After sitting through the years of debate and reading your bill, we have what we would consider well-founded fears that the wholesale revision of the remedy section in your bill will yield sloppy cleanups that will require years of vigilant operation and maintenance at a considerable risk to public health and the environment. As we have noted before, we are greatly concerned with the language that, in essence, places the right of the PRP to a cheap cleanup tab above the rights of those who wish to use the impacted land and resources for a variety of beneficial uses.

In our view, your bill directly invites litigation on the question of "reasonably anticipated uses" and makes the difficult prediction of those uses the starting point for all cleanup decisions. That approach and the direct requirement for the use of site-specific risk assessment and the consideration of actual exposure data in all instances will likely slow down rather than speed up cleanups. Indeed, it may make moot EPA's efforts to speed up cleanups by issuing soil screening guidance and presumptive remedies for certain categories of sites.

On the important question of who pays, your bill, in our view, does grave harm to the fundamental "polluter pays" approach of strict, joint and several liability. One might argue that it leaves that language in tact, but we believe that it eats around the edges of the liability approach significantly enough to undermine it.

You do attempt as is reasonable -- to help out the little guy, to make sure the Agency doesn't try to squeeze blood from a turnip by pressing those who cannot begin to pay to do so. But your carve outs are more than reasonable -- absolving small businesses from all liability even when their wastes contributed significantly to cleanup costs, allowing site owners to avoid paying for cleanup even when they knowingly bought contaminated property, and unwisely broadening the consensus provisions aimed at those who sell certain recycled products in place of virgin materials to other riskier businesses.

H.R. 1300's provisions go well beyond what is needed on municipal solid waste, absolving large waste handlers and haulers from responsibility and shifting the hefty price of those cleanups to the Fund. What's more this section appears to offer liability relief in the future, thereby inviting land disposal operations that do a less than adequate job in protecting the environment.

Under your bill, it seems that the leverage in settlements gained by strict, joint and several liability is severely undermined, with those parties who resist agreement still eligible for reimbursement from the Fund related to cleanup orders issued to them.

Mr. Chairman, I could go on, but I do not wish to imply that the best way to address this bill's problems is to parse out the language in each section line by line. Rather I return to my earlier question. What Superfund program does this bill attempt to fix? I suggest it is the image of the program at the beginning of the decade rather than the program we have today. If that is the case, I urge you to take credit for the "oversight" that has brought reform and improvement to the program and do only what must be done in a reauthorization.

First, renew the taxes and assure that the improved pace of cleanup does not again slow down. Second, reach across the aisle and work on a bipartisan basis to craft a narrower brownfields bill that helps to provides money, technical assistance and creativity to struggling local governments. Address the prospective purchaser liability issues and carefully mend any problems that remain for de micromis parties and local govemments under the gun for municipal solid waste mixed with industrial waste. And drop the law's unintended bias against the recycling of scrap paper, metals and other materials as ironed out by long and careful negotiations. These and these alone are relevant Superfund reforms for 1999.

Mr. Chairman, I again thank you for this opportunity to share our views. I look forward to answering your questions.

Statement of Michael W. Steinberg

on Behalf of the Superfund Settlements Project

Before the Subcommittee on Water Resources and Environment of the House Committee on Transportation and Infrastructure

May 12, 1999

Mr. Chairman, and Members of the Subcommittee:

On behalf of the Superfund Settlements Project ("SSP"), I sincerely appreciate the opportunity to appear before you today to present testimony with respect to H.R. 1300, the Recycle America's Land Act of 1999. My testimony today will focus on the provisions of H.R. 1300 that relate to the allocation of liability for Superfund cleanup costs, with particular emphasis on the orphan share and the shares of potentially responsible parties ("PRPs”) whose liability is narrowed or

eliminated by other provisions of the bill. The SSP supports these provisions of H.R. 1300, which are carefully drafted to solve some of the problems that have dogged the Superfund program for so many years.

The SSP is a nonpartisan group of ten major corporations with substantial involvement and experience in the Superfund program. The SSP was first organized in 1987, and for more than a decade it has worked to help facilitate settlements, reduce litigation, and minimize transaction costs at Superfund sites. The present members of the SSP are: AlliedSignal, Bayer, Ciba Specialty Chemicals, DuPont, FMC, General Electric, General Motors, IBM, Lucent Technologies, and United Technologies. Collectively, these companies are involved at hundreds of Superfund sites throughout the United States, have paid out more than $1 billion for site studies and cleanup work, and have also paid many millions of dollars in Superfund taxes.

At the outset, I want to emphasize that the SSP supports meaningful reform to the Superfund liability framework. In the early 1990s, a broad consensus emerged that the joint and several liability scheme for funding Superfund cleanups is fundamentally unfair, because it so commonly leads to the imposition of liability far beyond the

that major changes should be made to limit the unfairness of joint and several liability and to reduce the delay, controversy, and transaction costs associated with assessing such liability. We have consistently sought legislative revisions that would accomplish these objectives. The allocation provisions contained in H.R. 1300 will bring about substantial improvements by determining the shares to be allocated to the Superfund, by providing orphan share funding for exempt parties and for unidentified wastes, by requiring EPA to accept settlements that are based on the report of a neutral allocator, and by requiring reimbursement for work performed under administrative orders.

