Segment 2 Of 6 Previous Hearing Segment(1) Next Hearing Segment(3)
SPEAKERS CONTENTS INSERTS
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91–722CC
1996
SUPERFUND REAUTHORIZATION
PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.
(104–22)
HEARINGS
BEFORE THE
SUBCOMMITTEE ON
WATER RESOURCES AND ENVIRONMENT
OF THE
COMMITTEE ON
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TRANSPORTATION AND INFRASTRUCTURE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTH CONGRESS
FIRST SESSION
JUNE 13, 1995 (STATE AND LOCAL PERSPECTIVES)
JUNE 20, 1995 (BUSINESS, INSURANCE, CONTRACTOR PERSPECTIVES)
JUNE 21, 1995 (ENVIRONMENTAL AND COMMUNITY GROUPS)
JUNE 22, 1995 (CBO, GAO, AND SUPERFUND ''THINK TANKS'')
JUNE 27, 1995 (FEDERAL AGENCY PERSPECTIVES)
JULY 11, 1995 (NATURAL RESOURCE DAMAGES UNDER SUPERFUND AND THE OIL POLLUTION ACT OF 1990) [Joint Hearing with Subcommittee on Coast Guard and Maritime Transportation]
Printed for the use of the
Committee on Transportation and Infrastructure
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
BUD SHUSTER, Pennsylvania, Chairman
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DON YOUNG, Alaska
WILLIAM F. CLINGER, Jr., Pennsylvania
THOMAS E. PETRI, Wisconsin
SHERWOOD L. BOEHLERT, New York
HERBERT H. BATEMAN, Virginia
BILL EMERSON, Missouri
HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
SUSAN MOLINARI, New York
WILLIAM H. ZELIFF, Jr., New Hampshire
THOMAS W. EWING, Illinois
WAYNE T. GILCHREST, Maryland
Y. TIM HUTCHINSON, Arkansas
BILL BAKER, California
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
PETER I. BLUTE, Massachusetts
JOHN L. MICA, Florida
JACK QUINN, New York
TILLIE K. FOWLER, Florida
VERNON J. EHLERS, Michigan
SPENCER T. BACHUS, Alabama
JERRY WELLER, Illinois
ZACH WAMP, Tennessee
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TOM LATHAM, Iowa
STEVEN C. LaTOURETTE, Ohio
ANDREA SEASTRAND, California
RANDY TATE, Washington
SUE KELLY, New York
RAY LaHOOD, Illinois
BILL MARTINI, New Jersey
DAN FRISA, New York
TODD TIAHRT, Kansas
RICHARD H. BAKER, Louisiana
JAMES L. OBERSTAR, Minnesota
NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
WILLIAM O. LIPINSKI, Illinois
ROBERT E. WISE, Jr., West Virginia
JAMES A. TRAFICANT, Jr., Ohio
PETER A. DeFAZIO, Oregon
BOB CLEMENT, Tennessee
JERRY F. COSTELLO, Illinois
PETE GEREN, Texas
GLENN POSHARD, Illinois
BUD CRAMER, Alabama
BARBARA-ROSE COLLINS, Michigan
ELEANOR HOLMES NORTON, District of Columbia
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JERROLD NADLER, New York
PAT DANNER, Missouri
ROBERT MENENDEZ, New Jersey
JAMES E. CLYBURN, South Carolina
CORRINE BROWN, Florida
JAMES A. BARCIA, Michigan
BOB FILNER, California
EDDIE BERNICE JOHNSON, Texas
BILL K. BREWSTER, Oklahoma
KAREN McCARTHY, Missouri
FRANK MASCARA, Pennsylvania
THOMAS C. SAWYER, Ohio
GENE TAYLOR, Mississippi
JUANITA MILLENDER-McDONALD, California
ELIJAH E. CUMMINGS, Maryland
Subcommittee on Water Resources and Environment
SHERWOOD L. BOEHLERT, New York, Chairman
ZACH WAMP, Tennessee, Vice-Chairman
DON YOUNG, Alaska
THOMAS E. PETRI, Wisconsin
HERBERT H. BATEMAN, Virginia
BILL EMERSON, Missouri
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WILLIAM H. ZELIFF, Jr., New Hampshire
THOMAS W. EWING, Illinois
WAYNE T. GILCHREST, Maryland
STEPHEN HORN, California
BOB FRANKS, New Jersey
JACK QUINN, New York
TOM LATHAM, Iowa
STEVEN C. LaTOURETTE, Ohio
BILL MARTINI, New Jersey
BUD SHUSTER, Pennsylvania
(Ex Officio)
ROBERT A. BORSKI, Pennsylvania
ROBERT MENENDEZ, New Jersey
ROBERT E. WISE, Jr., West Virginia
JERRY F. COSTELLO, Illinois
GLENN POSHARD, Illinois
ELEANOR HOLMES NORTON, District of Columbia
JAMES A. BARCIA, Michigan
BOB FILNER, California
BILL K. BREWSTER, Oklahoma
KAREN McCARTHY, Missouri
GENE TAYLOR, Mississippi
ELIJAH E. CUMMINGS, Maryland
JAMES L. OBERSTAR, Minnesota
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(Ex Officio)
Subcommittee on Coast Guard and Maritime Transportation
HOWARD COBLE, North Carolina, Chairman
TILLIE K. FOWLER, Florida
DON YOUNG, Alaska
SUSAN MOLINARI, New York
BILL BAKER, California
VERNON J. EHLERS, Michigan
BUD SHUSTER, Pennsylvania
(Ex Officio)
BOB CLEMENT, Tennessee
ROBERT A. BORSKI, Pennsylvania
PETE GEREN, Texas
ELIJAH E. CUMMINGS, Maryland
JAMES L. OBERSTAR, Minnesota
(Ex Officio)
(ii)
CONTENTS
Proceedings of:
June 13, 1995
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June 20, 1995
June 21, 1995
June 22, 1995
June 27, 1995
July 11, 1995
TESTIMONY
JUNE 13, 1995
Colman, James C., Assistant Commissioner, Massachusetts Bureau of Waste Site Cleanup, on behalf of the Association of State and Territorial Solid Waste Management Officials (ASTSWMO)
Gimello, Richard J., Assistant Commissioner, New Jersey Department of Environmental Protection, Site Remediation Program, on behalf of the National Governors' Association
Harding, Russell J., Deputy Director, Michigan Department of Natural Resources, on behalf of the State of Michigan
Levin, Bennett, P.E., Commissioner, Department of Licenses and Inspections, City of Philadelphia
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Strock, James M., Secretary, California Environmental Protection Agency, on behalf of the State of California
Thornton, Susan, Former Mayor and Mayor Pro Tem, Littleton, CO, on behalf of American Communities for Cleanup Equity The International City/County Management Association, the Municipal Waste Management Association, National Association of Counties, National Association of Towns and Townships, National League of Cities, National School Boards Association, and the United States Conference of Mayors
Weichsel, John, Town Manager, City of Southington, CT, and Vice Chairman, Local Governments for Superfund Reform
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Costello, Hon. Jerry F, of Illinois
Laughlin, Hon. Greg, of Texas
Martini, Hon. William J., of New Jersey
Poshard, Hon. Glenn of Illinois
Zeliff, Hon. William H., Jr., of New Hampshire
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PREPARED STATEMENTS SUBMITTED BY WITNESSES
Colman, James C
Gimello, Richard J.
Harding, Russell J.
Levin, Bennett
Strock, James M.
Thornton, Susan
Weichsel, John
SUBMISSIONS FOR THE RECORD
Colman, James C., Assistant Commissioner, Massachusetts Bureau of Waste Site Cleanup, on behalf of the Association of State and Territorial Solid Waste Management Officials (ASTSWMO):
Report, ''Superfund Reauthorization: An Overarching Clean Up Goal-Clean Up Standards-Remedy Selection Resulting in a Streamlined Superfund Program, ''How Clean is Clean Enough''
Report, ''Superfund Cleanup Program-State Authorization/Delegation''
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Report, ''Who Pays for a Superfund Cleanup Program?''
JUNE 20, 1995
Barth, Richard A., Chairman, President and CEO, Ciba-Geigy Corporation, Ardsley, NY
Kaplan, Dale, President and Owner, Kaplan Cleaners, Camp Hill, PA, on behalf of the Pennsylvania Chamber of Commerce
Klingenberg, Arnold, Manager, Solid Waste Legislative and Regulatory Issues, Mobil Corporation, Princeton, NJ, on behalf of the American Petroleum Institute
Mallen, Michael, General Counsel, Southern Foundry Supply Company, Inc., Chattanooga, TN
McIntire, Lee, Senior Vice President, Bechtel National, Inc., San Francisco, CA, and Member, Hazardous Waste Action Coalition
Morningstar, Mary P., Assistant General Counsel, Environmental Law, Lockheed Martin Corporation, Bedford, MA, on behalf of the Electronic Industries Association
Reilly, Bernie, Corporate Counsel, Wilmington, DE, on behalf of the Chemical Manufacturers Association
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Spisak, John F., President and CEO, Industrial Compliance, Inc., Lakewood, CO, on behalf of Superfund Reform 1995
PREPARED STATEMENT SUBMITTED A MEMBER OF CONGRESS
Poshard, Hon. Glenn, of Illinois
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Barth, Richard A.
Kaplan, Dale
Klingenberg, Arnold
Mallen, Michael
McIntire, Lee
Morningstar, Mary P
Reilly, Bernie
Spisak, John F
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SUBMISSIONS FOR THE RECORD
Barth, Richard A., Chairman, President and CEO, Ciba-Geigy Corporation, Ardsley, NY:
Supplemental Statement, July 26, 1995
Responses to questions from Rep. Boehlert
Klingenberg, Arnold, Manager, Solid Waste Legislative and Regulatory Issues, Mobil Corporation, Princeton, NJ, on behalf of the American Petroleum Institute, responses to questions, August 2, 1995
Reilly, Bernie, Corporate Counsel, Wilmington, DE, on behalf of the Chemical Manufacturers Association, responses to questions, August 10, 1995
Spisak, John F., President and CEO, Industrial Compliance, Inc., Lakewood, CO, on behalf of Superfund Reform 1995:
Report, ''Superfund Reform 1995, Principles for a New Superfund Program''
Chart, Cost/Return of Site-Specific NPL Financing
Chart, Annual Costs of the Superfund NPL Program: Direct, Indirect and Hidden Taxes Imposed by Superfund (Non-Federal Facilities)
Chart, Annual Costs of the Superfund Program: Federal and Non-Federal NPL Sites
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News article, ''Superfund Success Unwanted'', The Denver Post, February 26, 1995
JUNE 21, 1995
Florini, Karen, Senior Attorney, Environmental Defense Fund
Jackson, Milton, President, Stop Toxic Pollution, Chattanooga, TN
King, Linda Price, Director, Environmental Health Network, Chesapeake, VA
Miller, Carl, Former County Commissioner, Lake County, Colorado, and Superfund Coalition Against Mismanagement
Smith, Velma M., Executive Director, Friends of the Earth
Tarpoff, Craig, , Alderman, Granite City, IL, and Co-Chairman, Superfund Coalition Against Mismanagement
Trieste, Marion, President, Saratoga Springs Hazardous Waste Coalition, Inc., Saratoga Springs, NY
Williams, Patricia Randolph, Counsel and Legislative Representative, National Wildlife Federation
PREPARED STATEMENTS SUBMITTED BY WITNESSES
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Florini, Karen
Jackson, Milton
King, Linda Price
Miller, Carl
Smith, Velma M.
Tarpoff, Craig,
Trieste, Marion
Williams, Patricia Randolph
SUBMISSIONS FOR THE RECORD
Florini, Karen, Senior Attorney, Environmental Defense Fund, submitted letter from Institute of Chemical Waste Management
King, Linda Price, Director, Environmental Health Network, Chesapeake, VA, Environmental Health Network, reports and articles*
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Trieste, Marion, President, Saratoga Springs Hazardous Waste Coalition, Inc., Saratoga Springs, NY:
Chart, ARARs Used in Formulating Remedial Action Objectives
Proposed Plan, Niagara Mohawk Power Corporation Site, Saratoga Springs, NY, U.S. Environmental Protection Agency Region 2, June 1995
Newsletter, The Saratoga Springs Hazardous Waste Coalition, Spring 1995
Williams, Patricia Randolph, Counsel and Legislative Representative, National Wildlife Federation, ''The Playground that Became a Battleground'', excerpt from February-March 1993 issue of National Wildlife Magazine
JUNE 22, 1995
Acton, Jan Paul, Assistant Director, Natural Resources and Commerce Division, Congressional Budget Office, accompanied by Dr. Perry Beider
Clay, Don R., President, Don Clay Associates, Inc., and Former Assistant Administrator, U.S. Environmental Protection Agency Office of Solid Waste and Emergency Response
Dyckman, Lawrence J., Associate Director, Environmental Protection Issues, Resources, Community, and Economic Development Division, U.S. General Accounting Office, accompanied by Sharon Butler, Evaluator
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Frost, Edmund B., Esq., Senior Vice President and General Counsel, Clean Sites, Inc
Johnson, Hon. Nancy L., a Representative in Congress from Connecticut
Magee, Dr. Richard, Director, Northeast Hazardous Substance Research Center
Probst, Katherine N., Senior Fellow, Center for Risk Management, Resources for the Future
Taylor, Jerry, Director, Natural Resource Studies, Cato Institute
Zeliff, Hon. William H., Jr., of New Hampshire
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Boehlert, Hon. Sherwood L., of New York
Johnson, Hon. Nancy L., of Connecticut
Quinn, Hon. Jack, of New York
Zeliff, Hon. William H., Jr., of New Hampshire
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PREPARED STATEMENTS SUBMITTED BY WITNESSES
Acton, Jan Paul
Clay, Don R
Dyckman, Lawrence J
Frost, Edmund B
Magee, Dr. Richard
Probst, Katherine N
Taylor, Jerry, Director
SUBMISSIONS FOR THE RECORD
Clay, Don R., President, Don Clay Associates, Inc., and Former Assistant Administrator, U.S. Environmental Protection Agency Office of Solid Waste and Emergency Response, responses to questions, August 2, 1995
Probst, Katherine N., Senior Fellow, Center for Risk Management, Resources for the Future, responses to questions from Rep. Boehlert, August 2, 1995
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JUNE 27, 1995
Browner, Hon. Carol M., Administrator, U.S. Environmental Protection Agency, accompanied by Elliot Laws, Assistant Administrator, Office of Solid Waste and Emergency Response
Davison, Hon. Robert, Deputy Assistant Secretary for Fish and Wildlife and Parks, U.S. Department
Goodman, Hon. Sherri W., Deputy Under Secretary of Defense, Environmental Security, U.S. Department of Defense
Grumbly, Hon. Thomas P., Assistant Secretary for Environmental Management, U.S. Department of Energy
Johnson, Hon. Barry L., Ph.D., Assistant Surgeon General, Assistant Administrator, Agency for Toxic Substances and Disease Registry, Public Health Service, U.S. Department of Health and Human Services
Schiffer, Hon. Lois J., Assistant Attorney General, Environment and Natural Resources Division, U.S. Department of Justice
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Browner, Hon. Carol M
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Davison, Robert
Goodman, Sherri W
Grumbly, Thomas P
Johnson, Barry L., Ph.D
Schiffer, Lois J
SUBMISSIONS FOR THE RECORD
Borski, Hon. Robert A., of Pennsylvania, submitted a letter from the State of New Jersey, Office of the Attorney General, dated April 27, 1995
Browner, Carol M., Administrator, U.S. Environmental Protection Agency, charts:
Reducing the Superfund Inventory
Superfund Trust Fund: 70% Goes Toward Cleanup
The Impact of Funding on Project Starts
Johnson, Barry L., Ph.D., Assistant Surgeon General, Assistant Administrator, Agency for Toxic Substances and Disease Registry, Public Health Service, U.S. Department of Health and Human Services, responses to post hearing questions
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Schiffer, Lois J., Assistant Attorney General, Environment and Natural Resources Division, U.S. Department of Justice, charts:
Superfund Cleanup Process
Private Parties Pay for Most of Today's Cleanups
JULY 11, 1995
Chasis, Sarah, Senior Attorney, Natural Resources Defense Council
Davison, Robert P., Deputy Assistant Secretary for Fish and Wildlife and Parks, U.S. Department of the Interior
de Saillan, Charles, Assistant Attorney General for Natural Resources, State of New Mexico, on behalf of Attorney General Tom Udall, and the National Association of Attorneys General
Greenwood, George E., Senior Partner, Managers of Steamship Mutual Underwriting Association Limited, on behalf of the International Group of P&I Clubs, and Chairman, Pollution Subcommittee, accompanied by Lloyd Watkins, Secretary and Executive Officer, International Group, and Luke Readman, Partner of Thos. R. Miller & Son (Bermuda), Managers, United Kingdom P&I Club
Hall, Douglas K., Assistant Secretary for Oceans and Atmosphere, National Oceanic and Atmospheric Administration, U.S. Department of Commerce, accompanied by Craig O'Connor, Special Counsel for Natural Resources
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Hausman, Jerry A., MacDonald Professor of Economics, Massachusetts Institute of Technology
Hobbie, Richard H., III, President, Water Quality Insurance Syndicate, on behalf of the American Institute of Marine Underwriters
Kopp, Raymond J., Senior Fellow and Director, Quality of the Environment Division, Resource for the Future
McHugh, Martin J., Director, Office of Natural Resources Damages, New Jersey Department of Environmental Protection, on behalf of the Association of State and Territorial Solid Waste Management Officials (ASTSWMO)
McKnight, Kevin L., Manager, Environmental Remediation Projects, Aluminium Company of America (ALCOA), on behalf of the Coalition for Legislative NRD Reform
Schiffer, Lois J., Assistant Attorney General, Environment and Natural Resources Division, U.S. Department of Justice, accompanied by John Cruden, Acting Assistant Attorney General
Stewart, Richard B., Professor, New York University School of Law
PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS
Ewing, Hon. Thomas W., of Illinois
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Mineta, Hon. Norman Y., of California
Traficant, Hon. James A., Jr., of Ohio
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Chasis, Sarah
Davison, Robert P
Greenwood,George E
Hall, Douglas K
Hausman, Jerry A
Hobbie, Richard H., III
Kopp, Raymond J
McHugh, Martin J
McKnight, Kevin L
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Schiffer, Lois J
