SECTION 3m(a)(1) OF THE COMPREHENSIVE ENVIRONMENTAL
RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1QRO
(CERCLA or SUPERFUND)
A Report to Congress on the Environmental Protection
Agency's Experience With Implementing Superfund
December 1984

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CERCLA 301 STUDY EXECUTIVE SUMMARY
The Comprehensive Environmental Response, Compensation, and Liability
Act of 1980 (CERCLA or Superfund) provides the President with broad authority
to respond to the release of hazardous substances into the environment. This
broad authority permits the President to finance the cleanup of hazardous sub-
stance releases with funds from the $1.6 billion Hazardous Substance Response
Trust Fund (Fund) or to require responsible parties to finance cleanup action.
Fund money is derived from taxes levied on certain petrochemicals, inorganic
raw materials, as well as domestic crude oil and imported petroleum products.
Under Executive Order 12316, the President delegated primary responsibility
for implementing CERCLA to the Environmental Protection Agency (EPA).
Section 301(a)(1) of CERCLA requires the President to submit a compre-
hensive report to Congress on experience with implementing Superfund. Sections
301(a)(1)(A) through (I) require that the report address at least nine separate
issues including the effectiveness of the Superfund program, income into and
expenditures from the Fund, the extent of the hazardous substance release
problem, alternative tax schedules for financing the program, and the economic
impacts of the current tax on the nation's balance of trade. The "301 study"
has been designed as seven separate studies to fulfill the mandate under section
301(a)(1) of CERCLA.
The general purpose of the "301 study" is to provide information to Congress
and other interested parties on EPA's experience in implementing Superfund. In
particular, the study provides important information to assist Congress in
developing a new bill to reauthorize the program. Reauthorization is necessary
because the authority to collect taxes to finance Superfund activities expires
September 30, 1985.
The executive summary highlights the major findings or conclusions of each
study. The 301(a)(1)(A),(C),(F), and (G) studies are presented first because
they are considered to be the most important. The "A" study describes the
current program and evaluates its effectiveness in carrying out the CERCLA
mandate. The "C" study examines the extent of the hazardous substance release
problem by discussing the scope of the current program, estimating future
funding needs, and examining the potential for expanding the focus and
character of the current program. The "F" study examines the impacts of the
current tax on the Nation's balance of trade with other countries. The "fi"
study presents options for designing a new CERCLA tax to finance Superfund
after expiration of the current tax authority.
301(a)(1)(A) — EFFECTIVENESS OF THE SUPERFUND PROGRAM
Section 301(a)(1)(A) of CERCLA requires a study which examines "the extent
to which the Act and [the Hazardous Substance Response Trust] Fund are effective
in enabling Government to respond to and mitigate the effects of releases of
hazardous substances." The "A" study describes how EPA has conducted the three
major components of the Superfund program -- removal, remedial, and enforcement
actions. The study discusses EPA's goals and policies associated with each of
these three activities, analyzes how the goals and policies of these activities
have changed over time, and presents the Agency's accomplishments 1n light of
these changes.

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Goal s and Policies. The general goal of the Superfund program is to pro-
vide a timely and cost-effective response to the release of hazardous substances
to ensure adequate protection of public health, welfare, and the environment.
Three separate but often interrelated components — removal, remedial, and
enforcement -- have been designed to enable EPA to achieve this goal. The
National Oil and Hazardous Substances Pollution Contingency Plan (NCP) provides
the regulatory framework for implementing the three major components of the
Superfund program.
Section 104 of CERCLA authorizes both removal and remedial actions. The
removal program is designed as a quick response program for abating or minimizing
an immediate threat resulting from the release of hazardous substances into the
environment. Removal actions are limited in scope by section 104(c)(1) of CERCLA
to $1 million in costs and six months in duration, unless specific exemption
criteria are met. CERCLA does not define a role for State participation in
removal activities.
The remedial program is designed as a longer-term response program that
addresses the most serious hazardous release problems and provides the most
extensive cleanup. A remedial action must be consistent with a permanent
remedy and is taken in lieu of, or in addition to, removal actions to prevent
or minimize the effect of migrating substances on present or future public
health, welfare, or the environment. States are required to pay 10 percent
of the cost at privately-owned sites and at least 50 percent of the costs at
publicly-owned sites. States may also take the lead in conducting remedial
actions. Remedial actions cannot, however, be undertaken until the State
and EPA implement a formal agreement that defines respective roles and respon-
sibilities in conducting such action.
The remedial program has two distinct phases. The first phase is site
discovery and investigation. During this phase, EPA identifies and investigates
potential hazardous releases, scores sites using the Hazard Ranking System (HRS),
and lists those sites with a score of 28.5 or more on the National Priorities
List (NPL). The second phase is planning and implementation of remedial cleanup
activities. Only those sites listed on the NPL are eligible for Fund-financed
remedial actions. This phase includes developing an agreement between EPA
and the State governing site actions, initiating and preparing the remedial
investigation and feasibility study, selecting the preferred cleanup remedy,
and designing and constructing the remedy.
The enforcement program is designed to compel responsible parties to
finance and conduct appropriate response actions, and to recover the costs
of removal and remedial response actions financed with CERCLA funds. Sections
106 and 107 of CERCLA form the basis of this enforcement authority. Section
106 authorizes the use of administrative orders or the pursuit of civil actions
to compel responsible parties to undertake cleanup action. Section 107 makes
responsible parties liable for the costs incurred by Federal or State Govern-
ments or private parties that conduct response actions consistent with the NCP.
Negotiation with potentially responsible parties is an important part of
the enforcement process. Negotiations are conducted either to secure respon-

