Submission to the Senate Environment and Public Works Committee
Hearings on S 8, "The Superfund Cleanup and Acceleration Act of 1997";
September 4, 1997; by Mr. Robert N. Burt, Chairman and Chief Executive Officer, FMC Corporation on behalf of The Business Roundtable.

The Business Roundtable welcomes the opportunity to submit comments on the August 28, version of S. 8, "The Superfund Cleanup and Acceleration Act of 1997." The Roundtable is an organization of the Chief Executive Officers of over 200 of the nation's largest companies which agree that passing a comprehensive Superfund reform bill should be a priority for this Congress. We are pleased, therefore, that the Chairman has put this bill forward as the vehicle for consideration by the Environment and Public Works Committee.

While 280 of the sites on the NPL had reached the construction complete stage by June of this year (an additional 139 of these sites have already been delisted), 491 sites still have construction underway and approximately 500 sites are still in the study phase. Moreover, thousands of sites on the CERCLIS list remain as potential NPL sites. The slow pace of this program under current law (the GAO calculates it now takes twice as long to clean up a site as it did 10 years ago), its cost to the economy, the precedents it sets for other cleanup activities and its potential under current law to stretch out well into the next century, make reform a priority among our members. We would urge the Committee to proceed to mark-up this bill in a bipartisan way which accommodates honest differences on this issue.

The Roundtable is keenly aware of the differences which can divide opinion on how Superfund should be reformed. The Roundtable is comprised of companies which have paid a large proportion of the over $18 billion in business taxes which have gone into the Superfund Trust Fund since the law's enactment. The Roundtable also is comprised of companies which have spent some $30 billion on Superfund settlements over the life of the program, in addition to comparable sums in litigation concerning liability and other aspects of the Superfund program. Some of our members cleaned up sites in the early years of this program's history; while others still have substantial costs ahead of them.

Despite sixteen years of disparate experience among our membership, we are united in our view on the need for reform and have reached basic agreement on how such reform should occur. The considerable debate over this issue over three consecutive Congresses has substantially narrowed our differences on Superfund policy.

In many important ways, S. 8 is consistent with the consensus we have reached in the Roundtable over how best to proceed with reform. However, we would also note that there are important issues which we believe need to be addressed during the Committee's consideration of this bill before it can have our full support. Moreover, given the limited time frame in which we had an opportunity to review this bill, we may find it necessary to supplement these comments as our members review in more depth specific provisions.

Before turning to our concerns and recommendations, let me briefly summarize the principles which we believe need to be part of a comprehensive Superfund reform effort:

-- The tax revenue from Superfund must be dedicated to cleanup.

-- Significant reform of the remedy selection provisions of the law must be achieved, including elimination of the preference for treatment and the mandate for permanent remedies. Liability reform should provide all parties with fair and equitable relief; and not increase the burden on the economy.

-- No Superfund taxes should be enacted without comprehensive reform, including reform of the current law's Natural Resource Damages (NRD) provisions.

-- NRD should be geared to restoration of proven damages to resources, not to obtaining punitive damages.

In our own analysis of how the current Superfund law should be reformed to enable better performance, we have concentrated on the liability provisions in the law. However, throughout our economic analysis of several liability reform proposals, it has become increasingly clear that liability reform cannot and should not be addressed apart from other issues such as remedy selection, funding and NRD. While we understand this increases the challenge and complexity of the debate, we are pleased that this Committee will be addressing Superfund in a comprehensive way.

The following are the ways in which S. 8 is consistent with The Roundtable's position. We also will point out areas where it falls short of our goals or where the intent of the draft is unclear:

Remedy Selection: The remedy selection provisions underscore the need to base cleanup decisions on real rather than hypothetical risks. As drafted, this title of the bill will allow the parties involved in remedial decision-making greater flexibility to address site specific characteristics with emphasis on the current and reasonably anticipated uses of land and water resources, taking into account the timing and use of those resources. S. 8 does so while retaining the current goal for protection of human health in the National Contingency Plan (NCP) (i.e., 1 x 10-4 to 1 x 10-6) and by adding an important new, practical definition for environmental protection based on plant and animal populations. These goals are clear and will not require time consuming revision to the NCP before changes are realized.

We believe that S. 8 has been substantially revised in an attempt to conform the law to the better practices EPA and the states are implementing on groundwater cleanup. This includes distinguishing between the cleanup goals of drinking water and water used for other purposes, and reinforcing EPA's initiatives to look at the specific characteristics of each site and propose a deliberative, managed remedial approach. Looking at groundwater in separate zones and phasing in needed control measures facilitates this cost-effective, but protective approach.

