STATEMENT OF SUSAN ECKERLY
DIRECTOR, FEDERAL GOVERNMENT RELATIONS
NATIONAL FEDERATION OF INDEPENDENT BUSINESS Senate Environment and Public Works Committee September 4, 1997

Mr. Chairman, members of the Committee, thank you for the opportunity to testify today on the recently revised version of S. 8, the Superfund Cleanup Acceleration Act of 1997. My name is Susan Eckerly, and I am the Director of Federal Government Relations-Senate for the National Federation of Independent Business (NFIB).

The NFIB is the nation's largest small business advocacy organization, representing 600,000 small business owners in all fifty states. The typical NFIB member employs five people and grosses $350,000 in annual sales. Our membership reflects the general business profile in that we have the same representation of retail, service, manufacturing and construction businesses that make up the nation's small business community. NFIB sets it legislative positions and priorities based upon regular surveys of its membership.

I commend the committee for its continued efforts to reach consensus on legislation that will overhaul the Superfund program. We support your efforts to move forward by marking up legislation next week and hope that this Congress will at last put an end to the Superfund liability nightmare for small business. Those caught in the Superfund web cannot wait much longer for relief.

Superfund's Unintended Effects

When Superfund was originally passed in 1980, it was believed that the number of hazardous waste disposal sites and the costs to clean them up were relatively simple. Unfortunately, that has not been the case. Over the past seventeen years this program has proved to be one of, if not the worst, environmental programs on the books. It has failed to meet its mission of cleaning up hazardous waste sites and instead has encouraged wasteful, excessive litigation that can last for years and cost billions of dollars. Today's system is fraught with the wrong incentives: incentives to prolong clean up, continue expensive litigation and to drag even the smallest contributor through the lengthy process.

When examining the sites that have been cleaned up, the costs associated with such cleanups, coupled with the staggering amount of money that has gone directly to lawyers' coffers, it is easy to see that the fault and liability system currently in Superfund is flawed. Congress may have envisioned a system that would only catch the few, large, intentional or irresponsible polluters, however, the reality has been very different. There have been over 100,000 different potentially responsible parties (PRPs) identified at Superfund sites. Obviously, a majority of these are not Fortune 500 companies, but are small businesses. Since Congress last reauthorized Superfund, we have experienced an increasing number of complaints and questions from our membership. The effect of the current liability system is permeating all segments of the small business community. No issue in this very complex public policy debate will have a more direct impact on the present and future economic viability of many small businesses than this aspect of Superfund reform. There is not one segment whether it be a retail store, a professional service business, or a construction business that has not been touched.

Small Business Attitudes

It is helpful to keep in mind the unique nature of a small business when you examine small business owners' reactions to environmental legislation. Small business owners wear many hats. Two of the most important are being both a business owner and a citizen of a community. They drink the water, breathe the air and fish in the lakes. They want a healthy environment both for themselves and for their children. They also expect the government to be fair and responsible.

It is this lack of fairness and responsibility in the area of Superfund that is causing a groundswell of anger, distrust and in many cases, despair. The Committee has heard testimony twice from one of our members, Barbara Williams, a restaurant owner, who is a fourth party defendant at the Keystone landfill in Gettysburg, Pennsylvania. She is being sued for over $76,000 because she legally dumped her restaurant's trash, which consisted mostly of food scraps. If she is forced to pay this amount, she likely will close her restaurant and her employees will lose their jobs. As Barbara has testified: "This suit defies common sense. I have recycled for years. I used the trash hauler that was approved and permitted by my borough government." With the continuing emergence of these kinds of stories, NFIB began asking our members questions about Superfund in an effort to identify their specific concerns.

Overwhelmingly, our membership indicated that the liability scheme in the current statue was the area they felt needed the most reform. I would like to call your attention to a study undertaken by the American Council for Capital Formation (ACCF) in conjunction with the NFIB. This study surveyed small business PRP's and asked numerous questions about their experiences with Superfund. Approximately 70 percent of the 5,000 small PRP's surveyed indicated that the liability system was the major burden of Superfund. And at the 1996 White House Conference on Small Business, reform of Superfund's liability was voted by the conference as the group's fifth highest priority. Thus, our focus has been on the liability system and how to make it more equitable and efficient for the small business owner.

