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THE EROSION OF COMMUNITIES BY

LEAKING UNDERGROUND STORAGE TANKS

HEARING

BEFORE THE

SUBCOMMITTEE ON

HOUSING AND COMMUNITY OPPORTUNITY

OF THE

COMMITTEE ON FINANCIAL SERVICES

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED SEVENTH CONGRESS

SECOND SESSION

SEPTEMBER 12, 2002

Printed for the use of the Committee on Financial Services

Serial No. 107–81

(

(II)

HOUSE COMMITTEE ON FINANCIAL SERVICES

MICHAEL G. OXLEY, Ohio, Chairman

JAMES A. LEACH, Iowa

MARGE ROUKEMA, New Jersey, Vice Chair

DOUG BEREUTER, Nebraska

RICHARD H. BAKER, Louisiana

SPENCER BACHUS, Alabama

MICHAEL N. CASTLE, Delaware

PETER T. KING, New York

EDWARD R. ROYCE, California

FRANK D. LUCAS, Oklahoma

ROBERT W. NEY, Ohio

BOB BARR, Georgia

SUE W. KELLY, New York

RON PAUL, Texas

PAUL E. GILLMOR, Ohio

CHRISTOPHER COX, California

DAVE WELDON, Florida

JIM RYUN, Kansas

BOB RILEY, Alabama

STEVEN C. LATOURETTE, Ohio

DONALD A. MANZULLO, Illinois

WALTER B. JONES, North Carolina

DOUG OSE, California

JUDY BIGGERT, Illinois

MARK GREEN, Wisconsin

PATRICK J. TOOMEY, Pennsylvania

CHRISTOPHER SHAYS, Connecticut

JOHN B. SHADEGG, Arizona

VITO FOSSELLA, New York

GARY G. MILLER, California

ERIC CANTOR, Virginia

FELIX J. GRUCCI, JR., New York

MELISSA A. HART, Pennsylvania

SHELLEY MOORE CAPITO, West Virginia

MIKE FERGUSON, New Jersey

MIKE ROGERS, Michigan

PATRICK J. TIBERI, Ohio

JOHN J. LAFALCE, New York

BARNEY FRANK, Massachusetts

PAUL E. KANJORSKI, Pennsylvania

MAXINE WATERS, California

CAROLYN B. MALONEY, New York

LUIS V. GUTIERREZ, Illinois

NYDIA M. VELA ́ ZQUEZ, New York

MELVIN L. WATT, North Carolina

GARY L. ACKERMAN, New York

KEN BENTSEN, Texas

JAMES H. MALONEY, Connecticut

DARLENE HOOLEY, Oregon

JULIA CARSON, Indiana

BRAD SHERMAN, California

MAX SANDLIN, Texas

GREGORY W. MEEKS, New York

BARBARA LEE, California

FRANK MASCARA, Pennsylvania

JAY INSLEE, Washington

JANICE D. SCHAKOWSKY, Illinois

DENNIS MOORE, Kansas

CHARLES A. GONZALEZ, Texas

STEPHANIE TUBBS JONES, Ohio

MICHAEL E. CAPUANO, Massachusetts

HAROLD E. FORD JR., Tennessee

RUBE ́ N HINOJOSA, Texas

KEN LUCAS, Kentucky

RONNIE SHOWS, Mississippi

JOSEPH CROWLEY, New York

WILLIAM LACY CLAY, Missouri

STEVE ISRAEL, New York

MIKE ROSS, Arizona

BERNARD SANDERS, Vermont

Terry Haines, Chief Counsel and Staff Director

SUBCOMMITTEE ON HOUSING AND COMMUNITY OPPORTUNITY

MARGE ROUKEMA, New Jersey, Chair

MARK GREEN, Wisconsin, Vice Chairman

DOUG BEREUTER, Nebraska

SPENCER BACHUS, Alabama

PETER T. KING, New York

ROBERT W. NEY, Ohio

BOB BARR, Georgia

SUE W. KELLY, New York

BOB RILEY, Alabama

GARY G. MILLER, California

ERIC CANTOR, Virginia

FELIX J. GRUCCI, JR, New York

MIKE ROGERS, Michigan

PATRICK J. TIBERI, Ohio

BARNEY FRANK, Massachusetts

NYDIA M. VELA ́ ZQUEZ, New York

JULIA CARSON, Indiana

BARBARA LEE, California

JANICE D. SCHAKOWSKY, Illinois

STEPHANIE TUBBS JONES, Ohio

MICHAEL E. CAPUANO, Massachusetts

MAXINE WATERS, California

BERNARD SANDERS, Vermont

MELVIN L. WATT, North Carolina

WILLIAM LACY CLAY, Missouri

STEVE ISRAEL, New York

(III)

C O N T E N T S

Page

Hearing held on:

September 12, 2002 .......................................................................................... 1

Appendix:

September 12, 2002 .......................................................................................... 25

WITNESSES

THURSDAY, SEPTEMBER 12, 2002

Kanjorski, Hon. Paul E., U.S. Representative from the State of Pennsylvania . 2

Eachus, Hon. Todd, State Representative, 116th Legislative District, Pennsylvania ...................................................................................................................... 6

Urban, Hon. Stephan, Commissioner, Luzerne County, Pennsylvania ............... 7

Bartsch, Charlie, Executive Director, Northeast-Midwest Institute ................... 10

Harvey, William C., President, William C. Harvey & Associates, Inc. on

behalf of The Appraisal Institute ........................................................................ 12

Tomsho, Patricia, Resident, Laurel Gardens Community, Luzerne County,

Pennsylvania ........................................................................................................ 13

APPENDIX

Prepared statements:

Oxley, Hon. Michael G. .................................................................................... 26

Green, Hon. Mark ............................................................................................. 27

Clay, Hon. Wm. Lacy ....................................................................................... 29

Israel, Hon. Steve ............................................................................................. 30

Kelly, Hon. Sue W. ........................................................................................... 31

Kanjorski, Hon. Paul E. ................................................................................... 32

Bartsch, Charles ............................................................................................... 35

Eauchus, Hon. Todd ......................................................................................... 45

Harvey, William C. ........................................................................................... 48

Tomsho, Patricia ............................................................................................... 60

Urban, Hon. Stephan A. ................................................................................... 62

(1)

THE EROSION OF COMMUNITIES BY

LEAKING UNDERGROUND STORAGE TANKS

Thursday, September 12, 2002

U.S. HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON HOUSING AND COMMUNITY

OPPORTUNITY, COMMITTEE ON FINANCIAL SERVICES, Washington, D.C.

The subcommittee met, pursuant to call, at 10:04 a.m., in Room

2128, Rayburn House Office Building, Hon. Mark Green [acting

chairman of the subcommittee] presiding.

Present: Representatives Green, Kelly, and Frank.

Mr. GREEN. [Presiding.] The hearing of the Subcommittee on

Housing and Community Opportunity will come to order. Without

objection, we will proceed, even though we do not have a quorum

at this time. Our understanding is there may be a vote as soon as

at 10:15. At least this way, we could get through our first panel

and then go on to our second panel.

Without objection, all members’ opening statements will be made

part of the record. And the chair will recognize himself for five

minutes for purposes of making a brief opening statement, before

introducing our first panel.

Today, the subcommittee meets to examine the effects of leaking

underground storage tanks on homeowners and communities. In

1980, the Environmental Protection Agency determined that this

country was facing a very serious problem in that area.

Many of the more than two million underground storage tanks

in the U.S. were nearing the end of their useful life expectancy and

were expected to leak in the near future. With over half of the

United States relying on ground water for its drinking water, the

fact that leaking tanks were the leading source of ground water

contamination made finding a solution all that more critical.

