reasonable restoration and how your proposed language inadvertently frustrates that objective. First of all, for the cost reasonableness requirement to work, there must be a rational yardstick for determining when restoration is complete.

    The widely accepted benchmark is whether the action has re-established the functions that affect public use, known as human services. For example, fishing, hunting or birdwatching. Or those that are important to the public in terms of their ecological significance, such as a wildlife refuge area.

    The proposed definition of restoration would allow trustees to replicate the exact physical, chemical and biological nature of injured natural resources, even where such actions would have no effect on the services provided. Second, for cost reasonableness to work, you need to decide what resources require restoration.

    The obvious answer is those that were previously available for public use. This is known as committed use. The proposed language does not limit restoration to committed uses. This allows trustees to use NRD to create uses that were never available to the public before the natural resource injury occurred.

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    Third, the proposed definition of timeliness appears to authorize trustees to select an unreasonably costly selection measure, simply because trustees want to accomplish restoration sooner. The Coalition endorses the principle that restoration should be accomplished as quickly as is cost reasonable, but to make timeliness the primary criteria as Title IV currently appears to, guts the whole cost reasonableness requirement.

    And finally, the bill inappropriately creates a separate new element of damages for lost use. The current statute already requires that lost use be addressed in the restoration decision making. An example will help explain how lost use and timeliness both fit into the restoration decision making analysis.

    Assume two restoration options. The first will take 1 year to complete at a cost of $40 million. The second will take 5 years to complete at a cost of $1 million. Without information on the value of the lost uses, it's impossible to determine which of the two options should be selected. If the lost uses were $20 million per year, then selecting the more rapid 1 year option would be justified, because it would be cost reasonable.

    But if the lost use value were only a million dollars per year, then spending $40 million to accomplish restoration sooner would not be justified. So timeliness and lost use are both incorporated into the restoration decision making process, and it is unnecessary to consider lost use as a separate, additional element of damages.

    Thank you for your time.

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    Mr. BOEHLERT. Thank you very much, Mr. McKnight.

    Mr. Smith.

    Mr. SMITH. Thank you, Mr. Chairman.

    I am here today to testify on behalf of the American Insurance Association, an organization of property and casualty insurance companies. My comments today are in support of comprehensive and meaningful Superfund reform that will repeal retroactive liability, improve remedy selection and cleanup standards, and achieve genuine cleanup with the imposition of no new taxes.

    Mr. Chairman, virtually everyone connected with Superfund, including EPA Administrator Carol Browner, agrees that Superfund is broken and it must be fixed. The one way to do that is to get the lawyers out of the system. We have all heard the horror stories of how this well-intentioned program has gone awry. This subcommittee has heard testimony from both large and small business dramatizing the inefficient and unfair workings of the Superfund program. Hundreds of millions of dollars have been wasted on studies to pursue unrealistic cleanup objectives.

    The Superfund retroactive strict joint and several liability system in effect gives EPA unlimited access to private funding sources with no accountability. Thus, cleanup decisions have been made under a Federal structure that has no concern for cost, no concern for economic and social disruption, and no concern for the litigation which necessarily results.

    The issue is one of fairness. The imposition of retroactive liability is a harsh and unworkable doctrine. It makes no distinction between the intentional polluter and one who acted within the law, and at times even under the guidance of Government.

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    An opportunity now exists to correct this injustice. If we are unable to financially sustain a repeal of this harsh rule, then we should seek to achieve an adjustment which will alleviate the severe punishment levied on many of those who are without guilt, and to accomplish that result within our financial means.

    The argument has been made that the insurance industry will be a primary beneficiary of any form of repeal. This simply is not the case. Insurers will continue to be burned with the litigation instituted by those intentional polluters who retain responsibility under the reform. There are no absolute answers to this problem. But you are urged to be guided by principles of fairness and to lift much of the burden which has been so unjustly placed on so many for so long a period of time.

    Insurers are not polluters. Yet we find ourselves entangled in extensive Superfund litigation. We continue to experience first-hand, as President Clinton and others have noted, the costly and counterproductive litigation that is the principal product of this Superfund law. We are locked into disputes with the very clients we seek to serve.

    And because neither the PRP nor the insurer could have anticipated a retroactive law that imposes liability after the fact, where formerly there was none. Hundreds of millions in legal costs are consumed each year. None of these transaction costs has advanced the cleanup of a single dump site in America.

    We believe that H.R. 2500 contains a number of very positive reforms. However, I would be remiss if I did not point out that the bill as introduced would not significantly reduce transaction costs or litigation.

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    Mr. Chairman, we strongly agree with your statement earlier this year when you spoke of repealing as much retroactive liability as we can pay for. As introduced, H.R. 2500 falls short of broad retroactive liability repeal. We believe that we can do better. Cleanup of the worst Superfund sites can be financed by revenues derived from the current Superfund corporate taxes in which the insurance industry now participates. This can be accomplished with adoption of realistic changes to remedy selection and cleanup standards and substantial reductions in EPA overhead and litigation costs.

