MARCH 5, 1997

Good morning, Mr. Chairman and Members of the Committee. I am Terry Garcia, the acting Assistant Secretary for Oceans and Atmosphere for the National Oceanic and Atmospheric Administration (NOAA) of the Department of Commerce. I am here today representing the interests of the U.S. Department of Commerce, the U.S. Department of the Interior (DOI), the U.S. Department of Agriculture (USDA), the Department of Defense, and the Department of Energy in their role as natural resource trustees.

I would like to reassert for the 105th Congress the Clinton Administration's steadfast commitment to protecting and restoring the Nation's valuable natural resources. My testimony begins by reviewing recent progress made by the trustees toward restoring natural resources under the existing laws and rules governing damage assessment activities. I will then highlight reforms to the natural resource damage (NRD) provisions of the Comprehensive.Environmental Response, Compensation and Liability Act (CERCLA or Superfund) that this Administration proposes. The final portion of my testimony will focus on provisions in the Superfund Cleanup Acceleration Act of 1997 (S. 8) that would impede the efforts of state, tribal and Federal natural resource trustees to protect and restore the Nation's natural resource~ heritage.

CERCLA was enacted to address the legacy of hazardous substance contamination created by over 100 years of harmful disposal practices in this country. The statute provides important authorities not only to protect human health, but also to protect and restore this Nation's natural resources. These natural resources represent a critical component of our Nation's commerce - and the foundation of our future. Harm to the public's natural resources from years of improper handling and disposal of hazardous substances at sites throughout the country persists to this day. Losses to society and the U.S. economy from the public's inability to use and enjoy natural resources are potentially enormous. Over 76 million Americans enjoy birdwatching, photography and other non~consumptive uses of wildlife, contributing $18 billion a year to the economy. Annually, 50 million anglers contribute nearly $70 billion to the Nation's economy. Moreover, these and other citizens gain an enjoyment, serenity, and sense of community and national pride from unspoiled natural resources that transcend such economic impacts. The original drafters of CERCLA made a commitment to the American people that waste sites would be cleaned up and natural resources restored.

The natural resource damage provisions of CERCLA allow us to reclaim our environment and restore those natural resources that have been degraded or destroyed by years of harmful hazardous waste disposal. CERCLA provides that natural resources that have been lost as a result of the disposal of hazardous waste into the environment will be restored for the people of the United States. To curtail the ability of trustees to be fully effective in their efforts- is to deprive the people of this Nation of the right to have their natural resources fully restored to health and productivity.

Hazardous substances can be toxic to fish and wildlife at extremely low concentrations. Common effects of hazardous substances include death, cancer, impairment of reproduction, disruption of normal fetal development, impairment of growth, reduction of central nervous system functions, and impairment of normal behavior patterns essential for survival. Very low concentrations of dissolved zinc or copper in water are highly toxic to developing fish larvae. Some of the more serious contaminants in the environment are those that persist for long periods of time and build up in the tissues of fish and birds. For example, the bioaccumulation of dioxins, PCBs, and DDT can disrupt delicate hormonal systems and prevent normal reproduction. Relatively low concentrations in soil or sediment can accumulate and increase in concentration up through the food chain, causing harm in higher level animals. Effects can extend far beyond individual organisms, resulting in the collapse of populations, food chains, or even entire ecosystems, as the substances are transferred from one level of a system to another over long periods of time. With these potential losses at stake, and knowing how strongly Americans feel about protection of their natural resources, CERCLA's NRD provisions should only be revised if the changes strengthen the trustees ability to ensure effective restoration of the public's natural resources.

Significant progress has been and is being made by state, tribal, and Federal trustees toward restoring natural resources injured by hazardous substances. By working within the U.S. Environmental Protection Agency's (EPA) remedial process, trustees have reached agreements with responsible parties to restore habitat and injured resources at more than 25 hazardous waste sites as part of negotiated comprehensive government settlements. For these sites, trustees have been able to obtain small restoration projects that provide significant cumulative benefits for natural resources. Trustees have also obtained settlements and advanced restoration as a direct result of natural resource damage assessment activities. I'd like to highlight some of the restoration that has occurred since we last testified before this Committee:

Baytown, Texas. Restoration is complete at the French Limited Superfund Site, where a sand pit was used to dispose of enormous quantities of sludge and sediment contaminated with polychlorinated biphenyls, polycyclic aromatic hydrocarbons and other organic compounds between 1966 and 1971. Chemical residues from the pit contaminated groundwater and subsoils near the site, injuring trust resources such as migratory birds and crabs. Working within the EPA clean up process,.Federal trustees reached a settlement with the responsible parties to restore a marsh that would provide for the replacement of natural resources that had been injured, destroyed or lost. To achieve this end, the responsible parties worked cooperatively with the city of Baytown, Texas, to create a 60-acre wetlands reserve, including: 40 acres of saline to brackish marsh; 10 acres of forest land containing freshwater pools; and 10 acres of stream channels. Natural resources that previously used the area for food and shelter are returning to the restored marshland and local residents can now use the restored area for nature walks and fishing.