In 1984, Congress established a Leak Prevention, Detection and

Correction Action Program to address this nationwide problem of

leaking storage tanks. And in 1986, Congress created the Leaking

Underground Storage Tank Trust Fund to help states cover the

cost of cleanup.

Much progress has been made in the cleanup efforts. The EPA

estimates that since the Federal Underground Storage Tank Program began, 1.5 million of the roughly 2.2 million petroleum tanks

under the program have been closed. As of September 30, 2001,

419,000 releases have been identified; more than 279,000 cleanups

had been initiated; and nearly 269,000 cleanups had been completed; with 150,000 sites awaiting cleanup.

2

Despite this progress, however, several important issues have

emerged. With the implementation of the 1998 regulation, the

workload for states has increased significantly. States and localities

are looking to the federal government to provide additional resources to assist them in the cleanup and cost.

The discovery of the chemical MTBE at several of the underground storage tank sites and its detection in drinking water supplies has further complicated cleanup efforts and added to the initial cost of the original program. Finally, many of the affected communities are looking to the federal government to help them deal

with the effects that leaking underground storage tanks have on

public health and home values in their community.

While there is a program in place to assist with the cleanup of

these sites, the federal government has no program in place to assist the innocent homeowners affected by these leaking underground storage tanks. Many of these communities will likely face

the evaporation of home equity, a lack of buyers for the contaminated property and a scarcity of financial institutions that are willing to make loans in the contaminated areas.

We all remember the well publicized relocation actions in Love

Canal and Times Beach that were taken under special federal

order or through the Superfund Program. Because Superfund explicitly excludes petroleum pollution, the residents in the communities affected by these tanks have little recourse.

At today’s hearing, we will begin to examine this problem.

I will place the rest of my statement in my record. And at this

time, we will recognize our first panel and invite Mr. Kanjorski, the

Honorable Paul Kanjorski, to begin with his testimony.

Mr. Kanjorski, welcome. Sorry to put you under the gun. But

welcome. It is good to hear from you.

STATEMENT OF HON. PAUL E. KANJORSKI, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF PENNSYLVANIA

Mr. KANJORSKI. First of all, I want to thank the committee for

holding this hearing. It is an unusual problem. It is not unique to

Pennsylvania. But I think the example that we will see in Laurel

Gardens in Pennsylvania highlights some of the missing parts of

the need for a federal program to address this issue.

I want to thank particularly Marge Roukema, the chairman of

the subcommittee, for setting this hearing today and even under

theunusual and strange circumstances, to have that type of compassion for these people.

To address the nationwide problem of leaking underground storage tanks, Congress established, as the chair has indicated, various

programs, starting with the act in 1984. And then in 1986, setting

up the fund to help the Environmental Protection Agency cover the

costs of cleanup with the various states.

Since then, a great deal of progress has been made, mostly taking the potential leaking tanks out and replacing them and the

technology of double barreling the tanks and devices—electronic

devices—signaling leaking has certainly lessened the likelihood

that leaking tanks in the future will have an impact.

But the impact that it has today is multi-sized. And the federal

government’s direction to this impact has only been to help the

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states and the communities do the cleanup. What we have left out

is probably the most important issues, and that is the issue of the

effect on the community, the economic impact, the community impact, the fear and the dread and the desire for people to use usually their only and largest source of equity to either rearrange their

lives and relocate or to refinance their properties.

And if you have ever had the experience, as my constituents have

in Laurel Gardens, when you go to the bank, there are very few

banks that want to lend money on properties that are clearly located by the EPA in a hazardous waste site or a contamination

site. And furthermore, the efforts made in cleanup are the type of

efforts that cannot have an absolute, 100 percent certainty that

cleanup has occurred.

So there is a wide range of citizens—some that accept what the

government has done in cleanup and they are perfectly satisfied to

remain and stay within the community; others that are in dead

fear that the community cleanup has not been successful and, in

fact, they may be exposed to severe hazards. One of the great hazards, of course, under gas spills is Benzene.

Now when we saw this effort in Hazleton, Pennsylvania, we

moved very quickly to bring the EPA on board after the Department of Environmental Protection of the Commonwealth had been

onsite for more than 10 years. They did not take swift action. They

did not move to remedy the situation.

But in the year 2000, EPA did step in. And I was fortunate

enough to convince the Coast Guard to provide, out of the Coast

Guard fund, under the Oil Pollution Act, $25 million to direct toward the cleanup effort here, that otherwise could not have occurred. And of course, that occurred only because, by stretches of

imagination, this oil spill would eventually get to the Susquehanna

River, which was a navigable waterway. And the Oil Pollutions Act

covers potential spills for navigable waterways.

But it was, nevertheless, an extreme stress and compassion, expressed by the Coast Guard and the federal officials, that opened

up the federal purse of $25 million to address this problem.

Most recently, because we have had other less than satisfactory

results in the cleanup, we have now convinced the EPA to do the

entire collection system, sewer system, in the area to prevent any

further leakage, if that is possible. Our problem is the land is saturated. There are still several homes whose levels of Benzene are a

concern for chronic exposure.

There have been studies made recently that have indicated Benzene-related cancer and higher than average cases of lupus in the

Laurel Gardens area. All of these health hazards have certainly

contributed to the anxiety of the residents.

And they have asked a simple question. And they have asked it

of me. They have asked it of other elected officials who testify

today. It is basically this: ‘‘Yes, we understand the response of the

federal government, the state government, in cleaning up the hazardous area. But what do you do for us to allow us to get our lives

back in order?’’

And I think that is the plea that will be made here today. These

people live in a contaminated area. Their price—value of their

home has significantly plummeted, if not disappeared entirely.

4

They cannot get refinancing to reduce their mortgages, even

though the rates are significantly lower, because no institution

wants to provide that.

They cannot get a home equity loan, even though they had built

up equity in their home over a period of years. They cannot even

get a loan to take care of medical expenses, because of some of the

illnesses that are least suggestively traced to this spill.

In effect, we have taken care of the cleanup for the general public. We have stood in for the bankrupt company that caused the

damage. But the people that feel the effect—the homeowners in the

community—have really not received any type of lenient treatment

by the federal or state government in the nature of allowing them

to get their lives back in order and on place.

As a matter of fact, further complicated with that, because we do

not have an organized system, the Luzerne County, which is the

base county for taxing purposes, in order to provide relief, did provide that relief and made the assessment zero. But what that

caused is it took away any semblance of trying to find out what the

financial value of these properties would be. So that even in the

help of reducing the tax burden on the homeowners, it took away

their capacity to argue what value or equity they had in their

homes and how they could refinance to either leave, improve themselves or treat their diseases with the monies necessary from the

mortgage or refinancing operation.

What we have here are a number of homes—more than 200—

that have been affected, a number of people that are satisfied to

remain, have gone back and reconstructed their lives, but a small

portion of people that either are still getting very positive readings

of Benzene and other pollutants. And they really want to have the

capacity to relocate their families and take them out of harm’s way.

And we do not have a federal or state program that allows that to

happen.

What I have presented in draft form to many of my colleagues

and have circulated to the executive agencies of HUD and EPA is

a draft form taking the concept of creating a master and then creating a program, whereby the federal government, under HUD,

would insure the loans made by financial institutions to people in

designated areas such as this. So that while lawsuits are pending,

while situations are occurring that the people have to wait for their

redress over a period of years, they can nevertheless refinance and

relocate themselves and their families into a situation to allow

them to get on with their lives.

I think it is absolutely essential that the Congress address this

issue. It is not only a special issue that occurs in Hazleton, Pennsylvania, but is occurring throughout the United States. And as

witnesses that will testify here further today will indicate, this is

just the tip of the iceberg as to what will and is going to occur in

the very near future. So we need a remedy.

