I welcome the Obama administration’s support for re-instating the tax on the oil and chemical industries to help pay for cleaning up Superfund sites---some of the worst toxic waste sites in the nation.

The tax raised more than $1 billion every year from 1980 to 1995 to pay for cleanup of sites where no viable responsible party could be found. Congress refused to renew the tax in 1995 when it expired (President Clinton supported renewing it), and funding for the Superfund Trust Fund ran out in fiscal year 2003. President George W. Bush was the only president to oppose renewing the Superfund tax. As a result, more than $8 billion for cleaning up toxic waste sites has been lost.

It is important to remember that the “polluter pays” tax was enacted as part of a legislative compromise that excluded oil companies from liability for clean-up under Superfund. The industry has likely been spared hundreds of millions of dollars in clean-up costs as a result (and been exceedingly profitable in the meantime). Since the tax has been expired so long, it may make sense to eliminate the liability exclusion altogether.

The Superfund sites across the nation are known as being “the worst of the worst.” They require clean-up solutions that are frequently lengthy and expensive. President Obama is right to help ease the burden on taxpayers and restore the contribution that has been made in the past from the oil and chemical industries to pay for these clean-ups.

Often, the Superfund is associated with the big toxic cleanups one reads about in the news. But just as important are the toxic disasters that never happen because of the threat of Superfund liability. By bringing the Superfund back from the dead, President Obama will reinvigorate incentives for proper waste disposal taxes that have essentially lapsed while the Superfund stalled.

Underlying the Superfund program is the “polluter pays principle.” According to this principle, it is the responsibility of the polluter, not the public, to pay for the cleanup of improperly handled toxic waste. This principle is embodied in the Superfund law (the Comprehensive Environmental Response, Compensation, and Liability Act) through a system of strict, joint and several liability. This system of liability creates very clear lines of responsibility: The companies that handle, transport, and dispose of toxic substances are all on the hook. The resulting strong incentives to avoid being associated with a Superfund site mean that they all act as the “Superfund police” to make sure that waste is properly dealt with.

The money in Superfund gives EPA the bargaining leverage to enforce those incentives—if firms refuse to clean up a site, then EPA can use the Superfund to pay for the cleanup, and then sue parties to recoup the cost. Without that money, EPA is a paper tiger. It’s power to swoop in, clean up the site, and go after the responsible parties is significantly curtailed.

Of course, the Superfund program has its critics. Many complain that Superfund cleanup standards are unduly strict, causing companies to make sites “too clean.” The Superfund liability scheme itself has come under plenty of attack as well. The system of strict liability, which holds polluters responsible for cleanups even if they can show that their conduct was “reasonable,” strikes some as unfair and overly punitive. The lengthy litigation process that Superfund cleanups often engender, and the associated legal uncertainty, has also been heavily criticized.

But the way to deal with these criticisms, when they are legitimate, is to improve the Superfund program, not ax its funding. The program has evolved considerably since its inception. In 1986, Congress passed the Superfund Amendments and Reauthorization Act (SARA) that made significant changes. For example, the liability scheme was relaxed for certain types of parties, like lenders, where Congress felt that Superfund liability was not productive. In 2001, Congress passed the Small Business Liability Relief and Brownfields Revitalization Act, which made further changes to Superfund liability to make sure that it was not hampering the redevelopment of contaminated sites.

In the end, Superfund liability plays an extremely important role in giving companies the right incentives to properly handle toxic substances. Cleaning up sites is important, but equally important is ensuring that fewer toxic sites are created in the future. Even if few Superfund cleanups ever happened, the threat of the Superfund hammer coming down would give firms plenty of reasons to stay on the straight and narrow. And that is reason enough to keep the Superfund funded.

Today's chemical and oil companies operate under stringent environmental laws that are designed to prevent the creation of new Superfund sites.

For nearly 15 years, Superfund site activity has been funded through general revenues. To suggest that the chemical and oil industries are 1) responsible for the contamination of these “orphaned” sites; 2) should bear the responsibility or shoulder the cost when no other entity can; and 3) are responsible for cleanup related to customer and consumer misuse of products; is unfair.

There are a number of points that should be addressed when considering the reinstatement of the excise tax on the chemical and oil industries. Is there currently a lack of funding that is preventing or delaying investigation or cleanup of Superfund sites? The EPA is already vigorous in recovering its costs from PRPs. At a minimum, if a tax is reinstituted, there should be a different and more equitable formula applied that does not make an industry that accounts for a small fraction of the Superfund sites shoulder most of the cost.

Shell takes its environmental responsibilities seriously and works with state and federal agencies to pursue remediation that protects human health and the environment, and is cost effective. We oppose reinstituting a Superfund tax against an industry as a whole, rather than the polluters responsible for creating the problems.

This should be a no-brainer. The Superfund tax was created because certain sectors of the American economy -- oil, chemicals, mining, etc. -- had left behind a legacy of toxic waste dumps. It was only fair that the companies that make up that sector pay for cleaning up that legacy.

Where it was possible to identify individual companies who were responsible for a particular toxic waste site, the law puts the burden on those companies. Where it was not, or where the responsible party lacked the financial capacity to pay for the clean-up, the Trust Fund, funded by the whole sector, steps in.

This formula was adopted because in many cases very large, financially viable manufacturing companies had disposed of their waste by contracting with small, financially unstable waste haulers -- in effect taking the risk of their operations and passing them on to the public.

