Superfund Liability is a Major Migraine that is Not Going Away

Do not be fooled into thinking you are free and clear – or even at a reduced risk. You would be wrong. In fact, Superfund liability remains a headache for the recycling industry that simply will not go away.

First and foremost, the U.S. EPA is not going away. More pertinent and immediate is the fact that government – both federal and state – will always need money to clean-up hazardous messes and that money must come from somewhere. Where? Well, it could very likely be from YOU whether or not you are responsible for the mess.

We are talking BILLIONS of dollars extracted from private businesses just like YOURS. 

The Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. §9601 et seq. (1980)) — otherwise known as CERCLA or Superfund – creates an essentially privately-funded Federal “Superfund” to clean up uncontrolled or abandoned hazardous-waste sites as well as accidents, spills, and other emergency releases of pollutants and contaminants into the environment. The Superfund law is a strict-liability statute, with joint-and-several and retroactive liability. In practice, this means that any and all parties who ever have handled waste materials now in a hazardous-waste site are potentially responsible for part or all of the cleanup cost.

Through CERCLA, EPA was given power to seek out “potentially responsible parties” (PRPs) for any release and assure their cooperation in cleanup efforts. U.S. EPA is authorized to implement the Act in all 50 states and U.S. territories. Superfund site identification, monitoring, and response activities in states are coordinated through the state environmental protection or waste management agencies. The intent of the Superfund law is for responsible parties to pay 100 percent of the cleanup costs, including the Environmental Protection Agency’s (or other agency’s) investigation and oversight expenses, for sites that are deemed hazardous.

Recyclers Beware!

While CERLA was never intended to subject Superfund liability on those processing and handling traditional recyclables, a series of U.S. court rulings interpreting the sale of recyclables as “arranging for disposal” put a bullseye target on the recycling industry.  Citing the Superfund law’s remedial purpose, federal courts had interpreted broadly the law’s provisions, which impose liability on those who “arrange for treatment or disposal” of hazardous substances. Many of these courts had ruled that arranging for recycling constitutes an “arrangement for disposal.”^[i] These rulings had a significant negative impact on the recycling industry and placed recyclers at a competitive disadvantage to entities dealing in virgin materials.

Worse than the Tax Collector

Under CERLCA, all U.S. EPA has to do is assert that your company could have been responsible for part of the mess and – at the very least – you’ll have one serious headache with which to deal.  At worst case, you could face a crushing blow that might wipe out your business. Think that’s all? You’d be wrong again. Under its “polluter pays” principle and the law’s “cradle-to-grave” liability, U.S. EPA is authorized to – and has attempted in the past – to go after an individual’s personal estate even after the responsible party had long retired and left the business.

Despite all the rhetoric lately of reduced regulatory oversight, in fact, there is no slow-down in enforcement and collection of funds for “Superfund” cleanups. All one needs to do is look at the latest numbers. In fiscal year (FY) 2016, U.S. EPA pursued 11 enforcement agreements (settlements, consent decrees, and court orders) at a total of nine (9) Superfund sites across the nation for the cleanup of contaminated “sediments” at an estimated cost of more than $314 million. Another large settlement order in New Jersey involved contaminated groundwater and soil was valued at nearly $194 million, and there were others such as the $40 million settlement in Polk County, Tennessee, and a $27 million court order for clean-up in Washington State.

In total last year, the U.S. EPA cleanup enforcement program secured more than $1.1 billion in monies that will be used to clean up Superfund sites, replenish the Superfund Trust Fund, and reimburse the Agency for its past cleanup costs and administrative costs in managing the Superfund program. PRP’s were required to reimburse more than $55.3 million in clean-up costs from past site clean-ups, and required to commit more than $1 billion in new site clean-up work. These civil cases and consent decrees can all be viewed in detail on the U.S. EPA’s website.

Not Responsible for the Mess? – Who Cares? Pay UP!

In fiscal year (FY) 2016, U.S. EPA issued thousands and thousands of “potentially responsible party” letters to business owners indicating they owed money for clean-up costs in various communities and environmental justice areas – whether or not the business really had anything to do with the mess in the first place. Furthermore, states have enacted their own similar laws that enable state agencies to collect funds for clean-up of sites that the federal government passes over. So, even if you slide by overlooked by the federal government, the states have another shot at you and they are increasingly taking it.

One can get a severe headache just thinking about it. 

