Superfund: 20+20 = 40

Posted on January 14, 2020 by John Barkett

It seems hard to believe that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)—affectionately known as the Superfund law—will be forty-years old in December 2020.

I first became involved with CERCLA in 1981, a few months after the law’s adoption. The State of Florida’s environmental regulatory agency was concerned about a transformer salvaging operation. It feared that mineral oil containing polychlorinated biphenyls that had been spilled on the ground would be carried throughout the surrounding area if a hurricane hit Miami and caused severe flooding. So it called on the Environmental Protection Agency to conduct a removal action – an emergency response – under CERCLA. That led to a lawsuit to gain access.  I represented a utility that had sold transformers to the salvager. A federal district court judge set a hearing on EPA’s motion for a preliminary injunction to gain access and allowed two weeks for discovery.  The judge also ordered the utility to intervene in the action.  We were taking depositions around the clock until the judge called us into chambers just before the hearing was scheduled to begin. We left chambers and headed not to the courtroom but to a hotel where we were ordered to engage in settlement discussions and not to return until a settlement had been reached.  The settlement was reached.  No hurricane hit.  The site was eventually remediated.  And acronyms like RI/FS, RD/RA, PRP, and NPL became a part of my daily vocabulary.

This case, however, was not the norm.  Once Chem-Dyne came down establishing the principle that in a government cost recovery action, the Superfund law created joint and several liability, and other cases affirmed EPA’s position that liability was also strict and retroactive, the litigation floodgates opened.  To conserve enforcement resources, EPA (the United States) sued “deep pocket” parties. Those parties then sued other PRPs who sued other PRPs—waves of multi-party actions.  The calls to members of Congress became louder as pizza parlors were spending more money on lawyers for the hazardous substances in the ink on their pizza boxes than they could make on a calzone.

Reforms eventually followed in the next two decades of Superfund.  The Superfund Amendments and Reauthorization Act (SARA) in 1986 plugged some holes in the statute and expressly provided for contribution actions.  The “innocent landowner” defense was added and literally created an industry – environmental assessment firms sprung up over night offering their services to anyone buying land or lending money for a real estate acquisition. 

Other amendments followed.  Section 107 of CERCLA initially ended in subparagraph (m).  Now there is a subparagraph (n) to protect fiduciaries, (o) to protect “de micromis” parties, (p) to create a municipal solid waste exception, (q) to address contiguous properties, and (r) to address prospective purchasers.   The Superfund Recycling Equity Act was passed in 1999 to reverse decisions of courts which found that a person recycling certain products was an arranger for disposal liable under Section 107(a)(3) of CERCLA.

Landfills, used oil recyclers, and solvent recyclers received most of the attention in the first three decades of Superfund—and in many cases are still receiving attention.    In the fourth decade of Superfund, river sediment sites have been the most prominent sites on the National Priorities List.  Their remedial investigation/feasibility study and remedial design/remedial action costs dwarf those of landfills on the NPL.

The Supreme Court has weighed in on the Superfund law on a few occasions. Key Tronic wounded the private Superfund enforcement business when the Court in 1994 determined that a private Superfund plaintiff could not recover litigation attorneys’ fees under CERCLA. Aviall (2004), Atlantic Research (2007), and Burlington Northern (2009) followed in a string of decisions that shook up the Superfund jurisprudence in the arena of contribution actions, cost recovery actions, and the evidence required to establish when someone has arranged for disposal or treatment of a hazardous substance. Burlington Northern also weighed in on how to prove a reasonable basis for apportionment in a cost recovery action.

A lot of money has been spent on Superfund sites these past 39 years.  Whether the risk reduction bought with those dollars was the best use of these funds can be debated.  But there is no debate that toxicology has risen in prominence because of Superfund and lawyers have had to become familiar with notations or phrases like 1 x 106, slope factor, and reference dose, to make sense of the difference between carcinogenic and non-carcinogenic risks in human health risk assessments.

All Superfund lawyers know Section 113(f)(1) of CERCLA, the statutory standard applicable in a contribution action: the court is to allocate response costs according to “such equitable factors as the court determines are appropriate.”  That text has resulted in the “Gore factors,” the “Torres factors,” and a host of arguments – sometimes supported by facts and oftentimes supported by inferences or even educated guesswork – as judges and allocators attempt to satisfy the statutory standard.

As we embark on a fifth decade of Superfund, we have another Superfund Task Force and a new set of recommendations focused on trying to speed up cleanups, accelerate remedial design, encourage private investment resulting in reuse of Superfund sites, promote redevelopment of sites to revitalize communities, and promote transparency and engagement with Superfund stakeholders. Actions always speak louder than words, so we can all just watch and hope that the noble goals of this latest Superfund Task Force can be met.

So, here’s to a “Happy 40th” to the Superfund law in 2020.  I was there for your birth and am glad to still be around to declare: you have definitely aged, but you still seem to be going strong!

Carbonless Copy Paper Does Not Always Produce a Carbon Copy

Posted on October 22, 2013 by Linda Benfield

In 2009, CERCLA practitioners were thrilled to finally have a new Supreme Court case to work and play with.  Even better, Burlington Northern & Santa Fe Railway Co. v. United States, 129 S. Ct. 1870 waded into the murky area of “arranger” liability.  However, two recent cases addressing the potential arranger liability of NCR for the same business practices but at two separate sites, and both relying on Burlington Northern, illustrate that in this area the Supreme Court has just given us more language to argue about.

Both cases addressed the same business arrangements:  NCR’s sale of a PCB emulsion to paper coaters, their sale of coated paper back to NCR, and the resulting contamination when recyclers deinked the paper and released PCBs into major water bodies from 1954 to 1971.  The cases even relied upon the same language from Burlington Northern – that “an entity may qualify as an arranger … when it takes intentional steps to dispose of a hazardous substance.” 