The Problem

The fundamental reason for allocating Superfund liability is to assure that each PRP pays its fair share no more and no less -- of the costly cleanup work performed at Superfund sites. Allocation is required because CERCLA establishes an absolutely unprecedented mechanism for the U.S. Environmental Protection Agency (“EPA”) to maximize the transfer of financial responsibility from the Hazardous Substance Response Trust Fund to the PRPs. EPA can perform remedial work and sue PRPs to recover the costs, or it can enter agreements (or issue unilateral orders) requiring PRPs to perform the cleanup and bear the costs. Either way, CERCLA provides EPA with the power to impose on any particular PRP a wildly disproportionate share of the costs of cleanup.1/

Historically, EPA imposed liability on a small group of "deep-pocket" or cooperative PRPs, either through cost recovery lawsuits or through cleanup orders. This required the cooperative PRPs to bear the cost and effort of identifying and pursuing other PRPs for an equitable allocation of the total liability that was unfairly imposed on them by EPA in the first instance. In many cases, other PRPs that were responsible for the contamination had become defunct or insolvent. As a result, EPA's litigation strategy left the cooperative PRPs holding a large bag of liability that fairly should have been paid by these "orphan" PRPs, the defunct or insolvent PRPs.

The uncertainties, disagreements, and litigation produced by these aspects of joint and several liability have generated substantial delay, profound resentment, and high transaction costs in efforts to allocate the costs of cleanup. An example of the

Site in Crosby, Texas. EPA and the State of Texas spent some $150 million in Superfund monies cleaning up this site. The former owner and operator, Mr. Richard Sikes, is deceased. During his lifetime, he received waste from many companies, some of which may now be defunct. The orphan share at this site appears to be extremely large, both in percentage terms and also in total dollars.

When I last testified before this Subcommittee on April 10, 1997, I described how the unfairness of joint and several liability was forcing the PRPs at the Sikes site into litigation. Two years later, that litigation continues. For lack of an allocation system, PRPs seeking to pay their fair share and get out are unable to do so. The decision whether to use the Trust Fund to pay for any or all of the orphan share rests totally in EPA's discretion. The transaction costs continue to mount. In short, when it comes to joint and several liability, Superfund is still broken.

To EPA's credit, the Agency has in recent years acknowledged the need for orphan share funding and has adopted an administrative reform by that name. But for a variety of reasons, the actual program of orphan share funding that EPA has put in place is far too limited in its application to remedy this basic problem with Superfund's liability framework.2/ In fact, EPA's recent practice has left this administrative reform even narrower than when it was first announced in 1995. Thus, the problem of joint and several liability remains urgently in need of meaningful reform.

H.R. 1300 Would Substantially Improve the Superfund Liability Framework

Although H.R. 1300 would not redress all of the problems associated with Superfund liability, it would dramatically improve the present liability framework in four ways. These

are:

determining the shares to be allocated to the Superfund;

providing orphan share funding for exempt parties and for unattributable wastes;

requiring EPA to accept settlements that are based on the allocator's report; and

Requiring the Allocator to Determine Shares Attributable to the Superfund

H.R. 1300 would make the allocation process mandatory for all response actions where the costs of cleanup is estimated to exceed $2 million and the performance of the response action is not subject to a consent decree or administrative order as of March 25, 1999. EPA may voluntarily initiate the allocation process for any other response action. As a result, H.R. 1300 would force EPA to engage in allocation of the most significant of the unfairly imposed cleanup costs that have resulted from EPA's enforcement policies.

In order to protect all the parties involved, H.R. 1300 would stay EPA cost recovery litigation for 150 days after the issuance of an allocator's report -- unless a stay would result in manifest injustice. It would also place a moratorium on private cost recovery or contribution suits, and would toll the relevant statutes of limitations.

Before selection of the allocator, EPA would provide an estimate of the share to be borne by the Superfund and shall make a settlement offer on this basis. If settlement is not achieved at this early stage, the allocator is required to determine the share of response costs to be allocated to the Superfund. This approach provides an ideal balance. EPA may avoid the need for an allocation by making a realistic settlement offer early on, and the PRPs are assured of an independent determination by an allocator if EPA's offer does not fairly reflect those amounts.

Providing Orphan Share Funding

The allocation provisions of H.R. 1300 attribute to the Superfund the entire amount of "orphan shares" that EPA historically has declined to fund. The shares to be borne by the Superfund include: (1) the entire shares of insolvent or defunct parties (EPA's traditional category of “orphan shares"); (2) the remainder of the shares attributable to parties that have settled with EPA for less than their full equitable shares; and (3) the shares of small businesses, transporters and generators of municipal sewage sludge or municipal solid waste, and municipal owners and operators that have their liability limited or eliminated by other provisions of H.R. 1300. The important feature with regard to category (3) is that the shares of these parties are transferred to the Trust