We would note, however, S. 8 does seem to have some confusion in terminology related to groundwater. For example, it is not clear whether the balancing factors cited in the general rule applying to remedies also apply in the case of groundwater, or if the specific groundwater factors take precedence over these.

There is also some need for clarity around the reference to groundwater that is "suitable for use" versus groundwater where the "currently or reasonably anticipated future use" is for drinking water. This is important in that remedial actions must "seek to protect" uncontaminated groundwater suitable for use as drinking water unless technically impracticable. Since the bill provides a very limited definition of what is not suitable as drinking water" and this definition triggers specific control goals, further clarification is needed for this section of the bill. We are also concerned that land use determinations are made based on site specific factors while the use of groundwater gives substantial deference to state classification efforts which are generally not facility specific.

There also needs to be clarification of whether the bill has created any inflexible mandates. The reference to attaining cleanup goals to the edge of that contamination which is managed in place, might be read so as to in fact eliminate flexibility of site managers to look at the nature and timing of use and other factors. It is the experience of our membership that EPA in its own implementation of its administrative reforms, has gotten away from arbitrary requirements in terms of compliance points and choice of remedial measures. The bill should be clarified to conform to current practice.

While the bill does maintain the current law's preference for treatment, it does so for certain discrete areas. The definition provided appears consistent with sound principles of protection of human health and the environment. It also would appear to maintain flexibility in how actual risk from discrete areas of highly toxic, highly mobile contamination with the potential for human exposure can best be addressed. But it is not clear that this flexibility is sufficiently defined to take into account the unique characteristics of certain types of facilities which affect our membership ( i.e., landfills and mining sites).

We would also note the improvements made from prior Congresses in the approach to reevaluating Records of Decision (ROD's). This is an important provision for our membership and to the pace of future cleanup, particularly since many of our members signed ROD's and performed cleanup activity in the early years of this program's operation. We are concerned that the language in the bill can, in certain instances, be interpreted to fall short of current EPA practice.

For example, under current administrative reforms, EPA follows three criteria as the basis for review: (1.) changes in the remediation technology which would result in a more cost-effective cleanup; (2.) modification of the remediation objectives due to the physical limitations posed by site conditions; and (3.) modification of monitoring to reduce sampling, analysis and reporting requirements where appropriate. We would note that only the first of these criteria is a part of S. 8's approach and we would recommend adoption of the other two. We also believe it is unnecessary to invite a Governor's veto of the Remedy Review Board's decision because state input to this process is already a part of this bill.

In addressing the ROD review issue we recognize that reform must attempt to balance the competing needs of fairness and program pace. We would emphasize that it is in no one's interest to burden the EPA with having to make decisions on every single ROD currently in the pipeline; or to create a system that puts the Agency in the business of reviewing existing ROD's to the virtual exclusion of negotiating new ones. We believe given the status of sites in the current pipeline and the limits on the-number of new sites coming into the system under 5.8, the ROD review procedure should not impede program pace.

We agree with the elimination of "Relevant and Appropriate" standards being applied to remedial decisions under Superfund. Historically, this has led to an almost arbitrary application of remedial standards at some sites. Retention of state "applicable' standards as is now proposed, is acceptable if the standard relates to the remedy or to the siting of facilities and applies to the conduct or operation of remedial actions or cleanup levels under state law. However, it is not clear that these applicable state standards must satisfy the balancing criteria which apply to other remedies. We believe they should. Further, the bill requires any more stringent state applicable requirements relating to the remedy or facility siting law promulgated by the state after enactment to be published as a rule and consistently applied. However, the provision appears not to limit these new state standards to those that relate specifically to the conduct or operation of the remedy or the contaminants involved. We believe this clarification would improve the bill.

Liability: We believe this section of the bill should significantly decrease the litigation inherent in the current Superfund liability system. It does so by establishing an allocation system which can mitigate much of the inherent unfairness of the joint and several liability system. And, it eliminates liability altogether for small and other appropriate parties, further acting to reduce what is now an almost institutionalized unfairness in the liability system.

On principle we believe all parties should receive uniform treatment under any reformed liability system, regardless of their status as a PRP or the type of site at which they are involved. 5.8 does not adhere to this principle for co-disposal sites at which certain categories of responsible parties would be treated more favorably than others. For example, a generator or transporter of waste at a co-disposal facility is treated more favorably than an owner and operator of such a facility. Moreover, parties at co-disposal facilities are generally treated more favorably than PRP's at other sites, including other, large multi-party sites.