Also today, Mr. Chairman, we will have the advantage of having

testimony by two great public officials: a friend of mine, the

Luzerne County Commissioner, Stephen Urban and Pennsylvania

State Representative, Todd Eachus, who have both committed

themselves to this program and have worked very hard with this

neighborhood over the years to try and solve this problem.

5

Both gentlemen are expert in the field, as one could classify a political leadership as being expert. But they certainly are.

What I think we have to do together is to recognize that we can

no longer ignore the plight of the people that are impacted by hazardous waste spills, such as leaky tanks. In order to do that, while

they are waiting for whatever remedy the law allows, I think it is

most essential that we create a program. And as a result, the Solid

Waste Disposal Act to authorize the Housing and Urban Development to guarantee loans to homeowners living with the effects of

leaky underground storage tank contamination has been circulated.

I think it is one of the many remedies. I look forward to others.

Mr. GREEN. Mr. Kanjorski, I do not mean to cut you off. We have

now five minutes remaining for you and I to get over and vote.

Mr. KANJORSKI. Okay.

Well, Mr. Chairman, I will ask that my remarks be admitted as

part of the record.

Mr. GREEN. Without objection.

Mr. KANJORSKI. I urge the committee seriously—and I appreciate

your attention to this. It is an issue that needs to be attended to.

And the appreciation of this community and myself to this committee for taking it up at this time.

Thank you.

[The prepared statement of Hon. Paul E. Kanjorski can be found

on page 32 in the appendix.]

Mr. GREEN. Thank you, Mr. Kanjorski. We will reconvene immediately after this vote. Thank you.

[Recess.]

Mr. GREEN. Call the subcommittee back to order. And we will introduce the next panel of witnesses.

Our panel includes the Honorable Todd Eachus, who has represented the 116th legislative district of Luzerne County in the

Pennsylvania General Assembly for the past six years. He is a

member of the Aging and Older Adult Services Committee, the Insurance Committee and the Labor Relations Committee.

Next, we have the Honorable Stephen Urban, who was elected in

January of 2000 to the Luzerne County Board of Commissioners.

Previously, he had served 24 years in the U.S. Army. Lt. Colonel

Urban is a veteran of both the Vietnam and Persian Gulf wars.

Third, we have Mr. Charlie Bartsch, who is a senior policy analyst at the Northeast-Midwest Institute, specializing in economic

development issues, including federal and state, technical and financial assistance, tax incentives and industrial site reuse. He has

appeared before congressional committees in the past on the issues

of economic development and recovery.

Mr. William Harvey is here today on behalf of the Appraisal Institute. He has been an appraiser in the Washington, DC metropolitan area for over 20 years and is the president of William C.

Harvey and Associates. He is both a certified general real estate

appraiser and a certified instructor for the Virginia Real Estate Appraisal Board.

Ms. Patricia Tomsho comes to us from the Laurel Gardens Community in Luzerne County, which has been affected by leaking underground storage tanks. Since 1985, she has served as the executive director of United Charities and the United Children’s Homes.

6

Without objection, the written statements for each of our witnesses will be made part of the record. You will each be recognized

for a five-minute summary of your testimony.

It is my understanding that the lights on your end do not work,

in terms of notifying you as to when your time is running short.

I will try my best to do that gently and let you know it is time to

summarize your testimony. But again, your full written statement

will be made part of the record for those of us on the subcommittee.

So without further ado, we will recognize Todd Eachus at this

time.

Mr. Eachus, welcome.

STATEMENT OF TODD EACHUS, STATE REPRESENTATIVE,

116TH LEGISLATIVE DISTRICT (PA)

Mr. EACHUS. Thank you, Chairman Green. And I would like to

thank Chairman Roukema for calling this committee before the

Committee on Housing and Community Opportunity and allowing

me to submit my testimony for the record.

I would personally like to thank Congressman Paul Kanjorski for

his efforts on behalf of the citizens affected in my legislative district in the Tranguch gasoline spill and others nationally who are

adversely affected by petroleum spills.

More than a decade ago, a minimum of 50,000 gallons of gasoline

leaked into the Laurel Gardens neighborhood in my district, affecting about 400 homes and 1,500 residents. For more than 10 years,

the residents of those homes have been living in a virtual nightmare. The government, both on and federal government, has continuously downplayed the severity of the situation, trying to reassure—or mislead, depending upon how you look at it—the people

that there is nothing to worry about.

The reality for these citizens is quite different. Their homes are

virtually worthless. They fear for their health. If they had the financial means to leave the neighborhood, I have no doubt that they

would have done so.

Because a program to help people affected by environmental disasters is not included in the Oil Pollution Act, Congressman Kanjorski’s legislation to provide low-interest loans to affected residents so that they may escape the pollution that cripples their

health and the quality of their life is a good concept and one that

is long overdue.

As you move forward in discussing its merits, I ask that you keep

in mind the citizens that this legislation is designed to assist and

protect. I have a few observations and recommendations and I urge

the committee to consider on behalf of the residents of the spill

that I represent, as well as people who are living in this country

who are victims of gasoline spills, leaks and other environmentally

related hazards.

As the concept of the low-interest program progressed, it was determined that the Department of Housing and Urban Development—HUD—would be the best equipped to administer these loan

programs, as well as the forgiveness provisions within this bill. In

addition to being an impartial party in this process, HUD is better

equipped and has the knowledge necessary for this kind of assistance. I strongly urge the committee to keep HUD in this process.

7

Additionally, I believe the loan program should be available to

everyone affected by environmental hazard, not based on family income. The spill in my district did not distinguish between rich and

poor. It did not decide which families it would harm. Every family

affected by this spill has suffered substantial hardship. Every family should qualify for assistance.

I also have some concerns in the bill’s language relating to the

low-interest loans. Although the bill puts the final decision on loan

rates in the hands of the Secretary of HUD, who is expected to ensure the loans be at the lowest interest rate, the bill does not guarantee the rates will be at the lowest rate. Under the bill, the rates

of the loans are agreed upon by the borrowers and the lenders and

found reasonable by the secretary. However, it also says that the

rate cannot exceed—quote—‘‘the generally charged rates in the

area for home mortgage loans not guaranteed or insured by any

agency or instrumentality by the federal government.’’

Since these loans under this legislation are loans that are guaranteed by the federal government, why shouldn’t the cap be based

on rates generally charged for federally guaranteed loans? Those

rates definitely would be lower than loans that are not guaranteed

by the federal government.

Also under the bill, the borrower can obtain a loan to buy or

lease new property or use the equity in the home for whatever purpose they chose. While the bill is clear that the loan amount can

be 100 percent of the pre-release value, I would recommend clarifying that for loans based on the equity in the property as described on page three, line 12 of the bill, the equity is also determined based on the pre-release value. I also say that the market

value—the equity in these homes—may be, at this point, zero.

Mr. GREEN. Mr. Eachus, if you could summarize your testimony?

Mr. EACHUS. I sure can.

Mr. Chairman, I say to you that the citizens in my district have

been aggrieved by this process. And even though something is

being done today, something done is better than nothing at all. And

not only that, I say to you not only by providing residents of my

district a relief from this horrible situation that has faced them for

10 years, but also for other Americans facing the same tragic situation. And I urge the committee’s action.

[The prepared statement of Todd Eachus can be found on page

45 in the appendix.]

Mr. GREEN. Thank you, Mr. Eachus.

Mr. Urban?

STATEMENT OF STEPHEN URBAN, LUZERNE COUNTY (PA)

COMMISSIONER

Mr. URBAN. Thank you.