    In sum, we believe the meaningful reform of the Superfund program requires rethinking the basic structure of the statute. We in the insurance industry look forward to working with this committee to achieve that goal.

    Mr. BOEHLERT. Thank you.

    Let me ask all of the panelists, and let me start with you, Mr. Smith, is H.R. 2500 better than last year's bill? And if so, why, if not, why not?

    Mr. SMITH. Well, I think it's better to the extent that it provides some recognition of the need for some repeal of the retroactive liability law. And I think that's a positive in the law.

    Mr. BOEHLERT. Mr. McKnight.

    Mr. MCKNIGHT. Mr. Chairman, it's enormously better from our perspective. Because last year's bill did not include natural resource damage reform. And this year's bill does. So one of the reasons why ALCOA was so adamantly on the outside of last year's reform effort was because it did not address the needed NRD reforms.

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    Mr. BOEHLERT. Mr. Macmillan.

    Mr. MACMILLAN. From our perspective, the remedy selection portions of last year's bill were superior in that they retained some form of hot spot concept, and some rebuttable presumptions for permanence and treatment in remedy selection.

    Mr. BOEHLERT. Okay, Mr. Curtis.

    Mr. CURTIS. We believe that H.R. 2500 provides a workable approach and is quite comparable to last year's efforts.

    Mr. BOEHLERT. According to Mr. Smith, this year's bill is better, but the industry is not willing to pay anything. Last year you were willing to put some money on the table. What's the reluctance this year?

    Mr. SMITH. Well, let me clarify the position that was taken last year, since I was an advocate of the bill. In my testimony in the House and also in the Senate, I made the very first priority of the insurance industry that I represented repeal of retroactive liability, full repeal. So the position I took that year and the one I am taking again this year is consistent.

    Secondly, I would I would say that we were in a difficult situation in that there were sharply divided political conflict and it looked like there would be no relief given at all. And we were faced with a possible reenactment of the bill in its current form which was totally unacceptable. So we entered into some effort to reach a respectable compromise solution.

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    However, when I went back to the industry, as that compromise solution began to evolve, it became apparent that the taxation portion of the program created a wide split, an absolute dissent on the part of the majority of the insurance industry. So I found myself having little support for the compromise bill as it moved forward.

    Further, as the bill was amended, it became unworkable last year from an administrative point of view. There were so many changes it became difficult to effectively administer. So it failed by reason of the evolution of the bill as it moved forward, and the fact that the question of taxation upon the insurance industry, from the viewpoint of the majority of insurers, who not only were not polluters, but did not insure polluters, the bare tax created a dissent that we were unable to deal with.

    So the end result was, of course, the bill failed in its final votes.

    Mr. BOEHLERT. I know you're not polluters, you're not hurricanes, you're not fires and you're not auto accidents. But you insure and you collect premiums and you pay up. I just can't understand. I think we would have been a lot farther ahead if the industry in general was as responsive this year as they were last year when we came so close, so close to getting something passed.

    And I have to confess, that's a great disappointment on my part. Because I really think we all agree that there's an urgent need for meaningful reform of Superfund.

    Mr. SMITH. If you'll allow me to respond to your comment about hurricanes, windstorms, etc., all of those are predictable risks which give the insurer an opportunity to evaluate and properly set premiums to cover the costs of those losses when they occur. Superfund, retroactive joint and several liability, was imposed some 20 years and 30 years after the event occurred. There was no opportunity to conduct a normal insurance business and to evaluate risks and to charge premium consistent with that risk.

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    So it was a burden imposed without any opportunity to have sufficient funds to pay for that burden, not only on us, but on the PRPs. And the result of that is the current disruption that you read every day in the papers now, concerning the difficulty that insurers are having meeting that burden, and their inability to raise sufficient funds to cover the costs of that retroactive law which imposed that unfair result upon them.

    Mr. BOEHLERT. Well, I would respond by saying that you had a golden opportunity this year. If you'd put some money on the table, we might have had what you want, full repeal of retroactive liability. Then you wouldn't have that concern.

    Mr. SMITH. Well, I don't think that our putting money on the table is consistent at all with our responsibility here, or the fact that we never had a chance to evaluate the risks. And it's very unfair to ask us now to come forward and put money on the table.

    Mr. BOEHLERT. All right, I'll go now, my red light is on. Mr. LaTourette? Are you announcing for the Presidency?

    Mr. LATOURETTE. No, I'm not in this, either, Mr. Chairman. Since the Browns moved to Baltimore, I'm not for much of anything today.

    Mr. Macmillan, if I understood your testimony correctly, and I was listening intently, so I didn't miss the point, I took it that you are not a fan of the ROD reopening provisions of H.R. 2500. Am I correct in that?

