CERCLA Reauthorization: The Wise Demise of § 114(c) and Exxon v. Hunt

Robert A. Freeman

Editors' Summary: In our form of government, an important aspect of all federal environmental laws is the tension between the need for national uniformity in certain areas of environmental protection and the realization that state and local governments are closer to the problem and may have additional resources, financial and otherwise, to did in solving the problem. This tension has been particularly clear in the field of hazardous waste cleanups, as many states have "mini-superfunds" that overlap with the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In March of this year, the Supreme Court came down on the side of national uniformity when it ruled that CERCLA preempts the New Jersey Spill Compensation and Control Act to the extent that it provided for compensation for claims that may be compensated by CERCLA. The author reviews Exxon Corp. v. Hunt and evaluates the potential impact of the decision given the likelihood that the preemption provision at issue will be removed when CERCLA is reauthorized.

[16 ELR 10286]

Congress is expected to soon enact the long-awaited amendments reauthorizing the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).¹ One of the less-heralded but important anticipated changes in the law is the removal of CERCLA's preemption provision, § 114(c).² Without much debate, Congress has apparently deleted a section that has provoked considerable dispute and that jeopardized the effectiveness of state superfunds. Section 114(c) was construed by the Supreme Court earlier this year, in Exxon Corp. v. Hunt,³ to preempt part of the New Jersey Spill Compensation and Control Act (Spill Act).⁴ With the removal of § 114(c), CERCLA will no longer preempt state superfund statutes. This comment traces the path intially charted by New Jersey with the Spill Act to its abrupt interruption by the Supreme Court's holding in Exxon, and concludes that the decision to remove § 114(c) is a wise policy choice. The deletion of § 114(c) will be beneficial, even though it will open the door to potential double taxation and may reduce state and federal coordination, because the Exxon holding would otherwise have seriously curtailed hazardous waste cleanups. The negative implications of deleting § 114(c) pale in comparison to the expanded opportunity for hazardous waste cleanup activities under the new legislation.

The Spill Act and CERCLA 1980

In 1977, New Jersey enacted the Spill Act to combat the threat to the state's "economy and environment" posed by hazardous substance transfer and storage.⁵ The Spill Act created the Spill Compensation Fund (Spill Fund) to pay removal and cleanup costs, damage claims (including property, natural resources, lost profits, lost tax revenues, and loan interest), research expenses, and administrative costs.⁶ The Spill Fund was financed by a per-barrel tax on petroleum and hazardous substances upon their transfer between manufacturing facilities.⁷

Three years later Congress passed CERCLA, intended to deal with similar problems as the Spill Act but on a national scale.⁸ CERCLA created the Hazardous Substance [16 ELR 10287] Response Trust Fund (Superfund),⁹ funded by per-barrel taxes levied on (1) crude oil either received at a refinery or exported; (2) imported petroleum products; and (3) production or importation of 42 feedstock chemicals.¹⁰ The Environmental Protection Agency (EPA) may spend Superfund resources to pay governmental response costs, authorized third-party cleanups, state or federal natural resource damage claims, and a variety of administrative costs.¹¹ Even at the outset, however, Congress knew the Superfund would be insufficient to deal with all the nation's cleanup needs.¹²

The source of the Exxon controversy, CERCLA § 114(c), states that "no person may be required to contribute to any fund, the purpose of which is to pay compensation for claims for any costs of response or damages or claims which may be compensated under this subchapter."¹³ Section 114(b) prohibits any person from receiving double compensation for such costs.¹⁴ The dispute centered on the meaning of the words "may be compensated." Although § 114(c) clearly prohibits states from imposing some taxes, the scope of preemption was uncertain. Industry urged a broad construction of § 114(c) that would effectively preempt state superfunds, while state governments contended that the provision more narrowly restricted the scope of their funds. Soon after the President signed the bill into law, New Jersey and Exxon Corporation, joined by other oil and chemical companies, began what became a long trail of litigation to determine exactly what states could and could not do. The long trail ended when the Supreme Court rendered its decision in Exxon last March.¹⁵

