Testimony of Larry L. Lockner
For the American Petroleum Institute
before the
Subcommittee on Superfund, Waste Control and Risk Assessment
of the U. S. Senate Environment and Public Works Committee
March 5, 1997

The American Petroleum Institute (API) strongly supports reform of the Superfund program. Comprehensive reform of Superfund is important to accomplish during this Congress; a mere refunding of the program is insufficient. API members believe that S. 8, the "Superfund Cleanup Acceleration Act of 1997," incorporates many important and necessary reforms to the program. It is an appropriate vehicle to continue the Superfund reform process.

Petroleum companies -- as community members, as potentially responsible parties (PRPs), and as taxpayers -- will be greatly affected by the changes that Congress elects to make to the Superfund program. Moreover, the petroleum industry has a unique perspective with regard to Superfund. It is estimated that the petroleum industry is responsible for less than 10 percent of the contamination at Superfund sites; yet the industry has historically paid over 50 percent of the taxes that support the Trust Fund. This inequity is of paramount concern to API members and has caused the industry to focus on those elements that affect the costs of the program and the authorized uses of the Trust Fund.

When Superfund was enacted in 1980, Congress envisioned a program that would cost $1.6 billion and be complete within five years. Almost seventeen years later, however, billions have been spent, but relatively few sites on the National Priorities List (NPL) have been cleaned up. The program appears to be without end.

API members are pleased that the Senate bill would reduce the number of sites to be added to the NPL and commend the sponsors for taking this important step. Limiting new additions to the NPL ensures a more reasoned federal program with reduced future funding requirements. Additionally, we support the bill's provisions that would delegate Superfund remedial authority to the states at non-Federal NPL sites. In general, the states have well established programs and have demonstrated capability at cleaning up sites. We urge subcommittee members to add provisions to the bill limiting the federal program to emergency removal actions at newly discovered sites.

The following sections of this testimony provide specific comments on liability/funding reform, remedy selection, natural resource damages as well as exploration and production wastes.

LIABILITY/FUNDING REFORM

API member companies support liability reform. Reform in this area will expedite cleanups and reduce transaction costs. Clearly, under current law, too much money is wasted on high legal costs. However, as an industry that has borne a highly disproportionate share of the taxes that support the Trust Fund, the petroleum industry is concerned about the impact that any liability changes would have on program costs.

At this point, we do not know how much the liability reform outlined in S. 8 will cost. For example, under the liability provisions contained in S. 8, the Fund would pick up orphan-share costs as well as post-enactment response costs at co-disposal landfills for generators, transporters, and arrangers who contributed wastes prior to January 1, 1997. Moreover, municipal owners' and operators' liability would be capped at such landfills. In addition, de micromis, de minimus parties and others would be exempt.

We need to understand whether the cost savings associated with the remedy selection and the administrative-process provisions are sufficient to offset the additional costs arising from the shift in liability from PRPs to the Fund or, whether the program as envisioned under S. 8, would place increased demands on the Fund. As the largest group of taxpayers to the Fund -- which is expected to cover most of the future costs of the federal Superfund program -- API members cannot conclude their evaluation of the legislation without fully understanding these cost ramifications.

Without substantial reform of the underlying Superfund program and the tax system supporting the fund, API opposes authorization of any Superfund taxes. It is critical that Congress restructure the taxes that support the Fund. Superfund sites are a broad societal problem, and taxes raised to remediate these sites should be broadly based rather than focused on specific industries.

EPA has found wastes from all types of businesses at most hazardous waste sites. As consumers, as residents of municipalities, and as residents and taxpayers of a nation, our entire economy benefited in the pre-1980 era from the lower cost of handling waste. To place responsibility for the additional costs resulting from retroactive CERCLA cleanup standards on the shoulders of a very few industries when previous economic benefits were widely shared is simply unfair.

The additional costs to the Fund from exempting parties from liability must be offset by other reform measures including remedy selection reform. Thus, API offers the following comments on several additional reform provisions.

REMEDY SELECTION REFORM

API members have long advocated remediation standards that are site-specific and risk-based. The remediation process should provide protection of human health and the environment through methods that are practical and achievable in a cost-effective fashion. The remedy reform measures contained in the S. 8 largely reflect these attributes, and API members endorse many of the approaches taken in the bill. Specifically, API members support the provisions in S. 8 that would:

-- Eliminate the preference for permanence and treatment (a major factor in delay of cleanups);

-- Establish a protective risk range of 10\-4\ to 10\-6\ for all remedies;

-- Establish facility-specific risk evaluations;

-- Allow PRPs to prepare facility evaluation work plans for sites;

-- Establish the reasonableness of cost as a remedy selection criterion;

-- Give consideration to future land and water use;

-- Consider all remedial alternatives on an equal basis, including engineering and institutional controls; and

-- Streamline the current remedy selection process.

API also endorses the use of the remedy selection balancing criteria and is pleased to see that 5.8 would establish the reasonableness of cost as a remedy selection criterion. In selecting a remedy, the incremental benefits of the remedy should justify any additional costs. The balancing criteria are the keystone of the remedy selection process, and API thinks that all remedy selection procedures and applications should be subject to them.

