[Congressional Record Volume 141, Number 2 (Thursday, January 5, 1995)]
[Extensions of Remarks]
[Page E31]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                              [[Page E31]]

  


       THE LENDER AND FIDUCIARY FAIRNESS IN LIABILITY ACT OF 1995

                                 ______


                            HON. FRED UPTON

                              of michigan

                    in the house of representatives

                       Wednesday, January 4, 1995
  Mr. UPTON. Mr. Speaker, in the last Congress, I called attention to 
some of the unintended effects of the Federal Superfund Program. I 
pointed out that Superfund's draconian liability provisions were 
undermining job creation in older manufacturing areas by discouraging 
the redevelopment of previously used industrial sites.
  We came close to fixing this problem in H.R. 3800, the Superfund 
reauthorization bill cleared by the Committees on Commerce and Public 
Works last year. It did not become law, however, and the distinguished 
gentleman from Louisiana, Mr. Tauzin, and I are introducing ``The 
Lender and Fiduciary Fairness in Liability Act'' today so that no 
momentum will be lost in the effort to repair this broken program.
  Throughout America there are previously used industrial sites lying 
fallow because lenders and investors are afraid that owning or renting 
such sites will make them liable for the costs of cleaning up messes 
they did not make. Under Superfund, owners and operators of property 
requiring cleanup are assumed to be responsible for contamination found 
on or in such properties. In some cases, institutions that loaned money 
for the acquisition of such properties can be held liable, too.
  This shadow of liability hanging over previously used industrial 
properties often makes it impossible to sell property or to secure 
financing for acquiring and redeveloping it. Potential investors won't 
invest and lending institutions won't lend so long as Superfund 
threatens either liability, the loss of collateral value or both.
  The safe alternative in such cases is to avoid the previously used 
``brownsites'' in central cities and historic manufacturing areas in 
favor of virginal ``greensites'' far away. It is simply safer to 
develop a cornfield on the periphery than to redevelop a downtown site. 
A Michigan State legislator described the net effect of this process 
thusly: ``Urban devastation, and jobless workers, are left in the 
cities. With development forced outward, lots of open space and 
farmland gets gobbled up. There are tremendous public costs to provide 
new roads and services. And the old urban sites are not cleaned up--
they just sit there!''
  Mr. Speaker, I doubt that such results were intended by the authors 
of Superfund. In fact, I doubt that a single Member of this House or 
the other body even suspected such results when the statute creating 
Superfund was enacted in 1980 and extensively amended 6 years later. 
Nonetheless, more than a decade of court decisions and administrative 
interpretations have brought us to this point. The program is doing 
more harm than good in much of the country and we have a responsibility 
to get it back on track.
  The bill my distinguished friend and I are introducing this evening 
addresses the redevelopment of contaminated sites in two ways. First, 
it shelters from Superfund liability innocent landowners who acquire 
property subsequently found to be contaminated. Second, it shelters 
lenders and lending institutions from Superfund liability unless they 
actively participate in the management of an organization subsequently 
found liable.
  It is important to recognize that neither of these concepts is new. 
Superfund law currently exempts innocent landowners from liability and 
shelters lenders via the ``secured creditor exemption.'' The problem is 
that the law does not provide the executive and judicial branches with 
sufficient guidance on its implementation. Whether a given party 
qualifies for the innocent landowner or secured creditor exemption is 
virtually impossible to determine at the beginning of the process. One 
must take his or her chances and hope that EPA or the courts will make 
the appropriate interpretations later in the process. With Superfund 
cleanups averaging $30 million per site, this simply presents too much 
risk for potential redevelopers and those who provide the capital they 
need.
  This bill strengthens the existing by clarifying the specific steps a 
party must take in acquiring and financing previously developed 
properties. It lets no polluters off the hook. Those who contaminate 
will be just as liable after passage of this legislation as they are 
today.
  Similar legislation garnered more than 300 cosponsors in the last 
Congress and became part of a bill reported unanimously by the 
Committee on Energy and Commerce. I hope my colleagues on both sides of 
the aisle will join Mr. Tauzin and me in this effort.


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