U.S. GOVERNMENT PRINTING OFFICE

40–588 CC WASHINGTON : 1997

S. HRG. 105–42

BROWNFIELD LIABILITY AND RESOURCE ISSUES

HEARING

BEFORE THE

SUBCOMMITTEE ON

SUPERFUND, WASTE CONTROL, AND RISK

ASSESSMENT

OF THE

COMMITTEE ON

ENVIRONMENT AND PUBLIC WORKS

UNITED STATES SENATE

ONE HUNDRED FIFTH CONGRESS

FIRST SESSION

MARCH 4, 1997

Printed for the use of the Committee on Environment and Public Works

(

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington DC 20402
(II)

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

ONE HUNDRED FIFTH CONGRESS

JOHN H. CHAFEE, Rhode Island, Chairman

JOHN W. WARNER, Virginia

ROBERT SMITH, New Hampshire

DIRK KEMPTHORNE, Idaho

JAMES M. INHOFE, Oklahoma

CRAIG THOMAS, Wyoming

CHRISTOPHER S. BOND, Missouri

TIM HUTCHINSON, Arkansas

WAYNE ALLARD, Colorado

JEFF SESSIONS, Alabama

MAX BAUCUS, Montana

DANIEL PATRICK MOYNIHAN, New York

FRANK R. LAUTENBERG, New Jersey

HARRY REID, Nevada

BOB GRAHAM, Florida

JOSEPH I. LIEBERMAN, Connecticut

BARBARA BOXER, California

RON WYDEN, Oregon

STEVEN J. SHIMBERG, Staff Director and Chief Counsel

J. THOMAS SLITER, Minority Staff Director

SUBCOMMITTEE ON SUPERFUND, WASTE CONTROL, AND RISK ASSESSMENT

ROBERT SMITH, New Hampshire, Chairman

JOHN W. WARNER, Virginia

JAMES M. INHOFE, Oklahoma

WAYNE ALLARD, Colorado

JEFF SESSIONS, Alabama

FRANK R. LAUTENBERG, New Jersey

DANIEL PATRICK MOYNIHAN, New York

BARBARA BOXER, California

BOB GRAHAM, Florida

(II)
(III)

CONTENTS

MARCH 4, 1997

Page

OPENING STATEMENTS

Allard, Hon. Wayne, U.S. Senator from the State of Colorado ............................ 9

Baucus, Hon. Max, U.S. Senator from the State of Montana .............................. 6

Boxer, Hon. Barbara, U.S. Senator from the State of California ........................ 11

Chafee, Hon. John H., U.S. Senator from the State of Rhode Island ................. 4

Lautenberg, Hon. Frank R., U.S. Senator from the State of New Jersey ........... 2

Sessions, Hon. Jeff, U.S. Senator from the State of Alabama ............................. 9

Smith, Hon. Robert, U.S. Senator from the State of New Hampshire ................ 1

Warner, Hon. John W., U.S. Senator from the Commonwealth of Virginia ....... 8

WITNESSES

Bollwage, J. Christian, mayor, Elizabeth, NJ, on behalf of the U.S. Conference

of Mayors .............................................................................................................. 15

Letter, Brownfield program funds, U.S. Conference of Mayors .................... 136

Prepared statement .......................................................................................... 79

Report, Impact of Brownfields on U.S. Cities, U.S. Conference of Mayors . 91

Responses to additional questions from:

Senator Chafee .......................................................................................... 90

Senator Lautenberg ................................................................................... 90

Senator Smith ............................................................................................ 89

Fields, Timothy, Acting Assistant Administrator, Office of Solid Waste and

Emergency Response, U.S. Environmental Protection Agency ........................ 12

Prepared statement .......................................................................................... 50

Responses to additional questions from:

Senator Chafee .......................................................................................... 60

Senator Smith ............................................................................................ 58

Guerrero, Peter F., Director for Environmental Protection Issues, Resources,

Community and Economic Development Division, U.S. General Accounting

Office ..................................................................................................................... 33

Prepared statement .......................................................................................... 225

Responses to additional questions from:

Senator Chafee .......................................................................................... 230

Senator Smith ............................................................................................ 228

Louder, Lorrie, director of industrial development, St. Paul Port Authority,

on behalf of the National Association of Local Government Environmental

Professionals ......................................................................................................... 18

Prepared statement .......................................................................................... 219

Report, Building a Brownfields Partnership from the Ground Up,

NALGEP ........................................................................................................ 176

Responses to additional questions from:

Senator Chafee .......................................................................................... 224

Senator Smith ............................................................................................ 223

Riley, William J., general manager for environmental affairs, Bethlehem Steel

Corporation, on behalf of the American Iron and Steel Institute .................... 39

Prepared statement .......................................................................................... 232

Responses to additional questions from:

Senator Chafee .......................................................................................... 234

Senator Smith ............................................................................................ 235

Scherer, J. Peter, senior vice president and counsel, Taubman Company,

on behalf of National Realty Committee ............................................................ 35
Page

IV

Scherer, J. Peter, senior vice president and counsel, Taubman Company,

on behalf of National Realty Committee—Continued

Prepared statement .......................................................................................... 250

Responses to additional questions from:

Senator Chafee .......................................................................................... 255

Senator Smith ............................................................................................ 252

Seif, James M., secretary of environmental protection, Pennsylvania Department of Environmental Protection ..................................................................... 14

Prepared statement .......................................................................................... 67

Responses to additional questions from:

Senator Chafee .......................................................................................... 78

Senator Lautenberg ................................................................................... 79

Senator Smith ............................................................................................ 77

Wray, William K., senior vice president, Citizens Bank, Providence, RI ........... 37

Prepared statement .......................................................................................... 236

Responses to additional questions from Senator Smith ................................ 237

ADDITIONAL MATERIAL

Articles:

Turning Elizabeth Landfill into a Retail Center, New York Times ............. 165

Clarification of Secured Party and Fiduciary Liability under U.S. Environmental Statutes, BNA ............................................................................. 243

Memorandum, Environmental Liability and Real Property Collateral, FDIC ... 239

Reports:

Brownfields Redevelopment Action Agenda, U.S. Conference of Mayors .... 83

Building a Brownfields Partnership from the Ground Up, NALGEP .......... 176

Statements:

Brownfields Redevelopment, Mayor Freeman R. Bosley, Jr ......................... 138

Daschle, Hon. Tom, U.S. Senator from the State of South Dakota .............. 49
(1)

BROWNFIELD LIABILITY AND RESOURCE

ISSUES

TUESDAY, MARCH 4, 1997

U.S. SENATE,

COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS,

SUBCOMMITTEE ON SUPERFUND, WASTE CONTROL

AND RISK ASSESSMENT,

Washington, DC.

The committee met, pursuant to notice, at 9:30 a.m. in room 406,

Senate Dirksen Building, Hon. Robert Smith (chairman of the subcommittee) presiding.

Present: Senators Smith, Warner, Allard, Sessions, Lautenberg,

and Chafee [ex officio].

Also present: Senators Baucus and Wyden.

OPENING STATEMENT OF HON. ROBERT SMITH, U.S. SENATOR

FROM THE STATE OF NEW HAMPSHIRE

Senator SMITH. The hearing will come to order.

Good morning, everyone. I would like to thank everyone for coming this morning and thank the witnesses in advance for being

here.

We’re here to review the issues associated with abandoned and

underutilized industrial sites, otherwise known as brownfields. Although there are no concrete figures on how many of these

brownfield sites there are in the United States, GAO estimates indicate there are over 150,000 acres of these sites nationwide. While

the number in size is unclear, what is clear is it’s a significant national problem. These properties sit idle in many cities and towns.

They not only represent a nonproductive drain on municipal services, but also they’re not adding to the local tax or employment

base. There are estimates of billions of dollars in tax losses for

these sites.

I believe that the problems associated with brownfields are twofold: first, at many of these sites we simply don’t know what the

level of environmental contamination is. Sometimes we don’t know

if there’s any at all. By providing funding for environmental characterization, many of the sites with limited or no contamination

can be quickly returned to productive reuse. Second, at many of

these sites the current owners, including municipalities, that have

taken these properties via tax liens are aware that some environmental contamination exists, but they’re afraid to redevelop them

for fear of being caught in the web of Superfund liability.
2

While many of these owners are willing to clean up these sites

under State voluntary cleanup programs, they are tremendously

fearful of getting sucked into the Superfund morass.

What they want is certainty. They want one entity in charge of

the cleanups; they want to have a clear and consistent set of standards; they want to know at the end of the day after they’ve cleaned

up the site according to the agreed requirements; and that they

don’t have to fear unlimited future liability.

I believe this is a well-founded fear and one that Congress needs

to address. If we don’t deal with this matter, companies will continue to fence these older landholdings and put their new facilities

at pristine so-called ‘‘greenfield sites.’’ The issue of brownfields redevelopment has long been an important one for both political parties. The commitment on both sides is also underscored by the fact

that both of us this year have introduced legislation affecting

brownfields as part of the top 20 agenda for the U.S. Senate, S. 8

and S. 18.

Given the discussions that we have had together with the various members of the committee on both sides, I think there is general agreement that we should work hard to address these and

other difficult Superfund related issues this year.

Although we were not successful in our efforts to comprehensively reauthorize Superfund last Congress, I was very heartened

by the positive negotiations that we had both at the staff and member level with Senator Chafee, Senators Lautenberg and Baucus, as

well as the representatives of the Clinton administration, specifically Carol Browner.

Working together I hope we will continue to make progress, and

I would like to thank my colleagues in advance for these very cooperative comments in this regard.

I will turn it over now to the ranking member, Senator Lautenberg.

OPENING STATEMENT OF HON. FRANK R. LAUTENBERG,

U.S. SENATOR FROM THE STATE OF NEW JERSEY

Senator LAUTENBERG. Thank you very much, Mr. Chairman.

I too want to salute the spirit of bipartisanship that is evolving.

I think that it’s crucial that we get on with the responsibilities. We

have every right to differ, but the fact is that we have a hearing

today, for which I thank you, to discuss the brownfields legislation

as presently proposed, separate from Superfund. I hope that we

will be able to establish the fact that brownfields legislation is, of

and by itself, quite an independent course of action from Superfund

reauthorization. We would like to see both get done. It is the testament to the bipartisan interest and getting on with the environment agenda that’s so important.

I am hopeful that this spirit will continue as we address the complex and controversial issues that will be coming before this

Superfund subcommittee.

Fortunately, the brownfields legislation isn’t one of those complex

and controversial issues. Both parties have recognized that the

threat of Superfund liability is deterring the redevelopment of contaminated properties. Both parties support liability relief for pro-
3

spective purchasers, developers, and bankers who would clean up

these blighted properties and restore them to productive use.

Both parties have supported making low-interest money available to communities to clean up hazardous waste sites, and so it’s

fair to say that we all support brownfields legislation, which would

promote jobs in urban communities and remove contaminants from

the environment.

Mr. Chairman, now that we have this bipartisan consensus on

the value, we ought to try to act. There are more than 100,000

brownfields sites that Superfund will not clean up because the contamination levels are too low to qualify. Cleaning up these sites

can make an enormous difference for communities all around our

country.

One of the first bills introduced this year was S. 18, my legislation, to provide assistance for brownfields redevelopment. The first

title of S. 8 that Senator Smith and Chafee introduced in their

Superfund reauthorization bill had many provisions similar to

those contained in S. 18.

Unfortunately, there is disagreement about whether brownfields

legislation should go first or should be held until both parties resolved the many issues involved in the comprehensive reform of

Superfund.

Some of my colleagues on the other side of the aisle have suggested that a separate brownfields bill is nothing more than a feelgood measure, which would distract Congress for more important

questions. With respect, I disagree. I think we should act now. It’s

a much simpler case to review, and if we can get it in place, I think

we can help our communities enormously. They need this legislation.

Mr. Chairman, I want to be clear that I remain very interested

in revising Superfund. We’ve had private conversations about it. I

think that there is a distinct possibility that we can work out our

differences, and, certainly hope so. I would like to find an acceptable bipartisan approach to such a bill because we both know, we

all know, that unless it’s bipartisan, it’s not going to happen.

But I don’t want controversies over Superfund to stall this critical brownfields legislation, and, frankly, as I see it, enactment of

brownfields is not only the right thing to do, but it would help promote a spirit of progress and bipartisanship on environmental legislation. It would show that we can move things along.

I think that many of our witnesses today will help make the case

for moving forward to address the brownfields problems and opportunities. I am especially looking forward to the testimony of Mayor

Bollwage from Elizabeth, NJ, from my State, and a city I lived in

during my movements around New Jersey with my family. There

were many communities that we lived in as my father tried to establish a place to make a living. Elizabeth was one of those good

industrial towns. Elizabeth was home to the Singer Sewing Machine Company. The city is a renowned place for companies that

came, worked and later on abandoned. That wasn’t in the plan, but

that was the result. The economic stabilization of Elizabeth is an

inspiring story, and the Mayor here has gained some significant

distinction and leading the fight to reinstall pride, jobs, and

progress in that city.
4

Mayor, we congratulate you. I hope that the Mayor’s story will

convince all my colleagues that we ought to get going on

brownfields legislation now.

Thank you very much, Mr. Chairman.

[The prepared statement of Senator Lautenberg follows:]

PREPARED STATEMENT OF HON. FRANK R. LAUTENBERG, U.S. SENATOR FROM THE

STATE OF NEW JERSEY

Mr. Chairman, I am pleased that we are here today to receive testimony on

brownfields legislation. This hearing is a testament to the genuine spirit of bipartisanship that currently exists among members of the committee. And I’m hopeful

that this spirit will continue as we address the complex and controversial issues

that will be coming before the Superfund Subcommittee.

Fortunately, brownfields legislation is not one of those complex and controversial

issues. Both parties have recognized that the threat of Superfund liability is deterring the redevelopment of contaminated properties. Both parties support liability relief for prospective purchasers, developers and bankers who would clean up these

blighted properties, and restore them to productive use. Both parties have supported

making low-interest money available to communities to clean up hazardous waste

sites. And so we all support Brownfields legislation, which would promote jobs in

urban communities, and remove contaminants from the environment.

Mr. Chairman, now that we have such bipartisan consensus, we should act. There

are more than 100,000 brownfields sites that Superfund will not clean up because

contamination levels are too low to qualify. Cleaning up these sites can make an

enormous difference for communities all around our Nation.

One of the first bills introduced this year was S. 18, my legislation to provide assistance for brownfields redevelopment. The first title of S. 8, Senators Smith and

Chafee’s Superfund reauthorization bill, had many provisions similar to those contained in S. 18. Unfortunately, there is disagreement about whether brownfields legislation should go first, or should be stalled until both parties resolve the many issues involved in comprehensive reform of Superfund.

Some of my colleagues on the other side of the aisle have suggested that a separate ‘‘brownfields’’ bill is a ‘‘feel good’’ measure, which would distract Congress from

more important questions. I respectfully disagree. I think we should act now. Our

communities need this legislation. And many of them need it very badly.

Mr. Chairman, I want to be clear that I remain very interested in revising

Superfund, and would very much like to find an acceptable, bipartisan approach to

such a bill. But I don’t want controversies over Superfund to stall this critical

brownfields legislation. And, as I see it, enactment of a brownfields bill is not only

the right thing to do, but it would help promote a spirit of progress and bipartisanship on environmental legislation.

I think many of our witnesses today will help make the case for moving forward

to address brownfields. I am especially looking forward to the testimony of Mayor

Bollwage of Elizabeth, New Jersey. His city’s experience shows that a concerted effort can turn contaminated lands into gold mines. It’s an inspiring story—one of

many. And I hope it helps convince all of my colleagues that we should act now to

enact brownfields legislation.

Senator SMITH. Thank you, Senator Lautenberg.

We are delighted to have both the ranking member and the

chairman of the Full Environment and Public Works Committee

here this morning, Senator Chafee.

OPENING STATEMENT OF HON. JOHN H. CHAFEE,

U.S. SENATOR FROM THE STATE OF RHODE ISLAND

Senator CHAFEE. Thank you very much, Mr. Chairman.

I would prefer to go for 3 minutes if the lights could alert me

that because I’m anxious to hear the witnesses this morning. I

want to congratulate you, Mr. Chairman, for holding this hearing

on brownfields. I want to recognize you for your leadership in the

entire Superfund issue. You’ve worked on this last year—I know

the mere mention of Superfund makes you shake your head, but

don’t despair. We shall prevail and get a Superfund bill passed.
5

I also want to recognize the ranking members of the committee

and subcommittee, Senators Baucus and Lautenberg, for their continued efforts on brownfields and on Superfund. Both of them have

labored long and hard on this subject.

One of the unintended consequences of the Superfund statute is

that new industries have shied away from urban areas, because

they’re worried about liability under brownfields. They move out to

pristine areas in the countryside that we, as a committee, are trying to preserve. So we’ve got an unfortunate consequence of the legislation that we passed. The brownfields effort is an attempt to

overcome that problem.

As Senator Lautenberg pointed out, while there is a lot of commonality between our two approaches—that is, S. 8 and S. 18—the

basic difference is that we on this side believe that brownfields

should be part of an overall Superfund reauthorization. In other

words, pass Superfund legislation. On the other hand, Senator

Lautenberg has indicated that he would like to proceed with S. 18,

solely the brownfields part, and later follow on with the Superfund

revisions overall.

I agree with you, Mr. Chairman. I prefer to see it in a package.

We’re having a hearing on brownfields, but I would like to see that

part of the overall Superfund reform. I really do fear, Mr. Chairman, that absent that, if we just do brownfields alone, that the enthusiasm to do something about Superfund overall would slacken.

So, Mr. Chairman, I want to do everything I can to help you. I

would just quote from a letter that you and I wrote to Administrator Browner in July 1996:

We see little benefit in moving forward with the brownfields bill that fails to address the critically important issues of the Federal-State relation, and potential liability under Superfund, and we strive for the overall reform of Superfund.

Thank you very much, Mr. Chairman.

[The prepared statement of Senator Chafee follows:]

PREPARED STATEMENT OF HON. JOHN H. CHAFEE, U.S. SENATOR FROM THE

STATE OF RHODE ISLAND

I want to thank the Chairman of the Subcommittee on Superfund, Waste Control

and Risk Assessment, Senator Smith, for holding this hearing on the topic of

Brownfields, and recognize him for his leadership on Superfund reform generally

and on this very important part of Superfund reform, namely brownfields revitalization. I also want to recognize the Ranking Members of the Committee and Subcommittee, Senators Baucus and Lautenberg, for their continued efforts on

Superfund.

One of the unintended consequences of the Superfund statute is that new industries have shied away from urban areas, which already have in place an infrastructure to support new manufacturing and industrial facilities, and have instead located in previously undeveloped areas without any infrastructure to support them.

Thus, a law that was supposed to be protective of the environment has actually led

to increased development of formerly pristine lands.

In late January, both we and the Democrats introduced our bills on Superfund

and brownfields. A central focus of the Superfund bill we introduced in January,

S. 8—the ‘‘Superfund Cleanup Acceleration Act of 1997,’’ is a strong pro-brownfields

revitalization policy. We all know what brownfields are—they are the abandoned

plant that might be contaminated, or might not be. It is the mothballed facility that

a large company is afraid to sell for redevelopment because a successor’s mismanagement might expose it to Federal liability years later. No one knows exactly

what the problems at these sites are, so people are afraid to invest in them or redevelop them, people are afraid of liability. So rather using old industrial sites, new

development flees the city and tears up our open space, green fields. In the meantime, these old sites remain a blight and a big hole in local tax bases.
6

There is some commonality between our approach to brownfields and the Minority

approach. The legislation introduced by Senator Lautenberg and others addresses

some of the brownfields redevelopment barriers the Committee previously identified.

The bill includes grants for site characterization, grants for States to set up revolving cleanup funds, and liability relief or limitations for bona fide prospective purchasers, and innocent landowners. All but one of the provisions are similar to provisions in our comprehensive bill, S. 8.

Title I of S. 8 contains many provisions that should facilitate brownfields redevel- opment. It will provide $15 million annually to capitalize revolving loan funds for

site characterization and cleanup, and an additional $25 million annually to capitalize a revolving loan fund for site remediation. It provides an additional $25 million

annually to improve or create State voluntary cleanup programs. It will lift the Federal liability cloud from sites cleaned up under a State cleanup program, and it provides other assurance for prospective investors.

A major difference between our position and that of the Minority is the scope of

a brownfields bill. It is our position that there are many redevelopment candidates

beyond the numerous lower risk, less-contaminated sites that are not likely to be

added to Superfund’s National Priorities List. In fact, there are many redevelopment

candidates that either are currently on the NPL or could be. Rhode Island’s Department of Environmental Management informs me that there are over 200 Rhode Island sites that RIDEM screened as likely to score above the Superfund listing

threshold score. The vast majority of these 200 sites will never be added to the

Superfund NPL list; inevitably it will be Rhode Island’s responsibility to supervise

these cleanups. This has led us to conclude that a complete solution to the

brownfields dilemma requires significant changes to CERCLA beyond Title I of S. 8.

These changes will make possible a brighter future for brownfields sites, whether

or not they are on the Superfund list or in a State cleanup program.

During Superfund hearings in the last Congress, we repeatedly heard testimony

from State officials who were concerned about the potential for increased Federal

involvement in State voluntary cleanup programs. We will hear similar testimony

from many of our witnesses today. These witnesses will tell us that a key element

needed to make brownfield programs work is the ability of States to provide future

liability waivers to parties that clean up these sites.

I agree. As Senator Smith and I noted in a letter on brownfields to Administrator

Browner in July, 1996, ‘‘we see little benefit in moving forward with a brownfields

bill that fails to address the critically important issues of the Federal-State relationship and potential liability under Superfund.’’ The time for tinkering around the

edges of Superfund is over. We need to extensively overhaul Superfund and I invite

the Minority and Administration to join us.

The Minority makes a strong case for enacting brownfields reform legislation.

While we appreciate the continued commitment on the part of the Minority and the

Administration toward improving this flawed environmental program, we believe

that pursuing stand-alone brownfields legislation so early in the 105th Congress

would seriously undermine our effort to attain comprehensive Superfund reform this

year.

Real brownfields reform starts with recognizing that States and not the Federal

Government are already cleaning up the vast majority of these brownfields sites,

therefore it follows that the key to reform is empowering the States. It is for this

reason that I believe that a real solution for brownfields reform means removing the

Federal impediments to reusing these properties. I stand ready to work with the

sponsors of S. 18 and the Administration to make sure that we get real brownfields

reform, namely comprehensive Superfund reform, as a top priority for the Environment and Public Works Committee and commend them for their hard work on this

issue.

I look forward to hearing from our witnesses today on this important topic.

Senator SMITH. Thank you, Senator Chafee, distinguished ranking member of the full committee, Senator Baucus.

OPENING STATEMENT OF HON. MAX BAUCUS, U.S. SENATOR

FROM THE STATE OF MONTANA

Senator BAUCUS. Thank you very much, Mr. Chairman.

I would like to speak about the approach rather than getting in

a debate about whether brownfields is a separable or intrinsic part

of Superfund reform. I believe that there’s an opportunity here to

do something constructive, and I hope that we do it.
7

I want to remind this committee that is the first hearing that

we’ve had this Congress on brownfields legislation. We’ve had hearings on regulations, but this is the first hearing on legislation. It’s

a good opportunity to set the right tone, to go forward and not get

bogged down by partisanship.

We would all agree there’s been too much partisanship in the

last couple of years, but there has not been partisanship on this

committee. That is due to the leadership of our chairman, Senator

John Chafee and the chairman of this subcommittee, Senator

Smith. I think all of us have done a pretty good job of trying to

keep this debate above board, to work hard to try to find solutions.

We’ve made some progress.

I think it is also important to remind ourselves that the approach

that we have taken in the past has worked. Most significantly, this

committee wrote a very good law reforming the Safe Drinking

Water Act. That was legislation praised by residents of both cities

and States. It was praised by environmental groups and it received

overwhelming bipartisan support.

I’ve been thinking a little bit about why that happened, why in

contrast to other legislation was that effort such a success. Here is

my view: the Safe Drinking Water Act was, to use a cliche, a ‘‘winwin’’ proposition. We didn’t just reduce regulatory burdens, but we

also increased environmental protection, especially by expanding

the public’s right to know about the quality of drinking water. Reducing unnecessary regulations is a good thing in and of itself—we

should do that. Also, we should increase environmental protections.

This is a practical political matter. If you try to accomplish only

one of these goals and not the other, you are unlikely to achieve

a consensus.

As we begin to consider other environmental laws like Superfund

and the Endangered Species Act, I hope we take the same approach that we took in the Safe Drinking Water Act. Let’s try to

come up with a win-win approach that not only makes the law less

burdensome for those it regulates, but also that provides more environmental protection for the American people.

The brownfields legislation that we are considering today is a

good example. We all talk about the environment and the economy

going hand in hand, and the brownfields legislation puts our words

into action. There are thousands of old, vacant industrial sites all

over the Nation. Many of these sites have some contamination but

usually not very much. Most can easily be cleaned up and returned

to productive use. Yet, most of these sites are sitting idle.

Why? One reason is that the developers are afraid of Superfund

liability. The brownfields bill makes it clear that developers and innocent landowners would not be subject to Superfund liability.

Both bills also provide a little seed money to help them get the ball

rolling. These provisions will help communities turn idle properties

into new business opportunities creating new jobs and economic

growth. That is already happening in some States like Oregon, and

Illinois and New Jersey. It’s also happening in my home State of

Montana. In Butte, MT, county officials working together with the

Chamber of Commerce built a new Visitor’s Center in an area that

was once used as a landfill. Nearby in Anaconda, folks have worked

for years to come up with a creative approach. We’re turning the
8

site of an old smelter works into a world-class golf course designed

by Jack Nicholas. That will attract visitors from all around the

country and all around the globe. In each case it’s a win-win solution, good for the local economy, good for the environment. The legislation that we are considering today would mean more solutions

like this.

There is another reason for passing brownfields legislation—the

Welfare Reform Bill that we passed last year. That bill requires

welfare recipients to find work—which is a good thing—but the

strategy is successful only if jobs are available. The brownfields bill

can play an important role in helping to create jobs where they are

needed. For this reason, brownfields legislation is one of the most

important economic revitalization initiatives that we will consider

this Congress.

In closing, I want to thank expressly Senator Chafee, Senator

Smith, and Senator Lautenberg and others on this side of the dais

for holding this hearing. It gets us off to a good start. I hope and

pledge every effort to work to find a common solution, one that has

give and take on both sides, as we did when we passed the Safe

Drinking Water Act.

Thank you.

Senator SMITH. Thank you, Senator Baucus.

Senator Warner.

OPENING STATEMENT OF HON. JOHN W. WARNER,

U.S. SENATOR FROM THE COMMONWEALTH OF VIRGINIA

Senator WARNER. Thank you, Mr. Chairman.

I join the others here in commending you and the distinguished

ranking member for your efforts and leadership. You have been unfailing, Mr. Chairman, in your dogged persistence to try and come

up with legislative solutions to this troublesome situation of

Superfund.

It is interesting that the distinguished ranking member from

Montana, as well as, I believe, the distinguished ranking member

from New Jersey used in their statements the phrase, ‘‘afraid of

Superfund liability.’’

It is deeply regrettable that Congress has passed a law which

people are fearful of. Therefore, if we have created that fear, we

have an obligation to remove it. Brownfields legislation, in my

judgment, is an effort in that direction.

But I take a word from Mr. Baucus’ statement about welfare.

Many of these sites are co-located in those neighborhoods where

our welfare legislation will have a major impact. It will provide,

hopefully, the jobs that are needed. Most importantly, these people

don’t have the ability to buy a car and drive to the site on the outskirts of the cities. This legislation will enable them to walk to

work, saving the cost associated with additional transportation.

Very often public transportation in place today will serve the sites

we regard as brownfields.

So I think this is probably the best example of time and economic

advancement, together with an environmental advancement. That

opportunity is before us—let’s make sure this committee gives the

Senate the leadership and guidance to pass that legislation.

Thank you.
9

Senator SMITH. Senator Allard.

OPENING STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR

FROM THE STATE OF COLORADO

Senator ALLARD. Thank you, Mr. Chairman.

It is great to be on your subcommittee, and I note with interest

all the seniority that we have on this committee. Senator Sessions

and I are the new men on the block. I don’t know about him, but

I kind of feel like the cross-eyed javelin thrower. You’re not going

to be making many points, but everybody is going to be watching

you.

[Laughter.]

Senator ALLARD. But let me just say from a Coloradan’s perspective that I come from a State that is interested in green areas, and

we’ve dedicated a lot of local dollars in the State to do that. One

of the frustrating things is the brownfields sites’ locations, and

there are sites that can never be dealt with because of the big liability issue that goes with it. In some cases they are close to a

Superfund site, they get intermingled with those issues related to

the Superfund site. That is why I think we need to address both

Superfund as well as brownfields sites.

But the brownfields site legislation, which I am a co-sponsor of

with the chairman of this committee, I think would help a lot in

our State. I think from hearing the other comments, it will help all

over the country, and, certainly, very worthwhile legislation. I hope

we can get it to move forward as a companion issue with the

Superfund reauthorization.

[The prepared statement of Senator Allard follows:]

PREPARED STATEMENT OF HON. WAYNE ALLARD, U.S. SENATOR FROM THE

STATE OF ALABAMA

Thank you Mr. Chairman. I’m looking forward to today’s hearing on brownfields

and the positive economic and environmental impact that cleaning up these sites

could have for Colorado and other States. Specifically, I want to mention Colorado

because in my State leaving these sites abandoned can have a disproportionate impact on individuals who live miles from a brownfield.

One of the unique aspects of Colorado, particularly the front range, is that cities

are broken up by green space. Unfortunately, one of the challenges Coloradans face

is growth pressure for both residential homes and new businesses that lead to development of green space. In fact, when Coloradans are asked what their major concerns are, growth always ranks near the top. To protect from this the State runs

a program to buy open space for preservation called Great Outdoors Colorado.

GOCO, as it is called, spends hundreds of millions preserving green space from development. Further, in last year’s Farm bill Congress authorized $35 million to preserve farmland threatened by urban sprawl.

Unfortunately, the Federal Government doesn’t always help in terms of providing

policies that could be characterized as preservation friendly. Superfund, and the liability hammer it carries, is but one good example. Because of the fear of liability,

sites that otherwise could be cleaned up and redeveloped are left empty and new

industrial development occurs elsewhere.

Mr. Chairman, with respect to brownfields I’m pleased to be a cosponsor of your

legislation. I think if we can get Federal agencies out of the way, States will be able

to clean up brownfield sites to a satisfactory level. Thank you.

Senator SMITH. Senator Sessions.

OPENING STATEMENT OF HON. JEFF SESSIONS, U.S. SENATOR

FROM THE STATE OF ALABAMA

Senator SESSIONS. Thank you, Mr. Chairman.
10

I salute you for the leadership you’ve given in working on this

matter. It’s a complex and important issue, and I think Senator

Baucus’ comments are well worthwhile. If we can improve the environment at the same time, reduce burdensome and unwise regulation, we’ve had a double advantage. I think that is possible in this

legislation, and that’s why I’ve been supportive of it.

I’ll just share this story and conclude my opening remarks. On

the northern edge of the city of Mobile there is an area that is of

marginal strength economically. My law firm was involved in a situation where there was going to be built a nice, low-cost motel. A

corner of that property had a service station on it. Everything was

ready to go forward, but it became impossible for the environmentalists and the lawyers to agree on whether or and not they

could protect that motel from future liability from the possibility of

pollution from that service station years before. As a result, that

project was dropped, the development was not made, and that

property still remains vacant. I think it indicates to us that we do

need to make sure that our government institutions and agencies

can promptly respond to determine promptly whether or not there

is a serious danger to the environment, and what it’s going to cost

to fix it so that rational decisions by developers can be made.

I salute you for working on the problem, and I look forward to

learning more about it as we go forward.

Senator SMITH. Thank you, Senator Sessions.

[The prepared statement of Senator Sessions follows:]

PREPARED STATEMENT OF HON. JEFF SESSIONS, U.S. SENATOR FROM THE

STATE OF ALABAMA

Mr Chairman: I believe that today’s hearing into the creation of urban

brownfields, and the barriers that impede their recovery for productive use, are a

classic illustration of what can occur when good intentions go awry. As we look into

the issues which will be raised over the course of the next several days, I have deep

concerns that in its haste to remedy the problem of environmental contamination,

Congress has enacted legislation with structural defects that lead to the kind of unforeseen and costly unintended consequences we will have presented before us

today.

In this case, passage of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 has led to these types of unintended consequences.

Clearly, the problem of urban brownfields is a significant one, and we should seek

to address this issue in the most effective and efficient way possible.

The problem of ‘‘brownfields’’ is self-evident. It is estimated that hundreds of thousands of brownfield acres exist in major cities throughout the country. In fact, in

many cities the amount of brownfield land present exceeds the total land area of

Washington, DC. This abandoned or underutilized land, which once was put to productive use, is often overlooked or ignored by future developers who fear exposing

themselves to Superfund’s drastic joint and several, strict and retroactive liability

provisions. Further, the lack of finality and certainty created by a State’s certification of cleanup serves to undermine incentives for restoring potentially contaminated brownfield sites.

Finally, the effectiveness of the actual cleanup programs, both in terms of cost

and time, is often hampered by the tide of litigation which has resulted from these

regulations. Our cities and families cannot afford the continuing loss in jobs or tax

revenues that these brownfield areas create, and we should seek measures which

will remedy the inherent problems that give rise to these situations. To this end,

I look forward to hearing the testimony of the witnesses on these issues.

Senator SMITH. Let’s have the first panel of witnesses please

come forward.

Mr. Timothy Fields, the Acting Assistant Administrator at the

Office of Solid Waste and Emergency Response for the U.S. EPA;
11

Mr. James Seif, secretary of Environmental Protection, Pennsylvania Department of Environmental Protection; The Honorable J.

Christian Bollwage, Mayor, city of Elizabeth, on behalf of the U.S.

Conference of Mayors; and Ms. Lorrie Louder, director of Industrial

Development. St. Paul Port Authority, on behalf of the National Association of Local Government Environmental Professionals.

Welcome to all of you this morning for being here. Each of your

statements, as you’ve written them, will be made part of the permanent record, and if you could summarize those statements in

about 5 minutes each, we would appreciate it because we do have

another panel.

We also have a prepared statement by Senator Boxer for the

record.

[The prepared statement of Senator Boxer follows:]

PREPARED STATEMENT OF HON. BARBARA BOXER, U.S. SENATOR FROM THE

STATE OF CALIFORNIA

Mr. Chairman, resolving the issue of how to encourage the cleanup of abandoned

and underutilized industrial sites around the country is of critical importance as we

strive to revitalize our inner cities.

The city of San Francisco alone has an estimated 5,051 brownfields sites. If we

take into account the fact that many of these sites contain multiple properties, San

Francisco may have as many as 15,000 or more individual brownfields properties.

Each one of these abandoned, vacant industrial and commercial sites means fewer

inner-city job opportunities, neighborhood blight, and the increased pressure of

urban sprawl and loss of local tax revenue.

As reported in the 39-City Survey on the impact of brownfields on U.S. Cities,

local tax revenue losses to the city of San Francisco are estimated to be between

$16 million and $100 million.

The current Superfund law impedes brownfields development. Many new businesses prefer to locate in uncontaminated areas outside cities rather than face the

costs of assessing and cleaning up brownfields, and face the possibility of becoming

involved in cleanup liability issues for contamination caused by former users of the

site.

In order to bring businesses back to intercity commercial sites, and help revitalize

our communities, we must provide liability relief for prospective purchasers and innocent landowners while ensuring that we in no way erode protection of human

health and the environment. The Lautenberg/Baucus bill of which I am a cosponsor

would provide this relief.

The Lautenberg/Baucus bill also authorize grants to State and local governments

to characterize brownfield sites and capitalize revolving loan funds for brownfields

cleanup. Providing these funds is critically important as demonstrated by the success of EPA’s grants for brownfields pilot cleanup projects in the last 2 years.

California has four EPA brownfields National Pilot Projects: in Sacramento,

Stockton, Emeryville, and Richmond. We also have two Regional EPA Pilot

Projects—one in San Francisco and one in Oakland, and EPA provides regional assistance to Los Angeles and East Palo Alto.

EPA brownfield grants are playing an important role in, for example, the city of

Stockton’s plans to redevelop its abandoned shipyard and industrial sites along the

waterfront. EPA is helping the City fund a master plan for brownfields site assessment and remediation, and incentives for redevelopment. San Francisco has received a $100,000 grant to help revitalize the South Bayshore

neighborhood adjacent to the Hunters Point Naval shipyard.

In Sacramento, EPA grants are helping to redevelop the old Southern Pacific and

Union pacific railyard sites situated in the heart of the city.

While there are many similarities between the brownfields provisions in your

Superfund reauthorization bill and the Lautenberg/Baucus brownfields bill, I am

particularly concerned about provisions in your bill which allow Superfund cleanups

to occur under State voluntary cleanup laws and policies. State programs are designed to clean up low risk sites and may not prove adequate not appropriate for

high risk Superfund site cleanup.

Mr. Chairman, acting quickly to resolve critically important liability and cleanup

issues in brownfield sites all over the country is of utmost importance for our Nation.
12

I look forward to working with you to get brownfields reform provisions approved

as quickly as possible.

Senator SMITH. We’ll start with you, Mr. Fields.

STATEMENT OF TIMOTHY FIELDS, ACTING ASSISTANT ADMINISTRATOR, OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, ENVIRONMENTAL PROTECTION AGENCY, WASHINGTON, DC

Mr. FIELDS. Thank you, Mr. Chairman, and members of the committee.

I am pleased to be here this morning to discuss the current state

of the EPA Brownfields Economic Redevelopment Initiative and to

discuss how those initiatives can inform the dialog with the context

of legislative reform, as expressed in S. 8 and S. 18.

As you know, Administrator Carol Browner will be testifying before you tomorrow. She will discuss Superfund in a more comprehensive way.

My purpose today is to discuss with you some of the accomplishments of the Brownfields Action Agenda that we have implemented

over the last couple of years, and to identify some of the issues that

are raised by the legislation that is pending before you on

brownfields legislative reform.

As you know, the EPA has worked over the last 2 years to try

to address brownfields in a proactive way. There are four major

components of the Action Agenda. First, we’ve awarded 78 pilot

grants to communities around the country. We had planned on 50

pilots in fiscal year 1998, but 78 pilots have been awarded to date

to provide support for assessment, to facilitate cleanup and to support redevelopment planning activities in those communities, and

to provide job training support as well. Second, we have built partnerships with various other players beyond the local governments.

Federal agencies, like Housing and Urban Development, the Economic Development Administration of the Department of Commerce, the Department of Labor—are working together to address

brownfields, job training, and redevelopment issues in communities.

We also have worked with States. As you know, State voluntary

cleanup programs are a very important component of effective

brownfields redevelopment. Thirty-three States have voluntary

cleanup programs. The EPA has signed Memorandums of Agreement with 10 of those State programs; most recently MOAs were

signed with Rhode Island and the State of Maryland in the last few

weeks. We have eight other Memorandums of Agreement that are

being negotiated with States. So, we hope to have 18 of those

MOAs completed by the end of the year.

We also have in our budget this year $10 million to support the

establishment of voluntary cleanup programs and to make sure

those programs are developed in an effective way.

Finally, regarding State voluntary cleanup programs, we’re working together in a stakeholder process that would allow us to develop national principles and guidance regarding the operation of

State voluntary cleanup programs and the Memorandums of Agreement. In terms of our partnership efforts, EPA and the States are

working together on these initiatives.
13

We believe in terms of working together on brownfields that the

brownfields reforms that we have made under Superfund over the

last couple of years should inform the legislative debate that you

are undertaking today. We believe that brownfields legislative reform should codify many of the reforms that we’ve implemented administratively and include, among other things, funding for technical assistance, for brownfields identification, for assessment and

reuse planning, for funding to capitalize revolving loan funds and

liability relief, for bona fide prospective purchasers, as well as protection for innocent landowners.

We believe also that S. 235 regarding the brownfields tax incentive should be supported as part of the overall brownfields redevelopment equation.

S. 8, we think, provides for many of the kinds of things we want

in legislative reform. We’re encouraged to see the substantial

brownfields provisions, as well as the voluntary cleanup provisions

within S. 8. However, we do have concerns regarding some of those

provisions. We believe that the voluntary cleanup provisions would

eliminate the authority of the EPA and other Federal agencies to

respond to releases of hazardous substances whenever a State remedial action plan has been prepared.

The mere existence of a plan eliminates Federal authority to respond to emergency events even where there is an imminent substantial endangerment. The provisions would leave us paralyzed to

deal with those emergencies, and we think that is something that

should be fixed.

Second, we believe that the S. 8 language regarding ‘‘adequate

opportunity’’ for community involvement is a problem. Communities need to be involved. Those who live next to these brownfields

properties need to have a say involving decisions of land use and

remediation at these sites.

S. 8 also identifies elements for a qualifying State voluntary response program. However, it allows some of those programs to

move forward without necessarily meeting all of those qualifying

program elements.

Finally, regarding S. 18, we think that that bill does address

many of the barriers that are preventing the cleanup and economic

redevelopment of brownfields. It promotes many of the brownfields

cleanup and economic development goals—that are shared by the

Clinton administration—and builds upon many of the lessons

learned by the EPA over the last couple of years in implementing

our Brownfields Action Agenda. We think that S. 18 has the liability relief that we need. The major concern we have with S. 18 is

that we don’t believe it has an adequate level of funding provided

to support the full range of brownfields activities.

In conclusion, the Clinton administration believes that a comprehensive approach to brownfields legislative reform would support all of the existing elements of the current program—some of

these elements that are in S. 8 and S. 18—but should also include

the brownfields tax incentive, we believe, is an important element.

Mr. Chairman, thank you for the opportunity to address the committee. Thank you for the little extra time, and I would be pleased

to answer any questions that you and the members might have.

Senator SMITH. Thank you very much, Mr. Fields.
14

Mr. Seif, welcome.

STATEMENT OF JAMES M. SEIF, SECRETARY OF ENVIRONMENTAL PROTECTION, PENNSYLVANIA DEPARTMENT OF

ENVIRONMENTAL PROTECTION, WASHINGTON, DC

Mr. SEIF. Thank you, Mr. Chairman.

Mr. Allard, I might point out that as a State official, I occasionally feel in dealing with the EPA like a javelin receiver, but I’ll

leave it up to the committee to decide if I have become cross-eyed

yet.

[Laughter.]

Mr. SEIF. I would like to start with two stories in summary of

my testimony. One was December 1980 when President Carter

signed the Superfund bill, and he said at that point that ‘‘for $1.6

billion we had once and for all solved the problem of abandoned

waste sites in America.’’ Flash forward nearly 16 years. Last Friday Senator Moynihan of this subcommittee participated in a ceremony at the Smithsonian celebrating that Institution’s move for

the first time outside the Beltway to a site in Bethlehem, PA. An

old steel mill will become the National Museum of Industrial History in Pennsylvania.

If one knew nothing of the intervening 16 years, one could say

President Carter was right. Here comes a site back from behind the

cyclone fence and closed-down status. The fact is since then we’ve

learned that Superfund is the least successful Federal environmental statute, at least in modern history. It has every perverse

incentive, it has frozen progress in any number of communities

around the Nation, it has enriched the wrong people and impoverished others, and it must be reformed. Pennsylvania would very

much like to see that.