Let's be blunt. Companies facing serious toxic waste liabilities are highly creative at using contracting and bankruptcy to avoid responsibility for their actions -- and the business sector as a whole has not policed itself. As an example, American Smelting and Refining Company (ASARCO) tried to shift http://www.sierraclub.org/sierra/200605/goingforbroke/ at least $500 million in toxic waste liabilities to the general public by declaring bankruptcy in 2005 even while its parent company, Grupo Mexico, was doubling its profits by shedding ASARCO's liabilities. And ASARCO is not unique -- the huge number of "orphan" toxic waste sites are evidence that it is critical to hold industrial sectors as a whole responsible for the consequences of their actions.

That doesn't mean the Superfund is perfect. The existing law can be improved -- indeed, back in 1993 a broad coalition of organizations, ranging from the Sierra Club to the National Federation of Independent Businesses, agreed on such a reform package -- only to have it die in partisan bickering in the Senate.

Once the tax expired, too many business interestes, like the American Chemistry Council, walked away from Superfund reform because they were off the hook. We ought to restore the tax, and perfect the law.

There is an old saying that the only things in life that are certain are death and taxes. To that we can add a third item -- bureaucracy.

In the stimulus package the administration added $600 million for the cleanup of hazardous waste sites, $200 million for the cleanup of old underground storage tanks, and $100 million for brownfield sites. Similar programs from the 1980’s fulfilled their usefulness. Now the new administration wants to impose another $6 billion dollar tax on chemical and petroleum products to pay for additional waste sites clean ups. All of this is on top of a possible $645 billion tax on industry to pay for CO2 emissions, and that estimate could be on the low side if the cost of the auction credits increase over time. These are all big, big monetary costs that are being imposed on the business community.

But let’s just focus on Superfund, Why is it needed and what will it do? Based on EPA’s own website there are few federal sites left for cleanup to be completed; most remaining sites are state sites. Of the completed 1063 NPL sites only 61 were federal, the rest state sites. Of the proposed sites remaining to be cleaned up only 6 of 57 are federal. Of the remaining final sites only 157 are federal and 1098 are state sites.

Those observations notwithstanding, leaving aside questions about the number and type of sites and the size of the funding allocation for clean up of these remaining sites, the real issue is that the effort was, is, and will continue to be a jobs killer. This is because of the joint and several liability provisions in the Superfund program. In particular, anyone with waste at a Superfund site is responsible for cleaning up the entire site, even if that entity had a very small amount of waste at the site. This is the big problem. What has happened as a result of these joint and several liability provisions is that if all the bad actors who were largely responsible for the contamination at a site are out of business the government instead has gone after all the remaining viable companies for the cleanup of the entire site, no matter what the cost or the small amount of waste these companies sent to the site. As a result of this practice, many good balance sheets go bad. That is the history of the Superfund program and throwing more money at clean up isn’t going to solve this problem. And like the Superfund fiasco, if we’re not careful now, throwing $645 billion at a CO2 emissions problem is going to produce similar consequences. That’s no way to keep business in this country healthy.

ACC strongly believes Superfund taxes should not be reinstated.

First, it’s important to understand that Superfund is overwhelmingly a “polluter pays” program. The companies targeted by the old Superfund tax – oil, chemical, and large manufacturing companies – have paid for Superfund several times over. As responsible parties, they’ve paid to study, cleanup, and reimburse federal and state government costs at sites they contaminated. At multi-party sites, they paid the shares of responsible parties that were defunct, bankrupt, or released from liability by Congress. As corporate taxpayers, they paid again. Reinstatement of the Superfund excise and environmental taxes is not necessary in order to assure that “polluters pay” – they already do.

Responsible parties pay for the majority of cleanups. The Superfund law puts the burden of paying for cleanup squarely on responsible parties. The Trust Fund only bear the costs of cleanup for those “orphan” sites where no solvent responsible party can be found, or where Congress has exempted the responsible parties of liability. Since the taxes expired, responsible parties have continued to pay for all costs of cleanup at their sites and to reimburse EPA for all its costs related to cleanup. In 2004, EPA collected a record $1.7 billion in cleanup funds from responsible parties.

What’s more, Superfund taxes do not control the pace of cleanup. Even when the Superfund Trust Fund ran a significant surplus, Congress determined how much EPA could spend in the Superfund program. In other words, the Superfund taxes never determined EPA’s annual Superfund budget. Congressional appropriations have remained fairly constant for the past many years, between $1.2 and $1.4 billion.

The chemistry industry is facing unprecedented financial challenges. Reinstating Superfund taxes would unduly impact the business of chemistry at a time of economic crisis. Reinstating the chemical excise tax would impose a $310 to $450 million cost on chemical manufacturing every year, even though the products subject to the tax are not necessarily associated with Superfund cleanups. Reinstating the tax on just two products – chlorine and ammonia – would essentially offset any economic return on sales to current producers, making those segments non-competitive in the global market. Moreover, an excise tax on chlorine would increase the cost of disinfecting water; while the cost of fertilizer (which depends on ammonia) would also increase. Reinstating the corporate environmental income tax would add another tax burden on an industry already affected by significantly higher fuel and feedstock and increased global competition. The U.S. is already losing production and jobs to other areas of the world where energy costs are lower.

Finally, general revenues should support Superfund. The revenues from Superfund taxes are used for many purposes, including program administration, research, training grants, education and public outreach, as well as cleanup of “orphan sites.” These expenditures are appropriately paid from general revenues, particularly as the proportion of orphan sites addressed by the program has increased.