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sible party action to fund or conduct cleanup, or to recover CERCLA funds
al ready expended. Negotiations for removal actions are of relatively short,
duration. Negotiations for remedial actions are generally of longer duration
and may take place before, during, or after a response action, depending upon
site circumstances as well as the nature and immediacy of the threat. EPA
makes a site-by-site determination on whether to pursue negotiations or Fund-
financed cleanup. The need for prompt response affects this determination.
The three major components of the Superfund program are interrelated
in several ways. For example, at some sites a removal action may constitute
a final action to abate a threat. At other sites removals may be conducted
prior to or concurrent with a remedial action to stabilize conditions on-site,
while more extensive remedial actions are being planned or carried out.
Similarly, EPA may conduct preliminary assessments or investigations to deter-
mine that removal or remedial actions are necessary, hut may secure responsible
party agreement to conduct such action through the negotiation process before
or during Fund-financed actions. Finally, negotiations or enforcement actions
may be necessary after a removal or remedial action is completed to recover
CFRCLA funds used to finance such action.
Policy Changes. The Superfund program has undergone major policy changes
during the past four years which have significantly affected the implementation
and accomplishments of the program. Some changes evolved from the Agency's
growing experience in addressing the hazardous substance release problem and
in implementing a new program. Other changes resulted from a major reevaluation
of the program undertaken in the spring and summer of 1983. These policy changes
resulted in significant shifts in approach and emphasis in the Superfund program.
Policy changes which have significantly affected the operation of the
Superfund program include changes with respect to responsible party negotiations,
States' cost-sharing requirements, the pace and scope of removal actions, overall
program management, and community relations. These policy changes are briefly
discussed below.
The most significant change that occurred in 1983 was a shift from FPA's
policy of negotiating with responsible parties prior to CERCLA response
action to more prompt use of Fund resources and formal enforcement measures
to expedite responses to hazardous substance releases. The initial emphasis
on negotiations to achieve responsible party cleanup was designed to conserve
Fund resources for responses at sites with no potential responsible parties
or where enforcement efforts had failed. This policy, however, led to signif-
icant delays in achieving cleanup. EPA, therefore, developed a new approach:
initiating Fund-financed response more promptly for both removal and remedial
actions; targeting enforcement resources on those sites where there is a
greater likelihood of successful action; and participating in a formal enforce-
ment process which moves from negotiation to civil or administrative enforcement
in a reasonable timeframe.
A second policy change that affected the Superfund program related to the
timing of the States' cost-sharing requirement for remedial actions. Initially,

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States were required to provide their ten percent cost-share during the
planning stage (i.e. remedial investigations and feasibility studies) of
the remedial response. This meant that States were required to commit funds
prior to the determination of the extent and cost of cleanup. Significant
delays in initiating responses occurred in instances where States were unable
to provide their required cost-share. In light of this problem, EPA shifted
Agency policy to require State cost-sharing only during the implementation
of the cl eanup.
A third important, policy change affected the pace and the scope of the
removal program. During the first years of the program, EPA initiated Fund-
financed removal actions only in urgent situations. The emphasis was on
encouraging States and responsible parties to undertake removal actions.
EPA now permits removal actions to occur at sites with potential as well as
existing threats. EPA had also initially limited the scope of removal actions
at NPL sites to small-scale stabilization actions to reduce only the most
imminent hazards (e.g. fires and explosions). EPA policy was changed to
encourage removals at NPL sites that involve a more extensive surface cleanup
to prevent the need to conduct subsequent stabilization actions.
A fourth policy change affected general Superfund program management.
During the first years, decision-making and approval authority for Superfund
actions were centralized at the EPA headquarters senior management level.
Since the spring of 1983, EPA has decentralized the program by delegating
decision-making and implementation authority to Regional Offices. This decen-
tralization has shortened the timeframe for approval of removal and remedial
actions and has eliminated burdensome steps in the process.
A fifth policy change affected the community relations program. EPA
initially encouraged flexibility in tailoring community relations activities
at each site. By 198?, EPA determined that a more formal structure for con-
ducting community relations would improve the ability of the program to pro-
vide the public with an opportunity to contribute to the decision-making
process and to channel information to and from the public. This policy
requires: the development of a site-specific community relations plan to
identify on-going communication activities with the community; a review by
the public of site studies and alternative remedies under consideration by
EPA; and a summary of EPA's response to the public's concerns.
Accomplishments of the Superfund Program. The pace of the Superfund pro-
gram waTTrTrniTT7-sTowT Over the past two years, however, program activities
and accomplishments have grown.
EPA has established the Emergency and Remedial Response Information
System (ERRIS) which contains information on approximately 19,000 potential
hazardous waste sites. EPA has devoted a considerable amount of resources
to investigating these sites to determine whether they pose an Imminent and
substantial danger to public health, welfare, or the environment that warrants
removal or remedial action.

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Through FY 1984, FPA has completer! preliminary assessments at more than
10,700 sites as well as site inspections at approximately 3,fi00 sites. The
Hazarrl Ranking System (HRS), which scores potentially hazardous sites accord-
ing to their relative degree of hazard, has been used to score approximately
1,700 sites. Sites scored by the HRS that meet specific criteria are then
placed on the NPL for potential remedial action. As of May 1984, EPA had
placed 410 sites on the NPL. In September of 1984, the NPL was updated to
include 128 additional sites. The second NPL update, announced in October of
1984, proposes to add an additional 244 sites to the list. Only those sites
listed on the NPL are eligible for Fund-financed remedial action.
Through FY 1984, EPA and the Coast Guard initiated 472 removal actions,
329 (78 percent) of which were initiated in FY 1983 and FY 1984. The cost
of these actions was more than $87 million. These figures indicate the
dramatic increase in the pace of the removal program during the past two
years. The level of removal activity is particularly important since removal
actions are the mechanism EPA uses to respond to sites which pose the most
significant threat to public health, welfare, or the environment. Removal
actions may be taken at those sites not eligible for longer-term remedial
action (i.e. non-NPL sites) or at NPL sites requiring short-term immediate
responses.
In addition to direct Fund-financed removal actions, EPA and the U.S.
Coast Guard monitor short term cleanup actions by the States and responsible
parties. FPA encourages and assists these non-Federal response efforts.
EPA also monitors these activities to ensure that appropriate cleanup action
occurs. If responsible parties or the States fail to respond adequately, EPA
may assume cleanup responsibilities. EPA and the Coast Guard provide on-site
monitoring at 300 to 500 sites per year.
The pace of the remedial program has increased significantly during Fiscal
Years 1983 and 1984. Remedial action (i.e. construction of a "permanent"
remedy) has been completed at only a few sites. Significant interim accomplish-
ments, however, more accurately reflect efforts to undertake remedial responses.
Fund-financed remedial investigations (RIs) and feasibility studies (FSs) are
underway at 290 sites. Fund-financed remedial designs have been initiated at
34 sites, and construction has been initiated at 29 sites.
EPA's Superfund enforcement efforts also reflect significant accomplish-
ments, especially during the past two years. For example, enforcement actions
through the end of FY 1984 have resulted in responsible parties commiting to
undertake RI/FSs at 25 NPL sites and cleanup actions at 22 NPL sites. Total
Fund-financed and responsible party RI/FS, then, have been initiated at 315
NPL sites, design at 56 NPL sites, and construction at 51 NPL sites.
Negotiations to gain responsible party cooperation in undertaking specific
investigative or cleanup actions have resulted in 144 consent decrees and consent
administrative orders, 100 of which were reached in FY 1983 and FY 1984. The
value of these 144 settlements which resulted in both removal and remedial activ-
ities by responsible parties is valued at more than $310 million.