However, with respect to the PCB cleanup of the Fox River, the federal district court for the Eastern District of Wisconsin held that NCR had “knowledge alone” and was not liable as an arranger.  The court found that even though NCR knew that remnants - “broke” - contained the emulsion and released PCBs when recycled, “there was no evidence that NCR had any purpose in selling its emulsion to [a coater] other than to produce a commercially viable product.  Broke was simply not part of the equation.”  This court viewed the arrangements as the sale of a useful product. Appleton Papers Inc. and NCR Corporation v. George A. Whiting Paper Co.  Across Lake Michigan and 15 months later, the federal district court for the Western District of Michigan held the opposite - that NCR was liable as an arranger for the PCB cleanup of the Kalamazoo River.  The court focused on NCR’s efforts to encourage recycling of the broke, and found that “not later than 1969, NCR understood the  … broke .. was no longer anything but waste and was no longer useful to any paper recycler who understood the true facts as NCR did.” Georgia-Pacific Consumer Products LP, et al, v. NCR Corporation, et al.  Given the size of the cleanup bills in both rivers, keep an eye out for the appellate decisions.

No Arranger Liability for Used Transformer Sales

Posted on June 6, 2013 by Thomas Lavender

On May 1, 2013, the United States District Court, Eastern District of North Carolina, entered final judgment on a January 31, 2013 ruling on summary judgment  in favor of Defendant Georgia Power holding that the sale of used transformers did not constitute an arrangement for disposal under CERCLA Section 107.  The May 1 order afforded the opportunity to appeal, which plaintiffs Consolidation Coal Co. (“Consol”) and PCS Phosphate Co. (“PCS”) promptly filed earlier this month. 

In 2005, Carolina Power & Light Company (now Duke Energy Progress, Inc.) (“CP&L”) and Consol entered into an administrative settlement with EPA to perform a time-critical removal action of PCB contamination at the Ward Transformer Company Superfund Site (“Site”) in Raleigh, North Carolina, and to reimburse EPA for its removal costs at the Site.  PCS entered into a trust agreement with CP&L and Consol to contribute to the funding of the removal action required under the Administrative Settlement with EPA.  The plaintiffs and PCS are seeking recovery of costs incurred by the companies at the Site, which to date exceed $60,000,000. 

In its January 31, 2013 ruling, the district court found that Georgia Power’s sale of used transformers to Ward Transformer Company did not constitute an arrangement for disposal under the United States Supreme Court ruling in United States v. Burlington Northern & Santa Fe Railway Co.  In Burlington Northern, the Court held that a finding of arranger liability requires a showing that the defendant took “intentional steps to dispose of hazardous substance.”  The Court further held that a determination of whether arranger liability attaches is a “fact intensive and case specific” inquiry. 

In ruling that Georgia Power did not have the requisite intent to dispose of PCBs when it sold used transformers to Ward Transformer, the district court made the following findings: (1) the transformers were sold in arms-length transactions; (2) they had “marketable value” (between $150 and $3200) when sold; (3) they continued to be “useful materials” after the sale, as demonstrated by the fact that they were refurbished and resold by Ward Transformer for a profit; and (4) Georgia Power drained and disposed of PCB-laden oil in the transformers before selling them.  The court thus held:  “Georgia Power’s purpose for these transactions was to sell transformers to Ward and not dispose of the oil containing hazardous waste. . . . Therefore, Georgia Power had met its burden on summary judgment by showing it did not have the necessary intent to create arranger liability under CERCLA.”  

In Burlington Northern, the Supreme defined the “two extremes” in which intent to dispose required for arranger liability is clear.  At one end of the spectrum, arranger liability clearly attaches when a party enters into a transaction “for the sole purpose of discarding a used and no longer useful hazardous substance.”  At the other end, no arranger liability attaches when a party sells “a new and useful product if the purchaser of that product later, and unbeknownst to the seller, disposed of the product in a way that led to contamination.”  The Supreme Court left open the determination of liability based on a “fact intensive inquiry” in “cases in which the seller has some knowledge of the buyers’ planned disposal or whose motives for the ‘sale’ of a hazardous substance are less than clear.”  The Fourth Circuit will now have the opportunity to shuffle the “sales” category deck in the Ward Transformer case and provide further guidance on those factual determinations which fall between the two extremes identified by the Burlington Northern Court.

EPA Issues a New Policy on Superfund Negotiations: Time For Another Rant?

Posted on October 19, 2009 by Seth Jaffe

Late last week, Elliott Gilberg, Acting Director of EPA’s Office of Site Remediation Enforcement (OSRE) issued an Interim Policy on Managing the Duration of Remedial Design/Remedial Action Negotiations. Members of the regulated community may not be surprised by the contents of the memo, but they certainly will not be pleased. In brief, the memorandum fundamentally makes two points:

EPA wants to shorten the duration of RD/RA negotiation

EPA is going to use the heavy hammer of unilateral administrative orders, or UAOs, to keep PRPs’ feet to the fire and ensure that negotiations move quickly.

PRPs will likely agree that shortening the duration of negotiations would be a good outcome in the abstract – but achieving it by greater use of UAOs? I don’t think so.

I can only wonder if EPA has even considered the impact of the Burlington Northern decision here. Is this a perverse reaction from EPA? A metaphorical throwing down the gauntlet to PRPs? It certainly feels that way.

I have a different suggestion, if EPA truly wants to shorten negotiations. First, acknowledge Burlington Northern and compromise on the merits in those great majority of cases where there are legitimate divisibility arguments. Second, stop acting like the last bastion of command and control regulation. Set cleanup standards and then, to the maximum extent permitted by existing law, let PRPs clean up to those standards, without micromanaging every detail of the cleanup process.