Stewart, Richard B
Udall, Tom, delivered by Charles de Saillan
SUBMISSIONS FOR THE RECORD
Hall, Douglas K., Assistant Secretary for Oceans and Atmosphere, National Oceanic and Atmospheric Administration, U.S. Department of Commerce:
Response to question from Rep. Boehlert
Chart, Estimated Expenditures: Natural Resource Damage Assessment Regulations, Oil Pollution Act of 1990
Responses to questions from Rep. Traficant
Hausman, Jerry A., MacDonald Professor of Economics, Massachusetts Institute of Technology, article, ''Contingent Valuation: Is Some Number Better than No Number?'', Journal of Economic Perspectives, by Peter A. Diamond and Jerry A. Hausman, Vol. 8, Number 4. Fall 1994
Hobbie, Richard H., III, President, Water Quality Insurance Syndicate, on behalf of the American Institute of Marine Underwriters, Executive Summary, Comments on Proposed Regulations for Natural Resource Damage Assessments Under OPA, Economic Analysis, Inc
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McHugh, Martin J., Director, Office of Natural Resources Damages, New Jersey Department of Environmental Protection, on behalf of the Coalition for Legislative NRD Reform, response to question from Rep. Mineta
Schiffer, Lois J., Assistant Attorney General, Environment and Natural Resources Division, U.S. Department of Justice, charts, Compendium of Federal Natural Resource Damages Cases Under CERCLA-Pending Natural Resource Damage Assessment Matters, responses to post hearing questions from Rep. Baker
Stewart, Richard B., Professor, New York University School of Law:
Report, ''Evaluating the Present Natural Resource Damages Regime:The Lawyers' Perspective''
Memorandum, CVM and the Extent to which Applicable Law Mandates its Use in Assessing Natural Resource Damages
ADDITIONS TO THE RECORD
American Institute of Chemical Engineers, statement
American Institute of Merchant Shipping (AIMS), Ernest J. Corrado, President, statement
Associated Builders and Contractors, statement
Associated General Contractors of America, Stephen E. Sandherr, Executive Director, Congressional Relations, statement
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Bunn, Richard L., President and CEO, UGI Utilities, Inc., statement
Citizens Against Toxic Exposure, statement
Food Industry Environmental Council, statement
Huddleson, Edwin E., III, Counsel, Volpe, Bosky, and Lyons, statement on behalf of the Equipment Leasing Association of America (ELA)
International Association of Fish and Wildlife Agencies, Gary J. Taylor, Legislative Counsel:
Statement
Report, ''The Economic Benefits of Hunting in the United States in 1991'', September 1994*
Report, ''The Economic Contributions of Bird and Waterfowl Recreation in the United States During 1991'', March 1995*
Report, ''The 1991 Economic Impact of Sport Fishing in the United States''*
International Association of Independent Tanker Owners (INTERTANKO), statement
Norwegian Shipowners' Association and the Swedish Shipowners' Association, Austin P. Olney, Attorney, LeBoeuf, Lamb, Greene and MacRae, letter, July 24, 1995
State of New York, Department of Health, letter, August 14, 1995
U.S. General Accounting Division, Peter F. Guerrero, Director, Environmental Protection Issues, Resources, Community, and Economic Development Division, statement
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*May be found in subcommittee file.
SUPERFUND REAUTHORIZATION: BUSINESS, INSURANCE, CONTRACTOR PERSPECTIVES
TUESDAY, JUNE 20, 1995
House of Representatives,
Subcommittee on Water Resources and Environment,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 10 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 second in a series of five hearings that the Water Resources and Environment Subcommittee will hold on the reauthorization and reform of Superfund. As we heard from representatives of State and local governments last week, the Superfund Program is not meeting the legitimate needs and interests of the people or the industries to whom the program relies on to finance the cleanup.
Superfund Program is in need of a fundamental reform, and this subcommittee is actively engaged in developing such a reform. Today we will hear from two panels representing the interests and concerns of the business and contractor and insurance communities. These segments of our economy have experienced the brunt of Superfund's inequities and escalating costs, and they have critical insights on how Superfund can be most effectively reformed.
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Today's hearing will play an important role in shaping future debate on the scope and direction of Superfund reform. On our first panel are Ms. Marjorie Morningstar—I am sorry. Tell me, who wrote the book?
Ms. MORNINGSTAR. Herman Wouk.
Mr. BOEHLERT. Thank you very much. How many times has that happened?
Ms. MORNINGSTAR. A few.
Mr. BOEHLERT. I apologize. Ms. Mary Morningstar, representing Lockheed Martin Corporation and the Electronic Industries Association; Mr. John Spisak, representing Superfund Reform '95; Mr. Bernie Reilly, representing the Chemical Manufacturers Association; Mr. Richard Barth, representing Ciba-Geigy; and Arnold Klingenberg, representing the American Petroleum Institute.
On our second panel are Mr. Dale Kaplan of the Pennsylvania Chamber of Commerce; Mr. Michael Mallen of Southern Foundry Supply; and Mr. Lee McIntire of the Hazardous Waste Action Coalition. These panels are a cross-section of our Nation's largest and smallest business interests. Though these industries agree on the need to establish reasonable cleanup standards, and that is a tough one to define, and reduce unnecessary litigation, like the members of this panel, they have differing views on how we should reform Superfund to meet these objectives.
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I look toward to hearing from our witnesses and would now like to recognize the subcommittee's distinguished Ranking Member, Congressman Borski of Pennsylvania.
Mr. BORSKI. Thank you very much, Mr. Chairman. I first want to thank you for putting this hearing together in the way you have. We will be able to hear from several different points of view within the business community and I appreciate that opportunity.
These witnesses reflect the very real and understandable frustration with the Superfund Program. There is no question that the Superfund Program has been broken. Too many site cleanups have been delayed because of expensive legal action over liability. All too often, the proposed remedies have been too expensive and have not fit the planned use of the site.
The Superfund Program has been so badly broken that there is widespread recognition of the need for a major overhaul. EPA Administrator Carol Browner has made a series of reforms in the administration of the program, which have clearly moved in the right direction.
Last year's coalition agreement, which unfortunately failed to pass, was also a recognition of the need for major changes. Through all this, Mr. Chairman, it is important to focus on the primary purpose of Superfund, cleaning up hazardous waste sites. We must not be diverted from our goal of removing threats to the health and environment of the American public. If we are going to move forward with the cleanup of Superfund sites, we must have a source of funds.
We will hear from witnesses today who will tell us that the current liability system is actually delaying cleanups. But if we change the liability system, the absolute critical question is, who will pay for the cleanups? Where will we get the money to continue the cleanup of hazardous waste sites?
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Do we raise taxes or do we cut back on the cleanups? While there are significant changes that can be made in the way the cleanups are done, I don't believe the public wants us to reduce the number of cleanups. They do want us to develop a more efficient program that will get more cleanups done at less cost.
I look forward to working with the business community to develop a program that will help us reach that goal. Also, Mr. Chairman, I want to note that we have a witness today from HWAC, the Hazardous Waste Action Coalition, representing the response action contractors. I was very happy last year to offer the amendments that these contractors needed to continue in the Superfund Program.
These amendments were approved unanimously by this committee and I am sure would have been approved on the House Floor. The response action contractor problem typifies what is wrong with Superfund. There is absolutely no reason for someone who is trying to clean up a site to be faced with liability as if they were responsible for disposing of the hazardous waste. These are businesses, some large, some small, trying to do a job, but they are getting caught in the web of Superfund.
Mr. Chairman, I appreciate your joining with me to urge Administrator Browner to solve the response action contractor problem, and I hope we can work together to do what is necessary in rewriting this law. Thank you, Mr. Chairman.
Mr. BOEHLERT. Thank you very much.
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Mr. LaTourette.
Mr. LATOURETTE. Mr. Chairman, I have no opening statement.
Mr. BOEHLERT. Mr. Parker, about anything?
Mr. PARKER. Well, I can talk a lot if you want me to. No, I don't have anything. I am looking forward to the testimony.
Mr. BOEHLERT. All right.
Mr. Poshard.
Mr. POSHARD. Mr. Chairman, in the interest of time, I would just like permission to or unanimous consent to submit an opening statement for the record.
Mr. BOEHLERT. Without objection.
[Mr. Poshard's prepared statement follows:]
[Insert here.]
Mr. BOEHLERT. Thank you very much, my colleagues. And now we will go to our first panel. And let me, once again, repeat who is on this first panel. Mr. John Spisak, President and CEO of Industrial Compliance, Inc.; Mr. Arnold Klingenberg, Manager of Solid Waste Legislative and Regulatory Issues for Mobil Corporation, here today as part of the team for the American Petroleum Institute; from the Chemical Manufacturers Association, Mr. Bernie Reilly is the corporate counsel with the DuPont Corporation; from Lockheed Martin Corporation and the Electronics Industries Association, Mary Morningstar; and from Ciba-Geigy Corporation, Mr. Richard A. Barth, Chairman, President and CEO. If we will go in the same order as they were announced, from left to right, right to left from where you are. Mr. Spisak.
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TESTIMONY OF JOHN F. SPISAK, PRESIDENT AND CEO, INDUSTRIAL COMPLIANCE, INC., LAKEWOOD, CO, ON BEHALF OF SUPERFUND REFORM '95; ARNOLD KLINGENBERG, MANAGER, SOLID WASTE LEGISLATIVE AND REGULATORY ISSUES, MOBIL CORPORATION, PRINCETON, NJ, ON BEHALF OF THE AMERICAN PETROLEUM INSTITUTE; BERNIE REILLY, CORPORATE COUNSEL, THE DUPONT CORPORATION WILMINGTON, DE, ON BEHALF OF THE CHEMICAL MANUFACTURERS ASSOCIATION; MARY P. MORNINGSTAR, ASSISTANT GENERAL COUNSEL, ENVIRONMENTAL LAW, LOCKHEED MARTIN CORPORATION, BEDFORD, MA, ON BEHALF OF THE ELECTRONIC INDUSTRIES ASSOCIATION; AND RICHARD A. BARTH, CHAIRMAN, PRESIDENT AND CEO, CIBA-GEIGY CORPORATION, ARDSLEY, NY
Mr. SPISAK. Good morning. I am John Spisak, President and Chief Executive Officer of Industrial Compliance of Lakewood, Colorado. I am a chemist and biologist by professional training and have 15 years of experience in the Superfund Program.
I have the privilege of appearing this morning before the subcommittee on behalf of Superfund Reform '95, the broadest based coalition working for comprehensive structural reform of Superfund's liability, remedy and funding regimes. SR '95 now consists of over 500 large and small businesses, trade associations, local governments, the entire insurance industry, and concerned citizens and environmental professionals, all of whom are dedicated to creating a new reformed Superfund this year.
Our 500 plus members represent more than 200,000 entities in 47 States across the country. Everyone, including you, Mr. Chairman, agrees that Superfund is horribly broken and has wasted tens of billions of dollars, while accomplishing very little in the way of cleanup. From my perspective of someone actually doing the work under this broken regime, the cause of this legacy lies in the Superfund statute itself.
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The current statute simply was not designed to create a program that will work quickly and cost effectively. You need a completely new Superfund law if you are going to change these dismal results. Just tinkering with the procedures or adjusting administrative policies will not change the inevitable results of the existing statute. SR '95 reform proposal is without question the most detailed and comprehensive blueprint for meaningful change in the current debate.
While a copy of our reform proposal is attached to my written testimony, I would like to touch on some of the major principles. The total number of current and future non-Federal sites on the NPL should be capped. Eliminate the current strict retroactive joint and several liability scheme for disposals prior to January 1, 1987, and institute a proportional liability system that exempts truly innocent parties for disposal after 1986.
Clarify and rationalize the liability and remediation rules relating to natural resource damages. Make major changes in remedy selection that will mandate the use of site-specific risk assessments, cost benefit analyses, and targeting of real world exposure pathways. Remedies should be designed according to the reasonably anticipated use of the land and water resources of the site.
Qualified States should have the option of seeking delegation of the reformed Superfund Program and should be given the funding to do so. Incentives should be created for voluntary cleanups of any site, and sites cleaned up under such voluntary programs should not be subject to subsequent second-guessing by EPA.
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Finally, EPA should be given a fixed annual budget that ties the overall size and objectives of the Superfund Program to congressional direction. Require EPA to prioritize spending from its annual budget to ensure implementation of remedies and selection of sites that will maximize risk reduction to human health at the lowest reasonable cost.
I am pleased to report that only last week the delegates to the White House Conference on Small Business overwhelmingly voted in favor of Superfund reform principles similar to those that I have just outlined, including the elimination of retroactive liability as of the 1987 date. In fact, Superfund reform ranked as the fifth highest priority of the small business delegates, tied with health care reform.
A Congress that ignores this powerful signal of the needs of small business is making an enormous mistake. Finally, at last week's hearings, Mr. Chairman, you suggested you could support retroactive liability reform that adequately funded cleanups, did not require additional taxes, and did not reduce protection to the public.
I am pleased to report to the subcommittee that SR '95 has indeed met this challenge. Our 70-page report entitled the cost of Superfund and proposed reforms has been provided to you and discussed at length with your staff. That report represents the most detailed analysis of costs and the financial flows associated with Superfund that anyone has prepared to date, and it shows that even without the enormous savings attainable from remedy selection reform, that adequate funding is available to pay for the elimination of retroactive liability as of 1987, while maintaining equivalent dollars going to clean up as they exist today, without the need to increase taxes.
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When the very substantial remedy reform savings of our plan are also taken into account, adequate funding for comprehensive reform is assured. I am pleased to say that our analysis has been confirmed by Peat Marwick, a major and prestigious accounting firm, and that their own report has been forwarded to the subcommittee and discussed with your staff.
In conclusion, Mr. Chairman, Congress owes the American people enactment in 1995 of a completely new Superfund Program that cleans up more sites faster and more effectively than the dismal record compiled by EPA over the last 15 years. Let's truly reform Superfund in 1995. On behalf of Superfund Reform '95, let me thank you for this opportunity to present our views and to work with you on this matter of enormous importance.
Mr. BOEHLERT. Thank you very much.
Mr. Klingenberg.
Mr. KLINGENBERG. Good morning, Mr. Chairman, and members of the subcommittee. I am Arnie Klingenberg, with Mobil Oil Corporation, and Chairman of the American Petroleum Institute's CERCLA Task Force.
API appreciates the opportunity to present its views on reform of the Superfund Program. API represents approximately 300 companies. As members of many communities, as potentially responsible parties, and as Superfund's biggest taxpayers, API members could be greatly affected by any changes that Congress may make to the program.