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EPA has also issued 111 unilateral administrative orders to compel private
parties to undertake investigative or cleanup activities, 107 of which were
issued in FY 1983 and FY 1984, In instances where responsible parties fail
to comply with such orders, EPA may initiate treble damage suits. In addition,
the Department of Justice (DOJ) has filed 72 civil litigation cases to compel
responsible party cleanup.
The success of these enforcement efforts is encouraging and important
in conserving Fund monies. EPA has demonstrated its commitment to seeking
negotiated settlements when possible, but has also demonstrated the Agency's
willingness to proceed with formal enforcement mechanisms when negotiations
do not result in appropriate responsible party action.
Cost recovery of Fund-financed actions was initially slow. This was due
to EPA policy that such actions be initiated once removal or remedial actions
have been completed. Time is also required to secure adequate documentation
and prepare cases for DOJ. Nevertheless, EPA has reached settlements or
judgements resulting from 33 separate actions for a total of $6.6 million.
The 301(a)(1)(D) study discusses cost-recovery accomplishments and efforts
in greater detail.
301(a)(1)(C) — EXTENT OF THE HAZARDOUS RELEASE PROBLEM AND FUTURE
FUNDING NEEDS	—
Section 301(a)(1)(C) of CERCLA requires a study which provides "a pro-
jection of any future funding needs remaining after the expiration of authority
to collect taxes, and of the threat to public health, welfare, and the environ-
ment posed by the projected releases which create any such needs." The "C" study
provides the basis for determining long term funding needs for the Superfund
program. In doing so, the stiKly characterizes the nature of the hazardous sub-
stance release problem, examines the scope and future funding needs of the
current program, as well as the potential for expanding the current scope of
Superfund.
Threats Posed by Hazardous Substance Releases. Hazardous substance
releases listed on tne NPL are typically characterized by three factors:
substances present at sites are inherently hazardous to health; routes of
exposure to the substances exist; and target populations and environments
are present that may receive exposure to hazardous substances.
The twenty-five substances most frequently found at NPL sites (including
lead and PCBs) have widely differing toxicities. However, among the properties
of these substances, nearly half are known or suspected carcinogens; seven are
very toxic to aquatic life; nine are known to be mutagens; seven are known
teratogens; and seven will ignite at room temperatures. Additionally, many
sites contain hazardous substances that may work synergistically to cause or
enhance a variety of toxic effects.
Scope of Superfund and Future Funding Needs. Over the past four years, EPA
has made progress in discovering potential hazardous substance releases. Approx-
imately 19,000 sites are now listed in EPA's hazardous substance inventory (ERRIS).

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EPA has also made progress in investigating releases and listing the most serious
ones on the NPL for potential remedial action. As of October 1984, 538 sites are
listed on the NPL, with an additional ?48 sites proposed for listing.
EPA expects that many of the sites that will be targeted for Superfund
cleanup in the future will pnse threats resembling those that are currently
listed on the NPL. The current inventory of sites and anticipated new additions
will produce an NPL of 1,500 to ?,500 sites over the next several years. EPA's
baseline estimate, using current program experience, is that the NPL will in-
crease to approximately 1,800 sites.
To address an NPL of 1,800 sites, with an average remedial cost of $8.1
million and expected responsible party contributions of 50 percent of the cleanup
costs, future funding requirements would total "511.7 billion (FY 83 dollars).
This estimate includes costs of remedial and removal responses, support and
enforcement, as well as reimbursement to the Fund from responsible parties.
The central estimate is based on the assumption that the scope of the Superfund
program will remain similar to FPA's experience with the program to date.
Recause of uncertainties in the projections, a central range of future
funding needs is estimated as well. Depending on assumptions about the size
of the NPL, the average cost of remedial action, and the level of responsible
party contributions to cleanup actions, future funding needs could range from
$7.6 to $22.7 billion, in FY 83 dollars.
Potential Expansion in the Focus of the Superfund Program. While FPA's
response authority under CERCLA is extremely broad, these central estimates
of funding needs are based on the assumption that the Superfund program will
remain similar to EPA's experience with the program to date. The emphasis
over the past four years has been on traditional hazardous waste sites and
obvious release problems. More recently, however, the focus and character
of the program appear to be expanding to include sites that will require
more intensive discovery efforts as well as problems that are new to Superfund.
If EPA were to undertake a targeted, systematic discovery and investiga-
tion effort into these program areas, the size of the program could increase
substantially. The emerging problem areas include the following:
° RCRA Subtitle C Facilities: Approximately 130 of 960 privately-owned
land disposal facilities and approximately 475 of 3,520 privately-
owned storage and treatment facilities are expected to close for
financial reasons. As long as these facilities continue operating,
RCRA provides sufficient authority to require owners and operators
to control and cleanup hazardous substance releases. However, once
the facility is inactive and if the owner does not have the financial
capability to correct the problem, the facility may be a potential
Superfund site. There are 45 RCRA facilities on the final and second
update to the NCP.
° Municipal Landfills: Approximately 1?,000 to 18,000 municipal landfills
are currently operating, with up to twice as many that are inactive.
Many of these received hazardous wastes prior to the RCRA notification

