[Senate Hearing 105-42]
[From the U.S. Government Publishing Office]


                                                         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




                        U.S. GOVERNMENT PRINTING OFFICE
 40-588 cc                     WASHINGTON : 1997

_______________________________________________________________________
            For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington DC 
                                 20402



               COMMITTEE ON ENVIRONMENT AND PUBLIC WORKS

                       ONE HUNDRED FIFTH CONGRESS

                 JOHN H. CHAFEE, Rhode Island, Chairman
JOHN W. WARNER, Virginia             MAX BAUCUS, Montana
ROBERT SMITH, New Hampshire          DANIEL PATRICK MOYNIHAN, New York
DIRK KEMPTHORNE, Idaho               FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma            HARRY REID, Nevada
CRAIG THOMAS, Wyoming                BOB GRAHAM, Florida
CHRISTOPHER S. BOND, Missouri        JOSEPH I. LIEBERMAN, Connecticut
TIM HUTCHINSON, Arkansas             BARBARA BOXER, California
WAYNE ALLARD, Colorado               RON WYDEN, Oregon
JEFF SESSIONS, Alabama
          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             FRANK R. LAUTENBERG, New Jersey
JAMES M. INHOFE, Oklahoma            DANIEL PATRICK MOYNIHAN, New York
WAYNE ALLARD, Colorado               BARBARA BOXER, California
JEFF SESSIONS, Alabama               BOB GRAHAM, Florida

                                  (ii)




                            C O N T E N T S

                              ----------                              

                             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
    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




                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 
two-fold: 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.
    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 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 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 feel-good 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.
    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.
    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.
    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 redevelopment. 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.
    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 ``win-win'' 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 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.
    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.
    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; 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.
    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.
    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.
    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 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 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 13\1/2\ years to clean up that 
site, $13 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 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:
    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?
    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?
    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.''
    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 
NPL-rankable 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.
    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 purchasers 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 pre-scored 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 re-enter 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 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, 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 statutory 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, 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, 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 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 site-specific 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.
    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 so-called 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 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.

  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 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 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.
    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 private-sector 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.
    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.
    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 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 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 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 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?
    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.
    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.
    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.
    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 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.]
    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.
    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 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 Redevelopment 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 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, reflected 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 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 encouraging 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 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.
            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.
            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.
                                 ______
                                 
  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 
required. 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 
enforcement-based 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/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 pre-
scored 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 health-based 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
     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 site-specific 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/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.
    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 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 release 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 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 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.
    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.
    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 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.
    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 step-by-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 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 necessary 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 
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 
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 built-in 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.
     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.
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 Government 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 basin-wide 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.
    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 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.

    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;
    (5) Expedited Cleanup Strategies and Cleanup Standards Based on 
Future End-Use; 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.
    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.
    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.
    [GRAPHIC] [TIFF OMITTED] TH042.083
    
    [GRAPHIC] [TIFF OMITTED] TH042.084
    
    [GRAPHIC] [TIFF OMITTED] TH042.085
    
    [GRAPHIC] [TIFF OMITTED] TH042.086
    
    [GRAPHIC] [TIFF OMITTED] TH042.087
    
    [GRAPHIC] [TIFF OMITTED] TH042.088
    
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 full-scale 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.
    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.