We strongly support comprehensive reform, hopefully this year, to four aspects of Superfund, remedy selection, natural resource damages, liability, and the funding scheme. The petroleum industry is unique with regard to Superfund in that it pays over 50 percent of the taxes that support the trust fund, yet it is responsible for less than 10 percent of the problem. This funding inequity is of paramount concern to our members.
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For this reason, I will focus my oral statement today on just the funding problem. API's recommendations for reform on other issues of importance to us, particularly remedy selection and natural resource damages, are discussed in detail in our written testimony.
Three tax sources provide dedicated revenue for the trust fund. Only petroleum companies pay all three. We pay all the tax on petroleum, over half the tax on chemicals, and about 8 percent of the corporate environmental tax. This amounts to over three-quarters of a billion dollars each year, more than 50 percent of all Superfund taxes collected. This high tax share is inconsistent with our industry's relatively small contribution to the problems at Superfund sites.
Data in EPA's 1991 study of NPL sites indicates that only 4.4 percent of responsible parties were from petroleum, refining and related industries. If we doubled this figure, to allow for the possibility that some waste from petroleum company-owned mining and chemical operations may have been reported under other categories, our responsibility would still be considerably under 10 percent. This finding was confirmed by a recent survey of API members.
The survey was designed to estimate past, present and future liability costs at all non-Federal NPL sites. Results showed that the petroleum industry is expected to be responsible for about $2.4 billion, or only 7 percent of the 33 billion that resources for the future estimates it will cost to clean up these sites.
Paying over 50 percent of the taxes to address a problem for which we are less than 10 percent responsible is clearly inequitable. API companies believe the existing tax base must be broadened to more fairly spread this financing burden. Additionally, we are concerned that this inequity could get worse.
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Should Congress enact liability reforms, or exemptions for specific groups, large remediation costs would be shifted from private parties to the trust fund. If the existing tax scheme was used to generate the additional revenues needed to pay for these new fund expenses, our already disproportionate share of the program's total costs would grow even higher. Therefore, API will support liability reform proposals, but only if they include provisions that sufficiently broaden the funding base and do not increase total cost to our industry.
Finally, Superfund tax authority will expire at the end of 1995. API opposes the authorization of any Superfund taxes beyond 1995, unless it is coupled with substantial reform of the current tax system and the underlying Superfund Program. Thank you for the opportunity to present API's views. I would be pleased to answer any questions.
Mr. BOEHLERT. Thank you very much.
Mr. Reilly.
Mr. REILLY. Good morning, Mr. Chairman. My name is Bernie Reilly. I am a DuPont attorney with 15 years experience working with Superfund. I appreciate this opportunity to testify today on behalf of CMA.
I would like to begin my statement today by sounding a note of urgency. Time is running out for Superfund, America's best known and least effective environmental program. Superfund's source of funding expires at the end of this year.
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If the program isn't reformed in the next six months, it may come to a crashing halt. That happened before in 1985, and it was a fiasco. Cleanups were stopped dead in their tracks. Communities and businesses were left in limbo. In the end, we all paid dearly for that shutdown in dollars and reputation.
Let's not condemn ourselves to repeat our past mistakes. We must now make every effort to restore and renew Superfund this year to bring—to breathe new life into old sites.
Restoring Superfund will not be easy. The program needs a complete overhaul, from the ground up. It needs new rules for selecting remedies, a new system for assigning liability, an expanded role for the community in the decision-making process. And we must do something about Superfund's growing surplus.
In the last 4 years, Superfund has become a cash cow for the Federal Government. It is being milked to offset the costs for a lot of other programs. Superfund has its own special tax system. It raises a great deal of revenue from business for the express purpose of cleaning up hazardous waste sites. The large chunk of those tax dollars never get used for cleanups.
This year, the program will take in 600 million more dollars than it hands out. And next year, it will take in 750 million more dollars than it spends. That is just plain wrong. Every dollar raised for Superfund should go to Superfund. Superfund faces many problems, Mr. Chairman, but these problems are not insurmountable. The program can be made more efficient and more effective by changing the laws, remedy selection process, and its system for assigning legal liability.
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As to remedies, CMA recently commissioned a study that documents how a few simple changes in the law can make it possible to cut cleanup costs by 35 percent and still fully safeguard the health of the community and its environment. To get these savings, Congress must eliminate the statutory preferences for treatment and permanent remedies. It also needs to eliminate the requirement that cleanups meet the so-called ARARs. These are experiments that have failed.
Cleanups need to be technically feasible, site-specific, and risk-based. They need to reduce the community's risk to safe levels, at the lowest cost, and be fully acceptable by the community. As to liability reform, we would like to focus on restoring fairness to the program.
Today's liability scheme is as unfair as any on the books. It has created a breeding ground of litigation and delay and serves mainly to enrich lawyers. We think several liability reform programs need the fairness test. One solution is to repeal a retroactive liability standard. CMA could support that solution, provided it is crafted in a way that treats all parties fairly. Plans that help one group at the expense of another group must be avoided.
Repealing retroactive liability won't come cheap. Even when you include the 35 percent remedy selection savings, and cut EPA's administrative costs by 25 percent, we calculate it still will cost in the neighborhood of 2.5 billion to keep the program running apace if we repeal retroactive liability. And that excludes credits for past costs, which we think are justified. And obviously that 2.5 billion is much greater than the currently appropriated amount of about $1.45 billion a year.
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How do we make up the difference? I can tell you the chemical industry is already a major source of funding, both in terms of payments, tax payments and direct payments at the sites. But we should not and cannot pay for everyone else's freight. And we would oppose keeping a broken program afloat with more and more taxes.
If everyone who stands to benefit from liability reform were to pick up their share of the tab, then retroactive liability repeal could be an attractive and workable option. In this regard, we believe that our colleagues in the insurance industry, who insure these cleanup costs, would benefit greatly from reform and should give us a hand on finding these additional resources.
CMA can also support a fair share liability scheme. This plan keeps retroactive liability intact, but repeals the joint and several standard for parties willing to pay their fair share. The plan divides responsibility for cleanups according to how much a party contributed toward contaminating a site.
The trust fund would pay for the so-called orphan share belonging to unknown and insolvent parties. We think fair share liability would cost around $1.8 billion a year. In addition, we could fully support a hybrid that is between retroactive liability repeal and fair share.
In conclusion, Mr. Chairman, we are entering this critical six-month period for Superfund. The way we see it, we have two choices. We can complete a plan that reforms and reauthorize the program and put Superfund back on track, or we can stand by and watch itself destruct. Leaving Superfund in the lurch serves no one's best interests. It must be reformed and reauthorized this year. To that end, Mr. Chairman, CMA pledges to work with you and other stakeholders in an effort to make this happen. Thank you.
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Mr. BOEHLERT. Thank you very much, Mr. Reilly.
Ms. Morningstar.
Ms. MORNINGSTAR. Thank you, Mr. Chairman. I would like to thank you and the members of the subcommittee for the opportunity to present the views of Lockheed Martin Corporation and the Electronic Industries Association on the critical issues facing this Congress during the Superfund reauthorization debate.
I am Mary Morningstar, Assistant General Counsel, Environmental Law, for Lockheed Martin. My testimony will focus on the first of two important issues in Superfund reform, the liability allocation scheme. Next, you will hear testimony from Richard Barth of Ciba Corporation regarding remedy selection reforms, which Lockheed Martin and EIA believe were the essential second part of an effective Superfund Program.
Superfund's strict joint and several retroactive liability system was intended to ensure quick cleanups, but has instead produced inefficiencies and resulted in extremely high transaction costs. The Rand Institute found that transaction costs accounted for almost 20 percent of large company expenditures at NPL sites, and 60 percent of small company expenditures. Small companies therefore spend more than half of every Superfund dollar on lawyers and administrative costs, leaving less money to contribute to actual site cleanup.
Given this inefficiency, Lockheed Martin and EIA agree that retroactive liability is inherently unfair. In evaluating how to reform retroactive liability, however, we urge Congress not to aggravate the existing unfairness in the system, or compromise the ability of the program to clean up contaminated sites.
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Since enactment of Superfund, thousands of companies have spent billions of dollars on private property cleanups. Most of these companies have also undertaken legal obligations to finance costly cleanups far into the future. Eliminating retroactive liability without addressing these past costs and ongoing obligations would punish the very companies that have complied with the existing law, and reward companies that either by design or circumstance have been able to delay their Superfund expenditures.
Moreover, many companies are concerned that a wholesale repeal of retroactive liability might compromise their recovery rights under private insurance policies. In addition to the fairness issue, another question surrounding the elimination of retroactive liability is the continuing financial liability of the Superfund Program. Although retroactive liability repeal has been debated since 1980, no concrete proposal has adequately explained how the trust fund will generate the estimated $1.4 billion a year in additional funding required to cover pre-1987 retroactive liability repeal, and avoid a slow counsel or halt to cleanups at some Superfund sites.
After examining the inefficiencies of the status quo, and the serious obstacles to wholesale retroactive liability repeal, Lockheed Martin, EIA and other companies have concluded that there must be a compromise where liability reform can be equitable, economical, protective and practical. We believe that the first step in developing an effective Superfund liability structure would be to repeal retroactive liability at those sites where the current structure produces its most inefficient results.
We have identified two classes of sites, co-disposal landfills and regional multisource contaminated areas, where we believe retroactive liability repeal would produce the greatest improvement in efficiency, without placing an overwhelming financial burden on the Superfund Program. Retroactive liability at co-disposal landfills has largely proven unworkable, due to the large number and wide variety of PRPs and the lack of accurate pre-1980 documentation.
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To address these shortcomings, Superfund reform should eliminate retroactive liability at all co-disposal landfills that stopped accepting hazardous waste before 1981. This reform will lead to a fairer Superfund Program and result in a significant reduction in overall transaction costs. Superfund would also benefit from a repeal of retroactive liability at region-wide multisource contaminated area sites.
While these sites are few, the large number of PRPs and the inability to determine the discrete contribution of multiple sources to the contamination, lead to extremely high transaction costs, increased litigation, and virtually impossible liability allocations. Moreover, the breadth and nature of these sites make it appropriate and efficient to respond to them with increased public funding, rather than overburden local governments and businesses.
In addition to the limited repeal of retroactive liability there, are a number of simple reforms that would limit the expanding scope of the program and enhance the efficiency at minimal cost. Superfund reform should exempt de micromus parties from liability, provide expedited settlements for de minimis parties, statutorily reinstate the EPA-promulgated lender liability rule, and statutorily mandate a deadline for the promulgation of an industrial site redevelopment role.
These changes, while extremely valuable, would not address all of the flaws in the current system. Superfund's reliance on joint and several liability has resulted in expanding waves of litigation as named PRPs attempt to involve additional parties, delays in implementing cleanups due to complex liability allocation, and unfair imposition of substantial orphan share liability on solvent parties.
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To address these problems, Superfund reform should replace joint and several liability with the flexible proportional allocation mechanism that establishes each PRP's liability based on factors relevant to the cost of remediating that PRP's waste contribution. Unidentified cost shares, de micromus shares and de minimis shares above the amount received in expedited settlements would be assumed by the trust fund.
My testimony today merely introduces a part of what Lockheed Martin, EIA and other companies believe are realistic reforms for a reengineered Superfund. There are substantial reforms beyond liability allocation and remedy selection that can have a positive impact on the program, from reestablishing the role of States in the program, to returning the scope of natural resource damages to Congress' original intent, to providing incentives to resolving the wasteful and draining insurance litigation surrounding many Superfund sites.
While each of these reforms is incrementally beneficial, Lockheed Martin and EIA strongly believe that the current program needs the type of integrated reform that also incorporates the essential concepts that Ciba and we are outlining here today. Thank you, Mr. Chairman.
Mr. BOEHLERT. Thank you very much.
Mr. Barth.
Mr. BARTH. Thank you, Mr. Chairman, and Members of this committee, for the invitation to appear before you today. I am CEO of Ciba. We have approximately 16,000 employees here in the United States. And Superfund reform is clearly a very important agenda item for us. We want reform which will result in a workable program that delivers expedited, fair, cost-effective cleanups, that are protective of human health and the environment.
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We are actively involved at a number of Superfund sites. Some are company-owned, and some are operated by third parties. Our involvement stems from waste disposal practices, some of which date back almost half a century, and all of which were legal, permitted, and consistent with state-of-the-art practices. We are presently spending approximately $60 million a year on Superfund.
Since the inception of the program, we have spent almost $400 million. We believe a significant part of such outlays can be reduced in the future without a compromise in protection of human health and the environment. I will focus on two subjects of today's subject, remedy selection and liability.
On remedy selection, I agree with comments given earlier here today that remedy selection must ensure that real risks are addressed. However, improper risk assessments based on hypothetical assumptions have led to extremely costly remedies which are far in excess of what is required to protect human health and the environment.
The current law's one-size-fits-all preference for a permanent remedy often time produces cleanups which far exceed the need, especially when combined with unrealistic risk, groundwater, and land use assumptions. Superfund reform should place all available remedial options where the containment, bioremediation treatment, or a combination of these, on an equal footing, taking into account real risks, as well as cost considerations.
Records of decision and/or consent decrees, which are in progress or which have yet to be implemented, should be eligible for review and reopening so that the excesses of the old law are not needlessly perpetuated into the future. Present and future land and groundwater use must be integral factors in developing a remedy. It doesn't make sense to remediate an industrial site to pristine or residential levels if that site will be, for the foreseeable future, used for industrial purposes.
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Likewise, we need to carefully examine steps required to remediate groundwater. If groundwater is being used as a drinking water source, steps must be taken to treat that water to drinking water standards, or provide an alternative source for drinking water.
In those cases where groundwater is not being used for drinking water, but the continued flow of the contaminated groundwater poses a risk to receiving waters or human health, steps should be taken to prevent further migration of the groundwater. If groundwater isn't being used for drinking water and isn't posing a threat, its likely future use, time frame for use, and the effects of natural attenuation, should be factors to be considered in crafting a remedy, if, in fact, any is needed.
Superfund reform should also provide for the normal and customary standard of judicial review when disagreements arise over remedial actions. The present law does not allow for meaningful judicial review. In fact, it forces PRPs, by virtue of the fact that they are exposed to punitive treble damages if a bona fide review is not successful, to proceed with remedial actions which do not make sense.
On the topic of liability reform, that topic has been well covered as well. The Superfund liability was fixed in 1980, extended in 1986, in a way which went above and beyond the standard of common law nuisance. And that was changed with regard to company-owned sites and third-party sites, and it applied for waste disposal practices which were legal and accepted at the time they occurred. This was and remains unfair.
The compounding effect of grafting a joint and several liability standard on to the strict liability standard has produced the explosion of litigation amongst responsible parties and between them and their insurance carriers. Joint and several liability traditionally applies to joint tort-feasors. And it is generally accepted that in the vast majority of cases, PRPs were not joint tort-feasors.
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This is another example of the counterproductive, punitive nature of this statute. As this subcommittee wrestles with the thorny issue of liability reform, I sincerely hope that in addressing the inequities of the past that future ones are not inadvertently created.
For example, company-owned sites and third party sites need to be treated equally under any reform plan. Additionally, costs incurred to date under the existing law must be treated the same as future costs. If the new law does not impose liability on parties prospectively, those who incurred costs in abiding by the old law should be entitled to reimbursement of their past costs. In the event full reimbursement is not realized in any given instance, the contractual rights of PRPs under their insurance policies should remain undisturbed by any legislative reform. I will not add on a couple of separate topics covered.
Natural resource damages, we do think the existing law needs to be revised in that regard. On State delegation, we encourage, if Congress is considering that, that that be pursued. We would urge that any remedy selection improvements in the Superfund statute should govern nonNPL sites, which would be administered by the States.
Clearly, we support opportunities for public participation in this process. So wrapping up, we believe these reforms will improve the Superfund Program. We think the monies that we are putting as a company towards the program, which are unnecessary, can be reinvested in our business and we can create more meaningful jobs for employees and new employees.
In management, it is often said that winners cut their losses and losers ride those losses down. Congress will be a winner if it cuts the country's losses on Superfund.
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Mr. Chairman, this concludes my remarks and I would be happy to answer any questions.
Mr. BOEHLERT. Well, thank you very much. Thank all of you very much. We have had some differing views expressed here, and it would be interesting just to sort of let you go at each other. But let's make one thing very clear from the outset.
I don't think there is a person on this committee or on Capitol Hill that doesn't agree that the Superfund Program, no matter how well-intentioned, and it certainly was, is broken and needs to be fixed. I don't think that anyone disagrees with that. I don't think there is anyone in the world who spent 2 minutes looking at the program who disagrees with that proposition. So we have got the challenge of trying to come up with a reform that is meaningful and is fair. And that is quite a challenge. And in line with that, we sincerely appreciate the fine testimony all of you have given. Because it doesn't really help clarify, because there is some differences.