Liability--Small Business Concerns

What are the small business problems with regard to liability? NFIB members have identified three major problems. First, the nature of Superfund encourages litigation. In most cases, our members are dragged into the process by being named as a PRP in a third party lawsuit. They are forced to spend thousands of dollars and an excessive amount of their time defending themselves when they have done nothing wrong or illegal or have no records to prove their innocence.

Second, they are forced to remain in the liability scheme when many times small businesses could and should be eliminated from the lengthy settlement process through exemptions. These businesses contributed a minute amount of waste, and it frankly is a waste of time and money to include them in the process. Nothing is gained -- either for the economy or the environment -- when businesses are forced to close their doors due to the lack of reasonable settlement offers.

Third, the retroactive joint and several liability scheme is what our members find most unbelievable and unfair. The fact that they can today be held responsible for past actions that were legal at the time they were undertaken and could be forced to pay for 100 percent of the cleanup costs is un-American and outrageous. It forces our members to choose between two equally bad and unfair decisions: either pay for the cleanup even though you did nothing wrong or face years of litigation, huge legal fees, loss of credit and the threat of bankruptcy.

With the large number of small businesses already entwined in this web and with the increasing threat of thousands more in the future, NFIB's goal is to achieve meaningful reform in this Congress. Given the widespread agreement among the Administration and both parties in Congress that liability relief should be provided to small business, we sincerely hope that these business owners do not have to wait much longer for the rhetoric to become reality.

Superfund Reform Proposals

As we testified in March, Senator Smith's and Chairman Chafee's bill, S.8, is an important step forward to eliminating the liability nightmare for small business. It contains some excellent reforms, and we appreciate the steps that have been taken to eliminate some of the inequities and burdens placed on small business. We are pleased that the draft Chairman's mark, distributed on August 28, contains much of the small business reforms included in S. 8.

For the first time, a small business exemption is applicable to those businesses with fewer than 30 employees or less than $3,000,000 in gross revenues. This will provide much needed relief and an early exit to the truly small businesses who, in most cases, do not deserve to be caught up in the Superfund litigation morass. By identifying an employee and monetary threshold, S. 8 approaches reform from a standpoint that NFIB has long advocated.

Both proposals also take positive steps to reform the current liability system by eliminating the liability for those parties involved in co-disposal municipal landfill sites and those parties who contributed only municipal solid waste to a site. Many NFIB members will benefit from this reform.

In addition, S. 8 and the revised draft make strong improvements in the current program by including a "de micromis exemption" to exclude the smallest of contributors from Superfund liability. We are disappointed, however, that the draft Chairman's mark fails to contain the one- percent "de minimus exemption" included in S. 8, as introduced, and instead subjects those contributors to an expedited settlement procedure. Due to the limited financial and legal resources of most small business owners, we believe that both de micromis and de minimus contributors serve no purpose but to delay the process and hinder the ultimate goal of cleaning up our nation's most polluted sites. We hope that you will reconsider this modification.

Small Business Improvements to S. 8

While these liability reforms move in the right direction, there are several areas that NFIB would like to see clarified or that we have concerns with.

NFIB has consistently supported creating an "ability to pay" definition that would become a required criteria when assessing a small business's contribution during the allocation process or any expedited settlement procedure. We feel that a strong definition that does not leave the burden on the small business owner to bring forward information and initiate the process is necessary. Notification to small business parties should be an automatic requirement in which all small businesses are requested to provide necessary financial documents and then the burden should be on the government to determine small business' ability to pay.

In addition, NFIB has advocated that EPA and the allocator meet certain time deadlines set forth both in the expedited settlement procedure and in the allocation process. These deadlines, both for the commencement of the allocation process and for de minimis settlements, are a necessary ingredient in order to have a more expeditious and decisive process. We feel that such prompt determinations are an essential element if a reformed process is to succeed. To ensure that EPA and the allocator meet these imposed deadlines, we suggest that incentives be included.

Finally, we applaud the exemption for recyclers. NFIB would suggest that the elimination of liability provision be broadened to include oil recycling or refining centers. The parties that sent their oil to these types of sites were not only following the direction of their local governments, they were attempting to improve the environment. They should not be penalized for acting responsibly.

Conclusion

Mr. Chairman, we feel that the revised S.8, in combination with our suggested changes, would address most of the concerns that our members have expressed. If passed, these reform suggestions will dramatically reduce unnecessary litigation, ensure that money will go towards its intended purpose, and most importantly, ensure that sites will be cleaned up in a timely manner. We thank you for this opportunity and for your efforts to address the small business concern with Superfund.