A Response to "'Arranging for Disposal' Under CERCLA"

James W. Moorman and Lawrence S. Kirsch

Mr. Moorman is a partner and Mr. Kirsch an associate at Cadwalader, Wickersham & Taft, 1333 New Hampshire Ave., N.W., Washington, D.C. 20036.

[15 ELR 10274]

We read with great interest the comment on "Arranging for Disposal Under CERCLA."¹ The comment was generally well done, but may have missed some points of interest.

First, the discussion of United States v. A & F Materials, Inc.,² focused on that decision's holding concerning the sale of hazardous waste as opposed to disposal. At the end of the section discussing A & F Materials, the comment states that the decision "does not shed light on whether the generator must have chosen the ultimate respository of the substances."³ We disagree. In the context of explaining why the generator in A & F Materials should be held liable, the court stated its view of the test operating in § 107(a)(3) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).⁴ The court said that "the relevant inquiry is who decided to place the waste into the hands of a particular facility that contains hazardous waste . . .," and that it is precisely this decision that CERCLA was intended to regulate."⁵ (second emphasis added). Under this test, a generator who did not decide to place the waste into the hands of a "particular facility" should not be liable for releases at that facility.

The second point is a reading of § 107(a)(3) that the comment does not discuss. The section makes a generator liable for releases "at any facility owned or operated by another party or entity." This language can be read to hold a generator liable only for waste disposed at sites owned or operated by the party or entity with whom the generator contracted for disposal. An example is the following: Generator contracts with Disposer A to dispose of substances at Disposer A's facility. Disposer A fraudulently contracts with Disposer B for the disposal of Generator's waste at Disposer B's facility. CERCLA should not hold the Generator liable under these circumstances. Although this interpretation is unclear from the current wording, the section's legislative history clarifies Congress' intent.

Section 4(a)(iii) of S. 1480 read as follows as the bill was reported out of committee:

(iii) any person who by contract, agreement, or otherwise arranged for disposal, treatment, or transport for disposal or treatment by any other party or entity of hazardous substances owned or possessed by such person, at facilities or sites owned or operated by such other party or entity and containing such hazardous substances.⁶

This bill, by its use of the phrase "at facilities owned or operated by such other party or entity" (emphasis added) following the phrase "any other party or entity," made clear that a generator is liable at most for arranging for disposal or treatment at facilities or sites owned or operated by the same person with whom the generator contracted. The subsequent modification of this section, attempting to clarify that the "by any other party or entity" refers to the disposer or treater, not to the transporter,⁷ resulted in the change to the current language.Thus, a court should read CERCLA to create liability, at most, for disposal at other sites owned or operated by the disposer or treater with whom the generator made its arrangements. This is the only proper reading, in our view, of the phrase "by any other party or entity."

This view is supported by a strong policy argument. Although the language of CERCLA does not require a showing of culpability on behalf of a generator, no beneficial purpose would be served by holding a potentially responsible party (PRP) liable for disposal practices over which the PRP had no control. As noted in the report of the Senate Committee on Environment and Public Works, the purpose of imposing strict liability was to "create a compelling incentive for those in control of hazardous substances to prevent releases and thus the public from harm."⁸ This purpose would not be served by holding generators liable for the actions of disposal companies who transfer wastes to other companies without the generators' knowledge or consent.

[15 ELR 10275]

If the "decision that CERCLA was intended to regulate"⁹ was not 'the decision to place the waste into the hands of a particular facility,"¹⁰ Congress must at least have intended CERCLA to regulate the decision to place the wastes into the hands of a particular disposal company. As the A & F Materials court noted, to hold a party liable for disposal practices by some unknown party would create limitless liability. But "liability for releases under § 107(a)(3) is not endless; it ends with that party who both owned the hazardous waste and made the crucial decision how it should be disposed of or treated, and by whom."¹¹

1. Comment, "'Arranging for Disposal' Under CERCLA: When is a Generator Liable?," 15 ELR 10160 (June 1985).

2. 582 F. Supp. 842, 14 ELR 20432 (S.D. Ill. Mar. 30, 1984).

3. Comment, 15 ELR at 10164.

4. 42 U.S.C. § 9607(a)(3), ELR STAT. 41947.

5. 582 F. Supp. at 845, 14 ELR at 20433.

6. S. 1480, § 4(a)(iii), 96th Cong., 2d Sess. (1980), 126 CONG. REC. S14929, 14940 (daily ed. Nov. 24, 1980).

7. Of course, a disposal or treatment company may also be a transporter, but a comparison of the language of the S. 1480 provision with CERCLA's current language reveals that § 107(a)(3) was changed to clarify that generators could still be liable if they arranged with a transporter for disposal at a facility owned or operated by a disposal company other than the transporter. The earlier language might have been read to require that the facility must have been owned or operated by a transporter, even if the generator's contract called for disposal at a facility owned oroperated by a separate disposal company.

8. S. REP. 848, 96th Cong., 2d Sess. 14 (1980).

9. A & F Materials, 582 F. Supp. at 845, 14 ELR at 20433.

10. Id. (emphasis added).

11. Id. (emphasis added).