Should Taxpayers Pay the Cost of Superfund?

Rena I. Steinzor and Matthew F. Lintner

Ms. Steinzor is a partner and Mr. Lintner is an associate at Spiegel & McDiarmid, a Washington D.C.-based law firm specializing in the representation of municipalities. The firm serves as legislative counsel to American Communities for Cleanup Equity, a national coalition of local governments that was formed to address municipal issues under the Superfund program.

[22 ELR 10089]

Throughout the history of the Superfurnd program,¹ potentially responsible parties (PRPs) have searched for ways to distribute the costs of cleanup as broadly as possible. PRPs look high and low for deep pockets in their attempts to spread the pain, and the ensuing litigation makes no one but Superfund lawyers happy. Until recently, PRPs focused their efforts on other industrial PRPs and their insurance companies. In the last two years, however, PRPs have begun to focus on spreading Superfund costs to the deepest pocket of all: the nation's taxpayers.

The extraordinarily broad liability scheme of the Superfund statute is being used to involve local governments across the country, and through them the general taxpayers, in costly defenses to third-party Superfund lawsuits. PRPs are asserting liability against local governments for the generation or the transportation of municipal solid waste (MSW), including ordinary garbage and sewage sludge, which was sent to what later became a Superfund site, and courts are allowin the suits to proceed. This tactic could shift potentially billions of dollars in cleanup costs to taxpayers.

Some 20 percent of the sites listed on the Superfund national priorities list (NPL)² are defined as "municipal" sites, a loose category established by the U.S. Environmental Protection Agency (EPA), which includes sites owned or operated by municipal governments, as well as privately owned or operated sites that routinely accept MSW for disposal.³ The vast majority of these sites are landfills across the country that have become contaminated by the codisposal of industrial hazardous waste with MSW and sewage sludge. In fact, EPA has indicated that only a handful of such sites are so-called pure garbage facilities, where there is no clear evidence of the codisposal of industrial hazardous waste.⁴

The MSW or sewage sludge sent to such sites is typically of very low toxicity. Studies show that hazardous substances constitute less than one half of a percent of the materials contained in ordinary garbage.⁵ However, it is a well-established principle of Superfund case law that wastes are included in the statute's liability scheme if they contain even trace amounts of hazardous substances.⁶ Industrial PRPs sued by the federal or state government at these sites have seized upon this principle and taken it to its logical extreme by suing for contribution cities and towns whose citizens produced trash that was brought to the site.

Before the current onslaught of such suits, EPA recognized the substantial exposure to liability that local governments faced and issued an INTERIM MUNICIPAL SETTLEMENT POLICY in December 1989.⁷ The policy stated that EPA would not prosecute local governments or private parties whose only connection to a Superfund site was the generation or transportation of MSW, unless EPA obtains some site-specific information indicating that the MSW contains hazardous substances derived from a commercial, institutional, or industrial process or activity.

While the policy reduced the dangers to municipalities of federal government prosecution for MSW or sewage sludge, it did nothing to limit the ability of industrial polluters to sue local governments. Indeed, since the issuance of the policy in 1989, industrial PRPs have filed several third-party lawsuits at sites across the country.⁸ The suits [22 ELR 10090] assert that the MSW generated by the citizens of a local government leads to Superfund liability against the local government itself. Even in cases in which the local government's only action was to issue a business license for a private waste hauler to pick up MSW from individual households, industrial PRPs have asserted liability.⁹

Of course, if a local government is to be liable under Superfund for the MSW generated by its citizens, there is nothing to stop prosecution of the citizens themselves.¹⁰ While a suit against an individual household for the generation of trash at a Superfund site may sound ludicrous, the current suits against municipalities for their citizens' MSW would have the same effect. If successful, such suits will result in a potentially massive transfer of Superfund remediation costs from the private to the public sector. If remediation costs are allocated at these sites by volume, as they frequently are at Superfund sites, cities and towns that contributed only MSW to a site could find themselves asked to pay up to 90 percent of the cost of remediation. For some sites, these costs could run into hundreds of millions of dollars.¹¹ Even if other allocation schemes are developed and implemented, local governments and the taxpayers they represent would almost certainly find themselves paying a disproportionately high share of remediation and transaction costs for a Superfund problem they did not create. This transfer of Superfund costs will occur despite the fact that almost without exception, the codisposal sites that are the focus of litigation would not be on the Superfund list if only MSW had been sent to those locations.

