B.F. Goodrich v. Murtha and EPA's Municipal Settlement Policy: Municipalities Are Not Exempt From CERCLA Liability

Sarah Robichaud

Editors' Summary: This Comment examines the district court's decision in B.F. Goodrich Co. v. Murtha that municipal solid waste (MSW) is not exempt from CERCLA for purposes of apportioning cleanup costs, and that EPA's Municipal Settlement Policy does not insulate municipalities from CERCLA liability at the expense of private waste generators. The Comment concludes that the court's decision is consistent with CERCLA's goal of cleaning up hazardous waste sites and apportioning damages regardless of the source of the waste, and with the language of the Municipal Settlement Policy. The Policy was adopted to assist EPA regions in deciding whether to expend their limited resources on pursuing municipal PRPs for MSW cleanup costs, and by its own terms, does not provide an exemption for potential liability under CERCLA § 107 for any party.

The U.S. Court of Appeals for the Second Circuit has granted the municipalities' request for interlocutory appeal in Murtha, and its ruling will be the first appellate decision in an emerging line of cases on the highly contentious issue of whether disposing of MSW gives rise to CERCLA liability. At the same time, local governments have organized a lobbying effort to revise CERCLA so that the unique characteristics of MSW are recognized and treated in an equitable fashion. The outcome in Murtha will strongly influence the degree to which municipalities should be prepared to negotiate with other PRPs to reach settlements in CERCLA contribution actions. Municipalities facing potential CERCLA liability have a strong incentive to avoid the high costs associated with CERCLA liability by eliminating hazardous waste from municipal waste streams, changing waste collection and disposal operations, and examining waste reduction or recycling alternatives. Sound local waste management practices could be a persuasive defense for municipalities caught in CERCLA cost recovery actions and could help guard against current litigation strategies that are on the verge of stretching CERCLA's liability provisions to an extreme by naming hundreds of municipalities, small businesses, and school districts as PRPs. The issue of liability for MSW at CERCLA hazardous waste sites is a significant factor in the long-term controversy over cleanup delays, litigation costs, and an unfair process that remains unresolved as CERCLA enters its second decade.

This student Comment was written during Ms. Robichaud's tenure as a legal intern for ELR in 1990-91, with emendatory review by ELR Associate Editor M. B. Arnett.

[21 ELR 10456]

In B.F. Goodrich v. Murtha,¹ a group of municipalities attempted to use the Environmental Protection Agency's (EPA's) Municipal Settlement Policy (Policy)² to defend a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)³ contribution action in the U.S. District Court for the District of Connecticut.⁴ A coalition [21 ELR 10457] of CERCLA potentially responsible parties (PRPs) sought contribution from the municipalities for the costs of cleaning up municipal solid waste (MSW) at two Connecticut hazardous waste sites. The court held that municipalities may be notified as PRPs and may not escape CERCLA liability based on EPA's Policy.⁵ The court sided with an EPA brief that maintained that the 1989 Policy was an internal decision to target litigation resources at industrial polluters, not a blanket exemption for municipalities. The U.S. Court of Appeals for the Second Circuit has granted the municipalities' request for interlocutory appeal, and its ruling will be the first appellate decision on the highly contentious issue of whether disposing of MSW gives rise to CERCLA liability. The outcome in Murtha will strongly influence the degree to which municipalities should be prepared to negotiate with other PRPs to reach settlements in CERCLA contribution actions.⁶

EPA issued the Policy in 1989 to provide guidance on settlements under CERCLA § 122⁷ that involve municipalities or municipal wastes. It provides that EPA will impose CERCLA liability on municipalities if the municipal solid waste (MSW) collected and delivered to the site by municipalities contains hazardous material generated from commercial, industrial, or institutional processes and activities.⁸

Determining the sources of waste and responsible parties at a municipal landfill is a foreboding task. These sites typically involve a large number of responsible parties, multiple waste sources and diverse waste streams that are both municipal and industrial, and waste streams varying in toxicity.⁹ Indeed, almost one-quarter of the proposed and final sites on the CERCLA national priorities list (NPL)¹⁰ involve municipalities or municipal waste. Given the high cleanup costs, municipalities have understandably resisted liability for depositing MSW at waste sites. Industrial parties, however, argue that municipalities should share in the cost of expensive cleanups.

This Comment examines the court's ruling in B.F. Goodrich v. Murtha that municipalities are not exempt from liability for MSW in CERCLA contribution actions. First, the Comment describes the purpose of EPA's Municipal Settlement Policy and examines the policy's role in the CERCLA settlement process. The following section analyzes the arguments of the municipal and industrial PRPs in B.F. Goodrich v. Murtha, as well as EPA's position on municipal liability under the Policy. This section also explores the court's conclusion in B.F. Goodrich v. Murtha that MSW is not excluded from CERCLA liability. The Comment then evaluates recent efforts by municipalities to alleviate their liability for CERCLA contribution costs by lobbying Congress to exempt MSW from CERCLA. Finally, the Comment cautions that, pending the outcome of the Second Circuit's decision in Murtha, municipalities should prepare for the growing number of CERCLA contribution actions involving MSW. Potential liability for CERCLA cleanup costs gives municipalities an added incentive to change their waste collection and disposal operations and to examine waste reduction or recycling alternatives.

