Retroactive Application of a New CERCLA Defense: The Superfund Recycling Equity Act

Carol J. Miller

The author is an attorney and a University Fellow in Research and Professor of Business Law at Southwest Missouri State University, where she teaches environmental law. She was the 1999 recipient of a University Research Recognition Award and the 1998 recipient of the University Foundation Teaching Award.

[31 ELR 10867]

The 1999 Superfund Recycling Equity Act (SREA) amended the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) by creating an exemption from strict liability under CERCLA § 107(a)(3) & (4) for persons "who arranged for recycling of [certain] recyclable materials."¹ This exemption applies to sellers of recyclable material as well as to individuals who arrange for the recycling of qualified materials.² The SREA is intended "(1) to promote the reuse and recycling of scrap material in furtherance of the goals of waste minimization and natural resource conservation while protecting the human health and the environment; (2) to create greater equity in the statutory treatment of recycled versus virgin materials; and (3) to remove the disincentives and impediments to recycling created as an unintended consequence of the 1980 Superfund liability provisions."³

CERCLA liability historically applies to a broad class of individuals who (1) owned or operated a vessel or facility where hazardous substances were generated, stored, or transported for disposal or treatment (from which there was a release or threatened release of a hazardous substance), or (2) transported or arranged for the transportation of such hazardous substances.⁴ The essential purpose of CERCLA is to provide "the tools necessary for a prompt and effective response to the problems of national magnitude resulting from hazardous waste disposal [and to require] those responsible for the problems caused by the disposal of chemical poisons [to] bear the cost and responsibility for remedying the harmful conditions they created."⁵ Joint and several liability, which has been imposed through case law, further enhances the liability potential of parties responsible for the pollution cleanup.⁶

Because of its very pro-environment purpose, there are few defenses to CERCLA § 107(a) strict liability.⁷ CERCLA initially allowed a defense if the toxic release was caused by an (1) act of God; (2) act of war; or (3) act or omission of a third party (who was not an agent or under contract with the defendant).⁸ Additional defenses now include the innocent purchaser defense,⁹ the security interest holders defense,¹⁰ the common carrier exclusion,¹¹ the application of pesticides pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act,¹² and those releases that are federally permitted.¹³ The SREA is one more step in the narrowing of classes of individuals subject to strict liability under CERCLA by providing an exemption for qualified arrangers and sellers of recyclable materials.

Defining Recyclable Material Under the SREA Exemption

Under the SREA amendment to CERCLA, recyclable material includes scrap paper, plastic, glass, textiles, and metal. It also consists of scrap rubber (other than whole tires) and spent batteries, including spent lead-acid and nickel-cadmium batteries.¹⁴ Minor amounts of material adhering to the scrap material will not preclude it from being considered "recyclable."¹⁵

To qualify for this recycling exemption, a market must exist for the recyclable material, and a substantial portion of recyclable material must be used in new saleable products where it is a replacement or substitute for virgin material.¹⁶ Commercial grade specifications must be satisfied,¹⁷ and specific compliance criteria is listed by type of recyclable [31 ELR 10868] material. According to the court in Gould Inc. v. A&M Battery & Tire Service (Gould II),¹⁸ the SREA and its legislative history make no distinction between spent lead-acid batteries that are wholly recyclable and those that contain nonrecyclable components (such as rubber casings). The court held that the fact that SREA § 127(c)(3) requires a substantial portion of the recyclable material to be made available for feedstocks for the manufacture of a new saleable product does not require that 100% of the material be a replacement or substitute for virgin raw material under SREA § 127(c)(4).¹⁹ The Third Circuit thus endorsed a broad reading of the exemption as it applies to the recycling of spent batteries.

In addition, the arranger or transporter of such recyclable material has a due diligence requirement to use "reasonable care" in ascertaining that the consuming facility is in compliance with federal, state, and local environmental laws.²⁰ Compliance with current customary industry quality control practices are expected.²¹ A person is not eligible for the SREA exemption if he had an "objectively reasonable basis to believe" the material would not be recycled or that the consuming facility was not in compliance with substantive environmental laws, regulations, and compliance orders.²² The burden is on the arranger seeking to qualify for the liability shield to show that the SREA criteria is satisfied.²³

What is considered recycling versus disposal versus use for other purposes varies among environmental acts. Excluded from the SREA exemption are hazardous substances that have been added "for purposes other than recycling" and materials burned as fuel, energy recovery, or incineration.²⁴ Notably, even if the SREA recycling criteria is satisfied, the exemption applies only to CERCLA liability (not to the Resource Conservation and Recovery Act (RCRA) liability),²⁵ so significant avenues of liability may remain if the material meets RCRA's definition of a hazardous solid waste.²⁶

