I am writing regarding the unfortunate situation of over 150 small businesses in Quincy, Illinois. As you are aware, a number of our small business members have been contacted by the EPA and named as Potentially Responsible Parties for the cleanup of the Adams County Quincy Superfund Site. The owners of these businesses feel that they are being treated like criminals for legally sending garbage to their local landfill over 20 years ago.

Recently, 66 residents of Quincy sent a letter to Congress requesting changes to the Superfund law that would put an end to this type of unfair treatment. I am pleased by your response to Speaker Hastert and encouraged by your commitment to help enact small business liability relief in Superfund reform legislation.

On behalf of its 600,000 members, the National Federation of Independent Business
(NFIB) has aggressively fought to cure the inequities of the Superfund law in its treatment of
small businesses through legislative fixes. The Clinton Administration and NFIB have agreed
that certain parties, including many small businesses, should never have been dragged into the
Superfund liability scheme.

I remain confident that Superfund reform can remove small businesses from the shadow of potential liability and crippling legal costs without sacrificing the EPA's desire to hold polluters accountable. In addition, our mutual desire to absolve parties like Barbara Williams, owner of the SunnyRay Restaurant in Gettysburg, Pennsylvania, and small business owners in Quincy, Illinois from Superfund liability should speed consideration and passage of meaningful reform.

We look forward to working with you to meet our mutual goals.

Sincerely,

и шик

Dan Danner

Vice President

Federal Public Policy

National Federation of Independent Business

Small Business Burks,

600 Maryland Avenue SW., Suite 700 Washington, DC 20024 202-554-9000 Fax 202-554-0496

Testimony of

BARRY J. TRILLING

National Association of Industrial and Office Properties
before the

Subcommittee on Water Resources and Environment
Committee on Transportation and Infrastructure

on

H.R. 1300, the "Recycle America's Land Act of 1999"

May 12, 1999
Washington, D.C.

Mr. Chairman and Members of the Subcommittee:

My name is Barry J. Trilling. I am a member of the National Association of Industrial and Office Properties (NAIOP) and chairperson of NAIOP's task force on Superfund Reform and Brownfields Revitalization. I practice law as a partner in the Pittsburgh, Pennsylvania office of Pepper Hamilton LLP. I have practiced in the field of environmental law and land use for over 25 years, representing a variety of clients, including the United States Government, on matters such as hazardous waste cleanup and the sale, acquisition, development, and operation of industrial and commercial sites. My experience includes service as a senior trial lawyer for the United States Department of Justice, where I led the government's litigation team in its litigation seeking remediation of the infamous "Love Canal" in Western New York State, perhaps the nation's first and most prominent brownfield.

With more than 7000 members, NAIOP comprises the nation's leading organization of developers, investors, and owners of commercial real estate. NAIOP provides support and guidance to its members to help create, protect, and enhance the value of commercial and industrial real estate. NAIOP promotes grassroots public policy related to real estate development. Among its numerous activities, NAIOP works with various public sector entities, particularly local government and regional economic and industrial development agencies, authorities, and corporations in helping to bring unused or underutilized properties back as productive sources of jobs and tax revenues. As the owners, purchasers, and developers of brownfield properties, our members have a keen interest in legislative efforts aimed at renewal of these properties.

Further, as the owners and developers of commercial and industrial properties subject to regulation under a variety of federal and state environmental laws, NAIOP members have much at stake in efforts to reform the Comprehensive Environmental Response, Compensation, and Liability of 1980, commonly known as "Superfund" or "CERCLA."

NAIOP greatly appreciates the opportunity to explain to the Subcommittee why we

The Superfund Liability Scheme and the Creation of Brownfields

A brownfield is any real property that, because of actual or suspected environmental contamination, may lie idle, unoccupied, underutilized, or unused. In most, if not all, instances, a brownfield will not be the subject of an active investigation, remedial or enforcement action by the U.S. Environmental Protection Agency (E.P.A.), or a state environmental agency.

The contamination at these properties may stem from activities that took place or conditions that arose before current ownership and operation of the property, and as a result of lawful non-negligent conduct.

Liability for cleanup of these sites arises under the federal Superfund and similar state statutes, and extends to all past and current owners and operators of the property and to any party responsible for generating or transporting any hazardous substances requiring cleanup at the property. Liability under this scheme is "joint and several," i.e., each potentially responsible party (“PRP") bears the entire responsibility for all remedial expenses to a person who cleans up a site, notwithstanding the amount or nature of contamination for which the PRP may be individually responsible. Allocation among PRPs usually takes place in lawsuits or in other adversary contexts in which the PRPs seek equitable contribution among themselves.

The Superfund liability scheme has clearly exacerbated the difficulty of bringing brownfields back to productive use. Moreover, that liability scheme itself is responsible for the creation of many brownfields. This system makes the owners of contaminated properties liable for millions of dollars in cleanup costs even if they had nothing to do with contaminating the site and they purchased the property decades after the contamination occurred. It exposes landowners not only to Superfund actions by E.P.A., but also to lawsuits decades in the future by as-yet unanticipated parties who incur costs to clean up the property. Concerned about this “trailing” liability, owners of properties that may be contaminated hold these properties back from the market. This practice has been referred to as "mothballing," bringing to mind the useless hulks of rusting ships set aside by the U.S. Navy after World War II. When properties which carry the stigma of contamination become available for sale, most developers avoid them out of concern for exposure to endless uncertainty and undue financial liability.