Thank you, Chairman Green and other distinguished members of

the House Financial Services Housing and Community Opportunity

Subcommittee. Thank you for the opportunity for appearing before

you to discuss our concerns in Luzerne County and specifically how

leaking underground storage tanks located in Laurel Gardens,

Hazle Township and Hazleton City have eroded the home values.

In my written testimony, I provided a brief description of the underground storage leak in the Hazleton area. This was described in

8

a Hazle Township health effect study that was provided by the

University of Pittsburgh Graduate School of Public Health.

I will go right to my personal experiences in dealing with the

problem, since this is in the written remarks.

In January 2001,the Luzerne County commissioners were informed through public meetings presented by the U.S. EPA that

more than 400 residential properties were affected by the Tranguch

gas spill, caused by leaking underground storage tanks. Upon notification of the magnitude of the gasoline spill, we also learned that

very little immediate help was available for homeowners living in

the spill site.

My immediate concerns were for the health and safety of our

residents living in the gas spill and to determine if funds were

available from the federal or state governments to assist homeowners to relocate outside the spill area. Through work with federal and state agencies, I learned that funds were not available for

homeowners to move permanently outside the spill area.

I believe residents in the community are in favor of establishing

a program to allow homeowners the opportunity of recovering the

equity of their property. Over the past two years, my office has received numerous phone calls and letters from homeowners residing

in the Tranguch gas spill site asking for help in gaining equity in

their homes or to relocate outside the spill area. Also, in public

meeting’s with homeowners, many impacted homeowners asked for

help in relocating from the spill site.

Many residents have cited health and safety concerns as a primary reason for wanting to leave the spill site and because fear of

the unknown. Residents do not know how long the underground

storage tanks have been leaking. Residents do not know the length

of time that they were exposed to Benzene or other toxic byproducts of the gas spill. The government does not have data that can

accurately predict what effect low dose, long-term exposure to Benzene and other toxic byproducts of gasoline will have on the health

of people living in an area contaminated with gasoline. And the

time period for cleanup of the Tranguch site is unknown.

Based upon a history of the Tranguch spill site, underground

storage tanks were probably leaking as early as 1991, when homeowners first began smelling gas fumes. In my opinion, the health

and safety of our homeowners should be of paramount concern and

homeowners should be allowed to receive equity from their property and be given the opportunity to move on with their lives and

live in a more safe and healthy environment.

Homeowners residing in the Tranguch site have not been treated

fairly. Compare the magnitude of the Tranguch site spill 50,000 to

900,000 gallons of gasoline that traces its origin to 1991 and another oil spill that occurred in Jackson Township, Luzerne County

in 2000.

In January 2000, a 5,500-gallon oil spill erupted in Jackson

Township, Luzerne County. Of the 17 homes impacted by the

5,500-gas spill, all residents were offered buyouts. Of the 17 homes

impacted, nine were settlements involving tenants who chose to

stay on the property and eight were settlements that resulted in

buyouts of property owners.

9

In addition, all impacted property owners received a minimum inconvenience payment of $50,000. And impacted tenants received

a $10,000 payment. In addition, homeowners that chose to stay and

live in the impacted homes were awarded a maximum of $95,000

in return for the release of claims, except personal injury, at the

end of a five-year period.

In Jackson Township, Luzerne County, a responsible oil company

made the right decision and provided equity to homeowners impacted by the oil spill. The oil company offered equity in the form

of a buyout to homeowners.

Homeowners residing in the Tranguch spill site deserve the same

type of treatment from the government as the homeowners in Jackson Township received from an oil company. Homeowners residing

in the Tranguch site deserve the option of receiving equity from

their homes because they are victims of this environmental disaster.

In response to the large number of families affected by the

Tranguch spill, the Luzerne County commissioners implemented

several measures to help homeowners in responding to the case of

environmental contamination. On March the 7th, the Board of

Commissioners adopted a resolution declaring a state of emergency

within the city of Hazleton and Hazle Township, Luzerne County,

Pennsylvania.

Our resolution stated that homeowners residing in the City of

Hazleton and Hazle Township, Luzerne County are impacted by a

gasoline spill, which has entered an underground mine in that section of the county. Luzerne County recognized that a potential serious health risk exists in the Tranguch gas spill area, caused by the

exposure to Benzene and other toxic byproducts of the gas spill.

Also, our resolution supported a buyout of the affected residential

real properties. This state of emergency still exists today.

On February 7, 2001,the Board of Commissioners, at a public

meeting, unanimously approved a resolution requesting the

Luzerne County Board of Assessment Appeals to requests to reduce

to zero the value of realty properties of those real estate properties

affected by the gas spill, as determined by the federal government

for the period January 1, 2001 to December 31,2002.

In our resolution, the County Board of Commissioners again recognized that homeowners are subject to the potential serious health

risks which exist due to the exposure to Benzene, as well as other

toxic byproducts.

Mr. GREEN. Mr. Urban, if you could summarize, please. Thank

you.

Mr. URBAN. What I am really here to say, Mr. Chairman, is that

the citizens of Hazleton really need help. And we need the help of

your committee. There is no legislation that is out there today that

will offer buyouts or will create equity for homeowners living in

this gas spill site. And the people of our community ask for your

help.

Thank you, Mr. Chairman.

[The prepared statement of Stephan Urban can be found on page

62 in the appendix.]

Mr. GREEN. Thank you, Mr. Urban.

Welcome, Mr. Bartsch.

10

STATEMENT OF CHARLIE BARTSCH, EXECUTIVE DIRECTOR,

NORTHEAST-MIDWEST INSTITUTE

Mr. BARTSCH. Thank you. Thank you for the opportunity to testify today.

The institute has worked closely with the bipartisan NortheastMidwest Congressional Coalition, which is currently co-chaired by

Representatives Jack Quinn and Marty Meehan. And I know that

both of them have worked with the subcommittee, on different bills

that have explored the relationship between environmental contamination and community development. And I think this is a natural next step.

My comments are going to focus on the broader aspects and concepts related to this bill, focusing more on some of the cleanup and

reuse aspects. But clearly, these are important to owners because

you need to do these activities to set the stage to restore value.

These comments are based on the findings of two recent reports

that I have worked on. One is ‘‘Recycling America’s Gas Stations.’’

And the other one is ‘‘Using State Voluntary Cleanup Programs to

Support Residential Redevelopment,’’ done in cooperation with the

National Association of Homebuilders.

Both of these really get at the question which is the focus of this

hearing, and that is: how significant is the problem of leaking underground storage tanks or LUSTs? And what is its impact on communities?

There is no question that the sheer number of single and multifamily housing units affected by real or potential LUST contamination is unknown. But given the age of so many of these structures

and their utility systems, there is no question that it is significant,

potentially hundreds of thousands of units.

And Mr. Chairman, you gave us numbers in your statement that

really convey the magnitude of this. And like other contaminated

sites, LUST sites need to be addressed in a comprehensive way, in

which contamination is not only detected and contained, but also

where sites are cleaned up and put back into use. And this requires

access to affordable resources.

My longer statement discusses in detail some of the specific

issues that tank problems raise relative to housing and community

development—concerns like local capacity for technical and financial support to help carry out LUST site activities, the lack of needed incentives, legal and situational constraints, such as the problems of applying existing federal and state resources to LUST

cleanup and site reuse, and HUD’s policy, which largely prohibits

use of housing program resources for any residential project which

includes institutional controls.

So what is currently being done to address the LUST issue? Well,

states and communities have taken some limited, but important

initial steps to address problems posed by UST sites. I just want

to mention three quickly.

