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
•
“arranger”
•
Transporter
who selected
site
•
O/O at time
of disposal
•
Current
owner
liability
• Liable parties  “PRPs”
CERCLA, a/k/a Superfund
1. History
2. Triggering Superfund
3. Liability
• Nature of
liability
• Act of god
• Liable parties
• Third party
• Defenses to liability
• 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)
Raw materials + instructions
ACETO &
OTHERS
Finished product
AIDEX
CHEMICAL
Are the raw materials “hazardous wastes”?
Did Aceto “arrange for disposal”?
Spills,
On-site
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
PROCESS:
• 106 orders
• Orphan shares
• Liable parties
• Mixed funding
• Defenses to liability
How would you allocate
liability among PRPs?
• Allocating liability
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.