Three Years of Superfund

James A. Rogers

Editors' Summary: It has been almost three years since the enactment of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund) and the prospects for rapid achievement of the Act's goals are not bright. Implementation of CERCLA has been plagued by lack of information on the scope and incomplete scientific understanding of the mechanisms of hazardous waste pollution. Hasty legislative drafting of an approach to pollution control different from that of the regulatory schemes already in use in federal environmental law created a legal puzzle that cannot be solved easily or quickly. These intrinsic barriers to carrying out the Superfund mandate were magnified by the recently ended political debacle surrounding administration of the program at EPA. Mr. Rogers reviews the status of CERCLA implementation and assesses the prospects for further progress. He argues that while the data base is improving and EPA is restoring confidence in its Superfund office, by continuing to pursue expansive theories of generator liability for hazardous substance cleanup the federal government is ensuring that the Superfund program will be mired in slowmoving litigation for years to come.

Mr. Rogers is a partner in the Washington, D.C. office of Skadden, Arps, Slate, Meagher & Flom.

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It has been almost three years since the enactment of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or Superfund).¹ It is safe to conclude that no environmental law can match CERCLA for a tempestuous early history. Amidst the continuing intense public debate over hazardous waste issues, early implementation of the Superfund Act would have been diffiult even in the best of times at the Environmental Protection Agency (EPA). But the past three years have not been the best of times. Largely over Superfund-related issues the EPA Administrator resigned, the now-deposed head of the program has been indicted twice by federal grand juries, and other important EPA officials have come and gone much like managers of last-place baseball teams. The Agency's hazardous waste regulatory programs seem more stable now, largely the result of the efforts of a respected Administrator and capable Assistant Administrator.

The Superfund Act itself can confound the most tenacious regulator or practitioner. The general purposes behind the statute are clear: promptly informing the government about releases of hazardous substances, providing funds for government cleanup efforts, and supplying a legal foundation for actions against responsible parties. However, virtually all other legal details essential to a smooth-running program remain shrouded in mists of competing or nonexistent legislative history and inconsistent judicial interpretation.

This confusing law has created enormous challenges for EPA regional offices; it is the first of the major federal environmental laws that cannot be administered largely through national regulations and essentially non-controversial individual permits. The entire CERCLA program revolves around site-specific, factually complex, and legally unguided litigation between the federal government and changing groups of well-represented corporations whose interests often dictate that they oppose each other as well as the government. It will take many district court decisions, appeals to the circuit courts, and petitions for certiorari to the Supreme Court before this legal kaleidoscope is brought into clear and unchanging focus.

At least in the eyes of industry lawyers, one reason there are so many raging legal battles is because the federal government continues to pursue expansive theories of generator liability for hazardous substance cleanup, arguing that waste generators are jointly and severally liable without fault, and recently, without causation. This all-out effort to find deep pockets in the private sector from which to extract cleanup funds, without regard to traditional principles of responsibility and liability, will mire the Superfund program in litigation for years to come.

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Turning from the legal and procedural problems, there is little reliable and generally applicable information on the environmental and health effects of the many chemicals now being detected in groundwaters near the abandoned sites. Thus the appropriate extent of remedial action at each site ("how clean is clean") is likely to remain for resolution on a case-by-case basis (often through the indirect route of deciding, early in a case, to what concentration levels the experts should look for pollutants).

The Status of Implementation: Unresolved Battles

Despite the obstacles, there have been surprisingly significant steps taken both in the EPA implementation of the Act and in private voluntary cleanup of sites.EPA has published a generally well-received National Contingency Plan,² including a recently revised list of those priority locations where there have been releases of hazardous substances or threats of such releases.³ The Agency has proposed (albeit tardily) a useful table of reportable quantities of hazardous substances.⁴ Real environmental cleanup has occurred at many of the top priority Superfund sites, although in most cases this means that the drums of wastes and perhaps the top few inches of contaminated soil have been removed and safely disposed of at well-run facilities. At scores of sites sophisticated subsurface investigations are underway, often funded and directed by the private parties that have agreed among themselves to conduct such activities.