These initial actions, though, could play an important role in a

HUD-driven homeowner-focused effort to grapple with housing site

contamination. From an operational standpoint, some communities

are starting to work to incorporate UST project approaches into

various parts of their local government community development

processes. This has led to some general site cleanup, new housing

11

and commercial development and restoration of property values to

increase tax ratables.

And in terms of federal programs, cities in several states—notably those in places like Wisconsin and New York and New Jersey

have suggested that it would be really important to bring a variety

of federal program resources to bear on these projects. They require

packaging. And you need to bring more programs into the mix. Programs offered by HUD and EDA and other agencies, which are targeted to distressed areas or markets, capital market imperfections,

have the potential to play in a key role. And the bill under consideration by the subcommittee would enhance this.

A second approach is informational. We need to get information

to private parties—both owners and lenders—to show them how to

overcome the barriers, to instruct them about the economic benefits

of cleaning and reusing these sites and about the various public incentives and private tools, such as environmental insurance, that

can really help tie these projects together and minimize stigma and

enhance site value.

And clearly, the third thing that is being done, slowly—and it is

clearly the most critical, as the proposed bill suggests—we need financial support. It is a key activity. It is just now starting to be

considered. A small but significant number of states and communities have started to address the LUST issue and its impact on

housing through initiatives of their own.

Again, my statement talks about a number of these initiatives.

But these are efforts that would really be enhanced by additional

federal action.

There is no question that more needs to be done. In my recent

work on tank sites, several states and cities urged an UST field

connection to HUD, similar to the one that now exists for

brownfield efforts, which is in fact a link which this subcommittee

worked to put into place.

And I think in the case of expanding and clarifying ways in

which HUD could encourage things like financing tank cleanup and

restoring distressed properties to productive use, these are activities that really fit within HUD’s basic mission. And this really gets

to the heart of what this proposed legislation would do.

In establishing a HUD loan guarantee program—

Mr. GREEN. Mr. Bartsch, if you could summarize for us. Thank

you.

Mr. BARTSCH. I will just close by pointing out that I think the

bill is a good one. I would suggest a couple of minor modifications,

including a finding that makes it clear that cleanup and reuse of

housing, unused or abandoned because of LUST contamination,

should be a clear goal of HUD.

I would allow public housing agencies to delegate the authorities

that this bill gives them to other capable local agencies or non-profit organizations that might be better suited to deal with some of

the management issues related to properties that are acquired

through program. I would provide an additional incentive—perhaps

a 100 percent guarantee—to lenders that agree to provide financing

for cleanup of the original housing property as part of the financing

package.

12

I would allow the guarantee to be extended to mixed-use properties that include commercial uses, as well as housing, because

this is a good way to get value back into communities. And I think

finally, I would direct HUD to allow appropriate and protective institutional controls to be used in conjunction with its other housing

programs. HUD does not allow this very often now. And I think

this could limit the effectiveness of this proposed bill.

I think this bill sets in motion the prospects of a really productive public-private partnership between homeowners, lenders and

communities and HUD to make some of these properties better.

[The prepared statement of Charles Bartsch can be found on

page 35 in the appendix.]

Mr. GREEN. Thank you. Thank you, Mr. Bartsch. Very interesting.

Mr. Harvey, would you please testify for us? Thank you.

STATEMENT OF WILLIAM C. HARVEY, PRESIDENT, WILLIAM C.

HARVEY AND ASSOCIATES, INC., ON BEHALF OF THE APPRAISAL INSTITUTE

Mr. HARVEY. Mr. Chair, members of the subcommittee, thank

you for the invitation to testify.

I am William C. Harvey, MAI. And I am here to address the

issues of valuing pre-contaminated property and the effect of contamination from leaking storage tanks on the housing market.

Appraising contaminated property in its pre-contaminated condition requires that the appraiser invoke a hypothetical condition

that the property is free of contamination and clearly indicate such

in any report. Three categories of effective appraisal dates—retrospective, current or perspective—may then be used, according to

the purpose and function of the appraisal assignment.

A retrospective appraisal occurs when the effective appraisal

date is prior to the date of the report. This type of appraisal is

most commonly developed for purposes of estate administration,

condemnation proceedings and litigation to recover damages. Since

a retrospective appraisal is complicated by the fact that the appraiser already knows what has occurred in the market after the

effective appraisal date, it is critical that the appraiser establish a

logical cut-off date for the consideration of subsequent data that no

longer reflects the relevant market.

While this can be a difficult determination to make, studying the

market conditions as of the effective appraisal date will aid the appraiser in judging where to make this cut-off. The effective appraisal date should be considered as the cut-off date for data considered by the appraiser, absent evidence that data subsequent to

the effective appraisal date were consistent with the market expectations at that time.

Once the context of the appraisal is established, a retrospective

appraisal is developed like any other appraisal through the proper

development of the applicable approaches to value that are typically used to value vacant land and improved property. The reliability of an appraisal relates to the extent to which the valuation

process yields the same results on repeated trials. To that end, retrospective appraisals can be as reliable as any other appraisal, so

long as a complete appraisal process is utilized.

13

In developing a complete appraisal, the appraiser will use all applicable valuation procedures. And the value conclusion will reflect

all known information relative to the subject property, market conditions and available data. By contrast, in a limited appraisal, the

appraiser and the client agree before the commencement of the assignment that the appraiser will not use all applicable valuation

procedures or that the value conclusion will not reflect all known

information about the subject property, market conditions and

available data.

Thus, to ensure the highest level of reliability, the process should

involve a complete appraisal.

On the issue of the impact on the affected housing market, my

personal experience in appraising properties affected by environmental contamination varies from a single residence with minor

onsite releases to communities comprised of hundreds of homes sitting atop large plumes of hazardous materials. Notwithstanding

the differences in the case studies, the effects on value generally

follow what has become known as the Detrimental Condition

Model. This model, a copy of which is attached to my written statement and appears in demonstrative form to your left, graphically

illustrates the fundamental effects that environmental contamination can have on housing markets.

While the DC Model recognizes all possible stages, each detrimental condition must be analyzed on a case-by-case basis because

of the potential for a variety of impacts on value during the property’s life cycle. The first step with any detrimental condition analysis is to consider the unimpaired value of the property as if there

is no detrimental condition. This is reflected as Point A on the

model.

Upon the occurrence—or more likely, the discovery—of the detrimental condition, the value may fall to Point B if the facts and

market data support such a decline. The value during this period

is often the lowest. And in some instances, the value is unmarketable until the magnitude of the detrimental condition can be

ascertained. Nevertheless, in a retrospective appraisal where all assessment, remediation and ongoing issues are studied, a reliable

determination of Point B can be made.

Mr. GREEN. Mr. Harvey, if you could summarize your testimony

for us? Thank you.

Mr. HARVEY. While the DC Model suggests an orderly process,

each detrimental condition must be analyzed on a case-by-case

basis due to the variety of impacts on value. Although my experience has shown no two cases are alike, the analysis of environmental contamination should begin with the DC Model.

Thank you for the opportunity to testify.

[The prepared statement of William C. Harvey can be found on

page 48 in the appendix.]

Mr. GREEN. Thank you.

Now if we could hear from Ms. Tomsho. Welcome.

STATEMENT OF PATRICIA TOMSHO, RESIDENT, LAUREL

GARDENS COMMUNITY, LUZERNE COUNTY, PA

Ms. TOMSHO. Thank you for having me. On behalf of the residents of Laurel Gardens, Hazleton City and Hazle Township,

14

Luzerne County, Pennsylvania, I thank you for allowing us the opportunity to express our serious concerns. I speak not only for our

community, but also for the many other communities across the

United States which are similarly affected.

In fact, in review of the EPA’s web site on Leaking Underground

Storage Tanks—LUSTs—they cite 418,918 leaking underground

storage tanks across the country. And these are confirmed releases.