The Municipal Settlement Policy

The Municipal Settlement Policy's stated purpose is to provide EPA regional offices with guidance on enforcement actions and settlements involving municipalities or municipal wastes and to consistently address how municipalities will be treated in such settlements.¹¹ The Policy is intended to establish a national framework to facilitate settlements,to allocate Agency resources, and to help set enforcement priorities.¹² The Policy addresses three fundamental issues: (1) whether EPA should notify parties that generate or transport MSW or sewage sludge, usually municipalities themselves, that they are considered PRPs and to include them in the information-gathering and settlement processes; (2) how municipalities should be handled in the settlement process when they are notified as PRPs; and (3) how treatment of municipalities affects the treatment of private parties and certain kinds of commercial, institutional, or industrial wastes in the Superfund settlement process.¹³ Generally, the Policy provides that municipalities will not be subject to EPA cost recovery actions unless the solid waste that the municipalities collect and deliver to sites contains industrial or commercial hazardous materials.¹⁴

Information Gathering and Notification

EPA will follow the same information gathering and notification processes for potentially responsible municipalities as it follows for private party PRPs.¹⁵ During the formulative phase, some municipal representatives argued that the Policy should give municipalities special treatment in the notification process.¹⁶ In contrast, some industry representatives [21 ELR 10458] argued before the Policy's adoption that "municipal owner/operators should be handled the same as other PRPs and should be part of the larger settlement process that may involve other parties, including private parties."¹⁷ EPA agreed.¹⁸ Accordingly, the Policy provides that parties will be notified as PRPs if they were past owners or operators of facilities at the time hazardous substances were disposed, or if they are present owners or operators of facilities where hazardous substances were disposed, or where there is a threatened release of hazardous substances.¹⁹ Similarly, municipal PRPs and private party PRPs will be treated alike under the Policy when EPA determines whether to notify them as generators or transporters of MSW, sewage sludge, and any other hazardous substance.²⁰ For notification, EPA must have site-specific information that the MSW or sewage sludge contains a hazardous substance. Additionally, EPA must believe that the hazardous substance is derived from a commercial, institutional, or industrial process or activity.²¹

Settlement Process

Because municipalities and private parties generate similar waste streams and may dispose of their waste at one site, the Policy treats municipalities and private parties essentially the same in a CERCLA contribution action.²² Ideally, all parties will be included in one settlement agreement, consistent with the intent of CERCLA.²³ However, separate settlement agreements may be used at a site when necessary.²⁴ For example, the Policy facilitates settlements with municipalities by providing for delayed payments, incremental payments, and in-kind contributions in lieu of cash when appropriate. These settlement provisions take into account unavoidable constraints on a municipality's ability to pay and allow flexible timing for its payments due to its status as a government entity. However, unless a party has entered into a settlement with the United States or a state and obtained contribution protection under CERCLA § 113(f), the Policy will not protect a party from contribution claims of another PRP.²⁵

B.F. Goodrich Co. v. Murtha

In B.F. Goodrich Co. v. Murtha,²⁶ two landfills in Connecticut accepted waste from industrial and municipal sources. EPA identified B.F. Goodrich Co. and Uniroyal Chemical Co. as among the PRPs. The companies then filed a contribution claim against Harold Murtha, the owner and operator of the landfills, for response costs. Murtha filed a third-party complaint against numerous municipalities, arguing that the municipalities should be liable for cleanup costs.²⁷ B.F. Goodrich and Uniroyal, plaintiffs in the original action, amended their complaints against Murtha to include the municipalities.²⁸ The municipalities argued that the court should defer to EPA's Policy and hold that CERCLA exempts them from financial responsibility for cleaning up the contaminated landfills.²⁹ The industry PRPs claimed, however, that the sites were contaminated by MSW containing small amounts of hazardous materials deposited by numerous municipalities.³⁰ The industry PRPs further argued that because the municipalities were responsible for some of the contamination, they were liable for a portion of the cleanup costs.³¹ Like industry, EPA opposed a liability exemption for the municipalities.³² The court, agreeing with the industry PRPs, found that the Municipal Settlement Policy does not exempt municipalities from CERCLA liability.

The Municipalities' Argument for Exemption

Given CERCLA's silence on liability for MSW,³³ the municipalities argued that EPA carefully developed a logical [21 ELR 10459] policy to establish a liability framework for owners or operators and generators or transporters of MSW under CERCLA.³⁴ The municipalities contended that the Policy encourages EPA to focus on the nature and source of the waste, instead of the identity of the generator or transporter, when determining PRPs.³⁵ They also argued that they did not arrange for disposal, treatment, or transport of hazardous substances. According to the municipalities, the collection or generation of primarily household MSW should not incur CERCLA liability.³⁶

To incur liability under EPA's Policy, the municipalities argued, EPA must have site-specific information that the MSW or sewage sludge contains a hazardous substance and is derived from a commercial or industrial process or activity.³⁷ The municipalities emphasized EPA's statement that it will pursue generators and transporters of MSW containing household hazardous waste only when the majority of the waste deposited at a site is household hazardous waste.³⁸ The Policy, the municipalities argued, acknowledges that MSW may contain a small amount of household hazardous wastes, but presumes two things: that MSW is nonhazardous unless proved otherwise, and that trash from commercial and industrial entities using toxic chemicals contains hazardous wastes.³⁹

The municipalities argued that the Policy, although not an official rulemaking, is logical and supports CERCLA's intent that industries profiting from hazardous substance disposal must pay for the cleanup costs. The municipalities contended that it would be absurd if the mere generation of MSW resulted in liability, because every household member would become liable under CERCLA every time trash is disposed.⁴⁰ The municipalities further argued that if Congress had planned to place the burden for cleanups on municipalities instead of industry, it would have funded the Act through a broad-based tax and without a liability scheme.⁴¹ To illustrate that Congress' focus was on waste streams from industrial processes instead of municipal waste streams, the municipalities emphasized that MSW was mentioned only once in CERCLA's legislative history.⁴²