Exxon Corp. v. Hunt: The Convoluted Case History

Soon after CERCLA was enacted, Exxon sued New Jersey, first in federal court and then at the state level, challenging the Spill Act's constitutionality under the preemption doctrine.¹⁶ Exxon claimed that it had been unlawfully taxed by the state since 1980, when it had started paying the excise taxes required by CERCLA. Separately, New Jersey brought two separate federal actions seeking declaratory relief upholding the Spill Act.¹⁷ Only Exxon's state action survived motions to dismiss, although one of New Jersey's suits did result in a settlement in which EPA agreed not to challenge the state's interpretation.¹⁸

Exxon and its fellow plaintiffs contended that a plain reading of the statute required a finding that CERCLA totally preempted the Spill Act. Exxon maintained that a state could not lawfully tax a firm for any claim potentially compensable under the federal law. Since cleanup compensation was the main purpose of the Spill Act and its tax, the entire statute was void and Exxon deserved its money back. The oil company claimed that this reading, while required by the plain meaning of § 114(c), also conformed to CERCLA's legislative history, as Congress had recognized that overtaxing the petroleum and chemical industries would reduce their competitiveness with foreign producers. In addition, Exxon asserted that Congress had intended to coordinate state and federal cleanup efforts for maximum efficiency, requiring states to follow national priorities rather than going their own routes.¹⁹

New Jersey, not surprisingly, contested Exxon's interpretation of § 114(c). At first, New Jersey claimed that the provision only barred actual double compensation; the state argued that "may be compensated" meant "are compensated."²⁰ However, this reading would result in § 114(b) being rendered superfluous, since the section plainly prohibits such double compensation.²¹ Besides, there is no reason why states should want to doubly compensate a claimant anyway.

As the litigation progressed, the state's position evolved. The state conceded that § 114(c) forbade taxing for activities either actually compensated by CERCLA or still eligible [16 ELR 10288] for CERCLA compensation.²² New Jersey asserted that it could spend money raised by industry taxes not only for activities the Supreme Court later held were not preempted,²³ but also for maintenance costs at CERCLA sites and compensation for cleanup response at sites not realistically eligible for federal CERCLA money given the limitations on EPA resources. Thus New Jersey argued that CERCLA only preempted it from using the Spill Fund to pay for (1) remedial action at a National Priorities List (NPL) site, and then only until EPA denied a state request for federal funding; (2) removal action at a site not on the NPL but clearly qualifying for federal assistance under the National Contingency Plan (NCP), again only until actually denied federal assistance; or (3) state or federal government natural resource damage claims that are realistically eligible for CERCLA funding.²⁴

New Jersey claimed that this interpretation would maximize cleanup efforts while maintaining coordination by channeling the states into the federal program for acutely hazardous sites. New Jersey understood that states could not circumvent federal regulations by using their funds for sites realistically eligible for federal financing. The state argued that the legislative history and CERCLA's overall purpose supported its contention that § 114(c) be construed as narrowly as possible.²⁵

Meanwhile, the initial concerns over Superfund's financial limitations were proving to be well-founded. In 1980, Congress feared CERCLA would not remedy all hazardous waste sites;²⁶ by 1985, when CERCLA was due to be reauthorized, it knew the Superfund was woefully inadequate.²⁷ Although estimates of the total number of potential Superfund sites reaches well into the thousands, by the summer of 1986 EPA had completed only 13 cleanups and started fewer than 500.²⁸ Reauthorization discussions have indicated that federal funding of the Superfund will increase, but certainly not enough to adequately tackle the growing hazardous waste disposal problem. The apparent need for more state funding had little bearing on the outcome of Exxon but has shaped CERCLA's reauthorization.

