August 24, 1995
"Superfund Overhaul - With a Huge Chunk of the Money for Toxic Cleanup Going to Lawyers, and Only 17% of the Worst Dump Sites Purged, it's Time to Simplify Rules on Financing Hazardous Waste Removal"
San Jose Mercury News
By Timothy Taylor
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SUPERFUND was signed into law in 1980 in response to estimates that of the nation's 50,000 dump sites, between 1,200 and 2,000 were potentially hazardous.

It was a two-pronged attack on the danger. Liability standards were toughened drastically, so that any party that had contributed any amount to what had become a hazardous waste site - even if the disposal was legal at the time - could be required to pay for cleaning up the entire site. In addition, special taxes on oil and chemical companies were enacted to create a cleanup fund when responsibility couldn't be determined.

The president of the Chemical Manufacturers Association argued that the whole idea was an overreaction, because cleaning up all the worst hazardous waste sites in the nation would only cost a total of $500 million. But more mainstream estimates, like those from President Carter's Council on Environmental Quality, predicted that cleaning up the nation's hazardous waste sites would cost more like $28-$55 billion.

Now, 15 years later, the Superfund is widely seen as a disappointment. Authorization for the program to spend money expired last year, and the taxes to finance the program expire this year. The Republican chairmen of the House committees that oversee Superfund have pointedly stated that if they cannot achieve ''meaningful, comprehensive'' reform, then ''this is a program which simply should not be continued.''

Since 1980, the federal Environmental Protection Agency and various states have evaluated 38,000 dump sites; 1,300 of those sites were troubling enough to be placed on a National Priorities List for cleanup. Within four miles of these sites live 73 million Americans.

But after 15 years, the EPA still has perhaps another 1,000 sites to add to the NPL. Of the priority sites listed to date, only about 17 percent have been cleaned up - and even these successes still require monitoring.

While cleanup dawdles, the Superfund has been a boon to lawyers and tax advisers. Perhaps one-quarter of the cleanup money actually has gone to legal fees and other transaction costs, according to studies from the Rand Corporation.

The Superfund relies on a quirky group of three taxes to raise money from corporations: a petroleum tax on oil refiners; a ''chemical feedstock'' tax imposed on 11 organic chemicals, 31 inorganic chemicals and 73 imported chemicals; and an ''environmental income tax'' that is an add-on to the corporate alternative minimum tax.

Combined, these taxes collect less than $2 billion a year, or about one-tenth of 1 percent of federal tax revenue. According to economists at the Brookings Institution and Resources for the Future, the cost to corporations of complying with these peculiar little taxes may actually be as much as the federal government collects from the taxes.

Even the strongest environmentalist should sympathize with these complaints. No one is in favor of siphoning money into tax preparation and lawsuits while actual cleanup dawdles. The needed reforms are clear enough.

Eliminate the oddball Superfund taxes, and raise the public funds with a slightly higher rate on an existing tax, like the gasoline tax or the corporate income tax. Change the liability rules so that the government goes after big polluters, but doesn't spin its wheels chasing firms that legally disposed of small amounts of waste several decades ago. Aim at raising the resources, through taxes and legal recovery, to finish the cleanup over the next decade or so.

Just before the congressional summer recess, Sen. Robert Smith (R-N.H.), chairman of the main subcommittee that oversees Superfund, put forward his reform proposal. Key Republicans in the House have offered praise, but Smith's reforms have at most one wheel on the right track.

On the silly side, Smith would tell the EPA to add no more than 90 additional sites to the National Priority List, and give states the right to veto a site being added to the list - as if excluding a site from the priority list means that it poses no risk.

More sensibly, Smith would relax some of the harsh legal liability rules, which would have the beneficial result of less money being spent on liability, but the worrisome result that less would also be available from private parties for cleanup. He would also require that EPA clarify its standards for what is an acceptable cleanup.

Some environmentalists will surely raise the roof over these proposals, but frankly, many of those same environmentalists often seem to care more about harassing industry with easy lawsuits and offbeat taxes than they do about whether hazardous waste sites are actually cleaned up.

The bottom line is that it will take $81 billion (plus or minus $40 billion) for a total clean-up of known and yet-to-be-discovered hazardous waste sites, according to the Congressional Budget Office. Over a decade or so, a wealthy nation can readily afford this level of expense, if its leadership shows a commitment to doing so.

But the Republican reforms proposed to date - like reducing corporate liability and public spending, or putting only a limited number of sites on the priority list - will not help in raising the necessary resources to complete the cleanup.

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