The municipalities in Murtha urged the court to defer to EPA's Policy as law, since it is "the best and only interpretation of CERCLA by the Agency charged with administering the statute, derived after extensive consideration and public comment."⁴³ Because Congress intended EPA to have substantial discretion in administering CERCLA generally,⁴⁴ the court must defer to the Agency's interpretation of municipal liability if it is reasonable and consistent with Congress' intent.⁴⁵

Finally, the municipalities argued that because household waste is not considered hazardous under § 3001(i) of the Resource Conservation and Recovery Act (RCRA),⁴⁶ MSW should not be considered a hazardous substance under CERCLA. The municipalities contended that RCRA's household waste exemption was incorporated by reference into CERCLA § 101(14),⁴⁷ where CERCLA defines as a hazardous substance "any substance designed as hazardous or toxic in certain other environmental statutes, including RCRA section 3001."⁴⁸

Industry's Response

Industry PRPs in Murtha actively contested the municipalities' argument for summary judgment. Because most of the waste at the Connecticut sites is MSW, industry charged that CERCLA imposes liability on the municipalities that arranged for the disposal of hazardous substances at the sites.⁴⁹ Industry argued that the municipalities essentially admitted liability, based on CERCLA's provision that "any person" disposing of or transporting hazardous substances may be liable for cleanup costs.⁵⁰ Additionally, industry noted that Congress did not intend to differentiate procedurally [21 ELR 10460] or substantively between municipalities and any other "person" as defined by CERCLA.⁵¹ For these reasons, industry argued that municipalities should face CERCLA liability along with private PRPs.

Industry also claimed that EPA's Policy actually undermines the municipalities' position.⁵² EPA, industry argued, did not design the Policy to restrict the broad application of CERCLA in private contribution actions.⁵³ Instead, the Policy is simply a legitimate exercise of EPA power that helps the United States to "pick and choose among potentially responsible parties … and recover cleanup costs against one, some, or all of them."⁵⁴ To support its argument for municipal CERCLA liability, the industry PRPs rebutted the municipalities' reliance on Chevron U.S.A. v. Natural Resources Defense Council⁵⁵ for the proposition that the court should defer to an agency interpretation that exempts MSW from CERCLA liability. Industry claimed that Chevron and Murtha presented entirely different issues. Whereas Chevron dealt with EPA's authority under the Clean Air Act to promulgate certain regulations, Murtha centered on whether the court should substitute EPA's enforcement policy "for the express mandates of CERCLA when construing CERCLA's application to the defendants."⁵⁶

EPA's Position

In a motion opposing the municipalities' motion for summary judgment, EPA clarified its position on CERCLA's coverage of MSW. EPA argued generally that the municipalities misstated and incorrectly interpreted the Municipal Settlement Policy and CERCLA's scope of liability.⁵⁷ EPA emphasized that the municipalities' restrictive interpretation would prevent EPA from adequately enforcing CERCLA: "[T]he United States has a direct interest in the court's resolution of the pending motion because EPA may in the future seek to recover its unreimbursed response costs associated with the Beacon Heights and Laurel Park sites from the Municipal Defendants, [or from] other municipalities…."⁵⁸

EPA contended that CERCLA clearly and unambiguously covers all hazardous substances, including hazardous substances contained in MSW.⁵⁹ EPA asserted that the municipalities may, in fact, be liable under CERCLA § 107(a)(3) if they arranged for the disposal or treatment of a hazardous substance.⁶⁰ CERCLA's definition of "hazardous substance" in § 101(14)⁶¹ is broad: it encompasses any substance designated hazardous under five environmental statutes,⁶² makes no distinction regarding the source of the substance, does not distinguish among PRPs, and includes a hazardous substance "even if present only in minute amounts."⁶³ A hazardous substance is not excluded from liability because it was generated or transported as part of MSW.⁶⁴ Additionally, EPA argued, CERCLA's silence on MSW does not imply an exemption of MSW from CERCLA liability.⁶⁵ EPA concluded that municipalities are not exempt from CERCLA § 107(a)(3) liability for MSW under the unambiguous language defining hazardous substance in CERCLA § 101(14).⁶⁶

Given CERCLA's plain and unambiguous language, EPA contended that considering the statute's legislative history and the Municipal Settlement Policy is unnecessary.⁶⁷ Even if CERCLA's legislative history is considered, EPA noted that nothing in it suggests that Congress intended to exempt MSW from liability.⁶⁸ Instead, CERCLA's legislative history suggests that Congress intended to cover all hazardous substances — regardless of their sources.⁶⁹

EPA opposed the liability exemption for municipalities in Murtha, arguing that such an exemption "grossly distorts the nature and substance" of the Policy.⁷⁰ EPA reasoned that although the Policy is persuasive legal authority, it has no binding impact on PRPs or the court and cannot be relied on as a defense or used to provide an exemption from CERCLA liability for any party.⁷¹ EPA concluded that the municipalities failed to show any basis in CERCLA, its legislative history, or the Municipal Settlement Policy that exempts them from CERCLA liability or supports the conclusion that the Policy should be adopted as law.