[GRAPHIC] [TIFF OMITTED] TH042.091

[GRAPHIC] [TIFF OMITTED] TH042.092

[GRAPHIC] [TIFF OMITTED] TH042.093

[GRAPHIC] [TIFF OMITTED] TH042.094

[GRAPHIC] [TIFF OMITTED] TH042.095

[GRAPHIC] [TIFF OMITTED] TH042.096

[GRAPHIC] [TIFF OMITTED] TH042.097

[GRAPHIC] [TIFF OMITTED] TH042.098

[GRAPHIC] [TIFF OMITTED] TH042.099

[GRAPHIC] [TIFF OMITTED] TH042.100

[GRAPHIC] [TIFF OMITTED] TH042.101

[GRAPHIC] [TIFF OMITTED] TH042.102

[GRAPHIC] [TIFF OMITTED] TH042.103

[GRAPHIC] [TIFF OMITTED] TH042.104

[GRAPHIC] [TIFF OMITTED] TH042.105

[GRAPHIC] [TIFF OMITTED] TH042.106

[GRAPHIC] [TIFF OMITTED] TH042.107

[GRAPHIC] [TIFF OMITTED] TH042.108

[GRAPHIC] [TIFF OMITTED] TH042.109

[GRAPHIC] [TIFF OMITTED] TH042.110

[GRAPHIC] [TIFF OMITTED] TH042.111

[GRAPHIC] [TIFF OMITTED] TH042.112

[GRAPHIC] [TIFF OMITTED] TH042.113

[GRAPHIC] [TIFF OMITTED] TH042.114

[GRAPHIC] [TIFF OMITTED] TH042.115

[GRAPHIC] [TIFF OMITTED] TH042.116

[GRAPHIC] [TIFF OMITTED] TH042.117

[GRAPHIC] [TIFF OMITTED] TH042.118

[GRAPHIC] [TIFF OMITTED] TH042.119

[GRAPHIC] [TIFF OMITTED] TH042.120

[GRAPHIC] [TIFF OMITTED] TH042.121

[GRAPHIC] [TIFF OMITTED] TH042.122

[GRAPHIC] [TIFF OMITTED] TH042.123

[GRAPHIC] [TIFF OMITTED] TH042.124

[GRAPHIC] [TIFF OMITTED] TH042.125

[GRAPHIC] [TIFF OMITTED] TH042.126

[GRAPHIC] [TIFF OMITTED] TH042.127

[GRAPHIC] [TIFF OMITTED] TH042.128

[GRAPHIC] [TIFF OMITTED] TH042.129

[GRAPHIC] [TIFF OMITTED] TH042.130

[GRAPHIC] [TIFF OMITTED] TH042.131

[GRAPHIC] [TIFF OMITTED] TH042.132

[GRAPHIC] [TIFF OMITTED] TH042.133

[GRAPHIC] [TIFF OMITTED] TH042.134

[GRAPHIC] [TIFF OMITTED] TH042.135

[GRAPHIC] [TIFF OMITTED] TH042.136

[GRAPHIC] [TIFF OMITTED] TH042.137

[GRAPHIC] [TIFF OMITTED] TH042.138

[GRAPHIC] [TIFF OMITTED] TH042.139

[GRAPHIC] [TIFF OMITTED] TH042.140

[GRAPHIC] [TIFF OMITTED] TH042.141

[GRAPHIC] [TIFF OMITTED] TH042.142

[GRAPHIC] [TIFF OMITTED] TH042.143

[GRAPHIC] [TIFF OMITTED] TH042.144

[GRAPHIC] [TIFF OMITTED] TH042.145

[GRAPHIC] [TIFF OMITTED] TH042.146

[GRAPHIC] [TIFF OMITTED] TH042.147

[GRAPHIC] [TIFF OMITTED] TH042.148

[GRAPHIC] [TIFF OMITTED] TH042.149

[GRAPHIC] [TIFF OMITTED] TH042.150

[GRAPHIC] [TIFF OMITTED] TH042.151

[GRAPHIC] [TIFF OMITTED] TH042.152

[GRAPHIC] [TIFF OMITTED] TH042.153

[GRAPHIC] [TIFF OMITTED] TH042.154

[GRAPHIC] [TIFF OMITTED] TH042.155

[GRAPHIC] [TIFF OMITTED] TH042.156

[GRAPHIC] [TIFF OMITTED] TH042.157

[GRAPHIC] [TIFF OMITTED] TH042.158

[GRAPHIC] [TIFF OMITTED] TH042.159

[GRAPHIC] [TIFF OMITTED] TH042.160

[GRAPHIC] [TIFF OMITTED] TH042.161

[GRAPHIC] [TIFF OMITTED] TH042.162

[GRAPHIC] [TIFF OMITTED] TH042.163

[GRAPHIC] [TIFF OMITTED] TH042.164

[GRAPHIC] [TIFF OMITTED] TH042.165

[GRAPHIC] [TIFF OMITTED] TH042.166

[GRAPHIC] [TIFF OMITTED] TH042.167

[GRAPHIC] [TIFF OMITTED] TH042.168

[GRAPHIC] [TIFF OMITTED] TH042.169

[GRAPHIC] [TIFF OMITTED] TH042.170

[GRAPHIC] [TIFF OMITTED] TH042.171

[GRAPHIC] [TIFF OMITTED] TH042.172

[GRAPHIC] [TIFF OMITTED] TH042.173

[GRAPHIC] [TIFF OMITTED] TH042.174

[GRAPHIC] [TIFF OMITTED] TH042.175

[GRAPHIC] [TIFF OMITTED] TH042.176

[GRAPHIC] [TIFF OMITTED] TH042.177

[GRAPHIC] [TIFF OMITTED] TH042.178

[GRAPHIC] [TIFF OMITTED] TH042.179

[GRAPHIC] [TIFF OMITTED] TH042.180

[GRAPHIC] [TIFF OMITTED] TH042.181

[GRAPHIC] [TIFF OMITTED] TH042.182

[GRAPHIC] [TIFF OMITTED] TH042.183

[GRAPHIC] [TIFF OMITTED] TH042.184

[GRAPHIC] [TIFF OMITTED] TH042.185

[GRAPHIC] [TIFF OMITTED] TH042.186

[GRAPHIC] [TIFF OMITTED] TH042.187

[GRAPHIC] [TIFF OMITTED] TH042.188

[GRAPHIC] [TIFF OMITTED] TH042.189

[GRAPHIC] [TIFF OMITTED] TH042.190

[GRAPHIC] [TIFF OMITTED] TH042.191

[GRAPHIC] [TIFF OMITTED] TH042.192

[GRAPHIC] [TIFF OMITTED] TH042.193

[GRAPHIC] [TIFF OMITTED] TH042.194

[GRAPHIC] [TIFF OMITTED] TH042.195

[GRAPHIC] [TIFF OMITTED] TH042.196

[GRAPHIC] [TIFF OMITTED] TH042.197

[GRAPHIC] [TIFF OMITTED] TH042.198

[GRAPHIC] [TIFF OMITTED] TH042.199

[GRAPHIC] [TIFF OMITTED] TH042.200

[GRAPHIC] [TIFF OMITTED] TH042.201

[GRAPHIC] [TIFF OMITTED] TH042.202

[GRAPHIC] [TIFF OMITTED] TH042.203

[GRAPHIC] [TIFF OMITTED] TH042.204

[GRAPHIC] [TIFF OMITTED] TH042.205

[GRAPHIC] [TIFF OMITTED] TH042.206

[GRAPHIC] [TIFF OMITTED] TH042.207

[GRAPHIC] [TIFF OMITTED] TH042.208

[GRAPHIC] [TIFF OMITTED] TH042.209

[GRAPHIC] [TIFF OMITTED] TH042.210

[GRAPHIC] [TIFF OMITTED] TH042.211

[GRAPHIC] [TIFF OMITTED] TH042.212

[GRAPHIC] [TIFF OMITTED] TH042.213

[GRAPHIC] [TIFF OMITTED] TH042.214

[GRAPHIC] [TIFF OMITTED] TH042.215