However, further progress has been blocked by EPA's counterproductive insistence on preserving maximum potential generator liability. For example, undoubtedly there would have been more voluntary efforts to investigate environmental harm and formulate potential solutions were it not for one crucial EPA decision. In the spring of 1983, the Agency abjured the right of private parties to conduct remedial investigations and feasibility studies (RI/FS) in lieu of governmental efforts, except when those parties also agree to conduct whatever ultimate remedial efforts EPA determines are necessary.⁵ Private parties are asked to sign these "blank checks," blindly committing themselves to construct whatever cleanup facilities EPA eventually deems appropriate, and to cover the unknown costs of operating and maintaining the facilities for up to 30 years. This EPA strategy may have been an effort to recover from the bad publicity associated with Rita Lavelle's alleged "sweetheart deals" by avoiding settlement discussions with industry entirely and spending federal Superfund money as fast as possible. Even so, the policy reflects an impulse to find ways of making generators foot the entire bill for cleanup. Fortunately, this misdirected policy is being reconsidered in light of widespread state and regional EPA criticism. EPA also seems to realize that if the Agency pays for all the necessary and costly RI/FSs, there soon will be little left in the Superfund for ultimate cleanup work.

While EPA Superfund policies have oscillated back and forth, virtually all the legal issues considered important when the Act was passed have remained unresolved. Courts have yet to determine the categories of parties (other than owners and operators of sites) that are liable under the § 107 cost recovery provisions of the Act.⁶ Two district courts that squarely addressed the question of responsible parties in the context of the injunctive provisions of § 106 have just as squarely disagreed with one another. The court in United States v. Wade⁷ held that non-negligent, off-site generators are not included within the coverage of § 106(a); the court in United States v. Price⁸ not only disagreed with that ruling, but held that such generators are to be judged under a theory of strict liability.

In the first decision tackling the much-discussed question of joint and several liability for statutory Superfund actions, the court in United States v. Chem-Dyne Corp.⁹ held, in denying defendant generators' motion for partial summary judgment, that in appropriate factual situations CERCLA defendants may be jointly and severally liable. However, if the harm is divisible "and there is a reasonable basis for apportionment of damages, each defendant is liable only for the portion of the harm he himself caused."¹⁰ The defendants bear the burden of proof as to apportionment. There are several matters in pendinglitigation that may result in additional rulings on the joint and several issue, and in which other important legal questions may be answered in the near future. Among these cases are United States v. Conservation Chemical Co.,¹¹ United States v. South Carolina Recycling and Disposal, Inc. (Bluff Road),¹² and United States v Columbia Steel and Sheet Metal Co. (Dreyfus Street).¹³ In addition, state courts have issued major opinions relying on common law principles to establish the joint liability of handlers of hazardous wastes.¹⁴

Although the federal government has recently argued that a right of contribution should be inferred in the Superfund liability scheme,¹⁵ there is but one brief and confusing federal court opinion on the point, and it concludes that no such federal right exists.¹⁶ This ruling seems to be inconsistent with the implicit holding in City of Philadelphia v. Stepan Chemical Co.,¹⁷ which allowed [13 ELR 10363] a potentially responsible party to sue others for cleanup costs that were incurred by that responsible party. Of course, as long as federal courts do not interpret CERCLA or its legislative history to prohibit contribution actions of any kind, in most states parties will have access to state statutory systems allowing such actions,¹⁸ but the lack of a federal rule raises the intensity of litigation on generator liability. Hardships can result under a system of joint and several liability without a right of contribution or indemnity. For example, if the government sues one of many possible defendants (and wins), or one of several defendants breaks from the group and chooses to litigate (and loses) while the other defendants settle for only a percentage of their shares of liability, the lone unlucky defendant will have to any more than its fair share.