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requirements and some still receive hazardous wastes of small quantity
generators and households. There are currently 163 sites on the final
and second update of the NPL that are classified as containing municipal
refuse or as municipally-owned landfills.
0 Industrial Landfills: Approximately 75,000 industrial landfills are
currently operating, some of which contain and/or continue to receive
hazardous wastes. There are 107 sites classified as commercial/
industrial landfills on the final NPL, and ?7 more have been proposed
for 1isting.
° Mining Waste Sites: Approximately 10,000 to 64,000 active and inactive
mines may be of concern for Superfund. Mining wastes may include heavy
metals such as lead, arsenic, and cadmium, radioactive materials, as
well as ashestos. There are 15 mining wastes sites on the final NPL,
and three more are proposed for listing. Ore processing and smelting
operations are represented by an additional 16 sites on the final
NPL, and one more has been proposed for listing.
° Leaking Underground Storage Tanks: There are approximately 11,250
to 187,500 non-petroleum sites with 1 eaking underground tanks that
contain hazardous substances. The 1984 RCRA Amendments regulate
underground tanks through various notification, inspection, monitoring,
and corrective action requirements. There are 34 underground tank
sites on the final NPL, and 23 more have been proposed for listing.
° Contamination from Agricultural Uses of Pesticides: To date, at least
15 pesticides have been discovered in ground water in over twenty states.
This source of contamination has occurred through the routine applica-
tion of pesticides for agricultural use. There are six pesticide con-
taminated sites proposed for inclusion on the NPL.
° Radioactive Sites: The Nuclear Regulatory Commission (NRC) administers
8,900 materials licenses; agreement States administer an additional
13,000. FPA does not respond to radioactive releases from facilities
holding a current materials license since NRC has adequate authority
to control such releases. EPA does, however, consider former NRC
licensees and State licensed facilities for NPL listing. There are
34 final and proposed sites on the NPL containing radioactive materials.
Until systematic identification and investigation of these different types
of sites is undertaken, it is impossible to estimate the total number of sites
that could become Superfund problems. However, even if a small fraction of these
sites require Superfund response, the funding needed to address them would over-
whelm the central estimates currently projected for the Superfund program.
Finally, it is possible that a large number of sites that have been
investigated but that do not score high enough on the Hazard Ranking System
may pose hazards that will need to be addressed by Superfund at some point
in the future. These additional listings, like the above problem areas, have
important implications for expanding the focus of the Superfund program.

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301(a)(1)(F) — THE IMPACT OF THF CERCLA TAX ON THE NATION'S RALANCE OF
TRADE
Section 301 (a)(1)(F) of CERCLA requires a study which analyzes "the
impact of the taxes imposed by Title II of this Act on the Nation's balance
of trade with other countries." This study examines the impact of the current
tax as required by CERCLA. However, it also provides a framework for analyzing
the foreign trade effects of various alternative taxes.
CERCLA imposes a tax on 11 petrochemicals, 31 inorganic raw materials,
as well as crude oil and petroleum products. Approximately 87 percent of
the revenues generated from this tax have been derived from taxes on the
chemical raw materials referred to as feedstocks. The tax is imposed on
both domestic and imported feedstocks but not upon imported intermediate and
final products made from these basic feedstocks. Thus, the prices of
domestically-produced intermediate and final products presumably reflect the
CERCLA tax while foreign-produced products do not. Since chemical markets
are generally price-competitive, this situation has implications for U.S.
domestic and export markets. Exports represent a major market for many
domestic chemical producers as well as a significant positive contributor to
the U.S. balance of trade.
The "F" study has two objectives. The first is to determine whether
the CERCLA tax has actually led to higher imports and/or lower exports due
to an increase in prices resulting from the CERCLA tax. The second objective
is to investigate the hazardous waste management policies of those countries
whose chemical producers compete with U.S. producers. Knowledge of whether
foreign competitors are required to absorb costs associated with releases
of hazardous substances will contribute to an understanding of the relative
burden imposed on U.S. producers.
Impact on Balance of Trade.
° Although the U.S. chemical trade surplus has narrowed since 1980,
this reduction is small relative to the overall deterioration in the U.S.
trade balance. More important, the U.S. has not lost market share in world
chemical exports since the enactment of CERCLA. The U.S. has historically
maintained a substantial surplus in chemical trade that amounted to a record
%U. 1 billion in 1980, ill.7 billion in 1981, $10.4 billion in 198?, and *9
billion in 1983. Despite this decline, the U.S. share in world chemical
exports in 1983 — 17 percent -- was the highest in more than 10 years.
° U.S. imports of CERCLA-taxed feedstocks exceed U.S. exports. The
U.S. trade deficit in taxed feedstocks amounted to an average of $725 million
annually in 1980-1983. Most of the taxed feedstocks are net import goods, so
that the effect of the current excise tax on the U.S. trade balance in feed-
stocks is unlikely to be significant because both imported and domestically
produced feedstocks are taxed.
° Global recession, decontrol of U.S. crude oil prices, changes in
exchange rates, and increases in foreign chemical production capacity overwhelm
any potential effects of the excise taxes imposed by CERCLA on the U.S. balance
of trade. These other economic factors generally influence trade markets in
all sectors of U.S. industry and, thus, (1) are substantially more important

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for explaining changes in the overall U.S. trade balance, and (?) make it
difficult to isolate CERCLA's trade effects. For example, while the CERCLA
tax represents less than one percent of the price of the majority of taxed
feedstocks, the trade-weighted value of the dollar appreciated 61 percent
relative to other currencies between 198(1 and mid-1984.
° There is sufficient empirical evidence to conclude that the effect
of the CERCLA tax on U.S. trade in the five intermediate chemicals studied
-- cumene, styrene, ethylene glycol, acryl onitril e, and polypropylene --
has been insignificant compared to the effects of other economic factors.
During the recessionary period of 1982 and early 1983, the percentage increase
in price of these intermediate chemicals, assuming full pass-through of the
feedstock tax, was of the same order of magnitude as on their feedstock
inputs (approximately one percent). Recessionary conditions leading to low
capacity utilization, imports from plants in feedstock-rich countries, and
the strong dollar were the factors that affected the trade of these inter-
mediate chemicals since the CFRLCA tax was imposed. These recessionary
conditions may also have contributed to the intermediates being priced near
the cost of the feedstocks used to make them.
Foreign Hazardous Waste Management Policies.
0 Organization of Economic Cooperation and Development (OECD) legislation
and policy are guided by the "polluter pays" principle which suggests that
the burden of pollution control should be borne by the polluter. Most countries
have, however, found the principle difficult to implement due to the inability
to identify the responsible party or inability of the responsible party to
pay the costs of cleanup. Consequently, governments often assume the burden
of financing corrective measures.
0 There are laws in some OECD countries that address problems similar
to those addressed by CERCLA. No other country has, however, adopted a
CERCLA-type tax. Many countries have laws that are comparable to RCRA that
establish policy on the control and management of hazardous waste, including
transportation, treatment, storage, and disposal. There appears to he
some movement toward a CERCLA-like tax in a few countries.
0 Some OECD countries lag behind the U.S. in recognizing the problems
of hazardous wastes and in instituting effective remedies.
0 Legislative gaps between the U.S. and its OECD trading partners are
narrowing. The European experience seems to be following the U.S. experience
in that early environmental legislation covers primarily oil spills, water,
and air pollution.
301(a)(l)(R) — THE FEASIRILITY AND DESIRABILITY OF ALTERNATIVE TAX SYSTEMS
FOR SlIPERFliND	"
Section 301(aHlHG) of CERCLA requires the development of a study which
provides "an assessment of the feasibility and desirability of a schedule
of taxes which woul d take into account one or more of the following:

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0 the likelihood of a release of a hazardous substance,
° the degree of hazard and risk of harm to public health, welfare, and
the environment resulting from any such release,
0 incentives to proper handling, recycling, incineration, and neutrali-
zation of hazardous wastes, and disincentives to improper or illegal
handling or disposal of hazardous materials,
0 administrative and reporting burdens on Government and industry, and
0 the extent to which the tax burden falls on the substances and parties
which create the problems addressed by this Act."
The "G" study is essentially a study of alternative tax options that
could be used to finance the Superfund program. The study examines the feasibility
and desirability of five alternative taxes with regard to six evaluative criteria.
The tax options are designed to raise $1 billion annually. This revenue target was
chosen for illustrative purposes only and is used to ensure comparability among
options. The choice of a revenue target, specific tax rates, taxable substances,
and tax exemptions were necessary to conduct the analysis, and do not constitute
an EPA recommendation about an appropriate CERCLA tax.
The five tax options are derived from three general tax structures: a
feedstock tax, a waste-end tax, and a combination feedstock/waste-end tax. A
feedstock tax (e.g. the tax imposed under CERCLA) is imposed at the beginning
of the production process on the raw materials used to make the chemical
products associated with hazardous substance generation. A waste-end tax is
imposed late in the production process on the generation, transportation,
treatment, storage or disposal of hazardous wastes. A waste-end tax may be
collected from either generators or managers of treatment, storage, and disposal
facilities. A combination tax is imposed on both chemical raw materials or
feedstocks as well as on the generation and management of hazardous wastes.
The following highlights the tax options evaluated in this study:
0 Feedstock Tax I (Modified Rates) is a feedstock tax that increases
the existing CERCLA tax rates on the 43 substances identified in
section ??\ of CERCLA. The existing tax rates were multiplied by
3.43 to raise the level of revenue over a five year period from $1 .6
to $5 billion. This feedstock tax, like the current CERCLA tax, is
imposed at the beginning of the chemical production process and is
levied on the raw materials and primary petrochemicals believed to be
associated with the production of hazardous substances. The tax is
collected from a relatively small number of taxpayers.
° Feedstock Tax II (Modified Rates and Substances) is a feedstock tax
that is levied on a somewhat different set of substances than are
taxed under the current CERCLA tax. Taxable substances were selected
by examining FPA data to determine which substances have been found

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at sites likely to evoke Fund spending. A list of 48 substances were
identified for taxation. The tax rates for these substances were
calculated to reflect the frequency with which each substance was
found at sites. Tax rates were set to reach a revenue target of $5
billion over five years.
0 Maste-End Tax (Non-Incentive) is a tax on the generation of all
hazardous wastes regulated under the Resource Conservation and Recovery
Act (RCRA). Set at a flat rate of 54.73 per ton, this tax is not
designed to create strong incentives to reduce waste generation or to
alter waste management practices. While waste generation creates a
tax liability, the tax would not be collected until the waste is
treated, stored, or disposed in order to minimize the number of
taxpayers.
° Combination Tax T (Feedstock Tax and Non-Incentive Waste-end Tax)
combines elements of both a feedstock tax and a waste-end tax. The
feedstock tax component, designed to raise $500 million per year, is
identical to the Feedstock Tax II described above, except that the
rates have been reduced by one-half. The waste-end tax component,
also intended to produce $500 million annually, is based on the
waste-end tax described above but has a tax rate of $2.37 per ton.
The rationale for combining two taxes is the ability of the resulting
tax system to simultaneously achieve the strengths and benefits of
each individual component. There may, however, be synergistic effects
which are not experienced when using either tax by itself.
0 Combination Tax II (Feedstock Tax and Incentive Waste-End Tax) is
similar to the tax described above, but raises $800 million per year
from the feedstock tax component and $200 million per year from the
waste-end tax component. There are also significant differences in
the structure of the waste-end tax component. The waste-end tax
component is to be implemented in two phases. The first phase taxes
RCRA-designated hazardous wastes that are land disposed or stored in
surface impoundments or waste piles. The second phase, intended to
create strong incentives for reduced environmental risk, uses a
complex set of tax rates that depend on a number of environmental
factors and which rise over time.
Each tax option is analyzed in terms of:
0 Economic Impacts. These impacts include price and quantity changes
for the taxed substances as well as macroeconomic effects.
° Equity Implications. Equity is considered in terms of both
retrospective and prospective equity. The former measures the degree
to which a CERCLA tax is levied on those industries and substances
responsible for existing Superfund sites while the latter implies
that the tax burden faced by a particular firm ought to reflect the
likelihood that its activities will provoke Fund spending.

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° Fconomic Incentives. The types of incentives analyzer! include
incentives created by a CERCLA tax to reduce generated quantities of
hazardous wastes, to produce a less hazardous mix of wastes, to
encourage better waste management practices, or to engage in environ-
mentally unsound practices such as tax evasion and illicit disposal.
° Revenue Generating Capacity. For each tax, revenue generation is
assessed in terms of the ability of the tax to generate the requisite
funds and the predictability of the revenues generated.
° Administrative Feasibility. The administrative burden of each tax is
measured in terms of the difficulty associated with the identification
of taxable parties, substances, and activities; the overall reporting
and recordkeeping burden imposed by the tax; and the ability of
government agencies to monitor and enforce compliance with the tax.
° Programmatic Effects. Alternative tax options may affect both Federal
and State regulatory programs for the management of hazardous wastes.
A CERCLA tax may enhance, hinder or be neutral with respect to such
programs. Similarly, a CERCLA tax may have implications for State
tax revenues and authority.
Each of these criteria are used to evaluate the five tax options included
in the study. The study does not recommend a particular tax option because
doing so would require a decision about the relative importance of each
criterion. Further, there are key issues which are outside of the scope of
the 301(a) (1WG) study that clearly will prove critical during the reauthorization
of CERCLA. One example is the balance of trade effect of alternative CERCLA
taxes. As the 301 (a)(1)(F) study notes, the U.S. trade balance in chemicals
has worsened in recent years. Thus, any CERCLA tax (either feedstock or waste-
end) that creates a situation where taxed U.S. chemicals compete in world
markets with untaxed foreign chemicals, potentially exacerbates the erosion of
the U.S. trade balance in chemicals. In the context of reauthorizing CERCLA,
international trade effects would be an important consideration in the design
of alternate CERCLA tax options.
The key findings of the study are as follows:
° Virtually any CERCLA tax designed to raise $1 billion per year has
the potential to induce changes in the prices and quantities of the
taxed substances. For feedstock taxes, such changes are likely to
occur in the markets for primary petrochemicals and inorganic raw
materials. For a waste-end tax, these changes may include a reduction
in the quantity of wastes disposed or generated, higher costs for on-
site waste management and higher prices for off-site waste management.
Careful tax design can ensure that the adverse consequences of these
economic affects are minimized and that the changes that do occur will
be consistent with overall policy goals.
° The effect of the various taxes on macroeconomic indicators such as
employment and interest rates is expected to be negligible because