What has happened also, however, is the States which first tried

to mimic Superfund with their own hazardous site cleanup bill got

the message, and, as I believe one member of the panel has pointed

out, perhaps Mr. Fields, there are now some 30 plus States that

have programs. Our program is a statutory one. It has pretty much

gone its own way. While Superfund in Pennsylvania has finished

only 8 of 103 sites, we are now in 47 of our 67 counties with 64

final cleanups, 195 in progress. The American legislative exchange

has dubbed our program the model for other States.

What are the elements of successful programs? My testimony on

page 2 lists them. First, let’s abandon the Garden of Eden cleanup

standard. Pristine isn’t even possible in nature we now know. If we

decide—and it’s a fundamentally local decision—what the future

use of that land will be, we can craft a safe level of cleanup.

Second, let’s stop at some point the liability. If you have a contaminated site and your uncle walked past it in 1952, you will wind

up litigating his estate over liability under the present approaches

of Superfund. I have myself been in Court over residues of paint

cans left in a factory in 1968. That kind of litigation incentive has

no place in community cleanups.

Third, stop the delays in general. Get a pathway toward bringing

a site through a process and then follow it.

Finally, reduce the chilling effect of a far-reaching and a liability

scheme that reaches everybody and which is joint and several. That
15

has entrapped lenders and scared them off and frozen many sites

behind the cyclone fence.

Our cleanup standards are based on risk and the fundamentally

local decision of land use. Air statutes and water statutes, it seems

to me, do have a more appropriate reach between States, but the

fact is that land use still remains fundamentally local and it should

be that way with brownfields statutes.

Second, liability protection is final in our State. You get a release

from my Department and you may proceed; it’s bankable. Unfortunately, the EPA regional office may decide someday that there is

a better way to clean it up and screw the deal up. We hope that

we can have some protection from that.

Finally, and I’ll depart with a heartfelt agreement with Senator

Lautenberg on all of what he said except on one point, and that is

the use of Federal money or any money in these sites. It seems to

me that if you have a sensible cleanup standard and then you get

out of the way, the private sector will find a site in, say, downtown

York, PA, price it in terms of its location, its value, existing infrastructure and so on. If you then supply just enough money to determine what cleanup costs would be and it’s a realistic cost, then

subtract cleanup costs from the site value, the remainder puts the

property in play—the private sector will use it.

If it will not use it, there is not enough money in either the Commonwealth budget or the Federal budget to bring them all back.

The fact is that we have found that money is following sites. Law

firms are advertising their ability to utilize our Industrial Site Recycling Act, consultants are advertising it, we have multi-site

agreements with utilities and others. We can make progress.

I see that my time is up. I simply refer to the recommendations

for Federal legislation that are at page 7 in the testimony.

Senator SMITH. Thank you very much, Mr. Seif.

Mayor Bollwage, welcome.

STATEMENT OF HON. J. CHRISTIAN BOLLWAGE, MAYOR, CITY

OF ELIZABETH, AND ON BEHALF OF THE U.S. CONFERENCE

OF MAYORS, WASHINGTON, DC

Mayor BOLLWAGE Thank you, Mr. Chairman, and thank you for

this opportunity.

Senator Lautenberg, thank you for those kind remarks. It’s good

to see you again.

Mr. Chairman, I know you have roots in New Jersey going back

to our Capital City, so I invite you back to our State to view the

work that we’re doing in the city of Elizabeth.

It’s a pleasure for me to testify here today on behalf of the U.S.

Conference of Mayors, as well as our great city of Elizabeth. The

U.S. Conference represents over 1,000 cities throughout our Nation

with populations of over 30,000 people, and our nation’s mayors

have been at the center of our national debate on the redevelopment of the brownfields sites and the need for comprehensive

Superfund reform. Last year the Conference of Mayors adopted a

National Brownfields Action Agenda that called on Congress and

the Administration to develop a national brownfields.

Mr. Chairman, you have my full statement and the attachments,

which provide details on this agenda and other items. We are now
16

revising this agenda, and I will submit for the record a further

elaboration of these principles for a national strategy once it is finalized.

The mayors of this nation want to thank the members of this

committee, Mr. Chairman, for all of your hard work in realizing the

importance and the development of a national strategy for cleaning

up hundreds of thousands of brownfields that can be found all

across this Nation. We believe that it is preferable that brownfields

be a major part of Superfund reform and the reauthorization process. It is also critical that we move on brownfields in this Congress.

Mr. Chairman, contamination of industrial property was not

caused by our local governments or the citizens who must now live

with the consequences of these lost jobs, as Senator Lautenberg

spoke about the great Singer complex in the city of Elizabeth, and

the abandonment of underutilized properties that denigrate our

communities.

In large measure, this unintended negative consequence of our

Federal Superfund policy has been the price for achieving the

Superfund program’s national benefits. This unfortunate situation

simply must be addressed in a very aggressive way. We must undo

the unintended harm that Superfund has imposed upon our communities that was spoken about by Senator Lautenberg and Senator Warner.

I would like to explain to you and show you a little bit of what

is going on in the city of Elizabeth. You have the Conference’s 39-

city survey on the impact of brownfields in our cities. I have two

photos here that show a basic before and after site of the formal

landfill in the city of Elizabeth, which was a 166 acre tract that

is now being converted into a metro mall project.

There’s been identified 56 brownfields locations in the city of

Elizabeth, and we’ve been able to focus our resources on rehabilitating several of these properties.

Mr. Chairman, if you come back to New Jersey and look at the

city of Elizabeth on a former brownfields site, you will see the Ikea

store that was built on Port Authority property, sold to the city of

Elizabeth, that is now generating, along with a Toys-R-Us

Superstore, the first of its kind in the Nation, next to an Incredible

Universe that is now generating a million dollars in annual tax

revenues and more than $2 million in State-urban enterprise zone

revenues, providing thousands of jobs for people in our city and our

neighboring communities.

The pictures that I just showed you is the former municipal landfill, 166 acre site, that we hope to put pilings in the ground this

Spring and summer that will convert to a 250-store mega mall

project and create as many as 5,000 jobs.

This has been done with minimal investment on the government’s side because we care. We have worked with a developer on

brownfields legislation, on applying for grants. We’re currently applying under that pilot program for a $200,000 EPA grant in revitalizing this site.

But we are also, Mr. Chairman, the home of Chemical Control

that dates back to 1980, which was a Superfund site that was destroyed by a fire, and it took 131⁄2 years to clean up that site, $13
17

million of investment in the EPA and $26 million of investment by

the State.

The Superfund site, known as chemical control, is now a cement

slab with no ability to create jobs, no ability to be reused. It is just

going to be monitored by the EPA forever. The brownfields site, on

the other hand, have generated tax-ratables, have generated jobs

and clearly an effort on brownfields legislation in the 105th Congress is something that will benefit our cities throughout the Nation.

Mr. Chairman, we are pleased that the brownfields issue has the

bipartisan support of this committee. The bills that have been introduced, both S. 8 and S. 18, are excellent starting points. We are

pleased, for example, that these bills make efforts to address the

many issues that we have laid out as our principles.

The Conference president, Chicago Mayor Richard Daley, has

made brownfields legislation one of our top priorities, and we want

to work with you to refine our proposals. We are pleased that the

funds will be made available for site characterization and assessment work on brownfields sites, although these funds are quite

frankly very modest compared to the damage that has been done

to our communities.

Likewise, we are very pleased that both the EPA pilot program

and your bills call for the capitalization of local revolving loan

funds, although, again the effort is too modest compared to the

magnitude of the program that our cities face. We believe that the

funds generally should be directed to local programs unless such

State programs are targeted to smaller jurisdictions that would be

unlikely to administer their own revolving loan fund.

We believe both bills need to address brownfields sites that are

not in the hands of public entities. Not only must liability protections be extended to such public entities, but direct grants should

be available for the cleanup of properties in neighborhoods that

have shown disinvestment.

We also want to commend the committee for addressing the need

for liability protections for redevelopers of brownfields sites, and we

believe that to examine the relationship between the State voluntary cleanup programs and the local brownfields cleanup initiatives to effectively address the brownfields problems in our communities.

Mr. Chairman, many other issues remain to be addressed, and

we will be supplementing our comments with further technical

comments in the drafts of both bills. But let me, again, commend

the committee for beginning a bipartisan debate on brownfields.

We support your efforts to address brownfields in the 105th Congress, and we look forward to working with you this year to enact

legislation.

We cannot, as mayors of this great country, afford to let another

Congress go by without enacting a comprehensive national program that will lead to the thousands of brownfields cleanups, creation of jobs and sound local economies.

Mr. Chairman, one final point, while it is not in the jurisdiction

of this committee, we believe it is extremely important for the Congress to enact tax incentives that will help companies redevelop
18

brownfields sites. I would like to thank you for this opportunity to

appear before you today, and I am available to answer questions.

Thank you.

Senator SMITH. Thank you very much, Mayor.

Ms. Louder, welcome.

STATEMENT OF LORRIE LOUDER, DIRECTOR OF INDUSTRIAL

DEVELOPMENT, ST. PAUL PORT AUTHORITY, ON BEHALF OF

THE NATIONAL ASSOCIATION OF LOCAL GOVERNMENT ENVIRONMENTAL PROFESSIONALS, WASHINGTON, DC

Ms. LOUDER. Good morning, Chairman Smith, Chairman Chafee,

Senator Lautenberg and committee members.

One of my main responsibilities at the St. Paul Port Authority

is to redevelop brownfields. I am also a member of the Brownfields

Advisory Committee for the National Association of Local Government Environmental Professionals, NALGEP, whose membership

includes more than 50 cities. It represents local officials responsible

for developing and implementing environmental policies and programs in their communities.

Mr. Chairman, I am pleased to have the opportunity to testify

here today on behalf of NALGEP and present the findings of its

brownfields project.

NALGEP’s findings are documented in our report entitled,

‘‘Building a Brownfields Partnership From The Ground Up: Local

Government Views On the Value and Promise of National

Brownfields Initiatives,’’ which we have provided for your committee, Mr. Chairman, and which we would like to submit for the

record today.

Today I will summarize NALGEP’s key findings with a particular focus on the need for legislative solutions to facilitate the cleanup and reuse of brownfields sites across the country.

Mr. Chairman, I would like to compliment and thank the members of your committee for your leadership in promoting the legislative solutions for the brownfields issue. Virtually every community

faces this important challenge. We should not forget the fact that

brownfields revitalization provides key environmental and economic outcomes including expediting site cleanup, renewing local

economies and generating jobs, limiting urban sprawl and associated environmental problems and assisting Welfare reform through

customized job training and linking jobs with area residents.

In St. Paul the Williams Hill project provides an excellent example. This 30-acre site is within the federally designated enterprise

community area. It consists of 200 to 300 foot mounds of sand and

aggregate material. There have been substantial environmental

quality problems, air quality problems, along with sub-surface soil

contamination.

The Port Authority in St. Paul recently acquired this site, and

we will take this site from 16 jobs currently to 325 jobs with wages

in the $10 to $15 per hour area. We will take the tax-base from

$80,00 per year to $650,000 per year. We will achieve full environmental cleanup, and the bottom line is that after we have invested

over $10 million in public cost on this site, we will leverage over

$11 million in private sector investment.

Now, Mr. Chairman, I am going to focus on NALGEP’s findings:
19

We have found that the EPA’s overall leadership and its package

of liability clarification policies have in fact helped establish a climate conducive to brownfields renewal. However, we have also

found that legislative action is needed to facilitate the cleanup and

redevelopment of more sites. One of the most significant things the

Federal Government can do to facilitate brownfields reuse is to enable the EPA to delegate the authority to limit liability and issue

no further action decisions for none Superfund caliber sites to the

States with cleanup programs, and it’s important to note that these

States must have minimum requirements to protect public health

and the environment.

Here’s why: States with voluntary cleanup programs are completing the most significant brownfields activity today. New Jersey estimates that they have cleaned up several thousand sites; other

States report similar successes. Also, the specter of Superfund liability continues to put a damper on brownfields cleanup and redevelopment in the development and lender communities. Additionally, the EPA clearly does not have the resources to review and

sign off on the hundreds of thousands of brownfields sites that

exist across the country.

To delegate to the States NALGEP suggests the following approach:

No. 1, the EPA and the States should clearly distinguish between

NPL-caliber sites and the far numerous less contaminated

brownfields sites. For example, Minnesota has approximately 160

NPL-category sites, as compared to the over 1,500 brownfields

sites.

No. 2, the EPA should only delegate to States that meet the minimum requirements and States, as you probably know, vary widely

because of the differing technical expertise and capacities.

No. 3, the EPA should retain its ability to reopen its involvement

at a particular brownfields site under exceptional circumstances.

Continued Federal investment is critical to site assessment, remediation and redevelopment. This is where the Federal dollars

will help dramatically. The EPA pilot grants have enabled many

communities to develop brownfields programs, leverage private sector investment and begin to give developers and lenders the confidence and the clear message that the communities are serious

about brownfields developments.

NALGEP has found that Congress should build on this success

by broadening the Federal investment in brownfields through the

following:

Mr. Chairman, we recommend and we have found that Federal

grants are needed to establish more pilot programs. Funds for

cities and States are needed to capitalize brownfields revolving

loan funds, and, last tax credits for expenses related to assessment

and cleanup of brownfields sites is important, as well.

Mr. Chairman, thank you for your time today. We appreciate it.

Senator SMITH. Thank you very much, Ms. Louder.

We will take 5 minutes on the first round. Let me just start with

you, Ms. Louder, on a question—some have said with voluntary

cleanup that the States would participate in a race to the bottom.

Have you seen any signs that the States have endangered their

citizens in their voluntary cleanup programs?
20

Ms. LOUDER. Mr. Chairman, not at all. In Minnesota, which I

can speak to relative to the State Pollution Control Agency, this is

an agency that is very clearly interested in doing the right thing

as far as cleaning up the environment. In a word, they are our

counterparts. They are our partners in the development business,

as we are attempting to bring these sites into a redeveloped status

and bring jobs to these sites. So the combination of both the real

estate and financing expertise, as well as their environmental expertise, is critical.

I think that the safeguard here would be the EPA reopener

where if the States do not do the right thing, the EPA can in fact

step right back in, and NALGEP feels very strongly about that, Mr.

Chairman.

Senator SMITH. Mayor Bollwage, do you have any idea how many

sites, brownfields sites, you have in Elizabeth?

Mayor BOLLWAGE Yes, Mr. Chairman. We did a study with the

Regional Plan Association in the metropolitan area, and there were

56 identified sites in the city of Elizabeth—that is combined between land that is owned by the Port Authority, Conrail, the railroads and former abandoned industrial sites, as well as some

neighborhood sites such as a cleaners that may want to expand. I

mean, you know it is always different.

Brownfields sites could be—they are like fingerprints, Mr. Chairman. I mean, they are unique to each individual community.

Senator SMITH. What is your estimate of tax revenue loss to your

city?

Mayor BOLLWAGE We could estimate anywhere between $5 million to $10 million on an annual basis on all of the brownfields

sites that we lose on an annual basis in the city of Elizabeth.

Senator SMITH. What is your position, and if it’s different, the position of the Conference of Mayors on the issue of finality in the

cleanup of these sites?

Mayor BOLLWAGE The mayors, especially myself, regarding the

Chemical Control site—we were not informed of the final capping

of the location. It was basically dictated to us as a municipality on

how the final structure was going to occur at the chemical control

site, and I don’t know if you are aware of what happened there in

1980, but there were 55,000 drums of hazardous material that just

blew into the sky and created a massive pollution. About eight firemen had serious health problems and eventually died during the

course of the next 10 years. The chemical control site in all of our

estimations during the 1980’s was eventually going to be able to be

turned over to a municipality and be created into a park land for

some type of reuse.

That did not happen, Mr. Chairman. It’s just a cement slab out

there that could never ever be used; whereas, brownfields will generate jobs, generate tax ratables and create a stronger local economy.

Senator SMITH. Do you believe, though, that once States or communities have completed a cleanup either at the State level or

through voluntary cleanup, do you believe that they should be liable for additional Federal liability?

Mayor BOLLWAGE Who should be liable?
21

Senator SMITH. Those who cleaned up the sites. Should there be

additional Federal liability at the State level after a site has

been——

Mayor BOLLWAGE For the people responsible for cleaning up the

site?

Senator SMITH. Right.

Mayor BOLLWAGE Well, Mr. Chairman, I can only look back at

the history. You had Singer Sewing Machine in the city of Elizabeth. You had an awful lot of corporations that paid an awful lot

of income taxes and corporation taxes to the U.S. Government

through the years, and they have now either abandoned or walked

away from the site and left the municipality the ability to clean up

those sites. So the burden on the municipality is an extremely unfair burden after the Federal Government has clearly benefited

from the corporation and the income taxes through the years of

this.

Senator SMITH. So you support waiving Federal liability if the

sites cleaned up, after it’s cleaned up?

Mayor BOLLWAGE There has to be waiving of some liability at

some point.

Senator SMITH. Mr. Seif, I was interested in the story that you

told regarding the success in Pennsylvania, and I was just curious

as to how you were able to get the numbers of people involved in

the cleanup in those various sites that you talk about in your statement without the waiving of Federal liability. How were you able

to pull that off?

Mr. SEIF. In a couple of ways. Finality is important, and we give

a very definite, final release under State law, including from private lawsuits. Bureaucracies don’t like finality but the private sector does. I’m not saying one is right or wrong, but we need to, I

think, demonstrate a bias, if we legislate, in favor of finality—really exceptional circumstances to interrupt what has in fact gone into

a stream of commerce or onto the tax rolls after it has been done.

That finality that we are able to give, plus sensible cleanup

standards and a great deal of public relations work—and that’s just

what it is, going out and looking for customers—has brought us as

many sites as we have.

Senator SMITH. But you could have been—are you saying that

your success would be greater if you had finality?

Mr. SEIF. I think so. We continue to hear evidence from people

about reluctance to join our program because of the fact that it’s

only our program and not a broader one.

Senator SMITH. Senator Lautenberg

Senator LAUTENBERG. Thanks very much, Mr. Chairman.

Mayor Bollwage, I just want to be certain about something that

was in your testimony and I read on page 2—‘‘We believe that it’s

preferable that brownfields be a major part of Superfund reform

and the reauthorization process.’’ And you say in the same sentence, ‘‘It is also critical that we move on brownfields during this

Congress.’’

So are you connecting brownfields to Superfund reauthorization

because in the second part of the sentence it sounds to me like

you’re saying, ‘‘Hey, we’ve got to move on brownfields.’’
22

Mayor BOLLWAGE Senator, I don’t want to trivialize the impact

of Superfund legislation or cleanup throughout this country, but I

think it’s important that brownfields legislation moves in some

form in order to benefit our municipalities and the ability to create

jobs and stimulate economic development. I think brownfields could

probably move on its own with a minimal investment because the

developers in our community, they want to know that not only the

Federal Government, and the State governments and the municipal

governments care, but they want them to play a role in the development of this property. That is why I believe that brownfields

could probably move on its own.

Senator LAUTENBERG. Thank you. I wanted to be sure of that because you in particular, since we know each other and we are both

long-time New Jerseyans, know that our State problems are, as

usual, the same but more of the same. We have—our industrial

past has left us a legacy that we didn’t expect to inherit, and that

is lots and lots of contaminated sites, and I assume Pennsylvania

has a similar structure, as has Rhode Island perhaps with its industrial history.

So to me having seen the success you’ve had with mine fields of

contaminated sites there—the Port Authority, PCBs, you name it—

you’ve been able to create an incredible business site. You neglected to say that when a sale is on at IKEA, the turnpike can

be tied up for miles with people waiting to bring their money in

and buy their goods there at this formerly abandoned site.

Mayor BOLLWAGE Like you said, Senator, if you would have

asked me 10 years ago would people be coming to the city of Elizabeth enough to shut down an exit of a turnpike, I would say to you,

‘‘That would be a bit ridiculous,’’ but that is exactly what happened

in November this year when the turnpike, Exit 13A, was shut

down for 4 hours because of the numerous shoppers that were coming to former brownfields locations and now doing their shopping

for the holiday season.

Senator LAUTENBERG. I don’t know if you remember, but I was

the Commissioner of the Port Authority that paid for 13A at the

time that it was being done.

Mayor BOLLWAGE Well, we thank you for that, Senator.

[Laughter.]

Senator LAUTENBERG. It wasn’t done for you. It was done for the

public at large but Elizabeth benefited.

[Laughter.]

Senator LAUTENBERG. Mr. Seif, in contrast with the song,

‘‘there’s seldom heard a discouraging word,’’ your description of

Superfund was at best bleak, and I would have to say lots of discouraging words. But I ask you as you appropriately boast of Pennsylvania’s successes with their own sites, what the level of contamination was? Would these sites have qualified for NPL registration

or are they on the low side of contamination?

Mr. SEIF. Your point is well taken. Clearly, they are not NPLrankable sites, though there are quite a number of sites in Pennsylvania which for some reason are on the NPL and subject to

1,200 pages of directions and decades of cleanup that probably

should not have been either, and I can think of a few in New Jersey from my days at the EPA that meet the same description.
23

Senator LAUTENBERG. The number of pages doesn’t necessarily

make for bad legislation. What makes for bad legislation is the inability to enforce it into an effective program.

Mr. SEIF. Well, those 1,200 pages are just the instructions, not

even the law itself.

Senator LAUTENBERG. What would you have done with those

sites? Would you just simply have them walked away from? Who

would you go after to clean them up? Where would the money come

from?

Mr. SEIF. Superfund has performed and will perform at some

sites, with a narrower range than I think it is now applied, a critical and non-duplicable function. Indeed, the forcing of technology

and the inventorying of sites, and indeed the energy we see behind

this brownfields legislation arises out of Superfund. I think what

we need to do, however, is not mimic Superfund in the States—and

we’ve explicitly not done that—but to take the next step, to go beyond, and to get the EPA to understand that the setting up of criteria, as it now wishes to do—and some indeed are in Senate legislation about approving our programs—could well be reversed. I

think the States ought to get together and decide to approve the

EPA’s programs every once in a while, including in this area.

Senator LAUTENBERG. I would think it might vary from State to

State? When you come into a State like New Jersey, the most

densely populated State in the country, and compare that to my

colleague from Montana, one could reasonably disagree on what

level of cleanup might be in order, but the one thing that I do see

is that Superfund ought to be renewed. I think what you’re suggesting in your last comments is that brownfields could very well

fill that kind of gap, as I heard you describe it, between the very

complicated, the highly contaminated site, and that which needs

just a little bit of a push. I think the brownfields legislation would

fill that gap nicely.

Thank you.

Mr. SEIF. I certainly agree with that.

Senator SMITH. Senator Chafee.

Senator CHAFEE. Thank you, Mr. Chairman.

First, I want to congratulate Senators Allard and Sessions for

their willingness to plunge into this very complicated area. I’ll be

the first one to confess—although I’ve been wrestling with this for

a number of years—that I don’t claim to know all of it. But I applaud you for your willingness to try and master this intricate subject.

I would like to ask the panel a question to see if I’ve got this

thing correctly. What we’re trying to do here is to give some definiteness to lenders and potential purchasers. Is that correct? In

other words, we’re trying to solve the problem that Senator Sessions referred to, that people just wouldn’t touch a particular site

because they didn’t know of the potential liability. So what we’re

trying to do is get exactness, if we can.

Is that right, Mr. Fields? Don’t give to long of an answer because

I’m under a time limit here.

[Laughter.]

Mr. FIELDS. I think that is a critical element. I think there are

elements in S. 8 and S. 18 regarding relief for prospective pur-
24

chasers and innocent landowners. It is a critical part of the equation.

Senator CHAFEE. OK, all right.

Now, as I see it, we’ve got three kinds of sites that we’re talking

about, what you call low-risk sites, low-risk brownfield sites. Then

the next one are those NPL, National Priority List, as possible, but

not listed sites. In my State we’ve got 200 of them. They’ve prescored over 28.5. They’re not on the list but they pre-scored at that.

OK, is everybody with me? That is the second group.

Now, the third group are the NPL-listed Superfund sites. OK,

now as I understand it—and you can correct me, Mr. Fields, if I’m

wrong. What Mr. Seif wants, and, as I understood the first part of

Ms. Louder’s testimony, when the State takes over, the low-risk

ones or, the ones that pre-score, that the EPA does not have a lead

role in those. The EPA can have a lead role in the third group, the

NPL-listed sites. Now it stands that the next EPA may easily reenter the issue, and the EPA now shows up and says, ‘‘You, Pennsylvania did a lousy job,’’ so we’re coming back in to make you do

it all over again because, ‘‘This cleanup isn’t adequate.’’

Now, as I understand it here, we, at least S. 8, only lets the EPA

come in in extraordinary circumstances.

Now, am I right here, Mr. Seif, or tell me what you think.

Mr. SEIF. We would hope that that is what S. 8 does and would

urge that it do that and that it define an extraordinary circumstances, because——

Senator CHAFEE. Because if you let the EPA come back in at one

of these less polluted sites after the State cleans it up and everything seems fine, but then along comes the EPA and says, ‘‘No,

that is not right.’’

Now, do you agree with me, Mr. Fields?

Mr. FIELDS. Well, I didn’t read S. 8 quite the same way. The way

I read S. 8 is that if a State had a voluntary response plan the

EPA would be precluded from going in, and I’m really concerned

about that. I do believe that—although there are very effective

State voluntary cleanup programs out there—when there is an imminent and substantial endangerment, an emergency situation,

like in Hoboken, NJ, for example, the EPA needs the ability to be

able to respond and assist as well as when there is a need to respond to a State request to supplement State authority or State

ability in these types of emergencies or imminent substantial

endangerment situations. I’m concerned that the way that the current brownfields provisions of S. 8 are drafted would preclude us

from responding to real emergencies.

Senator CHAFEE. What do you say, Mr. Seif?

Mr. SEIF. I can only speak for Pennsylvania but——

Senator CHAFEE. Well, that’s good enough, speak for Pennsylvania.

[Laughter.]

Mr. SEIF. I would be delighted to do so. It goes almost to the

‘‘race to the bottom’’ problem—will some State not have a decent

program and should, therefore, the Senate, the Federal Senate, legislate for that case fully. We would rather not be fettered by any

Federal oversight on the category of site you list after we have run
25

it through our program. It just seems to me that there are diminishing public policy returns, down to zero, to do that.

Senator CHAFEE. Well, I see my time is up so I just want to

quote or say what Ms. Louder has said on page 8. She said, as I

understand it:

The EPA should provide that it will not plan or anticipate any further action at

any site unless at a particular site there is an imminent and substantial danger to

public health in an environment, and/or the State response is inadequate or the

State requires the EPA’s assistance.

What we’re trying to do here, it seems to me, is get some cutoff

point where the Federal Government won’t come back in, and so

that there is definiteness to the whole business. What I worry

about is ending up with some program where no matter what you

do you have a State voluntary cleanup program, and you think

you’re done with it, and then comes in the EPA and says, ‘‘No, that

is not right.’’

Well, my time is up here.

Ms. LOUDER. Mr. Chairman?

Senator SMITH. Yes, Ms. Louder.

Ms. LOUDER. If I might respond——

Senator SMITH. Yes, you want to respond, sure.

Ms. LOUDER. Thank you, Mr. Chairman, and Senator Chafee.

That is precisely it, and let me clarify my earlier comments.

NALGEP’s position is that the States in fact should take the lead

on the non-NPL sites, and that the EPA should be involved in the

Superfund sites and that the States must have adequate methods

to draw the distinction between the two and to deal with that. The

safety net, so to speak, Mr. Chairman, is that if one of the States

has a problem with that procedurally, then the EPA could come in

under the re-opener, but the bottom line is we do need closure because our lenders and our end-users of the sites, the manufacturers, and the developers and so forth are, quite frankly, afraid of the

EPA coming in subsequently, and that has put a chill on developing these sites.

Senator SMITH. Thank you.

Senator Allard.

Senator ALLARD. Thank you, Mr. Chairman.

Mr. Fields, I don’t know whether you’ve had an opportunity to

read over the testimony from some of the other members of your

panel, but I’m looking at testimony from Mr. Seif, and he says that

there are three points that need to be laid for brownfields redevelopment. I would like to have your response to those three points.

I’ll go over them to refresh your memory.

His first point is a release of Federal liability of State land recycling sites, and his second is a waiver of Federal permitting requirements at State and land recycling sites, and then the third

point is the authority for Governors to veto proposed NPL listings.

I would like to know what your response is to his suggestion.

Mr. FIELDS. On the first point, we, obviously, want to provide

clarity as to what sites are covered by a State voluntary cleanup

program and to make sure that only in very limited situations

would the EPA get involved.

We do think that there are some situations where it may be appropriate, and we should make that very clear, as Ms. Louder says,
26

but that should be a very rare occurrence. The State is, obviously,

going to handle most of these sites, and we at the EPA will not get

involved. But we do think that there are some situations, an emergency situation, for example, where it may be appropriate for the

Federal Government to step in or to lend assistance. We don’t

think that our ability to do that ought to be precluded.

So we do agree in general about providing clarity, but we don’t

believe in a complete elimination of Federal authority.

Second, with respect to his point on the waiver of Federal permitting requirements, under RCRA corrective action, the State

wants to clean up that site, where they have not already done a

cleanup of that RCRA corrective action unit, under a State voluntary cleanup program, we, the Federal Government, are willing

to go along with that and allow the cleanup to proceed, pursuant

to that State program, and it would not have to be further addressed under the RCRA corrective action program, as it is currently.

We are trying to make that clear in our guidance and to make

sure that we work with States to make clear that voluntary cleanup programs are another option.

Regarding the authority of Governors to veto proposed NPL listings, we’ve operated for the last several years in EPA under a system where we seek State concurrence on the listing of sites on the

NPL. We are OK with that, and with our ability to work together

with States to get their concurrence on listings. That process has

worked fairly well. We do believe, though, that there may be situations where a Governor’s veto for the listing may be threatening

the public health and safety of the public around that site. So, I

do believe that there ought to be certain exceptions or waivers from

that ability of the Governor to approve the listing of a site. We may

want to, in an emergency, or for public health reasons list a site,

if that is the only way we can assure that the people who live

around that site are protected.

Senator ALLARD. And, as you might guess, Mr. Seif, I would like

to have you respond to his response, if you would please?

Mr. SEIF. We would go directionally the same but a little further

in each case. The release of Federal liability, of course, is the issue

of, as Senator Chafee says, ‘‘Where are we going to cut it off and

make for finality?’’

On the waiver of permits our own State statute and some other

State statutes provide for the waiver of State permits. That includes water, and air and other things or activities that go on during the cleanup.

When those permit requirements attach, and if the Federal ones

also are attached, we would be right back into the morass of delay

and problems and too many cooks baking the cake. If a State has

a good brownfields program, let it work without interference. That

is the whole purpose of the brownfields carve-out, I think.

Third, we think that sometimes the Federal Government doesn’t

know best about what local conditions are, and that the Governor

probably has a better shot at knowing and could exercise his or her

authority in that regard. I don’t believe you’re going to get a Governor at a site that is a falling down emergency saying, ‘‘We don’t

want to list it.’’ The fact is that that Governor will use every statu-
27

tory tool, Federal or State, at his disposal but would not use the

Superfund when its track record has been so dismal.

Senator ALLARD. I want to thank both of you for your responses.

I see my time is up.

Senator SMITH. Senator Sessions.

Senator SESSIONS. Thank you very much, Mr. Chairman.

Mr. Seif, let me just ask you this just briefly. How is it that a

piece of property—like in my example of the motel and the gas station. Everyone seemed to know about it; they were concerned about

it. At what point is the State environmental agencies or the EPA

aware that this possibility exists, and what’s the danger for a purchaser to develop over that area without telling anybody. How does

this occur?

Mr. SEIF. Generally local lore and anecdotes. There’s also the

CERCLA list maintained by the EPA of all sites about which any

allegation of contamination has ever been lodged. If you own land

and you’re on the CERCLA list, you’ve, of course, just had a considerable devaluation of your property, whether or not the allegation

was correct. You can get off that list eventually, but at Superfund

speed, meaning not very fast.

Senator SESSIONS. Well, I think sometimes it is publicly known

by the government agencies and sometimes not.

Mr. SEIF. Correct.

Senator SESSIONS. To me two things are necessary. First is a

prompt decision, a plan for the proposed developers that someone

can afford. He can know that if he follows this plan, he should be

able to develop that property successfully. If he thinks he is going

to get into it and spend hundreds of thousands of dollars and then

later finds out that there millions of dollars, that he was going to

be asked to do more, he will walk away and find another site in

the suburbs somewhere and leave the inner-marginal area alone.

OK, that being said, looking at some of these proposed expenditures, we’ve got here—I’ve have some questions about the wisdom

of that. I would rather use that money, it seems to me, in a way

that could get a potential developer a prompt, an authoritative, definitive answer on what he needs to do before he can buy that property. A lot of them will buy it, if they know. If they are not certain,

they’re going to leave it undeveloped.

Do you have any comments or thoughts about that?

Mr. FIELDS. Just a couple. One is that over the last couple of

years we have removed more than 30,000 sites from the overall

master Superfund inventory—that is 75 percent of the 40,000 sites

have been dropped and many of the sites are in major urban cities

around the country.

That effort has provided for some relief from the stigma associated with being in the Superfund inventory, and that has encouraged prospective purchasers and developers to develop many of

those properties.

For example, an old steel mill in Buffalo, NY, is being converted

into a tomato farm because the site is no longer in the Superfund

inventory and people there are more willing to get involved in the

development of properties like this one.

I think also that, as we have tried to do administratively, and

the various bills before this committee are trying to do legislatively,
28

things that change liability for prospective purchasers, innocent

landowners. In addition, the change last year to the statute to deal

with lender liability, we believe, will provide a greater incentive for

people to get more involved in redevelopment of these properties.

I think we’re sending a signal that we want to encourage developers, we want to work with people who want to redevelop contaminated property. Relief from liability can be provided in these

ways. We are trying to do all we can to remove the stigma of being

associated with the Superfund inventory.

Senator SESSIONS. Sometimes the States are slow in responding

too, aren’t they?

Mr. SEIF. Our statute has specific deadlines in it so that there

can be certainty in those respects as well. I would say in fact if

there is a reopener for the EPA in a statute, that it too would see

some deadlines so that that might be the way to get some finality

into a site after the running of a certain amount of time—just a

thought.

Senator SESSIONS. One more question, Mr. Fields.

S. 8 proposes grants and loans for characterizing and remediating brownfields and identification of brownfields. How mechanically

will those grants be allocated? Who will make the decision and

what standards will be employed, or do you know?

Mr. FIELDS. The terms of S. 8 are fairly similar to what we’ve

been implementing now the last couple of years. The grants are

awarded out to communities who are interested in assessing and

planning for remediation of brownfields properties in their jurisdiction. The EPA regions under our current program work with us in

headquarters to identify communities that would be recipients of

those grants, and we would work with them to provide the funding.

Senator SESSIONS. Who makes the decision about when three

cities apply and there is money for one, who makes the decision?

Mr. FIELDS. Right now that is a decision made by the EPA, and

right now it’s me. You’re looking at him right here.

[Laughter.]

Senator SESSIONS. Right, I know who to call.

[Laughter.]

Senator SESSIONS. All that line, I’m somewhat concerned about

the word ‘‘remediating’’ because to me once we start remediating,

then Washington, DC, is going to be in the business of cleaning up.

Is that a distinction? Can you see a distinction between remediating and paying for the cleanup in every city in America?

Mr. FIELDS. Yes, we are looking at that. That is a very limited

amount of money that is provided in both bills for remediation.

Dollars for remediation are provided through a grant program to

local governments to capitalize revolving loan funds.

Senator SESSIONS. Once the doors get open——

Mr. FIELDS. Right. We recognize that most of the cleanup is

being done by responsible parties or by other private investors.

We’re finding that the $200,000 in grant money for inventory and

assessment that we’re providing is being leveraged by millions of

dollars in private sector investment in these communities across

the country. The limited amount of money that we’re currently providing to capitalize loan funds for cleanup are for those rare situations where municipalities, for example, acquire bankrupt property,
29

and then the city has to remediate it because the responsible party

has walked away. So we think that the revolving loan fund would

allow loans to be given to prospective purchasers who want to redevelop property where there is not a private interest there to provide money for cleanup.

Senator SESSIONS. You decide which one is getting it?

Mr. FIELDS. Yes, sir.

[Laughter.]

Senator SESSIONS. Certainly, every eligible person—there

wouldn’t be enough money to come close to supplying the needs of

every eligible claimant.

Mr. FIELDS. We have seen historically over the last couple of years that about $200,000 to a community who really has expressed an interest in getting involved in our brownfields assessment program, and who has applied for one of these grants can

benefit greatly from it. We expect that communities may benefit

from seed money up to about $350,000 for cleanup of brownfields.

Senator SMITH. Thank you, Senator Sessions.

We do have another panel so I’m going to ask that in the second

round we just ask one question and try to not have four parts to

each question, if you can do it that way.

Mr. Fields, and to all the panel, there seems to be something indefinite about the term ‘‘finality’’ here. There’s not an agreement

on how we reach finality. It is very interesting what you said a few

moments ago. You said that ‘‘The EPA may want to overrule a Governor because of health concerns,’’ and there’s a good example

there. I mean, what is the implication there, that the Governor

doesn’t care about health concerns of his State or her State? I

mean, I think the issue—and I didn’t mean to imply that you

meant that—but that is really the underlying implication here, and

I think that is where we have trouble coming up with finality. I

believe that a Governor probably has as much interest in finality

and cleanup and preservation of the environment as you or anyone

else in the Federal Government.

Let me ask you specifically how do we—what is the best way to

get finality? Are you willing to allow the States to make the decision that they need to make in order to get somebody to clean that

site up, the brownfields site and redevelop it? Are you willing to

accept their decision?

Mr. FIELDS. I think, Mr. Chairman, that on for both the toxic

waste dump, the NPL site, and the brownfields sites the same situation applies. We do not want to overrule the Governor, as you say.

I think that we would like to work together, as Commissioner Seif

has said. We would like to work together with the States and agree

that if a site poses a high-risk, public health threat, this type of

site ought to go on the NPL. That way there won’t be any difficulty,

there won’t be any controversy, there won’t be any disagreement

between the Federal Government and the States because we will

all agree up-front that this type of situation would possibly trigger

a site listing on the NPL.

Likewise, in the case of a voluntary cleanup program, we would

hope to work together with Mr. Seif and other State officials

around the country and agree that there would only be a rare, limited number of situations, as the panel has indicated, that would
30

reopen a voluntary cleanup program and possibly trigger some Federal involvement. They would be situations that everyone would

agree on—the imminent substantial endangerment, an emergency

situation that may occur. That way when we, the EPA, and the

States all agree that these are the limited, very limited, number of

situations where we might get involved, I think that would provide

a great degree of finality to the regulated community, to developers. I think that would provide the kind of finality that everybody on the panel has been talking about. But, we have to have

some criteria for the listings of NPL sites and what would trigger

Federal involvement, and, second, in the case of voluntary cleanup

programs, we need to identify up front those rare events where we

might need some additional assistance to be provided in that sitespecific case.

Ms. LOUDER. Mr. Chairman?

Senator SMITH. Yes.

Ms. LOUDER. If I might offer just a brief suggestion here,

NALGEP is recommending on the bottom of page 13 just a simple

way of doing that—brownfields should be delegated to the States,

and there are only two circumstances under which the EPA would

walk back in and get involved in that: First, is an imminent and

substantial threat to public health or the environment; and, second,

either the State response is not adequate or the State requests

EPA assistance if they don’t have the capacity.

Mr. Chairman, in getting to finality, as you mentioned, I would

suggest that the committee look seriously at that suggestion on

page 13 of our report.

Thank you.

Senator SMITH. Thank you.

Senator Lautenberg.

Senator LAUTENBERG. Yes, thank you, Mr. Chairman.

I’ll make a short statement for the benefit of our new colleague,

Senator Sessions, and that is that you have to be sure that Mr.

Fields doesn’t have Caller-ID, which shows the number that’s calling in before he answers the phone.

[Laughter.]

Senator LAUTENBERG. I would ask this question. In New Jersey

there is a famous philosopher named Yogi Berra who said, ‘‘It ain’t

over ’til it’s over,’’ and that kind of applies to this question of finality because I ask you what do you do with a newly discovered problem? You find out that there is migration of contaminants from one

place to another that was unexpected. Very often the terminology—

and Mr. Seif, you know it well—‘‘O and M’’, operations and maintenance, because you haven’t really been able fully to get at the

source of the contamination. What does one do? Who pays in the

event of a discovery of a new problem at an old site?

Mr. Seif.

Mr. SEIF. I guess I have to dissent from Ms. Louder on that

point. Someone will pay but it seems to me that the buck can stop

at the State House, and increasingly the idea of delegated programs and then watching over it is something the EPA has been

doing for 30 years micromanaging is becoming increasingly less appropriate as the States have gone up and running.
31

I think the States can run programs like this once they’re delegated, and that State brownfields laws can have—or State tort

laws; you know, the discovery rule and all of that being imported

into how much did you know and when did you know it—can be

run by the States. Every case doesn’t have to be a Federal case.

Senator LAUTENBERG. I am prohibited by the code set down by

the Chairman from following on with an intelligent deep perspective question. So I will not ask it.

Mr. FIELDS. Can I just add a comment? I think we all agree that

in the majority cases the sites that we are talking about today, the

brownfield sites, the sites covered by State voluntary cleanup programs, are typically going to be covered by State programs. They

are dealt with at the local level. I think, though, as you said, Senator Lautenberg, we have to make some provision for when the unexpected does occur, those rare events that occur, the emergencies

that happen. There needs to be some agreement up front that there

are some situations when the Federal Government may need to

provide assistance or may need to get involved. Those situations

should be rare but we need to make clear that we define those, and

that we don’t preclude those protections. That is my biggest concern.

Senator SMITH. Senator Chafee.

Senator CHAFEE. Mr. Seif, I would like to ask you the following

question: the low risk, or what the EPA calls brownfield sites,

they’re taken care of. The State can go in there and probably the

chances of the Federal Government back in are very, very slight.

I would like to go to the next category of the three that I formerly

outlined; namely, those NPL caliber sites. They’re not on the list

yet but they pre-scored a 28.5 or more.

Now, tell me please your experience with those sites. When you

go in and clean them up under a voluntary State program, does

the—do purchasers come along and buy them with complete confidence or is there always the worry that EPA will come back in

in some form?

What has been your experience in those, that category?

Mr. SEIF. As Secretary in Pennsylvania and as a private practitioner before that, we keep people away from those sites. If a site

ranks, even if not formally listed and subject to an instruction back

of 1,200 pages about how to clean it up, investors will not come.

The situation doesn’t arise when a site gets ranked like that.

Senator CHAFEE. So the only ones that get cleaned up are the socalled brownfields low-risk sites? It is hopeless to try this second

category, or the NPL caliber sites? They don’t get cleaned up or

people don’t come and buy them?

Mr. SEIF. Well, until Superfund is reformed that may be the

case, yes.

Senator CHAFEE. Well, not maybe; it is, isn’t it?

Mr. SEIF. In Pennsylvania that has been the case, yes, sir.

Senator SMITH. Senator Sessions.

Senator SESSIONS. Mr. Fields, as a former Federal prosecutor,

and you mentioned, I believe—somebody did—the limitations on action.

Has any thought been given to extending the length of the statute of limitations from discovery of the fact that a previous owner
32

had a deliberately, and willfully and knowingly deposited illegal

substances? Are you familiar with that?

Mr. FIELDS. I am familiar with that, yes.

Senator SESSIONS. What is the status of that?

Mr. FIELDS. Well, we’re just beginning to look at that in a

broader context of overall Superfund reform. We have not come up

with any sort of position on that issue yet. That is something that

we should look at.