The Battle Widens: Emerging Superfund Conflicts

As if the backlog of unresolved CERCLA issues were not enough, other issues will come to the fore in the coming months.

Owners of sites on the recently promulgated National Priorities List may challenge the list and the rules that the government has imposed for "de-listing" a site.¹⁹

Potentially responsible parties may challenge proposed expenditures by the federal government at particular sites, on the theory that those expenditures will be unwise or completely unnecessary. If such fears materialize it is such private parties who must bear these wasted expenditures if they ultimately are determined to be liable under § 107 of the Act.

Industry or environmental groups probably will challenge EPA's expected policy on the applicability of the Resource Conservation and Recovery Act (RCRA) requirements to activities conducted in a government-supervised Superfund cleanup: industry, if EPA declares that RCRA applies in addition to the safeguards built into Superfund cleanup efforts; environmental groups, if EPA determines that RCRA does not apply.

Certainly the Act contemplates that EPA will afford potentially responsible parties some opportunity voluntarily to undertake response and remedial efforts, but the federal government and industry disagree over the point in the process when the invitations must be tendered. This issue clearly will arise in some of the cost-recoupment actions, and may appear earlier, in actions to enjoin expenditures of government monies.

Controversy could erupt over pending EPA rules governing claims against the fund under §§ 111 and 112 of CERCLA by those who have incurred costs in responding to environmental problems in a manner consistent with the National Contingency Plan. If those rules severely limit access to the fund or limit the right of private parties to seek contribution from other potentially responsible parties, they may well be challenged.

There also is the question of the extent to which the Act implies private causes of action. There is already one case²⁰ in which a private party is attempting to use Superfund to recover damages other than incurred cleanup costs from another private party, an action that appears to be unauthorized by the statute, but whose very existence is evidence of th unsettled nature of the law under CERCLA.

Other conflicts may arise out of apparent differences among EPA Regional Offices as to the relative liabilities of transporters and generators in particular cases. Some Regions seem to regard transporters of hazardous wastes to be particularly appropriate defendants, perhaps because they often had a role in choosing the disposal site and were able to view operations at the site when they delivered the wastes. Other Regions have ignored transporters when the generators of the wastes have been located.²¹ The distinction is arbitrary since the applicable subsections of § 107(a) of the Act contemplate liability by both transporters and generators who played a role in the selection of the problem site. These issues may well be aired in private contribution actions brought by generators against transporters and vice-versa, if not in direct challenges to EPA settlements.

Liability Without Causation: The Last Straw

The foregoing list illustrates the range of new legal conflicts that may emerge under CERCLA. However, no legal issue has so aroused the ire of lawyers representing potentially responsible parties under CERCLA as the government's recent contention that persons may be held responsible when they merely dealt with the operators of a site that now poses a problem. According to a brief recently filed in the Bluff Road case, the federal government is not required to show that a defendant's wastes caused a releaseor threatened release of a hazardous substance, with respect to which the federal government incurred response costs. Rather, the United States need only meet the following two-part test to establish generator liability under § 107:

[T]he government must show:

(1) that a generator arranged with another person for disposal or treatment of its hazardous substances; and

(2) that there was a release or a threatened release of hazardous substances from the facility at which the generators' hazardous substances were stored, treated, or disposed.

The United States need show nothing more.²²

This striking new federal position goes well beyond the assumptions on which private parties negotiated early Superfund settlements; it also appears to be inconsistent with the Conservation Chemical and Chem-Dyne briefs filed by the federal government as recently as three months ago.

Attorneys counseling defendants in the early Superfund cases had assumed that traditional causation elements of common-law tort liability would apply in assessing liability. Thus, even if the Act were read as creating [13 ELR 10364] strict liability and a system whereby each defendant is severally liable for the entire relief sought and all defendants jointly liable for that relief, the plaintiff must prove that a particular defendant's conduct was both a cause-in-fact and proximate cause for the resulting injury and incurrence of cleanup costs. Defense lawyers were willing to acknowledge that the stringent terms of § 107(b) of CERCLA may have modified the common law of proximate cause with respect to the acts of intervening third parties,²³ but at no time have they considered the government free of the obligation to show a cause-in-fact relationship between the defendant, the release, and the cleanup costs incurred.