[GRAPHIC] [TIFF OMITTED] TH042.216

[GRAPHIC] [TIFF OMITTED] TH042.217

[GRAPHIC] [TIFF OMITTED] TH042.218

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
     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 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 less-contaminated 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 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 non-point 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; 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 ``non-NPL 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.
    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.
    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 NPL-caliber. 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.
    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\
---------------------------------------------------------------------------
    \1\ Superfund: Barriers to Brownfield Redevelopment (GAO/RCED-96-
125, June 17, 1996).
    \2\ S. 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.
---------------------------------------------------------------------------
    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 
contaminated sites in the country created a moor incentive for 
responsible parties to clean up their sites.\3\
---------------------------------------------------------------------------
    \3\ Impact on States of Capping Superfund Sites (GAO/RCED-96-106R, 
March 18, 1996).
---------------------------------------------------------------------------
    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.
---------------------------------------------------------------------------
    \4\ An Analysis of State Superfund Programs, Environmental Law 
Institute under contract with EPA (1996).
---------------------------------------------------------------------------
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.
---------------------------------------------------------------------------
    \5\ The Asset Conservation, Lender Liability, and Deposit Insurance 
Protection Act of 1996, contained in the Omnibus Consolidated 
Appropriations Act, 1997 (P.L. 104-208).
---------------------------------------------------------------------------
       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 action 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.
---------------------------------------------------------------------------
    \6\ The grants would be provided out of the Superfund trust fund 
which has been primarily financed from taxes on crude oil and certain 
chemicals.
---------------------------------------------------------------------------
    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 programs? 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.

    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 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, long-term 
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.

    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 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.
                                 ______
                                 
    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.
    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.

    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.
    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 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 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?
    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.
[GRAPHIC] [TIFF OMITTED] TH042.239

[GRAPHIC] [TIFF OMITTED] TH042.240

[GRAPHIC] [TIFF OMITTED] TH042.241

[GRAPHIC] [TIFF OMITTED] TH042.242

[GRAPHIC] [TIFF OMITTED] TH042.243

[GRAPHIC] [TIFF OMITTED] TH042.244

[GRAPHIC] [TIFF OMITTED] TH042.245

[GRAPHIC] [TIFF OMITTED] TH042.246

[GRAPHIC] [TIFF OMITTED] TH042.247

[GRAPHIC] [TIFF OMITTED] TH042.248

[GRAPHIC] [TIFF OMITTED] TH042.249

 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, 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 stakeholders 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 significant 
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.
    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 credit-worthiness 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.
                                 ______
                                 
  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.


                                (all)