Senator SESSIONS. Well, what is frustrating is you find a site and

investigation shows that it was a deliberate dump, willfully and

knowingly done. The company is bankrupt and the only real vindication that can be done would be a prosecution of the person who

willfully and deliberately did it, but the statute of limitations has

run by the time they find it.

I think that is something we ought to give some thought to.

Mr. FIELDS. We will do that.

Senator SESSIONS. And I think—I’ll just share this.

Mr. Seif, your comments about agencies—I’ve worked with them

as a Federal prosecutor and U.S. attorney for 12 years, and it is

an institutional feeling. It is hard to overestimate, as you suggest

in your opening remarks how reluctant they are to make any final

decision, but somebody somewhere has got to do so. You’ve got to

decide what is a minimally dangerous site, which ones are—you’re

going to let the State do and let it go forward and identify the ones

that are not. Hopefully, this legislation will help in that regard.

Senator SMITH. Thank you, Senator.

Let me just say before we go to the next panel that committee

members will have until Friday to submit additional questions.

Should they do so you would have until March 14 to submit the

answers to those questions, and that would also hold true for the

next panel as well.

Thank you all very much for coming. We appreciate it.

Mr. SEIF. Thank you.

Ms. LOUDER. Thank you, Mr. Chairman.

Mr. FIELDS. Thank you, Mr. Chairman.

Mayor BOLLWAGE Thank you.

Senator SMITH. The next panel is Mr. Peter Guerrero, the Director for Environmental Protection Issues, Resources, Community

and Economic Development Division, General Accounting Office;

Mr. William Riley, general manager of Environmental Affairs at

Bethlehem Steel Corporation; Mr. Peter Scherer, senior vice president and counsel of the Taubman Company, Bloomfield Hills, MI;

and Mr. William K. Wray, senior vice president of Citizens Bank

in Providence, RI.

Gentlemen, thank you all for being here today, and, again, as

with the previous panel, your complete statements will be part of

the record. If you can summarize it in 5 minutes or less, that would

be appreciated.

We’ll start with you, Mr. Guerrero, if you are ready to go.
33

STATEMENT OF PETER F. GUERRERO, DIRECTOR FOR ENVIRONMENTAL PROTECTION ISSUES, RESOURCES, COMMUNITY AND ECONOMIC DEVELOPMENT DIVISION, GENERAL

ACCOUNTING OFFICE

Mr. GUERRERO. Thank you, Mr. Chairman.

I am pleased to be here today to discuss the committee’s efforts

to support the cleanup and redevelopment of brownfields. While a

number of factors have impeded the redevelopment of these properties, real or perceived, environmental contamination has required

businesses to incur additional costs associated with assessing and

cleaning up these sites.

For some businesses these additional costs have encouraged

them to locate elsewhere, resulting in a loss of tax revenues and

employment in communities with brownfields.

Last year you asked us to provide information on the legal barriers that Superfund presents for redeveloping brownfields and the

types of Federal financial support needed. My testimony today

summarizes the findings from that work and provides some additional information from our ongoing review of State voluntary programs, a tool available for addressing brownfields.

State voluntary programs replace enforcement actions with incentives to encourage rather than compel private parties to clean

up contaminated properties. States, like Pennsylvania, have found

these programs to address brownfields are faster and less costly

than enforcement-based cleanup programs.

In summary, Mr. Chairman, we found the following:

First, even though most brownfields are not contaminated

enough to be listed as Superfund sites, owners are unwilling to

identify contaminated properties and prospective developers and

property purchasers are reluctant to invest in projects that could

leave them liable for future cleanup costs under Superfund. Most

of the voluntary cleanup program managers in the 15 States that

we surveyed felt this concern discouraged some participation in

their programs. Both bills before the committee include various

provisions that would help address these concerns.

Second, to help promote the redevelopment of brownfields, States

and localities desire Federal financial support to cover some of the

costs associated with assessing these properties for contamination,

cleaning them up and developing voluntary cleanup programs.

Over the past few years the EPA and the Congress have provided

funds used by States and localities to, for example, develop inventory of brownfields properties. Funding provisions in the bills

would continue to expand this support.

I now would like to turn to the issue of Superfund legal barriers.

Under Superfund the EPA could compel the parties responsible for

hazardous waste contamination to clean up a contaminated property or pay for its cleanup. Most States have also adopted enforcement-based programs modeled on Superfund. These State and Federal programs have limited resources and have generally been used

to address the most highly contaminated sites. While the EPA targets its Superfund enforcement actions to properties on the National Priorities List, or NPL, a national list of the most highly contaminated sites, Superfund’s liability and enforcement provisions

apply to non-NPL sites, as well. States have found that the threat
34

of Superfund liability often convinces responsible parties to clean

up highly contaminated sites. However, States also believe that

Superfund liability discourages some parties responsible for sites

with lesser contaminated, such as brownfields, from coming forward to voluntarily cleanup their properties.

For example, prospective investors and developers are wary of

cleanup liability provisions that may hold them liable for any contamination later found at sites. Former property owners may also

be liable for cleanup costs if contamination occurred while they

owned properties.

Thus, even the suspicion of current or prior contamination may

make developers hesitant to purchase brownfield properties and

owners reluctant to place them on the market.

To deal with this concern and encourage participation, most

States with voluntary programs offer a release of liability under

State law. However, State officials feel that some potential volunteers would still find Superfund liability a deterrent to their participation.

Moreover, managers of State voluntary programs cited limiting

Federal liability for certain parties, such as prospective purchasers,

as one of the more important ways the Federal Government could

facilitate additional voluntary cleanups.

The Congress has already taken action last session to limit the

liability of lenders. The two bills before this committee also include

various provisions to help address concerns about Superfund liability issues at brownfields, such as limiting the liability for prospective purchasers and clarifying circumstances under which current

landowners would not be held liable for past contamination.

Now I would like to turn to Federal financial support. During our

review of brownfields and voluntary programs, we found that

States and localities desire Federal financial support to help them

characterize, assess and cleanup brownfields, as well as to establish and support voluntary programs.

Most of the States in our review of voluntary programs, even

those that levied fees high enough to cover their program costs,

identified Federal funding as a key way for the Congress to promote these programs. The pending bills would continue and expand

on the Federal support already provided. Specifically, the bills

would give the EPA the authority to provide grants of up to

$200,000 per property, to characterize and assess the nature and

extent of contamination at these sites. These characterization and

assessment studies are required before these properties can be redeveloped.

Because these studies involve research into a property’s history

and a technical analysis of its conditions, they may be costly and

potentially discourage redevelopment. We estimated that for most

brownfields assessment costs could average from $60,000 to

$85,000 per site, and for some properties with groundwater contamination costs could exceed $200,000. However, the per site

amounts in the bills to help fund property characterization and assessment should be sufficient for most brownfields.

In addition to providing funds for site characterization and assessment, both bills would provide other financial support for
35

brownfields redevelopment. It was clear from our discussions with

key parties that such financial support would be most welcome.

Mr. Chairman, this concludes my statement. I would be happy

to answer any questions you or the committee members may have.

Senator SMITH. Thank you, Mr. Guerrero.

Mr. Scherer.

STATEMENT OF J. PETER SCHERER, SENIOR VICE PRESIDENT

AND COUNSEL, TAUBMAN COMPANY, ON BEHALF OF NATIONAL REALTY COMMITTEE

Mr. SCHERER. Thank you, Chairman Smith, Chairman Chafee,

Senator Lautenberg, Senator Sessions.

My name is Peter Scherer. I’m the senior vice president with the

Taubman Company. The Taubman Company is a national real estate company specializing in the development and management of

regional shopping centers. I’m speaking today on behalf of the National Realty Committee. NRC represents the Nation’s leading real

estate owners, builders, managers, lenders, and advisors. As such,

the organization has focused extensively on the national policy issues associated with the redevelopment of our Nation’s brownfield

properties.

Several weeks ago I was here in Washington and had the pleasure of meeting with Jeff Merrifield of the chairman’s staff, and

Scott Slesinger from Senator Lautenberg’s office. We had a wonderful exchange of ideas and I left our meeting encouraged and energized, and I am delighted to be here today to have the opportunity

to share with you some thoughts on what the real estate industry

believes it will take to get our country’s non-productive, modestly

contaminated and hopelessly idle real estate back into the Nation’s

economic mainstream.

Two very positive legislation proposals, S. 8 and S. 18, include

provisions which reflect a sophisticated understanding, in our view,

of how current law can best be modified to encourage brownfields

development. NRC is on record as supporting both of these bills.

We are also on record as supporting the efforts made by the EPA

to foster brownfields development, but while these efforts are encouraging, they are simply not enough to achieve the economic and

environmental objectives sought by S. 8 and S. 18.

As the sponsors of the bill our well aware, and as EPA Administrator Browner has stated, changes to the Superfund law are required to achieve the significant long-term impact that we seek,

and let me specifically mention some initiatives taken by the EPA

that the real estate industry applauds. But at the risk of striking

a more sober note, let me also explain why these well-intentioned

initiatives fall short of their intended objectives.

First of all, we’ve heard earlier this morning that the EPA has

removed thousands of sites from the so-called CERCLIS list and issued guidance encouraging regulators to consider realistic future

land uses in determining the extent of the cleanup activities. If it’s

known that a property will become a parking structure, then why

force a cleanup to the level needed for a day care facility? This is

a common sense approach which the business community finds

both workable and sensible.
36

Second, the EPA has issued guidance identifying circumstances

under which it will enter into prospective purchaser agreements.

Developers are willing to take risks, but there is simply too many

other opportunities available for any successful developers to bet

their balance sheet on a brownfield where you have unlimited environmental downsides, not to mention the difficulty in obtaining financing.

In each of these situations the EPA has set a course, which my

industry believes is in sync with the national policy objective of returning our country’s brownfields to productive use. So why isn’t it

enough? Well, let me tell you specifically in 50 words or less, and

at the end of each guidance I’ve referred to above, the EPA has inserted a disclaimer which reads as follows, and I quote:

This policy does not constitute rulemaking by the Agency and is not intended and

cannot be relied on to create a right or benefit, substantive or procedural, enforceable at law or in equity, by any person. Furthermore, the Agency may take action

at variance with this Policy.

So as well-intentioned as these initiatives may be, it is clear they

will fall short of providing the kind of certainty to attract privatesector capital.

I come here today not asking for the creation of economic or financial incentives to encourage brownfields developments, but

rather, in the case of our industry, we’re looking only for the removal of disincentives and asking that you level out the playing

field, and, in doing so, create the kind of certainty that permits

prudent investment and intelligent risk assumption.

So what do we think is needed? The various amendments to

CERCLA that we’ve discussed today would significantly reduce the

uncertainty that kills many deals with the type of stability, predictability, and certainty needed for brownfields initiatives to succeed.

The EPA has endorsed this reform and there is no doubt that its

enactment would make a difference in the real world.

At the end of the day our industry is asking for nothing more

than the kind of certainty and predictability that other Federal

agencies are able to provide. We ask that you empower the EPA

to provide the equivalent of no further action letters, which can be

obtained from the Securities and Exchange Commission or the private letter rulings that the Internal Revenue Service regularly provides to parties concerned with the consequences of contemplated

activities.

Companies will frequently seek from these agencies an advance

ruling before a certain activity, such a complex corporate restructuring, is undertaken. It is only after an assurance from the

Agency is received, after there is certainty as to how the restructuring will be treated, and after the parties receive a document

they can rely on does the actual transaction occur.

Providing this degree of predictability and certainty with respect

to our Nation’s brownfields will give our industry the confidence

and the ability, we believe, to achieve the type of long-lasting objectives that we’ve talked about this morning.

The National Realty Committee remains committed to the enactment of policies and encourage reinvestment, and we remain willing to work to achieve those goals that I know that we all share.

Thank you very much for this time.
37

Senator SMITH. Thank you, Mr. Scherer.

Mr. Wray.

STATEMENT OF WILLIAM K. WRAY, SENIOR VICE PRESIDENT,

CITIZENS BANK, PROVIDENCE, RI

Mr. WRAY. Thank you, Mr. Chairman, and thank you for this opportunity to address this important subject.

My name is Bill Wray, and I’m a senior vice president of Citizens Financial Group. Citizens is a $15 billion commercial bank holding

company headquartered in Providence, RI. We have over 230

branches throughout Connecticut, Rhode Island, Massachusetts,

and New Hampshire.

Please realize that I am not attempting to represent an official

position on behalf of the banking industry or any of its trade associations. In my role as manager of Credit Administration for Citizens, I’ve seen first-hand how environmental risk affects banking

at the community level. This testimony is a reflection of my personal experience in that role.

In my review, both bills are fairly similar in their approach to

the brownfields issue, although S. 8 also addresses a variety of

other needed reforms. Since my charter was to address brownfields,

I will confine my comments to that.

Let me start by saying we have a great deal of interest in seeing

brownfields initiatives work. As a secured creditor, we can’t succeed unless our borrowers succeed. This means they must be able

to quantify and respond to environmental risk issues without incurring inordinate expense or disproportionate liability.

We, in turn, have direct exposure to environmental liability arising from our role as a secured creditor, as well as an owner and

operator of facilities.

But, finally, as members of the community, we live and work

alongside our customers. We pass by abandoned industrial sites

that have been locked out of consideration for productive reuse because of the chilling effects of unpredictable environmental liability. All of us want to see these sites brought back to useful life with

the economic and aesthetic benefits that will result.

We believe that these bills represent a substantive effort to address many of the issues at hand, and it is an effort we welcome.

We know that this process can work, and here is a real life example:

About 18 months ago, Citizens made a presentation at a seminar

that had been sponsored by the Rhode Island Department of Environmental Management. Our message was that brownfields

projects were a good business opportunity. We encouraged potential

borrowers in the audience to bring their deals to us for review. As

a result of that presentation, the owners of a company called Display World, Inc., contacted us about financing the purchase of the

13-acre Carol Cable facility in Warren, RI, which had been idle for

some time due to various contamination problems.

We were part of the team involving the site owners, Display

World, a prospective purchaser, and State regulators. Today the facility is again in operation and over 100 jobs have returned to Warren, RI, as a result, with growth expected to continue in that facility.
38

So you can see we believe in this process, and we’re encouraged

to see the attention it’s receiving from this committee.

Let me address two specific provisions of S. 8:

First, I understand and appreciate the reasoning behind the

windfall lien provisions in section 105. However, it is unclear what

precedence the proposed lien in favor of the United States would

have. If the intent is to have the lien be junior to all encumbrances

of record at the time the lien arises, this should be explicitly provided in the bill. If the intent is otherwise, this creates a difficulty

for lenders because of the uncertainty associated with the amount

involved. As a practical matter, it can be difficult to quantify the

incremental market value that is attributable to a response action.

So this provision, as currently drafted, could insert an unknown

quantity of unknown precedence into the credit underwriting equation.

I recommend then that the bill explicitly provide that the windfall lien is junior to prior encumbrances of record. In any event, I

ask that the intent of this provision be made clear to avoid this

being decided case-by-case by the courts.

My second comment relates to section 106, which provides a safe

harbor for purchasers of real estate in certain circumstances. One

of those circumstances applies when the purchaser has made all

appropriate inquiries into the environmental contamination. We

support the bill’s direction to the Administrator to provide clear

standards for these inquiries, but we would ask in addition that

the Administrator recognize that banking regulators have also issued guidelines on appropriate inquiries for environmental contamination, and we are examined as to our compliance with these

guidelines. Our hope is that these two sets of directives could be

reviewed and synchronized so that lenders do not receive direction

from the Federal Government which is in conflict or inconsistent on

this issue.

If I may, let me close with a more general comment, again, based

on my front line experience:

All parties to this subject—legislators, regulators, community

groups, and private sector businesses—seem to agree that our goal

is to foster responsible reaction to existing environmental problems,

and to provide safeguards against future danger from contamination.

But the statutory and regulatory apparatus that has been created to foster this goal can be bewildering. It is especially difficult

for grassroots businesses, small scale entrepreneurs or community

banks, to afford the legal and technical analysis necessary to untangle the Gordian knot of environmental rules, and to understand

the myriad of potential liabilities that may arise from them.

As a result, those grassroots businesses must either take on

these liabilities blindly, which we must all agree is undesirable, or

more commonly, they forego opportunities for desirable redevelopment. Thus, many smaller sites will remain undeveloped and

unremediated, which otherwise could have been revitalized by the

energies of the private sector.

Again, I think we must all agree that this latter outcome is undesirable, even tragic. It is made no less tragic by the fact that
39

none but the best intentions have underlain the legislative and regulatory initiatives in this area.

The bills we’re discussing today are a laudable effort to further

our common goal, as I’ve outlined it above, but they are limited to

a narrow section of the regulatory spectrum as it affects environmental matters. I hope this constructive approach will be continued

and will be eventually broadened to cover a greater range of environmental legislation.

Please realize we are not asking for our risks to be eliminated,

or for our costs to be subsidized, or for protection against the consequences of negligence on our part. We ask only that our environmental risks be quantifiable, predictable, and reasonable. This will

allow us to evaluate environmental risks in context with our business risks, rather than having it loom as a black hole of liability

that trumps all other issues when making a credit decision. This

will help our borrowers to succeed, and that is the only way that

we, as lenders, can succeed.

Again, I applaud the tone and direction of these bills, and that

of other recent legislation in this area. I appreciate the opportunity

to provide this testimony.

Senator SMITH. Thank you, Mr. Wray.

Mr. Riley.

STATEMENT OF WILLIAM J. RILEY, GENERAL MANAGER, ENVIRONMENTAL AFFAIRS, BETHLEHEM STEEL CORPORATION,

ON BEHALF OF THE AMERICAN IRON AND STEEL INSTITUTE

Mr. RILEY. Thank you, Mr. Chairman.

I represent the American Iron and Steel Institute who is here

today in the interest of cleaning up the sites that we’re talking

about today.

The committee’s leadership is to be commended for addressing

brownfields legislation, which has been addressed in a number of

bills introduced in Congress, in particular, S. 8 and S. 18. These

bills address some of the issues associated with brownfields, but we

believe that legislation must address all of the issues which created

the impetus for legislation in the first instance.

The steel industry has been a leader in promoting reasonable

brownfields legislation at the Federal, State, and local levels. The

States have taken the lead on this issue through voluntary cleanup

legislation, such as you’ve heard from Mr. Seif today, and have collectively developed the model framework that has achieved widespread support.

In particular, I would like to commend Governor Ridge of Pennsylvania, who has been a strong advocate in the Great Lakes region for brownfields legislation. A wide variety of brownfields sites

can be cleaned up and redeveloped effectively and efficiently under

existing State programs if Federal legislation is enacted that promotes the one master concept—namely, that remediation under a

State program will satisfy Federal requirements.

There are basically two categories of brownfields sites—abandoned sites and underutilized sites. Usually, abandoned sites are

relatively small in size and have been left deteriorating for a number of years. As a result, the infrastructure associated with these

sites has also been deteriorating. Such sites are often municipally
40

owned and usually will require financial assistance for redevelopment. Brownfields sites with a viable owner are far larger in size,

and, with effective legislation, can undergo cleanup without the

need for public funds. Often these sites are underutilized or surplus portions of large manufacturing sites which have ongoing adjacent operations.

As a result, the infrastructure associated with these sites is usually in much better condition than that for abandoned sites, making them more attractive to potential buyers. There are a growing

number of these sites in the United States, especially as a result

of the restructuring activities in industries, such as steel, that have

been made, and continue to be made, in response to intense competitive environments.

There are three primary objectives that must be addressed in

comprehensive brownfields legislation. They are Federal finality,

certification of State voluntary programs and eligibility of sites. I

will address each of these as follows:

Federal Finality—State voluntary cleanup program provide certain incentives to buyers and sellers of contaminated industrial

properties, and thus facilitate faster cleanup and redevelopment of

sites. However, to provide buyers and sellers sufficient incentive to

make the necessary investment in these properties, these parties

need assurances of finality—that is, assurances that they will face

no further liability under Federal and State law for those sites, or

portions of those sites, that are investigated and cleaned up in accordance with the State voluntary cleanup program. We support

the provision in S. 8 that eliminates CERCLA liability once a site

has been cleaned up under a State plan. We are concerned, however, that the EPA could second guess the cleanup through the

RCRA statutes, and, therefore, need RCRA liability relief as well.

Certification of State Voluntary Cleanup Programs—To quality

for Federal liability relief a cleanup should be conducted pursuant

to a certified State voluntary response program. We believe that

the criteria set forth in section 102(b) of S. 8 would be appropriate

criteria for the certification of State voluntary response programs.

Eligibility of Sites—In order to promote and accelerate the cleanup and redevelopment of a wide universe of underutilized industrial properties, brownfields should be broadly defined. In particular, we strongly believe that RCRA sites where cleanup has not yet

commenced and where cleanup would be accelerated by participating in a State voluntary cleanup program should be eligible. There

are approximately 6,100 RCRA corrective actionsites, large portions

of which often have minimal or no contamination. Less than 5 percent of these sites have completed cleanup.

We would like to have the ability to clean up portions of a facility

under a State voluntary cleanup program and sell them to potential buyers for economic redevelopment purposes. RCRA, which

triggers corrective action facility-wide, often precludes our ability to

redevelop these properties in a timely manner. Again, we are not

proposing to skirt our corrective action obligations, but merely

striving to accelerate cleanup for economic redevelopment purposes.

In addition, we are not seeking financial assistance or grant money

to clean up our facilities. We believe the one master concept where
41

the State programs satisfies all cleanup requirements results in

comprehensive liability relief is the way to proceed.

Thank you for addressing this issue.

Senator SMITH. Thank you very much, Mr. Riley.

Senator Sessions has to leave early so I’m going to yield my time

to him at this point.

Senator SESSIONS. Thank you, Mr. Chairman.

It is an area—it does appear that business developers and realtors, environmentalists and government officials ought to be able to

agree. We are at a point where if we can take these marginal sites

and have them cleaned up by private investment and make them

into productive taxpaying properties, we have done something real

good and it does appear that the present law prohibit and inhibits

that. Mr. Chairman, and all of you that have worked on this so

long, I salute you.

Let me ask Mr. Scherer in the course of his real estate experience, and Mr. Wray, as a lender, have you actually seen circumstances yourselves in which properties where there was a willing buyer and developer and a willing lender in those circumstances collapsed and not be developed because of fear of environmental concerns?

Mr. SCHERER. Yes, we have in our own company one example of

a relatively small project, one project that didn’t go forward because of the inability to obtain the appropriate, in this case, both

State or Federal sign-offs, and I think that there are many examples that are out there that are all too familiar to people in my industry.

Mr. WRAY. The bank I worked at before I joined Citizens, Senator, in 1 year during the real estate depression that hit New England we had at least $10 million of charge-offs just in one State because we couldn’t foreclose on properties because the environmental liabilities were too uncertain. They may not have been too

severe; they were too uncertain, so we had no choice but to walk

away.

Senator SESSIONS. And if you had foreclosed on it, you could have

been liable for the cleanup which would have exceeded the amount

of loan you had outstanding?

Mr. WRAY. That is correct, and some of those issues have been

corrected, but we had a lot of potential buyers who we could have

worked with to take that site who wouldn’t touch it for the same

reason.

Senator SESSIONS. It is my experience that when you’ve got a

willing developer and a willing lender, delay is the enemy. Is that

fair to say?

Mr. SCHERER. You know our industry well.

Senator SESSIONS. The longer the delay, the more likely it is to

collapse. Another property becomes available and the person goes

somewhere else. I do think you’re dealing with a real problem.

Mr. Chairman, I hesitate to suggest a new little twist to this, but

it is something that is coming to mind that I think might be helpful.

In terms of Federal dollars that’s spent how does the idea of a

program, a grant program, to encourage State environmental management agencies to form rapid response teams to do an immediate
42

analysis in review, and, if appropriate, approval of cleanup plans

for sites.

Would that be a cost-effective way, in your opinion, to increase

the number of sites that are cleaned up? Do you have any thoughts

about that?

[No response.]

Senator SESSIONS. Mr. Riley.

Mr. RILEY. I can’t speak from personal experience. In the States

in which we operate, which are principally here in the Northeast,

we, as a company—most of those States have programs underway.

I can’t speak to the other States from the point of view of whether

or not that kind of a program would help. However, I do have a

personal observation, and that is that we have been at this environmental program since the early 1960’s, and I think we should

substantially increase the ability of States to manage programs. I

think we need to stand back and let them assess their ability to

do that. We should be in a position to do that.

Mr. SCHERER. In Michigan I can tell you that the State is very

active in trying to get a number of brownfields sites under some

sort of productive use, and I met fairly recently with a senior executive of a large national grocery chain. There was a meeting with

the Department of Environmental Quality in Michigan, and they

were very motivated in learning from us can we help them identify

these sites so that they can try to market them.

For example, the fellow from the grocery industry said, ‘‘You

know, we’re in this business and we understand it well, but our

risk is, whether somebody is going to walk in today and buy a loaf

of bread or something. We cannot accept a risk which subjects our

balance sheet to unlimited liability, even if the site is in the exact

location where we want to be.’’ Many of these sites are serviced by

public transportation, and in the real estate industry if you don’t

eliminate those unlimited, environmental risks and provide certainty, developers will go to the suburbs or go somewhere else

where there is ample opportunity to develop properties. You need

to take a look at some of these sites and their locations and how

ideal they would be for what we want to do, but, yet, unreasonably

risking private capital just doesn’t make business sense.

Senator SESSIONS. Well, that—I think nothing can be better. In

some of the lower income neighborhoods they have a discount grocery store very conveniently located. It could save them a significant part of the income.

Mr. SCHERER. And a nice new one instead of one that has been

run down and not renovated.

Senator SESSIONS. Thank you.

Senator SMITH. Thank you, Senator.

Senator Lautenberg.

Senator LAUTENBERG. Thanks, Mr. Chairman.

Mr. Scherer, I was curious, is there a—are there minimum sizes

for companies to belong to the National Realty Committee, the

NRC?

Mr. SCHERER. I don’t know what the—if there are actual printed

criteria. It is——

Senator LAUTENBERG. Are there small—yours is a giant company, but are there smaller operators?
43

Mr. SCHERER. Yes, very much. It’s a very broad spectrum of people interested in the real estate industry.

Senator LAUTENBERG. Because I was curious as to whether the

rules that you’re proposing would be of benefit to all size purchasers.

One of the things that I sense in the panel’s discussion—it was

very good; all of you, let me compliment you—is that the focus kind

of gets away and gets to the larger entity.

Mr. Riley, in particular, you had an appeal there, if I understood

correctly in a quick review of the testimony, for the companies to

be able to develop these sites to a point, or clean them up, and then

turn them over to other people who would develop them. In that

role the company would be kind of a middle man.

Mr. RILEY. Yes, Senator, we’ve got large steel plants, many of

which we’ve closed and we’re in the process of cleaning them up

under various programs, and primarily the EPA’s corrective action

program. What we are attempting to do is develop portions of those

properties, and what we’re seeking is legislative changes which facilitates that, not avoids responsibility in the program but which

removes the heavy bureaucracy within these programs, which impede progress and impede our ability to separate out particular

portions of properties, which we, in fact, have done in many instances but do not have any liability relief. That portion of it, the

lack of liability relief, we believe is going to impede the further development from the financial community and buyers.

Senator LAUTENBERG. Yes, but what—it raises a question for me

and that is why isn’t the smaller business, the smaller proprietor,

able to get kind of first-hand review of that? As you construct liability and definition of what constitutes finality, I think you run

into some serious problem there. It is very hard to say that this

is all that we have to worry about, and I couldn’t agree with you

more—you don’t want to leave these things open-ended because,

my gosh, where does it stop?

For the banking industry, Mr. Wray, we’ve taken very good effort

in the signing of the budget reconciliation last year to limit lender

liability, which I think makes sense. Lend someone $10,000 and

wind up with an obligation for a half a million dollars. It just didn’t

make sense, but in this case, Mr. Riley, what I kind of sense is that

the companies are looking for a chance to make some money on

this public program, really narrowing the definition of finality, liability, etcetera, and I think if the same conditions were made

available to the smaller businessman, the individual who wants to

open a couple of stores or something of that nature, I think that

what we’re doing is assuring the larger company that they wouldn’t

have any risk connected with it. I think we ought to extend the

same courtesies and the same opportunity to the smaller

businessperson who can’t afford what XYZ steel company can do,

and let them get in there and do it.

Do you disagree?

Mr. RILEY. I don’t disagree. I think liability relief across the

board is appropriate.

Senator LAUTENBERG. Yes.

I just want to ask Mr. Guerrero a question, if I may, Mr. Chairman.
44

In your testimony you talked about States as well as localities

that need Federal assistance to do the evaluation characterization,

assess and cleanup—$85,000 is the number you used—of

brownfields sites. And, by the way, this number is jumping all over

the place, as you know. It’s gone from a low of 85,000 to a high

of 500,000, based on witness presentations. That is a fairly narrow

range.

You say that the assessment themselves would have to be there

before the developers would come into purchase the property, and

I think that that is probably reasonable, but S. 8—if we’re distinguishing between two bills—there is no argument about the fact

that we could use good brownfields legislation. It is a question of

where it comes in the scheme of things.

S. 8 excludes States from receiving assistance to perform these

assessments. S. 8 also requires that the States put up a 50 percent

match in order to qualify for Federal funds to capitalize that, a

cleanup loan fund.

Won’t the S. 8 provisions end up preventing States from moving

expeditiously to get brownfields development programs started?

Mr. GUERRERO. To date the States have been a very effective

partner in this process, and it would seem reasonable to want to

include them in the future.

Senator LAUTENBERG. But if we could limit the scope of the liability, why couldn’t we expedite these things, going direct, which

is what I’m proposing in S. 18, and not incumber them with the requirements of S. 8?

Mr. GUERRERO. I’m not sure I entirely follow your question, but

I think the concern initially is whether the funds could be made

available to the States, as well as localities and the parties themselves.

Senator LAUTENBERG. Yes, I have no problem with that, but we

tried to make it easier by not having the States serve as an

intermediary that might slow the process down. I would ask you

to take a look at S. 8 and S. 18 and make the comparison. We want

to jump out ahead because we think that we have a piece of legislation that can be considered, that doesn’t in anyway inhibit the inability to reform Superfund, which is a goal that we all salute here.

But get this section out and I haven’t heard one witness yet say

that we don’t want to clean up the brownfields. We want to do it;

we’re interested in limiting liability. Everyone, by virtue of their

testimony, certifies that this is a pretty good program, and I say

then let’s move it.

I don’t want to inhibit Superfund’s reauthorization in any way,

but I thing this is separate and apart. I was trying to get an assessment from you, as you did your study, whether you saw problems, one with the other.

Mr. GUERRERO. Our own view is that from talking to the States

and others involved in brownfields redevelopment, the States have

been a very effective partner in that process and have not slowed

it down, but in fact have facilitated brownfields redevelopment.

Senator LAUTENBERG. Thank you.

Thank you, Mr. Chairman.

Senator SMITH. Senator Chafee.

Senator CHAFEE. Thank you, Mr. Chairman.
45

First, Mr. Riley, I would like to commend you for the summation

you have in the back of page 5 and then goes on to page 6, where

you list those things that will be the result if we can speed up this

brownfields and the overall approval of cleanups.

The only thing I would add in there is a point that was made

by Senator Lautenberg and Senator Warner, and that is, what it

means to the creation of jobs in the inner city. Not only would jobs

be created, but I think this point is an excellent one about we

would be retaining those jobs in the inner city where so many people would find them readily available. They would not have to drive

to some green, pristine area where the plants would otherwise go.

So I would just suggest you add that into your list.

Mr. Wray, I was interested where you said you deplored the red

tape that you had to go through: ‘‘the regulatory and statutory operation or apparatus that has been created to foster the attainment

is bewildering, and especially difficult for grassroots business—

small entrepreneurs, community banking—to afford the legal and

technical analysis necessary to untangle the Gordian knot of environment rules.’’

I think that presents us with a real challenge. We really should

do something about this. So I appreciate that guidance that you

gave us and want to thank you, and want to thank all the members

of the panel. You’ve been very helpful.

I have no further questions, Mr. Chairman.

Senator SMITH. Thank you, Senator Chafee.

Mr. Guerrero, in your testimony you said that the voluntary program managers in the 15 States that you had surveyed identified

Superfund liability as a barrier to tracking volunteers to accomplish cleanups, including those at brownfields.

Did you mean to limit that to only prospective purchasers or did

you also include owner-operators in terms of the liability issue?

Mr. GUERRERO. We surveyed States using a questionnaire and

they were very clear in stating that proposals to limit the liability

of lenders, fiduciaries and prospective purchasers would be very

helpful. In another area they said that they felt that the lack of

resolution of this issue of Superfund liability did limit the participation by some individuals in their voluntary programs.

Senator SMITH. Could I ask each of you the same question? Do

you believe that the prospective purchaser is sufficient or do you

believe that the owner and the operator must also be given the

same treatment as to prospective purchaser?

Mr. Scherer.

Mr. SCHERER. Well, I must say in the case of these sites, the

members of the National Realty Committee by and large aren’t the

current owners of them, given the constituency of our membership,

but, obviously, we are the kinds of people who would like to become

a prospective purchaser, purchase and develop these properties. So

I speak from the standpoint of the developer, not necessarily from

the current owner, but I do know that with many sites out there

it’s a lot cheaper to put a chain-link fence and a couple of

Dobermans on the property than it is to go through the worrisome

and very expensive, and perhaps unlimited, liability situation involved with a cleanup.
46

So I think that there does have to be some recognition of that.

Many of the sites, perhaps sites we’ve talked about this morning

even, won’t get into the cleanup program because of sellers who are

unwilling to let the regulators or consultants come on to their land

and begin peeling the onion of information.

Senator SMITH. Mr. Wray, do you want to answer the same question?

Mr. WRAY. Senator, as I said, we can’t do anything right unless

our borrowers understand what’s going on and that their good faith

efforts are rewarded, and so we lend typically to very small businesses and our typical commercial loan may be under a million dollars. What I’m concerned about is that those folks can’t afford to

pay somebody to read 1,200 pages of cleanup standards, can’t afford to have somebody understand this on their behalf so I think,

without getting very specific, you have to look at prospective purchasers but you also have to look at owner-operators to the extent

that they acted in good faith or they may not have been aware of

issues.

I mean, there was an article in the Providence Journal the last

couple of days about a gas station owner who lives about 2 miles

from me whose business is being closed down because of a leak. He

had no idea where it came from, what’s happening to him, or how

to deal with it.

Now, again, these things have to be dealt with, but right now it’s

simply bewildering. No offense intended, but the Bethlehem Steel

probably understand this to the T, but a community bank and a

community bar is going to have a very hard time coping with this.

As a result, the response has been to run away from it.

Senator SMITH. Mr. Riley.

Mr. RILEY. Thank you, Mr. Chairman.

Not surprisingly, we believe that owners-operators need liability

relief, and that is appropriate. We operate very large sites for Bethlehem. We’re usually in the center of a community. We’ve been

present for a very long time—many years—and we have an investment in the community. When we shut down these facilities, we

have an interest in trying to help preserve the jobs. Senator Chafee

pointed out we should preserve the jobs in the inner cities. We

have chain-linked fences around our properties for security purposes. We would like to take those fences down and develop the

properties. It’s in our interest to remove all barriers to that process. We see barriers throughout various statutes, and what we’re

trying to do is to work with you and your staff to remove them so

that proper cleanups can occur and those properties can be redeveloped.

Senator SMITH. A major difference between the provisions in

brownfields and S. 8, section 1 of the bill, and S. 18 is that one

deals only with prospective purchasers and the other deals with

owner-operators and prospective purchasers. It seems a bit discriminatory, doesn’t it, if you have a owner-operator who wants to

clean the site up but doesn’t get liability relief, whereas if he sells

the property, the liability relief is there.

I mean, do you all agree with that point?

Mr. WRAY. Senator, if the intent of this is to put these back in

the economic mainstream and it lets you understand and quantify
47

risk, you can’t leave that half of the equation out, meaning it

should apply to both.

Mr. RILEY. We believe that S. 8 is a very good start. We would

recommend addressing the issues which we’ve outlined.

Senator SMITH. Let me just ask one more question of each of you

on finality.

As I asked the last panel, there seems to be some difference as

to how you get that finality and indeed who has it. Are you willing

to accept finality at the State level?

Mr. Guerrero, is that acceptable or do you believe there are

States that couldn’t meet the standards to provide for the protection of the environment by granting them that authority?

Mr. GUERRERO. I would like to make a couple of observations on

that question.

First, of the State voluntary programs we looked at 12 of the 15

States did provide a release from State liability. Of course, they

could not do that for CERCLA, but they were able to do that under

their own State laws.

To help shed light on this, I would add there are an important

number of considerations—first, that almost none of them did, however, provide a blanket release from liability. They all allowed for

some type of reopener under certain circumstances—fraudulent

submission of data, ineffective remedies and so forth.

The second consideration is that the States themselves when it

came to Superfund liability did find Superfund liability to be useful

in bringing recalcitrant parties to the table for dealing with the

problem sites, not the brownfields sites but the sites of higher

risk—the Superfund NPL caliber type of sites. In other words,

Superfund liability was useful for getting those parties to the table

to deal seriously with those problems and to own up for their responsibilities there.

But it is a balancing act and it’s balancing between having in

your back pocket the threat of that liability to get the cleanups versus the incentive to get volunteers to come forward and cleanup

sites of lesser risk, and a number of States that we talked to were

able to maintain that kind of balance by adapting the degree of liability relief, as well as the conditions of the programs, to the degree of risk posed by the sites.

Senator SMITH. Are there sites out there, brownfields sites, that

would be redeveloped if there was a way for Federal liability to be

released?

Mr. GUERRERO. I can’t point to specific sites, but I can say that

we were told by any number of States that participation would increase if that issue were more definitively resolved.

Senator SMITH. Does anybody on the panel have a problem with

the State being the final arbiter? You brought up a very good point

about fraud or some other problem. We’re not asking people who

commit fraud be eliminated from liability, but if there should be an

additional problem on the site after all good intentions, who should

be liable?

[No response.]

Senator SMITH. Don’t all speak at once.

[Laughter.]
48

Senator SMITH. I mean, where does the liability fall? Does it go

back to the Federal Government? If so, then they need to look back,

right, or does it go to the State? Who is ultimately liable?

Mr. RILEY. Senator, I don’t see why the standard couldn’t be that

the State either concurs in or requests the EPA’s intervention and

involvement, but I don’t see any need for something beyond that.

Even in the event of an imminent hazardous threat, which was

raised many times, it appears to me that the State ought to be the

best judge of when the Federal Government needs to be involved.

Senator SMITH. All right, so the issue then of finality really gets

to the point of good faith efforts on the part of all those who are

volunteering to do the cleanup whether they be prospective purchasers or purchasers, whether they be owner-operators, or the

States, or, for that matter, the Federal Government? It’s good faith

intent. If it falls short, then your—is it your position if all of that

occurred, it’s a good faith attempt that the people who were on that

site whether they be owner-operator or prospective purchaser

would not be liable, if everything was done in good faith and good

science, and everybody thought they were doing the right thing?

Mr. SCHERER. Senator——

Senator SMITH. That is the only way you can get finality, right?

Mr. SCHERER. You need certainty, predictability and finality, and

I think you’ve defined what that means.

Senator SMITH. Did you say you thought I defined it?

Mr. SCHERER. I believe you defined it.

Senator SMITH. Mr. Riley.

Mr. RILEY. I agree with that. Typically, when we go through the

cleanup programs, the evaluations are very extensive. I can’t believe that we’re going to leave ticking time bombs if we’re responsible, and I know we are, as a company. We initiated our programs

well before RCRA. We initiated site evaluations when we went into

a major restructuring program within the corporation and sold

many properties. We wanted to know what we were selling. We

wanted to make sure we were not selling liabilities to others, and

I think where there is a good faith attempt, responsible management, I think that under those circumstances there should be liability relief.

Senator SMITH. Senator Chafee.

Senator CHAFEE. Mr. Wray, one question. On page 5 you said,

The bills we are discussing today are a laudable effort to further our common

goal, as I have outlined it above, but they are limited to a narrow section of the

regulatory spectrum as it affects environmental matters. I would hope that this constructive approach will be continued and will be eventually broadened to cover a

greater range of environmental legislation.

What are you referring to there specifically?

Mr. WRAY. Well, Senator, I know it takes me a long time to think

in my head the difference between RCRA and CERCLA, besides

what the acronyms mean, and one can be applied to when the

other can. What I understand is they overlap and sometimes they

can beat you about the head with CERCLA and then use RCRA as

another club. There’s all the other issues affecting operation of

properties, cleaner air acts, and clean water acts and various components, which don’t appear to be touched on here.
49

This is primarily focused on spilling things on dirt. I’m concerned

about operational liabilities, again, particularly for our small borrowers who may be running a lobster boat or doing something like

that, understanding all the different legislative issues and regulatory issues that might affect them. I, frankly, don’t understand

them all but I know they’re out there, and I can guarantee that our

borrowers don’t generally understand them.

So this whole approach to cleaning up, simplifying and addressing good faith I would like to see extended beyond these laws,

which primarily affect just real estate.

Senator CHAFEE. Yes, I’m—let me say if we solve this problem,

we’ll deserve a lot of kudos, and if we can move on to the others,

three cheers.

Mr. WRAY. Well, I get to fly home tonight, Senator, I don’t have

to worry about it. I can say it and leave.

Senator CHAFEE. OK, thank you.

Senator SMITH. Final question, do you believe that the States are

going to try to get away with what we would call ‘‘crummy cleanups’’ that some have charged or do you feel confident that we’re

going to get the type of cleanups that are warranted without the

heavy hand of the Federal Government overseeing them or second

guessing in here? Each of you, yes or no.

Mr. SCHERER. We’re talking brownfields, and my experience has

been that the States are very interested and very careful when

they go through these, and also at this point in time very motivated to try to get them back into the mainstream. So I’ve seen

nothing that would suggest that States aren’t capable, in my experience, Senator.

Mr. WRAY. We agree.

Mr. GUERRERO. I would observe that the States have adopted

these streamlined voluntary approaches simply because you can’t

do everything under Superfund. You can’t do everything under the

State Superfunds, and the majority of programs we looked at have

controls in place. But I would also observe that those controls do

vary from State to State.

Senator SMITH. Given the liability problems we have under

Superfund, does it—is it better to go forth with brownfields separately or is it better to go with the broader Superfund reform and

include brownfields?

Mr. GUERRERO. I don’t have any opinion on that matter.

Mr. SCHERER. Well, I think that we’re encouraged by seeing the

way that both sides are working together, and we would love to see

that continue to provide the type of bill we’ve talked about.

Senator SMITH. All right, I guess that’s it. Thank you very much

for coming today.

The hearing is adjourned.

[Whereupon, at 12:02 p.m., the subcommittee adjourned, subject

to the call of the Chair.]

[Additional statements, submitted for the record, follow:]

PREPARED STATEMENT OF HON. TOM DASCHLE, U.S. SENATOR FROM THE

STATE OF SOUTH DAKOTA

Mr. Chairman and Ranking Member, thank you for holding this hearing to explore the merits of enacting legislation to encourage brownfields cleanup and redevelopment. This is a very important issue affecting both the quality of our urban
50

environment and the potential for urban economic development. It is my hope that

Congress will move in a bipartisan manner to enact brownfields legislation in the

very near future.

Throughout this country there is an enormous unfulfilled potential to restore contaminated industrial sites, known as ‘‘brownfields,’’ and create urban parks and rejuvenated centers of commerce. Unfortunately, current law and a lack of resources

have combined to hinder the cleanup and development of these sites for productive

use.

That is why Senate Democrats have introduced legislation, as one of our first ten

bills, to change current law and provide the resources needed to address this problem.