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the Si billion annual tax is only a small fraction of the nation's
gross national product (n.0?8 percent in 1984).
° The equity consequences of a particular CERCLA tax depend, in part,
on its basic design:
-- A feedstock tax, because it is imposed early in the production
process, is paid at some point in the manufacture or generation
of virtually all hazardous substances.
-- A waste-end tax may not have been collected in several situations
where Superfund spending is involved. The inadvertant spill of a
non-waste product or the illegal disposal of a hazardous waste
are two cases where the tax would not be paid despite a Fund
response.
-- A firm's tax burden under a feedstock tax does not necessarily
reflect the environmental risk associated with its waste management
activities. The tax also does not distinguish among the uses to
which a taxed substance is put, despite varying degrees of hazard.
A waste-end tax that reflects environmental risk may provide a
closer connection between a firm's tax burden and the likelihood
of provoking Fund spending.
0 Any CERCLA tax system may create economic incentives for changing
the hehavior of firms by modifying the relative costs of inputs
to the production process and/or the costs of hazardous waste
disposal. Feedstock taxes are generally not capable of creating
incentives for significant changes in waste management practices.
A waste-end tax, depending on its design, and the size of the tax,
may create some incentive for desirable behavior such as reducing the
volume of waste generated or encouraging environmentally preferred
waste management methods. Also, the tax, like other environmental
control costs (e.g. regulations) may increase the incentive for
generators to engage in undesirable behavior such as failure to report
waste activities and illegal disposal of wastes.
° All of the tax systems analyzed in the study appear capable of
generating $1 billion per year in revenues. Careful design and
implementation of the tax, however, are necessary to ensure full
collection of the tax. The current CERCLA tax demonstrates the
revenue raising potential of a feedstock tax, although its rates are
roughly one-third those necessary for a $1 billion tax. The experience
of several states indicates that, in spite of some initial difficulty
in estimating revenues, the waste-end tax is also capable of generating
significant amounts of revenue.
0 A feedstock tax imposes only a small administrative burden on both
the taxpayer and the IRS. Hepending on the set of substances included in
the tax base, an expanded version of the current feedstock tax is not
likely to add a significant number of new taxpayers and would not
require major changes in the existing tax collection mechanism. A

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waste-end tax may impose an added administrative burden on taxpayers
and the IRS, depending on the design and level of complexity of the
tax.
301(a)(1)(B) and (D) — HAZARDOUS SURSTANCE RESPONSE TRUST FUND RECEIPTS,
OBLIGATIONS, AND DISBURSEMENTS
Section 301(a)(1)(B) of CERCLA requires a study which presents "a summary
of past receipts and disbursements from the Fund." Section 301(a)(1)(D) re-
quires a study which provides "the record and experience of the Fund in
recovering Fund disbursements from liable parties." The data compiled to
fulfill the mandates under sections 301(a)(1)(B) and (D) are presented as two
separate components of one study. Sections (B) and (D) were combined into
one study because both require a review of related financial aspects of uses
and receipts of the Fund.
"B" Study. This section presents a variety of data on Fund receipts
and disbursements as required by statute as well as obligations against
the Fund. Obligations were included in this study because they reflect the
Agency's commitments regarding the pace and direction of the Superfund
program. This section of the study, therefore, identifies the source of
Fund revenues, how the revenue has been spent, as well as how EPA currently
plans to spend the remaining funds.
The text of the study presents Fund receipt, obligation, and disbursement
data. This data is presented in three exhibits: a balance sheet of Fund
receipts, obligations, and disbursements; obligations and disbursements for
various program activities (e.g. removal and remedial activities, enforcement
action, and research and development); and transfer allocations of CERCLA
funds to other Federal agencies participating in Superfund program activities.
The executive summary only presents data relating to overall Fund receipts,
obligations, and disbursements.
TRUST FUND RECEIPTS, OBLIGATIONS, AND DISBURSEMENTS

FY 81
(mil 1 ions of dol 1 ars)
FY 82 FY 83 FY 84
Total
FY 85
Est.
Est. Total
(FY 81-85)
Recei pts:
$153
$341
$332
$387
$1,212
$397
$1,609
Obiigations:
40
181
230
466
917
651
1,568
Di sbursements:
8
80
148
285
521
448
969
Unappropriated






54
Fund Bal ance:
78
229
351
277
277
54
Unexpended






$640
Fund Balance:
$145
$406
$590
$691
$691
$640
"H" Study. This section addresses EPA's cost-recovery efforts, including
actual funds collected, settlements reached, cases referred to the Department
of Justice (DOJ) for filing, and cases in development.

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Thp recovery of Fund disbursements is authorized by Section 107 of CERCLA.
Generally, section 107 provides that past and present owners, operators,
generators, and transporters of hazardous substances may be liable for the
costs of removal or remedial actions undertaken at those sites and for damages
to or loss of natural resources.
The primary objective of cost-recovery action is to provide reimbursement
of expenditures from the Fund. A secondary objective is to encourage voluntary
actions by responsible parties. Cost-recoveries include all payments or re-
imbursements to the Fund by responsible parties. A cost recovery, therefore,
includes payments by responsible parties into the Fund to (1) finance EPA
or State-lead cleanup activities before the work is undertaken, and (2)
reimburse the Fund for money al ready expended for site cleanup activities.
EPA's cost-recovery strategy generally calls for the initiation of cost-
recovery efforts as soon as cleanup activities end. Generally, this means
after the completion of a removal or remedial action. In some instances,
however, cost-recovery may he initiated after a discrete portion of remedial
work has been completed, depending upon individual circumstances and merits
of the case.
The cost-recovery program concentrated on removal actions during the
initial years of the Superfund program because these actions are typically
of short duration (i.e. less than six months'). Ry contrast, remedial actions
generally take several years to complete. The cost-recovery program will
focus on remedial actions in the coming years as more remedial actions are
completed. The following summarizes EPA's cost recovery efforts:
SUCCESSFUL COST RECOVERIES
Number of
Actions	Value
Cost Recovery Settl ements/ 33
Judgements
Cost Recoveries Collected:	$6,106,149
Cost Recoveries Outstanding:	535,047
Total:	*(5,641,19*
COST RECOVERY EFFORTS
Cases Filed:
Cases Referred to DOJ:
Cases in Development:
Total:
Number of
Actions	Est. Val ue
77	t 117,68ft,300
?6	13,006,300
19	7,049,200
TTT	*in/,/«3tRnn