For example, is retroactive liability fair? Hell no. Is repeal of retroactive liability fair? Probably not. So how do you deal with the issue? Let me ask you, Mr. Spisak, were you a member of the coalition in the last Congress, that delicately crafted coalition that was working to help bring about meaningful reform of the Superfund Program?
Mr. SPISAK. No, I was not. I think it is the coalition that you have referred to that was part of the NACEPT process and that group.
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Mr. BOEHLERT. Yes.
Mr. SPISAK. No, I was not.
Mr. BOEHLERT. Well, you know, it got some of us really excited, because it brought together people from big business, small business, the environmental community. Everybody except the lawyers, and we can understand their exemption, was excited about it last time, and we thought we were going to get something done, and we came that close. Only it didn't happen.
So now we have a new Superfund Reform Program that you are heading. And I notice that an awful lot of the people that were working very hard in the last Congress to bring about Superfund reform are not a member of Superfund Reform '95. And I think part of the reason is there is genuine and honest division about repeal of retroactive liability. Let's face it, that is the gut issue.
Now, couple questions. Are you for complete repeal of retroactive liability? Would you accept partial repeal?
Mr. SPISAK. Our position is for complete repeal of retroactive liability prior to 1987.
Mr. BOEHLERT. Well, the 1987 is an interesting question. I will come back to that in a minute. Because I would like you to talk to Mr. Reilly and some others about that. Why don't we do that right now.
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Now, Mr. Reilly, he has got some expert testimony and I have a high regard for him. He says in his testimony, how such a cutoff date squares with a proposal to eliminate retroactive liability, dot, dot, dot, is beyond CMA's understanding. Help him understand it.
Mr. SPISAK. Well, two things. First, to your first point, I think there is significant agreement among these panelists. I think all of the panelists said they could favor and support the repeal of retroactive liability if the program was to continue with adequate funding, their taxes weren't to be raised, and we were to protect human health and the environment and get these sites cleaned up at a proper pace. I think everyone said that.
Mr. BOEHLERT. That is a very big if, and I will get to that next.
Mr. SPISAK. I understand, I understand. But I think everyone said that. So I think there is—and on remedy, I think there is a strong point of agreement. On the second date, 1987 date is a practical date.
If our objective is to get the program reformed, to take the lawyers out, to cut the transaction costs, we have to do something for the small business component. The small business folks weren't involved in the recordkeeping process.
If you repeal retroactive liability earlier, say 1980, the folks that don't have the records, now you invite them to the table to come in and do an allocation of fair share and apportionment as was proposed in 3800 last year, the costs and the burden on small business who don't have the records, who are sued, who are brought into the process, becomes inordinate.
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Some of the very small businesses will spend money in research and legal fees that can drive them to the brink of bankruptcy. The big businesses who have the records, who were required to have the records, can come to the table, put their liability and determine I did this at this period of time, I can pretty much tell what my percentage is.
The small business folks can't do that. That is the focus on the 1987 date. It brings in the small business community or gives them an opportunity to get out of this program which bankrupts them. When you look at de minimis, for example, a one—if you take the studies that have been done that say the average Superfund site is 15 to $20 million, a 1 percent de minimis settlement for a small business is 150 to $220,000. That bankrupts a lot of the small businesses that we are familiar with.
Mr. BOEHLERT. Well, a couple of things I would observe. And I want to give Mr. Reilly equal time for this subject, since we are referring to your specific testimony. But last year, the small business community in general endorsed the program that we moved forward with. Unfortunately, it did not pass. That program retained retroactive liability. And the National Federation of Independent Business, I worked closely with that organization, and we were able to craft some specific language that recognized the special needs of small business.
Because I can agree 100 percent with you that you have got to look out for the interests of small business. They are on the firing line, many times they are at the margin. And they just can't absorb too much of a hit.
Mr. SPISAK. Mr. Chairman, if I might respectfully point out, the leadership of NFIB worked on that process. There were small businesses involved in that process. But there was a significant and large segment of small business that was part of the opposing coalition, which was ours in the last session of Congress, as well as the White House conference that just recently occurred, which favors very strong——
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Mr. BOEHLERT. No doubt about it. Here is the problem. I want you to understand it, then we will go to Mr. Reilly. My time is up, but the same question, so he will finish it.
Let me tell you what we face up here. You want to know the names of the Fortune 500 companies who are for repeal of retroactive liability? I will get you a list. You want to know the names of the Fortune 500 companies who are for retaining retroactive liability? I will get you the list. You want to know the names of the small businesspeople who are for repeal of retroactive liability? I will give you a long list. You want to know the names of the ones who want to retain it? I will give you a list.
The point is, there is division. There is genuine difference of opinion. And we are trying to come to grips with developing responsible public policy in response to a proven need. And it ain't easy. Now, Mr. Reilly, would you please respond to the 1987 cutoff date versus 1980? Because I found your testimony very interesting.
Mr. REILLY. Yes, sir. And by the way, DuPont was a member of that broad coalition last year that tried to build, I guess, the big tent that almost made through, and we were very disappointed that we didn't get reform last year. The 1980 date to the chemical industry is just simply a matter of the Congress changed the rules in 1980, and we don't want to be up here telling you we didn't understand that the rules were changed.
As in 1980, any disposal conduct was subject to strict joint several liability standard, and so we don't want to be saying that in 1991 or 1992—1981 or 1982, we did something that now we are going to come back to you and ask to be picked up by someone else. We feel that if we did not recognize in the 1970s, which we actually started—the bigger companies figured this out pretty darn early once these sites started coming back. We changed our practices dramatically in the 1970s. But as of the birthday of Superfund in 1980, we knew that it was a strict liability scheme. Even if you gave it to Joe's trucker and he went to the wrong landfill, it was still your responsibility. So we just don't want to be arguing to you that we should be having someone else pick up costs that are associated with that conduct.
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Mr. BOEHLERT. I noticed, Ms. Morningstar, you are shaking your head, yes. I assume that means you agree with what Mr. Reilly is saying?
Ms. MORNINGSTAR. Yes, Mr. Chairman, I do. We agree that the 1987 date is actually not a repeal of retroactive liability. It is really a repeal of prospective liability. The bill was passed in 1980. The RCRA, Resource Conservation Recovery Act, regulations were promulgated and effective as of the end of 1980, by November of 1980. And that took care of about 85 percent of all the hazardous waste generated in this country.
Mr. BOEHLERT. Mr. Klingenberg, Mr. Barth, do you care to—Mr. Barth.
Mr. BARTH. I would like to just add, maybe emphasize at least our focus. One, on the debate on retroactive, et cetera, we just, as a company, feel it is critical that we don't lose sight of the fact, first of all, remedy selection reform.
If we can get a 35 percent savings going forward, we certainly don't want to lose that going forward savings opportunity. And I urge that that savings opportunity going forward apply for company-owned sites as well as for multiparty sites. And so going forward, the reform is going to save a lot. And we will benefit as an individual company.
Number two, on reopeners, we are operating under the old law, the old system. If we can change it, if we can get relief on reopening either RODs that haven't been implemented or RODs which are being implemented, but which can be changed and reduced so the cleanup criteria come in line with the future criteria, then we can save some going forward monies with regard to the past hand that has been dealt to us.
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With regard to the past issues, I was active in the coalition. We were prepared to take a compromise. And that compromise was based on the fact that we spent a lot of money in the past, both on company-owned sites and third-party sites, and the insurance industry and ourselves had been pushed by the law into a very difficult situation. And we were prepared as a company and I think our trade associations and the insurance industry through the fund was prepared to step in and share that past pain. And we were prepared, taking together the 35 percent reduction of costs going forward, the sharing of that past pain between ourselves and the insurance carriers, we saw that we were going to get a very significant reduction in our total Superfund bill. And that is—it was very pragmatic and there was nothing philosophical about it, it was just cutting a deal and saving us and getting on with the future saving.
I would hate to see this become an ideological war that is on the past and we lose the urgency that is needed to correct the future.
Mr. BOEHLERT. Thank you very much.
Mr. Klingenberg.
Mr. KLINGENBERG. I would just like to say on behalf of API, that we generally agree with the Chairman that this ain't easy, and this is another one of these issues, the repeal date. When we first look at it, we are sympathetic with the position of Superfund '95 here.
Repealing as of before 1987 is much more efficient there, would be less haggling over the shares, the records are better, et cetera. The flip side of that is that is going to shift, versus 1980. It is going to shift more of the cost to the fund. And we are very concerned about the burden on the fund and the impact that is going to have on generating revenues and increases to taxes. So on balance, I guess, for our industry, because of this concern, we would be more comfortable with the 1980 date on the basis of dollars.
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But on the basis of program efficiencies, the 1987 date makes better sense. You have got to balance all this stuff and come out with a result that is fair to everybody, and recognizes what the impact is going to be on everybody, not just one industry; how it is better for one or it is better for the other.
Mr. REILLY. Or equally unfair.
Mr. BOEHLERT. Or equally unfair. I think of that is really the nub of it. Which is the least unfair of a bunch of unfair alternatives? But this has been a good exchange on the panel. You are not winning on the score card here, but the fact of the matter is it is tough. It is simply tough. And let me go to Mr. Borski because I know he is anxious to proceed on this subject.
Mr. BORSKI. Thank you very much, Mr. Chairman. I would like to—this is very difficult. I am assuming you are going to be a little lenient with the time clock, with five expert witnesses.
Mr. BOEHLERT. Right.
Mr. BORSKI. But I want to make an assumption first, and that assumption would be there would be no new taxes for this program, or no general revenues coming into the program. With the difficulties we are currently having to balance the budget, I think it is a fair assumption to make.
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The question is, I would like to start with you, Mr. Barth, is do you support the repeal of retroactive liability? And if you do, do you believe that a viable publicly acceptable program can run on the current revenues of the program?
Mr. BARTH. Mr. Borski, I don't want to duck the question. I am not competent to make the assessment as to the size of these—of the numbers I have heard, 3 billion, 2 billion, et cetera. I really have not studied those details. I would submit that—at least I can only speak for our company's experience, but I think it is true of CMA member companies, we do not have within our control, or programs I think it is fair to say even at third-party sites, we do not have present in situ waste conditions which represent a threat. That hot spots, serious situations that we have the resources to address, have been addressed. And so I would urge, and it is a risk that people will say, well, the industry is backing off of commitment for cleanup.
I don't think that is the case at all. I think there is a lot of resources being applied. And proceeding, as I say, on these remedies that are inappropriate, unnecessary, past RODs going forward, and, too, at the rate of expenditure, if you can find a way, a mechanism, to slow down the rate of expenditure as well as reduce the absolute expenditure, I expect some of these very large numbers can be tamed. But I am only giving you an attitude on that, I don't know the details.
Mr. BORSKI. Ms. Morningstar.
Ms. MORNINGSTAR. We actually, both Lockheed Martin and EIA, as well as some other companies we have been working with, do support a limited repeal of retroactive liability. Our problem with an outright repeal with the 1987 date has always been it continues to be that the funding would not be sufficient to pay for the program.
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I know that there are studies out there that say they are, but there are many, many assumptions that are made in those studies that I personally cannot see clear how those assumptions would come true. So we support a limited repeal with the idea that that would not tax the fund too much. We don't want the program to slow down. That is not a win for us. So a limited repeal would be something that we would support.
Mr. BORSKI. Mr. Reilly.
Mr. REILLY. Yes, sir, when we look at the numbers, right now about $3.1 billion is going into the program, not counting transaction costs on our side of the table. About 1.5 billion from EPA, and about 1.5 billion from EPA, about 1.6 from the PRPs. It is difficult to squeeze that number all the way down to, I guess, your initial constraints, which is, I guess, $1.5 billion.
You are essentially cutting the amount of money in half, and have money laying around to do that many cleanups. So I would say within CMA we support as much retro repeal as can be offered, afforded, and if the Budget and Appropriations Committees will only appropriate at the level of 1.5, that is not a lot of retroactive repeal.
Mr. KLINGENBERG. Yes, we believe that the current—the adequate program could be run at the current funding levels, particularly if we focused on those aspects of reform that are going to benefit everybody; namely, remedy selection and improved efficiencies to the program. If we focus on repeal to the maximum extent, no, we do not believe the program could be run at the current funding level.
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Mr. BORSKI. Mr. Spisak.
Mr. SPISAK. Two things. First, our program has been thoroughly reviewed by Peat Marwick, and they agree that our assumptions are correct. They also agree that the basis of the numbers and the origin of the numbers are direct. And I want to give you the numbers so that you understand how this can be done.
You said no new taxes, and we agree with that. You have also said the general revenues have to come out because they are not going to be appropriated, they are needed for other things. The existing tax base is 1.5 billion. After our reforms are in place, there is still about 115 to $120 million in site-specific PRP payments that will continue to be made, even after repeal. There is a State share of about 200 million that is going to come into the program that represents a reduction of almost 100 million from what their total obligations are today, after reform.
There is interest building up on the trust fund of a little over $200 million. That brings the program to $2 billion. And that is before any consideration for technical reforms. That is before any consideration for remedy, to the effects of risk, to the effects of the number of sites that are going to have to be dealt with should risk reform be implemented. So I think clearly we can demonstrate, and it was Superfund '95's original objective to demonstrate that with structural reform alone we could bring this program into balance without the technical reforms. Because we know everybody agrees on remedy selection reform. If you take EPA's own numbers for remedy, when they estimate about a 25 percent savings, and you look at the current numbers that are being spent of about $1.8 billion, going into the ground, actual cleanup, and you apply a 25 percent remedy factor to that alone, that is over $450 million available to augment the $2 billion number that we are talking about here.
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Mr. BORSKI. Mr. Spisak, let me stay with you for a second. I want to ask a question on retroactive liability. If it is repealed, how do you propose to settle the inequity of those who have settled their liabilities and have paid up in a big way with those who have not?
Mr. SPISAK. That is—you know, that is a tough question. The inequities were created by the original unfairness of the program by the original creation in 1980 of the retroactive scheme to begin with. These were folks who for generations had operated facilities in compliance with what laws were there or accepted industry practice, and all of a sudden they incurred a huge liability.
It is a tough issue. But quite frankly, how does Congress deal with past inequities when they change the tax law? How do they deal with past inequities when they deal with product liability? Is there—is there a way that I can go back and sue Ford Motor Company for the unsafe quality of the old Model A that killed my great grandfather? I don't know how you deal with that. It is very difficult. But I think—I think you begin to start down a slippery slope if you begin to look at that. And I sympathize with all of the folks who have spent past money on this program.
But there is tremendous benefits to be gained by going forward. If we let something like this block real reform in the program, every party at this table is going to benefit immensely from the repeal of liability and the changes in remedy selection and the changes in risk going forward. There are billions of dollars to be saved in the future.
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There is also an opportunity, as we work down the NPL, to create a surplus in the taxes. That surplus, as the NPL shrinks, as we get these sites cleaned up, can be used for things like reimbursement for past costs. There are opportunities in a reformed program by getting these sites cleaned up, bringing this program to a conclusion, that at some point in the future will allow us to shift, possibly shift if Congress so decrees, monies to take care of some of these inequities, these built-in inequities.
Mr. BORSKI. Another twist to that same question, if I will, are you advocating rewarding those who fought the system instead of those who complied with the system?
Mr. SPISAK. There is no reward for those who fought the system. Everyone who fought the system were absolutely compelled to do so because of the unfairness of the law. Further, you can retain, easily retain the rights of those who have claimed against their insurers, and it is part of our proposal, going forward to keep those claims in place. Hopefully, a reformed program will provide incentives for those parties to settle, but there is no reason to remove or just to continue the reservation of their rights against their insurers.
Mr. BORSKI. Mr. Chairman, if I may, I just wanted to know if anyone would like to respond to the last lines, perhaps one person.
Mr. Barth.
Mr. BARTH. Well, I just, at the risk of repeating myself, one, going forward on the relief, that company-owned sites, if we don't get full relief on the past costs we have incurred, both on company-owned sites and third-party sites, going forward, if there is going to be repeal of retroactive liability, from whatever starting date is agreed upon, that that should govern for company-owned sites as well as third-party sites. It is the same issue.
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Second, and I repeat, getting reopeners, there will be a lot of argument I expect that, well, we are going backwards, et cetera. I urge reopeners of existing RODs or of RODs that are being implemented can also save us.