Exxon Corp. v. Hunt: The Supreme Court Decision

In a 7-1 opinion written by Justice Marshall, the Supreme Court held that CERCLA preempted the Sprill Act in part and remanded the case to the New Jersey Supreme Court.²⁹ The court first held that the the phrase "costs of response or damages or claims" in § 114(c) includes governmental response costs, natural resource damages, and third-party cleanup claims.³⁰ The Court agreed with Exxon that the words "may be compensated" mean eligible for CERCLA compensation.³¹ The Court refused to adopt New Jersey's argument that CERCLA's legislative history warranted the state's inexact interpretation of § 114(c), and applied a more logical reading of the troublesome clause.³²

Having determined CERCLA's preemptive scope, the Court applied it to the Spill Act. First, the Court noted that CERCLA listed its compensable expenses: remedial costs for sites on the NPL, removal costs for sites eligible according to the NCP guidelines, and state or federal government natural resource damage claims.³³ The Court had already ruled that states cannot pay for anything that could be compensated under CERCLA; it went on to rule that any part of the Spill Act that overlaps with the federal law was preempted.³⁴ The court remanded the case to state court to determine whether the preempted and non-preempted parts of the Spill Act were separable, and whether any part of the tax could remain in place.³⁵ Depending on the final result on remand, Exxon could cause a substantial refund of state tax revenues collected between 1980 and 1986. Moreover, the decision imperiled a number of other states' superfund laws.³⁶

Exxon thus mandated that states could no longer impose taxes on industry for use in cleanup programs, at least not for certain specified purposes. Still, this left many areas of expenditure unaffected. States could use industry-based revenues to pay for cleanup of petroleum spills or sites not on the NPL, the required state share of cleanup costs at CERCLA sites, third-party damages, lost profit and lost tax revenue claims, and personnel, equipment, research, and administrative costs. In addition, states were always free to spend general revenues for any purpose, as long as they did not compensate anyone already compensated under CERCLA.³⁷

[16 ELR 10289]

However, while the prohibited expenditures only correspond to a portion of the Spill Act's stated purposes, they actually accounted for the great majority of Spill Fund expenditures.³⁸ Although states could still tax industry to pay for nonpreempted activities, these activities occupy a lower priority on states' hazardous waste agendas. The record of New Jersey's expenditures suggests that it had placed payments for cleanup expenses, rather than peripheral needs such as administrative costs, on center stage in its waste cleanup plan. New Jersey's priorities are presumably typical of other states with superfund laws, and any action taken by the New Jersey Tax Court, where the case is currently pending, will be persuasive when the issue arises in other states. On remand in this case, the tax court might order a refund of all tax monies spent in contravention of § 114(c). States could substitute general revenues to fund the desired activities, but the political difficulty of either raising taxes or transferring allocations from other state programs makes this option unlikely to yield significant income.

Waiting for CERCLA: The Belated Reauthorization

In reaction to the confused, possibly unintended, and certainly controversial results of the original provision's enactment, Congress' 1986 CERCLA reauthorization package is expected to simply delete § 114(c).³⁹ The law will no longer preempt any portion of state superfunds. States can establish any tax plan to use for any purpose, subject only to limitations of state law and § 114(b)'s ban on actual double compensation.⁴⁰ The purpose of this is to remove "[a]ny cloud of uncertainty over the legitimacy of these [state] taxes."⁴¹ The CERCLA reauthorization's effect must be measured by how it changed the original § 114(c) as interpreted in Exxon. Without restrictions on their action, states will now have full freedom to determine their own revenue schemes and expenditure priorities. One question that remains is whether or not the preempted portions of the Spill Act have been retroactively reinstated. The answer to this must await New Jersey Tax Court review.⁴² It is already evident, however, that the change has three broad results bearing generally on CERCLA's effectiveness in dealing with the hazardous substance problem.

State Cleanup Activity

The amended law should increase the total volume of cleanup activity since it enlarges the role of state governments in the national cleanup effort. A Senate committee working on the reauthorization noted that it hoped the deletion of § 114(c) would "result in an increase in the number and pace of hazardous substance response actions undertaken or partially funded by States, since States will be able to raise funds to assist such hazardous substance response."⁴³ Without federal limits on the scope of their involvement, states are free to raise as much revenue earmarked for waste cleanup as they desire in any manner they choose.