To use a recurring example, few lawyers believed that if their clients had contributed only scrap metal filings or other relatively innocuous material to a site, and the perceived environmental problems were high concentrations of carcinogenic organic compounds, the government lawyears would attempt to claim that the metal (or other) wastes were in any sense a cause of the governmental response action. Indeed, many potentially responsible parties have refrained from entering into settlement of the early Superfund cases in the belief that their particular wastes did not contribute in any way to the need for incurrence of response costs, and that it would be both unfair and illegal for the government to cast a liability net over them.

The early traditions of successful Superfund settlements supported these common-sense views of the Act. For example, the government in several major cases made a point of emphasizing the roles of generators that contributed persistent or highly toxic substances to a site, such as bulk liquids or chlorinated hydrocarbons.

Moreover, in very recent filings in other Superfund casesthe federal government has indicated that it is legitimate to inquire whose wastes are contributing to (i.e., causing) the problem. In its magnum opus filed in Conservation Chemical, in response to the generator defendants' motion to dismiss, the government states:

[T]he United States' position is that joint and several liability is appropriate where the injury resulting from multiple causes is indivisible as matter of fact. Since the question of whether the injury is indivisible turns on questions of fact, we suggest to the court that this issue is not ripe for decision on motions to dismiss.²⁴

Presumably, the government does not argue that the identity of a person as a generator is the issue of fact; rather, for the brief to make any sense the issue the government refers to is whether the generator's particular wastes caused an environmental injury that necessitated cleanup expenditures, and whether that generator's causal contribution to the problem cannot be separated from others' contributions.

According to the Bluff Road brief (which has since been adopted in the government's brief in another major case²⁵), an action under § 107(a) "seeks restitution, rather than compensatory damages, for costs incurred in removing hazardous substances that were the responsibility of other parties …." Thus, traditional rules applicable in tort suits are inapplicable. (And the Conservation Chemical inquiry is unnecessary.) Moreover,

[A]lthough the United States must establish a relationship between the generator defendants and the Bluff Road site, causation, in the traditional sense, is not required. Rather, in an action based on quasi-contract, the critical relationship is defined in terms of duty: Did these particular defendants owe a duty that was discharged by the government? If so, there is liability under CERCLA Section 107.²⁶

Counsel for a group of generators recently characterized the totality of the government's theory of Superfund cost-recovery liability as: "Anyone who at any time transacted any business with the owner or operator of any disposal site is strictly, jointly and severally, and retroactively liable for any threatened or actual release of any hazardous substances at any [disposal sites owned or operated by that owner or operator].²⁷

It appears that, in the eyes of government lawyers, it is irrelevant whether a generator's wastes have migrated to the groundwater, or that they have any bearing on the need for response and remedial actions. It is also irrelevant, under this view, whether any of the generator's wastes were ever released in any respect at the hazardous waste site in question. Thus, even if a generator sent materials that were incinerated, that generator is still responsiblefor all of the cleanup costs brought about by the spread of, for example, ruptured drums of polychlorinated biphenyls sent to the site by another party. Moreover, if one takes the government's position literally, it would appear that anyone who sent drums of material to a facility to be stored, and eventually retrieved all of his drums of wastes, would likewise become liable for government costs incurred in responding to groundwater pollution involving other chemicals.

Even acknowledging that it is often difficult to parse § 107 of the Act, it is most difficult to read that section as to eliminate the requirement that hazardous substances shipped to a site at least be present there at the time there is a release or threatened release.²⁸ But under this remarkable new government position, one's economic livelihood could be determined by the fluke of having had a fleeting commercial dealing with a disposal site operator who accepted toxic chemicals from another party in containers [13 ELR 10365] that eventually leaked. Viewed on a national level, the government's new theory would make all producers of hazardous wastes virtual insurers of the government's cleanup efforts.