The Court's Resolution

The court in B.F. Goodrich v. Murtha⁷² found that the generation and collection of MSW may subject municipalities to CERCLA liability, and thus denied the municipalities' request for summary judgment. Rejecting the municipalities' contention that MSW is exempt from CERCLA [21 ELR 10461] liability, the court resolved the issue by analyzing the language and legislative history of CERCLA, the designation of MSW under CERCLA, and EPA's Municipal Settlement Policy.

First, the court found meritless the municipalities' argument that MSW is not a hazardous substance based on RCRA's household waste exemption. The court stated that EPA has broad authority under CERCLA to force responsible parties to pursue response actions.⁷³ The court noted that as a general proposition, private party PRPs may recover response costs from other PRPs, and "an exemption for municipalities would remove one link from the chain in derogation of Congress' broad imposition of responsibility."⁷⁴ The court reasoned that, even though CERCLA is silent regarding MSW, if a hazardous substance is present in MSW or the substance falls within the definition of hazardous waste under § 101(14), municipalities are liable for cleanup costs.⁷⁵ Because several municipalities conceded disposal of MSW at one or both of the Connecticut sites,⁷⁶ the court found that a question of fact existed as to whether the waste the municipalities disposed at the sites contained hazardous substances.⁷⁷ Furthermore, noting that compliance with regulations is not a defense to liability, the court concluded that if the municipalities deposited hazardous substances, and a release or a threatened release occurred at the site, the municipalities face liability.⁷⁸

The court also held that RCRA's exemption of household waste does not apply to CERCLA because Congress did not exempt MSW when it enacted CERCLA.⁷⁹ The court concluded that the goal of CERCLA is to clean up sites and apportion damages, regardless of the source of the waste.⁸⁰ Thus, to allow a municipal exemption would frustrate Congress' intent in enacting CERCLA, particularly because CERCLA does not distinguish between municipal and private party PRPs.⁸¹

Recent Efforts to Exempt MSW From CERCLA

The court's decision in B.F. Goodrich Co. v. Murtha⁸² demonstrates that neither EPA's Municipal Settlement Policy nor CERCLA precludes private party claims against municipal PRPs.⁸³ The court reasonably concluded that to allow an exemption for MSW would frustrate Congress' intent in enacting CERCLA, because the goal of CERCLA is to clean up sites and apportion damages, regardless of the source of the waste. The lack of an explicit exemption of MSW from CERCLA creates a statutory roadblock for municipalities attempting to escape liability as PRPs, and an emerging line of court decisions holding municipalities liable for cleanup costs provides no relief.⁸⁴

In response to the trend toward municipal liability, Rep. Smith (R-N.J.) has introduced H.R. 2767, which would exempt municipalities from CERCLA liability for the generation or transportation of MSW, and a group of California municipalities formed a national coalition, American Communities for Cleanup Equity (ACCE), to lobby Congress to amend CERCLA to expressly exempt MSW from liability.⁸⁵ The move by ACCE is endorsed by the National League of Cities, which recently approved a resolution asking Congress to "eliminate local government liability under Superfund for the disposal of ordinary municipal waste."⁸⁶ Additionally, the Solid Waste Disposal Task Force of the Conference of Mayors approved a similar resolution that requests a restructuring of CERCLA settlements with municipalities.⁸⁷ Municipalities argue that without an amendment to CERCLA, cleanup costs will ultimately come from taxpayers, contrary to congressional intent. Municipalities are concerned that even if EPA does not pursue them for cleanup costs, other polluters may still sue municipalities in third-party actions, consistent with [21 ELR 10462] recent case law. Therefore, municipalities contend that MSW should be exempt from CERCLA to limit litigation and to quicken the pace of cleanups. This concern is heightened at a time when litigation strategies are on the verge of stretching CERCLA's liability provisions to an extreme by naming hundreds of municipalities, small businesses, and school districts as PRPs.⁸⁸

In response to these initiatives, industry argues that an exemption for MSW would unfairly require industry to pay more than its share of the cleanup costs.⁸⁹ They argue that CERCLA's goal is to clean up waste sites, not to achieve fairness. Industry further argues against an exemption for MSW because EPA retains discretion to settle with cities and to protect them from third-party suits.⁹⁰

In an atypical alliance with industry, environmentalists also oppose an exemption from CERCLA liability for MSW.⁹¹ Environmentalists argue that if local officials mishandle waste, local taxpayers should be responsible for cleanup costs. Making municipalities liable for a portion of cleanup costs will promote citizen oversight and help to prevent official mismanagement. Additionally, differential treatment of municipal and private party PRPs under CERCLA may lead other groups, such as the insurance industry, to attempt to escape liability, thus promoting further litigation and slowing the pace of CERCLA cleanups.⁹²

Finally, EPA's Office of Waste Programs Enforcement (OWPE) has recognized a need to address municipalities' concerns in third-party suits. OWPE plans to award a grant to a city management organization in an effort to help small towns handle potential Superfund liability.⁹³ The organization would provide expert assistance to cities named as PRPs or communities located near Superfund sites.

Conclusion

The National League of Cities' endorsement of ACCE's proposal to exempt MSW from CERCLA liability is a powerful lobbying tool. Nonetheless, municipalities may not win an exemption of MSW from CERCLA liability. And, even though mayors nationwide requested a restructuring of municipal settlements under CERCLA, EPA urged the mayors to pursue settlements with EPA under CERCLA's de minimis settlement provisions. Thus, municipalities must, at least temporarily, accept the concept that taxpayers will pay for cleanup activities.

