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AUGUST 1998

Superfund refinancing and reform called opportunity - and peril

Business Council members should closely monitor the work of a new task force created by Governor Pataki to make recommendations on refinancing and reform of the state's environmental Superfund, according to The Council's environmental expert.

"This task force will give business a chance to suggest key reforms," said Ken Pokalsky, The Council's director of environmental affairs and one of Governor Pataki's task force appointees.

"But it will also give other groups a seat at the table, including those that have promoted onerous and unfair new business taxes."

Pokalsky added, "It seems likely that the future of the Superfund will be one of the top issues before lawmakers in the next session."

Through the task force, business will be able to make the case for key reforms to liability standards and clean-up standards, Pokalsky said.

For example, he said, The Council strongly supports adoption of "risk-based" cleanup standards for Superfund sites. Under risk-based standards, the cleanup required reflects the risk actually posed by the material being cleaned.

Current standards are often more stringent than is necessary to nullify the actual risk, Pokalsky noted.

Pokalsky said The Business Council also advocates two liability reforms.

First, he said, businesses that complete state-approved clean-ups at sites should receive limited releases from future liability.

Second, the definition of responsible party should be narrowed so that liability falls only on entities responsible for creating the site, not on subsequent owners such as banks that repossess property but did not generate or dispose of wastes at the site.

Refinancing Superfund is considered likely, Pokalsky said, noting that the Superfund Management Board has estimated that New York will need $2 billion more over the next 10 years to clean sites already identified.

The board has recommended $80 million in new funding, half from the state's general fund and half from business fees that will take effect in several years.

New York already collects about $25 million a year for the Superfund from hazardous waste permit fees, hazardous waste special assessments, and petroleum terminal transfer fees.

Last year, a coalition of environmental groups proposed new and increased business fees that would have raised $1.9 billion over nine years to fund cleanups, Pokalsky said. The coalition also urged $625 million in additional general fund spending over the same nine-year period.

The Business Council successfully opposed these tax hikes and argued that changes in Superfund financing should be accompanied by reforms, including risk-based cleanup standards and liability reforms.

Besides Pokalsky, the Governor's new task force includes state environmental and public health officials, local government officials, environmentalists and other business representatives.

Another issue to be addressed by the working group is whether to include hazardous substance sites in the state Superfund program.

Under current law, DEC may use monies in the state Superfund to remediate sites where "hazardous waste" was disposed but not sites contaminated by "hazardous substances."

The task force has been asked to make recommendations by Jan. 1, 1999.

The next two meetings of The Council's Environment Committee-August 27 at Council headquarters in Albany and Sept. 3 at the Radisson Buffalo-will focus solely on Superfund refinancing and reform. These meetings are open to all Business Council members.

August 20, 1998