Third, on the past, I understand it is a tough issue. I would urge that this analysis of exactly what the program will, in fact, cost, you know, before we lose the shot at getting some of the past costs reimbursed or credited or whatever might be the technique, that, you know, the numbers are looked at very hard. I am sure they will be, but I have trouble imagining that if we can get these savings that we are talking about, that—and spread these costs time-wise, that there won't be some left over. Thank you.
Mr. BORSKI. Mr. Chairman, I think Ms. Morningstar wanted to respond. My time is up.
Ms. MORNINGSTAR. I am sorry, I will keep it short. Congressman Borski, as I am sure you know, the way the Superfund process works is EPA goes out, finds parties, and tries to bring them, if there is many, many parties, to a negotiating stance.
Some parties choose not to enter that stance, hoping that they will be able to—they will be forgotten about or the process will be so long that by the time that they are called up, a significant amount of the dollars will be paid. Most of the parties sitting on this side of the table certainly have not done that. We have gone into the negotiating process with the idea that we don't want to be stuck with a larger bill, so if we are in the process we will have that bill.
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If retroactive liability is repealed completely, then the parties who have entered the negotiating process in a good faith effort to resolve the problem would be penalized and the companies who were standing back and hoping that something would change would, in fact, be rewarded.
Mr. BORSKI. Thank you, Mr. Chairman.
Mr. BOEHLERT. I would like to call to Mr. Spisak's testimony on page 6, under the liability scheme, the statement, ''Polluter pays is in reality nothing more than an unfair and grossly inefficient funding mechanism that is relied upon and produces huge amounts of wasteful litigation.''
The last part I can agree on. We produced a huge amount of wasteful litigation. But I hope you are not turning your back completely on the concept that polluter pays, because the alternative is everybody pays. And that is something of great concern. It has to be a concern to all those people out in Colorado.
Mr. SPISAK. Well, Mr. Chairman, I think you have to look at the history of polluter pays. The folks that owned property that didn't put one pound of pollution on the site are pulled into this system.
We have a site in Texas, it is a piece of property that we owned. We never did anything with it. A chemical company, small pesticide, herbicide manufacturer, went out there and polluted the site. As soon as EPA moved against them, they declared chapter 11 and moved offshore, and guess who got saddled with the full cost?
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And what about—what about the polluters, the polluters, the chemical industry, who pay their taxes every year, and then get slapped with their 106 orders and have to go out and pay for the sites? Do they get a credit from EPA for the taxes that they have paid, which are for the Superfund Program?
Mr. BOEHLERT. I understand the issue full well, but what I am trying to point out is this, that the alternative of polluter pays is everybody pays. And I am not quite certain that is very fair.
Mr. SPISAK. Congressman, everybody pays today. If we are all naive enough to think that the costs of this program are not passed on in the products, in lost jobs, in money diverted from R&D for global competitiveness, we are kidding ourselves. Everybody is paying for this grossly inefficient program today. And what about the Federal sites? The Federal share of the total $6 billion societal Superfund Program is close to $2 billion.
Mr. BOEHLERT. Oh, the Feds are the biggest hypocrites of all.
Mr. SPISAK. Who pays for that? The taxpayer. Every one of us here pays for that.
Mr. BOEHLERT. Sure, I understand that.
Mr. SPISAK. And what we are saying is that without changing the existing tax structure, with the inputs into the program that we have carefully analyzed and have had peer reviewed independently, that says you can repeal this unfair liability scheme, which generates litigation, waste and delay, and get the program done and get it done as effectively as it is now, which isn't very good, and add sites quicker and faster, and that has been our focus from day one. And everybody is paying today.
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Mr. BOEHLERT. Well, we have a basic agreement. The area of basic agreement is that a well-intended law now on the books has cost us all an inordinate amount of money, and is in desperate need of reform. There is no argument there.
Every single person up here, Republican and Democrat alike, agrees with that. But when we get to the nub of the issue, polluter pays versus everyone pays, that is the difficult choice.
Mr. LaTourette. That was an easy choice.
Mr. LATOURETTE. Thank you, Mr. Chairman. I appreciate that. Mr. Spisak, as I read your testimony, I understood your criticism of polluter pays is in the present system the polluters aren't paying, it is everyone else is paying; is that a fair assessment?
Mr. SPISAK. That is correct.
Mr. LATOURETTE. As a matter of fact, I think you even had an observation in there that the polluters are sending themselves to the Caribbean while others are left behind to take care of the problem. Would that be a fair assessment also? I am not going to beat the retroactive liability issue again. But my question to you, Mr. Spisak, there have been suggestions that we modified the joint and several liability portion.
As you are aware, this Congress has also moved on cost-benefit legislation particularly in H.R. 9. And if those two items were adjusted, and that was we had regulations based on cost benefit, risk assessment, we also adjusted the joint and several liability issue, without repealing retroactive liability, would that achieve in part or would that get anywhere near the goals of your organization? Or do we need to repeal retroactive liability?
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Mr. SPISAK. All the pieces have to be integrated. You cannot do effectively two or three of the pieces without the repeal of retroactive liability. That was one of the problems with the bill last year, is there was a focus on remedy and a fair share apportionment process. But without the repeal of retroactive liability, as you well know, how EPA and other bureaucracies function, there is going to be a creeping focus towards maintaining rights, preserving positions, dealing with cleanups, and over a period of time the program would be back to where it is today.
Further, you are not going to get the participation of parties who don't like their apportionment under this system. There is still going to be enormous amounts of litigation. There is going to be litigation in some kind of an apportionment process. So without the repeal of liability, you are not going to see the benefits that are proposed for a program that leaves retroactive liability off the table.
Mr. LATOURETTE. Okay. Moving to another area. In our area, we found that sometimes the threat of a Superfund designation has been more effective than Superfund itself. And it gets people motivated, and also causes not only industry, but State and local communities to get together and come up with innovative solutions in particular the smaller sites. And to that end, the Federal Government has from time to time issued waivers and given States the authority to oversee particular sites.
If the focus was shifted to permit more waivers, to permit more local control, to permit local communities and State governments to have greater flexibilities in supervising sites, is that something upon which most on the panel can agree could be effective?
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Mr. REILLY. Sir, I think most of the members of the chemical industry would support an enhanced role for the States. One of the biggest problems we have in Superfund cleanups is when you get the agencies, both with equal authority, disagreeing with each other. And that really slows the program down.
So our sort of buzz word here is we want a single master at the sites. But in a lot of cases, the States are ready, willing and able to take over sites. Indeed, you are correct, the Superfund is such a feared and loathed system, that people will really get cracking if they have got an opportunity to keep a site off the national priority list. And that is a healthy driver. But in a lot of cases, yes, the States probably will result in better cleanups. They are closer to the people, better able to make the key land use decisions.
Mr. LATOURETTE. Mr. Reilly, somewhere, and one of the sad things about coming to Congress is I forget where I read stuff, but one time I believe I have seen some studies or statistics that show that State cleanups are 17 times more efficient, 17 times less costly. Is that correct?
Mr. REILLY. I believe that is from a recent study by either the National Governors or the Association of State and Territorial Solid Waste Management Officials. Our experience at the States is early on a lot of the States were for the purer-than-the-driven-snow option.
Eventually, that simply doesn't work. You simply cannot put every molecule back into the bottle. In a lot of States now you are seeing a tremendous maturity. They see that if you have an unrealistic program, all you do is create abandoned properties and you don't get cleanups. So a lot of States I think have gone over the sort of the unrealistic early phases of the program, recognize you got to make compromises, but also recognize you can protect public health and the environment without breaking the bank.
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Mr. LATOURETTE. What about the other radical proposal of assigning States the authority to supervise these sites and block granting the funds directly back to the States to supervise those? And the reason I bring that up, unlike some of our other legislation such as clean air and clean water, where air and water has a tendency to move jurisdiction, Superfund sites pretty much stay within the boundaries of the States. Does that have any supporters on the panel?
Mr. REILLY. Some States are ready, willing and able. I think of the States' view is you are, you better give us some money if you are going to give us this responsibility. Jersey right now is actively overseeing and essentially managing a handful of Superfund sites. It does pretty well as long as they don't get into a tiff with EPA over the selection of the remedy.
Mr. LATOURETTE. Is there anyone who has a problem with that on the panel?
Mr. KLINGENBERG. API would just like to say we don't have a clear preference on whether the States or the Federal Government should oversee these cleanups. We think the important thing is either program should embody all the reforms we are talking about today.
If a State is capable of carrying out the program and can do it in a cost-effective manner, we are perfectly agreeable with going along with that and we support when Mr. Reilly said about the one master.
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One of the worst things we can get is being whipsawed between two groups with different rules. So it just shouldn't be automatically all given to every State, unless it is determined that those programs are just as cost effective as the reformed Federal program should be.
Mr. LATOURETTE. Okay. Thank you very much. Thank you, Mr. Chairman.
Mr. BOEHLERT. Mr. Poshard.
Mr. POSHARD. Thank you, Mr. Chairman.
Mr. Klingenberg, why do you think the chemical industry is singled out for a disproportionate share of the cost of the Superfund program?
Mr. KLINGENBERG. Well, I will tell you why. When I first came into this area, about 5 years ago, and started working on Superfund reform, I started reading advertisements in the papers from the insurance industry about what a terrible program this was and how unfair it was and how this liability should be repealed.
Boy, retroactive liability, that is—joint and several, you mean I have to pay for everything? You know, I was just totally sold. Well, after a couple of months of looking over the facts and figures of the program, you come to realize that, yes, the liability system is unfair, but the only thing that is more unfair is how the program is paid for, the funding mechanism. And if we fix this unfairness in the liability system by transferring all of these costs to the fund, who gets stuck with those costs, who is going to pay those costs? And we are not talking about a couple of million dollars here. We are talking about possibly a billion or more dollars.
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It is going to be the people that pay the taxes. And our industry has to pay over half of these taxes right now. And if that kind of thinking and philosophy continues, in generating the additional revenues that are going to be needed, we are going to end up paying for this.
I heard today that everybody pays. Well, everybody pays, but some people are paying a lot more than other people here. I would like to say that my industry is the one that is paying the most, and we don't think that is right, and we don't think it should be made any worse than it is, for sure.
Mr. POSHARD. Okay. Help me put, at least, a more realistic face on the oil industry from your perspective, and maybe from mine. I represent a large rural area. About 14 of my counties are dependent upon the oil industry. This is in Illinois. We only have a couple of refineries. We have a rather large Marathon refinery and then a smaller refinery. But about 90 percent of the oil industry in my district are small, independent oil companies, that depend upon the refinery to buy their oil, to refine their oil.
The interrelationship there is great. They feel, through retroactive liability and other things, because the increased costs to the bigger companies per se on Superfund and other environmental restrictions, that this is all passed on to them in some form or the other. And right now that industry is on its back.
Those little 15 and 16 and 20-men companies are absolutely out of business nearly. And it has affected our economy greatly. And all of this figures in some way. So when we are talking about disproportionate share of cost to your industry, we are talking about a lot of small businesses that get hurt by this, too, along the way. And it—you know, the face of the oil industry in this company isn't mega companies, like Exxon and Marathon and others. It is the small independent stripers and producers who also have to make a living in the small communities throughout this country, and those are millions of people, hundreds of thousands of workers. And I am just wondering about the interrelationship there, when we see this kind of disproportionate share to the industry in general, if the public really understands how all of this affects people up and down the industry itself.
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Mr. KLINGENBERG. I don't think the public understands it. And in fact, I have been in other hearings where I am not sure a lot of Members of Congress understand it. Because we are questioned, how can we even object to this tax share. We have so much money and we make so much profits and everything else, that why are we even concerned about this?
Well, my company is very concerned about these profits. We are very concerned about our profitability. For years, we have been in a severe cost-cutting mode. We are reducing our staffs, and our profitability, frankly, is just not satisfactory.
There was a recent study in Business Week that compared 24 industrial segments in terms of their return on investment. And the oil and coal and gas industry ranked third from the bottom, okay. The only people who had lower profitability than us were packaging and containers, and I think of the paper and forest industry. So this thought that we have all the money to pay for this program is just misguided.
Mr. POSHARD. Do you have any specific suggestions on how we might broaden the base with respect to proportional share?
Mr. KLINGENBERG. No, we don't have a specific tax to recommend this morning. But our tax department at API is working on this issue and they are considering broader-based alternatives. And we will welcome the opportunity to work with this committee in arriving at a broader-based tax mechanism or funding mechanism that will accurately reflect the contribution of the various parties, and there are broad society, groups of society that contributed to this problem. They should all be contribution, and then there is another group of people that benefited from these lower disposal costs of past years, and will benefit from these changes to the program that we are making. And all of those parties should contribute to paying for this program, not just one industry.
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Mr. POSHARD. Thank you.
Thank you, Mr. Chairman.
Mr. BORSKI. Will the gentleman yield for one quick question?
Mr. POSHARD. Me? Oh, certainly. Be happy to yield to the question.
Mr. BORSKI. I wanted to follow this up, Mr. Klingenberg, if I may. There is a petroleum exemption in Superfund. Are you better off repealing the exemption and lowering taxes?
Mr. KLINGENBERG. No, we are not better off repealing the exemption. And the country wouldn't be better off if the exemption was repealed. Congress knew what it was doing back in 1980 when it put that petroleum exclusion in there. And since that time, it has developed a number of regulatory programs to address spills of petroleum.
We are not talking about exempting petroleum wastes, by the way, which a lot of people think is what that does. It does not exempt petroleum waste. Petroleum waste, if they are hazardous, are hazardous substances under Superfund. It only exempts pure products, okay, before they are used.
Now, there are several, under the Clean Water Act, under the Oil Pollution Act of 1990, under RCRA, there are programs that clean up and adequately address and more promptly address spills of petroleum products than would Superfund. If you take and bring all these petroleum spills into Superfund, you are right, you will increase our involvement in the Superfund Program. But you will also increase the involvement of many small businesses in this country.
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You will swamp the Superfund Program with low risk sites that petroleum spills represent, and you will not be addressing adequately the hazardous substances. So we believe the petroleum exclusion works to improve the response and the cleanup and the adequate protection and bringing it into Superfund would be the biggest mistake that I think you would make. It would be disastrous.
Mr. BORSKI. I wasn't advocating. I was just asking the question.
Thank you, Mr. Chairman.
Mr. WAMP. [Presiding.] Thank you, Mr. Poshard.
The Chair recognizes Mr. Petri.
Mr. PETRI. Thank you. I guess I am going to direct this question to Mr. Barth. Are we having all this trouble with Superfund at the Federal level because it is a cutting edge program and we are leading the world and we are doing something that no one's done before and therefore you have to expect a lot of inefficiencies and dead-ends?
Or, you operate in a lot of other countries, are other countries doing this sort of thing? And is there anything we can learn from the effectiveness that they have found or the mistakes that they have made in reorganizing this Federal program that we have got?
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Mr. BARTH. Well, I wish I could give you hard facts in response to your question. And I don't know what is going on. I can only give you anecdotal, what I have heard, conversation within our organization with regard to the Superfund Program. And that is, I do think many countries have watched this program. Certainly they have waste disposal problems, pollution problems. And I expect that they are learning by some of the mistakes that we have encountered. But that is not to gloss over the fact that when pollution is existent and it represents a threat, our country is better off for having gotten on in addressing these issues.
I think the liability issue underlying it, a lot of it is this program in a way perhaps was trying to address those waste sites which did not have resources to correct the problem. These are the orphan sites. And we got this joint several liability concept, which was a financing hook to get money and resources put to sites which might not otherwise have them. And when you start going off in those tangents and the inequities that flow, you get the litigation, the resistance, et cetera and so I think in particular, where we try to probably cover too many bases at one time, is a key flaw of the program.
I would also say, I mean why did some companies spend at the rate they did? And we addressed this past cost issue. The take on this is the judicial review standard was so punitive, is so punitive in this statute, very limited review opportunity, tremendous, excessive deference to the administrative agency beyond the APA standard, and on top of that, the punitive standard, you have to pay three times your costs if you—even though you made a bona fide challenge, that you were in the wrong. And so you had a tilt on the judicial review standard, which resulted in companies really being not able to challenge in a bona fide way wrong-headed approaches.
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We had to carry them through, and you then get this past cost issue. So, you know, done is done, and, hopefully, we will get some relief on the past, but in the future, the new statute, I urge that the judicial review standard be balanced. Not that we tie up the agencies with more litigation going forward, litigation has not been against the agencies. It has been amongst PRPs and against insurance carriers. Those are the transaction costs which are normal.