Of course, § 114(c) was only one factor influencing states' revenue scheme determination, and the deletion of the provision will not single-handedly overhaul a state's cleanup posture. Although the change will not require that states adopt a more vigorous stance toward hazardous waste, some states will surely increase their efforts now that they have the opportunity. Even though CERCLA's preemptive effect was only clarified by Exxon in March 1986, § 114(c)'s presence since 1980 may well have dissuaded some states from enacting more aggressive hazardous response statutes for fear of preemption.⁴⁴ Now, states with hazardous substance problems and a fertile political climate can pursue a more active cleanup program than that established by CERCLA and EPA. Assuming that some state governments have not achieved the full level of response and cleanup capability they desire, they can now increase their tax programs, consequently increasing the national level of funding.

Inter-governmental Coordination

The deletion of § 114(c) also could reduce the degree of coordination between state and federal cleanup programs. Both New Jersey and Exxon argued before the Supreme Court that their respective interpretations of § 114(c) encouraged inter-governmental cooperation.⁴⁵ Under the ruling in Exxon, states could not take action at any site on the NPL if they were using industry tax dollars. Thus, states were channeled into focusing on sites of local importance not serious enough to merit national attention; § 114(c) promoted uniformity in remedial actions at priority sites. Federal decisionmaking also dominated emergency response actions, where the NCP provided guidelines which, if met, excluded state tax revenue expenditure. Again, states were precluded from acting on the most serious sites. This organizational hierarchy prevented overlap and imposed an order of priorities determined by the federal government.

With the deletion of § 114(c) in the reauthorization, states are legally free to act on their own initiative with their own funds without deference to federal plans; they need no longer follow the federal lead simply for the sake of uniformity. Exxon feared that in the absence of preemption, the "experiment" in inter-governmental cooperation established by CERCLA would be undermined by "[s]tates' preoccupation with their individual funds."⁴⁶

[16 ELR 10290]

In practice, however, the deletion of § 114(c) is not likely to greatly increase the danger of duplication. In the first place, the section was so limited it did not really provide that much coordination by itself. Other CERCLA provisions, retained in the reauthorization, continue to foster federal-state cooperation,⁴⁷ and states still have an incentive to coordinate their efforts with federal activities in order to maximize cleanup efficiency. The opportunity for unwitting duplication of expenditures is only minimally greater than before. Thus, as a result of informal incentives and legal mandates, and given the limited impact of preemption before reauthorization, the removal of § 114(c) should improve the progress of cleanup efforts.

Double Taxation

The reauthorization without § 114(c) will allow additional inequitable taxation for some companies already subject to CERCLA taxes. Section 114(c) limited the degree to which industry could be taxed since it forbade duplicative taxation for certain purposes. But the section, at least as interpreted by the Supreme Court in Exxon, did not entirely protect petroleum and chemical industries from state hazardous waste taxes, since the companies subject to taxation under CERCLA were also subject to state taxes to pay for other, non-preempted purposes. The petrochemical industries remain attractive targets for legislatures, and taxes on them may well increase absent the preemption provision, but the additional drain should not be too severe given industry's substantial vulnerability to taxation prior to the reauthorization. However, the actual impact is difficult to assess, particularly in light of the remaining uncertainty over how the federal Superfund will be financed in the reauthorization package.

To some degree, the petrochemical industries can pass any additional tax burden on to later links in the production chain, eventually filtering down to consumers. Nonetheless, since CERCLA imposes a tax upon the sale of the chemicals and the Spill Act imposes one upon transfer, domestic taxed industries could be at a disadvantage in the international market. Importers of feedstock derivatives escape the tax and will compete directly with domestic derivatives unless an equivalent tariff is imposed. Foreign producers selling abroad will have a competitive edge, escaping the tax liability of their American counterparts.⁴⁸ The affected industries will also be at a disadvantage compared to competing domestic suppliers of substitute items not subject to the tax. For example, CERCLA imposes a tax on petroleum but not on coal; the industry will suffer relative to coal, an alternative fuel source.⁴⁹