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    Mr. MACMILLAN. Yes, that's correct. We think it will create significant litigation and a flood of preliminary injunctions which are going to be, we believe, easy to get.

    Mr. LATOURETTE. That's what I thought I heard you say. When the last panel was here, I explored the ROD reopener provision with them. And I'll ask you the same thing. Is it a situation where we need to tweak the language to set standards for when these decisions may be approached for a sort of a threshold before we get to the reopening? A member of the previous panel said no, we shouldn't have a provision at all.

    Mr. MACMILLAN. I can see scenarios under which reopening of RODs for certain narrowly drawn categories of records of decision which are at certain stages in the pipeline would probably be appropriate, and would not result in the litigation, the slowdowns and the problems that we envision. So I think something possibly could be done in that area. Though it would be hard.

    Mr. LATOURETTE. Well, I would hope so. Because from my perspective, at least, and the explanation given by the last panel is that we were dealing with a small pool of resources and so we have to be careful how we allocate our resources.

    But if a decision based upon new science, it's the same argument that Mr. Smith is making on retroactive liability, if we reach a conclusion that a manifest injustice is being worked, that's akin to sending someone to the gallows and having the prosecutor throw up his hands and say, well, we don't have enough prosecutors or we don't want to bother the judge with this new evidence that we've found to correct the injustice.

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    So I would hope that we get to the point that we find some language that is acceptable to not only you, but also members of the last panel.

    And Mr. Smith, if I can just follow up on what the Chairman was asking, I didn't have the pleasure or, I don't know if pleasure is the right word, of being here last year during last year's debate. But you did indicate in your testimony that the Chairman, and I remember him saying that, that we would have as much retroactive liability repeal in this bill as we could pay for.

    And I think that unless I'm missing my mark, that's kind of where his questions were going. It was my understanding that the industry, your industry, was willing, and was a supporter of this environmental insurance resolution fund, that as I understood it, at least, or as I understand it today, would not only have gotten us further along the road to paying for more repeal of retroactive liability, but would have also relieved the insurance industry of some of what you now indicate will not be a windfall for the insurance industry, and that is that you're going to continue to be burdened by litigation.

    Wasn't it the focus of that EIRF to deflect litigation from the insurance companies themselves, so that the claim had to be brought against this fund, which was initially at least going to be funded by the insurance industry? Wasn't that it's purpose?

    Mr. SMITH. I don't think there was a broad inaccuracy in your statement concerning the bill last year. But I would want to say that I wish I had the capability for conviction and convincing that the Chairman has here that I could use on the insurance industry.

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    But the fact of the matter is that the majority of insurers cannot rationalize or support an insurance tax, because they are not the beneficiaries of the remedy. So when you try to make a convincing argument to that group other than a small number of insurers, which was established in the recent Standard and Poor's evaluation, there are not a significant number of beneficiaries to the bill last year. And as a result of that, we had this disruptive refusal to engage.

    So we did not have the broad-based support that is now being referred to as something, why don't you just repeat what you did last year. If we repeat what we did last year, assuming we're able to convince at least a meaningful group of people to come forward in the industry and provide some kind of monetary relief, it would erode rapidly, because we just haven't that kind of support or that ability to convince.

    However, to answer the second part of your question, I think we recognize that if we cannot pay for total repeal, we may have to accept something less than total repeal. And we would have to compromise on the extent of repeal that we get. My problem with H.R. 2500 and its carve-outs is that it will create more litigation than we have at the present time. Because everybody will have to then litigate to determine whether they are inside or outside the carve-out. So in essence, we don't reduce litigation. We increase it.

    However, there are other possibilities for the reduction or peeling back of repeal, total repeal, that would be financially saving and still capable of achieving a great deal of retroactive repeal, which seems to be what most insurers at the present time would strongly advocate. And I think that's a sellable position.

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    Mr. LATOURETTE. If I can just ask one more question, Mr. Chairman.

    Mr. BOEHLERT. Certainly.

    Mr. LATOURETTE. Thank you.

    Just so that I'm clear, when I came to this issue, I had a member of my staff come and whisper in my ear that last year the insurance industry was willing to contribute to this EIRF to the tune of 800, 600, a number of million dollars.

    Are you telling me that that's just not so, that there was no support in the insurance industry to get that done in the context of last year's agreement, that while you or others who may have been negotiating it said, this sounds like a good idea, when you went home to try and sell it to the guys at home, they said, what are you, nuts? I mean, is that what you're telling me?

    Mr. SMITH. Well, they voted against me. I think you fully understand what that means.

    Mr. LATOURETTE. Actually, yes. People vote against me all the time. Thank you very much.

    Mr. BOEHLERT. Thank you very much. And I want to thank all the panelists. And we may have some further questions for you in writing, and we would appreciate timely responses. Thank you.

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    The hearing is adjourned.

    [Whereupon, at 3:43 p.m., the subcommittee was adjourned, to reconvene at the call of the Chair.]

    [The witnesses prepared statements follow:]