The legislation developed by Senator Lautenberg and introduced as part of our

leadership package will, if enacted, encourage the cleanup and development of contaminated industrial sites and thus help communities to rehabilitate these areas for

productive use and reduce the public health risks posed by many of these sites.

When most people think of brownfields, they envision vast and aging urban areas

where dying industries have left behind a dangerous, and in some cases toxic, legacy

of blight. But this caricature is not always accurate. Even in largely rural States,

such as South Dakota, there are opportunities to transform brownfields into productive and aesthetically desirable parts of the city landscape.

The city of Sioux Falls has worked for years to redevelop a brownfield site in the

center of town. As is often the case in these circumstances, lack of resources have

hampered this effort. Fortunately, last year, Sioux Falls succeeded amidst enormous

competition in obtaining a grant from EPA to assist in this process and the project

is moving forward.

But for every Sioux Falls, there are a number of other worthy cities and sites that

have not been able to obtain assistance. There is much more demand for brownfields

redevelopment assistance than the current system can support. That is why legislation is needed and why Senate Democrats have made brownfields legislation one of

our top priorities for this Congress.

Our legislation authorizes EPA to provide grants to local communities for use in

evaluating and cleaning up brownfield sites. It also eliminates the existing disincentives in Superfund that have hindered independent efforts to clean up sites by innocent landowners and prospective buyers.

By providing relief from potential Superfund liability to innocent owners and prospective buyers who had no hand in causing the contamination, the legislation will

encourage characterization and cleanup of sites in a fair and equitable manner.

There is broad agreement that brownfields legislation is needed. I note that the

Republican’s Superfund reauthorization bill, S. 8, includes a brownfields title. Our

legislation, S. 18, would encourage the redevelopment of brownfields sites and does

not link passage of needed reform in this area to broader and more contentious

Superfund legislation.

There is no need to delay enacting brownfields legislation. We were successful at

the end of last session of Congress in passing the Safe Drinking Water Act, reform

of pesticide regulation, and the Magnuson Fisheries reauthorization with strong bipartisan cooperation. Brownfields legislation clearly has strong support on both

sides of the aisle and deserves to be enacted quickly.

PREPARED STATEMENT OF TIMOTHY FIELDS, JR., ACTING ASSISTANT ADMINISTRATOR,

OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, U.S. ENVIRONMENTAL PROTECTION AGENCY

INTRODUCTION

Good morning, Mr. Chairman, and Members of the Committee. I am pleased to

have this opportunity to appear before you today to discuss the current state of the

Brownfields Economic Redevelopment Initiative. I am also pleased to have the opportunity to begin these discussions within the context of legislative reforms to the

Superfund program. I am, of course, preceding Administrator Browner, who will be

testifying before you tomorrow. Her testimony will provide a broader perspective

and context for discussion of the substantial accomplishments EPA has achieved

over the past few years through its administrative reforms of Superfund. It will also

provide the framework for legislative reforms that will address the remaining barriers to success for the Superfund program and that can help us achieve responsible

legislative reform in this Congress.

My purpose today is threefold: (1) to share with you the substantial accomplishments EPA has achieved since the initiation of the Brownfields Economic Redevel-
51

opment Initiative in 1995 and the very positive linkages these activities are engendering among other key stakeholders; (2) to identify key EPA brownfields legislative

principles for you; and (3) to examine the reflection of those principles in legislation

now before this Committee and the U.S. Senate for consideration—S. 8 and S. 18.

BROWNFIELDS ECONOMIC REDEVELOPMENT INITIATIVE

EPA is promoting redevelopment of abandoned and contaminated properties

across the country that were once used for industrial and commercial purposes

(‘‘brownfields’’). While the full extent of the brownfields problem is unknown, the

United States General Accounting Office (GAO/RCED–95–172, June 1995) estimates

that approximately 450,000 brownfields sites exist in this country, affecting virtually every community in the Nation. EPA believes that environmental cleanup is

a building block, not a stumbling block, to economic development, and that cleaning

up contaminated property must go hand-in-hand with bringing life and economic vitality back to communities. EPA’s Brownfields Economic Redevelopment Initiative

places a new focus on brownfields. The Brownfields reforms are directed toward empowering States, local governments, communities, and others to work together to assess, safely cleanup, and sustainably reuse these sites. As the National Community

Reinvestment Coalition (NCRC) said ‘‘[W]e wholeheartedly support the EPA’s

Brownfields Economic Redevelopment Initiative. NCRC believes that [EPA’s] multifaceted initiative represents a significant step forward by the Administration in

working with distressed communities on the local level in their revitalization efforts.’’

EPA efforts, to date, have been accomplished through the Brownfields Action

Agenda—an outline of specific actions the Agency is conducting.

Brownfields Action Agenda

The initial Brownfields Action Agenda announced on January 25, 1995, outlined

four key areas of action for returning brownfields to productive reuse: (1) awarding

Brownfields Assessment Demonstration Pilots; (2) building partnerships to all

Brownfields stakeholders; (3) clarifying liability and cleanup issues; and, (4) fostering local workforce development and job training initiatives.

Brownfields Pilots are Encouraging Redevelopment

The Brownfields Assessment Pilots form a major component of the Brownfields

Action Agenda. Chosen through a competitive process, these pilots are helping communities articulate a reuse strategy that demonstrates model opportunities to organize public and private sector support, leverage financing, while actively demonstrating the economic and environmental benefits of reclaiming brownfield contaminated sites. The Brownfield pilots will develop information and strategies that

promote a unified approach to site assessment, environmental cleanup, and redevelopment. In addition, these pilots are providing opportunities to stimulate jobs and

economic activity. EPA exceeded its early commitment to fund at least 50 pilots by

actually funding 76 pilots at up to $200,000 each by the end of 1996. And, just this

month, the Administrator announced the addition of two more pilots, bringing the

total to 78. These 2-year pilots are intended to generate further interest in

Brownfields redevelopment across the country. Many different communities are participating, ranging from small towns to large cities. Stakeholders tell the Agency

that Brownfields redevelopment activities could not have occurred in the absence of

EPA efforts.

Brownfields Partnerships Build Future Solutions

The Brownfields Initiative is clearly about partnerships—with other Federal,

State, and local agencies, and a diverse array of stakeholders. The EPA has undertaken partnership efforts with individual States as well as through broad organizational structures like the Association of State and Territorial Solid Waste Management Officials (ASTSWMO), the National Governors Association (NGA), and the National Association of State Development Agencies (NASDA). Federal partnerships

have been fostered, in particular, through Memoranda of Understanding (MOUs).

EPA has signed MOUs with the Economic Development Administration of the Department of Commerce, the Departments of Labor, Housing and Urban Development, and Interior. EPA is working with the Agency for Toxic Substances and Disease Registry and county health officials to address the health concerns of

brownfields communities. EPA also forged working relationships with a vast spectrum of other stakeholders, including the Mortgage Bankers Association of America,

the Irvine Foundation’s Center for Land Recycling, NASDA, ASTSWMO, International City/County Management Association (ICMA), to mention but a few. Other
52

outreach efforts include coordination of brownfields efforts with the Agency’s Common Sense Initiative.

Ultimately, it is the voice of the community that all brownfields stakeholders

hear. The recently released report, Building A Brownfields Partnership from the

Ground Up, by the National Association of Local Government Environmental Professionals, February 13, 1997, presented the views of a network of local government

brownfields leaders on the value of EPA’s brownfields programs and policies. The

report calls local government leaders ‘‘a key link in the success of brownfields partnerships, for it is the environmental, health, development and political leaders in

our cities, counties and towns who can best build a brownfields partnership ‘‘from

the ground up.’’ EPA has developed its brownfield capacity for outreach through

each of its ten regions. Each region has a designated ‘‘Brownfields Coordinator’’ to

assist and oversee the brownfields pilots and other actions under the Brownfields

Initiative. We believe our Brownfields Coordinators are the most effective link to

communities and form the linchpin of success under the Brownfields Action Agenda.

In addition, EPA has assigned staff members to cities around the country (e.g., Detroit, Los Angeles, Dallas, East Palo Alto) through Intergovernmental Personnel Assignments (IPA) to further support brownfields activities.

These partnerships and those that we will develop in the future represent new

ways of doing business with communities. We are working hard to continue to improve communication and coordination among all stakeholders. In this regard, we

are encouraged by the increasing linkage being made between brownfields redevelopment and environmental justice. The National Environmental Justice Advisory

Council (NEJAC) released its report, Environmental Justice, Urban Revitalization,

and Brownfields: The Search for Authentic Signs of Hope.’’ in July of last year. Recommendations from the NEJAC are the result of a series of public hearings held

in five cities (Boston, MA; Philadelphia, PA; Detroit, MI; Oakland, CA; and Atlanta,

GA). These recommendations will be used to address not only past mistakes of

urban planning but also to benefit brownfields identification and redevelopment.

Redevelopment Barriers—Addressing Liability Concerns

The Agency also committed to addressing the threat of liability and other barriers

impeding the cleanup and redevelopment of brownfields. Over the past year, EPA

has announced a variety of guidance and initiatives that have had a positive impact

among Brownfields stakeholders in terms of removing uncertainties often associated

with brownfields properties. EPA is promoting redevelopment of brownfields properties by protecting prospective purchasers, lenders, and property owners from the

threat of Superfund liability. EPA’s ‘‘prospective purchaser’’ policy is stimulating the

development of sites of Federal interest where parties otherwise may have been reluctant to take action by clarifying (through agreements known as ‘‘prospective purchaser agreements’’ (PPAs) that bona fide prospective purchasers will not be responsible for cleaning up sites provided they do not further contribute to or worsen contamination. EPA issued new guidance in May 1995, which allowed the Agency

greater flexibility in entering into such agreements. The new guidance expanded the

universe of sites eligible for such agreements to include instances where there is a

substantial benefit to the community in terms of cleanup, creation of jobs, or development of property. Of the 50 agreements to date, more than 50 percent have been

reached since issuance of the May 1995 guidance. Environmental justice advocates

see these agreements as providing a new flexibility that will assist the consideration

of environmentally sustainable enterprises occupying former brownfields sites next

to residential areas, or of converting past industrial properties to green spaces or

non-polluting commercial operations.

People owning property under which hazardous substances have migrated

through groundwater also feared liability under the statute. EPA responded by announcing that it will not take enforcement actions under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against owners of

property situated above contaminated groundwater, provided the property is not a

source of contamination. Further, EPA also will consider providing protection to

such property owners from third party lawsuits through a settlement that affords

contribution protection.

EPA has given reassurance to the lending industry and to governmental entities

who acquire property involuntarily. EPA outlined in guidance what it considered appropriate actions a lender may undertake without becoming a liable party. In the

104th Congress, EPA worked with concerned White House offices (including the

Council on Environmental Quality and the National Economic Council) in a successful effort to gain legislation to clarify the liability of lenders and fiduciaries under

CERCLA and other toxic waste laws. This reform, which was developed through a

bipartisan effort involving this Committee and the Senate Banking Committee, re-
53

flected the principles of EPA’s own policy guidance as well as the approach Senator

Lautenberg had developed for his earlier brownfields bill. The resulting proposal

was incorporated into a broader banking reform bill enacted in the final days of the

Congress as part of the continuing budget resolution. This change in the law will

provide significant relief to banks and lending institutions, expand the availability

of credit for small businesses, and greatly facilitate the assessment, cleanup, and

redevelopment of brownfields sites. We were also pleased to have the support of the

Bankers Roundtable, the American Bankers Association, and the Environmental Defense fund in achieving this reform.

EPA also is providing ‘‘comfort/status letters’’, in appropriate circumstances to

new owners, lenders, or developers to inform them of EPA’s intentions at the site.

The Policy on the issuance of Comfort/Status Letters is designed to assist parties

who seek to clean up and reuse brownfields. EPA often receives requests from parties for some level of ‘‘comfort’’ that if they purchase, develop, or operate on

brownfield property, EPA will not pursue them for the costs to clean up any contamination resulting from the previous use. The policy contains four sample comfort/

status letters which address the most common inquiries for information that EPA

receives regarding contaminated or potentially contaminated properties. The policy

aims at using such ‘‘comfort’’ to where it may facilitate the cleanup and redevelopment of brownfields, where there is a realistic perception or probability of incurring

Superfund liability, and where there is no other mechanism available to adequately

address the party’s concerns.

Finally, EPA believes that the removal of sites from the active Federal inventory,

the Comprehensive Environmental Response, Compensation and Liability Information System (CERCLIS), is having positive repercussions for the Brownfields Initiative. To date, EPA has removed approximately 30,000 sites from CERCLIS, about

75 percent of the Federal inventory. EPA expects to remove more than 1,000 additional sites from CERCLIS per year over the next several years. The removal of

these sites eliminates the stigma of potential contamination and fear of liability associated with these sites, and allows stakeholders to focus on the future land use

and redevelopment of such sites.

Brownfields Job Development and Training

Brownfields may be a consequence of industrial downsizing, relocation or bankruptcy. The loss of jobs may also result. Training members of brownfields communities to fill potential jobs created as a result of cleanup and redevelopment efforts

is a critical component of the Brownfields Initiative, particularly for groups representing dislocated workers, welfare recipients, or the chronically unemployed.

EPA committed as an Agency to environmental workforce training programs in

brownfields communities throughout the country. Efforts successfully underway include the following:

• Work with the Hazardous Materials Training and Research Institute to expand

environmental training and curriculum development at community colleges located

near brownfields pilots. Since 1995, three workshops for 40 colleges in or near

Brownfields communities have been held. Of the colleges attending these workshops, 13 have established credit and noncredit environmental programs, 13 have

target dates for program startup, and 14 are collecting data and conducting labor

market surveys to determine the need for and feasibility of starting a program.

• Establishment of an environmental education and training center to provide

comprehensive technician-level training with an emphasis on Superfund and Resource Conservation and Recovery Act (RCRA)-related subjects with the Rio Hondo

Community College District in Whittier, California.

• A partnership with Cuyahoga Community College in Cleveland, Ohio, to develop training programs that increase cultural diversity in environmental employment.

• Working with the Department of Labor collaboration with EPA to leverage job

training opportunities for Brownfields Pilot communities.

• Working with the National Institute of Environmental Health Sciences (NIEHS)

to ensure that Minority Worker Training grants overlap with Brownfields pilot communities.

• Working to incorporate the Housing and Urban Development Department’s

Step-up Apprenticeship Initiative with community jobs strategies for Brownfields.

The Brownfields Initiative Today

By mid-1996, EPA completed all of its commitments on the initial Action Agenda.

It has become clear to us that the brownfields problem requires more interaction

among all levels of government, the private sector and non-governmental organizations. The need for continuation and expansion of the national brownfields response
54

was further buttressed by the recommendations of the President’s Council on Sustainable Development regarding the redevelopment of brownfields sites. To that end,

EPA and more than 20 other Federal agencies established an Interagency Working

group on Brownfields in July 1996. Our colleagues at HUD and the Department of

Transportation (DOT), for example, play a critical role in brownfields redevelopment. Through our Working Group collaborations, we are planning ways to further

identify, strengthen, and improve commitments to brownfields, while continuing efforts toward a comprehensive, community-based approach to clean up and redevelopment of contaminated property. The new Brownfields Action Agenda for fiscal

year 1997 and fiscal year 1998 is based on protecting human health and the environment, enhancing public participation in local decisionmaking, building safe and

sustainable communities through public/private partnerships; and, recognizing that

environmental protection can be the engine that drives economic redevelopment.

EPA’s brownfields efforts this year will include the announcement of an additional 25 Brownfields Assessment Demonstration Pilots (up to $200,000 each). The application deadline for award of these new pilots is now past and EPA is in the process

of reviewing and evaluating the applications. Award announcements are expected

by late March or April 1997.

For the first time, EPA will be awarding funds for a new type of brownfields pilot. The $10 million Brownfields Revolving Loan Fund (BRLF) pilot program is designed

to enable eligible States, cities, towns and counties, U.S. Territories, and Indian

Tribes to capitalize revolving loan funds to safely cleanup and sustainably reuse

brownfields. EPA’s goal is to select BRLF pilots that will serve as models for other

communities across the Nation. Only entities that were awarded National or Regional Brownfields Assessment Demonstration Pilots as of September 30, 1995, will

be eligible to apply to EPA’s BRLF pilot program. Therefore, up to 29 BRLF pilots

may be awarded in fiscal year 1997. Fiscal year 1997 BRLF pilots will be funded

at up to $350,000. The BRLF pilots will be awarded through a competitive process.

EPA recognizes the important role that State environmental agencies have in en- couraging economic redevelopment of brownfields. EPA also plans to provide $10

million, in fiscal year 1997, to encourage the development or enhancement of State

programs that encourage private parties to voluntarily undertake early protective

cleanups of less seriously contaminated sites, thus accelerating their cleanup and

redevelopment. EPA recently issued a memorandum setting out an interim approach for its relations with State voluntary cleanup programs. The memorandum

includes criteria for State voluntary cleanup programs that are enabling EPA and

the States to start negotiating a division of labor between EPA and the States in

memoranda of agreement (MOAs) as well as ensuring protection of public health

and the environment. EPA hosted a meeting here in Washington on February 27th

to continue our dialog with stakeholders and to solicit their views on a variety of

voluntary cleanup issues. We will use that input to develop principles and national

guidance on State voluntary cleanup programs. Finally, EPA is pleased with the

progress it has made in signing MOAs with States. Ten States have now signed

MOAs with EPA regarding sites to be cleaned up under voluntary cleanup programs. Both Rhode Island and Maryland have signed MOAs with EPA in the last

few weeks. We are in the process of negotiating with 8 other States.

Other elements for the fiscal year 1997 program include additional support for an

expanded site assessment initiative as well as technical assistance to existing pilots

and partnerships with other Federal agencies and nongovernmental organizations

(NGO’s).

KEY ELEMENTS OF BROWNFIELDS LEGISLATIVE REFORM

The Brownfields Economic Redevelopment Initiative has achieved much initial

success. The continuing value of the Brownfields Initiative is its evolution and

promise for the future. To build upon these successful first steps and launch others,

we must not lose sight of our overall goal to revitalize communities. Future efforts

under the Brownfields Economic Redevelopment Initiative must be viewed as an important component of any strategy for reform of Superfund. With the breadth and

variety of activities and stakeholders converging on the brownfields issue, we have

tried to establish a framework that articulates a complete and comprehensive

brownfields program. It is against this framework that we will measure legislative

proposals addressing brownfields.

Address Full Range of Brownfields Reforms

Brownfields reforms made under CERCLA should be codified, and should reaffirm

use of the Superfund Trust Fund to address the full range of brownfield issues including: technical assistance funding for brownfields identification, assessment and

reuse planning, cooperative agreement funding to capitalize revolving loan funds for
55

brownfields cleanup, support for State development of voluntary cleanup programs,

liability protection to bona fide prospective purchasers, protection for innocent landowners of contaminated property, support for mechanisms for partnering with Federal, State, local and tribal governments and other non-governmental entities to address Brownfields, and support and long-term planning for fostering training and

workforce development.

By the end of fiscal year 1997, more than 100 communities will have received

grants from EPA for brownfields assessment pilots. The United States Conference

of Mayors has stated regarding the fiscal year 1998 budget which has just been proposed by the Administrator that the ‘‘budget reflects the fact that momentum for

brownfields redevelopment, one of the mayors’ highest priorities, is building.’’

The Administration is also supportive of the continued growth of the State and

Tribal regulated and voluntary programs which have greatly expanded the number

of hazardous waste sites cleaned up to protect human health and the environment.

More than 30 States have established voluntary cleanup programs to date.

EPA has sought to integrate job training opportunities into brownfields cleanup

and redevelopment and is supported in this endeavor by the President’s Environmental Initiative. Forging these vital links between jobs and environmental cleanup

is both challenging and encouraging to us. Our pilots are providing specific examples. In Bridgeport, Connecticut, one of EPA’s first pilot cities, a job summit was

held as part of its public outreach strategy. The pilot in Cleveland, Ohio is now

home to several new businesses which have provided almost 200 new jobs. And, in

Baltimore at the former American Smelting and Refining Company (ASARCO) site,

old buildings are being razed, and 350,000 of the 750,000 square foot complex is

being renovated. Currently there are 200 construction workers employed on the

property. Additionally, it is expected that more than 180 permanent jobs will be in

place over the next 3 years.

EPA primarily supports the job training and workforce development aspect of the

Brownfields Initiative with non-Superfund general appropriations. Section 311(a) of

CERCLA provides limited authority for training and continuing education within

the context of hazardous substance basic research. As part of a comprehensive strategy for brownfields, we are also examining ways to address these statutory limitations.

Presidential Initiatives

Support Brownfields Tax Incentive

Innovative approaches and solutions to the problems faced by communities are

manifested in every aspect of brownfields. Innovative financing efforts are no exception. The Federal Government can help level the economic playing field between

brownfields and greenfield sites. Last year, in his 1996 State of the Union address,

President Clinton proposed a Brownfields tax incentive. Senators Moseley-Braun,

Lieberman, Abraham and others have introduced this proposal in the Senate

(S. 235). (A companion bill, H.R. 505, has been introduced in the House by Congressman Rangel). We support this proposal and believe it is an essential element

of a complete and comprehensive brownfields program. Under the proposed

Brownfields tax incentive, environmental cleanup costs for properties in designated

areas would be fully deductible in the year in which they are incurred, rather than

capitalized. This incentive would reduce the capital cost for these types of investments by more than one half.

The proposed tax incentive would be applicable to properties that meet specified

land use, contamination, and geographic requirements. To satisfy the land use requirement, the property must be held by the taxpayer incurring the eligible expenses for use in a trade or business or for the production of income, or the property

must be properly included in the taxpayer’s inventory. To satisfy the contamination

requirement, hazardous substances must be present or potentially present on the

property. To meet the geographic requirement, the property must be located in one

of the following areas: EPA Brownfields pilot areas designated prior to February 1,

1997; census tracts where 20 percent or more of the population is below the poverty

level; census tracts that have a population under 2,000, have 75 percent or more

land zoned for industrial or commercial use, and are adjacent to one or more census

tracts with a poverty rate of 20 percent or more; and Empowerment Zones and Enterprise Communities (both existing and those that would be designated in the second round proposed in the President’s fiscal year 1998 budget). Both rural and

urban sites would qualify for the proposed incentive. Sites on EPA’s National Priorities List would be excluded.
56

Support Environmental Initiative

Last August, the Clinton Administration announced an Environmental Initiative

which supported the significant expansion of the Brownfields program. We estimate

that with the expansion of the Brownfields Assessment Pilots and the BRLF Pilots,

a total of 300 cities/pilots can be reached resulting in cleanup at many thousands

of brownfields sites over the next 4 years. In addition, the Initiative called for additional support for State Voluntary Cleanup infrastructure and brownfields related

job training efforts. Many of these proposals are reflected in the President’s Budget

for fiscal year 1998.

The Environmental Initiative also supported an expansion of HUD’s Economic Development Initiative (EDI) grants and use of HUD section 108 loan guarantees to

leverage brownfields redevelopment funds.

EPA urges the Committee to support these components of the President’s Budget

as we work together on other statutory changes that will not only enhance our ability to implement these proposals, but also enable us to forge stronger partnerships

with States, local governments, communities, and private interests and successfully

accelerate brownfields revitalization.

CONCERNS WITH S. 8

The Administration supports brownfields legislation within the context of

Superfund legislative reform. We are supportive of legislation which continues the

progress made under the EPA’s administrative reforms and which also addresses

brownfields itself in a comprehensive manner.

EPA is very encouraged to see substantial Brownfields provisions, as well as voluntary cleanup program provisions, within S. 8. The bill authorizes EPA to issue

grants for assessment and to capitalize revolving loan funds, although the details

are of some concern to us. The provision which exempts ‘‘bona fide’’ prospective purchasers from CERCLA liability and the requirements that must be met to assert

an innocent landholder defense are also valuable additions to our authority. As with

other aspects of S. 8, however, we are concerned that the brownfields provisions

would erode protection of human health and the environment.

Voluntary Cleanup Program Concerns

The Administration is opposed to provisions in S. 8 regarding voluntary cleanup

that would eliminate the authority of EPA and other Federal agencies to respond

to releases of hazardous substances whenever a State remedial action plan has been

prepared, whether under a voluntary response program, or any other State program.

Under S. 8, the mere existence of such a cleanup plan eliminates any Federal authority to respond to a release or threatened release of hazardous substances—even

where there may be an imminent and substantial endangerment to human health

and the environment. This compromise of public protection is alarming. The provisions of S. 8 could leave us powerless to respond to immediate threats from the

worst toxic waste sites (VRPs are given authority to clean up NPL sites) even where

the State’s VRP program lacks the resources and expertise to ‘‘qualify’’ under the

provisions of S. 8.

Though S. 8 provides the elements for ‘‘qualifying’’ State voluntary cleanup programs, these elements are not used to make funding decisions. A State is required

to merely notify EPA of its ‘‘intent to establish a qualifying State voluntary response

program ‘‘to receive funding. Funding for States is provided at $25 million per fiscal

year. While S. 8 identifies elements for a ‘‘qualifying’’ State Voluntary Response Program (VRP), these provisions do not preclude a private party from cleaning up a

site, including an NPL site, pursuant to a State VRP that does not meet, or intend

to meet, the ‘‘qualifying’’ elements. Under this bill, States without a ‘‘qualifying’’

program may authorize such cleanups so long as they do not request or receive technical or other assistance, including funding from EPA.

In addition, the level of community involvement provided by S. 8 is questionable.

The bill limits the community to an ‘‘adequate opportunity’’ for public involvement

and does not guarantee participation in all levels of the cleanup process or determinations regarding end uses of the property. Finally, the preclusion of all private

and citizen suits belies the apparent commitment in S. 8 to strengthen community

participation.

As mentioned, EPA is already developing MOAs with concerned States to ensure

that its response authorities complement and encourage rather than duplicate or

discourage, voluntary cleanups. This approach, we believe, strikes the right balance

between Federal and State programs while continuing to provide the needed protection of public health and the environment for our communities.
57

Brownfields Characterization and Assessment Grants Do Not Include States

One of the major concerns with S. 8’s Brownfields characterization grants provision is the exclusion of States from the list of eligible recipients. EPA’s experience

with the Brownfields Pilot Program has taught us that in many cases, where small

communities are involved it may make more sense and be more efficient to provide

the grants directly to States. Six brownfields pilots have been awarded directly to

States. We are also finding that the availability of pilots at this level of government

can increase awareness of and involvement in the program.

Additionally, the limitation on funding of $100,000 per year for these grants may

restrict and inhibit the grant recipient from efficiently managing and benefiting

from the grant itself. Under the current brownfields program, EPA does not limit

funding or proscribe activities on a site-specific basis. Rather, EPA pilot funds are

awarded to State, Tribal, and municipal governments, which then determine, based

on their own priorities and resources, activities and allocations among different

brownfields sites.

Another concern is found in the definition of Brownfields. S. 8 improperly excludes

sites where removals have occurred, or are planned to occur, and sites deleted from

the NPL with ‘‘No Action’’ RODs. These sites may be appropriate candidates for redevelopment. In addition, EPA has first-hand experience with prospective purchaser

redevelopment of these properties.

Finally, we are concerned that the application for a characterization pilot would

require information which may not be available until after the Brownfields process

has been completed. Inventorying sites and casting economic projections have been,

in our experience, within the range of activities for which the pilot is being awarded

in the first place. Thus, the pilot applicant may find itself in the proverbial ‘‘catch–

22’’ situation—unable to complete the application to do the very thing that should

be done under the pilot.

S. 18

Before concluding my discussion this morning, I would like to mention S. 18, The

Brownfields and Environmental Cleanup Act of 1997, introduced by Senator Lautenberg (and Senators Baucus, Reid, Moynihan, Graham, Boxer, Wyden, Levin,

Torricelli, Breaux, and Kennedy). This bill addresses many of the barriers that are

preventing the cleanup and economic development of brownfields. It promotes many

of the brownfields cleanup and economic development goals shared by the Clinton

Administration and builds upon many of the lessons learned by EPA over the past

3 years as the Agency developed and implemented its Brownfields Economic Redevelopment Initiative. The bill authorizes EPA to issue grants to State and local governments to inventory and assess brownfields sites as well as providing grants for

States and local governments to capitalize revolving loan funds for the cleanup and

economic redevelopment of brownfields sites. Other provisions of the bill which capture important elements of the existing program include those referring to prospective purchasers and innocent landowners. They are important tools that will encourage lending and investment institutions to fund brownfields redevelopment. I would

add, however, that we do see some drafting problems with the bill and have been

assured by Senator Lautenberg that his staff will work with us to address those concerns. Our most significant concern is the inadequate level of funding provided in

this bill to support brownfields activities.

CONCLUSION

EPA’s Brownfields Economic Redevelopment Initiative represents an innovative

approach to environmental protection while bringing the focus of that protection directly to communities. It has spurred environmental cleanup, reduced neighborhood

blight, generated tax revenues, and created jobs and in so doing it has helped to

stabilize and enrich communities. Through this Initiative we have identified innovative ways to address the brownfields problem in the United States, which will assist

us during the discussion of legislative reform.

The Clinton Administration believes that a comprehensive approach to

brownfields legislative reform would include support for all the existing elements of

the current program, as well as the brownfields tax incentive. We believe that

brownfields legislative reform should be addressed within the context of responsible

legislative reform of the Superfund statute. The Administration is fully committed

to participating in that process and to seeing that responsible reform of the

Superfund law is the proud legacy of the 105th Congress.

Mr. Chairman, thank you for this opportunity to address the Committee. would

be pleased to answer any questions you or the other Members may have.
58

RESPONSES OF TIMOTHY FIELDS, JR., EPA, TO ADDITIONAL QUESTIONS FROM

SENATOR SMITH

Question 1. In your testimony, you site GAO figures of 450,000 brownfield sites

in the United States. Do you have any opinion about the accuracy of these figures?

Does EPA have the financial and personnel resources to oversee this many cleanups?

Response. The number of brownfields sites has not been determined. The June

1995 GAO/RCED–95–172 estimated 450,000 contaminated commercial and industrial sites across the country. The GAO report also states that ‘‘the precise magnitude and severity of brownfields is unknown because there is no national inventory.’’ The EPA’s fiscal year 1997 budget for brownfields is $36.7 million. The fiscal

year 1997 Superfund budget is, in total, $1.3 billion. For a comparatively small investment, the Brownfields Economic Redevelopment Initiative is seeing positive results among its pilot recipients, encouraging others to take steps toward brownfields

redevelopment, and producing results of national replicability.

The success of the Brownfields Assessment Demonstration Pilots, in particular,

will encourage others to take steps toward brownfields redevelopment, too. Stakeholders tell the Agency that brownfields redevelopment activities could not have occurred in the absence of EPA efforts. Institutions such as the Bank of America, the

National Community Reinvestment Coalition and others attribute new interest and

enthusiasm for brownfields redevelopment directly to EPA’s policies and efforts to

focus attention on the issue. The need for continuation and expansion of the national brownfields response was further buttressed by the recommendations of the

President’s Council on Sustainable Development regarding the redevelopment of

brownfields sites. To that end, EPA and other Federal agencies established an Interagency Working group on Brownfields in July 1996. This Working Group began

drafting a national plan to guide future work on brownfields. The purpose of this

effort is to continue to strengthen and improve upon the commitments made initially while continuing efforts toward a comprehensive, community-based approach

to cleanup and redevelopment of contaminated property.

As the report Building A Brownfields Partnership from the Ground Up, by the

National Association of Local Government Environmental Professionals, February

13, 1997, stated:

The EPA Brownfields Action Agenda represents a new generation of partnership between the Federal Government and local communities. Since EPA Administrator Carol Browner’s announcement of the Brownfields Action Agenda in

January, 1995, the Agency has successfully promoted a national message about

the value of brownfields renewal, launched nearly 100 pilot projects and successfully implemented policies for the clarification of liability, job training and

development, and Federal/local partnerships and outreach. These EPA efforts

have helped spur genuine results in communities across the Nation.

EPA does not intend to fund or oversee the cleanup of all brownfields properties.

EPA has not taken the position that overseeing the cleanup and redevelopment of

brownfields properties is solely a Federal responsibility. Rather, EPA has taken a

creative approach to effectively leverage Federal, State, local government and private resources, including State and local government capacity building, to encourage

brownfields cleanup and redevelopment.

Question 2. In your testimony, you make note that States should also be eligible

recipients of brownfields characterization grants. We have heard from local governments who oppose State control over these funds. Is there a disagreement between

the States and local governments over who should be the appropriate recipients of

this funding?

Response. EPA believes States should be eligible recipients of both brownfields

‘‘characterization’’ grants and grants to capitalize revolving loan funds for the cleanup of brownfields sites. This is particularly true in those circumstances where local

communities are unable to manage grants due to a lack of resources, personnel, experience or other management capability. In such circumstances, limitations on

State eligibility may deprive some communities of the benefits of a grant. Since

1995, EPA has awarded ‘‘Brownfields Assessment Demonstration Pilots’’, under cooperative agreements, to States, cities, towns, counties, and Tribes. These Pilots,

each funded up to $200,000 over a 2-year period, are designed to support creative

explorations and demonstrations of brownfields solutions. The Pilots are intended

to provide EPA, States, Tribes, municipalities, and communities with useful information and strategies as they continue to seek new methods to promote a unified

approach to site assessment, environmental cleanup, and redevelopment. States and

other eligible entities are invited to apply for pilot grants. Pilot applications are re-
59

quired. To date, 78 Brownfields Assessment Demonstration pilots have been awarded. In fiscal year 1997, EPA expects to fund 25 new National Brownfield pilots on

the basis of a competitive application process.

The Brownfields Assessment Pilot applicants were required to address the following criteria:

1. Problem Statement and Needs Assessment

—Effect of Brownfields on your Community or Communities

—Value Added by Federal Support

2. Community-Based Planning and Involvement

—Existing Local Commitment

—Community Involvement Plan

—Environmental Justice Plan

3. Implementation Planning

—Appropriate Authority and Government Support

—Environmental Site Assessment Plan

—Proposed Cleanup Funding Mechanisms

—Flow of Ownership Plan

4. Long-Term Benefits and Sustainability

—National Replicability

—Measures of Success

The Application Guidelines for Brownfields Assessment Demonstration Pilots (October 1996, EPA 500–F–96–067) state that while group applications are encouraged,

a single legal recipient must be designated. Moreover, as mentioned, local governmental entities must provide documented evidence of support from State and local

environmental, economic development, and health agencies. In addition, the application must describe the legal authority—State or municipal Superfund or voluntary

action/cleanup programs or other local, State, Territorial, or Tribal regulatory programs available for identifying, assessing, and remediating brownfields. EPA

strongly encourages States and municipalities to work together to identify and improve brownfields strategies. EPA also encourages municipalities to use existing

tools such as State voluntary cleanup programs to enhance their Brownfields efforts.

EPA encourages State-wide applications to be community specific. State-wide proposals that offer tangible cleanup and redevelopment success stories within the 2-

year time-frame of the awards will be considered; however, proposals that specify

the target location of these activities are stronger proposals than those that do not.

To date, 6 State pilots have been awarded.

Question 3. I know that a number of individuals at the EPA, including Administrator Browner, have frequently stated that Superfund is not the same program it

was 5 or 10 years ago? Given the significantly improved ability and sophistication

of the State hazardous waste cleanup programs, isn’t it fair to say that the State

programs aren’t the same that they were 5 or 10 years ago?

Response. Yes, EPA agrees State programs have changed over the past few years.

The vast majority of States (See table V–2, page 62, December 1995 50-State Study)

have followed the Federal lead and established hazardous waste cleanup programs

in order to address sites not covered by the Federal program. These programs vary

by their age, and breadth and depth. For many States, as with the Federal program,

experience and maturity have resulted in an increased number of cleanups taking

place and being completed. So too, both Federal and State programs are succeeding

in getting responsible parties to clean up sites. The States are not, of course, uniform in their authority, resources (both cleanup ends and personnel), success or accomplishment. A study is presently being conducted by the GAO that will focus on,

in particular, State voluntary cleanup programs which supplement the enforcementbased State cleanup programs. (A copy of the EPA 1995 ‘‘Analysis of State

Superfund Programs’’ is provided.)

Question 4. We have previously heard comments alluding to the fact that while

some States may have the technical sophistication to address brownfield and voluntary cleanups, others do not? Do you agree with this assertion? If so, would you

please provide the committee a specific list of every State you believe does not have

the ability to conduct voluntary cleanup programs and the reasons why?

Response. EPA believes State voluntary cleanup programs currently vary. Not all

States possess the same capability, resources, personnel, nor have they all achieved

the same level of success. There are approximately 37 State voluntary cleanup programs. The agency has not evaluated each of these State voluntary cleanup programs to determine how many would appropriately address brownfields sites. (A

GAO study is currently underway to evaluate State voluntary cleanup programs).

Several years ago, Regions began evaluating a limited number of State voluntary

cleanup programs to determine their capabilities, adequacy and appropriate State/
60

EPA roles with respect to sites addressed under these programs. From these efforts,

EPA Regions entered into Memoranda of Agreement with 10 States regarding voluntary cleanup programs. In addition, in order to facilitate discussions between EPA

and States on these issues, on November 14, 1996, EPA issued its ‘‘Interim Approach for Regional Relations with State Voluntary Cleanup Programs’’ which sets

out some basic criteria for EPA Regions to consider when entering into MOAs with

States. Since its issuance, Rhode Island and Maryland signed MOAs with EPA and

are included among the 10 States mentioned. Discussions are now underway with

8 other States.

EPA believes the promotion of effective State voluntary cleanup programs will

provide an integral tool to converting a significant portion of the brownfields sites

in this country into areas that offer the public both protection of their health and

environment, and sustainable reuse of these sites. Voluntary cleanups can benefit

the public by reducing risk posed by releases of hazardous substances, and by facilitating the beneficial reuse of brownfields sites. To accomplish this however, it is imperative that Federal, State and local governments works together to define complementary government roles that are focussed on restoring brownfields properties

to beneficial reuse.

RESPONSES OF TIMOTHY FIELDS, JR., EPA, TO ADDITIONAL QUESTIONS FROM

SENATOR CHAFEE

Question 1. I understand that EPA has not finalized the final State Voluntary

Cleanup program guidance and that a major point of contention is the universe of

sites to be covered under these agreements. I would like to ask you about the treatment of so-called National Priority List caliber sites—those sites that score above

the 28.5 hazard ranking system threshold for listing on the NPL. In my own State,

the Rhode Island DEM informs me that there are over 200 sites have been prescored above 28.5. Some of these sites may have significant redevelopment potential.

Do you believe the Rhode Island Voluntary Cleanup Program should not be allowed

to address these sites?

Response. The decision regarding the scope of sites covered by an MOA concerning

State voluntary cleanup programs is a complex issue that the Agency has not yet

resolved. Under consideration are issues such as the level of cleanup and public participation, the State preparedness to assume costs and responsibilities, and appropriate State/Federal roles with respect to clean up and enforcement.

EPA will continue to seek comment from affected stakeholders prior to finalizing

guidance that addresses the scope of sites to be included within an MOA on State

voluntary cleanup programs. EPA and the Rhode Island DEM have discussed their

respective approaches to addressing sites, and their respective resources, and have

negotiated an MOA that excludes sites referred for evaluation pursuant to the

CERCLA Hazard Ranking System (HRS). By entering this agreement, EPA and

Rhode Island DEM believe they are expediting the assessment and cleanup of contaminated property and are facilitating the return of such property to productive

use.

Question 2. If EPA does not decide to include NPL-caliber sites in these agreements, would it be EPA’s intent to list these sites on the NPL?

Response. EPA may not list all NPL-caliber sites on the NPL. However, each site

would require individual evaluation. Occasionally, sites initially screened and

ranked above 28.5 may not require NPL listing based upon subsequent evaluation.

EPA has issued guidance as to what constitutes ‘‘NPL-caliber sites’’ in its October

12, 1993 OSWER Directive 9320.2–07A, entitled ‘‘Additional Guidance on ‘Worst

Sites’ and ‘NPL-Caliber Sites’ to Assist in SACM (Superfund Accelerated Cleanup

Model) Implementation.’’ In addition, the fact sheet ‘‘Assessing Sites Under SACM—

Interim Guidance’’ (OSWER Directive 9203–1–05I, Vol. 1 No. 4 December 1992) offers examples of NPL-caliber sites. Those examples include sites where:

• Public drinking water supplies are contaminated with a hazardous substance

• Private wells are contaminated with a hazardous substance above a healthbased benchmark

• Soils on school, day care center, or residential properties are contaminated by

a hazardous substance above background levels

• A hazardous substance is detected above background in an offsite air release

in a populated area

• A highly toxic substance known to bioaccumulate (e.g., PCBs, mercury, dioxin,

PAHs) is discharged into surface waters
61

• Sensitive environments (e.g., critical habitats for endangered species) are contaminated with a hazardous substance above background levels

EPA recognizes that some percentage of sites that have the characteristics described above, will, upon site-specific review, not score for proposal on the National

Priorities List (NPL), due to the small number of targets, small waste quantity, etc.

Thus, it is difficult to draw a clear line between sites that will be listed on the NPL

and sites that will not be on the NPL for programmatic purposes, i. e., without sitespecific review. In general terms, EPA guidance states that sites where significant

human exposures to hazardous substances have been documented or where sensitive

environments have become contaminated should be considered NPL-caliber sites.

Finally, CERCLA and its regulations, particularly the National Contingency Plan

(NCP), contain certain provisions concerning sites on the NPL. For example, under

the NCP, the Superfund cannot be used to pay for remedial actions at non-NPL

sites. (See 40 CFR 300.425.) CERCLA and its regulations set out certain site cleanup requirements and provide for public comment on proposed remedies at NPL sites

(see CERCLA 121 and the NCP); thus, consistent with these requirements, Federal

remedial actions, which are usually taken at NPL sites, must: be ‘‘protective of

human health and the environment,’’ utilize ‘‘permanent solutions and alternative

treatment technologies or resource recovery technologies to the maximum extent

practicable,’’ be ‘‘cost-effective,’’ attain applicable and relevant and appropriate requirements (ARARs) and provide for meaningful public participation. CERCLA and

its regulations also provide funding for technical assistance grants (TAG) to certain

parties to help ensure meaningful community involvement at sites on the NPL.

These resources and opportunities are important to many stakeholders who live

near sites.

Question 3. In November 1996, you issued interim guidance which sets out the

criteria EPA plans to use to evaluate the adequacy of State Voluntary Cleanup programs when negotiating Memoranda of Agreement with States. Under such agreements, EPA would not plan to take any action at sites under a voluntary cleanup

action, except in cases of imminent and substantial endangerment. I have a number

of questions regarding this guidance.

a. Under the guidance, having an MOA does not constitute a release from

Superfund liability. Does this mean that volunteers could still face future requirements for removal or remedial action even after they have cleaned up a site under

a State program?

Response. As the Interim Approach for Regional Relations with State Voluntary

Cleanup Programs states ‘‘generally EPA does not anticipate taking removal or remedial action at sites involved in this Voluntary Cleanup Program unless EPA determines that there may be an imminent and substantial endangerment to public

health, welfare, or the environment.’’ Should such imminent and substantial

endangerment occur, EPA would take appropriate action in compliance with

CERCLA.

b. If volunteers still face liability under an MOA, what does the MOA really provide to volunteers?

Response. The MOA is a work planning tool for Regions and States. It defines respective roles and responsibilities within the current law. The MOA provides volunteers information about how EPA and a State are coordinating their efforts to address sites in a complementary manner.