That averages out to about 80,500 per state. Clearly, our group

is not the only affected group or residential area. And therefore,

the work you are doing here is so important to all of us.

What I am trying to do is give you the personal side of this. That

is my role. And that is what I do on behalf of our community.

Gasoline contains benzene, which is a known carcinogen, as well

as toluene, ethyl benzene, xylene. They are called BTEX. And they

are volatile organic compounds.

Also found in unleaded gasoline is MTBE, which is known to be

hazardous to health and is extremely water soluble. The effects of

MTBE are not still—they have not been widely tested, so they are

not well known. However, benzene is well known.

We have the map up there, which shows you the plume across

our neighborhood, the soil contamination. And underneath, it

shows you the entire neighborhood.

The black crosses are the deaths from cancer, gentlemen and ladies. The red crosses are people who have cancer illnesses. And the

green crosses are people who have other kinds of illnesses, like the

autoimmune diseases.

Clearly, our area is loaded with cancer deaths and cancer illnesses. You will note the yellow outline. That is the mine that

underlies our property. And that makes our particular spill more

unique than any other in the country. We looked and we could not

find another in the country that had an underground mine.

And it is a low point, so all the ground water goes into that underground mine. And the gasoline migrated there as well. And depending on the amount of rain, the gasoline fumes will go up and

down and affect the homes.

So the remediation has been challenging.

In Hazleton Township, as Mr. Urban and Mr. Eachus have

noted, we have completed a study from the University of Pittsburgh. And what they found is that we are 10 times more likely

to contract leukemia, eight times more likely to contract stomach

cancer and three times more likely to contract prostate cancer—

provided we are males, of course.

And the Hazleton part of the group is completing the study now.

Additionally, we challenge the national average of lupus. Usually

in the nation, there is one case in 1,000 people. We have five in

250 people—five cases of diagnosed lupus.

I am testifying today to convey to all of you the fear and the

hopelessness and mostly the loss of control and personal choice

that we as victims feel. We have to confront a spill on a daily basis.

And I would like to give you just a few case examples to help you

understand. One such case is a family who started to build a home

in the spill zone. The frame was completed, but the bank stopped

the mortgage. It is now a skeleton of rotting wood, a visible reminder of property loss. When you live in a gasoline-impacted

15

neighborhood, the loss of freedom and control, on which this great

country is founded, is absolute and very real.

There are areas over which we have no control—over our health,

the use of equity in our property and the sale of our property. All

of these have a financial impact on us. Health care is a primary

concern. One week of chemotherapy costs $15,000. The cost to employers for healthcare for lost workers is great.

People who have small children who cannot leave their homes

are really very traumatized. They are frightened for their children.

Mine grew up in that area. I am very happy that they live out now.

But it is traumatic for a mother to watch her children live in a

known zone.

I am moving along.

Mr. GREEN. Thank you.

Ms. TOMSHO. There is a heart-wrenching case of a grandmother

with MDS Leukemia who had to leave her home, but had to leave

her son and her grandchildren living there. I do refer you to the

booklets that we prepared. They are very well documented. It

shows you many of the traumas that we went through.

But I want to finish by telling you that the legislation you are

considering is crucial to us. It should be across the board and not

income-related. The spill has been non-discriminatory, affecting

young and old, rich and poor.

In cases like ours, it is very important to specify the forgiveness

aspect and who will make that decision. In our experience, we have

had to become adversarial with EPA in order to affect a serious

cleanup. And then, that agency having control over forgiveness

would be frightening to us.

All I can tell you is, please refer to the personal letters that are

in the booklets and some of the information. And I thank you for

your time and attention.

[The prepared statement of Patricia Tomsho can be found on

page 60 in the appendix.]

Mr. GREEN. Thank you, Ms. Tomsho. I thank all the witnesses.

That map and chart you have over there is truly astounding.

In terms of questions, Mr. Bartsch, I found your testimony and

the written statement particularly interesting. You have listed

some of the state programs—some of the state and local programs

that have emerged in this area.

I would invite you to supply some additional documentation to

the committee. I think we would be very interested to see, even in

a more comprehensive way, what some of the states are doing. Because obviously, that is useful information to us.

Mr. BARTSCH. I can do that.

Mr. GREEN. So I would appreciate it if you could do that for us.

And I guess along that line, let me ask you, Representative

Eachus, has the state of Pennsylvania taken a look at legislation

in this area? And has it passed any legislation? And if not, why?

What have been the forces of resistance?

Mr. EACHUS. Well, Chairman Green, we have not addressed the

housing perspective of residential spills. But I did provide the committee—both minority and majority staff—a summary of all of the

legislative framework in the state of Pennsylvania.

16

We do have an indemnification fund. But since this was an OPA

site and the state handed the role over to the federal regulators to

do the cleanup, they have been less than cooperative in taking financial responsibility for any aspect outside the agreed upon issues

between the folks at EPA, the Coast Guard and the Department of

Environmental Protection.

And I think that is an inhibitor. In these cases, the state was on

the site from late 1989, 1988, when they first started to get concerns from citizens, but really did nothing except study the spill

until 1999. In 1999, both myself and Congressman Kanjorski began

to make inquiries. And all of a sudden, EPA came in, took over the

site under OPA, made it an OPA site. And then the state folks

from DEP were unwilling either to make this an emergency—a

state of emergency—which we urged them to do and try to bring

PEMA funds in for these citizens or use any of our tank indemnification fund with regard to dealing with housing or buyouts or

any other kind of relocation strategies.

That is the problem. Once this is turned over to the federal government, I believe the states are going to take a walk with regard

to responsibility.

Mr. GREEN. Yeah, I fear you are right. That is one of the reasons

I posed that question.

In terms of our trying to get a more thorough understanding of

the scope of the problem—and I do not mean in terms of the number of sites. I think we have some documentation with respect to

that. And obviously, there are some programs that deal with these

issues in the abstract.

What I think would be real interesting for us is to try to get a

handle on the loss of value, try to measure some of the more

human aspects that we have had testimony on, on a national level.

Do any of you have any suggestions as to how we can begin to

accumulate that information, because I think it would be useful for

us?

Mr. HARVEY. Mr. Chair, you are talking about a very broad database of properties and communities.

Mr. GREEN. I understand. I understand.

Mr. HARVEY. But by illustration, a local community here that has

been a predecessor to this entire process is the Mantua community

in Fairfax. To give you an idea of the loss in value, that spill, which

affected 400 homes from a leaking storage tank at a tank farm, occurred in late 1990. And the full recovery of those home values

took 12 years.

It was augmented by a private property value protection plan, introduced by the responsible party, who took liability for the cleanup. Your legislation parallels in pretty good form the attributes of

that private property value protection plan.

Absent such a return of value, it is likely to be so far extended

that it just turns the American dream of home ownership into a

nightmare for the residents. So I think it is such a pervasive problem that you would be astounded by the numbers.

But I will be happy to introduce that request to my association

to see what we could provide this committee.

Mr. GREEN. I think that would be helpful.

Mr. Eachus?

17

Mr. EACHUS. Yes, Chairman Green. I have one other issue. And

that is relating to the issue of guaranteeing the loans under the

Kanjorski bill, there is a requirement that 10 percent be guaranteed by either mortgage premium insurance or other state agencies

or community programs.

I am unaware of anything at the county which would help to

guarantee those kinds of properties, as well as the Commonwealth.

And what I am concerned about is that if the committee can find

out if the mortgage premium insurance industry, the guarantee

sources, are available for these kinds of properties, I am unaware

of any in the Commonwealth of Pennsylvania that would help to

guarantee properties that would be contaminated under these sites.