According to the U.S. EPA, for every one dollar spent on Superfund civil enforcement activity, approximately eight dollars in private party cleanup commitments and cost recovery is obtained for cleaning up contaminated sites across the country.

Relief for Recyclers

ISRI advocates that recycling is the opposite of disposal. Since recycling is not disposal, Superfund does not and should not apply. The “magic words” in Superfund that invoke liability say if you ‘arrange for disposal’ of something, you’re liable for its cleanup. As such, it should not apply to people that do not dispose but recycle this material. As such, ReMA embarked on what many dubbed impossible – get Congress to amend CERCLA, which would be only the third time in more than 20 years it had done so.

Following nearly a decade of aggressive no-surrender lobbying tactics on Capitol Hill, ReMA cheered as President Clinton signed into law the Superfund Recycling Equity Act on November 29, 1999. The new law provides a Superfund liability exemption for companies that process scrap paper, metal, glass, textiles, batteries, plastics and other materials. Under the Superfund Recycling Equity Act (SREA), someone who arranges for the recycling of recyclable material is not liable for cleanup costs as an “arranger” or “transporter” at a site where both the recyclable material and hazardous wastes are present. In short, arranging for recycling no longer amounts to arranging for disposal.

At last adhering to the recycling industry’s mantra that “scrap is not waste,” Congress enacted relief that is specific to and just for recyclers. ReMA successfully engineered the exemption for its members through a mix of skill, energy and pure drive from the desperation of the matter. As a veteran U.S. Senate Environmental Public Works Committee staffer, industry lobbyist and current ReMA Vice President of Government Relations Mark Reiter recalls, ”it was heart-wrenching listening to ReMA members tell story after story of how Superfund was crushing their businesses. Furthermore, just the threat of being named as a PRP was a headache that no recycler should have had to bare because they simply are not responsible and should never had been considered as such under CERLA.”

The Protective Shield ReMA Members Need

The SREA law relieves scrap recyclers of Superfund liability, both retroactively and prospectively under specific circumstances. It is not a “get out of jail free” card or an insurance policy, but it is darn close if – and only if – recyclers meet what are some very basic requirements of the law. While there are some exclusions to the recycling exemption, if a recycler can demonstrate it meets the outlined requirements of the SREA law, the recycling is not only exempt from Superfund liability, but is eligible for reimbursement of attorneys’ and expert witness fees incurred in defending against a lawsuit.

The basics are easy. First off, it only covers material that meets a specification grade, is traded in commerce and is used to make something new that was never in the chain, or was diverted from the waste stream and put into the recycling process. Second, the material must be shipped for recycling purposes. Third, recyclers must take some reasonable steps to ensure those they ship to are in compliance with applicable law and they must be in compliance with the law themselves. If a recycler either contaminated his own site or sent hazardous materials to another site that became contaminated, he would still be liable.

The most confusing – and yet to be officially defined by the courts or U.S. EPA – is the “reasonable” steps a recycler must take to ensure compliance of the consuming facility to which it ships recyclable material. For shipments and transactions occurring after March 2000 (90 days following enactment of the law), the recyclers must take “reasonable care” to determine the facility is in compliance with substantive provisions of federal, state, and local environmental law. 

Having a protective shield is only good if one can afford to have the shield. ReMA recognizes that the process of gathering compliance information from federal, state AND local governments is a herculean task and can be very expensive. As such, as an exclusive ReMA membership benefit, ReMA offers the SREA Reasonable Care Compliance Program to assist members get the protection they need. In short, the program digs through and collects compliance data on behalf of ReMA members requesting compliance information to meet the law’s requirements. All information on the program can be found at ISRI.org/SREA.

A Cure for the Headache

The Superfund Recycling Equity Act corrects the unintended consequences of Superfund and provides relief that recyclers desperately needed. It is really that simple. It restores recycling as a rewarded rather than punished activity and eliminates the headache of being associated as a potentially responsible party for the costs of hazardous spill clean-ups. But, recyclers need to request the cure in order to benefit from its relief. The ReMA SREA Reasonable Care Compliance Program makes this simple.

The SREA law makes it clear that recycling is not disposal or treatment within the reach of U.S. EPA Superfund authority – a pretty potent aspirin for the really bad headache that EPA had become on this issue.

For more information about the ReMA SREA Compliance Program, contact ReMA General Counsel Thomas Casey or Shelley Backstrom.

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