EPA believes that the ten Memoranda of Agreement between States and the

Agency concerning voluntary cleanup programs offer private parties (volunteers)

some comfort that subsequent Federal action under CERCLA will not be taken except under limited conditions, such as imminent and substantial endangerment to

the public health, welfare, or the environment as the Interim Approach for Regional

Relations with State Voluntary Cleanup Programs states ‘‘generally EPA does not

anticipate taking removal or remedial action at sites involved in this Voluntary

Cleanup Program unless EPA determines that there may be an imminent and substantial endangerment to public health, welfare, or the environment.’’

c. What has been the States’ and State associations’ response to this guidance?

Response. EPA has entered into MOAs with ten States—Minnesota, Illinois, Indiana, Wisconsin, Texas, Colorado, Michigan, Missouri, Rhode Island and Maryland.

EPA does not believe that the November 14, 1996, Interim Approach has slowed the

pace of MOAs. Since November, two States, Rhode Island and Maryland, have

signed MOAs and eight other MOAs are now in negotiation.

The decision regarding the scope of sites covered by an MOA concerning State voluntary cleanup programs is a complex issue that the Agency has not yet resolved.

Under consideration are issues such as the level of cleanup and public participation,

the State preparedness to assume costs and responsibilities, and appropriate State/
62

Federal roles with respect to clean up and enforcement. EPA will continue to seek

comment from affected stakeholders prior to finalizing guidance that addresses the

scope of sites to be included within an MOA on State voluntary cleanup programs.

In addition, as further background on this matter, this was one of the Superfund

reforms announced in February 1995. In March 1995, EPA invited States, as co-implementers of the Superfund program, to work with it in investigating the feasibility

of developing National guidance concerning State voluntary cleanup programs. Representatives from five States (California, Pennsylvania, Tennessee, Minnesota, New

Jersey) agreed to participate with EPA and U.S. Department of Justice (DOJ) on

a workgroup tasked with drafting guidance that would then be recommended to senior EPA management for concurrence and release as final guidance. The workgroup

developed draft guidance in October 1995, which included the six criteria outlined

in the November 14, 1996 interim approach memo.

Senior EPA management discussed further Federal Government comments on the

October 1995 draft guidance with the States, primarily those States on the

ASTSWMO Voluntary Cleanup Task Force, from November 1995 through August

1996 via teleconferences and meetings. By August 1996, EPA believed that States

had clearly stated their position. Furthermore, EPA wanted to seek public comment

from other interested stakeholders. In the meantime, at least ten States had expressed to their EPA Regions interest in negotiating MOAs. In order to keep these

negotiations on track, EPA senior management decided to issue the November 14,

1996 interim approach memo to its Regional Superfund Policy Managers. The issuance of the interim approach was needed to prevent further delays in negotiating

MOAs with individual States.

d. You set out six criteria State Voluntary Cleanup programs needed to meet or

obtain an MOA including: (1) providing for meaningful levels of community involvement; (2) using protective cleanup requirements; (3) having adequate resources; (4)

ensuring the completion of cleanups; (5) overseeing cleanups; and (6) taking enforcement action if necessary. Do you think most States will meet the criteria you set

out in the guidance?

Response. EPA believes that the goal of promoting effective State voluntary cleanup programs is an important issue. As EPA negotiates Memoranda of Agreement

(MOAs) with States, EPA will evaluate State programs against the criteria and specific enforcement language contained in the November 14, 1996, memorandum entitled ‘‘Interim Approaches for Regional Relations with State Voluntary Cleanup Programs’’ until such time as other voluntary cleanup program guidance is finalized.

To enhance and develop State voluntary cleanup programs, EPA will be providing

States with technical and financial assistance ($10M in fiscal year 1997).

Question 4. I understand 8 States signed MOAs with EPA before the Interim

Guidance was issued. I have some questions about these States experiences.

a. Did these States receive any kind of release from Superfund liability?

Response. MOAs do not constitute a release from liability under CERCLA. However, they do provide comfort language as to EPA’s general intentions to conduct

a response action and the conditions under which EPA might consider doing so.

b. Have these States told you whether the MOA has helped them in any way?

Response. EPA is actively pursuing initiatives to encourage the development and

use of strong State voluntary cleanup programs. Several States at the February 27,

1997, stakeholder meeting expressed the belief that the MOAs helped to encourage

private party cleanups.

c. Are these States interested in additional releases from liability, such as those

offered in S. 8?

Response. EPA has not heard directly any States requesting ‘‘additional releases’’

to date. Moreover, releases are normally granted on a site-specific basis.

Question 5. On page 14 of your testimony you talk about a stakeholder meeting

on voluntary cleanups held last week. You state that ‘‘[w]e will use that input to

develop voluntary and national guidance on State voluntary cleanup programs.’’

a. Is this meeting the last outreach effort to States before the guidance is finalized? What was the result of that meeting? Do you believe all stakeholders, especially States with mature Brownfields programs were represented; and how were

the States selected.

Response. The primary purpose of the EPA stakeholder meeting on voluntary

cleanup programs held February 27, 1997, was to seek individual input from a diverse group of stakeholder representatives as part of EPA’s deliberations, rather

than to reach a consensus of the stakeholder participants. Once EPA has had an

opportunity to consider the information that this meeting produces, we will publish

the resulting draft guidance in the Federal Register for formal public comment.
63

The State representatives invited to the meeting included representatives from a

geographically diverse group of States that represented an array of experience with

voluntary cleanup programs. We invited States with relatively mature voluntary

cleanup programs that address a large number and/or diverse type of sites, such as

Minnesota, Texas, and New Jersey; States that have recently signed an MOA, such

as Rhode Island; and, States that have recently enacted a brownfields law, such as

Maryland. We also invited States who had experience in particular areas such as

environmental justice issues found in the south and southwest part of the country,

or whose voluntary cleanup law specified a more limited scope of sites to be addressed under the voluntary cleanup program. In addition to States, we invited representatives from communities and community organizations, local governments

such as mayors and county commissioners, economic development agencies, large

and small industry, the business, banking and development community, environmental justice communities, environmental groups and citizens.

b. Will the final guidance include a certain release from Superfund liability for

States meeting the criteria than the interim guidance?

Response. EPA is in the process of developing the voluntary cleanup guidance and

will announce the contents of guidance upon its completion. No determination on

the contents of that guidance have been made at this time. The draft guidance will

be published in the Federal Register for comment.

Question 6. On page 14 of your testimony, you discuss FY97 EPA funding for

State voluntary cleanup programs. I have a number of questions on this topic. To

date, how much of the FY97 $10 million appropriated for State voluntary cleanup

programs have you distributed?

a. When do you plan on distributing the money? What criteria do you plan on

using to distribute this money and have you shared this criteria with the States/

State organizations?

Response. The $10 million identified in the fiscal year 1997 Brownfields budget

is for general capacity building by States to implement State VCPs. The funding will

be distributed based solely on State need during fiscal year 1997.

Acting Assistant Administrator Tim Fields (Office of Solid Waste and Emergency

Response) committed to States that they would have the opportunity to provide individual State input concerning the criteria used to distribute EPA funding in support

of State Voluntary Cleanup Program (VCP) infrastructure. A draft paper entitled

‘‘Draft Approach for Regional Funding of State Voluntary Cleanup Programs’’ has

been prepared and made available for review by States. Individual State comments

are due on that draft document, March 20, 1997.

EPA plans to assemble its Regional Brownfields and Core Program Coordinators

in Washington, DC for a meeting in April 1997 to discuss the criteria and process

for distributing the $10 million budgeted in FY97 for support of State VCPs. State

representatives have been invited to attend the part of the meeting where criteria

and quarterly reporting are discussed. It is not appropriate, however, for States to

participate in any EPA discussion of ranking State proposals for funding should that

prove necessary.

b. Do you plan on distributing this money through your normal processes, i.e., allocating a lump sum to each region and allowing the regions to negotiate with the

individual States?

Response. The $10 million identified in the fiscal year 1997 Brownfields budget

is for general capacity building by States to implement State VCPs. The funding will

be distributed to the Regions based solely on State need in developing or enhancing

voluntary cleanup programs. The core program cooperative agreement vehicle will

be the funding vehicle used to distribute the money to the States. For purposes of

EPA Regional/State planning, EPA is preparing to discuss the distribution methodology in a meeting with its Regions. EPA HQ and Regional representatives will

participate in a National Coordinators’ meeting in April 1997 for the purpose of allocating the first year of National resources ($10M in fiscal year 1997) specifically

dedicated to the development and enhancement of State Voluntary Cleanup Programs. The purpose of this National meeting is to communicate the need for National consistency in the allocation of VCP infrastructure funding. Regional Core

Funding Coordinators and Brownfields Coordinators are encouraged to participate

in this National meeting. At this time, States are being advised that each State

should estimate its annual funding requests in support of its VCP at a level not to

exceed $300,000.

c. What role will headquarters play in this process? Do you realistically believe

headquarters can evaluate State programs better than individual regions?

Response. EPA headquarters’ role in the process of funding State voluntary cleanup programs infrastructures is to promote consistency among the Regions in the
64

areas of activities eligible for funding and quarterly reporting on the use of the

funds. EPA HQ is using this meeting to guide up-front planning so that the Agency

will be prepared to address future requests for information about voluntary cleanup

programs. This planning will help EPA successfully implement the funding process

in the out-years. EPA will evaluate whether a State voluntary program qualifies for

funding based on its meeting, or plans to meet, the base-line criteria and specific

enforcement language contained in the November 14, 1996, memorandum entitled

‘‘Interim Approaches for Regional Relations with State Voluntary Cleanup Programs’’ until such time as other voluntary cleanup program guidance is finalized.

EPA Headquarters and Regions are working to draft criteria and procedures that

will be used to allocate the funds for voluntary cleanup programs. In the November

14 interim approach, EPA identified six baseline criteria that we think are minimum elements that a voluntary cleanup program should contain. EPA may modify

these criteria as agency discussions on issues surrounding the development and enhancement of these programs continue. A draft set of criteria was provided to

ASTSWMO to distribute to the States March 6, 1997. Comments are due to the

Agency on March 20.

EPA will request States to address how they meet, or plan to meet, these criteria

in the context of their applications for either funding their efforts to develop voluntary cleanup programs or their efforts to enhance existing voluntary cleanup programs. State requests for funding voluntary cleanup programs may exceed the $10

million available in fiscal year 1997. To prepare for that, EPA HQ and Regions are

discussing ways to balance the needs of those States who are just starting a program versus those States that want to enhance an existing program. We want to

reward those States who were forward-looking and innovative in establishing voluntary cleanup programs at the same time we want to provide seed money to those

States who need assistance in establishing voluntary cleanup programs. This is the

type of issue that EPA HQ and Regions are now discussing and for which we are

developing criteria. Funds will be awarded by the Regions through the existing core

cooperative agreement mechanisms.

d. Will States without an existing voluntary cleanup program receive preference

over States with existing programs which desire program support funding? Will you

require States to have signed Voluntary Cleanup MOAs to receive funding?

Response. EPA HQ and Regions are discussing ways to balance the needs of those

States who are just starting a program versus those States that want to enhance

an existing program. We want to reward those States who were forward-looking and

innovative in establishing voluntary cleanup programs at the same time we want

to provide seed money to those States who need assistance in establishing voluntary

cleanup programs. This is the type of issue that EPA HQ and Regions are now discussing and for which we are developing criteria.

MOAs will not be required to receive funding from EPA, nor will the presence of

a signed MOA preclude a State from receiving funding.

Question 7. Does EPA seek legislation allowing RCRA corrective actions to be addressed under State brownfield or voluntary cleanup plans? Please explain why such

a legislative fix is necessary, in light of EPA’s long-standing policy against listing

on the NPL sites subject to RCRA corrective actions. (53 Fed. Reg. 51417 (Dec. 21,

1968).

Response. EPA believes the existing flexibility to use State brownfield or voluntary cleanup programs at RCRA facilities under current law is appropriate; EPA

is not seeking additional legislation in this area and does not support legislation

that would grant prospective waivers of corrective action liability for RCRA sites

that are cleaned up under these programs. Under current law, EPA and authorized

States have the discretion to allow cleanup of RCRA corrective action sites under

appropriate State brownfields or voluntary cleanup programs. EPA notes that the

discretion to allow cleanup of RCRA facilities using State brownfield or voluntary

cleanup programs does not affect the RCRA hazardous waste permit requirements

to address corrective action section 3004(u) or RCRA enforcement authorities related

to corrective action. However, allowing these sites to be handled under State

brownfields and voluntary cleanup programs can affect the amount of corrective action needed in any given RCRA permit or enforcement order. For example, if part

of a RCRA facility were appropriately cleaned up under a State brownfield or voluntary cleanup program before a permit or order was issued, for the purposes of

the permit or order for that facility, RCRA corrective action requirements should be

considered fulfilled action for those areas addressed under the State brownfields or

voluntary program.

Question 8. (a) Please provide examples of sites where a State had lead cleanup

authority under CERCLA; where a State responded to a hazardous substance re-
65

lease under its own authority; or where a State certified that a cleanup was complete and there was no need for further cleanup, in short, being handled or evaluated under State auspices, and where: a) a State requested that EPA assume the

lead (e.g., as is happening at the Grand Street site in Hoboken, NJ); b) EPA assumed lead on its own—e.g., upon finding of imminent and substantial

endangerment; or c) EPA assumed lead for another reason—e.g., upon finding that

the State failed to obtain a cleanup using its own enforcement authority; or that

the State-lead cleanup was failing to meet EPA standards for protectiveness. For

these sites, please describe the mechanism used by the State to respond to or evaluate site conditions, and the mechanism which ushered in EPA involvement. In addition, for each site, please indicate the cost of the EPA response, and whether EPA

sought reimbursement of this amount from a PRP.

Answer a. HOBOKEN, NEW JERSEY—Grand Street Mercury Site

Background: Mercury vapor lamps were manufactured at this site during the

1930’s. The 5-story building used for manufacturing was later used as a tool and

die company. In the early 1990’s the owner of the tool and die company sold the

building. Prior to that sale, the owner notified the New Jersey Department of Environmental Protection (NJDEP), as required pursuant to the State’s Environmental

Cleanup Responsibility Act. (ECRA).

Under ECRA, the tool and die company owner was required to conduct sampling

and implement a cleanup plan for the building. This work by the owner was limited

to sandblasting oil stained areas and removing an underground storage tank containing fuel oil. Upon completion of this voluntary cleanup action, the NJDEP issued an approval of negative declaration of ECRA. (Allows property to be sold.)

In 1993, the building was sold to Grand Street Artist Partnership (GSAP). The

building was renovated and converted into condominiums and artist studios. Sixteen

families purchased condominiums or otherwise came to live in the building.

Shortly after moving into these condominiums, a resident found elemental mercury dripping out of the ceiling. The NJDEP was contacted. NJDEP, in turn, contacted U.S. EPA. after air monitoring detected elevated levels of mercury. The State

requested U.S. EPA take the lead at the site. EPA, the Agency for Toxic Substance

and Disease Registry (ATSDR), the State and local health agencies conducted urine

analysis on the residents of the building. Urine sample results indicated that mercury levels in some residents were five times safe levels. Elevated levels of elemental mercury can damage the central nervous system and in severe cases cause

death.

The Hoboken Department of Health ordered the residents to vacate the building.

On January 4, 1996, EPA announced that it would provide temporary relocation assistance and study the extent of contamination in the building. Since the relocation

of the residents, the site has been proposed for listing on the NPL and is undergoing

extensive assessment.

On December 23, 1996, the NJDEP rescinded its approval of the negative declaration under ECRA.

Concerns Regarding Voluntary Cleanup and Proposed Legislation: Because the assessment conducted under ECRA was limited, the NJDEP was not aware of the extensive, and potentially life-threatening, levels of mercury contamination on this

site. It is for circumstances such as these, that EPA wishes to preserve its section

104, 106, and 107 authorities. In most States, Voluntary Cleanup Programs are only

2–3 years old, thus, extensive long-term monitoring history of VCP cleanups is not

available. While the Agency does not expect to be called upon to exercise its authority, it is important to preserve them for unanticipated circumstances as Hoboken exemplifies.

Answer b and c. EPA does not know of any specific examples.

Question 9. Please indicate whether EPA seeks to retain an ‘‘overfiling’’ authority

(i.e., an ability to take over responsibility for cleanup and enforcement at a site

whether or not a State requests or concurs in EPA’s action.)

Response. As the Interim Approach for Regional Relations with State Voluntary

Cleanup Programs states ‘‘generally EPA does not anticipate taking removal or remedial action at sites involved in this Voluntary Cleanup Program unless EPA determines that there may be an imminent and substantial endangerment to public

health, welfare, or the environment.’’ This memoranda sets out the baseline criteria

which EPA will employ until a permanent guidance document is issued.

Question 10. (a) Does EPA believe that brownfields and/or voluntary cleanup programs ought not to include NPL or NPL-caliber sites? (b) Does EPA believe that

brownfields cleanups should meet NPL-caliber cleanup requirements? (c) Does EPA

believe that liability relief (that is, assuming an acceptable scheme that contains a

re-opener of sorts) is appropriate for lenders, developers, and innocent purchasers
66

of brownfields? Does EPA believe that brownfield site owners should be entitled to

liability relief?

Answer a. The decision regarding the scope of sites covered by an MOA concerning State voluntary cleanup programs is a complex issue that the Agency has not

yet resolved. Points under consideration include the following related to the level

of cleanup and public participation, and the State preparedness to assume costs and

responsibilities. CERCLA and its regulations, particularly the National Contingency

Plan (NCP), contain certain provisions concerning sites on the NPL. For example,

under the NCP, the Superfund cannot be used to pay for remedial actions at nonNPL sites. (See 40 CFR 300.425.) CERCLA and its regulations set out certain site

cleanup requirements and provide for public comment on proposed remedies at NPL

sites (see CERCLA 121 and the NCP); thus, consistent with these requirements,

Federal remedial actions, which are usually taken at NPL sites, must: be ‘‘protective

of human health and the environment,’’ utilize ‘‘permanent solutions and alternative

treatment technologies or resource recovery technologies to the maximum extent

practicable,’’ be ‘‘cost-effective,’’ attain applicable and relevant and appropriate requirements (ARARs) and provide for meaningful public participation. CERCLA and

its regulations also provide funding for technical assistance grants (TAG) to certain

parties to help ensure meaningful community involvement at sites on the NPL.

These resources and opportunities are important to many stakeholders who live

near sites.

Thus, EPA plans to seek comment from affected stakeholders prior to finalizing

guidance that addresses the scope of sites to be included within an MOA on State

voluntary cleanup programs. In the meantime, Regions and individual States will

discuss their respective approaches to addressing sites, and their respective resources, and negotiate whether it is appropriate to include NPL-caliber sites within

the scope of an MOA for a specific State voluntary cleanup program.

Answer b. EPA has made no determination on this issue.

Answer c. Yes. As part of the Omnibus Consolidated Appropriations Bill for Fiscal

Year 1997, signed by the President on September 30, 1996, Congress enacted the

‘‘Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of

1996’’ (the ‘‘Act’’). The Act supercedes EPA’s Policy on CERCLA Enforcement

against Lenders and Government Agencies that Acquire Property Involuntarily. As

part of the Omnibus Consolidated Appropriations Bill for Fiscal Year 1997, signed

by the President on September 30, 1996, Congress enacted the Asset Conservation,

Lender Liability, and Deposit Insurance Protection Act of 1996 (the ‘‘Act’’). The Act

includes lender and fiduciary liability amendments to CERCLA, amendments to the

secured creditor exemption set forth in Subtitle I of RCRA, and validation of the

portion of the CERCLA Lender Liability Rule that addresses involuntary acquisitions by government entities. These amendments made by the Act apply to all

claims not finally adjudicated as of September 30, 1996, which include all cases that

are in the process of being settled.

While EPA’s Lender Liability policy outlined its use of enforcement discretion

with respect to the pursuit of lenders and government entities who acquired contaminated property involuntarily, that policy did not prevent third party contribution claims against these entities. The ‘‘Act’’ now clearly outlines the circumstances

under which these entities are protected against enforcement actions by the U.S.

Government for CERCLA liability and for third party contribution claims arising

under CERCLA.

Finally, EPA is encouraged to see legislation which addresses ‘‘bona fide’’ prospective purchasers from CERCLA liability and the requirements that must be met to

assert an innocent landholder defense. The Agency has noted with approval the inclusion of provisions on prospective purchasers and innocent landowners in S. 18.

Question 11. Please describe the MOAs into which EPA has entered regarding

State voluntary cleanup programs. Are the terms of these uniform? Do they provide

for releases of Federal liability? If so, how are those releases executed? Has your

November 14, 1996, Interim guidance hastened or slowed execution of MOAs?

Response. EPA has entered into MOAs with ten States—Minnesota, Illinois, Indiana, Wisconsin, Texas, Colorado, Michigan, Missouri, Rhode Island and Maryland.

The terms of these programs are not uniform and instead have varying characteristics in terms of organization, funding, scope, level of cleanup required, controls,

long-term monitoring, public participation, and assurance of relief from future State

liability. These MOAs vary depending on the provisions of each State program.

The MOA is a work planning tool for Regions and States. It defines respective

roles and responsibilities within the current law. The MOA provides volunteers information about how EPA and a State are coordinating their efforts to address sites

in a complementary manner.
67

EPA believes that the ten Memoranda of Agreement between States and the

Agency concerning voluntary cleanup programs offer private parties (volunteers)

some comfort that subsequent Federal action under CERCLA will not be taken except under limited conditions, such as imminent and substantial endangerment to

the public health, welfare, or the environment. As the Interim Approach for Regional Relations with State Voluntary Cleanup Programs states ‘‘generally EPA does

not anticipate taking removal or remedial action at sites involved in this Voluntary

Cleanup Program unless EPA determines that there may be an imminent and substantial endangerment to public health, welfare, or the environment.’’

EPA does not believe that the November 14, 1996, Interim Approach has slowed

the pace of MOAs. Since November, two States Rhode Island and Maryland have

signed MOAs and eight other MOAs are now in negotiation.

PREPARED STATEMENT OF JAMES M. SEIF, SECRETARY, PENNSYLVANIA DEPARTMENT

OF ENVIRONMENTAL PROTECTION

Mr. Chairman, my name is Jim Seif As Secretary of the Pennsylvania Department of Environmental Protection, I am proud to present Pennsylvania’s Land Recycling Program as you begin to consider changes to the Federal Superfund program.

Land recycling is the most significant environmental innovation developed in the

last decade—an innovation pioneered by States in response to unrealistic Federal

policies that actually encourage the abandonment of contaminated properties.

Returning properties to productive reuse free from environmental liabilities has

not only obvious environmental benefits but economic benefits as well. And by encouraging businesses to locate on old industrial sites in towns and cities, land recycling may also turn out to be a major factor in reducing sprawl development and

preserving open space and farmland.

To see just how successful our program is, you only need to look at the numbers.

In the short time since Governor Ridge signed our Land Recycling Act into law in

May 1995, over 195 sites have begun the formal process toward redevelopment and

a total of 64 have been completely remediated.

Compare that to the Federal scorecard for cleaning up contaminated sites in

Pennsylvania under the Comprehensive Environmental Response, Compensation

and Liability Act (‘‘CERCLA’’ or ‘‘Superfund’’). In 16 years, only 8 of Pennsylvania’s

103 Superfund sites have been cleaned up and removed from the National Priority

List.

Pennsylvania’s Land Recycling Program is a major environmental success story

for the Ridge Administration and has been selected as a national model by the

American Legislative Exchange Council. Superfund, while good intentioned, is universally recognized ads the least successful Federal environmental statute in history.

Today I want to outline the key elements of our Land Recycling Program and tell

you why it’s working so effectively. I will also discuss the efforts Pennsylvania and

its sister States are taking to promote redevelopment of old industrial sites in the

Great Lakes region through Governor Ridge’s chairmanship of the Council of Great

Lakes Governors. In addition, I want to give you my perspective on the Federal/

State relationship at land recycling sites and to tell you what States need from the

Federal Government to maximize the effectiveness of our land recycling programs.

PENNSYLVANIA’S LAND RECYCLING PROGRAM

Pennsylvania, like many other States, has learned from its mistakes. Past environmental cleanup laws and policies often encouraged property owners to ‘‘take a

walk’’ and simply abandon a site, rather than deal with the contamination.

The Federal Government and the States erected four barriers which effectively

prevented the cleanup and reuse of old industrial sites.

• First, cleanup requirements often used ‘‘Garden of Eden’’ or background standards, regardless of whether the site was to be used for a daycare center or steel mill.

These standards ranged from expensive to simply impossible.

• Second, there was never-ending liability for responsible parties, and everyone

who touched the land was ‘‘responsible’’. Government would not provide releases of

cleanup liability to anyone, even after a site had been made safe.

• Third, consider the now-legendary delays in approving cleanup plans. The adversarial, lawyer-dominated review process could take years to approve cleanup

plans, making it unpredictable. This uncertainty worked against normal timetables

for arranging financing for redevelopment.

• Finally, lenders and redevelopment authorities did not want to become enmeshed in this problem by loaning money to redevelopment projects. Lenders simply
68

stopped making loans to persons wanting to acquire or improve contaminated property.

For 3 years, the Pennsylvania General Assembly worked hard, in a bipartisan

way, to address these problems. It held numerous hearings, and heard from dozens

of witnesses all pleading for changes that would put some common sense back into

the process of redeveloping old industrial sites. Finally, on May 19, 1995, Governor

Tom Ridge signed into law a three-bill package, which created Pennsylvania’s Land

Recycling Program. He did so at the then abandoned, but now being redeveloped,

USX National Tube Works in McKeesport, Pennsylvania.

The Land Recycling Act applies to all contaminated sites in Pennsylvania, existing and future, and covers both voluntary cleanups and enforcement actions. The

Act sets cleanup standards based on health and environmental risks. Land use is

also incorporated into the cleanup standards, allowing different cleanup levels for

residential and non-residential sites.

The statute provides maximum flexibility to persons performing cleanups by allowing them to choose from three cleanup standards—background, a statewide

health-based standard, and a site-specific standard.

Persons choosing to meet background or the statewide health-based standard need

no prior approval from the Department of Environmental Protection (‘‘DEP’’ or ‘‘Department’’) to get to work. They simply file a notice of intent with DEP to remediate, perform the cleanup, and then file a final report with the Department showing

that they in fact met the standard. There is also notice to the community and to

the general public, but no required hearings or meetings.

Both the background and statewide health standard represent pre-approved

standards adopted by the General Assembly itself or by regulation after full scientific and public review.

Persons choosing to meet the site-specific standard, on the other hand, must submit at least three reports—remedial investigation, risk assessment, and cleanup

plan—to the Department for review and approval. In addition, a public participation

plan is required when the host municipality requests it. This may include public

hearings, meetings, or door-to-door canvassing of local neighborhoods as a means of

obtaining community input on the cleanup and reuse plans for the contaminated

property.

The Land Recycling Act creates special incentives for redeveloping abandoned

sites for which no financially viable party is available to perform the cleanup and

sites in State designated enterprise zones. For these ‘‘Special Industrial Sites’’ a developer is only required to perform a baseline environmental assessment and cleanup any direct and immediate threats to persons who will be on the property using

it for its intended purpose.

DEP signs an agreement with the developer outlining specifically what contamination he is and is not responsible for, giving him the assurance he needs to proceed. So far we have signed 8 agreements, and we have another 25 Special Industrial Area sites moving through the system.

To address the perpetual liability problem, the Act gives a full statutory release

of liability to any person who meets one of the three cleanup standards. The release

covers the current owner or occupier of the property, the developer, successors, assigns and anyone who participates in the cleanup. The release also includes contribution protection and protection from citizen suits under Pennsylvania (not Federal) law.

To make the Department more responsive to persons submitting plans for the

reuse of contaminated property, the Land Recycling Act sets up a clear process to

regularize approval of cleanup plans and imposes fixed deadlines. For example, the

Department has 60 days to review a site remediation plan. If the Department fails

to review the plan within that deadline, it is deemed approved, and the person gets

the release of liability. That has not happened yet, and I don’t expect it to. The point

is that the DEP now has real live deadlines that cannot be avoided.

Pennsylvania’s Economic Development Agency Fiduciary and Lender Environmental Liability Protection Act is the second of the three bill package. It frees lenders, development authorities, municipalities and fiduciaries from cleanup liabilities

unless, of course, they are the direct cause of contamination at the site. This protection covers all routine commercial lending practices, including taking ownership or

control of a property after foreclosure. Even if there was a release of hazardous substances on the property prior to and continuing after foreclosure, the lender will not

be sucked into the liability loop.

The message is simple—we have no interest in suing lenders. Our real objective

is to put money in the hands of people who can put industrial sites back into productive use.
69

Finally, Pennsylvania’s Industrial Sites Environmental Assessment Act, the third

law in the package, provides $2 million in grant money to cities and municipalities

to finance environmental assessments at industrial sites. In addition, the Land Recycling Act offers $15 million in grants and loans for assessment and cleanup.

Pennsylvania’s Community and Economic Development Department already has

over 90 projects lined up for State funding it has approved funding for 40 projects

at a total cost to the Commonwealth of $4.3 million in grants and loans. The largest

grant, close to one million dollars, was given to a reuse project in the city of Pittsburgh in which the old abandoned Hays Army Ammunitionsite was turned into a

hot dip galvanizing facility that now employs over 80 people.

IMPLEMENTATION OF OUR LAND RECYCLING PROGRAM

There were 60 days between the time the Land Recycling Act was signed and

when it became effective. In that period, an internal workgroup comprised of people

from DEP headquarters and our six regional offices put together a 200 page technical guidance manual, 10 fact sheets, and a citizen handbook that were made available to the public.

That effort showed that there are very creative, energetic scientists and engineers

working in the Department, who simply needed to be freed from the old perpetual

liability mindset. Our bureaucracy was indeed responsive. We have engaged in extensive outreach efforts, including seminars and conferences throughout the Commonwealth, to educate the public, local government, developers, property owners, attorneys, bankers, and the environmental consulting community, and provide a stepby-step understanding of how to move a property through the Land Recycling Program. We have also utilized our award winning weekly newsletter ‘‘The Update’’

and our worldwide web site (http://www.dep.state.pa.us) to provide information on

the program to tens of thousands of people.

After 20 months experience with the program, I can say emphatically that it is

working.

It is working at the 2.45-acre former Thonet site in the city of York, Pennsylvania.

That property contained a furniture manufacturing facility that suffered a catastrophic fire in 1993. It sat vacant and unused due to environmental contamination,

including soil and groundwater containing lead and benzene. Gur Land Recycling

Act brought new life to the site. In February 1996, a private developer and DEP

signed a Special Industrial Area Site Agreement. The cleanup included the removal

of paint, drums, and debris from the fire, asbestos remediation, and capping the contaminated soils, and was completed the following month. The new operator of the

site, The Wolf Organization of York, built a 37,000-square-foot state-of-the-art facility on the site to manufacture countertops. Tom Wolf, the president of the company,

said that without Pennsylvania’s Land Recycling Act the project would not have

happened. He told Governor Ridge that the plant ‘‘would not have been built without it.’’ ‘‘Without the Act, the plant would have been built on five acres of land at

some greenfields site outside of the city. We would have plowed under five acres of

agricultural land.’’

It’s also working at the former Johnson Bronze site in New Castle, Lawrence

County, Pennsylvania. That site was home to a ball bearing manufacturing facility

until 1978, when it was abandoned, leaving a site contaminated with lead and

PCBs. No financially viable past owner would take responsibility for remediating

the eight-acre downtown site, so the city of New Castle took possession. Both the

city and county were anxious to redevelop the property, but prospective buyers were

unwilling to commit because of the liability and health issues posed by site contamination. With the help of Pennsylvania’s Land Recycling Act, the site was remediated

as a Special Industrial Area site. The cleanup took 9 weeks and was completed in

February 1996. The city and the Lawrence County Economic Development Corporation recently found two companies to purchase tracts on the property. One is a ceramics company that will be expanding its operations and adding new jobs, and the

other packages frozen food and will employ between 35 and 80 people.

Our Land Recycling Program is working because we have a statute that brings

common sense and private sector resources to the process of redeveloping old industrial sites. Moreover, the Department is willing to meet with anyone, anytime, to

discuss redevelopment of any site, free from the ‘‘Gotcha!’’ mentality of the past. We

have built into the system enough flexibility to allow for creativity, innovation and

common sense in addressing the unique problems that arise at old industrial sites.

But the main reason why our Land Recycling Program is working is because there

are people out there—in local government, the private sector, the redevelopment authorities and others—with the vision for taking the promise of our new legislation

and turning it into reality. Without their hard work to identify sites, bring together
70

buyers and sellers, and raise the necessary capital, we wouldn’t have close to 200

sites in the system, and we wouldn’t be so optimistic about the future.

SUCCESS IS SPREADING

I urge the Subcommittee’s members and its staff to critically examine all of the

State land recycling laws and voluntary cleanup programs that now exist all across

the country. At latest count over 30 States had developed such programs. What you

will quickly see is that while State land recycling programs vary, there are many

similarities.

The common elements are (1) cleanup standards based on risk and land use; (2)

liability protection, in the form of a statutory release, a covenant not to sue or no

further action letter given to persons meeting the cleanup standards; and (3) a reliance on private funds to pay for the vast majority of land recycling cleanups, with

limited State funds available in the form of grants, low interest loans, and tax credits for site assessments and cleanups.

These land recycling laws and State voluntary cleanup programs are all designed

to promote site cleanups by providing clear standards and offering liability protection. They are not meant to provide ways for parties to avoid undertaking cleanups.

In fact, once a cleanup is completed, all the State and Federal laws and regulations

governing site operations and pollution control continue to apply.

Last year, Governor Ridge began a 2-year term as Chair of the Council of Great

Lakes Governors and made land recycling his top priority. His choice reflects a recognition on the part of all eight of the Governors on the Council that the ongoing

transformation of our region from a mass production economy to a high performance

economy depends, in large part, on the success of our State voluntary cleanup programs. (The Great Lakes States include Illinois, Indiana, Michigan, Minnesota, New

York, Ohio, Pennsylvania, and Wisconsin). In discussions with the Great Lakes Canadian provinces of Quebec and Ontario the Governor personally, and the Council,

have discovered that similar problems exist there, that similar solutions apply, and

that the world’s most productive industrial powerhouse can and will renew itself on

all shores of the Great Lakes.

Each of the Great Lakes States has worked very hard to develop State land recycling laws and voluntary cleanup programs that are environmentally sound, and respond to the needs and interests of local government, the business community and

the public.

In just a short time, our individual State programs have produced real results—

hundreds of old industrial sites cleaned up, countless acres of open space protected

from sprawl, and the creation of family sustaining jobs—all while protecting the

health and safety of our citizens and the environment.

As a way of building on these successes, the Council adopted a Land Recycling

Action Agenda at its annual meeting in Detroit last July. I have included a copy

of that Agenda with my testimony. The Council plans to form regional SWAT teams

of land recycling experts and to establish a clearinghouse of information on remediation and cleanup technologies that will allow our States to share individual approaches and solutions to our common problems.

STATES PLAY A LEAD ROLE

The land recycling activity occurring throughout Pennsylvania provides a useful

illustration of the role that the State and Federal Government currently play in the

process of redeveloping old industrial sites.

Old industrial sites that present good redevelopment opportunities are first identified by local government, local redevelopment authorities, or the private sector. If

there are environmental concerns, any notices, site characterization reports or other

studies are typically analyzed and reviewed by the appropriate regional office of the

Pennsylvania Department of Environmental Protection.

My staff meets with local officials, developers and others to provide technical support and guidance during redevelopment activities. In addition, local government

and the redevelopment community look primarily to the State for funding. While the

Federal Government has offered some limited funding for land recycling projects in

Pennsylvania, the State currently has made more dollars available and has funded

10 times the number of projects supported by the Federal Government in our State.

That is both a reflection of limited Federal resources, and the fact that these really

are local, community projects that draw more attention from State and local representatives.

When all the cleanup work is done at a site, DEP provides the critical review of

all the technical data and provides the final sign-off and State liability protection.

As you can see, Pennsylvania has all the personnel, resources and other tools nec-
71

essary to handle all of the land recycling cleanups from start to finish, and given

that the actual cleanup work is done privately, we have had no need for additional

staff resources to administer this program.

There really is no reason to seek the Federal Government’s involvement at a land

recycling project in Pennsylvania. We do advise people who want to redevelop a site

that is on the Superfund National Priorities List (NPL) or subject to a RCRA corrective action order to contact EPA’s Regional Office in Philadelphia. We recognize the

Federal Government’s interest in maintaining oversight and control over those site

cleanups.

If someone was interested in puffing one of those sites through our Land Recycling Program, we would contact EPA to see if it would be willing to allow the site

to be handled through our State system, and indeed that would be our preference.

Of the approximately 200 sites that have entered our Land Recycling Program to

date, none is an NPL site, and it is a rare occasion when EPA expresses any interest

in one of the non-NPL sites in our State system. The land recycling sites being redeveloped in Pennsylvania are sites where EPA readily acknowledges they have neither the time, resources nor interest to deal with.

RECOMMENDATIONS FOR FEDERAL LEGISLATION

For land recycling to really succeed, the Federal Government must undertake

common sense reforms similar to the States. There have been numerous

‘‘brownfields’’ bills introduced in Congress over the past few years. Unfortunately,

most of them have not addressed the three key things that the States need from

Congress to complement our land recycling and voluntary cleanup programs and

allow them to reach their maximum potential for environmental cleanup and economic revitalization. These key items are: (1) a release of Federal liability at State

land recycling sites, (2) a waiver of Federal permitting requirements at State land

recycling sites, and (3) the authority for Governors to veto proposed NPL listings.

S. 8 does address the three items.

Our No. 1 priority is to amend the Superfund law to provide a release of Federal

cleanup liability to any person who completes a cleanup at a land recycling site in

accordance with applicable State law.

These land recycling sites simply do not belong under the shadow of Superfund

liability. I hope we can all agree that Superfund was not written to address these

sites; it was written to address a limited number of highly contaminated sites that

presented emergency situations, imminent hazards and significant threats to human

health and the environment, and where no private resources were available. This

is generally not the case with land recycling sites. If they presented emergency situations, the State or EPA would have responded accordingly. It’s unfortunate that

Superfund, the Federal statute with the heaviest enforcement hand—strict, joint,

retroactive liability—is applied to the environmental problem where the concerns

are mostly local in nature. While someone could, no doubt, point to a case where

a land recycling site impacts more than one State, the local issues these sites

present are very different from the issues of air and water pollution that have obvious multi-state and national implications.

We need a Federal release of liability at State sites to combat the lingering perception by developers that Federal liability is a real concern at the typical State

land recycling site—one that is not on the Superfund list and has no outstanding

RCRA corrective action order.

As a former EPA Regional Administrator, I have tried to reassure the people who

want to redevelop old industrial sites that EPA is unlikely to take any judicial or

administrative action at sites that are being handled in the State system.

While this is comfort to some, there can be no assurance that EPA will not second

guess the State’s decision. There are also no assurances that they won’t be subject

to a third-party suit under CERCLA. Only Congress can provide local government,

lenders, and redevelopers of contaminated property the Federal statutory protection

that they seek. In asking for this, we aren’t alone. The Great Lakes Council of Governors, the Council of State Governments, the National Governors Association, the

Association of State and Territorial Solid Waste Management Officials and others

are all asking Congress to give releases of Federal liability to persons that cleanup

sites in accordance with applicable State law.

Second, there needs to be a waiver of Federal permitting requirements at land

recycling sites being addressed under a State voluntary cleanup program. Our General Assembly gave DEP the authority to waive State permits at sites being handled

by our Land Recycling Program, but only Congress can waive the requirement to

obtain Federal permits. These are the same permitting requirements that EPA has
72

authority to waive at the much more seriously contaminated sites it has captured

under the Superfund program.

In asking for this waiver, be assured that discharges to the air and water are fully

regulated by our State regulatory program, and persons cleaning up sites in our

State system have to meet all of our applicable emission and discharge limitations,

both during cleanup and thereafter.

Finally, Congress should reinstate the opportunity of Governors to veto proposed

Superfund listings. The impacts associated with Superfund sites are borne primarily

at the State and local level. If a Governor believes that a site is more appropriately

handled in the State system, he or she should be able to protect the community from

the Federal Superfund program.

Last year, when we had such opportunity, Governor Ridge concurred on adding

two sites to the NPL, but did not concur on two other sites. His reasoning was simple: the two sites that he allowed to be added to the NPL were former waste disposal sites with no potential for redevelopment, while the other two sites each presented reasonably good opportunities for redevelopment under our Land Recycling

Program.

Had these sites been added to the NPL, based on Superfund’s dismal track record

in Pennsylvania, it would be virtually impossible to convince anybody to redevelop

the property. Most people now see Superfund as a slow moving, lawyer feeding,

black hole that sucks the redevelopment potential out of any site and scares away

local government and the development community.

We are confident that private parties can cleanup these sites through our Land

Recycling Program much more quickly than they would get cleaned up under

Superfund and provide the same level of protection to the local community.

At the two sites where we did not concur with the proposed NPL listing, we recognize the interest of EPA to be kept informed of the status of the State’s cleanup

efforts. We have also advised the private parties doing the cleanup that if they fail

to move forward on a timely basis to remediate the site in accordance with our State

cleanup standards that we will recommend to EPA that those sites be re-listed.

FINAL POINT

In Pennsylvania, Governor Ridge, the members of our General Assembly, and others that worked so hard to develop our Land Recycling Program are at a loss to understand why anyone in Washington would argue that a person who meets the requirements of Pennsylvania’s Land Recycling Act and receives a release of State liability after cleaning up a site should not also be entitled to a release of Federal

liability.

Pennsylvania is more than willing to work in partnership with the Federal Government regarding the cleanup of Superfund sites, RCRA corrective actionsites, and

even sites proposed for listing on the NPL. But we hope that Congress recognizes

that it is the States that carry the responsibility for identifying the needs and interests of their citizens as they relate to the cleanup and reuse of old industrial sites

and addressing those local concerns through the adoption of State laws and programs.

As evidenced by a November 1996 EPA memorandum regarding State voluntary

cleanup programs, it appears that the Administration still believes there is a need

for the Federal Government to develop criteria for the review and ‘‘approval’’ of

State land recycling programs. Unfortunately, it seems EPA may be building a

Washington-driven program that looks a lot like Son of Superfund, with all its

downsides.

I have not been able to identify any Federal statute that directs EPA to develop

criteria for approving State land recycling programs.

What I can tell you is that Pennsylvania, and many of its sister States, spent

years developing our individual State land recycling laws, and did so without the

benefit of or need for Federal intervention or support. I have heard the argument

that supporters of Federal baseline criteria put forward—that without Federal oversight and approval and minimum requirements the States will engage in a ‘‘race to

the bottom’’ to develop the weakest cleanup laws to attract new business.

As I said earlier, before you put EPA in the position of reviewing and approving

State land recycling laws, I urge you to take a very careful look at the land recycling

laws already being applied by the States. You will see that there has been no ‘‘race

to the bottom.’’ It is pure fiction.

Indeed, the States that have adopted land recycling laws and developed voluntary

cleanup programs have gone to great lengths to ensure that the environment is not

sacrificed at the expense ofjob creation. These State land recycling laws were enacted by State senators and representatives that are directly accountable to their
73

constituents, the people that live, work and play in the communities that host the

land recycling sites. To say that these State elected officials can’t be trusted to protect the needs and interests of their constituents is offensive, and it smacks of the

kind of paternalism that has no place in our Federal system of government.

It is clear that some matters are best left to the States to handle and the reuse

of old industrial sites is a perfect example.

