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.

The example of states like Pennsylvania, Michigan, Indiana, and others with voluntary cleanup programs support this view. In Pennsylvania, for example, NAIOP actively participated in the legislative process that resulted in Act 2, the Land Recycling and Environmental Remediation Standards Act. Under that statute, parties may choose to clean up contaminated properties to one or more of three different levels, after which they receive a release from liability under state environmental laws. The remediation standards of Act 2 apply both to voluntary cleanups and mandatory remedial actions under the state's version of Superfund. The Pennsylvania statute has been adopted as model legislation by the American Legislative Exchange Council, an organization represented by legislators from all 50 states. Under Pennsylvania's program, in effect since July, 1995, 267 sites have already been cleaned up and nearly 500 sites are in the process of remediation. State voluntary remediation and revitalization efforts, such as Pennsylvania's, are significant steps forward, but these state programs do not protect our members from liabilities arising under the federal Superfund statute.

(4) Clean up standards that are site-specific, risk-based and take into account future uses.

Unrealistic standards that require actions whose costs exceed the market value of the property discourage redevelopment of contaminated sites. One reason for the extraordinary success of Pennsylvania's Land Recycling Program is the ability for parties who clean up contaminated sites, whether voluntarily or under legal compulsion, to use site specific risk-based cleanup standards instead of an inflexible standard that may be technologically or financially infeasible. The standards also take into account the planned use of the cleaned-up property. Sites that are to be used again for industrial purposes, for example, are not held to the same standard as sites that are to be converted to parks, playgrounds, or residential development. Section 401, in Title IV of H.R. 1300, adopts this concept by requiring E.P.A.'s exposure assessments and remedy selections under CERCLA Section 121(b) to be consistent with current and reasonably anticipated uses of land, water, and the other affected resources.

(5) Recognition of market forces.

Cleaning up real or perceived contamination will not assure the success of a brownfields remediation. The ordinary factors that make developments work must be in place for a brownfield development to succeed as well. Hence, brownfields revitalization incentives must be market-driven. Location, accessibility, infrastructure, work force, demand, and other market factors must be taken into account when allocating grants and other financial resources to brownfield revitalization efforts. Even public and non-commercial projects must make economic

sense.

Thus, while we applaud the provision in Section 102(a) for grants to be used for "developing an inventory and conducting an assessment of 1 or more brownfield facilities"(amended CERCLA Section 127(b)), we question whether the bill gives adequate attention to the need to demonstrate viable market factors for eligibility for the “Brownfield

Remediation Grant Program" (in amended CERCLA Section 127(c)). We suggest that the legislation provide for the President to consult with appropriate representatives of both the forprofit and non-profit development community in setting appropriate rating criteria. These consultant stakeholders should include representatives from organizations such as NAIOP and others which deal with development issues on a daily basis. Otherwise, the Brownfields Remediation Grant Program risks bowing to political pressures that ignore economic reality.

Conclusion

NAIOP supports H.R. 1300, but hopes the improvements suggested here can be made to the bill. We believe that brownfields can and should be redeveloped consistent with protection of the environment and human health. Failure to enact reform legislation, such as H.R. 1300, will result in the creation of more brownfields and continuing the current inhibitions on brownfield redevelopment. Such outcomes are unalterably inconsistent with protecting the environment and human health. Congress has an unparalleled opportunity during this session to take advantage of a positive economy and a booming commercial and industrial real estate market to encourage developers who have been reluctant to invest in restoration of distressed properties, many of which are located in economically needy urban centers. Congress should act before this limited window of opportunity closes. Enacting H.R. 1300 would, thus, result in both greater environmental remediation and the creation of wider economic opportunity in redeveloped brownfield sites.

Thank you again for the opportunity to testify.

Curriculum Vitae and Disclosure Statement Regarding Federal Grants and Contracts

The May 3, 1999 Meeting Notice for today's hearing states the requirement that the written testimony of any witness appearing in a non-governmental capacity must contain, "to the maximum extent practicable, a curriculum vitae and a disclosure of the amount and source (by agency and program) of any Federal grant (or sub-grant thereof) or contract (or subcontract thereof) received during the current fiscal year or either of the two previous years by the witness or by an entity represented by the witness." A summary of Mr. Trilling's professional experience is attached. With regard to contract activities between Pepper Hamilton LLP and the federal government, Donald H. Green, a partner in the firm's Washington D.C. office, has been retained for the last two and 1⁄2 years by the U.S. Department of Justice (jointly with private plaintiffs) to mediate a Title VII Civil Rights Act class action pending against the U.S. Department of Education. Otherwise, neither Barry J. Trilling nor the firm of Pepper Hamilton LLP has received a federal grant or contract in the current fiscal year or in either of the two previous years. Pepper Hamilton LLP is a national law firm with offices in nine cities and serves a diverse group of clients, many of whom may have received grants and contracts from various federal agencies. The firm represents some of these clients directly in some of these activities, including the following: the American Competitiveness Institute in connection with a $60 million, five year cooperative agreement with the U.S. Navy's MANTECH program; 25 to 50 Small Business Investment Corporations (SICS) in connection with their licensure

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and applications for guaranteed financing from the U.S. Small Business Administration; and numerous developers of affordable housing who have received grants from the U.S. Department of Housing and Urban Development and the Federal Home Loan Bank Board.

The National Association of Industrial and Office Properties has not received a federal grant or contract in the current fiscal year or in either of the two previous fiscal years.