However, we are also aware that co-disposal sites historically have been prone to the type of litigation which is most objectionable under the current Superfund; i.e., third- party cost recovery litigation, often involving literally thousands of small parties. It is our understanding that the basis for the so-called "co-disposal site carve out" is to reduce the burden on the allocation system and reduce these transaction costs. We would also acknowledge that removing the liability of a vast majority of parties at co- disposal sites and thereby eliminating there need for allocation, significantly reduces what may be a burden on the allocation system and should, therefore, facilitate the application of this important feature of the bill to other multi party sites. Moreover, our preliminary economic analysis of the approach to liability reform currently embodied in S. 8 indicates that this approach is affordable within historic EPA Superfund budget levels.

For the majority of parties, the critical element of fairness in 5.8 comes from its revised allocation system. By exempting small business and de micromis contributors early in the process, the bill eliminates the need for these parties to be present or have representation during an allocation. Moreover, the bill has in our view, the appropriate amount of specificity around the allocation process; it appropriately sets forth the authority conveyed to the allocator (including broad powers to discover information), indicates the so-called "Gore factors" as the basis for determining appropriate shares, defines the penalties for non-settling parties, and defines the role of the Administrator in defending the Fund. The definition of orphan share is a step in the right direction with the Fund assuming a pro rata share of the unattributable portion of the orphan. However, as a matter of fairness, The Roundtable believes the unattributable share should be paid fully if resources are available.

We support fairness for those parties already well into the cleanup process, as well as for those newly identified parties. S. 8 precludes those sites already under a settlement agreement from the mandatory allocation procedure. While we would oppose any double recovery of costs, there are conditions under which some sites at which there is an existing settlement should benefit from a mandatory allocation for future costs. These conditions could include the following: very high cleanup costs, a very large orphan share, cleanup costs which are driven primarily by the activities of orphan or recalcitrant PRP's, and viable PRPs that have cooperated with EPA in performing the cleanup work. Under such circumstances, third-party litigation to recover future costs at the site would of course be stayed.

Moreover, we believe the mechanics of payment should be clarified. The language in the bill clearly intends to structure a method for reimbursement for construction costs for lead PRP's (i.e., PRP's which volunteer or are ordered to undertake construction of the remedy at a site). But it is less clear in setting up a specific mechanism to assure that the dollars from the Fund are dedicated for this purpose. Nor is a specific amount for such Fund contribution designated. We believe more specificity needs to be given to issues such as the size of the Fund, how much is available for reimbursement, how the Fund will handle requests for reimbursement that exceed the annual size of the Fund (or the allocated portion), what recourse the PRP has if the government fails to meet its obligations, etc.

These are important issues since under the bill one or more responsible parties will continue to perform work at the site. They will then receive reimbursement from the Fund for any costs incurred after the date of enactment in excess of their allocated share. The Roundtable agrees that PRP's should continue to be the lead at sites to maximize efficiencies in site cleanup. However, we believe the bill, or at a minimum legislative history, needs to be more precise in defining the decision rules under which these performing parties will be reimbursed for amounts spent in excess of their allocated share of responsibility.

Natural Resource Damages: While we acknowledge that the experience with actual NRD claims is relatively limited, the consistently large size of pending claims, coupled with statements by the trustees that additional claims will follow, leads us to conclude that a fundamental reassessment of the current NRD provisions is needed. Claims upwards of a billion dollars, with a majority of those costs based on speculative methodologies and unrelated to what is needed for restoration, clearly warrant the full attention of this Committee. It could well be that we make real reforms in the rest of Superfund and accelerate the pace of cleanup, only to find that natural resource damage claims dwarf the transaction costs which are and historically have been associated with the liability and remedy provisions of current law.

S. 8 does take steps toward modifying the unconstrained features of NRD provisions of current law. The bill seeks to eliminate so-called non-use damages which are based on the highly speculative Contingent Valuation Methodology (CVM) and unrelated to restoration. Similarly, The Roundtable opposes imposition of past lost use in that it is punitive and not related to the actual injury to the resource.

We are also encouraged by the requirement mandating mediation of NRD claims as a way to fairly reduce the potential for protracted litigation. We are greatly concerned, however, that this sensible approach may be negated by other provisions that trustees may construe as taking away a defendants ultimate right to a de novo trial by jury.

We would encourage the Committee to reexamine the language of the bill which describes the objective of restoration and the criteria which Trustees consider in developing alternatives and selecting restoration measures. Specifically, unless a reformed law directs the trustees to select measures which are cost reasonable, there is no mechanism to insure that the ratio of benefits to costs will be balanced. S. 8 recognizes this important concept when it comes to selecting remedies, which makes it all the more important to apply this concept to NRD as well.

In addition, it is critical that trustees be given a rational, objective benchmark for when the goal of restoration is accomplished . In our view, the benchmark should be reinstatement of the public's ability to use and enjoy the resource again.