EPA is clearly playing catch-up in land recycling. While we are grateful for the

financial support for specific projects, it would be much more helpful for the Administration to devote its energies to promoting real reforms instead of seeking to building a bureaucracy to approve State programs.

We look forward to working with the Subcommittee on legislation that will help

complement our land recycling program and allow it to reach its full potential.

ATTACHMENT

LAND RECYCLING IN GREAT LAKES STATES A NEW OPPORTUNITY TO EXTEND THE

HIGH PERFORMANCE REVOLUTION

INTRODUCTION

Over the last 25 years, global shifts in the location of traditional manufacturing

industries have not only resulted in economic and social changes in the Great Lakes

States, but in thousands of vacant or under-used industrial sites. The persistent

‘‘Rustbelt’’ image of this region was created by these changes.

At the same time, increasingly stringent environmental laws adopted by Federal

and State governments established cradle-to-grave liability for hazardous wastes.

The unintended consequence of these laws was to discourage the redevelopment

of vacant industrial sites by fixing cleanup liability on any person who had an interest in a site, whether or not they were responsible for its contamination. Unrealistic

cleanup standards required the cleanup of these sites to near pristine conditions in

all cases even if they were to be reused for manufacturing, thus creating another

disincentive to reuse.

In the last 10 years, the Great Lakes region has seen an economic transformation

from a lagging, de-industrializing area to a high-tech, higher wage manufacturing

and industrial economy.

This change has taken place in many areas without taking advantage of a key

resource—vacant or under-used industrial sites that many times already have builtin transportation access, utilities, a nearby work force and other advantages over

new, greenfield sites.

Promoting the reuse of industrial sites in the Great Lakes States through an aggressive Land Recycling Program achieves several important objectives for the region——

• Promote the development of already urbanized areas so they are more economically and environmentally sustainable.

• Help to retain and expand existing manufacturing in the region.

• Save farmland and open space from development to improve the quality of life.

• Improve the environment by eliminating hazardous conditions in communities.

• Change the image of the Great Lakes region from ‘‘Rustbelt’’ to ‘‘High Performance.’’

KEYS TO LAND RECYCLING

There are many factors that go into a business location decision—transportation

facilities, tax policy, work force skills and even global economic conditions. Environmental concerns are only one part of that decision, but they are often viewed as a

significant barrier to be overcome.

In order to overcome these barriers and have used industrial properties actively

considered as an option for business expansion, a successful Land Recycling Program includes several key elements——

• Encourage the reuse of all commercial and industrial sites, not just a narrow

category of sites.

• Cleanup standards used in the program must be clear and based on risk and

sound science, preferably offering a choice of solutions, so that a property owner or

developer can reliably estimate the cost to clean up a site.

• Provide a straight-forward, timely process for reviewing cleanup plans and giving agency approvals.
74

• Provide finality with regard to clean up liability so that meeting a cleanup

standard ends the liability for further cleanup, except under clearly specified conditions.

• Provide cleanup liability protection for financial institutions, economic development agencies, fiduciaries, non-profit organizations and local governments that did

not contribute to contamination on a site so they can act as a catalyst for redeveloping sites.

• Resolve potential cleanup liabilities under Federal environmental laws.

• Provide financial and other incentives to conduct environmental assessments

and cleanups and locate in special areas like enterprise zones.

GREAT LAKES STATES MOVE AHEAD

In keeping with a long history of performance and leadership at the national

level, the Great Lakes region of eight States is once again at the forefront of a major

policy initiative—industrial sites reuse.

The Great Lakes States are the nations leaders in Land Recycling programs. Aggressive Land Recycling Programs are helping to transform the persistent Rustbelt

image of old into one which exudes the vibrant economy of today. High-tech, higher

wage manufacturing and industrial jobs are on the rise in the region. Innovative

State Land Recycling Programs complement this economic revitalization and continue to offer a dynamic new approach to distressed urban areas.

All eight States in the Great Lakes region have Land Recycling Programs. Individual legislation differs throughout, but each State is moving to implement practical, smart industrial sites reuse programs.

Three States—Illinois, Minnesota and Wisconsin—have entered into a Superfund

Memorandum of Agreement with the U.S. Environmental Protection Agency. These

agreements allow States to maintain the role of overseeing the cleanup of sites and

officially clearing the owner of future liability.

Illinois has built upon its voluntary cleanup program of 1991 which offers a No

Further Action letter upon completion of a site cleanup project. Recently, Illinois

EPA has prepared draft rules incorporating a tiering system based on risk, land use

and progressed levels of site information, establishing uniform cleanup objectives

and methodology for all site cleanup programs.

The Minnesota Superfund Memorandum of Agreement expanded on the States

Voluntary Investigation Program, better defining roles and responsibilities for the

cleanup of sites. This agreement encourages partnerships between U.S. EPA, Region

V; the Minnesota Pollution Control Agency; other State and local governmental

agencies and external stakeholders.

In addition to Wisconsin’s Superfund Memorandum of Agreement, the State has

recently created the Bureau of Remediation and Redevelopment within its Department of Natural Resources. Wisconsin has streamlined the cleanup process by creating various grades of uniform soil standards, relieving lenders, cities or counties and

innocent purchasers of liability for contaminated property and has implemented a

Brownfields pilot program with the U.S. EPA.

Indiana established a Voluntary Remediation Program in 1993. This program provides a mechanism for site owners or operators to voluntarily enter an agreement

with Indiana’s Department of Environmental Management to clean up contaminated

property. A Covenant Not to Sue is issued upon successful completion.

Michigan amended its Natural Resources Environmental Protection Act to create

an owner-pays liability scheme only when that owner contaminated the site; offer

a series of grant and loan programs for prospective site cleanups; create a task force

to speed up cleanups in Detroit and a Brownfields Coordination Team to customize

similar action on other cities; and create a Brownfields manual for guidance. Michigan offers two grant programs—Site Reclamation Grants and Site Assessment

Grants to encourage redevelopment

Ohio created a Voluntary Action Program which relies upon private parties to investigate and cleanup contaminated sites; allows the cleanup to be tailored to the

future use of the land; limits the property owners legal responsibility for future

cleanup; encourages public input; and audits at least 25 percent of properties

cleaned up. The Ohio EPA certifies professionals to oversee cleanups. Ohio offers

low interest loans, tax abatements and a grant program.

New York has a voluntary cleanup program that requires volunteers to investigate a site, remediate contamination to agreed-upon levels, and eliminate sources

of onsite contamination that cause offsite impacts. When the cleanup levels are met,

the New York Department of Environmental Conservation issues a ‘‘no further action’’ letter.
75

Pennsylvania Example

In May 1995 Pennsylvania adopted three new laws creating a State Land Recycling Program. In the past year 100 sites have participated in the program and

cleanups have been completed at 35 of those sites.

This record compares favorably with Pennsylvania’s Hazardous Sites Cleanup

Program, which has cleaned up only two sites permanently in 8 years, and the Federal Superfund Program, which has resulted in removing eight sites from the National Priority List in 26 years in Pennsylvania.

The cleanups completed so far under the Land Recycling Program include large

and small projects that resolve long.standing contamination problems, put abandoned industrial sites back into productive use, allow existing businesses to clean

up their own sites and continue operations, and give hope to ‘‘land-locked’’ cities

that now, for the first time in years, have potential industrial sites to show businesses seeking to expand. They include—— • the Frameisi USA Inc. site near Pittsburgh that was able to expand its operations after cleaning up a portion of its property • a former kitchen appliance manufacturing site closed since 1990 near Reading

that was put back into productive use as a site for a warehousing operation • a long-vacant manufacturing site in Harrisburg that will soon be home to a new

200-employee business • the former Johnson Bronze manufacturing site in New Castle, abandoned in

1978, that will be cleaned up and available for new businesses • a multi-site cleanup agreement with a State electric utility that requires the

evaluation and cleanup of 134 different sites around the State • a site that was part of the State Hazardous Sites Cleanup Program that was

taken over, given its final cleanup and will be reused by a private company.

A quick summary of each of the new laws forming Pennsylvania’s Land Recycling

Program follows:

Act 2—The Land Recycling and Environmental Remediation Standards Act

Act 2 establishes environmental remediation standards to provide a uniform

framework for cleanups. Land recyclers have a choice of three types of cleanup

standards: background standards, statewide health standards or site-specific standards. Special industrial area standards are available for certain sites and certain

persons. This framework provides new direction for a more reasoned, scientifically

based blueprint for site remediation.

The act describes the submission and review procedures to be used at sites using

each of the three types of cleanup standards, thus providing a uniform process for

all sites statewide.

Act 2 provides releases from liability for owners or developers of a site that has

been remediated according to the standards and procedures in the act.

Act 3—The Economic Development Agency, Fiduciary and Lender Environmental Liability Protection Act

Act 3 extends liability protection to financiers, such as economic development

agencies, lenders and fiduciaries. Under Act 3, these parties cannot be held responsible for contamination at any site unless their actions directly caused the contamination. Engaging in routine commercial lending practices, including foreclosing on

contaminated property, will not trigger liability. These provisions are intended to reduce the liability concerns that may inhibit involvement with contaminated or abandoned sites.

Act 4—The Industrial Sites Environmental Assessment Act

Act 4 authorizes the Department of Community and Economic Development to

make grants to municipalities, municipal or local authorities, nonprofit economic development agencies, and similar agencies. The grants help finance environmental

assessments of industrial sites located in municipalities that the Department of

Community and Economic Development has designated as distressed communities.

Certain cities are eligible for grants to conduct environmental assessments and remediation activities.

A detailed report on the first year of Pennsylvania’s Land Recycling Program is

available.

RECOMMENDATIONS

While Great Lakes States have become national leaders in adopting land recycling

programs, these efforts are not yielding the full economic and environmental benefits they could for the region. Great Lakes States should learn from each other about

how to promote land recycling. There are also issues involving the Federal Govern-
76

ment where increased levels of cooperation are needed to deal with cleanup liabilities under Federal law.

The Great Lakes States will act together to promote Land Recycling Programs

throughout the region by taking these steps:

1. Form a regional ‘‘SWAT Team’’ of land recycling experts who can be called upon

to offer technical assistance on individual industrial site reuse projects.

These experts could meet periodically to discuss what is working and what is not

working in the individual State programs. In addition, when issues arise concerning

the application of specific cleanup technologies or statistical methods of analysis,

these experts could be consulted to share individual State approaches and solutions.

2. Establish a regional clearinghouse of information on remediation and other land

recycling techniques, including an Internet website to provide quick access to information.

Remediation techniques and technologies are advancing quickly as more and more

companies are seriously looking at reusing industrial sites. Keeping up-to-date on

these technologies is a difficult task. Identifying existing sources of reliable information and tapping into the expertise available in State environmental agencies would

be a tremendous regional asset Making that information available through the

Internet, 24-hours a day, 7-days a week would allow the Great Lakes States to move

quickly on cleanup issues.

3. Develop a template of ‘‘best practices ‘‘ that highlight the most effective techniques

States can use to encourage land recycling.

No one State has the ideal set of programs to encourage the cleanup and reuse

of industrial sites. States also have their own experiences to share about the effectiveness of programs they have adopted. Capturing the ‘‘best of the best’’ for each

element of a land recycling program—approach to clean up standards, reviewing

cleanup plans, releases from liability, financial incentives—would enable the Great

Lakes States to put together a set of ‘‘best practices’’ that each State could use to

make improvements in their own programs.

4. Explore opportunities for the Great Lakes region to develop a private sector mechanism to help encourage investment in the reuse of industrial sites.

There seems to be clear evidence that regulatory action and grant programs alone

may not always provide sufficient incentive to attract investment to industrial sites.

On a region-wide basis there may be opportunities to stimulate investment by lowering risks and costs to banks and lending institutions. A bank pool which operated

as a form of guarantee or secondary market, for example, may lower the cost of capital and increase the number of projects attracting investment. A regional approach

to such a mechanism offers the potential for both a broader range of participating

institutions and a more diverse portfolio of sites.

5. Initiate discussions between Great Lakes States and the U.S. Environmental Protection Agency on a uniform memorandum of understanding that clarifies Federal cleanup liabilities related to State Land Recycling Programs.

In the absence of legislation that releases parties who complete brownfield cleanups from Federal liability, it may be appropriate for the Council to pursue a basinwide Memorandum of Understanding (MOU) with EPA that will clarify the Federal

Governments role at State brownfield sites.

A basin-wide MOU would be negotiated between the Council and EPA Regions 2,

3 and 5. If the Federal Government is serious about increasing brownfield redevelopment, it should have a great deal of interest in negotiating such a high profile

agreement with the major industrial States that comprise the Council. The benefit

of taking a basin-wide approach is twofold: it increases the bargaining power of each

individual State, and it ensures consistency among the three EPA regions.

6. Support changes to the appropriate Federal environmental laws to recognize State

Land Recycling Programs.

The Council of Great Lakes Governors provides the perfect forum for advocating

Federal legislation that will allow our individual State brownfield laws to reach

their full potential. In this regard, there are three elements that should be included

in a Federal legislative package: (1) a release of Federal liability to any person who

completes a cleanup at a brownfield site in accordance with State law; (2) a waiver

of Federal permitting requirements at brownfield sites being addressed under State

law; and (3) liability protection for lenders, economic development agencies and fiduciaries.
77

The Council can present a common front on these Federal legislative issues

through the issuance of white papers-and direct lobbying of State delegation members, especially those in leadership positions.

RESPONSES OF JAMES M. SEIF TO ADDITIONAL QUESTIONS FROM SENATOR SMITH

Question 1. Mr. Seif, in your testimony you state that the Pennsylvania Land Recycling Act applies to all contaminated sites in the State and covers both voluntary

cleanups and enforcement actions. Why did Pennsylvania choose to have such an

expansive cleanup system? Has EPA been supportive of your efforts?

Response. In the past, Pennsylvania’s environmental policies have been a disincentive for the cleanup of contaminated sites. Both State and Federal cleanup

laws imposed full responsibility for a site cleanup on new buyers, even though they

have had no involvement in contamination of the property, and imposed never-ending liability, discouraged private firms, lenders and public redevelopment authorities from getting involved.

The Land Recycling Program in Pennsylvania encourages the current landowner,

prospective buyer, redevelopment authority and lending institution, to look more favorably at cleanup and reuse of contaminated sites.

Our policy decision was to have one set of cleanup standards and procedures that

would apply to all contaminated sites. The reason was that we wanted to address

existing brownfields and not create new ones by forcing them to deal with different

standards. In addition, one set of standards for all sites is easier for the Department

to administer.

As far as I can tell, the components of the Land Recycling Program have been

supported by the Federal EPA. While we do not have a formal MOA, there have

been several contaminated sites that EPA has deferred to Pennsylvania for cleanup

under the Land Recycling Program at the request of the property owner or prospective buyer.

Question 2. Would you say that the current liability system under Superfund remains one of the biggest impediments that is keeping major developers and owners

from voluntarily cleaning up these sites in your State?

Response. Yes. The current liability system under Superfund is a major impediment to redevelopment efforts. There is still a lingering perception that our releases

of liability are not complete because there is no release from Superfund liability.

The liability associated with Superfund provides no incentive for site cleanup for

current or future owners of contaminated property. As a result, there is less cleanup

and more legal entanglements that increase costs and further impede redevelopment efforts.

Question 3. In Pennsylvania’s attempts to encourage potential investors and

banks to clean up these sites, have you found that liability uncertainty is the largest

problem?

Response. Yes, but the liability concerns are not driven by State law considerations. The liability uncertainty that impacts Pennsylvania’s Land Recycling program is the result of the liability that remains with the Federal Superfund program.

Sites cleaned up under the State’s Land Recycling Program receive a complete liability release under State statutes and regulations. However, potential exposure to

Superfund liability remains under the Federal law creating uncertainty for property

owners.

Question 4. Mr. Seif, you state that there are no NPL-caliber sites in your program right now and that EPA rarely expresses an interest in such sites. If that is

the case, why won’t EPA give you final authority concerning cleanup?

Response. There are currently no NPL ‘‘listed’’ sites or NPL-caliber sites that have

formally entered our Land Recycling Program. Nevertheless, we believe that we

have all of the tools necessary to handle all of the contaminated sites in our State

system, including NPL-caliber sites. With regard to why EPA won’t give us final authority, you’d have to ask them. EPA’s November 1996 memorandum on State voluntary cleanup programs seems to imply that the agency does not want to sign

MOA’s covering NPL or NPL-caliber sites.

Question 5. Mr. Seif, some people say that if States control their voluntary cleanup programs there will be a so-called ‘‘race to the bottom.’’ Has Pennsylvania or any

other State that you know engaged in a ‘‘race to the bottom?’’

Response. As I stated in my testimony, there has been no ‘‘race to the bottom.’’

It is pure fiction. You simply have to read the 30-plus State laws that have been

enacted to see that. Pennsylvania’s Land Recycling Program takes a health-based
78

approach to cleanups that incorporates risk associated with current and future use

of the site and surrounding property, and produces cleanups that are safe and protective.

Question 6. In your testimony you state, ‘‘we need a Federal release of liability

at State sites to combat the lingering perception by developers that Federal liability

is a real concern at the typical State land recycling site.’’ How do you answer critics

that are concerned that States will approve ‘‘crummy cleanups,’’ or that the taxpayers may get stuck with the bill if they aren’t done appropriately?

Response. The remediation standards established under the Land Recycling Program require compliance with one or a combination of the following three environmental standards: (1) background standard; (2) statewide health standard; and (3)

site-specific standard. The protection levels for human health and the environment

that are associated with these three standards assure the public that ‘‘crummy

cleanups’’ cannot and will not be approved.

While it is true that limited tax dollars will be spent to assess and cleanup abandoned sites, the dollars spent will be recovered in the future as revitalized sites will

bring in local tax dollars, increase employment and preserve agricultural land.

Question 7. In your testimony, you state that Federal and State cleanup requirements often used ‘‘Garden of Eden’’ or background standards regardless of whether

the site was to be used for a daycare center or steel mill.’’ In order to provide the

tools you need to fix brownfields, isn’t it necessary to modify the cleanup requirements under Superfund to inject some common sense into the system?

Response. Yes, the modification of cleanup standards under Superfund should be

pursued to complement the common sense approaches being taken by the States at

brownfield sites. Having cleanup standards that include a common sense approach

by allowing for a combination of health based standards or risk based standards associated with the current and future use of the property is essential.

Question 8. In your testimony you state that there were two potential Superfund

sites in Pennsylvania that Governor Ridge vetoed from being added to the NPL

based on, as you state, ‘‘Superfund’s dismal track record in Pennsylvania—that

would make it virtually impossible to convince anybody to redevelop the property’’

if it were to be added to the NPL. Could you expand on your comments in this area?

Response. It’s pretty simple. To developers, property owners, and lenders, placing

a site on the NPL is a kiss of death. We can move a site through our program much

faster than it can move through Superfund.

Two sites that were proposed for NPL listing were vetoed by Governor Ridge because there were responsible parties volunteering to participate in State cleanup efforts who wanted to avoid being forced into the Federal program. Their willingness

to commit to meeting our State standards is proof that the regulated community

would rather work with the State than take their chances with an NPL listing.

Question 9. In your testimony you state, ‘‘if someone was interested in putting one

of those sites (Superfund or RCRA) through our Land Recycling Program, we would

contact EPA to see if it would be willing to allow the site to be handled through

our State system, and indeed that would be our preference.’’ Given this statement,

is it your view that these NPL or RCRA caliber sites would get cleaned up a lot

faster under your authority rather than under EPA’s?

Response. Yes. The cleanup of contaminated sites under Pennsylvania’s Land Recycling Program will easily out-pace similar efforts under the Federal program.

RESPONSES OF JAMES M. SEIF TO ADDITIONAL QUESTIONS FROM SENATOR CHAFEE

Question 1. I am sure you would agree that EPA’s Brownfields Initiative is accomplishing some positive results. Can you comment on EPA’s testimony on the needed

elements of Brownfields reform?

Response. The common elements needed to drive a successful Brownfields program are: (1) cleanup standards based on risk and current/future land use; (2) liability protection in the form of a statutory release or covenant not to sue for persons

meeting those cleanup standards, and release for lending institutions and fiduciaries overseeing finances; and (3) lender protection and funding available in the

form of grants, low interest loans and tax credits for site assessment and cleanup

in combination with private funds. Those are actions that each State needs to take.

With regard to Federal reforms, the thing that is absolutely essential to

Brownfields reform is the release of Federal liability. EPA must recognize that, and

work with Congress to that end. If EPA can’t see the importance of that, then they

have not done a good job of listening to the States.
79

Question 2. Last year, the President delegated authority to issue section 106

cleanup orders to a number of Federal natural resource trustees. By the Executive

Orders terms, the trustees may only exercise this new authority at State-led sites,

then only with the concurrence of EPA. In your opinion, will this new delegation

of authority have a chilling effect on Brownfields cleanups in Pennsylvania?

Response. While we have some concerns about the Executive Order, I do not anticipate the delegated authority to Federal natural resource trustees to significantly

impact Brownfield cleanups in Pennsylvania. A typical Brownfield sites occurs in an

urban/industrial location where natural resource damages are generally of secondary concern. Should natural resource damages become a factor of concern at a

Brownfield site, cooperation of both government agencies and their natural resource

trustees must occur and the State’s interests need to be considered.

RESPONSE OF JAMES M. SEIF TO AN ADDITIONAL QUESTION FROM SENATOR

LAUTENBERG

Question. You describe several State programs in the attachment to your written

testimony, and speak of releases of liability thereunder. Are you referring to releases of State or Federal liability? Also, you describe two programs that limit owner

liability. Please describe how these work, whether the limitations result in any

shortfall, and if so, who pays the deficit?

Response. Pennsylvania’s Land Recycling Program provides for a release of liability under State law only. A major concern and deterrent at State cleanups under

the Land Recycling Program are the liability uncertainties that remain under Federal law for the responsible parties and prospective buyers of contaminated sites.

I have emphasized in my testimony the need for Congress to provide a Federal liability release when cleanup efforts occur under State law.

The Land Recycling Program provides a release of State liability only after the

remediation standard has been achieved. The release covers the current owner or

occupier of the property, developer, successor, and assigns. All of our standards are

designed to be safe and protective of human health and the environment. Accordingly, there should be no ‘‘shortfall’’ by way of environmental cleanup at any site

where one of our three standards is attained.

The State program also creates incentives for the development of abandoned sites

for which no financially viable party exists and for sites in designated enterprise

zones known as ‘‘Special Industrial Sites.’’ On these special industrial sites, a developer is only required to perform a baseline assessment and abate any direct or immediate threat to people who will be using the property. If additional long-term remediation for offsite contamination is required, State funding from our Hazardous

Sites Cleanup Fund is available. We have more than enough money in our HSCA

fund to deal with those situations. To date, we have not had to use any State money

to address offsite impacts at any of the 33 SIA sites in our program.

STATEMENT BY MAYOR CHRIS BOLLWAGE, ELIZABETH, NJ, ON BEHALF OF THE U.S.

CONFERENCE OF MAYORS

Mr. Chairman, Members of the Committee, I am Chris Bollwage, Mayor of Elizabeth, NJ. It is a pleasure for me to testify today on behalf of The U. S. Conference

of Mayors, which represents about 1,050 cities in our Nation with populations over

30,000.

The Nation’s mayors have been at the center of our national debate on the redevelopment of brownfield sites and the need for comprehensive Superfund reform. In

1994, Louisville Mayor Jerry Abramson, as President of the Conference, formed our

first Brownfields Task Force. St. Louis Mayor Freeman Bosley, Jr. was appointed

as chair of this task force. The work of the Conference’s Brownfields Task Force resulted in a Mayors’ National Brownfields Action Agenda that called on Congress

and the Administration to develop a national brownfields strategy that included, at

a minimum, the following:

(1) Liability Protection for Lenders, Innocent Third Party Purchasers and Redevelopers of Brownfield Sites;

(2) Development and Expansion of EPA’s Brownfields Initiative, Including Funds

for Preparation and Implementation of Local Brownfield Redevelopment Strategies,

Including Funds for Site Assessment and Characterization;

(3) Development and Capitalization of Local Revolving Loan Funds for Brownfield

Clean Ups;

(4) Targeted Tax Incentives for Brownfield Redevelopers;
80

(5) Expedited Cleanup Strategies and Cleanup Standards Based on Future EndUse; and

(6) The Availability of Tax Exempt Financing for Redevelopment of Brownfield

Sites.

Mr. Chairman, we are now revising this agenda and I would like to submit for

the record a further elaboration of these principles for a national strategy once it

is finalized.

The mayors of this Nation want to thank the members of the Committee for realizing the importance of developing a national strategy for cleaning up the hundreds

of thousands of brownfields that can be found all across the Nation.

We believe that it is preferable that brownfields be a major part of Superfund reform and reauthorization process and it is also critical that we move on brownfields

during this Congress. Why? Two of Superfund’s greatest accomplishments are: (1)

a dramatic national reduction in the generation of hazardous waste; and (2) a much

safer, national hazardous waste management and disposal system. But along side

these tremendous public benefits is a horrible, unintended consequence of the

Superfund program—the fact that the private sector would not invest in hundreds

of thousands of non-NPL, contaminated properties because of the fear of being

caught in the Superfund liability web. These properties are now commonly called

brownfields.

Mr. Chairman, contamination of industrial property was not caused by local governments or the citizens who now must live with the consequences of lost jobs, an

eroded tax base and abandoned or underutilized properties that denigrate communities. In large measure, this unintended, negative consequence of our Federal

Superfund policies has been the price for achieving the Superfund program’s national benefits. This unfortunate situation simply must be addressed in an aggressive way. We must undo the unintended harm that Superfund has imposed upon

our communities.

Last year The U.S. Conference of Mayors released at its Winter Meeting a 39-

City Survey on the Impact of Brownfields on U.S. Cities. Of the cities surveyed, 33

cities with brownfield sites said that more than $121 million is lost each year in

local tax revenues—using conservative estimates. More than $386 million is lost

each year, using more optimistic estimates, suggesting that the more than 20,000

cities and other municipalities nationwide could be losing billions of dollars each

year in local tax receipts due to the existence of brownfields. The survey also found

that cities of all sizes, small and large, had brownfield sites which were extremely

diverse in terms of size and configuration. I would like to submit the Survey findings for the record.

I would also like to give you an example of how brownfields impact my community. To date, we have identified 56 brownfields in the city of Elizabeth, NJ, alone.

For me, these sites represent 56 possibilities to create new industry, jobs, housing,

and more tax ratables. We have been able to focus our resources on rehabilitating

several of these properties—and our successes have been monumental. On one property we built an IKEA store, which has become the chain’s best performing store,

and a Toys R Us Superstore, the largest of its kind in the chain. Both businesses

provided hundreds of new jobs, more than $1 million in annual tax revenues and

more than $2 million in Urban Enterprise Zone revenues.

Nearby we cleaned up a former municipal landfill, and soon hope to use the land

for a 250-store Mega Mall project on 166 acres of land. The project will create as

many as 5,000 jobs. As part of our ongoing efforts in rehabilitating these and other

contaminated properties, we have applied for designation as one of EPA’s brownfield

demonstration pilots.

I have provided to the Committee a report, ‘‘Inventory of Reclaimable Sites,’’

which was prepared by the Regional Plan Association of New Jersey. I would ask

that this report be included in the record. I have also provided information pertaining to the OENJ Development Project.

Mr. Chairman, all of this information supports our claim that we need Federal

help to develop and implement strategies reclaiming brownfields sites. When these

sites were previously flourishing with manufacturing, commercial or other uses, the

Nation shared in this prosperity, including all governments in the form of tax receipts and other economic activity.

What is important to note is that for each tax revenue dollar that is generated,

local governments realize about 15 cents. More than 80 cents of each dollar accrues

to Federal and State governments in the form of income taxes and other revenues.

This explains why local governments can’t do it alone, and we need your help. We

can’t expect the level of government who realized the smallest share of the prosperity to absorb the largest share of the cleanup, remediation and redevelopment costs.
81

Mr. Chairman, we are pleased that the brownfields issue has the bipartisan support of this Committee. The bills that have been introduced, both S. 8 and S. 18,

are good starting points launching a more detailed deliberation on the brownfields

problem and the need for a comprehensive national strategy. The Conference of

Mayors President, Mayor Richard Daley, has indicated that brownfields legislation

is one of the Conference’s top priorities, and we want to work with you to further

refine your proposals.

We are pleased, for example, that both bills make efforts to address many of the

issues we have laid out as our principles. We are pleased that funds will be made

available for site characterization and assessment work on brownfield sites, although these funds are, quite frankly, too modest compared to the damage that has

been done to our communities. Likewise, we are very pleased that both the EPA

pilot program and your bills call for the capitalization of local revolving loan funds

for the ongoing, bureaucratic-free cleanup of brownfield sites, although again the effort is too modest compared to the magnitude of the problem. These funds should

be used for local programs and not be given to State bureaucracies, unless such

State programs are targeted to smaller jurisdictions that would be unlikely to administer their own local revolving loan programs.

We believe both bills need to address brownfield sites that are in the hands of

public entities, either through tax default or acquisition for economic development

purposes. Not only must liability protections be extended to such public entities, but

direct grants should be available for the cleanup of properties in neighborhoods of

disinvestment and in properties that have negative value due to more significant

contamination.

We also want to commend the Committee for addressing the need for liability protections for redevelopers of brownfield sites. It will be important to strike a balance

between giving redevelopers certainty that they will not be thrown back into the liability web after having invested in cleanups, and at the same time protecting the

public against future contamination of these sites.

We believe the Committee should seriously address the need to give local governments the flexibility to clean up properties with brownfield redevelopment funds

that are free from many of the arcane rules and regulations of the Superfund program. We need the flexibility to bring common sense to clean ups. This is not only

the case with the issue of cleanup standards based on end-use, but in the definition

of brownfields. We believe there are too many exclusions to the ‘‘brownfields facility’’

definition. For example, many abandoned industrial sites will have both removal

and remediation needs. These sites are typical brownfield facilities which require a

removal of immediate threats and a less urgent remedial process to restore the

property to a useful purpose. The bill would exclude all of these facilities from any

funding under this program. We would be glad to provide examples to the Committee.

It is also important for the Committee to address the relationship between State

Voluntary Cleanup programs and local brownfield cleanup initiatives to effectively

address the brownfield problems in communities. We have talked to several State

voluntary cleanup program administrators who indicate that their voluntary programs tend to focus on projects that are close to being NPL sites, not those

brownfields that are less contaminated but still suffer from the Superfund stigma.

While we believe there may be an appropriate link to State voluntary cleanup programs, we should not assume that they will expedite brownfield cleanups or that

they are the panacea for brownfield cleanups. Again, we believe local governments

are best equipped to expeditiously cleanup certain sites and to work with the private sector in the redevelopment of brownfields, albeit in some form of partnership

with State agencies.

Mr. Chairman, as a result of your efforts and those of the Administration to support brownfields redevelopment, communities are finally having some success in

cleaning up less contaminated properties, which is allowing us to get these sites redeveloped and back on the tax rolls. More complicated cleanups or NPL-caliber sites

do create some misconceptions about the nature of the bulk of the inventory of sites,

which we commonly refer to as brownfields.

Mr. Chairman, many other issues remain to be addressed and we will be

supplementing our comments with further technical comments on the drafts of both

bills. But let me again commend the Committee for beginning a bipartisan debate

on brownfields. We support your efforts to address brownfields in the 105th Congress and we look forward to working with you this year to enact legislation. We

cannot afford to let another Congress go by without enacting a comprehensive national program that will lead to thousands of brownfields cleanup, job creation, and

sound local economies.
82

Finally, Mr. Chairman, while it is not in the jurisdiction of this Committee, we

believe it is extremely important for the Congress to enact tax incentives that help

companies redevelop brownfield sites. We have worked closely with the Administration on the development of their proposal and would welcome the opportunity to

work with the Senate as they consider this year’s tax bill.

Again, we thank you for the opportunity to appear before you today.
83
84
85
86
87
88
89

RESPONSES OF MAYOR CHRIS BOLLWAGE TO ADDITIONAL QUESTIONS FROM SENATOR

SMITH

Question 1. Mayor, the Orion Project that you mention in your testimony involves

the capping and redevelopment of a 166-acre landfill. Included in this project was

the filling of approximately 10 acres of wetlands, could you talk about your interaction with the Federal agencies involved at this site regarding natural resource issues. Were there any claims for natural resources damages raised by the Fish and

Wildlife service?

Response. No.

Question 2. Mr. Bollwage, I understand you are representing The U.S. Conference

of Mayors. I am aware that the Conference of Mayors supports provisions in both

S. 8 as well as S. 18 that would provide grants and loans to localities attempting

redevelopment brownfields sites. What is the position of the Conference of Mayors

on the issue of finality? For example, after an individual or company has cleaned

up a site under State and local supervision, they could be liable for additional Federal liability?

Response. On the issue of finality, it is important that there be a mechanism for

a property owner or prospective purchaser to be able to know what level of cleanup

is necessary, and once those objectives are met, no further remediation will be required, unless there is some imminent and substantial threat to public health or the

environment.

With respect to brownfield sites, many States have well developed voluntary

cleanup programs that lead to ‘‘No Further Remediation’’ letters. The USCM believes that if a site has successfully gone through a qualified State program, then

there should be no additional Federal liability attached to that site for the contaminants of concern. There may be a need for a reopener clause, but it should be limited to cases where (1) there is an imminent threat to human health or the environment, and (2) either the State response is not adequate or the State requests Federal assistance.

The USCM is looking for legislation that will make a bright line distinction between Superfund caliber sites and brownfield sites that have been for too long disadvantaged by the shadow of Federal liability. If a State has the ability to evaluate

and approve a cleanup, then the issue of ‘‘finality’’ should also be delegated to them.

Question 3. Is it the position of the Conference of Mayors that comprehensive reform of the hazardous waste cleanup laws, including liability reform, remedy reform, and increased State and local controls are necessary to really ‘‘do the job’’ at

many of these brownfield sites? That is, does the Conference of Mayors believe that

grants are enough to deal with the problem or does more need to happen?

Response. Grants will provide municipalities with a tool for brownfields redevelopment. They can provide the impetus for getting a successful project off the ground.

But for an issue as complex as brownfields, grants are not enough. Successful redevelopment requires incentives for companies to relocate in sometimes blighted areas,

transportation projects to improve site access, and opportunities for job training to

bring jobs back into the cities.

In addition to grants, liability protection for prospective purchasers and municipalities which take title to brownfield sites for the purpose of cleanup and redevelopment must be a component of any national brownfields strategy. Without such liability protections, brownfield redevelopers will still not invest in these properties.

From our perspective, the brownfields issue is not just about cleanup, it is a fullscale recycling of our properties that will use the already existing infrastructure to

benefit both our economies and our environment. Flexibility in the way public resources can be leveraged with private investment is what we need most.

Question 4. One significant brownfield issue involves viable companies that have

the financial ability to clean up these sites, but fear to do so because they may get

caught in the Superfund liability net. Rather than risk a liability problem, they prefer to fence large industrial sites and let them lay fallow? Do you agree that this

is a problem? How would you propose to fix it?

Response. Idle, or mothballed properties are a problem in many cities. There is

almost no incentive for a company to initiate a cleanup and develop a property if

just securing the property and paying the taxes are less expensive. This goes back

to your earlier question about ‘‘finality.’’ If a company knows it can negotiate reasonable, risk-based cleanup standards, obtain certainty after it is done, and perhaps get

a tax incentive for initiating the cleanup, we are confident that more companies will

initiate their own, voluntary cleanups.
90

It is not an acceptable outcome for companies to continue to ‘‘mothball’’ land that

could and should be returned to productive reuse and tax generating property.

RESPONSES BY MAYOR CHRIS BOLLWAGE TO ADDITIONAL QUESTIONS FROM SENATOR

CHAFEE

Question 1. On large projects, the dedication of resources from the City, State and

Federal Government can often make the difference. However, not all projects are

large enough to justify such a commitment of resources. In your testimony, you note

that you have identified 56 brownfield sites in Elizabeth. What are the characteristics of those sites, in terms of the risks presented? Are they so-called NPL-caliber

sites? What changes do we need to make to Superfund to ensure that the average

site, and not just the exceptional site, is redeveloped?

Response. On the 56 sites in Elizabeth, I can’t simply characterize the risk on

each, without providing detailed information on these sites. Attached is a report

which provides a full description of these properties.

As a general statement, I would say that for most of these properties are not

NPL-caliber sites. Most of these properties are smaller, less contaminated sites,

which we typically consider brownfields. I will have an updated inventory of these

properties next month, and I would be pleased to provide this report to the Committee once it is available. Smaller, less contaminated, non-NPL sites need to be taken

out of the shadow of Superfund. We are asking for legislation to clearly distinguish

between Superfund and brownfield sites. The liability and remediation standards

should be delegated to States with solid cleanup programs.

Question 2. On page 5 of your testimony, you advocate resolving the relationship

between Federal voluntary cleanup programs and brownfields. You seem to imply

that brownfields cleanups may best be handled outside of State voluntary cleanup

programs. Could you expand on this, and do you believe that a brownfield cleanup

that satisfies State and local governments should be final with respect to Federal

liability, absent some extraordinary circumstance?

Response. Sites cleaned up under State programs should be final, absent some extraordinary circumstance. One practical way to handle this would be to limit further

Federal action unless, at a particular site, there is: (1) an imminent and substantial

threat to public health or the environment; and (2) either the State response is not

adequate or the State requests U.S. EPA assistance.

RESPONSES OF MAYOR CHRIS BOLLWAGE TO AN ADDITIONAL QUESTION FROM

SENATOR LAUTENBERG

Question. In your written testimony, you state that ‘‘[i]t will be important to strike

a balance between giving redevelopers certainty that they will not be thrown back

into the liability web after having invested in cleanups, and at the same time protecting the public against future contamination of these sites.’’ Please describe how

you, or how The U.S. Conference of Mayors, would strike such balance. Do you envision a Federal role anywhere in the equation?

Response. Your question addresses the issue of pollution prevention opportunities

and ways to protect against recontamination. Much of the brownfields contamination goes back to industry practices from the turn of the century. We are much more

sophisticated about environmental issues today than we were when CERCLA was

enacted. There are regulatory and enforcement measures in place to limit the probability of recontamination. It will be up to industries and environmental enforcement agencies to strike the balance between industrial growth and practical pollution prevention.

We believe finality on a site should pertain only to the preexisting pollution and

its subsequent cleanup activities. Pollution caused post cleanup by the redeveloper

should be subject to current environmental laws.
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219

PREPARED STATEMENT OF LORRIE LOUDER, DIRECTOR OF INDUSTRIAL DEVELOPMENT

FOR THE SAINT PAUL PORT AUTHORITY, MINNESOTA, ON BEHALF OF: THE NATIONAL

ASSOCIATION OF LOCAL GOVERNMENT ENVIRONMENTAL PROFESSIONALS ‘‘NALGEP’’

NALGEP BROWNFIELDS ADVISORY COMMITTEE

NALGEP would like to give special thanks and appreciation to our Brownfields

Advisory Committee. Comprised of 14 of the Nation’s top local government

brownfields leaders, the Advisory Committee members have provided critical leadership in the development and implementation of this project and report. They devoted substantial time and energy to developing the overall project game plan, the

interview questions, and the project findings. They offered invaluable guidance, reviewed and commented on several drafts of the report and participated in numerous

conference calls to discuss the various aspects of the project findings.

The members of the NALGEP Brownfields Advisory Committee are: Mark Gregor,

Manager, Division of Environmental Quality, city of Rochester, NY; Joseph James,

Director of Economic Development, city of Richmond, VA; David Levy, Brownfields

Project Coordinator, city of Baltimore, MD; Judith Lorbeir, Environmental Coordinator, city of Tacoma, WA; Lorrie Louder, Director of Industrial Development, Saint

Paul Port Authority, Saint Paul, MN; Lisa Maack, Deputy Director, Mayor’s Office

of Environmental Affairs, city of New Orleans, LA; Richard Mendes, Deputy City

Manager, city of Cincinnati, OH; Douglas C. MacCourt, Environmental Manager,

Office of Transportation, Portland, OR, and Director, Portland Brownfields Initiative; Beverly Negri, Brownfields Liaison, Economic Development Department, Dallas, TX; Jacqueline Ritchie, Brownfields Coordinator, Environmental Services Cabinet, Boston, MA; Mary Beth Schmucker, Brownfields Coordinator, city of Indianapolis, IN; Martin Soffer, Environmental Review Officer, Planning Commission, city of

Philadelphia, PA; Gary Stephens, Deputy Director, Department of Natural Resources Protection, Broward County, FL; and William Trumbull, Assistant Commissioner, Department of Environment, city of Chicago, IL.

* * * * *

Chairman Smith, Senator Lautenberg and members of the Subcommittee, the National Association of Local Government Environmental Professionals, or ‘‘NALGEP,’’

appreciates the opportunity to present this testimony on the views of local government officials from across the Nation on the need for additional Federal legislative

and regulatory incentives for the cleanup, redevelopment and productive reuse of

brownfields sites in local communities. NALGEP represents local government officials responsible for ensuring environmental compliance, and developing and implementing environmental policies and programs. NALGEP’s membership consists of

more than 50 local government entities located throughout the United States, and

includes environmental managers, solid waste coordinators, public works directors

and attorneys, all working on behalf of cities, towns, counties and municipal associations.

In 1995, NALGEP initiated a brownfields project to determine local government

views on national brownfields initiatives such as the EPA Brownfields Action Agenda. The NALGEP Brownfields Project has culminated in a report, entitled Building

a Brownfields Partnership from the Ground Up: Local Government Views on the

Value and Promise of National Brownfields Initiatives, which was issued on February 13, 1997 to the EPA and other agencies, congressional staff and the public.

As a result of this project, NALGEP is well qualified to provide the Subcommittee

with a representative view of how local governments, and their environmental and

development professionals, believe the Nation must move ahead to create long-term

success in the revitalization of urban brownfields properties.

NALGEP’s testimony will focus on the findings of its Building a Brownfields Partnership from the Ground Up Report, particularly with respect to liability, resource

and other legislative opportunities to promote brownfields renewal. The NALGEP

Brownfields Report was developed under the leadership of a 14-member Brownfields

Advisory Committee composed of local government brownfields officials from Environmental Protection Agency (‘‘EPA’’) brownfields pilot cities and other communities

with established brownfields programs. NALGEP worked with the Committee to develop a comprehensive brownfields interview, which was conducted with numerous

brownfields leaders across the Nation. Based on these interviews and a series of collaborative discussions with the Advisory Committee, NALGEP developed report

findings on:

• Clarifying and Limiting Liability to Promote Brownfields Cleanup and Redevelopment

• Building a National Brownfields Partnership: The Next Phase of the Federal

Agenda from a Local Government Perspective
220

• Improving Communication Among Local, State, and Federal Brownfields Officials

• Legislative Opportunities to Stimulate Brownfields Cleanup and Redevelopment

The NALGEP Brownfields Report itself best conveys the views of NALGEP and

its Brownfields Advisory Committee on the opportunities for the Federal Government to promote brownfields renewal. NALGEP therefore attaches the Report to

this testimony, and summarizes key points below.

The cleanup and revitalization of ‘‘brownfields’’ represents one of the most exciting, and most challenging, environmental and economic initiatives in the Nation.

Brownfields are abandoned, idled, or under-used industrial and commercial properties where expansion or redevelopment is hindered by real or perceived contamination. The brownfields challenge faces virtually every community; experts estimate

that there may be as many as 500,000 brownfields sites throughout the country.