The court's holding in B.F. Goodrich v. Murtha⁹⁴ that municipal PRPs are liable for MSW is consistent with CERCLA's goal of promoting quick hazardous waste site cleanups. CERCLA places the burden for hazardous waste cleanup on industry, which presumably profits the most from the generation and disposal of hazardous substances,⁹⁵ but it does not provide an exemption from liability for MSW. Furthermore, EPA's Municipal Settlement Policy does not preclude private party PRPs from pursuing municipal PRPs. To pay the enormous cleanup costs under CERCLA, the federal government and private parties will attempt to increase the pool of PRPs by seeking contribution from municipalities responsible for disposing of MSW.⁹⁶ The U.S. Court of Appeals for the Second Circuit has granted the municipalities' request for interlocutory appeal in Murtha, and its ruling will be the first appellate decision on the highly contentious issue of whether disposing of MSW gives rise to CERCLA liability. The outcome in Murtha will strongly influence the degree to which municipalities should be prepared to negotiate with other PRPs to reach settlements in CERCLA contribution actions.⁹⁷

EPA's Municipal Settlement Policy provides added strength to federal government cleanup efforts. By its own terms, the Policy does not provide an exemption for potential liability under CERCLA § 107 for any party.⁹⁸ It was adopted to assist EPA regions in deciding whether to expend their limited resources on pursuing municipal PRPs for MSW cleanup costs. Accordingly, EPA is likely to consider whether the majority of waste to be treated is MSW⁹⁹ and the extent to which the municipality is responsible for the presence of hazardous substances. Although municipalities may have difficulty contributing [21 ELR 10463] substantial sums for cleanups,¹⁰⁰ and proving their liability is expensive and time-consuming for other PRPs, municipalities should prepare to face potential liability for CERCLA cleanup costs. At a time when litigation strategies are on the verge of stretching CERCLA's liability provisions to an extreme by naming hundreds of municipalities, small businesses, and school districts as PRPs, documentation of sound local waste management practices would be a significant factor for municipalities caught in CERCLA cost recovery actions. Avoiding the high costs associated with CERCLA liability¹⁰¹ gives municipalities a strong incentive to eliminate hazardous waste from municipal waste streams, to change their waste collection and disposal operations, and to examine waste reduction or recycling alternatives.

1. 754 F. Supp. 960, 21 ELR 20777 (D. Conn. Jan. 7, 1991), petition for permission to appeal from interlocutory order granted, No. 91-7450 (2d Cir. May 8, 1991).

2. EPA Interim Policy on CERCLA Settlements Involving Municipalities or Municipal Waste (Municipal Settlement Policy), 54 Fed. Reg. 51071 (Dec. 12, 1989), ELR ADMIN. MATERIALS 35225.

3. CERCLA §§ 101-405, 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA 001-075.

4. See Defendants' Memorandum in Support of Motion for Summary Judgment (No. N-87-52(PCD)), digested at ELR PEND. LIT 66099.

5. Murtha, 754 F. Supp. at 968, 972-73, 21 ELR at 20781, 20783-84. See also Transportation Leasing Co. v. California, No. CV 89-7368-WMB(GHKx), 21 ELR 20826 (C.D. Cal. Dec. 5, 1990), where another district court refused to exclude MSW from CERCLA's definition of "hazardous substance" and allowed a suit by oil and chemical companies seeking to make 29 California cities pay for 90 percent of an estimated $ 650- $ 800 million cleanup. See also infra note 84.

6. See generally Bernstein, To Clean Up Landfills, the Leader Should be Municipalities Using Economic Incentives to Settle, 19 ELR 10012, 10014 (Jan. 1989) (estimating that $ 80 billion will be needed to clean up the approximately 2,000 contaminated municipal landfills in the United States).

7. CERCLA § 122, 42 U.S.C. § 9622, ELR STAT. CERCLA 054.

8. 54 Fed. Reg. at 51073, 51075, ELR ADMIN. MATERIALS at 35225-26.

9. 54 Fed. Reg. at 51071-72.

10. 40 C.F.R. § 300 app. B (the list of sites most in need of cleanup). Approximately 20 percent of the proposed and final NPL sites are classified as municipal landfills — any landfills either public or private that have received MSW. See 54 Fed. Reg. at 51071.

11. 54 Fed. Reg. at 51071, 51073, ELR ADMIN. MATERIALS at 35225.

12. Id. at 51071. To develop a manageable and fair policy, EPA held a conference and a discussion group to inform interested parties of its policy, stimulate public debate, and consider input from all interested parties. More than 100 state and local government, industry, and environmental groups attended a Municipal Settlement Conference in March 1988. Following the conference, EPA established the Municipal Settlement Discussion Group, which was open to the public in June, August, and October of 1988. Id. at 51072.

13. Industry generally is affected by the policy because private parties sometimes handle municipal waste or generate waste streams that are similar in nature to municipal waste, and because municipal and industrial wastes are sometimes commingled at the same site. 54 Fed. Reg. at 51073, ELR ADMIN. MATERIALS at 35225.

14. Id. at 51074, ELR ADMIN. MATERIALS at 35225-26.

15. Id. at 51074-75, ELR ADMIN. MATERIALS at 35226-27.

16. Some municipal representatives hoped the Policy would provide an early opportunity for municipalities to meet with EPA to resolve their potential liability. Id. at 51072.