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301(a)(1)(E) — STATE PARTICIPATION IN THE SUPERFUND PROfiRAM
Section 301(a)(1)(E) of CERCLA requires a study which provides "the
record of State participation in the system of response, liability, and
compensation established by this Act." The "E" study provides descriptive
and quantitative information on State participation in the Superfund program
in light of State resources and EPA policies over time.
The study includes a summary of CERCLA requirements and EPA policies
affecting State participation; a description of State activities in the
Superfund program including those associated with long-term remedial responses,
short-term cleanup responses, and enforcement action; and a description of State
hazardous substance cleanup programs including a summary of State financial and
other resource needs.
The analysis relies extensively on a survey conducted by the Association
of State and Territorial Solid Waste Management Officials (ASTSWMO) in the
Fall of 1983. The major findings or conclusions of the survey are discussed
below.
CERCLA Requirements and EPA Policies Affecting State Participation. CERCLA
establishes a clearly defined role for States in the Superfund program. The
Act requires that States participate in any remedial cleanup actions within
their boundaries, either cooperating with EPA on Federal lead projects or taking
the lead on the projects themselves. States must provide at least ten percent
of the costs of remedial action (if the site 1s publicly owned, the State
must pay 50 percent.), plus all operation and maintenance costs after the
first year.
In addition, States must follow certain notification requirements in CERCLA,
and States are authorized to submit site names for the National Priorities List
(NPL). In fact, among the 100 highest priority sites on the NPL, there must
be one for each State designated by the State as its highest priority.
EPA initially was responsible for almost all actions during the site discovery
and investigation phase of the program. However, during the last two years,
the role of States has expanded significantly 1n this area. States first re-
ceived grants for site discovery and Investigation work under the RCRA Section 3012
program. EPA has continued to follow up with assistance through cooperative
agreements.
State Hazardous Substance Response Activities. Although new sites
continue to be identified, It appears that the more serious and the more
obvious hazardous waste sites have been Identified. Therefore, the primary
emphasis currently 1s on site investigation, and most preliminary assessment
activity to Identify potential problems at individual sites is conducted by
the States.
A comparison of EPA's figures for total sites identified in each State
with estimates provided by States in the ASTSWMO survey indicates that both
EPA and State estimates are similar. EPA currently has approximately 19,000

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sites listed in the Emergency and Remedial Response Information System,
and the States have identified approximately 10,000 potential sites. However,
on a State-by-State basis, the EPA and State estimates vary widely.
EPA has started 290 remedial investigation/feasibility studies at NPL
sites, and at least 66 of these are State lead sites. As these projects move
into the construction phase over the next several years, States will be
required to provide their cost share for construction and will be required to
take over operation and maintenance after the first year. This 1s likely to
place a significant burden on States.
States have also undertaken some long term cleanups (i.e. cleanup
actions that cost more than $1 million) on their own. Since 1981 , 25 percent
of the 133 long term cleanups initiated by States have been completed. Roth
State funds and staff resources allocated to remedial or long term cleanup
activities have expanded over the past several years. Total State projections
for 1984 remedial funding levels show an increase of more than 100 percent
from the 1983 funding total of $126 million. For both years, States indicated
that CERCLA funds constitute the most important source for their remedial
response activities. Staff devoted to remedial activities were expected to
increase by 65 percent -- from 259 person years in 1983 to 428 person years
in 1984. The major source of funding for State remedial staff was expected
to come from State revenues.
State remedial resources and activities have remained concentrated in a
small number of States. EPA's remedial activities have been more widely
distributed across States.
State enforcement action is classified as the lead activity at 136 of
the 538 NPL sites, and 34 of the 248 proposed sites. There are, however, no
State enforcement authorities under CERCLA. States derive their enforcement
authority from a variety of State laws, which differ from State to State and
are not likely to contain the comprehensive authorities 1n CERCLA. Because
EPA does not monitor State enforcement activities, there is little data
avaialhle on the status of these actions.
States have reported over 2,000 sites subject to State enforcement
actions form 1981 through mid-1983. Many of these actions resulted in private
party cleanup. State resources devoted to enforcement totaled $4 million 1n
1983 and $6 million in 1984. Enforcement funding and staff, however, are
highly concentrated in a handful of States.
Data indicate that State sources account from the vast majority of sudden
release and removal funds available to the States. The number of removals or
short term cleanups conducted by both EPA and the States increased each
year between fiscal years 1981 -1983. The States have conducted more short
term cleanups than the Federal Government, but the scope of State cleanup
actions is unknown. States participate Informally 1n Superfund removal
actions.
An evaluation of the sources and amounts of State funds for hazardous
substance cleanup in fiscal years 1983-1985 indicates that 1n 33 jurisdictions,
$293 million was budgeted over this three year period. Amounts may vary
widely from jurisdiction to jurisdiction; however, those that reported the

