Superfund Recycling Amendment
March 13, 2001
In late 1999, Congress enacted the Superfund
Recycling Equity Act (SREA) in an effort to promote reuse and recycling of
material and to remove the disincentive to recycling created by unintended
consequences of Superfund’s strict liability provisions. Under the Act, a
company generally will not be liable as an arranger or as a transporter of
recyclable materials, which are defined as scrap paper, plastic, glass, metal,
textiles, rubber or spent lead acid, spent nickel cadmium or spent batteries,
unless the recycled material contains more than 50 parts per million of PCBs.
In order to qualify for the exemption, the
recycler must prove that at the time of the transaction, the materials met a
commercial specification grade, that a market existed for the material, that a
substantial portion of the material was made available for use as feedstock
for manufacture of a new product, and that the scrap material could have been
a replacement for a product made from virgin raw material. One question that
has arisen in the courts is whether the exemption applies to materials that
contain both recyclable and non-recyclable components. The only federal
appellate court that has faced this issue has held that the material need not
be 100% recyclable; the exemption applies if a substantial portion of the
scrap material was sold with the intention that it be used as a raw material
in place of virgin material.
The other major question that has arisen
concerns a provision of the Act which states that it has no effect on any
pending or concluded judicial or administrative action or any pending action
initiated by the United States. The few courts that have reached this issue
have concluded that the Act applies retroactively to pending suits by any
persons or entities other than the United States of America. For example, the
Act has been held to bar a suit by a state government seeking contribution,
suits by private parties for contribution that were filed prior to enactment
of the statute but are still pending, and even a suit where judgment had
already been obtained but where an appeal was pending at the time SREA was
enacted. However, one federal trial court has interpreted the statute as
allowing private contribution claims to go forward if brought within the
context of a suit that was originally filed by the United States.
One trend which is emerging as a result of the
Superfund Recycling Equity Act is that EPA no longer seems inclined to pursue
recyclers as potentially responsible parties at Superfund sites. This is
consistent with the language of the Act, which excludes from its reach pending
judicial, but not administrative, actions initiated by the United States.
Thus, for owners, operators and others who are faced with liability for
removals and remediations under Superfund, it appears that there will be far
fewer potentially responsible parties among whom to spread the risk and cost.
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