The judicial review standard insulated the bulk of the attacks and challenges on wrong-headed proposals, unnecessary proposals. So in the future, we correct that. I think we will get not more litigation, better outcomes.
Mr. REILLY. Sir, DuPont and a couple of companies were invited to talk to the European Union last fall. They are looking at their liability scheme and whether they should be considering a Superfund Program themselves. And we thought we may have to, you know, advise them that this is not the smartest way to go. And believe me, they know enough about American Superfund. They are already horrified about the liability system here. They have got no intention of following us.
But on the other side, it seems to me all of our folks that work in Europe say that they view contaminated sites as a practical problem that calls for practical solutions. And that is not the way we have intended to have gone about this in America.
You know, Lovely Canal, the Valley of the Drums, got everyone horrified about these sites in America. I think maybe some of that hysteria has dropped down. America is a very media-oriented country where we sometimes lose sight of the real risk. It just seems to us that the Europeans, anyway, go about this more as a practical problem with practical solutions, where you don't just throw money around like we have done in Superfund.
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Mr. WAMP. Thank you, Mr. Petri.
The Chair recognizes Mr. Menendez.
Mr. MENENDEZ. Thank you, Mr. Chairman.
I have heard this morning everybody pays. And I think there is an important corollary to that that not everybody profits. And in that context, I have also heard about this '80, 1980 to 1987 difference in terms of when you go back to in terms of the liability. And it seems to me that that is the red herring that ultimately still has one underlying consequence, which is that you cut the program. And if that is the case, in the response to Mr. Borski's questions, it seems that the arguments for fairness went out the window when we faced budget realities.
So my question comes to can you tell me, Mr. Spisak, for starters, can you tell me how is it possible that 40 attorney generals sworn to uphold the best interests of the citizens of their State and the National Governors Association and over 30 or so States that have retroactive liability, how could they be all so wrong as it relates to having a mechanism that gets people to the table?
There are other parts of the law that seem to me clearly need to be addressed, but when you deal with the retroactive liability, how is it that all of these public officials, sworn to uphold the best interests of their citizens, can be so wrong?
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Mr. SPISAK. Congressman, the attorney generals' letter that you are referring to is an indication of a large group that has an established program that mimics the Federal program in many cases, where they use retroactive liability as a fund-raising mechanism.
I think their concerns are the same concerns that have been expressed all along, that we want to be sure that we can get this done and pay for it. And that has been a problem with understanding, and that is why the work and the earth has been put into studying the numbers, researching the numbers, and having the numbers peer-reviewed to clearly demonstrate that the program, with the elimination of liability, is adequately funded and will work.
Mr. MENENDEZ. Well, that is the question. Let's assume for argument sake that that is their only concern, their only reason to support retroactive liability, is the question of funding. It comes to my mind as I listen to the arguments about equity, for those who delayed, stalled enough, and who now if the legislation is dramatically changed as is being suggested, would in essence, some would object to the terminology, but let's call it a windfall, would receive by virtue of not pursuing under the existing law, would your coalition consider knowing what your liability requirements are under the existing law now, paying some sort of a—I remember the windfall profit tax back in the 1980s.
Would you consider paying some form of tax based upon the liability that you presently have that will be foregone in order to insure that the fund would have sufficient revenues so that we wouldn't have to worry about the retroactive liability?
Mr. SPISAK. Well, I think a couple of things. We have made an assumption here that there was—that there is a windfall to be won. I think we are working in negative territory. There was a—there was a negative windfall, if I can use probably a Washington term, created in 1980, when a very unfair liability scheme was imposed. I think you have heard from most of these witnesses that the lack of judicial review, the incredibly punitive program that was put in place stacked so unfavorably to EPA, that company after company when faced with treble damages, with the power that the Agency had, the lack of ability to have this reviewed, made business decisions as they went along to involve themselves in the program.
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Those people that we talk about or that are referred to who delayed, who tried to hold out, who tried to avoid their liability, have looked at some incredibly egregious remedies, some incredibly egregious cleanup standards imposed by the Agency, and made the decision that they had to fight to protect the company from going bankrupt.
Mr. MENENDEZ. Well, let me ask you this.
Mr. SPISAK. It is not a delay to create a windfall.
Mr. MENENDEZ. Okay. I would say that maybe some would fall in that category, and I would say maybe others saw it as the best route to avoid a cost. And in doing so for now nearly a decade and a half since the law was passed, you know, what is being suggested now is a major change.
Let me ask this last question. In your statement, you say that your group advocates a January 1987 cutoff date, because of improved recordkeeping after that date.
Do you know what amount of the hazardous substances found at the sites are already or were already accounted for by existing solid waste disposal rules prior to that date? I understand that it is well over 90 percent. And if that is the case, isn't it the greater reason to pick the 1987 date because of exclusions under insurance policies?
Mr. SPISAK. Again, our position has been, and I said just a few minutes ago, that we would reserve the rights of those to continue litigation for cost recovery against their insurers. Those rights would be preserved.
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The second piece is practicality. When you talk about a strict legal sense, when was the unfairness visited upon the country? It was 1980. But in terms of protecting and developing a program for small business, the RCRA rules didn't apply to the small business, the small quantity generators, fully until 1986. Therefore, what they thought they were doing legally and correctly, pulls them into these sites, and there is no relief for small business unless you deal with the 1987 date.
Mr. MENENDEZ. Well, let me just add one comment, that I hear what you are saying, but I am always reminded of the statement that Americans are free to disagree with the law, but not to disobey it. And what I hear you say is that the unfairness was visited upon the country in 1980. The bottom line is that that is the law of the land. There are ways to try to change the law of the land, but one is free to disagree with what you view as the best interests of that law. And I don't believe that one is free to necessarily disobey it.
Mr. SPISAK. And we agree totally. There is no relief for those who broke the law in our program. The small business segment has—deals with the fact that they were making legal disposals from 1980 to 1986, but weren't required to keep records. So when they get embroiled in an allocation dispute, where businesses sue other businesses or EPA goes looking for PRPs, they have no way to come to the table without spending inordinate amounts of money in research and trying to reconstruct past activities, versus someone who was covered by the rulemaking for recordkeeping who can come in and say we contributed 43 percent to this site. That is what we are trying to solve for small business, with the 1987 date.
Mr. MENENDEZ. Thank you, Mr. Chairman.
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Mr. WAMP. Thank you, Mr. Menendez. The Chair recognizes Mr. Ewing.
Mr. EWING. Thank you, Mr. Chairman. I want to apologize to the panel because I didn't hear your testimony, but I am assuming that there isn't anyone on the panel who thinks the current law is effective. Is that agreeable? Is the industry, together with small business and the insurance industry, working on a suggested compromise or revision to this law? Any of you?
Mr. SPISAK. Well, certainly Superfund '95 represents the vast majority of the insurance industry and literally thousands of small businesses. And we are all working together on the reform of this law. That is our program.
Mr. EWING. And does it include some of the major companies, such as the oil companies we have at the table or any others?
Mr. SPISAK. Yes, it does. Yes.
Mr. EWING. So it is not just——
Mr. KLINGENBERG. There are some members, there are some oil companies that belong to Superfund '95, but not a majority of them.
Ms. MORNINGSTAR. And a majority of the manufacturing, nonoil company manufacturing companies, are also not members of Superfund '95.
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Mr. EWING. Are nonmembers?
Ms. MORNINGSTAR. Are nonmembers.
Mr. REILLY. The same goes for the chemical industry, the majority are not members of Superfund '95.
Mr. EWING. Is there a reason? Are they cooperative? Is there a cooperative effort I guess is what I am getting at?
Mr. KLINGENBERG. Yes, they are very cooperative. The reason is, total repeal of liability represents a big threat to the oil industry. And that is why many of the members have concerns about this proposal.
Now, we have read the proposal, we are sympathetic with some of the points that it makes, but frankly, we don't have the comfort level that they do that all of these best case assumptions are going to come true, and all of these potential revenue sources will be there and will be made available for the program, so that the increase of the burden on the fund will be covered. And if these things don't come true, we are going to need more taxes.
And frankly, as I am sure you know by now and probably sick of hearing, we are taxed out. So that is the reason that we are not more supportive of it. When we see more details on it and when we are given assurances that all of these funds would be made available and no new taxes will be required, then we might be able to make a decision on it.
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But right now, we view it as very unclear, okay, and we are not able to support and go along with that position. And since it represents such a threat to us, we are somewhat afraid to keep pushing that bandwagon.
Mr. REILLY. Yes, as far as the chemical industry is concerned, we are just concerned about the affordability issue. We can support repeal of retroactive liability, but we are very concerned, there has to be enough money there. And based on the signals we are hearing from Capitol Hill, it doesn't look like the Superfund appropriation is going to go up. And so we hate to, say, bet on a single horse, it may not make the race.
Mr. EWING. Well, it appears to me, from my vantage point, that there is pretty much agreement that this current law needs major revision. I often wonder if we aren't actually spending the money that is necessary out there in lots of wasted effort, and if we could redirect our resources, we could go a long way in actual paying for the cleanup and getting on with the job in front of us.
Is there agreement to that? I mean we probably could always use more money, but we are spending enormous amounts of money and getting very little result.
Mr. KLINGENBERG. API would strongly agree with that. We have been working on this program for over 5 years ago, reauthorizing it. We have known, we have had good proposals for remedy selection reform, which could save great amounts of money in this program, and year after year, these reforms don't get implemented, as we wrangle over these other issues. And so I would agree with that the program should definitely be reformed, at least on those issues that we all agree on, this year.
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Mr. EWING. Well, I appreciate your being here today for the hearing and I would hope that all of the groups, different industries, can try and work out an agreeable solution. If there is division among those being governed on this, it is going to be hard for this committee or any other committee to make the reform necessary to put an effective program in place.
Thank you. Go ahead.
Mr. SPISAK. Congressman, I would just like to make a couple of points. One, we certainly agree and understand and are sympathetic with the concerns of the folks who are not part of the coalition. And that is why we have put the effort into developing the numbers, researching them and having them independently peer reviewed. And all of that is going to be made available to all of our colleagues here at the table, so they can get comfortable that this, indeed, will work.
Second of all, the models and the numbers that have been generated by past studies make a series of assumptions about the old program, without reforms. A core cost with all of the administrative inefficiencies, programs based on old ROD numbers and expenditures, costs per site, none of those—or all of those numbers are significantly overstated because they weren't modeled with reforms in place.
When you begin to run those models with reforms in place, administrative reforms, technical reforms, the adjustment in liability and funding, the numbers all begin to match up with what we have done.
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Again, I want to focus on the fact that that is why we have had our work independently peer reviewed, based on independent studies and independent research, to make sure that those numbers do work. And as I am saying, we will make all that available to those folks who are concerned. And they rightly are concerned and we understand that concern.
Mr. EWING. Thank you, Mr. Chairman.
Mr. WAMP. Thank you, Mr. Ewing.
The Chair recognizes Mr. Gilchrest.
Mr. GILCHREST. Thank you, Mr. Chairman. I have been in and out, so maybe some of the questions I am going to ask have already been asked or already been resolved, but I am still at a stage in this reauthorization process where I am on a learning curve, so I am not going to make any judgment at this point. But is it my understanding that these four people are against total repeal of retroactive liability?
Mr. BARTH. Well, not from my standpoint.
Mr. GILCHREST. Okay, so there is two on the end—when I say total repeal of retroactive liability, I heard Mr. Klingenberg, I think, say that you were against that because you are not sure if there is enough money to pay for it, and Mrs. Morningstar made a couple of exceptions to co-disposal sites and the other term was multisource sites.
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So those two you can repeal retroactive liability, but in other areas you couldn't. Could I say, Mr. Barth, that you are in favor—is that Mr. Spisak? You two are in favor of repealing retroactive liability, and using the date of—well, I won't get into that right now, but repealing of retroactive liability?
Mr. BARTH. As a private company, in 1980, we were under the standard of a common law nuisance. If we created a condition that exposed third parties to risk, we were liable at that time to address that issue. Standards, remediation criteria, were put in in 1980 and 1986, which laid on our company and many other companies a liability which was new, much higher standard, than we had ever experienced before. We would love to think that we could go back to 1980 and never have had this happen after $400 million, but that is not——
Mr. GILCHREST. Let me ask you a question on that point. The standards in 1980 were different from 1979. The standards in 1986 were different from 1980. Do you feel at this point, and I assume you are talking about the cleanup standards——
Mr. BARTH. Right.
Mr. GILCHREST. ——the soil, the water and so on. Do you think the standards are correct?
Mr. BARTH. No, we feel that the standards, the risk assessment methodology which is used to determine whether a risk exists by virtue of a waste disposal condition, is unnecessarily high, that human health and the safety of the environment need not be served by theoretical risks. And we have had a number of examples where we have had to clean up to standards which really are quite farfetched and unnecessary. Those standards, plus the permanent standard of cleaning up the permanent——
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Mr. GILCHREST. Who makes—whose assessment of theoretical risks are farfetched? Whose assessment is that?
Mr. BARTH. That is the methodology being used.
Mr. GILCHREST. We have the scientists on one side, and I am not saying that——
Mr. BARTH. I hear you.
Mr. GILCHREST. We have, I assume, we have scientists on one side, saying that this particular amount per million is a health risk, and then a scientist on another side saying that it is farfetched. So we are talking about——
Mr. BARTH. No, I think that is maybe oversimplifying, with all due respect. We had cleanup ROD requirements where it was acknowledged that there was no present risk or foreseeable risk to the groundwater from a solid waste disposal. But there was a theoretical risk.
In fact, there was no drinking water exposure theoretically. We were required to do the digup and the cleanup. I come back to the judicial review standard. The two experts you refer to, it is like this. The deference to the expert under the statute is such that the risk of our challenging that was extraordinary, enormous. We end up just going forward and having to do it. And it is not a real risk.
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Mr. GILCHREST. I think we should look at that, but let me ask you this, if it is okay, hypothetical question. If you agree that the standards were correct, let's say we adjusted the standards, would you then assume the responsibility for retroactive cleanup, even though it changed a couple of times?
Mr. BARTH. I would accept that responsibility retroactively if the nuisance standard, the common law nuisance standard, is inadequate for the protection of the public and the environment. We as a company would accept a standard which imposes on us a liability to clean up.
Mr. GILCHREST. Mr. Reilly.
Mr. REILLY. I just would make a point that it tends not to be a scientific disagreement when it comes to these risk assessments. It tends to be a very judgmental thing, like will someone build a house right there? That is not a scientific question. That is almost a policy question. And the easier decision for an agency is to assume that there is going to be a house there with children in the dirt, drilling a well. It is very unrealistic.
Even the good ex-congressman, ex-governor, Mr. Florio, has stated that it is really unlikely that you are going to build a drinking water reservoir in a rail yard. And that is very often what you get down to in these things, not science.
Mr. GILCHREST. So would everybody up here agree, then? I guess I am looking at Mrs. Morningstar, if we could adopt this concept that has been nicknamed, I guess, ground fields, where if you are going to—if you are going to—if you have an industrial site that needs to be cleaned up and we can correct some of the groundwater problems, should there be some flexibility in the quality standards of the cleanup, depending on what is going to—what the site will be used for?
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Ms. MORNINGSTAR. Oh, absolutely. Congressman, actually, we have supported and supported in last year's bill the consideration of land use in setting cleanup standards. And we would ask your committee this year to support a proposal that you consider also the reasonably anticipated future groundwater use, so that if groundwater is to be used for drinking water or is to be used for irrigation purposes, it would be cleaned up. If it is simply sitting in the ground and is nonpotable, then we would be allowed to clean it at the wellhead, so to speak. So yes, we do support that.
Mr. KLINGENBERG. Mr. Gilchrest, I want to make sure that I haven't created a misunderstanding on API's position of reform of liability. We do not on principle oppose any of these reforms to liability. The liability system is definitely unfair, it could be improved, and if it was improved, the program would probably work more efficiently, there would be less resistance from people who think they were getting an unfair deal.
Our concern was how is it going to be funded, how is it going to be paid for, and we want to make sure there is enough money there to do it without raising the taxes and the burden on the petroleum industry. And we are concerned about the proposals we have heard to date, and I was sitting here listening, and I heard that we are going to have tremendous efficiencies in the EPA's indirect costs, okay, for running the program.
Now, I have a little bit of a problem with that. I mean EPA right now is leading cleanups at about 30 percent of the sites. PRPs lead the cleanups at about 70 percent of the sites. Under this proposal, it seems like the PRPs won't be responsible any more. They are not going to have as much involvement at these sites. So EPA is going to have to take on more of the program.
