TESTIMONY OF RONALD N. SCHULTZ, LEGAL DIRECTOR, CITY OF ROCKFORD, ILLINOIS PHONE (815) 987-5540 HR 1300 An Equal Opportunity Employer TDD# (815) 967-6951 SOUTHEAST ROCKFORD SUPERFUND SITE Thank you for the opportunity to address your Committee on the critical issue of recycling America's urban land. My name is Ron Schultz. I am the Legal Director for the City of Rockford, Illinois. Our Mayor, Charles Box sends his regards, but he is unable to be here today to testify. Mayor Box Co-chairs the Brownfields Committee of the U.S. Conference of Mayors. He fully supports the simplification of Superfund represented by HR 1300 and believes the Brownfield funding contained in the bill will be a productive investment in America's cities. The Rockford community is just completing a decade-long “Superfund experience." In January the City of Rockford entered a voluntary settlement with the Department of Justice and the State of Illinois whereby over $17 million was agreed to be paid by the City and over 130 property owners for past and future response costs related to the contamination of one aquifer in the City of Rockford. We believe that this settlement was unique in that a municipality took the lead in negotiating the settlement and promoting an equitable allocation of costs. We also were able to negotiate protection from Superfund liability for future owners and lenders. The complete Rockford experience has been documented by Peggy Morrissette of the Manufacturer's Alliance in a case study which I have submitted for the record. I will focus my comments today on the impact Superfund has had on our community and the ways HR 1300 would encourage settlements such as ours. Before I begin, I must say that we were lucky. We were working with State and Federal EPA project managers and enforcement attorneys that were willing to push the envelope and request approval of settlement provisions that were sometimes outside the scope of bureaucratic guidelines. I firmly believe that they were willing to do this because of the direct involvement of elected local officials in cooperation with our local Chamber of Commerce. The regulators knew that we wanted to encourage a settlement, and that we spoke for the local community. I am concerned that many Superfund sites are not so lucky. I am glad to see many of the concerns we were able to negotiate formally codified in HR 1300. So where is Rockford? What happened there? Rockford is the second largest city in Illinois. About 140,000 people live there. By income and racial diversity it is very much representative of the entire country. Many marketing firms test new products in Rockford because of its "typicalness." We are located about 80 miles northwest of Chicago. Manufacturing is Rockford. Last year Industry Week named Rockford one of the nation's top 25 world-class manufacturing communities. We have over 1,000 local manufacturers, so many small, family-owned businesses operate in Rockford. Machining and fasteners are two key metal working industries that have thrived in Rockford. It is the solvents used to clean metal parts after they are cut that caused an environmental problem in Rockford. Before we became environmentally aware, these solvents were routinely dumped on the ground or used as weed killers. One former farm in Rockford was used as a solvent dump site from the mid-1950s to 1970. This abandoned site was identified as the main source of groundwater pollution as a result of years of Superfund studies. The solvents from multiple sources traveled through Rockford's sandy soil to the shallow groundwater aquifer. This aquifer carried a plume of contamination over several square miles and beneath hundreds of properties. Our first clue that there was something in the aquifer was in the early 1980s. The City closed several drinking water wells when the first contaminants were detected. Further studies in the late 1980s detected elevated levels of solvents in the drinking water wells of a residential area just outside the City limits. In March of 1989, with little or no notice to the City, this one square mile area was placed on the National Priorities List and designated a Superfund site. The good thing about this was that a public health threat was identified, and Superfund worked the way it was intended. In a "removal action" funded by USEPA several hundred homes were connected to public water and a filtration system was provided for the closest public well. The bad thing was that polluters had to be found to pay EPA for the connections, and there were no industries in the Superfund Area. Consequently, five square miles surrounding the Site was added. When the sources of pollution were not clearly identified, another five square miles was added to the Site. By 1992, twenty per cent of the City's land area and 60 per cent of its industrially-zoned property, including over 600 parcels, was a Superfund site When demand letters for nine million dollars were received by eight companies, the political and business leaders were faced with a choice: Do we all file suit against each other and the other 592 property owners and pay lawyers and consultants for the next 20 years to sort out liability, or do we look for a quick way to negotiate a settlement and pay a little to save a lot? The City quickly realized the negative implications of Superfund. Several businesses near the original site were having trouble selling and financing their properties. Some applied for assessment reductions. Industrial land away from central Rockford looked more and more attractive. The City stood to lose jobs and tax base if a quick solution were not reached. We heard that Wichita, Kansas, had a similar experience with a contaminated aquifer, and that multiple lawsuits had been avoided through a local tax increment financing plan and voluntary investigation and cleanup. But when we visited Wichita we were dismayed to learn that Wichita had put its plan together practically overnight to avoid listing on the NPL and avoid the investigation and liability mechanism of Superfund. The Wichita plan was negotiated with the Kansas EPA. Even though we had to deal with the National Contingency Plan, we were able to persuade EPA to adopt a reasonable remedy and devise a local allocation of cost scheme based on property values. The lawsuits were avoided at costs at or below the cost of attorney fees in deminimus settlements for many companies. But we feel a settlement could have been achieved more simply and easily if we were not subject to the Superfund process or if some of the reforms proposed in this bill had been in place. ours: HR 1300 contains several provisions that would encourage voluntary settlements such as (1) Sections 104 and 105 offers assurance that the federal government will not unnecessarily intervene in voluntary state cleanup negotiations. Anything that can be done to keep sites out of the bureaucratic and expensive NCP process encourages settlement and cleanup. The private sector realizes the cleanup is often cheaper than the studies and the lawyers. (2) Section 303 offers relief for innocent parties. It was so difficult to educate our business owners about strict, joint and several liability. For sites with contaminated aquifers, the clarification for contiguous property owners is especially important. Right now a contiguous owner has the burden of proving that he never contributed to the contamination. (3) Section 401 encourages more realistic remedy selections that have already been adopted under many state programs. Although the cumbersome and hugely expensive process remains in place, site-specific requirements and ecological risk assessments should promote settlements that local officials can support. I shudder to think how close we came to a remedy selection that was 10 times more expensive simply because a few homeowners refused to connect to a public water supply. In summary, early participation by local government and business leaders can encourage realistic settlements and cleanups. HR 1300 would support such efforts, and we in Rockford encourage its adoption. Ronald N. Schultz has been the Director of the City of Rockford, Illinois, Department of Law since 1987. He has a B.A. in Economics from the University of Illinois (1973) and a J.D. from Valparaiso University (1976). He was admitted to the practice of law in Illinois in 1977. He can be reached at the City of Rockford, Department of Law, 425 East State Street, Rockford, Illinois, 61104. (815) 987-5540, Fax (815) 967-6949. |