The brownfields issue illustrates the connection among environmental, economic

and community goals that can be simultaneously fostered through a combination of

national leadership, Federal and State incentives, and the innovation of local and

private sector leaders. Cleaning up and redeveloping brownfields provides many environmental, economic and community benefits including the following:

• expediting the cleanup of thousands of contaminated sites;

• renewing local urban economies by stimulating redevelopment, creating jobs

and enhancing the vitality of communities; and

• limiting sprawl and its associated environmental problems such as air pollution,

traffic and development of rapidly disappearing open spaces.

The Williams Hill Project provides an excellent example of how a brownfields initiative is helping to revitalize Saint Paul, Minnesota’s local economy and environment. Williams Hill, which is a Federal Enterprise Community Area, is a 30-acre

site, formally owned by a highway construction company, which contains an asphalt

plant and 370,000 cubic yards of construction debris piled in 200–300 foot mounds.

The site has significant air quality problems associated with this debris as well as

some subsurface pollution problems. Prior to the involvement of the Saint Paul Port

Authority, the facility employed 16 workers and provided a $80,000 per year tax

base.

The Saint Paul Port Authority, which recently acquired the site, plans to remediate the pollution problems and redevelop the site into a light manufacturing industrial park. Saint Paul expects the new development to provide 25 developable acres

and create 325 new, high-paying jobs and $650,000 annually in taxes. This is an

example of the success stories that we can create through brownfields revitalization.

This year presents an exciting opportunity to build upon the initial successes of

EPA’s Brownfields Action Agenda and establish a long-term, sustainable Federal/

local brownfields partnership. The timing is especially good given that: (1) many

communities are emerging from the pilot stage of the EPA Brownfields program; (2)

several Federal agencies are preparing to expand the Administration’s commitment

to brownfields redevelopment by launching the BROWNFIELDS NATIONAL PARTNERSHIP AGENDA; and (3) Congress is considering opportunities for legislative solutions

to address local government brownfields needs.

Local government leaders are a key link in the success of brownfields partnerships, for it is the environmental, health, development and political leaders in our

cities, counties and towns who can best build a brownfields partnership ‘‘from the

ground up.’’ The NALGEP Brownfields Report represents the views of these officials

from communities actively involved in brownfields revitalization. Overall,

NALGEP’s key findings related to legislative opportunities in the brownfields area

are that (a) EPA should delegate the authority to limit liability and issue no further

action decisions for less contaminated brownfields sites to States with cleanup programs that meet minimum requirements to protect public health and environment;

(b) local communities need increased funding to ensure long-term brownfields success, including grants, loans, tax incentives and public/private financing partnerships for brownfields assessment, cleanup and redevelopment; and (c) the Federal

Government should identify and propose corrections for Federal laws and policies

which provide incentives to develop in ‘‘greenfields’’ rather than brownfields.

I. CLARIFICATION OF SUPERFUND LIABILITY AT BROWNFIELDS SITES

On the issue of Federal Superfund liability associated with brownfields sites,

NALGEP has found that the Environmental Protection Agency’s overall leadership

and its package of liability clarification policies have helped establish a climate conducive to brownfields renewal, and have contributed to the cleanup of specific sites

throughout the Nation. It is clear that these EPA policies, and brownfields development in general, are most effective in States with effective voluntary or independent
221

cleanup programs that have led to the negotiation with EPA of ‘‘State Memoranda

of Agreement’’ deferring liability clarification authority to those States. Therefore,

NALGEP finds that Congress should enable the EPA to delegate authority to limit

liability and issue no further action decisions for brownfields sites to States with

cleanup programs that meet minimum requirements to protect public health and

the environment.

A strong delegation of EPA liability clarification authority to approved States is

critical to the effective redevelopment of local brownfields sites. Such delegation will

increase local flexibility and provide confidence to developers, lenders, prospective

purchasers and other parties that brownfields sites can be revitalized without the

specter of Superfund liability or the involvement of Federal enforcement personnel.

Parties developing brownfields want to know that the State can provide the last

word on liability, and that there will be only one ‘‘policeman,’’ barring exceptional

circumstances.

At the same time, local officials are also concerned about delegating too much

cleanup authority too fast to States. States vary widely in the technical expertise,

resources, staffing, statutory authority and commitment necessary to ensure that

brownfields cleanups are adequately protective of public health and the environment. If brownfields sites are improperly assessed, remediated or put into reuse, it

is most likely that the local government will bear the largest brunt resulting from

any public health emergency or contamination of the environment. NALGEP believes that the U.S. EPA has a key role to play in ensuring that liability authority

over brownfields sites should only be delegated to States that demonstrate an ability

and commitment to ensure protection of public health and the environment in the

brownfields redevelopment process.

To foster expanded redevelopment of brownfields sites while ensuring the protection of public health and the environment, NALGEP finds that there should be

three components to the EPA brownfields delegation program. First, the law should

clearly distinguish between Superfund NPL-caliber sites and less contaminated sites

that can be put on a ‘‘brownfields track.’’ The delegation of liability authority to

States should focus on these non-NPL caliber sites. Putting non-NPL caliber sites

on a brownfields track will allow the application of EPA and State policy tools specifically designed to foster expedited, cost-effective brownfields redevelopment. Several of these brownfields track tools are suggested by NALGEP in Report Section

1, Finding 4.

Second, NALGEP finds that EPA delegation of liability authority over brownfields

sites should be granted only to State cleanup programs that meet minimum criteria

to ensure protection of public health and the environment. EPA should also have

the ability to withdraw a State’s delegation if these criteria are not being met. In

its report, NALGEP suggests the following types of criteria for State delegation:

1. Standards to ensure adequate site assessments early in the process. Good site

assessments will help prevent unanticipated problems from surfacing, and facilitate

efforts to direct particular sites into a ‘‘brownfields track.’’

2. Adequate State technical expertise, staff and enforcement authority to ensure

effective implementation of cleanup activities.

3. An adequate method to distinguish between NPL-caliber sites and those lesscontaminated sites that can be placed on a brownfields track.

4. Use of risk-based cleanup standards, that can be tied to reasonably anticipated

land use, established through an adequate public approval process.

5. Institutional controls such as deed restrictions, zoning requirements or other

mechanisms that are enforceable over time to ensure that future land uses tied to

certain cleanup standards are maintained.

6. Commitment to establish community information and involvement processes,

and assurance that State and local brownfields activities will consider community

values and priorities.

7. Commitment to build the capacity, through training and technical assistance,

of local government health and environmental agencies to effectively participate in

the brownfields development process and ensure protection of public health and environment.

8. Adequate mechanisms to address unanticipated cleanups or orphaned sites

where liability has been eliminated.

9. Ability of EPA to selectively audit State liability certifications to ensure that

the State program is fulfilling its responsibilities to protect public health and the

environment.

In addition, NALGEP has developed a finding with regard to EPA’s ability to reopen its involvement at a particular brownfields site in a delegated State. An EPA

reopener for particular sites is necessary to ensure that EPA can become involved

at any sites at which the State is unable or unwilling to adequately respond to a
222

substantial and imminent threat to public health or the environment. At the same

time, the reopener must be sufficiently limited to permit the State to take the lead

role at brownfields sites, and to give confidence to developers, prospective purchasers, lenders and local governments that EPA will not improperly hinder or

interfere in State liability decisions. Therefore, in delegating brownfields authority

for non-NPL caliber sites to the States, NALGEP proposes that EPA should provide

that it will not plan or anticipate further action at any sites unless, at a particular

site, there is: (1) an imminent and substantial threat to public health or the environment; and (2) either the State response is not adequate or the State requests

U.S. EPA assistance.

II. ENSURING ADEQUATE RESOURCES FOR BROWNFIELDS REVITALIZATION

With regard to local government resource needs for brownfields revitalization,

NALGEP finds that to ensure long-term success on brownfields, local governments

need additional Federal funding for site assessment programs, remediation programs and economic redevelopment. The costs of site assessment and remediation

can create a significant barrier to the redevelopment of brownfields sites, if the local

government is not supported by the leverage of Federal and private resources. In

particular, the costs of site assessment can pose an initial barrier that drives development away from brownfields sites. With this initial barrier removed, localities are

much better able to put sites into a development track. In addition, the allocation

of public resources for site assessment can provide a signal to the development community that the public sector is serious about resolving liability issues at a site and

putting it back into productive reuse.

Moreover, it cannot be doubted that the use of public funds for the assessment

and cleanup of brownfields sites is a smart investment. Public funding can be leveraged into substantial private sector resources. Investments in brownfields yield the

economic fruit of increased jobs, expanded tax bases for cities, and urban revitalization. And the investment of public resources in brownfields areas will help defer the

environmental and economic costs that can result from unwise, sprawling development outside of our urban centers.

Federal funding for brownfields revitalization and reinvestment should be provided from a variety of sources to meet the variety of local government needs on

this issue, including:

• Federal grants, such as the EPA Brownfields Pilot grant program, economic redevelopment grants by the Department of Commerce, Economic Development Administration, and funding for transportation protects in brownfields through the

Intermodal Surface Transportation Efficiency Act. NALGEP endorses the Administration’s intention to fund additional brownfields pilot grants.

• Federal Technical Assistance from EPA for site remediation, pollution prevention activities and the use of innovative environmental technologies;

• Loans and loan guarantees, including through Department of Housing and

Urban Development Section 108 funds, and through Federal funds to capitalize city

and State Revolving Loan Funds for brownfields site assessments and cleanup; and

• Tax credits and deductions for expenses related to the assessment and cleanup

of brownfields sites.

III. CORRECTING INCENTIVES THAT PROMOTE GREENFIELDS DEVELOPMENT OVER

BROWNFIELDS REDEVELOPMENT

With regard to the need to create Federal incentives to promote brownfields redevelopment over development in ‘‘greenfield’’ areas, NALGEP finds that the continued inactivity at urban brownfields sites, coupled with development in non-urban

‘‘greenfields’’ areas, creates environmental and economic distress for both cities and

the regions surrounding urban areas. Brownfields renewal can clearly provide urban

benefits including the cleanup of environmentally contaminated sites, and the creation of economic vitality, jobs and a stronger sense of community. At the same

time, brownfields activities that reduce ex-urban sprawl can also provide regional

and ex-urban benefits, such as reduced mobile source air pollution, reduced nonpoint and point source water pollution, decreased pressure on infrastructure, protection of valued natural areas, increased regional cooperation and the reduction of

urban problems (e.g., crime) that can affect areas outside of distressed cities and

towns.

Even with the Federal Brownfields Agenda and State and local programs to encourage reuse of brownfields, there are a variety of factors that encourage development in greenfields over brownfields. These incentives for greenfields development

include: transportation infrastructure and incentives in non-urban areas, including

Federal transportation funding and policies that favor highways over mass transit;
223

lower quality of life and quality of schools in urban areas; disincentives for urban

development from the regulatory requirements associated with pollutant ‘‘nonattainment areas’’ under the Clean Air Act; and lack of regional-urban coordination.

Therefore, the Federal Government should identify Federal policies that favor

greenfields over brownfields and identify opportunities to correct these disincentives, including:

• Expansion of ISTEA authority to include transportation spending for brownfields revitalization, and increased overall funding for mass transportation systems,

including through ISTEA;

• The National Environmental Policy Act should reflect the environmental and

cultural benefits of brownfields redevelopment over development in greenfields by

requiring that environmental impact statements consider alternatives that would

promote brownfields development over greenfields development.

• Inter-agency coordination in the use of Federal funding for urban brownfields

activities, in order to streamline and conform the burdensome procedural requirements associated with different funding sources and better allow the implementation of community-based environmental protection. In other words, local governments with comprehensive urban development programs should be better able to aggregate various funding sources for the implementation of their community environmental priorities, without the undue burden that can result from divergent procedural requirements and standards associated with different funding sources.

IV. CONCLUSION

In conclusion, local governments are excited to work with the Federal Government

to promote the revitalization of brownfields, through a combination of State delegations of liability authority, increased Federal investment in community revitalization, and innovative legislative and regulatory incentives designed to build a

brownfields partnership from the ground up. NALGEP thanks the Subcommittee for

this opportunity to testify, and looks forward to working with you as the process

moves forward.

RESPONSES OF LORRIE LOUDER TO ADDITIONAL QUESTIONS FROM SENATOR SMITH

Question 1. Your testimony seems to indicate that we should take a two track

cleanup approach to separate those sites that are of NPL caliber from brownfield

sites. As you know, sometimes this distinction can get rather difficult. If the State

has the ability to conduct NPL caliber cleanups in a voluntary cleanup program,

shouldn’t we allow this if it gets the site cleaned up better?

Response. The National Association of Local Government Environmental Professionals believes that States with approved cleanup programs that meet minimum

criteria to protect public health and the environment should be delegated the authority to clarify and limit liability at non-NPL caliber brownfield sites forthwith.

Such non-NPL caliber sites encompass the substantial majority of contaminated

sites affected with the burden of environmental contamination and potential liability. NALGEP’s two-track approach to State delegation is designed to facilitate the

delegation to States of authority over those sites that clearly should be within the

States’ exclusive responsibility. Delegation to States of authority for such non-NPL

caliber brownfields sites should not be slowed or hindered by the more difficult issues associated with NPL-caliber sites.

However, NALGEP’s approach would not preclude the delegation by the U.S. Environmental Protection Agency (‘‘EPA’’) to approved States of liability clarification

and cleanup authority over those sites that, while not on the CERCLA National Priorities List, are considered ‘‘NPL-caliber.’’ Many States have the ability to facilitate

the expedited and effective cleanup of contaminated properties.

As explained in the NALGEP Brownfields Report, delegation by EPA of

brownfields authority over any types of sites should only be granted to States with

cleanup programs that meet minimum criteria to protect public health and the environment. See NALGEP Report, Liability Section 1, Finding 5, bullets 3–5, pp. 11–

13. Such delegation criteria would certainly apply to delegation for NPL-caliber

sites.

NALGEP agrees that drawing the distinction between ‘‘NPL-caliber’’ and ‘‘nonNPL caliber’’ sites can get rather difficult. For this reason, NALGEP has found at

p. 10 of its Report that the keys to allowing such distinction are ensuring that State

cleanup programs have both a strong site assessment requirement and an adequate

method to make the distinction between the two types of brownfields sites.
224

Again, NALGEP believes that it is important to establish forthwith a means by

which States can obtain clear authority at non-NPL-caliber sites. so that cleanups

can begin and so that certainty and finality can be achieved at such sites. If individual States can also demonstrate to EPA the ability and commitment to take the

clear lead role for other, more contaminated, NPL-caliber sites, the NALGEP approach would not preclude such delegation of authority.

Question 2. Ms. Louder, many of these brownfield sites are old industrial locations

which will continue to be zoned for industrial purposes after cleanup. That being

the case, would you agree that cleanups of brownfields that are tied to risk-based

standards based on reasonably anticipated future use would help solve the

Brownfields problem?

Response. Undoubtedly. NALGEP strongly supports the use of risk-based cleanup

standards based on reasonably anticipated future use. In fact, NALGEP has found

that EPA delegation of brownfields authority to States should be granted to those

States whose cleanup programs (among other things) use risk-based cleanup standards based on future use. These State risk-based standards should be established

through an adequate public approval process. In addition, approved States should

require the use of institutional controls, such as deed restrictions, zoning requirements or other mechanisms that are enforceable over time to ensure that future

land uses tied to certain cleanup standards are maintained. See NALGEP Report

at p. 13.

Question 3. Although you suggest a two track approach to separating brownfields

cleanups from Superfund cleanups, isn’t it the case that the fear of potential

Superfund liability is what keeps parties from moving forward to clean up these

sites? How do we fix this? If providing finality is one of the answers, should present

owners be able to receive liability finality from States?

Response. NALGEP agrees that the fear of potential Superfund liability is a significant barrier to the cleanup and redevelopment of brownfield sites. The specter

of Superfund liability is associated with both heavily contaminated, NPL-caliber

type sites, and with those sites with lesser or even no contamination that should

be put on a brownfields track. NALGEP has found that the one way to remove the

fear of Superfund liability from brownfields sites is to promote the delegation from

EPA to approved States of the authority to clarify and reduce liability at non-NPL

caliber brownfields sites. If a State has the ‘‘final word’’ on liability at non-NPL-caliber sites, stakeholders involved in the revitalization of brownfields can have greater

confidence and certainty that environmental liability will not attach to them for

cleanup or redevelopment activities.

At NPL sites and NPL-caliber sites burdened with a greater level of contamination, liability issues may be more difficult to resolve and therefore State and Federal

mechanisms to ensure the protection of public health and the environment, and the

recovery of costs from responsible parties, may be necessary.

The Senator is correct that finality is a key element of resolving Superfund liability fears and promoting cleanup and productive re-use of brownfields sites. Therefore, NALGEP supports the ability of approved States to provide liability clarification and finality to present owners of non-NPL caliber sites who meet the requirements of the State voluntary or independent cleanup program.

RESPONSES OF LORRIE LOUDER TO ADDITIONAL QUESTIONS FROM SENATOR CHAFEE

Question 1. Your testimony advocates a ‘‘Brownfields track’’ that seems to exclude

NPL-caliber sites—sites that could possibly score above the National Priorities List

threshold of 28.5? I have 200 such sites in Rhode Island alone, you must have many

more in the NALGEP cities. EPA will never put 200 more Rhode Island sites, many

of them with redevelopment potential, on the NPL. What should the fate of these

sties be—who should do what at such sites?

Response. NALGEP believes that States with approved cleanup programs should

be delegated the authority to clarify and limit liability at non-NPL-caliber

brownfield sites, which encompass the substantial majority of contaminated sites affected with the burden of environmental contamination and liability.

However, the Senator is correct that there exist many sites—like the 200 in

Rhode Island alone—which are kept in redevelopment uncertainty because of their

status as NPL-caliber sites. NALGEP sought to recognize the importance of these

sites when it found in its report that ‘‘the remediation and redevelopment of

Superfund sites remains a vital environmental and economic need in communities.’’

NALGEP Brownfields Report at 9, Finding 4, Bullet 1.
225

The NALGEP approach to delegation to States of non-NPL-caliber authority

would not preclude the delegation by EPA of authority over NPL-caliber sites to approved States with cleanup programs that meet minimum criteria to protect public

health and the environment. Many States have the ability to facilitate the expedited

and effective cleanup of heavily contaminated properties. Other States do not. If individual States can demonstrate to EPA the ability and commitment to take the

clear lead role for more contaminated, NPL-caliber sites, the NALGEP approach

would not preclude such delegation of authority. However, it may be necessary to

create additional protections for the delegation of authority over these more-contaminated sites, such as stronger criteria for delegation, or a broader ‘‘reopener’’ provision for EPA involvement in particular sites that pose a threat to public health

or the environment.

It should also be noted that, under current law and policy, States are also precluded from taking action to clean up and redevelop sites that are considered NPLcaliber. Although these more heavily contaminated, NPL-caliber sites may not be

free from potential Superfund liability or EPA involvement, it is because the liability and cleanup issues are more difficult and substantial, and because further protections may be necessary to protect public health and the environment, and ensure

the recovery of costs from responsible parties. Although it may be more time-consuming or procedurally burdensome for States to take an active role in the revitalization of NPL-caliber sites, nothing prevents a State from doing so.

Question 2. On page 8 of your testimony, you describe the condition under which

EPA should be allowed to reenter a State cleanup. Your proposal is:

EPA should provide that it will not plan or anticipate any further action at any

site unless, at a particular site, there is (1) an imminent and substantial endangerment to public health and the environment; and (2) either the State response is

inadequate or the State requests EPA assistance.

Do you consider this standard to be more deferential than that EPA now offers

to States in its interim voluntary cleanup guidance?

Yes, NALGEP considers its ‘‘reopener’’ proposal for the reentry of EPA at particular brownfield sites to be more deferential than the EPA standard in its interim voluntary cleanup guidance. The need for certainty and finality of liability determinations provided by States at brownfields sites requires a very strong delegation of authority to approved States. with reopener only in exceptional circumstances.

The NALGEP reopener proposal would require both of two specific circumstances

before EPA re-involvement at a particular site would be warranted. First, there

must be a substantial and imminent threat to public health or the environment.

However, even when such threat exists, an approved State may well have the ability

to adequately respond to such threat. Therefore, the reopener also requires that

EPA not become re-involved at a site unless the Agency determines that the State

response to an imminent and substantial threat is not adequate. Likewise, if the

State desires and requests assistance from the EPA in responding to an imminent

and substantial threat at a particular site, nothing in the brownfields delegation

mechanism to that State should prevent such EPA assistance from being given.

CONCLUSION

On behalf of NALGEP and the St. Paul Port Authority, I wish to convey my great

appreciation to Senator Smith and Senator Chafee for the opportunity to provide

input on this topic of great importance to local communities.

PREPARED STATEMENT OF PETER F. GUERRERO, DIRECTOR, ENVIRONMENTAL PROTECTION ISSUES, RESOURCES, COMMUNITY, AND ECONOMIC DEVELOPMENT DIVISION,

GENERAL ACCOUNTING OFFICE

Mr. Chairman and Members of the Committee: I am pleased to be here today to

discuss the Committee’s efforts to support the cleanup and redevelopment of hazardous waste properties across the country. Over the past several decades, manufacturing has been declining in many of the Nation’s cities. When businesses closed, they

often left abandoned and idled properties, commonly known as ‘‘brownfields.’’ These

properties are sometimes contaminated with chemical wastes from manufacturing

processes. Partly to avoid the costs of assessing and cleaning up these properties

according to Federal and State environmental laws, some new businesses have chosen to locate in uncontaminated areas outside cities known as ‘‘greenfields.’’ These

decisions have led to the loss of tax revenue and employment in central city neighborhoods.
226

1Superfund: Barriers to Brownfield Redevelopment (GAO/RCED–96–125, June 17, 1996). 2S. 8, the Superfund Cleanup Acceleration Act of 1997, includes provisions that would (1)

limit Superfund liability for prospective purchasers; (2) clarify the circumstances under which

landowners who did not contribute contamination at a site (innocent landowners) may avoid liability; (3) limit liability for property owners whose property is contiguous to a contaminated

site; and (4) limit liability at any site subject to a State cleanup plan.

S. 18, the Brownfield Remediation and Environmental Cleanup Act, also includes provisions

that would limit liability for prospective purchasers and would clarity liability for innocent landowners. Both bills would establish grant programs and provide assistance for brownfield redevelopment.

The Congress has been interested in finding ways to help localities cleanup and

redevelop brownfields. This Committee asked us to provide it with information on

the (1) legal barriers that the Comprehensive Environmental Response, Compensation and Liability Act, commonly known as Superfund, presents for redeveloping

brownfields and (2) types of Federal financial support that States and localities

would like to help them address such properties. This testimony summarizes the

major findings from our June 1996 report on brownfield redevelopment and information from an ongoing review for this Committee of States’ voluntary cleanup programs.1 These programs substitute incentives for enforcement actions to encourage,

rather than compel, private parties to clean up contaminated properties. States are

beginning to use these programs to address brownfields because they are faster and

less costly than enforcement programs. This testimony also comments on how liability and funding provisions in two legislative proposals pending before this Committee respond to the legal barriers and funding needs we identified in our work.2

In summary, we found the following:

• Superfund’s liability provisions make brownfields difficult to redevelop, in part

because owners are unwilling to identity contaminated properties and prospective

developers and property purchasers are reluctant to invest in a redevelopment

project that could leave them liable for cleanup costs. While brownfields are usually

not contaminated seriously enough to be listed as Superfund sites, these parties still

fear that they may be sued under Superfund and State laws for cleanup costs if they

become involved with a contaminated property. In addition, most of the voluntary

cleanup program managers in the 15 States we surveyed judged that volunteers’

concerns about being held liable for a property under Federal Superfund law, once

a cleanup is complete, discouraged some of them from initiating a cleanup. Both

bills include provisions that would help to address these concerns, including provisions to limit liability for some prospective purchasers.

• To help promote the redevelopment of brownfields, States and localities would

like Federal financial support to cover some of the costs of assessing these properties for contamination, cleaning them up, and developing their voluntary cleanup

programs. Over the past few years, the Environmental Protection Agency (EPA) and

the Congress have provided some funds which States and localities have used for

activities such as developing an inventory of brownfield properties. Funding provisions in the bills would continue and expand this support and respond to the States’

and localities’ needs. For example, Senate bills S. 8 and S. 18 would authorize EPA

to provide grants to support the characterization and assessment of brownfields. We

determined that the amounts of the grants proposed in the bills for these activities

would be sufficient to cover the costs for most brownfield properties. Additional provisions in the bills for grants to fund some cleanup costs and provisions in S. 8 to

fund the development of State voluntary cleanup programs should also promote

brownfield cleanup and redevelopment.

BACKGROUND

Under Superfund, EPA can compel the parties responsible for hazardous waste

contamination to clean up a contaminated property, or pay for its cleanup, in order

to protect public health and the environment. Also, any party that contributed to

the contamination, even if this action was legal at the time, may be liable and may

be held responsible for the entire cost of the cleanup. The Federal Government targets its enforcement and cleanup resources to properties on the National Priorities

List (NPL), a list of highly contaminated sites. However, parties may be subject to

Superfund’s liability and enforcement provisions even if a property is not on the

NPL. Most States have adopted similar liability laws and enforcement programs.

States find that these stringent liability provisions have provided leverage to convince responsible parties to clean up the more highly contaminated sites in the

States’ inventories. As we reported last year in a separate study of the potential

cleanup workload in eight States, the program managers in these States pointed out

that the threat of having a site placed on the NPL and identified as one of the most
227

3 Impact on States of Capping Superfund Sites (GAO/RCED–96–106R, March 18, 1996). 4 An Analysis of State Superfund Programs, Environmental Law Institute under contract with

EPA (1996). 5The Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996, contained in the Omnibus Consolidated Appropriations Act, 1997 (P.L. 104–208).

contaminated sites in the country created a moor incentive for responsible parties

to clean up their sites.3

Brownfields, however, are typically urban properties that are less contaminated

than NPL sites. EPA defines brownfields as abandoned or underused facilities, usually in industrial or commercial areas, where redevelopment is hampered by real or

perceived environmental contamination. While we identified no official nationwide

count of brownfields, the States estimated in a study conducted for EPA that they

may have about 85,000 potentially contaminated properties, including brownfields,

that need investigation and may need cleanup.4 The Federal Superfund program

and similar programs in the States do not have the capacity to address these properties. These programs have limited resources, which EPA and the States target to

small numbers of highly contaminated properties. As a result, States and localities

are looking for alternative ways to address brownfields, including voluntary programs.

SUPERFUND’S LIABILITY PROVISIONS RAISE A LEGAL BARRIER TO

REDEVELOPING BROWNFIELDS

Most brownfields are not likely to be added to the NPL because they are not severely contaminated. However, investors are still wary of the cleanup liability provisions of both Federal and State legislation because these can apply to all sites, including brownfields. As a result, developers who purchase properties may become

liable for any contamination later found there. Former property owners may also be

liable for cleanup costs if the contamination occurred while they owned the properties. Thus, even the suspicion of current or prior contamination may make developers hesitant to purchase brownfield properties and owners reluctant to place their

properties on the real estate market.

The voluntary program managers in the 15 States we surveyed also identified

Superfund liability as a barrier to attracting volunteers to accomplish cleanups, including those at brownfields. All but one of these managers reported that their programs were addressing brownfields so that they could be returned to productive use

through redevelopment and expansion. Twelve of the managers reported that the

limits on State liability that their voluntary programs provide are a good incentive

to attract volunteers. However, State officials judged that some potential volunteers

would still find Superfund liability a deterrent to participation. Moreover, managers

cited limiting Federal liability as one of the more important ways the Federal Government could assist voluntary cleanups.

The Congress has considered actions to help address some of these issues. For example, because lenders had feared being named as responsible parties if they foreclosed on contaminated properties, the Congress passed legislation limiting lenders’

liability at such sites.5 S. 8 and S. 18 also include various provisions to help address

Superfund liability issues at brownfields, including limiting the liability of prospective purchasers of these properties and clarifying circumstances under which current landowners would not be liable for past contamination.

FEDERAL FUNDING CAN HELP SUPPORT BROWNFIELD REDEVELOPMENT

During our reviews of brownfields and voluntary programs, we found that States

and localities would like Federal funding support to help them characterize, assess,

and cleanup brownfields, and establish and support voluntary programs. Most of the

States in our ongoing review of voluntary prngrams—even those States that levied

fees on volunteers that were high enough to cover their program costs-identified

Federal funding as a key way for the Congress to promote their programs. Some

States said they would use the funds to help municipalities cover the costs of assessing properties where no parties had been identified as responsible for the contamination or where the cleanup costs would otherwise be too high to attract voluntary

cleanups. One State sought to use the support to establish a revolving loan fund

to support brownfield cleanups, similar to provisions in both the bills. Others said

they would use the funds to, for example, publicize the programs or develop information systems to better manage and evaluate the programs.

To date, both Federal agencies and the Congress have provided some funds in

support of brownfield cleanups and voluntary programs, and the pending two bills

would continue and expand on this support. In 1995, EPA issued a ‘‘brownfields ac-
228

6The grants would be provided out of the Superfund trust fund which has been primarily financed from taxes on crude oil and certain chemicals.

tion agenda’’ which, among other things, currently provides grants of up to $200,000

each to 76 State and local governments to fund a wide variety of brownfield demonstration projects. These include developing inventories of brownfields and establishing policies to govern brownfield redevelopment. The Department of Housing

and Urban Development has also provided funding to communities to redevelop

brownfields once they have been cleaned up. The Congress, in the House Conference

report accompanying EPA’s fiscal year 1997 appropriations act, indicated that more

than $36.7 million of the current Superfund appropriation would go to support

EPA’s brownfield activities and voluntary programs.

The two pending bills would provide substantial amounts of additional funding

that States and localities could directly use to characterize, assess and cleanup sites.

Specifically, the bills give EPA the authority to provide Superfund grants of up to

$200,000 per property, to characterize and assess brownfields.6 Before these properties can be redeveloped, an assessment must be performed to determine the nature and extent of the contamination present. Because the assessment requires research into a property’s history and a technical analysis of its conditions, a substantial expenditure may be involved. For some brownfields, this expenditure may be

significant enough to discourage developers. We estimated that for most brownfields, assessment costs could average $60,000 to $85,000 and for some properties

with groundwater contamination could exceed $200,000. Therefore, the grant provisions in the bills to help fund property characterization and assessment should be

sufficient for most brownfields.

In addition to these assessment funds, both bills would give EPA the authority

to issue Superfund grants to pay for actual cleanup actions at brownfields. S. 8

would also provide funds to assist States in establishing and administering voluntary cleanup programs. Although we asked the States for information on their

costs to clean up brownfield properties and to operate their voluntary programs,

most States did not yet systematically collect such data. Therefore, we cannot offer

a perspective on the sufficiency of the grants proposed for brownfield cleanup actions or State voluntary programs.

Mr. Chairman, this concludes my prepared remarks. At this point, I would be glad

to respond to any questions you may have.

RESPONSES OF PETER GUERRERO, GENERAL ACCOUNTING OFFICE, TO ADDITIONAL

QUESTIONS FROM SENATOR SMITH

Question 1. Did your research indicate that the States, given sufficient funding,

have cleanup programs capable of handling brownfields cleanups?

Response. We reviewed voluntary cleanup programs in 15 of 34 States that have

these programs. These programs provide incentives for volunteers to clean up contaminated sites, such as reduced administrative requirements and controls on cleanups and some relief from liability under State law. Because of these incentives, voluntary programs can sometimes achieve faster and less costly cleanups than enforcement-based programs. While the voluntary programs we reviewed are not devoted exclusively to brownfield cleanups, program managers in 14 of these States

said some voluntary cleanups accomplished under their programs are resulting in

economic redevelopment of brownfield-type sites.

Question 2. Did your research indicate that the issue of limiting Federal liability

should only be provided to prospective purchasers? In order to provide an incentive

for current owners of these facilities to clean up these sites, doesn’t it also make

sense for similar provisions to be given to the current owners and operators?

Response. Managers of State voluntary programs told us that limiting Federal liability for certain parties, such as prospective purchasers, would facilitate additional

voluntary cleanups. Most State voluntary programs do not distinguish between different types of volunteers, such as purchasers, owners, or parties responsible for the

waste. All of the voluntary cleanup programs we reviewed allowed both property

purchasers and owners to conduct voluntary cleanups. Twelve of the 15 States allowed any type of party to volunteer, and then certified that cleanup was complete,

providing some assurance that the volunteer was no longer liable under State law.

Three programs provided a less comprehensive liability release under State law for

parties responsible for the waste, which could include property owners.

Question 3. I understand that 34 States have some type of voluntary cleanup program. Is funding a constraint on other States establishing voluntary cleanup pro-
229

grams? Does S. 8, through its State program funding provision, address any funding

concern?

Response. Of the 15 existing voluntary programs we reviewed, only two were financially self-sufficient based on the fees they charged volunteers to participate.

Nine programs had already used Superfund cooperative agreement funds to develop

or implement their voluntary programs, and said that additional funds would be

helpful for activities like publicizing their programs, or helping local governments

pay for site assessments. Most States also used other State funds to supplement

their voluntary programs.

We surveyed States that did not have voluntary programs yet, and they identified

Federal financial assistance as an important component in initiating a voluntary

program.

Queston 4. In your testimony you state that ‘‘the voluntary program managers in

the 15 States we surveyed also identified Superfund liability as a barrier to attracting volunteers to accomplish cleanups, including those at brownfields.’’ I presume

this was not merely limited to prospective purchasers of this contaminated property,

but also current owners who feared to clean up the sites for the same reason?

Response. As we indicated in response to question #2, voluntary programs have

generally not differentiated between different types of parties who would like to conduct a voluntary cleanup, including property owners. Program managers indicated

that it was desirable to clarify the issue of Federal liability.

Question 5. In your review of State voluntary cleanup programs and State

brownfield programs, to what extent do you believe that these programs are not

fully successful because they are not able to waive Federal liability when these sites

are cleaned up to the satisfaction of the States? Put more simply, how big a deal

is finality to the States and do you believe their claim has merit?

Response. Almost all of the voluntary program managers we interviewed said that

Federal liability relief could increase participation in their programs to a higher

level. Those voluntary programs that had negotiated Memoranda of Agreement

(MOA) with EPA to reduce the likelihood that voluntary sites will be subject to Federal liability said that even this assurance had been important in attracting volunteers. For example, two of the programs that had these MOAs, Minnesota and Illinois, currently have 800 and 600 sites participating in their programs, respectively.

On the other hand, programs without MOAs also had significant levels of participation. For example, the Pennsylvania program currently has 201 participants.

Few of these programs offer a ‘‘final’’ or ‘‘blanket’’ relief from State liability.

Twelve of the State program managers did report that the State liability relief they

grant volunteers is an important incentive for participation. However, most programs include a ‘‘reopener’’ when they certify a cleanup as complete that explains

specific circumstances when the State could take additional action against the volunteer. Examples include discovery of fraud during the cleanup process, a failure

of the cleanup remedy, failure to maintain the cleanup, or a change in land use from

that originally approved.

Question 6. Some people have expressed concerns that States will engage in a

‘‘race to the bottom’’ if authority for cleanup is delegated to them. Have there been

any signs that States have endangered their citizens in their running of their voluntary programs?

Response. We did not conduct a review of sites to identity any instances where

voluntary cleanups failed to protect human health in our review of these programs.

We do note, however, that most of the programs are relatively new and have not

had completed cleanups in place for an extensive period of time. We also note that

the voluntary cleanup programs in our survey took a variety of approaches to providing incentives for participation and managing cleanups. Some programs significantly reduced the level of controls they placed on cleanups, such as oversight, and

long-term monitoring of sites without permanent remedies. While all voluntary programs set minimum cleanup standards to be protective of human health, they allowed volunteers more flexibility in how they achieved these standards. Several of

the programs we reviewed recognized the differences among sites, and varied the

level of controls they placed on volunteer’s cleanup according to the risks and characteristics of the site.

States also have different resources that they devote to clean up programs and

face different cleanup challenges. As we reported in 1996, some States still expect

to discover a significant number of seriously contaminated sites, while others believe

they have already addressed most sites. These differing resources and workloads

could affect States’ abilities to monitor cleanups or correct failed remedies, for example.
230

Question 7. How long does it take to list and cleanup Superfund sites and what

are the trends?

Response. In testimony on February 13, 1997, before the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs, House Committee on Government Reform and Oversight, we reported that EPA took an average

of 9.4 years from site discovery to evaluate and process the non-Federal sites it

added to the National Priorities list (NPL) in 1996. While this is some improvement

over 1995, it is longer than prior years. For sites listed from 1986 to 1990, it took

an average of 5.8 years from discovery to listing.

We also said that it took 10.6 years from the listing of non-Federal sites on the

NPL to complete the cleanup projects that were finished in 1996. This was also

longer than prior years. From 1986 to 1989, cleanup projects were finished, on average, 3.9 years after sites were placed on the NPL.

RESPONSES OF PETER GUERRERO, GENERAL ACCOUNTING OFFICE, TO ADDITIONAL

QUESTIONS FROM SENATOR CHAFEE

Question 1. What activities typically make up a brownfield site assessment, and

what do site assessments typically cost?

Response. Brownfield site assessments are similar to assessments conducted for

other potentially-contaminated sites and are typically accomplished in two phases.

In Phase I, the goal is to determine whether any potential for contamination exists

by reviewing the site’s historical records, interviewing employees and neighbors

about former activities at the site, and visually inspecting the site for evidence of

hazardous waste. A Phase I assessment generally costs between $1000—$5000 for

an average (10–20 acre) site and up to $10,000 for a larger or more complex site.

If the Phase I assessment identifies potential contamination, such as the discovery

of an underground storage tank, or evidence that certain chemicals were used at the

site, then a Phase II assessment is necessary. Phase II tests for actual contamination by sampling and analyzing the site’s structures, soil and groundwater. Phase

II assessments generally cost from 50,000 to $70,000 for an average site and up to

$150,000 for a large site, or a site with groundwater contamination.

Question 2. Does S. 8 offer a solution to the Brownfields redevelopment barriers

you identified in the Brownfields and voluntary cleanup studies you conducted for

this and other Committees?

Response. S. 8 would help reduce Brownfields redevelopment barriers by addressing concerns about Superfund’s liability provisions and by providing some Federal

funds to assist States and localities in their Brownfield redevelopment efforts.

Superfund’s liability provisions make brownfields difficult to redevelop, in part because owners are unwilling to identity contaminated properties and prospective developers and property purchasers are reluctant to invest in a redevelopment project

that could leave them liable for cleanup costs. S. 8 includes provisions that would

help to address some of these concerns, including provisions to limit liability for

some prospective purchasers.

In addition, States and localities would like Federal financial support to cover

some of the costs of assessing brownfield properties for contamination, cleaning

them up, and developing their voluntary cleanup programs. Over the past few years,

the Environmental Protection Agency (EPA) and the Congress have provided some

funds which States and localities have used for activities such as developing an inventory of brownfield properties. Funding provisions in S. 8 would continue and expand this support and respond to the States’ and localities’ needs.

Question 3. We understand that you found some States are accomplishing

Brownfield redevelopment through their voluntary cleanup programs. How many of

these programs currently exist?

Response. Nationwide, 34 States have implemented these programs. All of them

have been created since 1988, and most within the past 5 years. Also, officials in

some additional States expect their legislatures to pass voluntary cleanup statutes

this year. We collected information on voluntary cleanup programs in 15 of these

States in our work for these committee.

Question 4. What are the characteristics of these programs that lead volunteers

to initiate cleanup of contaminated sites?

Response. Voluntary programs offer a number of incentives that are not available

from a traditional State Superfund program. First, voluntary programs are cooperative—they allow volunteers to initiate their own investigation and cleanup instead

of waiting for a State enforcement action. Second, these programs allow volunteers
231

to choose from cleanup standards the State developed for specific chemical contaminants—and these are often based on the future land use at the site, for example,

industrial, commercial or residential. As a result, volunteers can choose a cleanup

standard appropriate for their site. Third, voluntary programs streamline certain aspects of the cleanup process. For example, they might require less oversight, longterm monitoring of sites, and public participation than a cleanup conducted under

State or Federal enforcement. Some voluntary programs also offer financial incentives, including tax abatements, low-cost loans, and grants for site assessments.

Finally, once a cleanup is complete, voluntary programs either certify that a

cleanup meets program requirements, release the volunteer from further liability

under State hazardous waste law, or do both. As a result, volunteers can be confident that their responsibilities to the State for cleanup at these sites is complete.

Because of these characteristics of voluntary programs, participants can often cleanup their sites relatively quickly and at low cost. Moreover, they are able to predict

the time and cost needed for cleanup, making these sites less risky from a redevelopment perspective.

Question 5. Have these programs been successful in cleaning up brownfields?

What are some examples?

Response. Yes, these programs have been successful in cleaning up brownfields.

In the States we reviewed, thousands of sites were cleaned under the State voluntary programs, including some brownfield sites. For example, • Chicago’s brownfield program cleaned up a closed wire manufacturing facility

in cooperation with the Illinois voluntary cleanup program. The site contained underground tanks and vaults filled with solvents and fuel oil that had to be removed.

The city then sold the property to an adjacent fuel pump manufacturing business,

Blackstone Manufacturing. Blackstone built a secured parking lot on the facility, allowing the business to add an extra shift of workers and increase production. • The Cellular One corporation cleaned up several adjacent lots in New Berlin,

Wisconsin through the Wisconsin Land Recycling Program. The lots had been used

for a variety of businesses, including those that repaired, maintained, and stored

heavy vehicles. The ground was contaminated with waste oil sludge, underground

and aboveground storage tanks, and miscellaneous debris. Now that the soil has

been excavated and treated and the tanks and debris removed, Cellular One plans

to build a warehouse and office building on the site. • Occidental Chemical Corporation operated a facility in Clarksviile, Indiana from

1950 to 1992. The facility made laundry detergents, and produced sodium and potassium phosphate products and phosphoric acid. Cleanup at the site was conducted

under the Indiana voluntary cleanup program and consisted of removal of over

25,000 cubic yards arsenic and phosphorus-contaminated soil. Occidental then sold

the 26-acre property to a real estate developer alter receiving a covenant not to sue

from Indiana. A retail developer bought the site and constructed a large retail shopping center

Question 6. What kind of liability relief or waivers have State voluntary programs

offered to volunteers, and have these waivers been effective in increasing program

participation?

Response. Our review of programs in 15 States showed that most States offer a

liability release from State hazardous waste laws to their volunteers after cleanup,

but they also reserve the right to reopen the release in certain circumstances. We

found covenants-not-to-sue are used in 5 States. Covenants not-to-sue commit the

State never to take enforcement action related to the voluntary cleanup except in

unusual circumstances, like fraud. Other States gave certificates of completion or

no further action letters upon completion of the cleanup, stating that the cleanup

met State criteria. Some of these also included a liability release. Several States

took a combination of approaches, based on the type of cleanup or volunteer. For

example, some States give a release from liability for cleanup that are permanent

and address all contamination and give a certification of the cleanup without a liability release for non-permanent or partial cleanups. Other States give a release

for non-responsible parties but give only a certification with no release for responsible parties.

Most States included ‘‘reopeners’’ in their liability assurances that allowed the

State to revoke the assurance in some circumstances. States might have reopeners

for the submission of fraudulent information or for a change in land use that does

not correspond with the cleanup standard.

State managers in all 17 State programs we reviewed said that the liability waivers they offer are important incentives for participation because they give volunteers

some certainty that their responsibilities to the State are at an end once a cleanup

is completed.
232

Question 7. You mentioned that States have estimated they have about 85,000

sites that need to be assessed and potentially cleaned up. Are these all brownfield

sites? What is the estimate of the number of brownfields in the U.S.?

Response. The 85,000 estimate, which is based on a survey of State Superfund

programs conducted for EPA by the Environmental Law Institute, could include

other types of sites such as NPL-calibre sites or sites not located in central cities.