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How they are going to do that, and slash their costs for running this thing, and run it more efficiently, I have got to tell you, I just have a little discomfort with that.
Mr. SPISAK. Well, let's be clear what our proposal is. It is not to have EPA run the program. Because EPA clearly is inefficient. I think it was Anbest and Rand that both did independent studies that indicated the private sector is 20 to 30 percent more efficient at the minimum than EPA in running the program.
The concept is absolutely to have the PRPs continue to run the program, to have a different type of contracting authority, someone who is used to managing contracts. And I will make an example suggestion, there may be agreement or disagreement, but someone other than EPA, for instance, the Corps of Engineers, to manage contracting. But in any case, the program is to be run principally by the private sector with those costs reimbursed by the fund. It would be foolish for us to propose that EPA run the program with their horrendous inefficiencies.
Mr. KLINGENBERG. I would question the inefficiency of a program even run by PRPs who really are going to have a stake in those costs. If they are not liable for those costs, they are not going to be—when we are involved in a site, we are spending our money. That is why those programs are efficient.
If we are going to be spending someone else's money or the government's money, frankly, we are not going to try all that hard. We are not going to put our best people on it. We are not going to give it the effort we are giving it right now when it is our money. And I just can't be comfortable with these kinds of savings that are based on those kinds of—I consider them to be soft assumptions.
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Mr. GILCHREST. This is a fascinating debate. My time is up.
Mr. BOEHLERT. [Presiding.] Mr. Gilchrest, thank you very much.
I think all the panelists have been outstanding. The spirit of the questions indicates, I would hope to you, that we really are trying to be objective. I know some people may feel that I am wedded to the concept of retroactive liability, and therefore that I fail the objectivity test. I am not wedded to that concept. It is just everything I know to date leads me to conclude that among leading alternatives that are not very fair, this is probably the most fair of the least fair, if you know what I—get my drift.
But I am still struggling at it. And that is why I sincerely, Mr. Spisak, you and your group, I really appreciate all the valuable information you have provided to the subcommittee. I thank all the witnesses. You know, my door is always open and I received an education from a good number of you.
I have got a lot to learn in this business. But I think you can see up here people who are genuinely interested in doing what we all want to do, reform a program that badly needs reform, to make it more efficient and hopefully less costly in terms of money being wasted or money going for something other than the intended purpose of cleaning up waste sites.
With that, I guess we will go on to the next panel. Thank you all very much.
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Mr. BOEHLERT. Our second panel of the day consists of Mr. Dale Kaplan, President and owner of Kaplan Cleaners, Camp Hill, Pennsylvania, representing the Pennsylvania Chamber of Commerce; Mr. Michael Mallen, General Counsel for the Southern Foundry Supply Company of Chattanooga, Tennessee.
Mr. Wamp has talked to us about Mr. Mallen. And Mr. Lee McIntire, Senior Vice President of Bechtel National, Inc., of San Francisco, representing the Hazardous Waste Action Coalition. Gentlemen, it is a pleasure to have the three of you here for a chat, discussion, and the friendly atmosphere among people who are trying to do the responsible thing. And as you get situated, we will proceed in the order announced, Mr. Kaplan, followed by Mr. Mallen, with Mr. McIntire batting third. Batting third.
See, whenever I am sitting with Mr. Borski here, we always have to get in a plug for the Philadelphia Phillies and the fact that Mike Schmidt and Ricky Ashburn are going into the National Baseball Hall of Fame this year. But I pointed out this morning to him that it was my townsman, Andy Van Slyke, who put on the Phillies' uniform for the first time last night and got a two-run homer that led them to victory.
Mr. Kaplan, forget about baseball for the moment, let's talk about Superfund.
TESTIMONY OF DALE KAPLAN, PRESIDENT AND OWNER, KAPLAN CLEANERS, CAMP HILL, PA, ON BEHALF OF THE PENNSYLVANIA CHAMBER OF BUSINESS AND INDUSTRY; MICHAEL MALLEN, GENERAL COUNSEL, SOUTHERN FOUNDRY SUPPLY INC., CHATTANOOGA, TN; AND LEE MCINTIRE, SENIOR VICE PRESIDENT, BECHTEL NATIONAL, INC., SAN FRANCISCO, CA, ON BEHALF OF THE HAZARDOUS WASTE ACTION COALITION
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Mr. KAPLAN. Thank you, Mr. Chairman. Members of Congress, fellow Pennsylvanians, good morning. My name is Dale Kaplan. I am a third-generation dry cleaner. I am the owner of Kaplan's Careful Cleaners of Camp Hill, Pennsylvania, a life-long resident of the Harrisburg area and of Pennsylvania.
I am testifying before you today on behalf of the Pennsylvania Chamber of Business and Industry, an organization representing over 4,400 small and large businesses, and through our local chamber network, 80,000 businesses.
The failed Superfund Program touches the full range of businesses operating in our State, and has negatively impacted the local economy in Pennsylvania. There are over 100 NPL sites in our State, and less than 10 of which have been cleaned up and deleted from the priority list to date.
The serious problems Superfund causes touches everyone from large manufacturers to local governments to small dry cleaners like myself. The State of PA has already implemented some important changes to its State cleanup program. The Ridge administration enacted the Land Recycling and Environmental Remediation Standard Act last month.
This law requires consideration of land use, liability exemption for lenders, and more flexible cleanup standards. Even with the anticipated improvements from the implementation of this law, we urge Congress to take the opportunity this year to include incentives in Superfund legislation that encourage States to extend these reforms to nonNPL sites. Without preempting any State laws, we believe that fundamental changes at Federal sites can send a signal that these changes produce similar benefits at State sites.
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This may prompt States to reexamine their own cleanup programs and take steps towards improving them. My participation in the chamber's Environmental Affairs Committee, and as President of Pennsylvania Dry Cleaners Association, and conversations with many other small businesses caught up in the Superfund mess, has led me to a clear conclusion.
Superfund's inability to clean up the Nation's worst hazardous sites is driven by the program's major flaws, its lack of clear and achievable remediation standards, and more importantly, its retroactive, strict joint and several liability scheme. Indeed, the program's shortcomings stem directly from the inefficient adversarial liability system which absorbs program administrators with fund-raising rather than cleanup.
You have probably heard from a lot of large companies and Washington associations recommending various changes to the Superfund law. Yet, I am here before the subcommittee today on behalf of a broad-based group of small and large businesses with firsthand experience with the Federal and State cleanup programs who are advocating comprehensive reform.
As a dry cleaner, my business involves handling and disposing of cleaning solvents. My firm has disposed of cleaning solvents and a small amount of waste oil according to the State disposal requirements. The Pennsylvania State cleanup law, modeled after the Federal Superfund law, enforces retroactive liability, meaning my company can be held potentially liable for the entire cost of cleaning up these wastes, despite the fact that I disposed of them properly.
In 1993, the State named my company as a PRP at a waste site 30 miles from Camp Hill. I sent about 300 gallons of waste oil when I was closing a tank to that site, and along with many other businesses. Rather than take part in lengthy and expensive negotiations, I settled and was forced to pay $3,000 for actions that were perfectly legal.
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Last year, I planned to expand my business. I was told that my bank—by my bank that the loan process required an extensive property assessment, including a contamination study. After considering the impact of the potential liability that might arise in disposal actions taken by the property's previous owner, I postponed indefinitely my business expansion plans.
Until I am certain that this issue is resolved, I am not willing to risk the catastrophic consequences that I have witnessed others in my industry undergo. Many of my friends in the cleaning industry have closed their doors directly because of their inability to pay for the immense environmental liability for their earlier actions that were legal and responsible.
Small businesses across the country have stated that Superfund reform is a critical issue. In fact, less than a week ago, delegates to the National White House Conference on Small Business voted to name Superfund reform among the conference's top five priority issues.
The conference adopted a position statement calling for fundamental reform of the law, including the elimination—the elimination of retroactive and strict liability prior to January 1, 1987. My experience and experiences of other businesses in the cleaning industry and the Pennsylvania Chamber may be judged as horror stories when you consider that we acted according to proper disposal practices of the time. Yet, only when one considers Superfund's impact on the entire State of Pennsylvania, does the real nightmare become apparent.
As I noted earlier, of the nearly 100 NPL sites in PA, less than 10 have been cleaned up so far. At these sites across the State, litigation and delays drag on for years, while cleanups are postponed indefinitely. Businesses continue to waste money on transaction costs, while little gets accomplished towards cleaning up the sites and returning them to productive use.
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Some examples of the program's history in Pennsylvania are included in my written testimony. The Chamber advocates comprehensive reform of the Superfund Program. Minor changes to one aspect of the law will not yield the effective changes that this program requires.
Congress must incorporate reforms of all aspects of Superfund, its adversarial liability system, its inflexible remedy selection process, and its inefficient management structure. Some people have told me that last year's Superfund legislation would have improved the program. Yet I understand that the bill did not include major changes to the program's central defect, its unfair adversarial liability system. Incremental reforms won't fix Superfund.
It is the chamber's position, Mr. Chairman, that any bill that does not include the elimination of retroactive liability is not fundamental reform, and will not remove the law's central focus on fund-raising. Unless Congress takes away the incentive to fight over the costs, even if the cleanup remedies were lower because of remedy reforms, you are still left with a system that is dominated by financing concerns. Parties will continue to fight over their share of cleanup.
In conclusion, the problems we see firsthand in Pennsylvania are occurring nationwide. It is important that Governors, mayors, key State leaders and State business groups be included into the national debate on Superfund reform.
There is a tremendous opportunity this year to vastly improve the effectiveness of the Federal Superfund Program. Pennsylvania has taken a significant step to address the cleanup standards and lingering liability issues at old industrial sites. Yet fundamental reforms of the Federal Superfund Program are necessary to achieve prompt, effective cleanups, and bring finality to the business community on the liability issue. What you shape in Federal reforms, Mr. Chairman, will certainly have repercussions at all levels of government.
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In order to promote faster cleanup of these sites, posing real risks to human health and the environment and return property to the tax rolls which can generate jobs, we cannot delay in passing comprehensive reforms. Making these laws work effectively will in turn help promote a stronger economy, not only for Pennsylvania, but nationally.
Mr. BOEHLERT. Thank you, Mr. Kaplan. I would like all of our witnesses to know that your full statements will appear in the record in their entirety, and I would appreciate, to the best of your ability—the Chair is going to be lenient. This is a very important subject matter, and to ask people to summarize their collective wisdom in 5 minutes is difficult, I understand that. So we will be lenient, as I will be with my colleagues during the question period, because this is an exchange, a learning exercise.
But I do want you to know that your statements will appear in their entirety.
Mr. Wamp, I would like to recognize you, the distinguished Vice Chairman of the subcommittee.
Mr. WAMP. Thank you, Mr. Chairman. I would like to begin by saying that this—our first panel did an outstanding job. But as you know, they represent some of the largest corporations in America. And while I am a great defender of our free market economy in this country, I really didn't come to Washington to represent big business.
I think big business is pretty well represented up here, quite honestly. I came up here to represent small businesspeople. And today, Mr. Mike Mallen comes as the general counsel from my home district, works for Southern Foundry Supply Company, which has a great tradition there, small business, family-owned company in Chattanooga, that has really had a bad experience. It is a story of frustration, a story of inefficiency, a story of injustice. And while the story of Southern Foundry Supply Company is a great American story, quite honestly the story that Mr. Mallen brings to us today from Chattanooga, Tennessee, is a rather unAmerican story. And with that, I am just glad that my friend and outstanding Chattanoogan, Mr. Mallen, has come to testify. Welcome, Mr. Mallen.
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Mr. BOEHLERT. Mr. Mallen, you may proceed. We look forward to hearing your testimony.
Mr. MALLEN. Thank you, Mr. Chairman. My name's Michael Mallen and I am——
Mr. BOEHLERT. Mr. Mallen, would you pull the mike just a little bit closer to you?
Mr. MALLEN. I want to begin by thanking the subcommittee on behalf of Southern Foundry and similarly situated businesses throughout the United States. Southern Foundry is a family-owned company which was founded in 1953 by Julius Chazen in Chattanooga, Tennessee.
Southern Foundry is in the business of purchasing, processing and reselling scrap metal to foundries and smelters throughout the United States. From its modest beginning in 1953, the company has grown to become a regional force in the recycling industry. We operate seven manufacturing facilities located in Chattanooga, Knoxville and Cookville, Tennessee, and Atlanta, Georgia.
We employ over 250 men and women, and the majority of our employees have been with the company 10 years or more. Our facilities in the course of a year shred 150,000 tons of automobiles and appliances, processed 8 million pounds of aluminum cans, 10 million pounds of copper, 7 million pounds of brass, 25 million pounds of scrap aluminum, and 175,000 tons of steel, all with state-of-the-art equipment and highly trained management. These materials, once processed, are packaged and shipped to foundries, steel mills and smelters which utilize our finished product as their raw material in the production of new iron, steel and nonferrous metals.
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The fact that we, along with others in our industry, recycle scrap iron and nonferrous metals, means that these materials do not end up in landfills, and further that less virgin ore must be extracted from our country's nonrenewable natural resources.
Now that I told you a little bit about who we are and what we do, I want to share with you the impact which CERCLA has had on our business. As you seek to evaluate the impact that CERCLA has had on small business, companies like ours are the lowest common denominator. We are the ones who are truly caught in the quagmire which the current regulatory system has created, and we are also the ones who are being held accountable for the misdeeds of others.
Let me share with you some examples, all of which have actually happened to us, and the names have not been changed to protect the innocent. First, Southern Foundry has found itself caught up the CERCLA liability as an owner-operator at the Amnicola Dump Superfund site.
In 1979, which was prior to the adoption of CERCLA, our company purchased an 18—our company purchased an 18-acre inactive construction debris disposal site in Chattanooga. The site had been operated by the City of Chattanooga and had been capped and revegetated. We utilized the site as an equipment and material sales facility.
Our business created jobs and the business was profitable. We sold usable salvage construction materials such as rebar and railroad cross ties. In the late 1970s, the EPA investigated the site, suspecting that a third party neighbor had dumped latex waste at the site in the early 1970s. No such waste was ever found.
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Nonetheless, EPA took the position that the site soil was contaminated by the presence of railroad cross ties. Let me get right to the point. EPA claimed the site was contaminated in a small area due to the presence of cross ties. EPA's investigation began in 1979.
The site was placed on the National Priorities List in 1983. The State of Tennessee and the City of Chattanooga both took the position that the site did not need Superfund remediation. In November, 1985, EPA notified a number of PRPs, including our company, that the site had been targeted for corrective action.
Now, almost 15 years later, the matter is about to be fully and finally settled. In the interim, EPA spent approximately $1,300,000 investigating the site. Additionally, our company spent almost $500,000 in attorney's fees and consulting fees over the period. And for what? The actual cleanup of the site, which EPA ordered and oversaw, cost approximately $38,000.
It took over 15 years and cost our company nearly $2 million in professional fees, lost profits, and environmental studies, all for the sake of a $38,000, 2-day cleanup, which resulted in three truckloads of nonhazardous dirt being trucked to Oklahoma.
Let me move on. Our company has not only been involved in the Superfund statutory scheme as an owner/operator, but we have also had more than our fair share of experiences with Superfund in the context of being alleged to be liable under Superfund as a generator of hazardous waste.
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We have found ourselves in this position because of an overly broad regulatory interpretation that has led courts to rule that recycling transactions are the same as those which are considered to be arranging for the disposal of waste.
Ironically, a smelter can buy scrap metal from a recycler or he can purchase virgin ore. However, only the recycler is held to be arranging for the disposal. The sale of virgin ore has not been so interpreted. Our specific experiences as an arranger for disposals under Superfund includes sites in Richmond, Virginia; Leeds, Alabama; Mifflin County, Pennsylvania; Ryebrook, New York; and Atlanta, Georgia.
The common theme in the sites I just mentioned is that our company shifted lead acid batteries or red metal such as brass scrap to smelters who purchased the material in order to melt it. The sales were not arranged for disposal. Rather, they were sales of scrap metal which were recognized worldwide as a commodity.
The contamination which brought our company into the ambit of Superfund was a result of the smelting company acting irresponsibly in terms of its manufacturing process. In each case, the smelter would not look after its environmental housekeeping and eventually the smelter would become insolvent.
As soon as EPA realized the smelter was unable to pay for the contamination which it solely caused, EPA elected to characterize the sellers of the scrap metal as those who had arranged for the disposal of the hazardous waste, and thus bringing the scrap metal seller into the picture as a potentially responsible party.