17. Id.

18. Id.

19. Id. at 51074, ELR ADMIN. MATERIALS at 35226.

20. Id., ELR ADMIN. MATERIALS at 35226-27. "Any other hazardous substance" refers to any hazardous substance covered under CERCLA § 101(14), 42 U.S.C. § 9601(14), ELR STAT. CERCLA 007, other than hazardous substances that may be contained in MSW, sewage sludge, or trash from a commercial, institutional, or industrial entity.

21. 54 Fed. Reg. at 51075, ELR ADMIN. MATERIALS at 35226. If EPA believes that the MSW comes from household sources, EPA will generally exclude the waste from the settlement process. Id. Municipal generators or transporters of household hazardous waste (HHW) are notified as PRPs only if the total contribution of commercial, institutional, and industrial hazardous waste by private parties to the site is insignificant when compared to the MSW. Id. at 51072. EPA expects this exception to be "sparingly applied," id, and EPA will include generators and transporters of HHW in the settlement process only where it would promote either settlement or response action at the site. Id. at 51074-75, ELR ADMIN. MATERIALS at 35226. See also id. at 51075 n.10, ELR ADMIN. MATERIALS at 35226 n.10.

22. Id. at 51075, ELR ADMIN. MATERIALS at 35227.

23. Id.

24. A de minimis settlement under CERCLA § 122(g), 42 U.S.C. § 9622(g), ELR STAT. CERCLA 058, is an example of a separate settlement, which may be used when it is consistent with applicable statutory requirements and existing EPA guidelines.

25. 54 Fed. Reg. at 51076, ELR ADMIN. MATERIALS at 35227.

26. 754 F. Supp. 960, 21 ELR at 20777 (D. Conn. Jan 7, 1991), petition for permission to appeal from interlocutory order granted, No. 91-7450 (2d Cir. May 8, 1991).

27. Third-Party Complaint (No. N-87-52 (PCD)), digested at ELR PEND. LIT. 66094.

28. Third Amended Complaint of Plaintiff Uniroyal Chemical Co. Alleging Additional Claims Against Certain Municipalities and Housing Authorities (No. N-87-52(PCD)).

29. Defendants' Memorandum in Support of Motion for Summary Judgment Filed on Behalf of the Defendant Municipal/Government Agency Collectors Group (Municipal Memorandum) at 37 (No. N-87-52 (PCD)); digested at ELR PEND. LIT. 66099.

30. Beacon Heights Coalition Plaintiffs' and Uniroyal Chemical Co.'s Memorandum of Law in Opposition to the Defendants Municipal/Government Agency Collectors Group's Motion for Summary Judgment (Industry Memorandum) at 21-41 (No. N-87-52 (PCD)).

31. Id. at 35.

32. Opposition of the United States to the Motion for Summary Judgment Filed on Behalf of the Municipal Defendants (EPA Memorandum) (No. N-87-52 (PCD)), digested at ELR PEND. LIT. 66104.

33. CERCLA § 107(a), 42 U.S.C. § 9607(a), ELR STAT. CERCLA 024. Additionally, household waste, the primary component of MSW, is exempted from liability under the Resource Conservation and Recovery Act (RCRA), RCRA § 3001(i), 42 U.S.C. § 6921(i), ELR STAT. RCRA 011, and 40 C.F.R. § 261.4(b)(1). The municipalities claim that because CERCLA incorporates RCRA's definition of hazardous waste into its own definition, CERCLA § 101(14), 42 U.S.C. § 9601(14), ELR STAT. CERCLA 007 also incorporates the entire household waste exemption. However, EPA points out that this argument is without merit, since the substances brought within the definition of hazardous substances under CERCLA are entirely independent of the lists of hazardous wastes under RCRA. EPA Memorandum at 12-16 (No. N-87-52 (PCD)).

34. Municipal Settlement Policy, 54 Fed. Reg. at 51071, 51073.

35. Municipal Memorandum at 23 (No. N-87-52 (PCD)).

36. Although EPA has taken the position that any release of hazardous substances could result in CERCLA liability, the municipalities argue that the release of a hazardous substance in concentrations that will not violate a state or federal standard or that does not present a hazard justifying response costs does not incur CERCLA liability. Id. at 26.

37. Id. at 27.

38. Id. Similarly, generators and transporters of trash from commercial and industrial entities will not be pursued as PRPs if the parties can demonstrate that none of the hazardous substances in the trash are derived from commercial or industrial processes or activities, and that the amount and toxicity of the hazardous substances contained in the trash do not exceed that which one would expect to find in common household trash. See Municipal Settlement Policy, 54 Fed. Reg. at 51075; ELR ADMIN. MATERIALS at 35226.

39. Municipal Memorandum at 24 (No. N-87-52 (PCD)).

40. Id. at 30-31.

41. Id. at 31.

42. During the debate for H.R. 7020, a precursor to CERCLA, Rep. Stockman (R-Mich.) opposed the bill because its language gave EPA the power to enforce liability for "household refuse." Rep. Madigan (R-Ill.) replied in support of H.R. 7020, explaining that the bill was intended to combat not a household bottle of rubbing alcohol or rat poison, but hundreds of 55-gallon drums of chemicals caused by large industrial contamination. Congress, the municipalities argue, did not change its focus from industry when it enacted CERCLA. Municipal Memorandum at 19-20 (No. N-87-52 (PCD)). But see EPA Memorandum at 18-21 (No. N-87-52 (PCD)), where EPA explains that H.R. 7020 was superseded entirely by a Senate bill eventually enacted as CERCLA.