So I am concerned about that.

Mr. GREEN. Mr. Bartsch, can you help us find that information

as well?

Mr. BARTSCH. I can help with that. And I think that raises a

good issue.

Just in the sense—I mean, I understand the need that you do not

want to have a full guarantee because you set the stage for projects

that may not be so well underwritten. But clearly, there is a gap

here that may need to be explored.

I know that there has been a lot of advances in environmental

insurance. And I also know that the states are going to have access

to some resources under the new brownfield law to promote environmental insurance. But again, I think there is going to be a lot

of demands on those. And I would be glad to see what I can find

out.

Mr. GREEN. Great. Much appreciate that.

The chair recognizes the ranking minority member, Barney

Frank, for any questions he might have.

Mr. FRANK. It just strikes me, as we talk about that last thing,

since we have passed legislation getting people out from under private mortgage insurance that they have been obligated to pay for

when they do not need it, maybe we can find something more useful for that industry to do now that they are not insuring people

who do not need the insurance and do not want it.

I am going to pass on to Mr. Kanjorski. I just want to acknowledge the fact that this is—we are here because of him. This is a

subject which he has brought to our attention. He has made a very

convincing case.

This hearing is a result of his efforts. And so I am going to yield

to him.

I want to thank the witnesses and particularly Ms. Tomsho. I am

always impressed—it does not happen a lot—when a citizen such

as yourself becomes not just interested, but as knowledgeable as

you are.

And my inference is that you gave yourself a late post-graduate

chemistry and medical course. And the results are very impressive.

And I thank you for the seriousness with which you have shared

that.

And with that, I am going to yield my time, which would be in

addition to his own time, to Mr. Kanjorski, because he really is the

driving force on this.

Mr. KANJORSKI. Thank you very much, Mr. Frank.

18

I want to bring to the committee members an observation that

I have made. And Pat, I am going to direct the question to you.

When this all started off, there was great sympathy in the very

broad community of Hazleton and Hazle Township and some sort

of an identification between all the residents and then the impacted residents. But over the course of years, I have sensed a narrowing of support from the unaffected community and sort of a

feeling like the affected community is asking for something that

they are not entitled to.

And Pat, do you sense that? And maybe you can shed some light

on the idea of—since the people that live in Laurel Gardens had

nothing to do with this spill, gained nothing economically from this

spill, were totally innocent parties, why is it that, at some point,

some of the rest of the community starts looking at the affected

community with annoyance, if you will?

What is that dynamic that is out there? And do you sense it? Am

I making an observation that is correct? And what is it?

Ms. TOMSHO. Actually, I have seen a dichotomy in that. Some

people are very invested and still supporting us. But they tend to

be the quiet majority.

What I would say is what—and this is my field. I am a social

worker by trade. And what you are seeing is the victim phenomenon. When people are victimized, people think poorly of them

and therefore, begin to dislike them. And then they resent them for

what they get.

And I think that is an issue that America—that is a broader

issue America maybe needs to study. But it applies even on a small

issue like ours. People resent victims. They resent what victims

get. And even if it is hard won and hard fought, they resent it.

Mr. KANJORSKI. One of the observations that we made and I

want to draw to my colleagues’ attention is that this is a process

that has occurred over 10, 12, 14 years. And up until EPA’s involvement in 2000, really nothing occurred, not even addressing

the fix-up of the remedy situation.

I mean, for all intents and purposes, this was going to be solved

by attrition, which probably is the least sympathetic methodology

I could think of solving this problem. But over the course of the

several years that I have been dealing with Mr. Eachus and Mr.

Urban and Pat’s group, it became eminently clear to me that tort

law recovery for negligence or other remedies, which may be built

into the law, just do not lend themselves to victims who are living

in a community and have most of their assets or equity in their

homes. They are literally prisoners to live in harm’s way, subject

to—hopefully—the cleanup process.

And if the cleanup process is not complete, they will have to

carry the burden for the rest of their lives of the exposure to their

children. I ran into so many families that are saying, ‘‘You know,

if it were just me alone, I would stay and take the risk. But every

time I look at my young children, I realize that it is my inadequacy

to go out and buy a new home and to relocate and take them out

of harm’s way, that if they should get sick or if something happens

to them in the future, it is my fault.’’

And that is a terrible burden to put on parents or grandparents.

And that is occurring in this neighborhood because it is a neighborVerDate 11-MAY-2000 13:17 Jan 06, 2003 Jkt 000000 PO 00000 Frm 00022 Fmt 6633 Sfmt 6633 C:\DOCS\83204.TXT HBANK1 PsN: HBANK1
19

hood of extended families. And very often, you will have two or

three generations living in the same household or within the same

neighborhood.

It is quite apparent, really, the solution to this is very simple.

Let those people who are in great fear and anxiety find a way to

recover their equity so that they go out and can relocate. And find

a methodology, not through the long process of condemnation and

acquisition that we all experience in redevelopment, but by putting

in the special master, really adopted out of the concept of the

World Trade Center, someone who could move very quickly, establish cost and expenses and have very broad latitude to give these

people the appraised value of their equity so that they can move

on.

And then allow the normal processes of the law to carry on for

recovery or for cleanup. But they are in a situation where they are

damned if they do and damned if they do not. And they are stuck

there until all the federal and state agencies and county agencies

and local municipal agencies take their time at bat and usually do

not hit a home run.

But the people here are the ones that are scored against. They

are the ones that lose.

I see Mr. Eachus wants to add to that.

Mr. EACHUS. I think Congressman Kanjorski is on the mark. But

from a public policy perspective, I really see these gasoline spills

as something that have to do with pre-regulation and post-regulation.

In Pennsylvania we have forced everybody who is business today

selling either petroleum or gasoline products to put new tanks in

that meet modern standards and federal standards. The releases

that are the most egregious in our region are ones that are pre-releases due to a lack of regulation by the federal and state authorities.

So I really see some of these spills as we are in a time where

the 1960s, 1970s and 1980s tanks that were installed are leaking

and having an impact on communities, but the new tank technology—not to say that it will not be spilled—it is less likely that

there will be spills. Plus, they have stronger indemnification requirements that put money in place to back up some of these spills,

which could be used as a match toward housing credits or other

kinds of things.

So I think we are in a unique time between pre-and post-regulation of gasoline tanks.

Mr. BARTSCH. And could I add one thing to that, too? Just getting at again, the issue of, again, as you suggested, ultimately

cleanup and reuse. I think that this country has a long history of

helping people in need. Clearly, this is the same situation.

And at the same time, I think what I like about the bill proposal

is that you really set the stage for, you know, sort of ultimate reuse

and cleanup of these things. I mean, you are not just moving people out and creating sort of uninhabitable wastelands, but you are

setting the stage for cleanup.

And to that extent, you can really look at the resources in this

bill as really an investment. And these investments will be recoverable as these homes are cleaned up and reused, as these sites are

20

cleaned up and reused. So it is an investment and not just a subsidy.

Mr. KANJORSKI. I have about three minutes, Pat. And since you

are the person that has led this cause all the way through, I am

going to ask you to, in your own words, spell out to the committee

what you would like the Congress to do as a remedy for Laurel

Gardens, but also for all the other Americans that are impacted,

through no fault of their own, by leaky storage tanks.

Ms. TOMSHO. I would like the Congress to certainly pass a law

or a bill, not my strong point, that will address the financial loss

that all of our neighborhood has. I cannot explain in enough words

how traumatic this has been for the neighborhood. And people

truly have no choices.

They need to be able to access the equity in their homes and

move if they feel unsafe. And at this point, we can do neither.

That is what we need. Thank you.

Mr. KANJORSKI. Thank you, Pat.