Congress used the industry-based tax in an attempt to force the affected industries to bear the costs of the "externalities" — the problems surrounding the manufacture, transport, and disposal of hazardous wastes — they had created.⁵⁰ However, it also balanced social and economic goals against the Act's potential commercial impact. Furthermore, economists dispute the best method of allocating responsibility for creating externalities such as hazardous wastes.⁵¹ To the extent that costs cannot be passed on and shared among other parties, additional taxation on the petrochemical industry results in inequitable imposition of financial liability. The inequity surfaces because the taxed industries are not responsible for introducing into the economy all the hazardous substances requiring cleanup that are not traceable to a responsible party. Producers other than the taxed companies introduce products that are equally dangerous, yet escape the blanket taxation imposed by CERCLA.⁵² These inequities between taxed and untaxed industries increase with additional taxes.

Congress' Motivations for Deleting § 114(c)

These three main impacts of removing CERCLA's preemption provision reflect several policy choices made by Congress. A desire to "protect the public health and environment" was one motivation expressly stated in deliberations in the House.⁵³ Congress wants a cleaner environment than it is willing, or politically able, to pay for out of federal monies. Giving the states free rein to tax as they please should result in increased overall cleanup efforts. The change also reflects a choice to grant the states additional sovereignty in environmental matters, and a realization that federal interests in environmental protection need not dominate or preclude state involvement.⁵⁴ This policy choice is only truly realized in the leeway given states to determine their own finance schemes, since they were free under the prior scheme to spend general revenues as they wished. Nevertheless, state "mini-superfunds" may be the most politically realistic way for states to expand their hazardous waste cleanup programs.

The apparent abandonment of express promotion of further coordination between state and federal efforts and the increased tax exposure of the petrochemical industries reflect costs accepted by Congress in return for the opportunity for more comprehensive cleanup efforts. Section 114(c) is not central to CERCLA's cleanup scheme since other provisions have a greater impact on intergovernmental coordination, and the tax provisions were already somewhat imperfect.⁵⁵ Even though the absolute value of deleting § 114(c), in terms of the number and extent of increased [16 ELR 10291] cleanups, may not be that great, the drafters of the 1986 CERCLA reauthorization package appear to have determined that the deletion is worth the even smaller unfavorable consequences that may result. CERCLA's essential purpose — site cleanup — is best realized by the deletion of § 114(c).

Conclusion

Exxon originally asserted that § 114(c) invalidates the entire Spill Act while New Jersey contended that the provision had almost no relevance at all. The Supreme Court's Exxon decision neatly bisected the earlier competing positions. Although the Supreme Court interpreted the statute in the most logical fashion, the opinion produced a result at odds with CERCLA's deeper purpose of expediting cleanup actions. As it became clear that the extent of the hazardous waste cleanup problem in America was much more widespread than CERCLA could effectively control by itself, drafters of the reauthorization bill realized that state efforts would be necessary in addition to what they could provide through CERCLA. Even though it might sacrifice some measure of coordinated efficiency and increase taxes on a segment of the economy, Congress is expected to remove the law's preemptive section. The deletion could exacerbate the financially unequal aspects of the Superfund tax by allowing industries to be subject to taxes for both state and federal funds. Congress appears to allow the inequity because it hopes that attempts to widen the tax base will reduce the unfairness, and more importantly, it is striving for a cleaner, safer environment.

1. The Senate and House conferees on the CERCLA reauthorization bill, which would amend 42 U.S.C. §§ 9601-9657, ELR STAT. 41941, completed their work on the non-tax provisions of the bill on July 31, 1986. At press time, a conference report was not yet available.

2. 42 U.S.C. § 9614(c), ELR STAT. 41952.

3. 475 U.S. __, 16 ELR 20396 (U.S. Mar. 10, 1986).

