CERCLA, a/k/a Superfund

1. History

• Love Canal & Times Beach

• 1980: lame duck Congress

• “polluter pays”

• Burford era

Hypothetical:

• XYZ Corp. discovers groundwater contamination (benzene, zinc).

• Investigation reveals that prior owner – paint manufacturer – used these materials in the 1980s.

• Possibly getting into groundwater from buried disposal area (low spot that prior owner used for waste disposal).

What happens now?

CERCLA, a/k/a Superfund

1. History

2. Triggering Superfund

What makes a site a Superfund site? What sort of event triggers Superfund?

Removal or

Remediation, in response to a

Release, of

Hazardous substances

CERCLA, a/k/a Superfund

1. History

2. Triggering Superfund

Report HRS NPL NCP RI/FS ROD

CERCLA, a/k/a Superfund

1. History

2. Triggering Superfund

3. Liability

• Nature of

liability

•Strict

•Retroactive

•Joint and several

CERCLA & Retroactive Liability

Olin Corp (11th Cir. 1997):

• Bases for constitutional challenge to Superfund?

• Commerce Clause

• Ex post facto clause

CERCLA, a/k/a Superfund

1. History

2. Triggering Superfund

3. Liability

• Nature of

liability

• Liable parties “PRPs”

• “arranger”

• Transporter who selected site

• O/O at time of disposal

• Current owner

CERCLA, a/k/a Superfund

1. History

2. Triggering Superfund

3. Liability

• Nature of

liability

• Liable parties

• Defenses to liability

•Act of god

•Third party

•Innocent purchaser

CERCLA, a/k/a Superfund

• Owner liability: Shore Realty (2d Cir. 1985)

• How was Shore classified as a PRP?

• What defenses to liability did Shore raise? How did the court respond to them?

• What if Shore hadn’t known about the hazardous wastes on the property?

1963: A (owner of mfg plant) installs underground storage tanks to hold hazardous wastes.

1971: A goes out of business, clears the surface of the land, but leaves tanks in the ground (full).

1972: A sells land to B. B is unaware of tanks.

1973: Pinhole in tank: slow leakage begins and continues for 12 years.

1978: Contaminants migrate (via groundwater) across property line onto C’s property

1979: B sells land to D. C sells his land to E.

1985: Site (including parts of C’s and D’s land) listed on NPL. A, B, C, D, and E named PRPs.

“Innocent landowners”

• “all appropriate inquiry”

“Bona fide purchasers”

• All disposal occurred before the acquisition;

• Provided all legally required notices;

• Exercised appropriate care with respect to hazardous substances to prevent any threatened future release

• Provided full cooperation, assistance, and access responders;

• Complied with information requests;

• "windfall lien"

SUPERFUND

OPERATOR LIABILITY

1. Definition of “operator” – how much/what kind of control?

• Regulatory control – Stringfellow landfill

• Bestfoods case

U.S. v. Bestfoods (1998)

U.S. v. Bestfoods (1998)

1957: Ott Chemical Co. began manufacturing chemicals at plant

1965: CPC International Inc. incorporated a wholly owned subsidiary to buy Ott’s assets in exchange for CPC stock

1972: CPC sold Ott to another company.

1981: CPC and Ott named PRPs (among many others)

Is CPC an owner under Superfund? An operator by virtue of its ownership of Ott?

U.S. v. Bestfoods (1998)

Is CPC an owner under Superfund? An operator by virtue of its ownership of Ott?

Doesn’t CPC manage Ott for CPC’s benefit? CPC shares directors and officers with Ott for that purpose. Isn’t that enough to trigger operator liability?

Must CPC have managed the activities that caused the release in order to trigger operator liability?

May CPC monitor those activities without triggering liability?

SUPERFUND

OPERATOR LIABILITY

1. Definition of “operator” – how much/what kind of control?

• Regulatory control – Stringfellow landfill

• Bestfoods case

2. Secured creditor exemption

SUPERFUND

GENERATOR/ARRANGER LIABILITY

1. Definition and defenses

• Must generator’s wastes be “released”?

2. The Aceto Chemical case

Aceto Chemical (8th Cir. 1989)

ACETO & OTHERS

AIDEX CHEMICAL

Raw materials + instructions

Finished product

Spills,

On-site disposal

Are the raw materials “hazardous wastes”?

Did Aceto “arrange for disposal”?

Aceto Chemical (8th Cir. 1989)

Prima facie case of Superfund liability:

1. Aidex is a facility

2. A “release” of a “hazardous substance” occurred there

3. Release caused U.S. to incur response costs

4. Defendant is PRP – i.e., one of the classes of parties listed in Sec. 107(a) (subject to 107(b) defenses).

SUPERFUND

GENERATOR/ARRANGER LIABILITY

1. Definition and defenses

• Must generator’s wastes be “released”?

2. The Aceto Chemical case

3. Factors that trigger “arranger” liability

4. Superfund Recycling Equity Act of 1999

Superfund Recycling Equity Act of 1999

(a) Liability clarification.

(1) … a person who arranged for recycling of recyclable material shall not be liable under sections 107(a)(3) and 107(a)(4) with respect to such material.

(b) … "recyclable material" means scrap paper, scrap plastic, scrap glass, scrap textiles, scrap rubber (other than whole tires), scrap metal, or spent lead-acid, spent nickel-cadmium, and other spent batteries …

CERCLA, a/k/a Superfund

1. History

2. Triggering Superfund

3. Liability

• Nature of

liability

• Liable parties

• Defenses to liability

• Allocating liability

PROCESS:

•106 orders

•Orphan shares

•Mixed funding

How would you allocate liability among PRPs?

O’Neill v. Picillo (1st Cir. 1989)

1977-79: Farm used as dump site (10,000 barrels)

1979: Removal action undertaken; cost recovery action filed for past and future costs

35 PRPs :

• 30 settled for total of $5.8 million.

• 3 of 5 non-settlers held liable for remaining past costs ($1.4 million) and future (unspecified) costs not yet incurred.

• 2 PRPs successfully argued that EPA failed to show they contributed haz substances to site

O’Neill v. Picillo (1st Cir. 1989)

Is harm divisible?

2 of 3 non-settling liable PRPs appealed:

• 10,000 barrels total

• 7800 barrels removed in phases II and III of cleanup

• 59 barrels attributable to 2 PRPs. THEREFORE,

(59/7800) x $1,053,934 = our share• Actual vs. averted harm

The "Gore factors":

(1) the amount of hazardous substances involved; (2) the degree of toxicity of the substances; (3) the degree of involvement by parties in the generation, transportation, treatment, storage, or disposal of the substances; (4) the degree of care exercised by the parties with respect to the substances; and (5) the degree of cooperation of the parties with government officials to prevent any harm to public health or the environment.