As noted above, it is hard to square the government's new position that traditional cause-in-fact need not be proved by the plaintiffs with the government's earlier acknowledgment that joint and several liability attaches when the environmental injury is indivisible. Under the quasi-contractual or restitution theory espoused in the Bluff Road brief, the injury may always be indivisible in the sense that, as the government puts it, "The injury of concern in a CERCLA § 107 cost-recovery action is the incurrence of response costs by the government, not the physical release of hazardous substances from a disposal site."²⁹ Thus, "Any generator whose wastes were disposed at the Bluff Road site contributed to a threatening condition which caused the incurrence of these costs, regardless whether there has been an actual release and whether a particular generator's wastes can be identified in the released materials."³⁰

The client that is being represented by the Department of Justice in Bluff Road is the United States government. If it is that client's request that its attorneys attempt to place the costs of hazardous waste site cleanup on private shoulders wherever possible, then the Bluff Road brief — a creative and not unethical document — certainly attempts to accomplish that goal.But one may question whether it is proper for the United States government to espouse a theory that is patently unfair. Is it in the government's interests to place unexpected and potentially disastrous (and virtually without exception, uninsured) financial liabilities on those persons who merely had dealings with a disposal site operator, and whose wastes in fact did not play a role in the need for expensive remedial efforts? Indeed, under the government's extreme theory, there appears to be little incentive for a generator to package his particular wastes in top quality containers if they are being shipped to a site where other parties are not following the same precautions. Generators would bear the impossible burden of not only looking after their own wastes, but keeping an eye on the materials contributed to the common site by other persons.

The government's new quasi-contract and inferred cause-in-fact theories have yet to be reviewed by a federal judge, but based on dicta in certain of the early Superfund cases, these novel approaches may not be accepted. For example, in a closing footnote in the recent Price decision, Judge Brotman stated:

During an argument on the appropriate liability standard, then Congressman David Stockman, an opponent of broad ranging liability under the Act, stated his fears regarding potential consequences:

… some day down the road about a year from now they are going to receive a letter from a company in their district that has just received a five or ten million dollar liability suit from EPA that was triggered by nothing more than a decision of a GS-14 that some landfill, some disposal site somewhere, needed to be cleaned up and, as a result of investigation that his office did, he found out that that company in your district contributed a few hundred pounds of waste to that site thirty years ago …. [When EPA finds] that deep pocket, they will immediately go to court and sue that deep pocket, and then all the onus of the law, all the burden will be on him to prove that he was not responsible ….

Though Stockman's concerns were not taken seriously by Congress at the time, this Court does not want those concerns to materialize during this lawsuit.³¹

Conclusion

There is more stability and commitment at EPA than there was two years ago, and more funds available to the Agency — particularly in the hazardous waste area. There are several CERCLA cases that will bear precedential fruit on major legal issues, and this should help environmental lawyers counsel clients in the many other similar suits. Subsurface environmental evaluations will soon be completed at many of the "top priority" sites, and EPA will establish crucial precedents concerning tolerable levels of contaminants in groundwater and soil. All of these currents can only sweep away some of the Superfund unknowns. Yet few observers expect that three years from now there will be substantially lessened interest in hazardous waste problems, or enough and sufficiently experienced government staff to handle the hundreds of cases, or reliable final rulings on many of the legal issues that must be answered for there to be a complete chart of these waters.

1. 42 U.S.C. §§ 9601-9657, ELR STAT. 41941.

2. 47 Fed. Reg. 31180 (1982), adding 40 C.F.R. pt. 300, ELR REG. 47401 (pursuant to § 105 of the Act, 42 U.S.C. § 9605, ELR STAT. 41946).

3. 48 Fed. Reg. 40658 (1983), adding app. B to 40 C.F.R. pt. 300.