43. Municipal Memorandum at 32 (No. N-87-52 (PCD)).

44. See Ayuda, Inc. v. Thornburgh, 880 F.2d 1325, 1344 (D.C. Cir. 1989) (citing Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 842-45, 14 ELR 20507 (1984), to explain that "deference to agencies was appropriate not only because of agency expertise but also because Congress is presumed to delegate the policy choices inherent in resolving statutory ambiguities to the agency charged with implementation of the statute.").

45. See Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 842-43, 14 ELR 20507, 20508 (1984), where the court held that if the intent of Congress is clear, both the court and the agency must follow that intent; see also American Mining Congress v. EPA, 824 F.2d 1177, 1182, 17 ELR 20614, 21066 (D.C. Cir. 1987), holding that if Congress has not addressed the question, the court must look to the agency's interpretation to construe the statute; and Chemical Waste Management v. EPA, 869 F.2d 1526, 1540, 19 ELR 20641, 20648 (D.C. Cir. 1989), which followed Chevron and accepted the idea that EPA has broad discretion to interpret its own rules.

46. 42 U.S.C. § 6921(i), ELR STAT. RCRA 011 (clarification of household waste exclusion).

47. 42 U.S.C. § 9601(14), ELR STAT. CERCLA 007-008.

48. Id., cited in Municipal Memorandum at 40 (No. N-87-52 (PCD)).

49. Industry Memorandum at 5 (No. N-87-52 (PCD)).

50. Id. at 6.

51. Id. at 14-18.

52. Id. at 18-20.

53. Id. at 19. See also Municipal Settlement Policy, 54 Fed. Reg. at 51076, ELR ADMIN. MATERIALS at 35227, where EPA states that "[n]othing in this interim policy affects the rights of any party in seeking contribution from another party, unless such party has entered into a settlement with the United States or a State and obtained contribution protection pursuant to section 113(f) of CERCLA." (footnote omitted), and id. at 51073 n.1, ELR ADMIN. MATERIALS at 35225 n.1, stating that "[t]his interim policy does not provide an exemption from potential CERCLA liability for any party; potential liability continues to apply in all situations covered under section 107 of CERCLA."

54. Industry Memorandum at 19-20 (No. N-87-52(PCD)).

55. 467 U.S. 837, 14 ELR 20507 (1984).

56. Industry Memorandum at 20 (No. N-87-52 (PCD)).

57. EPA Memorandum at 20 (No. N-87-52 (PCD)).

58. Id. at 3.

59. Id. at 4-18.

60. Id. at 9, citing 42 U.S.C. § 9607(a)(3), ELR STAT. CERCLA 024.

61. 42 U.S.C. § 9601(14), ELR STAT. CERCLA 007-008.

62. Id. Only petroleum and natural gas are excluded from the definition of hazardous substance under CERCLA § 101(14). See EPA Memorandum at 9-10 (No. N-87-52 (PCD)).

63. EPA Memorandum at 11-12 (No. N-87-52 (PCD)) (footnote omitted).

64. Id. at 12.

65. Id. at 12-13; see also Eagle-Picher Indus. v. U.S. EPA, 759 F.2d 922, 926-28, 15 ELR 20460, 15 ELR 20461-62 (D.C. Cir. 1985), which explains how CERCLA § 101(14), 42 U.S.C. § 9601(14), ELR STAT. CERCLA 007-008, encompasses each substance designated as hazardous pursuant to any of the major environmental statutes — unless the substance is specifically exempted.

66. EPA Memorandum at 16 (No. N-87-52(PCD)).

67. Id.

68. Id. at 18-21.

69. Id. at 21.

70. Id. at 22.

71. Id. at 23, 24; see Fed. Reg. at 51073 n.1, 51074; ELR ADMIN. MATERIALS 35225, n.1, 35225.

72. 754 F. Supp. at 960, 21 ELR at 20777.

73. Id. at 963, 21 ELR at 20779.

74. Id. at 963, 21 ELR at 20779.

75. Id. at 964, 21 ELR at 20779.

76. Id. at 968-972, 21 ELR at 20782-83.

77. Id. at 972, 21 ELR at 20783.

78. Id. at 973, 21 ELR at 20784. The court stated:

This conclusion does not shift the cleanup cost from the industrial polluter to the taxpayer. The degree of liability to which the municipalities are exposed will be determined by the extent of their contribution to the problem. The municipalities' liability under CERCLA will, accordingly, be limited to a share based on the amount of disposition shown to have contributed to the damage.

Id. at 973, 21 ELR at 20784 (footnotes and citation omitted). The court reasoned that in all cases, the impact of damages on municipalities are apportioned fairly, so that a responsible party pays only to clean up the portion of the hazardous waste that it was responsible for depositing at the site. Id. at 973, 21 ELR at 20784.

79. Id. at 965, 21 ELR at 20780. The court noted that Congress did not intend to insulate municipalities from CERCLA liability and leave the burden on taxpayers. Id. at 967, 21 ELR at 20781.

80. Id. at 967, 21 ELR at 20781. The court held that MSW is not excludable from the definition of hazardous substances because CERCLA liability occurs regardless of concentration if contaminants are "listed." Id. at 966, 21 ELR at 20781.