4. N.J. STAT. ANN. §§ 58:10-23.11 to 58:10-23.11z (West 1982 and Supp. 1985).

5. N.J. STAT. ANN. § 58:10-23.11a.

6. N.J. STAT. ANN. §§ 58:10-23.11f, g, o. Authorized research expenses include the development of cleanup and removal operations and inquiry into the prevention and effects of hazardous substance releases. N.J. STAT. ANN. § 58:10-23.11o(3).

7. N.J. STAT. ANN. § 58.10-23.11h. For specific expenditure information, see STATE OF NEW JERSEY, SPILL COMPENSATION FUND ANNUAL REPORT FOR FISCAL YEAR 1984 5-6 (1985).

8. See generally ENVIRONMENTAL LAW INSTITUTE, SUPERFUND: A LEGISLATIVE HISTORY (1982).

9. CERCLA § 221, 42 U.S.C. § 9631, ELR STAT. 41953.

10. CERCLA §§ 211(a), 231(a), 26 U.S.C. §§ 4611-4612, 4661-4662, 4681-4682, ELR STAT. 41957-41958.

11. CERCLA § 111, 42 U.S.C. § 9611, ELR STAT. 41950-41951.

12. "The evidence … clearly illustrates that the demand for moneys for government response far exceed the amounts authorized in this bill." S. REP. NO. 848, 96th Cong., 2nd Sess. 17 (1980).

13. 42 U.S.C. § 9614(c), ELR STAT. 41952. The entire subsection reads: "Except as provided in this chapter, no person may be required to contribute to any fund, the purpose of which is to pay compensation for any claims for any costs of response or damages or claims which may be compensated under this subchapter. Nothing in this section shall preclude any State from using general revenues for such a fund, or from imposing a tax or fee upon any person or upon any substance in order to finance the purchase or prepositioning of hazardous substance response equipment or other preparations for the response to a release of hazardous substances which affects such State."

14. 42 U.S.C. § 9614(b), ELR STAT. 41952. The subsection reads in pertinent part: "Any person who receives compensation … pursuant to this chapter shall be precluded from recovering compensation for the same … claims pursuant to any other State or Federal law." See infra text accompanying notes 19-20.

15. The New Jersey district court dismissed Exxon's first action on the grounds that it lacked jurisdiction since the state tax court provided a plain, speedy, and efficient remedy for Exxon's claim. Exxon Corp. v. Hunt, 11 ELR 20886 (D.N.J. July 27, 1981), aff'd, 683 F.2d 69, 12 ELR 20822 (3d. Cir. 1982), cert. denied, 459 U.S. 1104 (1983). Meanwhile, a New Jersey action seeking declaratory judgment that the Spill Act was not preempted was dismissed by another federal court for lack of sufficient immediacy. The district court for the District of Columbia held that since the federal government had not tried to enforce § 114(c), New Jersey's action did not warrant judicial review. New Jersey v. United States, 12 ELR 20184 (D.D.C. Nov. 10, 1981). Another suit brought by a state assemblyman who had been instrumental in passing the Spill Act resulted in the federal government agreeing to not challenge the state's interpretation of § 114(c). Lesniak v. United States, 12 ELR 20401 (D.N.J. Feb. 22, 1982). Exxon tried again in state court, but the court granted summary judgment for New Jersey, holding that even if § 114(c) could be construed to preempt part of the Spill Act, the non-preempted areas were sufficient to sustain the state law. Exxon Corp. v. Hunt, 4 N.J. Tax 294, 12 ELR 20734 (1982), aff'd, 190 N.J. Super. 131, 462 A.2d 193 (N.J. Super. Ct. App. Div. 1983), aff'd, 97 N.J. 526, 481 A.2d 271, 14 ELR 20932 (N.J. 1984), rev'd in part, 475 U.S. __, 16 ELR 20396 (U.S. Mar. 10, 1986).