New Castle County, Delaware. A restoration plan has been completed for the Army Creek Superfund site, where a sand and gravel pit was used as a landfill for municipal and industrial wastes during the 1960's. Untreated groundwater was discharged into Army Creek, a tributary of the Delaware River, to prevent additional contamination of private drinking water wells. Working within EPA's remedial process, trustees protected natural resources during the cleanup and reached a settlement that provided for recovery of injured natural resources, including migratory birds, anadromous fish and their habitats. Two off-site habitat enhancement projects are proposed in the restoration plan: the first involves improving and restoring fish and wildlife habitat in Lower Army Creek through modification of an existing water control structure; and the second project involves the acquisition and rehabilitation of approximately 60 acres of marsh and upland habitat to compensate for the loss of similar upland acreage.

Tacoma, Washington. Efforts continue to restore and enhance habitat for fish and wildlife injured by years of pollution in Commencement Bay. Two seasons of planting have been completed at the Middle Waterway Shore Restoration Project, converting 4.7 acres of industrial uplands to a mix of clean, replanted upland habitat, intertidal salt marsh and intertidal mud and sand habitats. The goals of this project were to create productive and diverse estuarine habitats for fish and wildlife and to provide a model for the use of volunteer assistance in carrying out coastal restoration. In October of 1995, volunteers planted over 600 native upland trees and shrubs as part of this effort. In October of 1996, an additional 300 trees and shrubs were planted by natural resource trustees.

New Bedford, Massachusetts. Cleanup is ongoing in New Bedford Harbor and the trustees are moving forward aggressively with restoration efforts. The trustees have issued a Restoration Plan/Environmental Impact Statement for restoration actions not directly dependent on the progress of the cleanup and have undertaken an extensive outreach effort to solicit public input. The plan was developed by the trustees in cooperation with local citizens, businesses, academic institutions, state and local governments and non-profit organizations. It identifies twelve preferred restoration actions to restore a broad range of natural resources and human uses throughout the New Bedford Harbor environment. The trustees are proposing restoration priorities that include marshes and wetlands, recreational areas, water quality, fish and shellfish, and endangered species, and expect project implementation to begin within the next six months.

John Day River, Oregon. Restoration of the John Day River is ongoing in response to the February 1990 spill of 3,500 gallons of hydrochloric acid into this river in north central Oregon. A final restoration plan has been issued that identifies twelve potential restoration projects for improving spawning and rearing habitat for both resident and anadromous fish. In addition to the restoration funding provided under the settlement, the trustees have successfully solicited matching funds for habitat restoration from the Bonneville Power Administration, the Forest Service and the Nature Conservancy. Two projects currently underway will improve spawning and rearing habitat for salmonids by reducing erosion and the buildup of sediment in the river, increasing streamside vegetation and restoring the natural pond and riffle characteristics of the streams.

Lake Charles, Louisiana. Natural resource trustees and Conoco are formalizing two agreements that will enhance habitats for-fish and wildlife to compensate for natural resource injuries associated with a March 1994 release of ethylene dichloride into the Clooney Island Loop area of the Calcasieu Estuary. A cooperative effort between trustees and Conoco will result in the creation and long-term protection of more than 200 acres of habitat on former farmland in the Hippolyte Coulee-Black Bayou area. More than 60,000 one-year old native tree saplings have recently been planted to restore habitat that provides sanctuary to many wildlife and fish species. Conoco is also voluntarily funding a Louisiana State University study to evaluate the success of the restoration project.

Salmon. Idaho. As part of a 1995 natural resource damage settlement for the Blackbird Mine case, responsible parties agreed to restore the water quality in Panther Creek to support all life stages of salmonids by the year 2002. Pending restoration of water quality on-site, the responsible party is pursuing offsite compensatory restoration under the provisions of the consent decree. Specific reaches of stream have been identified for habitat improvement through livestock exclusion. The responsible party is now negotiating with land owners to exclude cattle from seven miles of potentially excellent habitat for salmon and other fish in the Snake River basin. In addition, detailed plans for restocking and improving habitat in the Panther Creek watershed are under review for immediate implementation once water quality improvement is confirmed by monitoring.