The bill would also allow the use of "applicable" federal and state laws and state standards in selecting remedial alternatives. In our view, "applicable" laws should be subject to the balancing factors and technical practicalities; otherwise, there will be diminished savings, increased costs and little appreciable benefit to human health and the environment Clearly, the Fund should pay for remediation only when applicable laws have been subject to the balancing criteria.

Finally, the bill requires protection of uncontaminated groundwater and restoration of contaminated groundwater. It needs to be made clear that the requirement to protect or restore groundwater is subject to the balancing criteria and considers natural attenuation or biodegradation.

API's detailed comments on the remedy selection provisions contained in S. 8 are outlined in an attachment to this testimony.

NATURAL RESOURCE DAMAGES (NRD)

API is an active member of the Coalition for Legislative NRD Reform and strongly supports the coalition's positions and testimony they may submit. API believes that legislation should confirm and clarify existing statutory limitations on liability for natural resource damages. API's five core principles with respect to NRD reform would:

-- Reestablish the focus of the NRD program on restoring the functions of public natural resources in the most cost-effective manner;

--Eliminate liability for damages in excess of the reasonable costs of restoration (i.e., so-called "lost use" and "non-use" damages);

--Clarify NRD limitations adopted in 1980 to provide

- prospective application of NRD,

- a $50 million cap on recoveries,

- prohibition of double recovery;

-- Repeal the rebuttable presumption by requiring the courts to treat NRD claims in the same manner as other damage claims; and

-- Require consistency between the environmental component of remedy selection and the NRD program.

API is pleased that many of these provisions are addressed in the bill. We are concerned, however, that the bill does not clarify the strict $50-million cap on recoveries that Congress intended when CERCLA was originally enacted.

EXPLORATION AND PRODUCTION WASTE

API believes that the exploration and production waste language in the law needs clarification. Some court opinions have misinterpreted Congressional intent to exempt high volume, low-toxicity wastes, which EPA has determined do not need to be treated as hazardous wastes. Congress should clarify that these wastes are excluded under Superfund.

CONCLUSION

In summary, API commends members of the Subcommittee for their efforts to craft and to advance meaningful Superfund reform. The cost constraining measures contained in S. 8 are fundamental, and any weakening of these provisions may jeopardize Superfund reauthorization. We believe it is important that the reauthorization process continue, and we look forward to working with subcommittee members to accomplish this goal. We would like to provide additional comments to staff as we continue our review of the bill

Attachment: Comments on Remedy Selection Provisions Protection of Human Health

-- The bill says that a remedial action shall be considered to protect human health if a residual risk from exposure to threshold carcinogenic and noncarcinogenic hazardous substances does not exceed a hazard index of 1. This is overly prescriptive. API recommends using the wording "shows no appreciable risk of deleterious effects" as opposed to a specific index number.

State Applicable Standards

-- The bill allows for the application of more stringent state standards. States should have the flexibility to impose--where appropriate--less stringent state standards.

-- States may apply more costly remedies at delegated NPL sites but should not be able to recover incremental costs from PRPs, other agencies, or the Fund.

-- Waiver provisions are established where the Administrator determines that it is not appropriate for a remedial action to attain a federal or state standard. Historically, waivers have been difficult to obtain. Rather than being established as conditions for a waiver, these provisions should be set out as conditions where federal and state standards would not apply.

-- New state laws that may create standards with general applicability should be subject to a rulemaking process.

Land and Water Use Considerations

-- In determining reasonably anticipated future land use, the appropriate local authority should consult with the broadest spectrum of stakeholders including facility owners and operators as well as potentially responsible parties.

-- Governmental units would determine the reasonably anticipated future use of water resources. A broad group of stakeholders including CROs and PRPs should be consulted in this process.

Groundwater

-- The bill would require protection of uncontaminated groundwater that is suitable for use as drinking water by humans or livestock. The term livestock should be deleted because it would require regulation of extremely saline groundwater that could not be consumed by humans.

-- The bill also needs to make clear that the requirement to protect uncontaminated groundwater or restore contaminated groundwater is subject to the balancing criteria and considers natural attenuation or biodegradation.

- The bill requires contaminated groundwater to be restored if technically practicable. Does technical practicability include cost considerations?

Judicial Review

-- Provisions should be made that would allow pre-enforcement judicial review.

Risk Assessments

-- The bill establishes requirements for facility-specific risk evaluations. Such requirements are supported by API members.

-- The bill should also include language to clarify that facility-specific risk evaluations are tiered. A full risk assessment may be unnecessary at every site.

-- Additionally, the bill should make clear that PRPs have the right to conduct risk assessments in states with comprehensive delegation authority.

ROD Reopeners

-- API supports the concept of reviewing proposed remedies and previously negotiated RODs as expressed in the bill. However, qualifications for members of the remedy review board and PRP participation must be clarified. Presumptive Remedial Actions

-- A PRP should have the right to conduct a risk-based response action in lieu of a presumptive remedy.

Future Use of a Facility

-- The bill provides that a facility deemed suitable for unrestricted use would be subject to no further liability while a facility available for limited use would be reviewed every five years and potentially required to conduct additional remedial action. A facility available for reuse of any type should be subject to no further liability or review; otherwise the bill may have a negative impact on brownfield programs.