The federal government has reacted with passivity to the plight of local governments involved in these suits. Consistent with its practice throughout the history of the Superfund program, EPA is unwilling to intercede in what it views as nothing more than an allocation dispute between PRPs. There is some reason to hope that EPA may change its attitude. In response to political and legislative pressure by local governments, EPA recently embarked on an initiative to assist municipalities. This initiative includes the development of a model settlement document and allocation scheme for local governments facing assertions of liability for the generation or transportation of MSW or sewage sludge.¹² However, even if this initiative produces a favorable outcome for local governments, settlement guidelines from EPA will do nothing to halt third-party lawsuits. Many corporate PRPs will continue to file such suits, and many local governments will have to pay the high transaction costs associated with a Superfund defense. If, on the other hand, EPA's initiative results in an allocation method that seeks a large contribution from local governments, such suits will undoubtedly proliferate at a very high rate as corporate PRPs find official support for their cost-shifting efforts.

The only method that will fully counteract these suits is legislative reform of the Superfund statute. Local governments have recognized this reality and formed a coalition to press for changes in the Superfund law. Some 100 counties, cities, and towns in 12 states have organized American Communities for Cleanup Equity (ACCE), which has achieved the introduction of ideal legislation in both houses of Congress. In the Senate, the Toxic Cleanup Equity and Acceleration Act of 1991, S. 1557, was sponsored by Senator Frank Lautenberg (D-NJ) and Senator Timothy Wirth (D-CO),¹³ while in the House virtually identical legislation with the same title, H.R. 3026, was sponsored by Rep. Robert Torricelli (D-NJ) and Rep. David Dreier (R-CA).¹⁴

The legislation would block third-party suits against local governments, or any other person, if their only actions at a Superfund site were related to the generation or transportation of MSW or sewage sludge.¹⁵ If municipalities or other persons owned or operated a facility, or generated genuinely hazardous wastes, the block on third-party suits would not apply.

The legislation would also codify EPA's INTERIM MUNICIPAL SETTLMENET POLICY, restricting EPA's ability to sue municipalities or other persons that merely generated or transported MSW or sewage sludge, unless specifically defined "truly exceptional circumstances" exist. The legislation defines truly exceptional circumstances to include cases where there is site-specific evidence that a release contains hazardous substances not ordinarily found in MSW and that those substances have come from commercial, institutional, or industrial processes, not households. Such circumstances would also exist when the toxicity and volume of waste from commercial, institutional, and industrial sources is insignificant compared with the toxicity and volume of the MSW or sewage sludge at the site. Lastly, EPA would have the authority to prosecute local governments and others if an analysis of conditions at a site demonstrates that absent all the hazardous substances from commercial, institutional, and industrial sources, the hazardous substances in the MSW or sewage sludge would be a significant cause of the contamination at the site. Accordingly, in the unlikely event that the disposal of MSW or sewage sludge was the major reason why the site ended up as thetarget of a Superfund cleanup, the Agency would retain authority to prosecute.

[22 ELR 10091]

The legislation also contains special settlement procedures for local governments prosecuted by EPA because they generated or transported MSW. The central principle of these provisions is that when EPA finds truly exceptional circumstances and prosecutes local government MSW generators and transporters, the Agency must consider settlements with such parties on the basis of the toxicity of such waste, not its overall volume. During EPA and local government negotiations, a moratorium on all litigation of liability would be in effect.

Whether the ACCE and local governments throughout the country can obtain passage of the Toxic Cleanup Equity and Acceleration Act of 1991 is far from clear. Introduction of the bill caught the major industrial Superfund interests by surprise and they have begun to organize opposition to the municipal effort. The strength of this opposition remains to be seen. It also remains to be seen whether the EPA initiative will be successful in relieving municipalities of the burdens these suits impose. What is clear, however, is that unless some action is taken to counter the flood of third-party suits against municipalities, a large portion of Superfund costs will be transferred from the responsible industrial parties to taxpayers across the country. If this happens, one of the most basic principles of the Superfund law — that the polluter responsible for the contamination should pay for the cost of its remediation — will have been fatally undermined.

1. Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA 001-075.

2. 40 C.F.R. pt. 300 app. B (July 1, 1991).

3. EPA, INTERIM MUNICIPAL SETTLEMENT POLICY, 54 Fed. Reg. 51071 (Dec. 12, 1989), ELR ADMIN. MATERIALS 35226 [hereinafter MUNICIPAL SETTLEMENT POLICY].

4. Letter to the Honorable Esteban Torres from Don R. Clay, EPA Assistant Administrator for Solid Waste and Emergency Response (Aug. 29, 1991).

5. SEE, E.G., Kinman & Nutini, HOUSEHOLD HAZARDOUS WASTE IN THE SANITARY LANDFILL, 11 CHEM. TIMES & TRENDS 23, 24 (1988) (reviewing the literature on hazardous materials in municipal landfills).

6. Amoco Oil Co. v. Borden, Inc., 889 F.2d 664, 20 ELR 20281 (5th Cir. 1989); City of New York v. Exxon Corp., 744 F. Supp. 474, 21 ELR 20248 (S.D.N.Y. 1990); Louisiana-Pacific Corp. v. ASARCO, Inc., 735 F. Supp. 358, 20 ELR 21452 (W.D. Wash. 1990); United States v. Carolawn Co., 14 ELR 20696 (D.S.C. June 15, 1984).

7. MUNICIPAL SETTLEMENT POLICY, supra note 3.

8. Suits involving liability for MSW have arisen in California, Connecticut, Massachusetts, Minnesota, New Jersey, New York, and Pennsylvania. United States v. Kramer, 770 F. Supp. 954 (D.N.J. 1991) (severing third party claims), 757 F. Supp. 397, 21 ELR 20879 (D.N.J. 1991) (striking affirmative defenses); B.F. Goodrich Co. v. Murtha, 754 F. Supp. 960, 21 ELR 20777 (D. Conn. 1991) (denying motions for summary judgment); Transportation Leasing Co. v. California, 21 ELR 20826 (C.D. Call. Dec. 5, 1990) (order granting in part and denying in part motion for order specifying issues without substantial controversy); 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); New Jersey Dep't of Envtl. Protection v. Almo Anti-Pollution Servs. Corp., No. 89-4380 (JFG) (D.N.J. third party complaint filed Nov. 20, 1990); 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|N|2375129|}); United States v. Charles George Trucking, No. 85-2463-WD (D. Mass. third party complaint filed Feb. 12, 1990); United States v. Superior Tube Co., No. 89-7421 (E.D. Pa. third party complaint filed Dec. 22, 1989); New Jersey Dep't of Envtl. Protection v. Gloucester Envtl. Mgmt. Servs., No. 84-0152 (SSB) (D.N.J. amended third party complaint filed Apr. 14, 1988).

9. SEE Transportation Leasing Co. v. California, 21 ELR 20826 (C.D. Cal. Dec. 5, 1990).

10. In fact, such a suit has been threatened by an attorney for a corporate PRP against the citizens of New York City. SEE DESIGNATION OF METALS AS HAZARDOUS DISPUTED IN NEW YORK CITY LANDFILL COST RECOVERY SUIT, 21 Env't Rep. (BNA) 1653 (Jan. 11, 1991). Fortunately for every resident of New York City who has ever brought trash to the curb, the complaint was never filed.

11. SEE Murphy, A FUNNY THING HAPPENED ON THE WAY TO THE LANDFILL, WESTERN CITY, Apr. 1991, at 3.

12. EPA PROPOSAL FOR LANDFILL CLEANUPS STRIKES FEAR IN MUNICIPALITIES, INSIDE EPA's SUPERFUND REP., Oct. 23, 1991, at 1, 3-4.

13. 137 CONG. REC. S10952 (1991) (introduced).

14. 137 CONG. REC. H5817 (1991) (introduced).

15. These terms are defined in basically the same way as they are defined in EPA's INTERIM MUNICIPAL SETTLEMENT POLICY, SUPRA note 3, except that solid waste from other buildings is defined in the same category as solid waste from individual households and other residences.