16. Exxon Corp. v. Hunt, 11 ELR 20886; Exxon Corp. v. Hunt, 4 N.J. Tax 294, 12 ELR 20734. See also supra note 15.

17. New Jersey v. United States, 12 ELR 20184; Lesniak v. United States, 12 ELR 20401. See also supra note 15.

18. The settlement in Lesniak stipulated that New Jersey was not precluded from using the Spill Fund to finance: (1) oil spill cleanup; (2) Spill Fund administrative expenses; (3) purchase or prepositioning of response equipment; (4) the state share of CERCLA responses; (5) natural resource damage claims; (6) advance funding for planned CERCLA actions; and (7) CERCLA-eligible claims not actually financed by CERCLA. Lesniak, 12 ELR at 20401.

19. See Brief of Appellants, ELR PEND. LIT. 65868, Exxon Corp. v. Hunt, 16 ELR 20396 (U.S. Mar. 10, 1986) (No. 84-978).

20. See Complaint at 10-11, ELR PEND. LIT. 65695, New Jersey v. United States, 12 ELR 20184 (D.D.C. Nov. 10, 1981) (No. 81-0945).

21. 42 U.S.C. § 9614(b), ELR STAT. 41952, supra note 14. See generally SUTHERLAND STAT. CONST. § 46.06 (N. Singer 4th ed. 1985) ("A statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous.").

22. Brief of Appellees at 26-28, Exxon Corp. v. Hunt, 16 ELR 20396 (U.S. Mar. 10, 1986) (No. 84-978).

23. The Court held non-preempted activities to be cleanup of sites not on the National Priorities List or oil spills, the state's 10 percent or greater share of response costs, third-party damage claims, and personnel, equipment, administrative, or research costs. Exxon, 16 ELR at 20401.

24. Brief of Appellees at 20, 26, 28, Exxon, supra note 22.

25. Brief of Appellants at 17, Exxon, supra note 19. The Solicitor General submitted an amicus curiae brief contending that § 114(c) forbade Spill Fund payments of "other parties' damages and cleanup costs." Brief for the United States as Amicus Curiae at 20, ELR PEND. LIT. 65868-65869, Exxon Corp. v. Hunt, 16 ELR 20396 (U.S. Mar. 10, 1986). The Court rejected the Solicitor General's position. Exxon, 16 ELR at 20398.

26. See supra note 12 and accompanying text.

27. H.R. REP. NO. 253, 99th Cong., 1st Sess. 55 (1985).

28. Weisskopf, New Standards Set for Superfund Work, Washington Post, Aug. 1, 1986, at A6, col. 4.

29. 16 ELR at 20401.

30. 16 ELR at 20398-20399.

31. 16 ELR at 20399.

32. 16 ELR at 20400.

33. 16 ELR at 20400, referring to CERCLA § 105(8)(B), 42 U.S.C. § 9605(8)(B), ELR STAT. 41946-41947; National Contingency Plan, 40 C.F.R. part 300, ELR REG. 47401; and CERCLA Natural Resource Claims Procedures, 50 Fed. Reg. 9593 (1985).

34. 16 ELR at 20401.

35. Id. The New Jersey Supreme Court remanded the case to the New Jersey Tax Court, where Judge Evers, who heard the original tax court case, will apply the Supreme Court's ruling. Exxon Corp. v. Hunt, No. A66 (N.J. Tax Ct.).

36. One writer concluded that as of mid-1983, 13 of the 36 states with fund statutes were subject to preemption by § 114(c). Funk, Federal and State Superfunds: Cooperative Federalism or Federal Preemption, 16 ENVTL. L. 1, 35 n.131 (1985). The jeopardized statutes, besides the Spill Act, were: CAL. HEALTH & SAFETY CODE § 25300-395 (Deering 1983 Supp.); CONN. GEN. STAT. ANN. § 22a-448 (West 1982 Supp.); FLA. STAT. ANN. §§ 208.001, 403.703 (West 1982 Supp.); IND. CODE ANN. § 13-7-8.7-1 to -6 (West 1983); KAN. STAT. ANN. § 65-3430 (1982 Supp.); KY. REV. STAT. ANN. § 224.876 (Baldwin 1982); ME. REV. STAT. ANN. § 260.480 (1984); N.H. REV. STAT. ANN. § 147-B:3 (1981 Supp.); N.Y. STATE FIN. LAW § 97-b (McKinney 1983 Supp.) and N.Y. ENVTL. CONSERV. LAW § 27-0923 (McKinney 1982 Supp.); S.C. CODE ANN. § 44-56-160 (Law. Co-op. 1982 Supp.).

