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Posted On: Jan. 26, 1997 12:00 AM CST

WASHINGTON-Superfund reformers are encouraged that a legislative proposal for making the pollution liability system fairer is getting attention so early in the congressional session, but some contend the measure does not go far enough.

S. 8, the Superfund Cleanup Acceleration Act, does not call for comprehensive relief from retroactive liability. Instead, the bill would provide liability relief for certain small businesses, municipalities and transporters of waste to Superfund sites. It also would create a new mandatory but non-binding system of allocating liability for others found responsible for cleaning up pollution.

The bill is one of 10 priority bills unveiled by the Senate Republican leadership last week. Business interests disappointed in the limited nature of the Superfund reform proposal are taking some solace, though, in the importance the Senate leaders have placed upon another long-sought reform: product liability. The product liability reform bill that passed both houses of Congress last year, H.R. 956, only to fall to the president's veto, has been resurrected as S. 5-the Product Liability Reform Act-to kick off another round of debate on federal product liability standards.

No companion measure to either bill has been introduced in the House.

Insurers say that while the Republican leadership's decision to move quickly on Superfund is welcome, much remains to be done with the measure, the chief sponsors of which are Sens. John Chafee, R-R.I., and Robert Smith, R-N.H.

"We're encouraged that a bill was introduced early in the 105th Congress, but we're disappointed that the liability provisions do not go far enough. We want to work with Sen. Chafee and Sen. Smith to make the proposal more workable. The administrative allocation system appears to benefit some (potentially responsible parties) more than others, and we wonder whether or not it would produce an overall savings," said David Farmer, senior vp-federal affairs for the Alliance of American Insurers in Washington.

"I think it's quite obvious that Sen. Smith and Sen. Chafee are trying to break the deadlock they've experienced over the past two years," observed John Arlington, senior counsel for the American Insurance Assn. in Washington.

"We think this is just a starting point. There's going to be a lot of work put on this bill before it's over," Mr. Arlington said.

"We're glad to see that Superfund reform has taken such a high profile in this Congress as one of the first 10 bills introduced by the Republicans, and while the information we have on the liability system is still somewhat sketchy, we are encouraged to see the fair share allocation system and at least a limited repeal of retroactive liability," said Paul Brown, director-government affairs for the Risk & Insurance Management Society Inc. in New York.

"RIMS would still like to see a complete repeal of retroactive liability, but given the political realities we now face, we believe Sen. Smith's proposal is a good starting point. RIMS will continue to push for repeal of as much of the retroactive liability as possible, because we still believe it to be unfair and the biggest drag on the Superfund program," he said.

Under the allocation system advocated in the bill, a mutually agreeable qualified third party would determine the portion of liability each potentially responsible party should shoulder. Those that accepted would be absolved of joint and several liability for cleaning up other portions of the site.

The Superfund itself would pick up the costs of cleanup attributed to insolvent parties or for which no potentially responsible party could be found. PRPs that refused to accept the allocator's division and that were later found to be responsible could be held liable for cleanup costs under the program's current systems of joint, several, strict and retroactive liability.

In addition, the liability of municipal owners and operators of landfills would be limited at 10% or 20% of total costs, according to the population of the municipality, and the liability for private owners and operators capped at 30% of total costs.

Businesses with fewer than 30 employees or $3 million in gross revenues would also enjoy liability relief, as would generators and transporters of municipal solid waste, recyclers of certain materials and other specified small contributors of waste to a site. There would be no liability relief for PRPs guilty of illegal acts.

Sen. Smith made clear that he would have preferred broader relief.

"Liability has always been one of the most contentious issues in the Superfund reform debate. My position has been clear from the beginning. I believe that retroactive liability is fundamentally unfair, and if I had my way, I would repeal it," said Sen. Smith.

How the GOP leadership addressed the other matter of concern to insurers and risk managers during the first week of this Congress-product liability reform-is drawing little but praise.

"I think the introduction of legislation signifies that the Senate leadership sets this as a most important part of their legislative agenda," said the Alliance's Mr. Farmer. He said if that congressional level of "optimism and enthusiasm" for reform can be maintained, he is "guardedly optimistic" the measure could become law.

Supporters of S. 5 say it is a "placeholder" bill, designed to get the matter on the Senate docket early with the understanding the measure might not be the final bill.

"We're glad to see it take such a high profile, and if it is in fact just a placeholder, we look forward to seeing the final bill when it is ready," said RIMS' Mr. Brown.

Victor Schwartz, senior partner in the Washington law firm Crowell & Moring and a longtime lobbyist for product liability reform, noted that the product liability bill is the only measure among the GOP leadership's top 10 that already has won congressional approval. He said this approach was better than attempting to draft yet another bill from scratch.

"To some extent, this can become a good poster child for reconciliation" because it has been passed twice by both houses and enjoys bipartisan support, he said.

By saying the bill is a placeholder, the measure's backers are signaling that they are willing to work with the administration to craft a measure, he said.

Mr. Schwartz cautioned supporters about reading a slight increase in GOP Senate strength as a sign that all ahead is smooth sailing. "We are going to have to work extraordinarily hard to get the 60 votes," to end debate on S. 5 and bring the measure to a vote, he said.

"One should never assume that any new senator will vote one way or another on this bill" until the vote is actually cast.