Central California Coast. Significant progress has been-made to reestablish common murre colonies in the areas where colonies were extirpated or severely injured by the 1986 Apex Houston oil spill. Decoys and other attractants have been deployed at historic breeding sites: Murres have landed and have already bred at these sites. The common murres will be monitored to further refine and evaluate the recolonization effort. As part of this restoration effort, work began in 1995 to purchase old growth forest as nesting habitat near current populations of marbled murrelets. Trustees are in the process of negotiating a purchase with the property owner.

To accelerate restoration, Federal trustees have adopted several administrative changes aimed at expediting the restoration of injured natural resources. These include new natural resource damage assessment regulations and proposed amendments to CERCLA's natural resource-damages provisions. In 1994, the Department of the Interior finalized revisions to the CERCLA natural resource damage assessment regulations. The new regulations require trustees to focus their assessment work and base their claims on a publicly reviewed plan for restoring injured resources to their baseline condition (i.e., the condition that would have existed in the absence of the release). In January of 1996, NOAA issued final natural resource damage assessment regulations under the Oil Pollution Act of 1990. The OPA rule extends the restoration-based approach of the 1994 CERCLA regulations. Before trustees present a claim for an oil spill under the OPA rule, they must develop a plan not only for restoring baseline, but also for restoring the services lost in the interim until baseline is re-established. The OPA rule specifies that for the vast majority of oil spills, the trustees will no longer assess monetary damages for interim losses based on economic values. Responsible parties then have the option of either implementing the plan or funding the trustee's implementation of the plan.

This new paradigm is being used for the North Cape oil spill, where natural resource trustees and the responsible party continue to work cooperatively to assess the effects of the spill and to determine appropriate restoration actions for Rhode Island's coastal environment. Four teams of experts have examined impacts to salt pond communities (fish, shellfish and vegetation), marine communities (lobster and surf clams), birds, and human uses (charter boat fishing, tourism and recreation). The restoration planning efforts of these teams are nearing completion, and a draft restoration plan will be released for public review and comment in late spring of 1997.

The Department of the Interior is working to further improve the assessment process during the ongoing biennial review of the CERCLA regulations. DOI is currently evaluating public comments and expects to issue a proposed rule by January of 1998. The Department is examining how the mechanics of up-front restoration planning for interim losses can be adjusted at hazardous waste sites to minimize the cost of assessment work while at the same time ensuring that such work produces reliable results. The Department is also carefully reviewing the injury determination provisions of the regulations,, which establish specific injury thresholds that must be met before trustees-can pursue a claim. The Department is conducting an extensive technical review to determine how these provisions should be revised to reflect the current level of scientific knowledge.

These developments demonstrate that state, tribal, and Federal trustees are making progress toward restoring natural resources harmed by releases of hazardous substances. As confirmed by the recent General Accounting Office (GAO) report "Status of Selected Federal Natural Resource Damage Settlements," trustees across the Nation are using funds recovered from responsible parties for restoration. The GAO report also notes that restoration takes time and is often delayed by many factors beyond the control of the trustees. Nevertheless, the Federal trustees have been working hard to effect changes that accelerate the restoration of injured resources.

The Administration's Proposal for Natural Resource Damages Under CERCLA Last October, the Administration forwarded to this Committee, and other committees with jurisdiction, a proposal for reforming the natural resource damage provisions of CERCLA (Administration proposal). Federal trustees carefully considered criticisms of NRD that had been raised during previous reauthorization efforts. Our proposal for reform is specifically designed to shift the emphasis away from spending money on litigation and towards restoring injured natural resources. The proposal also contained changes that are based on our practical experience with the natural resource damage assessment and restoration process. These reforms are designed to improve the NRD programs by providing greater clarity concerning restoration, by assuring more timely and more orderly presentation of claims and by discouraging premature litigation. NOAA and the other Federal trustees encourage you to consider this proposal as the foundation for reform of Superfund's NRD provisions during the 105th Congress.

