Superfund Is Up to Environmental Task
WITH congressional re-authorization hearings under way, the federal Superfund law, principal vehicle for the cleanup of toxic dump sites, is increasingly under attack in the name of "third-wave environmentalism." Superfund - officially the Comprehensive Environmental Response, Compen- sation, and Liability Act (CERCLA) is commonly seen as generating wasteful bureaucracy, misguided priorities, and excessive litigation.
The law surely has its shortcomings. But if the Clinton administration truly believes its own rhetoric, it should rush to defend CERCLA's unique, if almost invisible, injection of environmental concern into the private sector. CERCLA has been a wild success in grabbing corporate America by the lapels and enlisting its considerable resources in the remediation of environmental hazards.
Opponents often point to the weighty sums allocated to fund the law's provisions ($10.9 billion since 1980), and the slow pace of cleanup of Superfund sites around the country.
While the pace of completing cleanups is hard to defend (161 out of thousands of potential sites have been remediated), many observers fail to realize that the Superfund law contains two key parts, only one of which pertains to the actual funds allocated by Congress.
The law's arguably more significant component has nothing to do with federal funding of cleanups.
At CERCLA's legal heart is a little-seen change to property liability rules, which has effected a quiet revolution in the conduct of American business.
CERCLA has done more to bring environmental issues into the corporate boardroom than any other United States environmental law. It accomplished this by imposing private-party cleanup liability on owners of polluted property.
This means that, once in the chain of title, a party can remain on the hook for a share of sometimes millions of dollars of cleanup costs.
Potential buyers now think twice (or at least they should) before buying property that could become an environmental liability; as a result, they often conduct "environmental due diligence" investigations, and demand legal protections from sellers. Consider CERCLA's threefold effect:
First, the law provides powerful incentives for private parties to conduct environmental investigations at suspect sites; these investigations are the first step toward any remediation, and they often provide vital initial public-health information.
Second, by encouraging parties to agree among themselves on environmental responsibility, CERCLA effects self-policing and private-party cleanup that doesn't cost the government a dime.
Third, and perhaps most importantly, because the presence of on-site pollutants discourages potential buyers and depresses value, CERCLA provides a much-needed incentive for businesses to prevent pollution in the first place.
In fact, by drawing attention to environmental issues in the midst of a "deal" - when money is on the table and management is paying attention - CERCLA raises environmental concerns when resources are most likely to be committed. CERCLA has brought environmental concern to garden-variety business transactions.
Of course, not everyone is happy about that. Attending to environmental matters has meant that new costs crop up during real estate sales, mergers, and acquisitions. But this is precisely the point from an environmental policy standpoint: Environmental costs should become a real "cost of doing business."
And in any event, as businesses become more familiar with the law's dictates, CERCLA increasingly becomes part of the normal background business environment - the way, say, title searches are.
The current system is admittedly imperfect, and improvements should be welcomed. For instance, bioremediation, instead of hauling and incinerating massive amounts of soil, should be permitted where appropriate.
But however current debates over appropriate technologies and acceptable risks are resolved, Superfund's central liability scheme, which is in essence an elegant but simple shift of environmental responsibility between business entities - from the hapless buyer to shared responsibility with the seller and other past owners - should not be fundamentally disturbed without devising a better alternative.
The alternative to CERCLA financing most often suggested is the establishment of a public works-style cleanup program. It would shift liability from responsible parties to taxpayers (in effect, expanding that portion of CERCLA, the congressionally allocated fund itself, which is most notoriously beset by complaints of excessive cost and little accomplishment).
In this age of deficit-hawk ascendancy, such a "reform" would be anomalous, indeed. Moreover, CERCLA's liability provisions are a model of "new generation" environmental controls which, instead of relying exclusively on command-and-control regulations, use market forces to reflect environmental costs on corporate balance sheets.
If economic development and environmental interests are to be truly compatible, as the Clinton administration advocates, then we will need more, not fewer, laws like Superfund that send the right environmental signals to businesses.