Legislative Reforms are Needed

Brownfields hold enormous potential value for both the private and public sectors. This potential will remain unrealized, however, unless Congress reforms the Superfund liability system. In April 1997, I had the privilege to testify before this Subcommittee during its hearing on Superfund Reform and Reauthorization. In that testimony I pointed to five elements that NAIOP views as necessary to achieve meaningful Superfund reform that will result in practical brownfields revitalization. These were: (1) reform of the Superfund liability system; (2) deference to state voluntary remediation programs; (3) cleanup standards that are site specific, risk based, and which take into account future use; (4) liability risks that can be quantified with

solutions that are final; and (5) recognition of market forces. Our analysis of H.R. 1300 leads NAIOP to conclude that the legislation contains most of these elements and that, with minor modifications, all five elements may be achieved with the legislation's enactment. I shall discuss below the following sections of H.R. 1300 (although I will take them up somewhat out of sequence because of the subject matter of each of NAIOP's five concerns): Section 102 (which creates a Brownfields grant program in a new CERCLA Section 127); Section 104 ("Enforcement in Cases of a Release Subject to a State Response Action"); Section 303 ("Innocent Parties"); Section 311 ("Allocation"); and Section 401 ("Remedy Selection").

(1) Reform of the Superfund liability system.

In my April, 1997 testimony, I stated the following:

"Existing liability protections for innocent landowners and prospective purchasers need to be strengthened, and their due diligence prerequisites must be more clearly defined."

"The underlying retroactive, joint and several liability system needs to be replaced with one that is more equitable and less litigious. A compromise must be reached on this issue."

The provisions of Section 303(a) of H.R. 1300, which is entitled “Liability Relief for Innocent Parties," directly address our concerns about innocent land owners and due diligence prerequisites. An amended CERCLA Section 107(b)(2)(A), 42 U.S.C § 9607(b)(2)(A), would release from liability innocent landowners and operators who (i) acquired a facility only after the disposal of hazardous substances at the property, (ii) did not cause or contribute to site contamination, (iii) exercised “appropriate care" with respect to hazardous substances, and (iv) for properties acquired after December 11, 1980 (the date of Superfund's enactment), exercised due diligence by making "all appropriate inquiry" about the property's condition and use based on "customary standards and practices at the time of acquisition." Amended CERCLA Section 107(b)(3), 42 U.S.C. § 9607(b)(3), will require that the determination of "appropriate care" be made on a site specific basis, also with regard to “good commercial standards and practices at the time of defendant's acts and omissions." It also provides a "Safe Harbor" for care taken to abate and prevent releases of hazardous substances and for cooperation with authorized remedial actions. These provisions help assure fairness by not retroactively imposing current day standards of knowledge and technology that did not exist at the time of the relevant acts.

We support the provision in subsection (iv) of revised Section 107(b)(2)(A), which provides that parties who innocently acquired contaminated properties after the enactment of Superfund will be able to escape liability if they conducted appropriate due diligence activities before they purchased the site. It was only after Superfund's enactment that innocent purchasers arguably were put on notice of the statute's retroactive, strict, joint and several liability scheme, which should have resulted in their undertaking due diligence activities. The bill thus recognizes that parties who acquired property before December 11, 1998 need only meet the requirements of subsections (i), (ii), and (iii), but not (iv), for the innocent owner defense to apply.

Regrettably, however, the amendment to Section 107(b) unjustly allocates the burden to establish eligibility for the innocent landowner defense upon the landowner. In fairness, as in most of our country's laws, the plaintiff should have the burden to establish the landowner's guilt, rather than for the landowner to prove its innocence. This would not necessarily upset the strict liability scheme, but would make it applicable only if the plaintiff can establish that the defendant engaged in some kind of offensive conduct, rather than be able to rely only on the defendant's status to establish liability.

As for the unduly litigious Superfund joint and several liability system, Section 311 of H.R. 1300 provides for an allocation system in cost recovery actions brought by the United States where the amount in controversy exceeds $2 million. This provision should result in less money spent on lawyers rather than cleanup. It should be extended as well to multi-party private cost recovery and contribution actions that exceed $2 million in costs sought.

(2) Deference to State Voluntary Remediation Programs and (3) Liabilities that can be Quantified and Solutions that are Final.

More than 40 states have programs that provide releases from liability under state environmental laws for parties who successfully complete voluntary and mandatory remediation actions. H.R. 1300 would require E.P.A. to defer to such programs, and it would provide statutory protection against both cost recovery and contribution actions by the federal government or private parties for persons who meet the requirements of those programs. State governments, however, would still be allowed to pursue Superfund claims. This deferral to the state programs in H.R. 1300 will provide an element of finality to site closure that is now missing from the Superfund site cleanup equation.

Owners of sites that can be remediated and put back into productive use need to have the assurance that their investment of princely sums to meet state cleanup standards will not come back to haunt them. H.R. 1300 addresses the problem of finality, while providing adequate protection for human health and the environment in situations where reopening is clearly merited. Section 104 of H.R. 1300 adds a new Section 129 to CERCLA, under subpart (b) of which the state may request the President to use Superfund to address a problem at a site remediated under the state's program. The President can also pursue Superfund remedies if he or she determines that a remediated site poses an immediate risk to public health and the environment that the state has failed to address. The President may also act under Superfund if the Agency for Toxic Substances and Disease Registry (ATSDR) issues a public health advisory with respect to the facility, or if the contamination from the facility has migrated across a state line. This provision should adequately address the cynical argument that, in order to attract business, the states will enter a competition to establish which one has the lowest cleanup standard. Rather, enactment of H.R. 1300 will encourage the use of state programs that have achieved outstanding cleanup and redevelopment results.