No nationwide estimate of brownfields exists. In fact, owners of contaminated property now have little incentive to provide this information to State or Federal Government. As a result, few inventories of brownfields have been developed except at

the local level.

Differing definitions of what a brownfield site is makes it difficult to estimate the

number of brownfield sites. We found that definitions vary by size of site considered

to be a brownfield (gas stations vs. large sites that have significant redevelopment

potential), location (urban v. suburban), level of contamination (actual vs. perceived)

etc.

Question 8. Do the remediation grants proposed in both bills provide enough funding to pay for cleanup at the average brownfield site?

Although we asked the 15 managers in our State voluntary program survey if

they could provide us with data on the costs of voluntary cleanups, they could not

provide this type of information. We did not identify any other source that could

provide this data.

PREPARED STATEMENT OF WILLIAM J. RILEY, GENERAL MANAGER, ENVIRONMENTAL

AFFAIRS, BETHLEHEM STEEL CORPORATION ON BEHALF OF THE AMERICAN IRON AND

STEEL INSTITUTE

Bethlehem Steel Corporation, on behalf of the American Iron and Steel Institute,

appreciates the opportunity to provide testimony in support of Brownfields/Voluntary Cleanup legislation, which deals with an important environmental and economic issue: the redevelopment of industrial sites. The committee leadership is to

be commended for addressing Brownfields legislation, which has been addressed in

a number of bills introduced in Congress, in particular S. 8 and S. 18. These bills

address some of the issues associated with Brownfields, but we believe that legislation must address all of the key issues which created the impetus for legislation in

the first instance.

The steel industry has been a leader in promoting reasonable Brownfields legislation at the Federal, State and local levels. At the Federal level, we have been working with both the Congress and the Administration. We led the efforts to include

the Brownfields issue as a major element in EPA’s Common Sense Initiative. We

have been involved with a number of States, some of which have enacted

Brownfields legislation, while others are currently developing Brownfields provisions. Today, we will address three principles that we consider to be fundamental

for Brownfields legislation.

The need for comprehensive Federal Brownfields legislation that complements

current and future State legislation has grown enormously. Over the past two decades many large corporations, like Bethlehem Steel, have significantly downsized to

respond to a rapidly changing global marketplace. Thousands of Brownfield sites

exist throughout the country, some of which continue to deteriorate in our urban

centers. These wasted assets, and the unnecessary despoiling of farmland and other

‘‘Greenfield’’ sites, have spawned numerous State Brownfield laws just within the

last several years. Indeed, the States have taken the lead on this issue through voluntary cleanup legislation and have collectively developed a model framework that

has achieved widespread support. In particular, I would like to commend Governor

Ridge of Pennsylvania, who has been a strong advocate in the Great Lakes region

for Brownfields legislation. A wide variety of Brownfield sites can be cleaned-up and

redeveloped effectively and efficiently under existing State programs if Federal legislation is enacted that promotes the ‘‘one master’’ concept: namely, that remediation under a State program will satisfy Federal requirements.

There are basically two categories of Brownfield sites: abandoned sites and underutilized sites. Usually abandoned sites are relatively small in size and have been

left deteriorating for a number of years. As a result, the infrastructure associated

with these sites has also been deteriorating. Such abandoned sites are often municipally owned and usually will require financial assistance for redevelopment.

Brownfield sites with a viable owner are far larger in size and, with effective legislation, can undergo cleanup without the need for public funds. Often these sites are

underutilized or surplus portions of large manufacturing sites which have ongoing

adjacent operations. As a result, the infrastructure associated with these sites is
233

usually in much better condition than that for abandoned sites, making them more

attractive to potential buyers. There are a growing number of these sites in the

United States, especially as a result of the restructuring activities in industries such

as steel that have been made and continue to be made in response to intense competitive environments.

Federal legislation must address these properties directly. In order to do so, there

are three primary objectives that must be addressed in comprehensive Brownfields

legislation. They are: Federal Finality, Certification of State Voluntary Programs,

and Eligibility of Sites. Each of these issues are summarized as follows:

1. Federal Finality—State voluntary cleanup programs provide certain incentives

to buyers and sellers of contaminated industrial properties, and thus facilitate faster

cleanup and redevelopment of sites. However, to provide buyers and sellers sufficient incentive to make the necessary investment in these properties, these parties

need assurances of ‘‘finality,’’ i.e., assurances that they will face no further liability

under Federal or State law for those sites, or portions of sites, that are investigated

and cleaned up in accordance with a State voluntary cleanup program.

We support the provision in S. 8 that eliminates CERCLA liability once a site has

been cleaned up under a State plan. We are concerned, however, that EPA could

second-guess the cleanup through the RCRA statutes and therefore need RCRA liability relief as well.

Due to the importance of Federal finality, perhaps a ‘‘re-opener provision’’ would

be appropriate, as contemplated in certain State voluntary programs, that allows

U.S. EPA to retain authority under certain circumstances. Such a ‘‘re-opener provision’’ should provide an appropriate balance of the property owner’s interest in finality, the State’s interest in preserving the integrity of its programs, and the Federal

interest in assuring that all significant rights are addressed.

2. Certification of State Voluntary Cleanup Programs—To qualify for Federal liability relief, a cleanup should be conducted pursuant to a certified State voluntary

response program. We believe that the criteria set forth in section 102(b) of S. 8

would be appropriate criteria for the certification of State voluntary response programs. In addition, a State seeking qualification for its program could submit a certification to the U.S. EPA that the State has in place a voluntary response program

and that the State has the legal authority, organization, financial and personnel resources, and expertise to implement that program.

3. Eligibility of Sites—In order to promote and accelerate the cleanup and redevelopment of a wide universe of underutilized industrial properties, ‘‘Brownfields’’

should be defined broadly. We should be encouraging the reuse of all commercial

and industrial sites, not just a narrow category. In particular, we strongly believe

that RCRA sites, where cleanup has not yet commenced and where cleanup would

be accelerated by participating in a State voluntary cleanup program, should be eligible. There are approximately 6,100 RCRA corrective action sites. Less than 5 percent of these sites have completed cleanup. The legislative principles being suggested today would accelerate the cleanup for many of the remaining sites.

We would like to have the ability to clean up ‘‘portions’’ of a facility under a State

voluntary cleanup program and sell them to potential buyers for economic redevelopment purposes. RCRA, which triggers corrective action facility-wide, often precludes our ability to redevelop these properties in a timely manner. Again, we are

not proposing to skirt our corrective action obligations, but merely striving to accelerate cleanup for economic redevelopment purposes. In addition, we are not seeking

financial assistance or grant money to clean up our facilities.

We applaud the Committee for addressing the problem of Brownfields. Remediating Brownfields is a win/win for all stakeholders because:

• cleanups would be accelerated;

• unused or underutilized properties would be reused;

• property appearances and urban blight would be ameliorated;

• environmental contamination would be remediated;

• jobs would be saved or created;

• tax revenues would be resumed;

• communities would be enhanced;

• valuable Greenfields sites—our forests and farmlands—would be preserved; and

• litigation would be reduced.

In conclusion, we believe that Federal Brownfields legislation should not be limited in scope, and should, as its primary goal, stimulate and empower State voluntary cleanup programs.

The ‘‘one master’’ concept, whereby the State program satisfies all cleanup requirements and results in comprehensive liability relief, is the way to proceed.
234

RESPONSES OF WILLIAM K. RILEY, BETHLEHEM STEEL CORPORATION, TO ADDITIONAL

QUESTIONS FROM SENATOR CHAFEE

Question 1. On page 4 of your testimony, you state that there may be some limited circumstances under which EPA should be allowed to reenter at a State cleanup. Earlier witnesses from NALGEP proposed the following standard:

EPA should provide that it will not plan or anticipate any further action at any

site unless, at a particular site, there is (1) an imminent and substantial endangerment to public health and the environment; and (2) either the State response

is inadequate or the State requests EPA assistance.

Is this an appropriate standard for EPA reentry at a State site?

Response. We recognize that a re-opener provision may be necessary to satisfy

those who feel that EPA’s intervention or assistance may be needed in critical situations. Such a re-opener should provide an appropriate balance between the property

owner’s interest in finality, the State’s interest in preserving its autonomy and the

integrity of its programs, and a carefully targeted Federal interest in assuring that

truly imminent and significant risks are addressed to alleviate acute (rather than

chronic) circumstances. In this context it should be recognized that, in part, as a

result of decades of Federal program grant and technical support, most State programs do, in fact, possess the requisite environmental expertise equivalent to that

developed or retained by EPA to address these matters. Hence the necessity for such

Federal oversight or intervention will most likely be infrequent.

Question 2. Often we try to think of Brownfields sites in terms of risk—from low

risk sites, to higher risk-NPL caliber sites, to sites actually on the NPL. Your testimony on page 2 gives us another interesting way to divide the potential Brownfields

site universe—between relatively smaller ‘‘abandoned’’ sites and relatively larger

idled sites with a viable owner that basically ‘‘mothballs’’ the facility. Bethlehem is

a responsible company and presumably does not abandon its old sites, but can you

explain why a rational, viable firm like Bethlehem might choose to mothball a facility and not sell it to someone for redevelopment?

Response. Many times we do not choose to ‘‘mothball’’ a site but such sites become

unsalable because buyers are concerned about the perception of environmental liability. We do hold a limited number of other sites, or portions of sites, which contain areas of potential contamination that could create liability to Bethlehem if improperly managed by others. We know of other companies that routinely ‘‘moth ball’’

properties, presumably for the same reasons. These liability concerns are created in

large part by EPA’S traditional use of unscientific, overly conservative ‘‘off-the-shelf’’

assumptions to define required cleanup levels that resulted in overly expensive and

unnecessary remedies. It is generally agreed that the use of these same techniques/

criteria are what has caused excessive delays, high transactional costs and a general

slowdown in Superfund site cleanups. If site specific, real world, scientific risk-based

analyses were adopted along with a streamlined administrative process, owners

would move more rapidly to redevelop sites rather than ‘‘moth ball’’ them. Many of

these sites could be reutilized if processed through a Brownfields program that provided for land-use-based cleanup standards, institutional controls, and liability relief.

Question 3. Your testimony raised RCRA sites as a Brownfields issue—sites where

RCRA’s corrective action cleanup provisions apply. What barriers does RCRA raise

to redevelopment and do current legislative proposals, S. 8 or S. 18, fix those barriers?

Response. The RCRA Corrective Action Program, as currently constituted and administered by EPA, presents programmatic, timing and flexibility impediments and

barriers to effective site redevelopment. It appears that the current legislative proposals do not contain sufficient provisions to remove those barriers. There are at

least two specific RCRA issues that need to be addressed.

The first is a definitional matter that involves the eligibility of RCRA sites in

State and Federal Brownfields/Voluntary cleanup programs. Where the Corrective

Action process has already been initiated, especially at a large facility, it makes

sense if portions of that facility which are surplus and available for redevelopment,

were expeditiously evaluated and remediated as necessary under a voluntary cleanup program instead of waiting for the completion of a lengthy Corrective Action

process. RCRA Corrective Action procedures require a very long time to complete,

primarily because of programmatic requirements which often do not affect the actual remedy. Moreover, such programs often require the entire facility to be studied

before the ‘‘site’’ can be released from the program. We believe that the preferred

course of action is the endorsement of a faster remediation regime under a State

voluntary cleanup program designed to reutilize the site and create jobs.
235

Second, RCRA Corrective Action Program barriers (e.g., permitting and waste

management requirements) exist at Brownfield sites. Separate legislation such as

that introduced last year by Senator Lott in S. 1274 should be considered to remove

these impediments.

It is not clear from reading S. 8 if the definition of ‘‘Brownfield facility’’ is meant

to apply only to the Brownfields revitalization title of the bill. If not, the definition

would exclude RCRA sites from liability relief provided for in the enforcement provisions of section 129. S. 18 deals primarily with financial incentives, and does not

address issues relating to the Landowner, such as liability relief in exchange for remediation. Therefore, the above RCRA issues are also not addressed.

RESPONSES OF WILLIAM K. RILEY, BETHLEHEM STEEL CORPORATION, TO ADDITIONAL

QUESTIONS FROM SENATOR SMITH

Question 1. Has Bethlehem Steel ever encountered any financing problems with

sites that it would like to redevelop, but cannot obtain funding because a fear that

Superfund liability may be involved? If not, are you aware of other corporations that

have had this problem?

Response. The perception of environmental contamination and the associated

CERCLA, RCRA and other liabilities attached thereto has been a factor in many

sales transactions. Although the fear of uncertain liability is seldom the sole reason

for a failed transaction, it has been, on several important occasions, a major contributor to a lost or significantly-delayed sale. Moreover, some of our properties have

not attained a higher use, commanded a fair price, or attracted quality buyers because they were previously-used industrial sites.

Question 2. Both S. 8 and S. 18 provide liability relief for prospective purchasers

and innocent landowners. That’s where S. 18 stops in this area, while S. 8 provides

relief for those who are covered by an approved State cleanup plan and are cleaning

up the site. Isn’t it true that in order to have a purchaser there has to be a seller

and that relief for just a purchaser does not fix the problem? I mean, why would

a seller sell if there was a threat of future liability for a site he no longer owns?

Response. The question is well stated and reflects an understanding of the

MAJOR problem for sellers with the reutilization of Brownfields sites that are

under private ownership. State Brownfields laws were created to provide cleanup

standards for owners to follow. In exchange for owners coming forward voluntarily

to clean up a site, the better State programs provide the owner relief from State

environmental liability. Otherwise, few sites will come out of ‘‘mothballs.’’ Clearly,

Federal CERCLA and RCRA relief should be provided if the site is cleaned up as

agreed upon!

Question 3. Your testimony indicates that the largest and most financially attractive sites for economic growth are sites where there is a viable owner. What are the

major barriers that are preventing these sites from being redeveloped?

Response. The primary environmental related barriers to redevelopment of these

sites are the liability scheme in the current laws, the lack of a streamlined process

and procedures for site assessment, investigation and remediation and the RCRA

Corrective Action process which is slow, overly prescriptive and expensive. We have

already discussed two of the major issues which need to be addressed and provided

for: (a) risk-based, land-use based cleanup standards, and (b) relief from environmental liability. Just as important from a FINALITY point of view is to be sure that

other regulatory obligations are considered to be met as a result of completing the

voluntary cleanup. Thus, a voluntary cleanup should satisfy the requirements, if

any, under the RCRA Corrective Action program.

Question 4. Our staff has been told that there are some relatively large, virtually

abandoned industrial sites out there that companies like yours would be perfectly

willing to clean up, but without some assurances that they aren’t going to get

caught up in the Superfund liability net, they do not want to clean up because the

potential liability might far outweigh any gain of developing these properties?

Response. That is correct. Especially with steel and other large manufacturing operations, there are often portions of such sites which are surplus or underutilized

which are Brownfields sites sometimes forgotten about when it comes to Federal

Brownfields legislative proposals. We know of one large manufacturer who will not

sell any previously used property until the owner can be assured that liability relief

is attainable. Once again, we emphasize that liability relief under RCRA in addition

to the Superfund statute (CERCLA) is important.
236

Question 5. Is it reasonable to expect an industrial site which is zoned industrial

and will stay industrial to have the same cleanup standards as a residential area?

Response. No. Generally speaking, sites which have been industrial for a long period of time could not reasonably be expected to achieve residential cleanup standards. We do not view that as a problem for reasonable future use considerations

since such sites are zoned industrial and intended to be used as industrial sites. If

subsequent purchasers choose to seek a higher use, they should bear the cost of subsequent cleanup to the higher standard and process the site through a voluntary

cleanup program again.

Question 6. Can I take it from your testimony that we should allow the States

to clean up the broadest range of facilities under State voluntary cleanup and

Brownfield statutes? How do you answer the concern that is likely to be raised by

some that this will result in ‘‘crummy cleanups?’’

Response. Yes, eligibility under voluntary cleanup proposals should be as broad

as possible. For example, in Pennsylvania, no sites are excluded. With respect to the

‘‘crummy cleanups’’ suggestion, we believe that such suggestions or assertions are

simply not true. Our experience with voluntary cleanup programs has shown them

to be quite stringent when it comes to site characterization and remediation. They

have defined cleanup levels and streamlined procedures to get those cleanups. Frequently local State environmental agency personnel actively follow the progress of

the site evaluation and remediation via frequent on-site visits. As a result, these

programs are frequently more stringent than many Federal cleanup situations, but

they are more targeted and faster. Voluntary cleanup programs regulate some contamination that might not otherwise be regulated under any other program.

PREPARED STATEMENT OF WILLIAM K. WRAY, SENIOR VICE PRESIDENT, CREDIT

POLICY AND REPORTING, CITIZENS FINANCIAL GROUP, PROVIDENCE, RI

Mr. Chairman and members of the subcommittee: Thank you for the opportunity

to address this important subject. My name is Bill Wray, and I am a Senior Vice

President of Citizens Financial Group. Citizens is a $15 billion commercial bank

holding company headquartered in Providence, RI. We have over 230 branches

throughout Connecticut, Rhode Island, Massachusetts, and New Hampshire.

Please realize that I am not attempting to represent an ‘‘official’’ position on behalf of the banking industry or any of its trade associations. In my role as manager

of Credit Administration for Citizens, I have seen first hand how environmental risk

affects banking at the community level. This testimony is a reflection of my personal

experience in that role.

From my review, both bills under review are similar in their approach to the

brownfields issue; although S. 8 also addresses a variety of other needed reforms.

Since my charter was to address the brownfields subject, however, I will confine my

comments to that: Let me start by saying that we have a great deal of interest in

seeing ‘‘brownfields’’ initiatives work.

As a secured creditor, we cannot succeed unless our borrowers succeed. This

means they must be able to quantify and respond to environmental risk issues without incurring inordinate expense or disproportionate liability.

We, in turn, have direct exposure to environmental liability arising from our role

as a secured creditor as well as an owner of facilities.

Finally, as members of the community, we live and work alongside our customers.

We pass by abandoned industrial sites that have been locked out of consideration

for productive re-use because of the chilling effects of unpredictable environmental

liability. All of us want to see these sites brought back to useful life, with the economic and aesthetic benefits that will result.

We believe that these bills represent a substantive effort to address many of the

issues at hand, and it is an effort we welcome. We know that this process can

work—here is a real-life example:

About 18 months ago, Citizens made a presentation at a seminar which had been

sponsored by the Rhode Island Department of Environmental Management. Our

message was that brownfields projects were a good business opportunity. We encouraged potential borrowers in the audience to bring their deals to us for review.

As a result of that presentation, the owners of a company called Display World, Inc.,

contacted us about financing the purchase of the 13-acre Carol Cable facility in

Warren, RI, which had been idled for some time due to various contamination problems. We were part of a team involving the site owners, Display World, and State

regulators. Today the facility is again in operation and over 100 jobs have returned

to Warren as a result, with growth expected to continue.
237

So you can see that we believe in this process and we are encouraged to see the

attention it is receiving from this committee. Let me address two specific provisions

of S. 8:

First, I understand and appreciate the reasoning behind the ‘‘windfall lien’’ provisions in section 105; however, it is unclear what precedence the proposed lien in

favor of the United States would have. If the intent is to have the lien be junior

to all encumbrances of record at the time the lien arises, this should be explicitly

provided in the bill. If the intent is otherwise, this creates a difficulty for lenders

because of the uncertainty associated with the amount involved. As a practical matter it can be difficult to quantify the increment to market value attributable to a

response action, so this provision as currently drafted could insert an unknown

quantity of unknown precedence into the credit underwriting equation. I recommend, then, that the bill explicitly provide that the windfall lien is junior to prior

encumbrances of record. In any event, I ask that the intent of this provision be

made clear to avoid this being decided on a case-by-case basis by the courts.

My second comment relates to section 106, which provides a ‘‘safe harbor’’ for purchasers of real estate in certain circumstances. One of those circumstances applies

when the purchaser has made ‘‘all appropriate inquiries’’ into the existence of environmental contamination prior to purchase. We support the bill’s direction to the

Administrator to provide clear standards for these inquiries. We would ask in addition that the Administrator recognize that banking regulators have also issued

guidelines on appropriate inquiries for environmental contamination, and that we

are examined as to our compliance with these guidelines. Our hope is that these

two sets of directives could be reviewed and synchronized so that lenders do not receive direction from the Federal Government which is in conflict or inconsistent on

this issue.

If I may, let me close with a more general comment, again based on my frontline experience:

All parties to this subject—legislators, regulators, community groups, and private

sector businesses—seem to agree that our goal is to foster responsible reaction to

existing environmental problems, and to provide safeguards against future danger

from contamination.

But the statutory and regulatory apparatus that has been created to foster the

attainment of our common goal can be bewildering. It is especially difficult for

‘‘grass-roots’’ businesses—the small-scale entrepreneur, or the community bank—to

afford the legal and technical analysis necessary to untangle the Gordian knot of

environmental rules, and to understand the myriad of potential liabilities that may

arise from them.

As a result, those grass-roots businesses must either take on these liabilities

blindly (which we must all agree is an undesirable outcome); or, more commonly,

forgo opportunities for desirable redevelopment. Thus, many smaller sites will remain undeveloped and unremediated, which otherwise could have been revitalized

by the energies of private-sector initiative. Again, I think that we must all agree

that this latter outcome is undesirable, even tragic. It is made no less tragic by the

fact that none but the best intentions have underlain the legislative and regulatory

initiatives in this area.

The bills we are discussing today are a laudable effort to further our common goal

as I have outlined it above, but they are limited to a narrow section of the regulatory spectrum as it affects environmental matters. I would hope that this constructive approach will be continued and will be eventually broadened to cover a

greater range of environmental legislation.

Please realize that we are not asking for our risks to be eliminated, or for our

costs to be subsidized, or for protection against the consequences of negligence on

our part. We ask only that our environmental risks be quantifiable, predictable, and

reasonable.

This will allow us to evaluate environmental risk in context with other business

risks, rather than having it loom as a ‘‘black hole’’ of liability that trumps all other

issues when making a credit decision. This will help our borrowers to succeed, which

is the only way that we as lenders can succeed.

Again, I applaud the tone and direction of these bills, and that of other recent

legislation in this area, and I appreciate the opportunity to provide this testimony.

Thank you for your attention.

RESPONSES OF WILLIAM K. WRAY TO ADDITIONAL QUESTIONS OF SENATOR SMITH

Question 1. How do the banking industry’s guidelines for due diligence inquiries

differ from those set forth in S. 8 & S. 18?
238

Response. I have attached a copy of the FDIC’s ‘‘Guidelines for an Environmental

Risk Program’’, dated 2/25/93. As far as I know, these are the most current version

of these guidelines, although I will do further research in this area.

The guidelines are not specific in the area of due diligence other than to require

it when appropriate. Our recommendation would be that the banking guidelines explicitly conform to or defer to any applicable laws that bear on this issue, so that

a single standard (e.g. ASTM) can be established and followed by banks without fear

of challenge. In addition, the guidelines have not been revised to reflect recent

changes in secured creditor exemptions, as can be seen from the sections on ‘‘involvement in the borrower’s operations’’ and ‘‘foreclosure’’.

Question 2. Do you know whether other industries have produced other types of

guidelines?

Response. Within the banking industry, other regulators (e.g. OCC, OTS) may

have established guidelines similar to those of the FDIC (I have not been able to

research this yet but I will forward my findings).

I do not know whether this has been done in other regulated industries.

Question 3. Has the lender liability law worked for you?

Response. I am attaching an article from the Bankers’s Roundtable about the recent changes which discusses the pros and cons of the new law.

Because of the exceptional reduction in troubled loans over the last several years,

this has become much less of an issue for banks than it was during the peak years

of loan workouts and foreclosures, so we have little practical experience with the

provisions of the new law to date.

However, the changes do provide a needed clarity and certainty to the process,

and make it easier for banks to understand their potential liabilities in cases where

they have environmental contamination issues affecting their collateral.
239
240
241
242
243
244
245
246
247
248
249
250

PREPARED STATEMENT OF J. PETER SCHERER, VICE CHAIRMAN, ENVIRONMENTAL

POLICY ADVISORY COMMITTEE, NATIONAL REALTY COMMITTEE

INTRODUCTION

Thank you Chairman Smith. My name is Peter Scherer and I am a Senior Vice

President with The Taubman Company. The Taubman Company is a national real

estate company specializing in the development and management of regional shopping centers. I am speaking today on behalf of the National Realty Committee. NRC

represents the Nation’s leading real estate owners, builders, managers, lenders and

advisors. As such, the organization has focused extensively on the national policy

issues associated with the redevelopment of our Nation’s brownfields properties.

Several weeks ago I was here in Washington and had the pleasure of meeting

with Jeff Merrifield of the Chairman’s staff and Scott Slesinger from Senator Lautenberg’s office. I left that meeting encouraged and energized, and I am delighted

to have the opportunity to share with you today some thoughts on what the real

estate industry believes it will take to get our country’s nonproductive, modestly

contaminated and, therefore, hopelessly idle, real estate back into the Nation’s economic mainstream.

Two very positive legislative proposals, S. 8 and S. 18, include provisions which

reflect a sophisticated understanding of how current law can best be modified to encourage brownfields cleanup and re-development. NRC is on record as supporting

both these bills.

We are also on record as supporting the efforts made by EPA to foster brownfields

development, and while these efforts are encouraging, much more can and should

be done to achieve the economic and environmental objectives of S. 8 and S. 18. As

the sponsors of these bills are aware and as EPA Administrator Browner has stated,

changes to the Superfund law are required to achieve significant long-term impact

in this area. Let me specifically mention some initiatives taken by EPA that the real

estate industry applauds. But, at the risk of striking a more sober note, let me also

explain why these well intentioned initiatives will ultimately fall short of their intended objectives.

During the past few years, the Administration has become more creative in its

efforts to locate potential buyers for properties stigmatized by the specter of

CERCLA liability. The Administration seems to have been motivated, in part at

least, by the need to market its own growing inventory of brownfields, including

those situated on former military installations. Certainly, in the course of pursuing

that objective the government has gotten a taste of its own medicine. And, like the

private sector, it seems to have learned that absent some new approaches to finding

willing buyers for these kinds of sites, the properties will remain idle and, therefore,

unproductive for the foreseeable future.

First of all, EPA has removed thousands of sites from the so-called CERCLIS list

and has issued guidance encouraging regulators to consider realistic future land

uses in determining the extent of cleanup activities. If it’s known that a particular

property will become a parking structure, then why force cleanup to the level required for a day-care facility? This is a common sense approach which the business

community finds workable.

Second, EPA has issued guidance identifying the circumstances under which it

will enter into prospective purchaser agreements. These agreements are intended to

assure potential investors in contaminated sites that the properties in which they

are investing will not become targets of a future enforcement action. Developers are

willing to take risks, but there are simply too many other opportunities available

for any successful developer to bet his balance sheet on a project with unlimited environmental downside. Not to mention the difficulty in obtaining financing!

Third, on the issue of migrating groundwater contamination, where land otherwise suitable for development is situated above an aquifer contaminated by external

sources, EPA has issued guidance seeking to reassure owners or purchasers that

they will not be targeted for cleanup actions. Again, an example of action on the

Agency’s part which reflects the fact that new money will not go into a project

where the only certainty is uncertainty.

In each of these situations, EPA has set a course which my industry believes is

absolutely in sync with the national policy objective of returning our country’s

brownfields to productive use. So why isn’t this enough? Let me tell you—specifically—in 50 words or less. At the end of each guidance document is a disclaimer

which reads as follows:

This policy does not constitute rulemaking by the Agency and is not intended

and cannot be relied on to create a right or benefit, substantive or procedural,
251

enforceable at law or in equity, by any person. Furthermore the Agency may

take action at variance with this Policy.

As well intentioned as these policies may be, they fall short of providing the kind

of certainty necessary to attract private-sector capital.

I come here today not asking for the creation of economic or financial incentives

to encourage brownfields development. Rather, in this case, our industry is looking

only for the removal of existing disincentives. We are looking for you to level out

the playing field and, in doing so, create the kind of certainty that permits prudent

investment and intelligent risk assumption. So what is it that we think is needed?

The recently adopted lender protections and the proposed protection for the new

purchasers are certainly positive steps, but many brownfields will remain undeveloped unless Congress provides protection from Federal and State enforcement actions for property owners who successfully participate in voluntary cleanup programs.

While recently enacted legislation protects financial institutions from undue liability under Superfund, lenders still have concerns about the value of the underlying

collateral and the creditworthiness of their borrowers. If a property that undergoes

a voluntary cleanup may be the subject of further Federal and State enforcement

action, a lender may consider the property inadequate for the loan. Moreover, if the

borrower may be compelled to pay for the further cleanup after having completed

a voluntary cleanup, even if the borrower is prepared to assume the risk, a lender

may consider the borrower uncreditworthy and deny the loan. Thus, without some

degree of predictability and certainty—and without the promise of finality after a

successful voluntary cleanup—many well situated and otherwise prime brownfields

will remain idle for want of willing and able developers and lenders.

A number of these concerns would be addressed in a meaningful way by a provision contained in both S. 8 and S. 18. This provision creates a new and eminently

workable exemption for those who acquire property in need of some environmental

remediation. The so-called ‘‘prospective purchaser’’ provision would look beyond the

existing ‘‘innocent landowner’’ defense to address the troublesome (and not uncommon) scenario in which contamination is discovered during the course of pre-acquisition due diligence.

To utilize this kind of defense, purchasers would be required to undertake prescribed levels of environmental due diligence, including a site assessment in accordance with a standardized protocol. They would also need to take circumscribed steps

to limit exposure to known contamination; and cooperate with those responsible for

the cleanup. In return for meeting CERCLA’s due diligence requirements, prospective purchasers could move forward and acquire property without fear of incurring

the associated CERCLA liability.

Here’s what happens in the real world: environmental due diligence becomes a

feeding frenzy for everyone involved, particularly lawyers and consultants. And

given the laws today, it’s difficult to blame them. When do you stop peeling the

onion? When will that consultant or lawyer provide, in writing, that all information

is known or that there is no risk associated with proceeding? More samples, more

tests, more lab results are recommended. More time, more money, more risk and

uncertainty until ultimately the project dies. You hardly ever have all the information.

Successful business decisions are made when all necessary information is known.

My point is that the various amendments to CERCLA I have referred today would

(to a significant degree) replace the uncertainty that kills many deals with the type

of stability, predictability and certainty needed for brownfields initiatives to succeed.

Notably, EPA has endorsed this reform and there is no doubt its enactment would

make a difference in the real world.

At the end of the day, our industry is asking for nothing more than the kind of

certainty and predictability that other Federal agencies are authorized to provide.

We ask you to empower EPA to provide the equivalent of the ‘‘no further action’’

letters which can be obtained from the Securities and Exchange Commission, or the

private letter rulings that the Internal Revenue Service regularly provides to parties

concerned with the consequences of contemplated activities. Certainty inspires confidence, and with it, action.

These legislative proposals—S. 8 and S. 18—form a good base upon which to work

in this session of Congress to develop bipartisan reform of CERCLA. In addition,

EPA’s continued focus on administrative reforms should be encouraged. Agency reforms combined with legislative reform hold the promise of reducing the stigma associated with these properties by limiting the specter of Federal liability.

The National Realty Committee remains committed to the enactment of policies

that encourage reinvestment. Working with the other local and national stakehold-
252

ers represented here today, our members will continue to help identify, analyze and

advocate policies that will achieve the goals I believe we all share.

Thank you.

RESPONSES OF J. PETER SCHERER, NATIONAL REALTY COMMITTEE, TO ADDITIONAL

QUESTIONS FROM SENATOR SMITH

Question 1. Do you believe that risk-based cleanups tied to reasonable anticipated

future use would improve the brownfields situation?

Response. Yes. Over the last few years, the States have successfully pioneered the

use of risk assessments. In addition, they have relied on realistic land use projections in the course of developing effective strategies for addressing brownfield properties. This approach allows for intelligent, environmentally protective and cost-effective remediation, and promotes the return of brownfield properties to beneficial

use. In NRC’s view, Congress should support this approach.

By using risk assessments as a basis for cleanup decisions, States and private

parties are able to determine what problems a brownfield may actually raise for

public health and the environment and to focus cleanup measures on those specific

issues. This is much more effective and efficient than the practice employed in earlier years of designing a broad range one-size-fits-all, cleanup program to address

all hypothetical problems that might occur at a site. Also, private parties and States

are able to use risk assessments to more accurately communicate to the public (i)

whether or not a given site presents a threat and (ii) if and when a threat has been

adequately addressed.

Cleanups should also be tied to anticipated land use. It is clear that a site that

is returned to light industrial use need not be cleaned up to the same standards

as a site that is used as a day care center. Moreover, the future use itself may sometimes provide a remedy. One remedy that is commonly used to clean up soil contamination is to construct an impervious cap to prevent the infiltration of rainwater

into contaminated soil. If the new use of the property includes the construction of

a building slab, a parking lot, a roadway, or some other impervious surface, that

surface may also function as a cap. In this way, the development itself sometimes

accomplishes a significant element of the cleanup.

Question 2. Some of our witnesses might suggest that the States do not have the

sophistication to clean up more than just the simplest brownfield sites. Do you agree

with this characterization? Can States be trusted to do the right thing?

Response. In our members’ experience, States are fully capable of administering

voluntary cleanup programs as well as many other environmental programs, and to

oversee the cleanup of a range of contaminated sites. For example, members of National Realty Committee from the State of New Jersey have found that State to be

among the innovators (as opposed to the followers) in addressing hazardous material releases. I am advised that New Jersey adopted its own Spill Act some time

before the Federal Government adopted CERCLA. Other States, including my home

State of Michigan, have lead the way in developing effective voluntary cleanup programs to return brownfields to productive use.

States also appear to have demonstrated their competence in this area in the

course of overseeing the cleanup of Federal facilities within their borders. Although

Defense Department and Energy Department facilities represent some of the most

complex environmental problems in the country, States do not appear to have shied

away from taking a responsible role in directing their cleanup. Indeed, States have

not hesitated to offer vigilant and constructive criticism of the Federal Government

when the cleanup measures proposed by the Federal authorities for their own properties have been inadequate. And States have even been willing to pursue legal action against the Federal Government over the cleanup of Federal facilities when

they believed that the health and welfare of their citizens was not being protected.

Surely, if States can aggressively supervise the cleanup of highly contaminated Federal facilities, they can oversee the cleanup of less contaminated brownfield properties.

Question 3. Some of our witnesses have alluded to the fact that if we really want

to fix brownfields, we need to conduct comprehensive Superfund reform, not merely

tinker around the edges. Do you agree with this principle?

Response. We do not believe that Congress would be ‘‘tinker[ing] around the

edges’’ of Superfund reform if it were to provide protection for prospective and innocent purchasers, protection for property owners who perform voluntary cleanups,

and protection for the innocent owners of property that is contaminated by migrating pollutants from contiguous sites. Any one of these reforms would provide a sig-
253

nificant enhancement to the process of redeveloping brownfields. All of them together would maximize the capability of States, local governments, and private parties to clean up and redevelop brownfields.

As described in greater detail in my response to questions nos. 4 and 5 below,

we view the issue of brownfield reform as a continuum—each separate reform measure is important, no one measure predominates. Even without reform, some

brownfields are being developed because individual investors are willing to take

risks. With each of these reforms, more brownfields will be developed. If prospective

purchaser protection is adopted, more businesses would be willing to invest in

brownfield redevelopment because they would know that they would not become liable for contamination that predated their purchase. This reform by itself would substantially increase the number of brownfield sites redeveloped. But, as discussed in

more detail in response to questions nos. 4 and 5 below, if Congress did not also

adopt protection for the current owners of brownfield sites who engaged in voluntary

cleanups, many potentially useful brownfield sites would remain undeveloped.

Finally, protection of contiguous property owners is also an important brownfields

reform. The owners of property that is affected by migrating contamination need to

know that they will not be held liable under CERCLA, and they need to be able

to communicate the same assurance to lenders, purchasers, and tenants. Also, the

Superfund law should not act to place a stigma on their properties. Otherwise, the

number of undevelopable brownfields will grow as contamination moves off the

original site.

Question 4. You mentioned in your testimony that ‘‘without some degree of predictability and certainty—and without the promise of finality after a successful voluntary cleanup—many well situated and otherwise prime brownfields will remain

idle for want of willing and able developers and lenders.’’ You didn’t mean to limit

this to prospective purchasers did you? In order to free these properties for redevelopment, isn’t it also appropriate to provide this finality to current owners and operators?

Response. As indicated in my response to question no. 3 above, we view

brownfield reform measures as a continuum. Each of these measures is separately

important in increasing the redevelopment of brownfields. Prospective purchaser

protection is highly significant, and most directly affects the National Realty Committee membership. With this reform by itself, we would expect to see a substantial

increase in the number of brownfield sites developed.

However, prospective purchaser protection is not the only reform measure that

would enhance the redevelopment of brownfields. Clearly, it is important to provide

liability protection for the current owners who either clean up property themselves

under a State voluntary cleanup program or who sell to prospective purchasers that

put the property in such a program. As described in my response to question no.

5 below, right now there are significant economic incentives for these current owners not to sell these properties or develop the properties themselves. Providing protection to current owners who either voluntarily clean up their sites under State

programs or who sell to purchasers who do so would lead to the redevelopment of

even more brownfield sites than just providing prospective purchaser protection.

Similarly, more brownfield properties would be developed if Congress also protected

the owners of contiguous properties from CERCLA liability and removed the stigma

associated with their properties by including them as part of a designated CERCLA

site.

Question 5. If we don’t provide finality to the owners and operators of large redevelopable sites, won’t the most prime real estate parcels be simply fenced off and

kept off the market? In order to fix this, don’t we have to make some major changes

in the Superfund liability system?

Response. Providing protection to prospective purchasers would clearly result in

more brownfields being redeveloped, even if no other reform is adopted. But to more

fully promote brownfields development, providing ‘‘finality’’ to owners and operators

is clearly crucial.

Currently, the owners of many brownfield sites have several economic incentives

not to bring their properties back into productive use. As long as their properties

have not been designated for investigation and cleanup by EPA or the States, many

of these property owners consider themselves better off simply putting a fence

around their property and waiting. As long as the owner leaves a property inactive,

it is not required to test or otherwise investigate the contamination level at the

property. Waiting defers any environmental cleanup costs, and allows time for the

level of contamination to be reduced through natural processes such as dilution, attenuation, and evaporation. Also, because the property is not productive, property

taxes may be reduced.
254

Also, there are numerous economic disincentives to developing brownfield properties. An effort to develop the property will often accelerate environmental remediation costs. To obtain permits from governmental authorities and financing from

banks, property owners often have to test their properties and report contamination.

Once that happens, they may become subject to obligations to perform further investigations and undertake cleanups. In many instances, the development of a property

is indefinitely delayed as a property goes through the elaborate process of governmental investigation and remediation. Thus, the environmental costs become due

early, but the economic benefit of development is deferred.

State voluntary cleanup programs were created to provide a mechanism to bring

brownfield programs back into productive use. They serve the governmental interest

in seeing that contaminated property is cleaned up and the property owner’s interest in providing certainty as to the cost of cleanup and the amount of time cleanup

will take. Once a property owner is able to quantify the cost and time for cleanup,

the owner can make an informed decision about whether to go ahead with the

project. However, if an owner who completes a cleanup under a voluntary cleanup

program is not protected from further Federal or State enforcement action, the cost

and time to complete the project cannot be accurately estimated. Without the ability

to reliably estimate the cost and time factors many property owners will continue

to choose to wait.

The recently adopted lender protections and the proposed protection for new purchasers are helpful in removing disincentives, but many brownfields will remain undeveloped unless Congress provides protection from Federal and State enforcement

actions for property owners who successfully participate in voluntary cleanup programs.

As indicated in my testimony, NRC welcomed recent legislation limiting lenders’

exposure to liability under Superfund. Nonetheless, lenders involved in brownfields

transactions will still have concerns about the value of the collateral and the creditworthiness of their borrowers. If a property that undergoes a voluntary cleanup may

be the subject of further Federal and State enforcement action, a lender may consider the property inadequate collateral for the loan. Moreover, if the borrower may

be compelled to pay for further cleanup after having completed a voluntary cleanup,

a lender may consider the borrower uncreditworthy and deny the loan. Thus, without the promise of finality after a successful voluntary cleanup, lenders may be reluctant to lend to borrowers who wish to develop brownfield sites.

Prospective purchaser relief would only affect a potential buyer of a brownfield,

and not the current owner who is, of course, the potential seller. If the current

owner is not also protected by finality at the end of a voluntary cleanup, that owner

will often have an economic incentive not to sell. An unprotected owner who sells

property to a prospective purchaser might become the principal target of a governmental enforcement action. Therefore, selling the property to a new developer might

only accelerate the current owner’s environmental obligations. If the owner (or prospective seller) cannot achieve a measure of certainty that once a voluntary cleanup

is completed it would not be subject to additional environmental liabilities, that

owner will often choose not to sell. As the number of willing sellers decreases so

will the number of prospective purchasers, and, therefore, the number of successful

brownfields projects.

Question 6. Are you aware of sites that your company, or other members of the

National Realty would have been willing to redevelop, but did not do so out of a

fear that you would be caught in the Superfund liability net? Will the provision of

some characterization grants be sufficient to address this problem.

Response. Numerous transactions involving contaminated or potentially contaminated properties have been avoided by our company and members of NRC because

of the risk of CERCLA liability.

Characterization grants are, of course, helpful insofar as they add to existing information about the likely extent of contamination (and, therefore likely cleanup

costs) at prime development sites. This information will often prove helpful to those

communities trying to attract outside investment in the redevelopment of these

sites. As I indicated in my testimony, business decisions can only be made responsibly when all relevant information is available. If potential sellers are able to provide prospective purchasers with sophisticated (albeit preliminary) due diligence information this may prompt otherwise anxious buyers to look more seriously at the

property in question. Needless to say, preliminary characterization efforts (however

funded) are not, by themselves, sufficient to overcome buyer or lender anxiety about

cleanup liability where the due diligence turns up evidence of significant contamination.
255

RESPONSE OF THE NATIONAL REALTY COMMITTEE TO AN ADDITIONAL QUESTION FROM

SENATOR CHAFEE

Question. Page 4 of your testimony seems to imply even if we codify prospective

purchaser protections and contiguous property owner protection; and even though

we recently passed lender liability protection last year; that more must be done on

liability to make many of these transactions work. Can you expand on this point.

Response. I am pleased to elaborate. As I described in my responses to Senator

Smith’s questions, protection of current owners who either cleanup properties under

State voluntary cleanup programs or who sell properties to purchasers who do so

is important in promoting brownfields redevelopment. Current owners should be encouraged in redeveloping their sites. Also, current owners should be reassured that

if they sell their sites to new purchasers, they will not be increasing or accelerating

their own liability.

As described in my response to Senator Smith’s question no. 5, the current system

creates disincentives for current owners either to develop their properties themselves or to sell to buyers who will do so. These disincentives need to be removed

and replaced by incentives to develop brownfields. Such incentives can be provided

by protecting a site owner who cleans up a site in accordance with a State voluntary

cleanup program from further Federal and State liability, and by providing similar

protection to a seller who sells the property to a buyer who performs the voluntary

cleanup.

Once again, we view these reforms as a continuum. Prospective purchaser protection, in and of itself, will jump start the redevelopment of brownfields. But providing finality to current owners, as well as to prospective purchasers, would be even

more effective in promoting brownfields redevelopment. Protecting contiguous property owners is also vital to restoring brownfields. Each of these reforms is significant in its own right; together, they provide the best framework for encouraging the

redevelopment of brownfields.

Æ