See also Comment, State Hazardous Waste Superfunds and CERCLA: Conflict or Complement?, 13 ELR 10348, 10356 (Nov. 1983) and ENVIRONMENTAL LAW INSTITUTE, STATE SUPERFUND STATUTES 1986 (1983).

37. CERCLA § 114(b), 42 U.S.C. § 9614(b), ELR STAT. 41952.

38. Brief of Appellants at 22-23 n. 24, Exxon, supra note 19. Appellants contended that over 90 percent of the Spill Fund was used for precluded cleanup costs.

39. S. REP. NO. 11, 99th Cong., 1st Sess. 59 (1985). The deletion of § 114(c) has been approved by the conference committee, which has not yet published its report. See supra note 1.

40. 42 U.S.C. § 9614(b), ELR STAT. 41952.

41. S. REP. NO. 11, 99th Cong., 1st Sess. 59 (1985).

42. Even if the reauthorization revives the preempted portions of the Spill Act, it would not retroactively affect any refund ordered by the tax court. However, according to one writer, it "is not necessarily true that taxes equal to those [preempted expenditure] sums would have to be refunded to the taxpayers." FUNK, supra note 36, at 34 n.129.

43. S. REP. NO. 11, 99th Cong., 1st Sess. 59-60 (1985).

44. While 36 states had fund statutes, only 13 adopted laws where tax or fee revenues were dedicated to cleanup efforts that conceivably could be affected. See, e.g., ENVIRONMENTAL LAW INSTITUTE, STATE SUPERFUND STATUTES 1984 (1983). Perhaps the other 23 states — to say nothing of the 14 states without any program at all — limited the ambit of their laws due to § 114(c)'s shadow.

45. Brief of Appellants at 19-21, Exxon, supra note 19; Brief of Appellees at 26, Exxon, supra note 22.

46. Brief of Appellants at 21, Exxon, supra note 19.

47. See, e.g., CERCLA § 104(c), (d), 42 U.S.C. §§ 9604(c), (d), ELR STAT. 41945-41946; CERCLA § 111, 42 U.S.C. § 9611, ELR STAT. 41950-41951.

48. An American company can escape the tax through overseas operations, but if it conducts any step in the manufacturing process in the United States, it will be financially responsible.

49. This is just an example; the actual financial inequity is not very large.

50. Congress also probably used the tax because it was an efficient collection method.

51. One view stresses that producers are best able to spread true costs, and so should bear liability for these expenses (e.g., cleanup costs that cannot be charged to a responsible party such as a previous site owner or operator); another holds that although inequitable tax imposition harms the affected industries, they are no more guilty than industrialized society that demands the troublesome goods.

52. See supra note 51. EPA developed an alternative feedstock tax based entirely on substances "that have contributed to the problem at Superfund sites" according to the Hazardous Ranking System. OFFICE OF SOLID WASTE AND EMERGENCY RESPONSE, UNITED STATES ENVIRONMENTAL PROTECTION AGENCY, THE FEASIBILITY AND DESIRABILITY OF ALTERNATIVE TAX SYSTEMS FOR SUPERFUND — CERCLA § 301(a)(1)(G) STUDY, FINAL REPORT 4-9 (1984). The list of 47 feedstocks contained 15 substances not taxed under CERCLA, including aluminum, asbestos, coal coke, copper, pig iron, manganese, selenium, and uranium oxide. Id. at 4-7. In addition, producers of imported feedstock or petroleum derivatives avoid the tax, yet they introduce into the economy potential hazardous wastes.

53. H.R. REP. NO. 253 (pt. 1), 99th Cong., 1st Sess. 54 (1985).

54. The coincidence of this policy with broader overall goals of states' rights advocates seems to be mere fortuity.

55. See supra notes 47-52 and accompanying next.