81. Id. at 968, 21 ELR at 20781.

82. Id. at 960, 21 ELR at 20777.

83. Id. at 967, 21 ELR at 20781.

84. U.S. v. Kramer, No. 89-4340 (JFG) (D.N.J. Feb. 8, 1991) (16 corporate defendants in a government action under CERCLA § 107 may raise only the divisibility of the environmental harm among 250 PRPs, including 17 local governments, as a defense to the government's claims; EPA's decision not to name local governments as PRPs does not insulate local governments from liability alleged in the 16 corporate defendants' third-party complaint; and EPA's Municipal Settlement Policy is not a rule promulgated in violation of the Administrative Procedure Act, but rather is a general statement of policy not subject to notice and comment); B. F. Goodrich Co. v. Murtha, 754 F. Supp. at 960, 21 ELR at 20777; Transportation Leasing Co. v. California, 21 ELR 20826 (C.D. Cal. Dec. 5, 1990) (see supra note 5). See also Anderson v. City of Minnetonka, No. CV 3-90-312 (D. Minn. City of Deephaven's memorandum in support of summary judgment filed Apr. 24, 1991), digested at ELR PEND. LIT. 66141|N|2372642|} (a municipality seeks to escape liability for CERCLA cleanup costs in connection with disposal of MSW); New York v. Ludlow's Sanitary Landfill, No. 86-CV-853 (N.D.N.Y. fourth-party complaint filed Oct. 10, 1990), digested at ELR PEND. LIT. 66110 (two third-party defendants seek contribution for cleanup costs under CERCLA from 603 PRPs, including 44 municipalities). For a discussion of the unique problems encountered in the Ludlow's Landfill litigation, see Tomsho, Big Corporations Hit by Superfund Cases, Wall St. J., Apr. 2, 1991, at A1; Case Study: The Dump in Utica, NAT'L L.J., Feb. 18, 1991, at 38.

85. 137 CONG. REC. H5049 (daily ed. June 25, 1991); Cities Band Together to Fight Superfund Claims, INSIDE EPA's SUPERFUND REP., Nov. 21, 1990, at 5.

86. Move to Protect Towns Gets Major Lobby Support, INSIDE EPA's SUPERFUND REP., Dec. 19, 1990, at 6.

87. Mayors Seek Broad Protection From Superfund, INSIDE EPA's SUPERFUND REP., Jan. 30, 1991, at 4-5.

88. See supra note 84. Some PRP companies must treat tons of MSW before they can reach the hazardous material they are supposed to clean up, and may justify these litigation strategies as the natural outgrowth of fundamentally flawed enabling legislation. While their concern for fairness merits reflection, such corporations have the ability to coerce countless municipal and small business PRPs into settlements without regard to liability, merely because the PRPs cannot afford the inordinate litigation expenses. Furthermore, that the federal government can avoid heavy expenses by allowing corporations to bear the financial burden of cleanup and to track PRPs may achieve a short-term benefit but does little to address the concerns of fourth-, fifth-, or sixth-party CERCLA PRPs, including municipalities. Current practices involving the assessment against a PRP of a flat "transaction fee" when a plaintiff is unable to determine what the PRP contributed to the waste site, or gimmicks involving "holiday specials" for PRP settlements entered by a date certain, further exacerbate public policy goals and defy expectations of fairness from the legal system.

89. See, e.g., Roth, Determining Municipalities' Responsibility, HAZARDOUS WASTE AND TOXIC TORTS L. AND STRATEGY, Aug. 1990, at 8.

90. Towns may take advantage of CERCLA's § 122(g) de minimis settlement provision, which allows a PRP that contributed only a small amount of waste to a site to settle with EPA, in exchange for protection of the PRP from suits by other PRPs who are looking to defray their own cleanup costs. 42 U.S.C. § 9622(g), ELR STAT. CERCLA 058-059.

91. Wasser, City Governments Pressing for Exemption of Municipal Waste from Superfund Liability, HAZARDOUS WASTE AND TOXIC TORTS L. AND STRATEGY, Dec. 1990, at 8.

92. Id. Insurance groups have, in fact, joined ACCE to change Superfund's liability structure. The American Insurance Association (AIA) recommends a broad-based tax on industry, while American International Group (AIG) recommends a commercial insurance tax. Insurance Company Seeks Coalition With Towns, INSIDE EPA's SUPERFUND REP., June 5, 1991, at 4.

93. EPA Pushes to Help Towns in Municipal Liability Suits, INSIDE EPA's SUPERFUND REP., May 8, 1991, at 14.

94. 754 F. Supp. at 960, 21 ELR at 20777.

95. See H.R. REP. No. 1016, 96th Cong., 2d Sess., pt. 1, at 63 (1980), reprinted in 1980 U.S. CODE CONG. & ADMIN. NEWS 6119, 6140; see also H.R. REP. No. 1016, pt. 2, at 5, reprinted in 1980 U.S. CODE CONG. & ADMIN. NEWS 6151, 6153.

96. Some litigation strategies stretch CERCLA's liability provisions to an extreme by naming hundreds of municipalities, small businesses, and school districts as PRPs. See Tomsho, supra note 84 (discussing practices involving the assessment against a PRP of a flat "transaction fee" when a plaintiff is unable to determine what the PRP contributed to the waste site and gimmicks involving "holiday specials" for PRP settlements entered by a date certain).

97. See generally Bernstein supra note 6, at 10014.

98. Municipal Settlement Policy, 54 Fed. Reg. 51073 n. 1, ELR ADMIN. MATERIALS 35225 n.1.

99. See supra note 21.

100. See Bernstein, supra note 6, at 10014.

101. See generally Hedeman, Cannon & Friedland, Superfund Transaction Costs: A Critical Perspective on the Superfund Liability Scheme, 21 ELR 10413 (July 1991).