Mr. Chairman?

Mr. GREEN. Thank you.

The chair recognizes Mrs. Kelly for any questions that she might

have.

Mrs. KELLY. Thank you very much. I will tell you, coming into

this hearing, I was on the phone with my husband. And I told him

I was coming to a LUST hearing. And he said, ‘‘What are you doing

in Washington?’’

[Laughter.]

He said, ‘‘Are you sure you are doing your job?’’ I said, ‘‘Yeah,

this is a serious situation.’’

And it is a serious situation. In my area of New York, I have

been working with a township next door to me where I have experienced firsthand with people a whole neighborhood that was contaminated by MTBE. And it went into their drinking wells from a

nearby gas station.

Some of these people had little children. They were told they

could not drink, could not cook, could not bathe and could not even

smell the water. They were told not to turn on the taps in their

sinks and their bathrooms. Flushing the toilet was not allowed because it put the MTBE in the air.

One of the serious things I think we have to look at with all of

this though is the fact that there is not good scientific information

on the environmental body contamination problems. It is just not

well defined on what is in the environment and how it affects the

body.

When I see a cluster like you have, this is terribly disturbing. It

seems it really should be looked at further. And I am glad that we

are having this hearing.

In another town near me, one also that I represent, there is a

young mother who, when her husband died, moved in and altered

the family bar so that she now has a convenience store and a gas

station. And she is okay. Her gas station is okay.

But there is a gas station on the hill up above her. And that gas

station has old tanks. It is leaking something down into hers. And

now people think this mother, who is trying to clean up the neighborhood and make a better life for her kids, they have got a situaVerDate 11-MAY-2000 13:17 Jan 06, 2003 Jkt 000000 PO 00000 Frm 00024 Fmt 6633 Sfmt 6633 C:\DOCS\83204.TXT HBANK1 PsN: HBANK1
21

tion where their land is contaminated by the gas station up the

hill.

And between the two gas stations is a farm. And the farmer is

spraying that on—it is a truck farm. That is going on the crops.

So we are having big problems with this. This is a serious situation.

And I just want to go to you, Mr. Bartsch, to ask you a couple

of questions. What areas—are doing the best job of cleaning up the

LUST problem?

Mr. BARTSCH. Well, one of the cities that I am most familiar with

that is doing that is Chicago. And again, it is because they have

made a significant public sector effort to take on these sites. They

aggressively take title to the sites.

Now this is more from a perspective of abandoned gas stations

and less from the perspective of home heating tanks. And one of

the things that they have done there that is an option that is not

available to most places is they have basically just forbidden the

use of ground water. You cannot drill a well. You cannot use any

of it.

That is an option that is not available to most places. But I think

what is important about what they have done there—they have

done really good things in a couple of cities in New York that I am

aware of, as well as, again, cities in Wisconsin—is they have really

made an effort to figure out the pieces and bring to bear all the

different kinds of resources that are needed. Because it is a patchwork. You cannot deal with one of these sites with one source. You

need to be able to pull from not only a HUD, but perhaps an EDA

and perhaps some other resources as well.

The state of Ohio has done a lot of work with the State Clean

Water Revolving Fund to do some pretty innovative financing. So

there are some things that can be done. And a big piece of this is

just getting the information out there and also educating the federal agencies about what they really can do. Because again, depending on where you go and who you talk to, some will allow

these kinds of activities and some will think that it is not in the

mission, which is why I suggested putting that direct finding into

HUD so that it is crystal clear that this should be one of their objectives.

Mrs. KELLY. Have you found that the agencies, when they are

dealing with each other, are talking about not just remediation, but

are they talking about affecting areas when they are looking at the

totality of the environmental concerns? Like an underground aquifer—for instance, I am north of New Jersey. A lot of the area I represent supplies water down into New Jersey.

Mr. BARTSCH. I think my impression would be that those kinds

of conversations are hit and miss. But I think there does need to

be more effort to coordinate that, for the simple reason that, again,

everybody brings information and resources to the table. And it is

an expensive problem.

We have some—it is not only resources. It is also liability.

I know in the case of some of the gas station issues, you have

some of the big oil companies that have really kind of chosen to basically mothball sites and not do anything because they are so

afraid of what might happen should they start to take a good first

22

constructive step. I think it is better to get some of these resources

used in sort of clean up and reuse than litigation.

Mrs. KELLY. Are the CDBG funds being used? And if they are,

perhaps we can take a look at maybe helping to coordinate these

efforts? Are they being used to fund the LUST cleanups?

Mr. BARTSCH. They are being used in some cases. Probably—

again, to go back to the Wisconsin example, the state of Wisconsin,

through its Small City CDBG, has funded some of these. Some entitlement cities have funded this. Again, it comes down to sometimes what your HUD area office decides is a good thing to do.

I have talked to people who really wanted to use the CDBG

funds for something like this, but have decided that sort of the

extra justification is just—they just cannot do it. They do not have

the capacity. It is just easier to go rehab something than to try to

take on something more innovative.

So again, I think that getting the body of case examples out

there is a helpful way of making this happen.

Mrs. KELLY. I would like to ask unanimous consent. I had an

opening statement. I was not able to be here. May I ask unanimous

consent to put that statement in the record, please?

Mr. GREEN. Unanimous consent has already been granted.

Mrs. KELLY. Thank you.

[The prepared statement of Hon. Sue W. Kelly can be found on

page 31 in the appendix.]

Mr. GREEN. Mr. Kanjorski, you were looking with great interest.

Do you have something that you wish to add?

Mr. KANJORSKI. Ms. Kelly raised a very interesting question

about using CDBG. Actually, you will find that it is not nearly significant enough in amounts to handle these problems. These problems are generally in the multimillions of dollars.

In communities like Pennsylvania—I say it with apology—we

have 2,500 municipalities, 90 percent of which are under 3,500 in

population. So they receive no direct CDBG money.

And the Commonwealth has a program of putting money out to

these communities. But it amounts to sometimes $10,000, $50,000,

at a maximum of $100,000.

Mrs. KELLY. If the gentleman would yield, I would respectfully

say that we need to use every resource possible to do coordination

and remediation. These people are stuck, especially if they are out

there in rural communities.

I know Hazleton. I have known Hazleton for 40 years. And I

know where it is.

And I understand that we have to do something. I am questioning how we can best position HUD and the monies that we

have there to help in this problem.

This is a serious problem. And it is all across our nation.

Mr. KANJORSKI. Mrs. Kelly, the design of my legislation really is

a public-private solution. Actually, we are not called upon here to

put up all the money for relief. All we are really called upon is to

put up some percentage of the money to allow these people to relocate and then to recover the real equity or value that they have in

these homes.

I would tell you that my judgment is probably 20 percent of all

of the money insured would ever be at risk from the federal governVerDate 11-MAY-2000 13:17 Jan 06, 2003 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 C:\DOCS\83204.TXT HBANK1 PsN: HBANK1
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ment. The other 80 percent will be recaptured when the cleanup

is done, when the people are adequately relocated and their lives

started.

But our problem is we cannot find that 20 percent. And the private market cannot be expected to take that risk in a contaminated

area.

So we are between the devil and the deep blue sea, if you will.

Mr. GREEN. Well, I think that is a real good place to wrap this

up, between the devil and the deep blue sea.

Thank you to all the members of the subcommittee. And my

great appreciation to the members of the panel. I think you have

given us a lot of very useful information.

There may be members who have additional questions that we

may forward on to you for response. And again, please, if there is

additional information you would like us to see, you have leave to

provide it to us.

And thanks again. Travel safely.

[Whereupon, at 11:37 a.m., the subcommittee was adjourned.]

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September 12, 2002

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