We would note that a number of provisions relating to restoration in 5.8 would, if made mandatory, allow trustees and PRP's to get on with the business of restoring injured resources; but because they are discretionary, they likely will lead to protracted litigation. These include all the criteria for selecting restoration alternatives; the reliance on facility specific information and scientifically valid principle in assessing, planning and quantifying restoration costs; conduct of assessments in accordance with regulations; and trustee coordination. These are the critical elements which will define the scope of the natural resource damage program. To truly focus this program on resource restoration, the Committee should conclusively decide the parameters under which this will be accomplished, rather than deferring to continued court interpretation and litigation. Moreover, reforms adopted in this bill should apply to pending NRD claims.

Funding: S. 8 makes reforms to the current law in a number of ways which will have measurable impacts on the costs of the program. We believe it is important that the authorizing committee continue its close coordination with the funding and appropriating committees on issues which affect how this program will be paid for in the future. S. 8 addresses these issues in an indirect way, in particular in limiting future listings on the NPL to an additional 100 sites until the year 2000 and not more than 10 per year thereafter. We believe current assessments of the NPL pipeline by the states and GAO, and EPA's own initiative to trim CERCLIS indicate such limits represent a workable target.

As authorizing legislation, S. 8 understandably does not address future funding issues which we believe are critical for this Congress if we are to put the reformed program on a sound financial footing going forward. Yet we believe it is important for this Committee to understand our views on enhancing the funding integrity of this program by more closely tying the funding aspects of this program to performance-based objectives. In this context, we would note that to date, the business community has paid virtually the entire cost of the Superfund program. The major dedicated Trust Fund, which funds EPA's responsibilities, has been funded by three industry taxes: excise taxes on the chemical and petroleum industries, and an across-the-board corporate income tax. In addition, individual PRP's pay the full costs of cleanup and transaction costs on sites at which they take the lead. They also reimburse EPA for federal oversight costs at those sites.

We would note that the amount of revenues to the Trust Fund, historically from $1.8 to $2.2 billion has been significantly greater than appropriations. This has resulted in a significant and growing surplus in the Fund. Due to the surplus and the limitations this bill would place on NPL listings going forward, the opportunity exists for future funding of the program to be tied to the pace of the program; or, put another way, its success in meeting its goals. The Roundtable members believe future funding for Superfund should be tied to needed NPL site cleanup.

We would further note that "core" or non-cleanup activities have grown to be almost equal to cleanup expenditures on EPA led sites. S. 8 addresses the continued pressure for expenditure of funds from the Superfund Trust Fund for brownfields development, community participation, health analysis, and other items not directly related to cleaning up sites on the NPL. And, as indicated by provisions in the State Role Title of S. 8, states will inevitably assume a larger role in the management of individual sites on the NPL. How large a role they play will be determinant in the amount of funds they will require from the Fund as well. We would ask that the Committee give special attention to the extent to which it is conveying additional non-NPL related cleanup activity to the Fund.

In this context of providing greater fiscal discipline to the Superfund budget, we note that the limitation on future NPL listings is an important step toward defining a successful end point to the Superfund program, which was not intended to be a permanent federal government responsibility. In addition, the inclusion of a "Results Oriented Cleanup" section begins to address the need to impose budget discipline on this program, allowing the Agency the latitude to define how it can best be measured.

We believe additional emphasis needs to be placed on the discussion of how a reformed Superfund will be funded. This discussion should include consideration of constraints on non-cleanup funding, and limitations on monies raised other than for cleanup purposes. These two provisions represent a constructive step in this direction.

Other Provisions: We would also note S. 8 makes substantial improvements to current law in enhancing the role citizens play in the remedy decision-making process. It is the experience of many of our members that such involvement can assist in developing remedies which are truly protective of human health and the environment, while taking into account the specific concerns of communities about comparative risks of alternative remedies. More often than not, citizens are looking to return Superfund sites to some productive use where this is consistent with meeting appropriate health and environmental standards. S. 8 also addresses fundamental issues associated with brownfields redevelopment, including limiting the liability of prospective purchasers and innocent landowners. However, we remain concerned that without additional clarification of future Superfund liability of for PRP's who undertake cleanup at non-NPL sites, there will be reduced incentive for them to undertake brownfields cleanups at non-NPL sites.

In conclusion, The Roundtable looks forward to continuing to work with the Committee in modifying S. 8 to accommodate the diverse range of views on these and other important issues in Superfund. We are prepared to do additional analysis of S. 8's economic and environmental impact by using of The Business Roundtable's Programmatic Superfund Model. Additionally, we are prepared to respond to amendments to S. 8 as offered by members of the Committee during mark-up. We thank you for this opportunity to comment.