4. 48 Fed. Reg. 23552 (1982).

5. Interim Pre-Litigation Settlement Procedures in Hazardous Waste Cases, Memorandum from Michael A. Brown, Enforcement Counsel, to Regional Counsel (May 20, 1983), 13 ELR 30011.

6. However, there have been dicta on this point, e.g., United States v. Price, 13 ELR 20843 (D.N.J. July 28, 1983); United States v. Wade, 546 F. Supp. 785, 12 ELR 21051 (E.D. Pa. 1982), appeal dismissed, 13 ELR 20815 (3d Cir. Aug. 5, 1983). See infra text accompanying note 16.

7. United States v. Wade, 546 F. Supp. 785, 12 ELR 21051 (E.D. Pa. 1982), appeal dismissed, 13 ELR 20815 (3d Cir. Aug. 5, 1983).

8. United States v. Price, 13 ELR 20843 (D.N.J. July 28, 1983).

9. 13 ELR 20986 (S.D. Ohio Oct. 11, 1983).

10. 13 ELR at 20988.

11. No. 82-1983-CV-W-5, ELR PEND. LIT. 65785, 65791 (W.D. Mo., complaint filed Nov. 22, 1982).

12. No. 80-1274-6, ELR PEND. LIT. 65762 (D.S.C., amended complaint filed July 26, 1982).

13. No. 83-1487-0 (D.S.C.).

14. E.g., State v. Ventron, 13 ELR 20837 (N.J. July 21, 1983).

15. Conservation Chemical, ELR PEND. LIT. 65785 (United States Response In Opposition to Defendants' Motion to Dismiss at 145).

16. United States v. Westinghouse Elec. Corp., No. 83-9-C (S.D. Ind. June 29, 1983) (Ruling on Motion to Dismiss Third-Party Complaint).

17. 544 F. Supp. 1135, 12 ELR 20915 (E.D. Pa. 1982).

18. Northwest Airlines, Inc. v. Transport Workers Union, 451 U.S. 77, 87 n.17 (1981).

19. See 48 Fed. Reg. 40668, 40669 (1983).

20. Bralow v. Owens-Corning Fiberglas Corp., No. 83-2878 (D.N.J., complaint filed Aug. 8, 1983).

21. See, e.g., United States v. Seymour Recycling Corp., No. 1P-80-457-C (S.D. Ind.).

22. United States v. South Carolina Recycling & Disposal, Inc., No. 80-1274-6 (D.S.C.) (United States' Response to Generator Defendants' Motion for Summary Judgment at 23, 24).

23. Recently, a federal judge opined, "Congress eliminated any language requiring plaintiff to prove proximate cause. This was done at the last minute and is not reflected in the legislative history." United States v. Price, 13 ELR at 20847 n.11.

24. See supra note 14.

25. The Dreyfus Street case, No. 80-1274-6, ELR PEND. LIT. 65762 (D.S.C., amended complaint filed July 26, 1982).

26. United States v. South Carolina Recycling & Disposal, Inc., No. 80-1274-6 (D.S.C.) (United States' Response to Generator Defendants' Motion for Summary Judgment at 25).

27. United States v. Columbia Steel & Metal Co., No. 83-1487-0 (D.S.C.) (Memorandum of Generators in Support of Motion to Dismiss at 18, 19).

28. [A]ny person who by contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances … by any other party or entity, at any facility owned or operated by another party or entity and containing such hazardous substances ….

from which there is a release, or threatened release which causes the incurrence of response costs … shall be liable

CERCLA § 107, 42 U.S.C. § 9607, ELR STAT. 41947.

29. United States v. South Carolina Recycling & Disposal, Inc., No. 80-1274-6 (D.S.C.) (United States' Response to Generator Defendants' Motion for Summary Judgment at 31).

30. Id.

31. United States v. Price, 13 ELR at 20848 n.14 (citation omitted, emphasis added).