The Federal trustees believe that revision of CERCLA's NRD provisions should be based on the following principles: Restore injured resources to baseline; and Restore the losses that the public suffers from the Impairment of natural resources from the time of injury until restoration is complete. The Administration proposal embodies these principles and was intended to achieve two critical goals: strengthen the focus on restoration; and reduce the costs associated with damage assessment claims by eliminating or reducing unnecessary litigation. Specific reforms include:

Adopt the Restoration-based Approach Developed in The Natural Resource Damage Assessment Regulation& The Administration's proposal shifts the emphasis of CERCLA damage assessment efforts toward restoration and away from arguing over the value of, or method for, calculating economic damages. This fundamental shift will avoid litigation and expedite the restoration of injured resources. The proposal contains definitions for primary restoration (return to baseline) and compensatory restoration (replacement of resources and services lost pending return to baseline) that parallel the concepts used in the natural resource damage assessment regulations promulgated under the Oil Pollution Act of 1990. This approach should eliminate disagreements over the valuation of natural resources by refocusing on CERCLA's overriding goal of restoring injured natural resources and establishing the cost of restoration as the primary measure of damages - not the monetary value of the lost resource.

Reduce Uncertainty and Ensure the Orderly Presentation of Claims: The current statute of limitations provisions have created a lack of certainty both for responsible parties and for natural resources trustees. To preserve claims, natural resource trustees have been forced to file natural resource damage claims before the completion of restoration planning or prior to effective coordination with EPA. To address this uncertainty, the Administration's- proposal contains provisions that would require a claim for damages to be presented within three years from the date of completion of a damage assessment by a trustee in accordance with the regulations, or the completion of a restoration plan adopted after adequate public notice. In addition, it ensures that claims can be filed in an orderly sequence, by specifying that a ~natural resource claim may be brought after an initial action to recover response costs. These revisions would clarify the sequential claims issue to reduce premature filings, protect against claim splitting, and provide time for effective restoration planning, thus preserving important public trust rights.

Require Fair and Cost-Effective Restoration: The trustees agree that restoration should not be gold plated and our proposal requires a cost- effectiveness test to maintain that priority. "Cost-Effective" is defined as the least costly activity among two or more restoration measures that provide the same or comparable level of benefits. In addition, the Administration proposal constrains compensatory restoration to replacing only those services that were lost as a result of the release under consideration, thereby providing protection against open-ended liability for responsible parties. These changes mirror the definition of cost-effectiveness in the CERCLA and OPA regulations, and ensure that the American public is adequately compensated for their losses while responsible parties are protected from unreasonable demands for restoration.

Provide for Judicial Review of Restoration Plans Based on an Administrative Record: The present standard for judicial review of natural resource damage assessments under CERCLA is unclear, providing an incentive for all parties to keep their information confidential. In the absence of clear guidance, trustees have generally assumed that their assessments will be used as evidence at trial and will not be afforded great deference. Consequently, the incentive is for trustees to keep their assessment studies confidential except to the limited extent that disclosure to parties is required in litigation discovery, and for private ,7 parties to delay providing information during litigation, rather than during the assessment process. This approach has generated more costly assessments, increased transaction costs, and inhibited the open review and debate that the trustees would like to foster.

The Administration's proposal recommends the designation of a lead administrative trustee to establish a publicly available administrative record to guide the selection of a restoration plan. This is coupled with provisions to limit judicial review of the restoration plan to review of the administrative record with an "arbitrary, capricious or contrary to law" standard of review. The process would be facilitated by new regulations for public participation in the development of the administrative record. Providing for judicial review of an administrative record would enhance public participation; increase certainty, predictability and trustee coordination; support the focus on restoration-based claims; reduce litigation costs; and allow adequate time for proper assessment and restoration planning.

Impose Requirements on the Performance of Damage Assessments: The Administration's proposal would require damage assessments to be performed, to the extent practicable, in accordance with regulations and generally accepted scientific and technical standards and methodologies. The proposal also recommends that injury determination, restoration planning, and quantification of restoration costs be based on facility-specific information to the extent practicable. These revisions codify the approach currently used by natural resource trustees to conduct damage assessments. This provision is designed to ensure the validity and reliability of assessment results.

Other changes to C~ERCLA's NRD provisions recommended by the Administration are designed to facilitate the process for both trustees and responsible parties. These changes include: improved coordination between damage assessment and remedial activities; restrictions on the use of damage recoveries; and contribution protection.

The Association of State and Territorial Solid Waste Management Officials, the National Governors' Association, and the National Association of Attorneys General have voiced support for revisions similar to those contained in the Administration's proposal for reforming CERCLA's natural resource damage provisions.

