CERCLA, a/k/a Superfund 1. History Love Canal & Times Beach 1980: lame duck Congress

1. CERCLA, a/k/a Superfund • 1. History • Love Canal & Times Beach • 1980: lame duck Congress • “polluter pays” • Burford era

2. 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?

3. 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

4. CERCLA, a/k/a Superfund • 1. History • 2. Triggering Superfund Report  HRS  NPL  NCP  RI/FS  ROD

5. CERCLA, a/k/a Superfund • 1. History • 2. Triggering Superfund • 3. Liability • Nature of • liability • Strict • Retroactive • Joint and several

6. CERCLA & Retroactive Liability • Olin Corp (11th Cir. 1997): • Bases for constitutional challenge to Superfund? • Commerce Clause • Ex post facto clause

7. 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

8. 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

9. 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?

10. 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.

11. “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"

12. SUPERFUND • OPERATOR LIABILITY • Definition of “operator” – how much/what kind of control? • Regulatory control – Stringfellow landfill • Bestfoods case

13. U.S. v. Bestfoods (1998)

14. 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?

15. 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?

16. SUPERFUND • OPERATOR LIABILITY • Definition of “operator” – how much/what kind of control? • Regulatory control – Stringfellow landfill • Bestfoods case • Secured creditor exemption

17. SUPERFUND • GENERATOR/ARRANGER LIABILITY • Definition and defenses • Must generator’s wastes be “released”? • The Aceto Chemical case

18. Aceto Chemical (8th Cir. 1989) Raw materials + instructions AIDEX CHEMICAL Spills, On-site disposal ACETO & OTHERS Finished product Are the raw materials “hazardous wastes”? Did Aceto “arrange for disposal”?

19. Aceto Chemical (8th Cir. 1989) • Prima facie case of Superfund liability: • Aidex is a facility • A “release” of a “hazardous substance” occurred there • Release caused U.S. to incur response costs • Defendant is PRP – i.e., one of the classes of parties listed in Sec. 107(a) (subject to 107(b) defenses).

20. SUPERFUND • GENERATOR/ARRANGER LIABILITY • Definition and defenses • Must generator’s wastes be “released”? • The Aceto Chemical case • Factors that trigger “arranger” liability • Superfund Recycling Equity Act of 1999

21. 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 …

22. 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?

23. 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

24. 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

25. 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.