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EPA's actions can only be characterized as an unintended consequence of Superfund, which perverts public policy inasmuch as it increases the cost of recycling and inhibits increased recycling and it provides a preference for nonsustainable virgin materials.
And finally, it results in prohibitive transaction costs which companies of our size cannot endure. EPA has told us that the cleanup at the Leeds, Alabama, site could approach $80 million. Our share of that could be well over $1 million under EPA's allocation scheme.
At the C and R battery site in Richmond, Virginia, we paid almost $100,000 as a result of having shipped four truckloads of batteries to the site for recycling. I respectfully request that you consider taking steps during the current session to correct the inequities of the current statutory scheme, and I would strongly urge you to pass H.R. 820, the Superfund Recycling Equity Act of 1995.
The legislation has been sponsored by a number of Members of both parties and it has been supported by government, environmental communities alike. It attempts to remove unintended impediments to recycling while providing significant environmental protections. And finally, it protects against sham recycling which tries to disguise disposal activities as recycling. Our business cannot continue to endure the burdens and hardships which Superfund has visited upon us. If we are to continue to survive and compete, we need relief.
Mr. BOEHLERT. Thank you, Mr. Mallen. You didn't disappoint us. You lived up to the advance billing that Mr. Wamp gave us. And I want you to know there are a lot of unintended consequences of legislation, and the story that you outlined is one that almost—well, it elicits some pretty strong response, and I can understand how you feel about it. Thirth-eight thousand dollars to clean up a site they spent all this money on, all this time, all this agony, that is why we have got to reform Superfund. No doubt about it.
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But I think you would be the first to agree that we shouldn't just walk away from the problem. We have to deal with the problem. Our challenge is how do we do it in a responsible way? And you are very helpful with your testimony. Thank you very much.
Mr. MALLEN. Thank you.
Mr. BOEHLERT. Mr. McIntire.
Mr. MCINTIRE. Mr. Chairman and committee members, it is a pleasure to be here today. I am Lee McIntire. I am a Senior Vice President and engineer with Bechtel, also on the leadership council of the Hazardous Waste Action Coalition, or HWAC. Also here today with me is Mr. John Daniel, who is our HWAC counsel.
I want to thank Chairman Boehlert and Mr. Shuster and chairman—Mr. Borski, excuse me, and Chairman Shuster and Mr. Mineta and Mr. Hayes for putting in the language last year into the bill that would have solved our problem. We are representatives of HWAC.
HWAC is a part of the American Consulting Engineers Council, about 5,000 members. HWAC has a hundred members and we represent the lion's share of the RAC contractors in America. We are the people that go in and clean up the sites so we are a little different from everyone else here that spoke in the earlier panels.
If the goal is to reform—and I am going to paraphrase, by the way, real quickly, because I know my testimony is in the record. We believe that Superfund is flawed and needs to be changed, and we would like to see reform this year if we could. Our concern is primarily the fact that Superfund's strict joint and several liability, here I am talking about a legal issue again as an engineer, it has created an environment that we believe as the people that go in and clean them up, that does not promote quicker, cheaper, better at all. And it certainly doesn't protect the public. That is our issue.
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It has exposed the RACs to lawsuits for recovery of cleanup costs and shifted the potential long-term liability or toxic tort, which is probably our greatest concern, to the RACs. And this is regardless of performance or fault, just for being there. We didn't clean it up—we didn't make the mess, we are coming in to clean it up. So we are being sued under CERCLA for cleanup costs to the sites, and we would like to submit for the record 28 cases that back this up, and also just give you a couple, real quick verbal cases.
There is five current cases right now, two RACs and two just normal construction contractors, where they have been involved in lawsuits where they unknowingly moved excavated or graded contaminated soils.
Not one of the contractors was found to be negligent or otherwise at all for the quality of its work. That is important. They did good work. But they still, under these cases, were found to be the operator because they operated equipment. They were found to be transporters, because they moved soil from one part of the site to the other. And they were called transporters because they provided a list of compliant disposal sites from which the client chose the site then.
More than half of the States have similar strict liability clauses. Another case is where site PRPs are being sued by the government, and then they seek other parties like the RAC contractors. PRPs at a Superfund site claim that EPA's contractors are site operators and therefore should be part of the cleanup costs. Very interesting one to me is another PRP alleged that EPA's cleanup contractor, or RAC, conspired with the government to drive up costs and claimed violation of the RICO or racketeering statute to go after the RAC contractor. It has just gotten a bit crazy.
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Of the 28 cases, 21 of them have been brought by PRPs to go after the contractors. Now our greatest fear, after talking about the costs of the cleanup, we also are probably more afraid of the third party liability. These are—because of the nature of the long latency periods for the claims, we are concerned about this. And just to give an order of magnitude, there were citizens around the DOE's Fernald and Mound facilities where site contractors were sued for health damage, emotional stress, and property value.
One suit was settled and a trust fund for $80 million is pending. The order of magnitude of our concerns for third party suits, for example, the petroleum spill case here in the Washington suburbs, Fairfax County, where a cleanup contractor is not involved, it is an ongoing leak and the residents are suing for about $150 million. So these are big lawsuits, and HWAC, of course, represents very small firms and some large firms and everybody in the middle.
The impact is the cleanups take longer, they cost a lot more, the level of technology is slow to evolve. That is a problem for all of us. And we believe the public is exposed. Now, the insurance, the insurance to get rid of our concerns is not available. We are encouraged that the insurance industry is starting to step up a little bit more and there is a few more policies available. And we have always supported insurance as the way we would like to go if we could. But they are very costly.
The coverage is unlikely to meet the true costs. And interestingly enough, they are claims made. In other words, you have to have paid a premium in the year that claims were made. Many of these claims, we figure, are going to be 10, 20, 30 years down the road. So if we do the work, we are going to have to keep paying premiums that are very, very expensive, huge deductibles, for who knows how many years.
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When I go to my executive committee and tell them that I am taking on a risk that is forever, they can't believe it. They say, oh, no, you are kidding, how many years are we allowing for this? I say forever. That is the point we are at right now. So HWAC's recommendations, we were not wed to any specific solutions, but we have made suggestions.
We believe that whatever we come up with together, this committee, we should be—it should protect the public and it should promote continued improvement in availability and cost of insurance and improve the process. The specific recommendations are these, and they are really principles and we are very flexible within them.
The language that was in your bill last year for this committee was adequate. The generator of the waste should bear the responsibility for public protection. The contractor should be held to a standard of negligence.
In other words, we want to be held for work that we perform and should be held to a standard of negligence. Cleanup should be subject to a statute of repose. In the design construction industry, which allowed all these buildings that are on the walls here to be built, it is a good public policy to have a statute of repose, or design construction or environmental work will be sort of restricted.
In other words, there should be a time limit put on the liability. The contractor should rely first on available insurance. We agree with that. Risk sharing or indemnification should be contracted site-specific. Some sites aren't very risky. Some are. Risk sharing or indemnification should flow down to subcontractors.
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In conclusion, we are now seeing lawsuits that reinforce our concern we have been worried about for the 10 years HWAC has been in business, and we think the process has evidence of need for reform. And now is the time to improve the process. We would like get on with the cleanup.
Mr. BOEHLERT. Thank you very much. The good news from your standpoint, Mr. McIntire, is that you are addressing some of the areas where there is general agreement. As you know, last year we had the—I hesitate to use the word, ''fix,'' because that doesn't sound positive, but it was constructive, the fix was in, and I think you are going to be okay this year because we recognize you make a very good case.
Let me turn now to Mr. Borski.
Mr. BORSKI. Thank you very much, Mr. Chairman. Mr. McIntire, let me start with you, if I may. First, let me say that I fully agree with you Superfund should be reformed this year. My fear is if it is not done this year, it won't get done at all.
Can you tell us if there has been any progress made in your discussions with EPA about the concerns of the response action contractors?
Mr. MCINTIRE. We believe there has been progress, and that they—I don't want to put words in your mouth, but I believe they generally agree with our principles, and we have had a task force team from HWAC and with EPA who have sat down and are, I believe, are making progress in this area. We have not come to a firm agreement yet, but we are still hopeful. Again, some of the things they can do are administrative. Legislative may have to fix some of the others.
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Mr. BORSKI. There are some people who say competition is the answer to the concerns raised by the response action contractors. Do you agree that added liability protection is not needed if there is adequate competition?
Mr. MCINTIRE. No, I don't think that competition solves the liability issue. All 800 members of HWAC and all RAC contractors are concerned about the risk. They all deal with it differently.
Each one of them has a different way of dealing with it. Some are very selective in how they go after the work. Some will enter into negotiations and if they can get a risk sharing, especially on the commercial side, where you go in and negotiate with your commercial clients, nongovernmental clients, you try to get the best risk sharing thing you can. So everybody—some buy insurance, some deal with it through limited assets. So everybody deals with it differently and I am not going to judge how that is done. But we don't believe that competition solves the liability issue and are really disconnected.
Mr. BORSKI. As you know, many of the proposals for amending Superfund advocate a greater reliance on containment remedies and institutional controls rather than on treatment and permanent remedies.
In your experience as a cleanup contractor, do containment remedies involve longer term and more extensive and costly operations and maintenance than do treatment remedies? And secondly, although containment remedies may be cheaper in the short term, don't they result in significant uncertainty for PRPs in the long term, since PRPs will never know if the waste is going to migrate and increase their liability under Superfund or for nuances or toxic torts?
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Mr. MCINTIRE. Well, the questions really could be responded on a technical way. But I would say that containment is one of the possible solutions to any problem at a site. And our own firm and other firms in HWAC have used that solution.
It can be weighed against cost, and it should be a cost-effective, part of a cost-effective solution. And it should be a risk, risk-based. So we think it is just one of the many bags of technological solutions that can be used. And you have to analyze the site and it depends.
Mr. BORSKI. Mr. Mallen, let me ask you a question, if I may. Is my understanding correct that while you advocate the elimination of impediments to legitimate recycling, you also recognize the need to impose liability on so-called sham recyclers, meaning those who so-called recycling involves releases of hazardous substance into the environment that are tantamount to disposal?
Mr. MALLEN. If there is a release of a hazardous substance in the course of one's operations, then I can draw a distinction between that and the activity of recycling a recognized commodity.
Mr. BORSKI. Okay. Mr. Kaplan, I wanted to thank you. We worked well together I thought, I hoped, last term, and we look forward to working with you this term as well. The key question I want to ask you is on the repeal of retroactive liability. Who should pay the costs that would lose in the program, in your view, if we repeal retroactive liability? Should the general taxpayer pay or the fund be increased?
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Mr. KAPLAN. I am not a financing expert. I read a lot of different things that SR '95 has shown me, but—and it was said earlier by the other panel, that we as consumers all pay. I mean I think I would state for the general dry cleaning public, people that I talk to a lot, that we know that one way or another we as consumers are going to have to pay, whether I increase the price of cleaning a suit a nickel to be able to pass it along, to be able to pay more in terms of revenues going out, or I pay more as a consumer for taxes to the government. One way or another, we are going to pay.
Mr. BORSKI. In your statement you talk about the lack of cleanup. I assume that the Pennsylvania Chamber would be for accelerating that process. You would not be for less cleanup, would you?
Mr. KAPLAN. No, no. I think from an environmentally conscious standpoint, that small business and large business, the people that I have spoken to, all would prefer to have the—let the sites be cleaned up on a good, common sense, and good science.
Mr. BORSKI. Okay. Thank you, sir. Thank you, Mr. Chairman.
Mr. BOEHLERT. Mr. Wamp.
Mr. WAMP. Thank you, Mr. Chairman. I will say, Mr. Kaplan, that I used to think dry cleaning was expensive, until I got elected to Congress and tried do that in Washington. It is real inexpensive back home to have your clothes cleaned, especially compared to here.
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And also, I am of the opinion, Mr. Borski, that if the taxpayers just knew what has to be cleaned up, how long it is going to take, what the beginning and the end is and how do we measure our progress along the way, they would support taxpayer-funded cleanup efforts, if you could just develop a time line and literally tell them what is out there, how many sites are on the list, and what needs to be done.
But right now we are just rocking along without any clear idea of where we are going. And that is what we are here for. And that brings me back to Mr. Mallen. In my district, Mr. Chairman, we have three NPL sites.
One is kind of obvious, it is the Oak Ridge reservation where we were making nuclear weapon parts for quite some time, and it is on the NPL site. Then there is two smaller sites in Chattanooga. One of them is Mr. Mallen's site. Believe it or not, tomorrow you are going to hear from a representative of a group, grass-roots organization, called Stop, in a real unfortunate area of Chattanooga, Tennessee, called Autumn Park where we have about a mile and a half of Chattanooga Creek contaminated with 6 feet of coal tar on both sides of the creek.
It is not even on the list. I think one of the reasons it is not on the list is because the Federal Government is one of the PRPs. And the Department of Justice has kind of stone walled the entire process. And it is not even on the list. Yet, Mr. Mallen's site has been on the list, over $38,000 worth of remediation. That is unfortunate.
And, Mr. Mallen, what specific reforms would prohibit that story, that unfortunate story that you told us from happening in the future? Specific ideas for Superfund reform that would have eliminated or excluded a small business like yours from being saddled with this type burden to remove as many railroad ties as you had. And incidentally, I was in the commercial industrial real estate business and sold dozens of sites in the Chattanooga market, and very familiar with this site; sold sites that visibly you wouldn't have known the difference between the site I was selling with an environmental report with the phase one, phase two, whatever was required to actually convey the report, not visibly any difference between his site and the sites that we were conveying.
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Mr. Mallen.
Mr. MALLEN. I think the first step is so commonsensical, but I will say it, the city and the State—the City of Chattanooga, the State of Tennessee, both objected strenuously to EPA's listing this site. The health risk was not there. EPA used, I think, the term used to be, ''voodoo science'', I guess, is the proper counterpart to the term I used to know. And if EPA had listened to the State and the city, and let the State and the city look after the problem, it would have been handled in, I think we said 30 percent earlier, 30 percent more efficient, I would say maybe 90 percent more efficient, without any trouble, when you are looking at two, two-and-a-half million dollars that were spent over 15 years.
Second, health risk is an issue. Health risk analyses need to be—there needs to be more of a sliding scale so that there is a recognition that if a site is in an industrial area, it shouldn't be cleaned up to drinking water standards. If the health risk comes from the ingestion of dirt and you are in an area, again, which is industrial, then I think you have to—you have to regard that health risk as one that might not manifest itself as much as if this were in a residential area. And I don't think the current statutory scheme allows for that. There is not enough flexibility. Everything is just sort of the round peg goes in the round hole and you jump through the hoops that EPA presents and EPA has absolutely no regard for the cost, the human cost or the economic cost.
And when I say human cost, I want to mention that we have got a site that Zach mentioned, the Chattanooga Creek, which there is a real human health risk there. Nothing is being done. We have got an industrial site, the Amnicola Dump site, which was fenced off, an industrial area, where there is no health risk and we had a fire drill out there for 15 years. So it is just absolutely backwards, 180 degrees wrong.
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Mr. WAMP. Thank you, Mr. Chairman.
Mr. BOEHLERT. Well, I want to thank all the witnesses.
Mr. Kaplan, I would ask that you do something. I am going to do, is I am going to make a pledge to you. I am not wedded to any particular concept, although I am leaning in a direction. Don't draw such a hard-line against repeal—or repeal of retroactive liability, until you can convince yourself that we can come up with something better. And that is what we are searching for.
Mr. Mallen, I did have one question. When you sell your recovered materials for use as a raw material, does CERCLA still consider that material a waste?
Mr. MALLEN. No, sir. If we shred an automobile so that it becomes shredded steel, then that shredded steel is not right now a waste. Two years ago, there was a possibility of that happening.
Mr. BOEHLERT. But it should not be, obviously.
Mr. MALLEN. It is certainly an impediment to recycling, if it becomes one. And what has happened to us is that raw product that we then sell to the steel mill who then melts it, if the steel mill mishandles its back house dust, its slags, what have you, those constituents may be hazardous waste once they have been converted by that independent act of the steel mill.
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If the steel mill is not solvent, EPA comes to see the providers of the material, the suppliers of the material, and considers us to be arranging for disposal by selling the scrap metal, the recognized commodity. And it is just not an arrangement for disposal.
Mr. BOEHLERT. One of my best friends is in your business, so I get occasion where he educates me. Thank you for educating us.
Mr. McIntire, I think you are in pretty decent shape, as you should be. Merit is on your side. So I thank you for that presentation. Thank you all very much. The committee is adjourned.
[Whereupon, at 12:39 p.m., the subcommittee was adjourned.]
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