Natural Resource Damage Reform and the Superfund Cleanup Acceleration Act of 1997 (S. 8) The Federal natural resource trustees applaud the efforts of this Committee to move the Superfund reauthorization debate forward and appreciate the thought and hard work that went into drafting S. 8. While there are provisions in S. 8 that reflect the concerns of the natural resources trustees, the Administration believes that S. 8 does not present an acceptable basis for achieving bipartisan consensus on Superfund Reform. Several of S. 8's provisions would severely impede the efforts of the natural resource trustees to protect and restore the Nation's natural resource heritage. We strongly urge the Committee to substitute the Administration's proposal for the natural resource damage provisions contained in S. 8. Our specific concerns with S. 8 are as follows -

S. 8 Precludes Restoration of Non-Use Values. Non-use values are real, though difficult to measure. For example, non-use values are based on knowing that a river exists, that our children will be able to swim and fish in that river in the future, and that the river will continue to be an integral part of our natural environment. S. 8 provides that there shall be no recovery for impairment of non-use values. This provision limits the ability of trustees to restore the full value of injured resources by prohibiting the consideration of the full range of values in determining restoration actions.

The Administration sees no reason to exclude the non-use component of resource values. If CERCLA imposes a cost-reasonable standard for restoration recoveries, the Administration feels that all components of value should be represented in applying the cost-reasonable test. To exclude non-use values, as specified in S. 8, means that the public will not be fairly and fully compensated for loss of resources.

Restrictions on The Recovery of Interim Loss: CERCLA currently prohibits recoveries for hazardous substance releases where the damage occurred wholly before December 11, 1980 (i.e., the injury occurred and the resource recovered before 1980). S. 8 appears to prevent the recovery of any interim loss at sites where injury first occurred prior to 1980, regardless of the magnitude of those losses or whether those injuries persist today. If interpreted in this way, S. 8 would dramatically restrict the recovery of interim losses at sites where the injury started prior to 1980 and continues to this day, benefiting responsible parties at some of the biggest sites of contamination, and blocking compensation for loss of public resources. The Administration's reform proposal contains a better approach to restricting the recovery of restoration costs for pre-1980 losses.

Cost Effective Instead of Cost `Reasonable" Restoration. S. 8 would only allow trustees to restore injured natural resources if the restoration project has a "reasonable cost," and does not define "reasonable." This provision apparently assumes that the existing protections against the use of excessively expensive restoration option are inadequate. However, the D.C. Circuit recently reached exactly the opposite conclusion in Kennecott Utah Copper Co. v. Department of the Interior, holding that the trustees' obligations under damage assessment regulations to evaluate a range of alternatives in a public process, and to consider cost-effectiveness, are enough to ensure that appropriate projects will be selected. Instead of introducing a new "cost reasonableness" requirement that will need to be defined through litigation, and that may prevent or delay needed restoration, the Administration urges the adoption of a cost-effectiveness standard for evaluating restoration alternatives.

Installment Payments Based on Restoration Needs, Not on Duration of Injury. S. 8 requires that responsible parties be allowed to pay for natural resource restoration over time, based on "the period of time over which the damages occurred." Trustees often agree to installment payments in negotiated settlements to reflect a responsible party's limited ability to pay or the time that /7 will be needed for restoration. However, the amount of time over which the damage to resources occurred should not be considered in a payment schedule.

Conclusion The natural resource trustees are firmly committed to implementing CERCLA's directive to restore injured natural resources in a timely and efficient fashion. This Administration has been working diligently to implement administrative changes that would facilitate the process for responsible parties and trustees while advancing the mission of fully restoring natural resources for the use and benefit of the American public. The efforts of state, tribal and Federal trustees are starting to show real restoration results across the country. The Administration's proposal for reforming NRD addresses many concerns that were voiced during previous reauthorization discussions, as well as provisions that would clarify and expedite the natural resource damage assessment process. S. 8's natural resource damage provisions, by contrast, would severely impede the efforts of state, tribal and Federal natural resource trustees, and deprive communities of their right to full restoration of the natural resources that support their economies and their way of life.

Thank you for providing me with the opportunity to present the Clinton Administration's position on reforming CERCLA's NRD provisions. The trustees look forward to working with this Committee to develop a proposal that truly will strengthen the natural resource damage assessment and restoration provisions of CERCLA so that all affected constituencies can support Superfund reform in the 105th Congress. I will be pleased to answer any questions that you might have.