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greatest expenditures and projected expenditures tend to contain numerous
National Priorities List sites. Data also show that approximately 66 percent
of the State's funds are available for cost-sharing.
With respect to legal and institutional constraints that have affected
State's capabilities to respond to hazardous substance releases, the data
support the need for States to obtain additional funding for personnel and
equipment. To achieve optimal staff levels, States' FY 1983 staff would need
to increase by 84 percent. In addition to the need for more funds, administrative
and institutional changes could benefit State programs. Hiring freezes and
salary limitations for technical personnel in conjunction with procurement
restrictions have impeded the progress of many State cleanup programs.
301(a)(1)(H/I) — ANALYSIS OF SUBSTANCES EXEMPTED FROM THE CERCLA TAX:
COPPER, LEAD, ZINC OXIDE, FERTILIZER FEEDSTOCKS, COAL-DERIVED SUBSTANCES,
AND RECYCLED METALS	
Sections 301(a)(1)(H) and (I) require a study which examines the impact
of "an exemption from, or an increase in, the substances or amount of taxes
imposed by section 4661 of the Internal Revenue Code of 1954 for copper,
lead, and zinc oxide, and for fertilizer feedstocks when used in the manu-
facture and production of fertilizers, based upon the expenditure experience
of Response Trust Fund" and "the economic impact of taxing coal-derived
substances and recycled metals." Together, the "H" and "I" studies require
analyses of various issues surrounding potential CERCLA taxation of: (1)
copper, lead, zinc oxide, and recycled metals, (2) fertilizer feedstocks and
associated substances, and (3) coal-derived substances.
Copper, Lead, Zinc Oxide, and Recycled Metals. Copper, lead, and zinc
oxide are not subject to taxation under CERCLA.' Recycled metals are not
expressly exempt from the tax. However, since the three metals which are
most often recycled -- copper, lead, and zinc — are not subject to taxation,
the need for this specific exemption was essentially moot when Congress
enacted CERCLA. The "H" and "I" studies examine two issues. First, whether
copper, lead, and zinc oxide should continue to be exempt from taxation.
This issue is addressed by reviewing:(1) EPA's experience in using CERCLA funds
to address sites containing those substances; and (2) whether there would
be a significant economic impact resulting from the taxation of those sub-
stances and recycled metals.
° Expenditure Experience Related to Copper, Lead, Zinc Oxide, and Associated
Substancis! The NPL is a reasonabl e proxy for the expenditure experience
of the Fund because Fund monies have already been spent characterizing
the NPL sites; some Fund resources have been spent carrying out or
approving remedial or removal actions at NPL sites; and these sites
represent the universe of remedial and removal actions likely to be
undertaken. Generally, evidence indicates that copper, lead, zinc,
and associated substances are found at a number of NPL sites, and that
Fund expenditures will be attributable to releases of these substances.

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° ToDDer lead, and zinc are among the most frequently detected sub-
: ,t NpL sites. Copper, lead, zinc, and related compounds
have been detected at 9*. 30%'. and 14% of the 538 updated NPL sites,
respectively. Lead is the second most frequently occurring hazardous
substance at NPL sites.
° Rased upon a sample of 73 NPL sites where laboratory tests have been
performed, copper, lead, and zinc each exceed detectable limits in
the vast majority of water and soil samples taken.
° Economic Impact of Taxing Copper, Lead, Zinc Oxide, and Recycled Metals:
A partial equilibrium economic model was developed for estimating the
impact of taxing copper, lead, zinc oxide, and recycl ed metals under
CERCLA. The model estimates the effects of alternative CERCLA tax
rates on the quantity of U.S. primary production, the quantity of U.S.
recycled production, the quantity of U.S. imports, and the market price.
Two types of CERCLA taxes can be examined by the model : a tax on U.S.
primary production, U.S. recycled production, and U.S. imports; and
exempting from taxation U.S. recycled production while taxing other
sources.
0 A tax on copper, lead, and zinc oxide comparable to current CERCLA
tax rates ($4.91 per metric ton for copper and lead and $3.93 per
metric ton for zinc oxide) would result in a minimal long-run
decrease in annual consumption and only a slight price increase
(under base case assumptions).
-- Copper: Annual decrease in consumption of one-tenth of one
percent and price increase of 0.2 percent, or $3.50 per
metric ton.
-- Lead: Annual decrease in consumption of one-tenth of one
percent and price increase of 0.6 percent, or $3.14 per
metric ton.
-- Zinc Oxide: Annual decrease in consumption of one-half of
one percent and price increase of 0.4 percent, or $3.84 per
metric ton.
° A tax comparable to current CERCLA tax rates would have little
significance for recycled copper, lead, or zinc supply.
Fertilizer Feedstocks. CERCLA exempts the following feedstocks from
taxation when used in the production of fertilizers: ammonia, methane used
to make ammonia, sulfuric acid, and nitric acid.
0 Expenditure Experience Related to Fertilizer Feedstocks: Expenditure
experience of the Fund with respect to fertilizer-related materials
can be defined as expenditures pertaining to actual or potential removal
or remedial actions. Since fertilizer-related releases are most likely
to be spills which occur during distribution, removal rather than
remedial responses are more relevant.

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There is little evidence that Fund resources have been or may be
used to respond to fertilizer-related chemicals. Of approximately 210
removals that occurred between December 1980 and September 1983, only
one is likely to be fertilizer-related. Similarly, analysis of remedial
action data indicate no information which clearly suggests fertilizer-
related Fund expenditure experience.
° Economic Impact of Taxing Fertil izer Feedstocks: The impact of taxing
fertilizer feedstocks at current CERCLA levels is unlikely to signifi-
cantly affect farmers. The demand for fertilizers is relatively insen-
sitive to price changes. This means the tax could probably be passed on
to farmers. The tax at current levels constitutes less than one percent
of ammonia prices, and less than 0.5 percent of sulfuric acid and nitric
acid prices. Fertilizers constitute approximately seven percent of farm
input costs. Even if the tax were fully passed on to farmers, the tax
would constitute no more than a 0.07 percent cost increase. This increase
is minor when contrasted with other factors affecting agriculture such
as interest rates, foreign trade policy, and weather patterns. Similarly,
the effect on fertilizer markets would also be small.
Coal-Derived Substances. Coal-derived substances are currently exempt
from taxation under CERCLA. At present, a tax on coal-derived feedstocks
would affect two industries -- the metallurgical coke industry and the synthetic
fuels industry. Feedstocks produced from coke oven by-products include benzene,
toluene, xylene, naphthalene, and ammonia. For the coal-based synthetic fuel
industry, only limited amounts of ammonia production would be subject to the tax.
Taxing coal-derived substances using the existing list of feedstocks and
tax rates established under CERCLA would generate approximately $2 million to
$4 million annually. Over ninety percent would be derived from coke oven
by-products. The elimination of the current exemption would probably have a
minor effect on the quantity of coal-derived substances produced because the
tax would not affect the amount of crude by-products recovered in the coke-
making process, and the price that producers receive for their coal-derived
substances is often determined by petroleum-derived substances. The Inability
of producers of coal-derived substances to pass on the tax in the form of
higher prices would result 1n an additional operating cost that would generally
have to be absorbed by the U.S. steel industry. The level of the current tax
is not, however, likely to be large enough to significantly affect the com-
parative economics of steel production.
Only limited amounts of ammonia production used for coal-based synthetic
fuel projects would be subject to the tax. Tax revenues from three projects
would be less than $400,000 annually. These costs would be absorbed by the
projects as the price of ammonia 1s based on more efficient production methods
for ammonia. Since these projects would likely be subsidized, the level of
subsidy would need to be increased or a lower return would have to be expected.

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