Transporters and Arrangers

CERCLA originally imposed liability on "transporters" and "arrangers" of hazardous substances. A "transporter" is defined in CERCLA as one who:

Accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance. . . .²⁷

While some courts have held that a company who trucked or transported materials to a toxic waste site cannot be held liable as a CERCLA "transporter" if the business did not "select" the delivery site,²⁸ CERCLA liability has attached to a "transporter" who "selected" the disposal facility or had substantial input into the decision process of where the hazardous substance should be disposed.²⁹ Notwithstanding the fact that CERCLA does not define "select," most courts have imposed an "active participation" test as a prerequisite to transporter liability.³⁰ Moreover, a company that transported hazardous wastes to a location that later became a Superfund site could have liability retrospectively, even if it non-negligently transported the waste prior to the enactment of CERCLA.³¹

An "arranger" is one who:

By contract, agreement, or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances. . . .³²

[31 ELR 10869]

"Arranged for" is not defined by the statute, but the statutory definition of "disposal" includes "the discharge, deposit, injection, dumping, spilling, leaking, or placing" of any hazardous substance such that the substance "may enter the environment."³³ In addition to any liability imposed on their businesses, corporate officers or other individuals who "arrange for" the transport or "disposal" of hazardous substances can have personal liability (especially where they do so with knowledge of the hazardous nature of the material).³⁴ Businesses generally have not been allowed to escape CERCLA liability simply by arranging for someone else to dispose of their waste or by characterizing the transaction as a sale instead of a disposal.³⁵

Recyclers are not specifically addressed in the original CERCLA language. Before the passage of the SREA, courts did not consistently determine the degree to which recyclers or arrangers of recycling were subject to CERCLA liability; analysis is conflicting, case-specific, and fact-intensive. "In some districts, recyclers were held liable as arrangers or transporters for disposal, while in other[s], recyclers were not liable, on the theory 'recycling' is not 'disposal' or that recycled materials were either not 'waste' or not 'hazardous.'"³⁶ Consequently, the SREA's purpose was to clarify that qualified "recycling" was not intended to be "disposal," and arranging the shipment for recycling was not intended to be "arranging for disposal" of hazardous substances.

Some courts applied a "useful product" defense to benefit recyclers while others narrowly interpreted that defense to preclude its use with materials that were not commercially valuable or useful products at the time they were sold for recycling. For years battery breaking facilities—and those who sold or transported toxic materials to them—had been subject to CERCLA liability.³⁷ In a pre-SREA court case, selling batteries to a recycling facility was deemed to be "trafficking in a hazardous substance" because it did not constitute the sale of a useful product for its original purpose.³⁸

To encourage recycling, "Congress intended the [SREA] to overrule court decisions holding bona fide sellers of recyclable materials liable under CERCLA."³⁹ Legislative history of an earlier version of the bill included a statement from key members of the Senate Committee on Environment and Public Works endorsing the application of the bill to pending private-party actions. "We believe that those parties who took batteries or used motor oil to legitimate recyclers should be exempt from Superfund liability in the past as well as in the future."⁴⁰ The SREA as passed in 1999 identifies "spent lead-acid batteries" as a "recyclable material" within the scope of the CERCLA liability exemption.⁴¹

In accord in Exide Corp. v. Aaron Scrap Metals,⁴² the U.S. District Court for the Northern District of Alabama applied the SREA retroactively (after extensive analysis of "arranger" status and SREA exemption requirements to protect defendants who sent materials to a contaminated CERCLA site). The site of a battery breaker and lead smelting facility in Leeds, Alabama (operated from 1970 through 1992) by the Interstate Lead Company (ILCO) was listed as a proposed national priority list (NPL) site for Superfund cleanup in 1985. ILCO was cited for numerous on-site contamination and off-site violations of environmental laws, which included dumping of contaminated sludge, battery contents, and casing. Two cases related to this site cleanup were consolidated. The first was a civil action cost cleanup action brought by the United States against Madewell & Madewell, Inc., a lead plate seller, and G.J. Battery Inc. (d/b/a Jowers Battery, Inc), both of which sent materials to the ILCO site.⁴³ The second action (the Exide case) was a contribution action brought by Exide Corporation and Johnson Controls, Inc., against these same two defendants and Lion Metals, Inc., another lead plate seller.⁴⁴

In the Exide case, the Alabama district court first examined the meaning of a CERCLA "arranger." Spent batteries no longer have value for the purpose for which they were manufactured, but contain hazardous substances. In accord with the pre-SREA Chatham Steel Corp. v. Brown⁴⁵ case, this post-SREA court ruling concluded that Jowers "arranged for the disposal or treatment" of hazardous wastes because he was getting rid of spent lead-acid batteries (waste products), not recycling useful products. Jowers made the "crucial decision" to send the spent batteries to a facility that would break open the batteries to recover the lead and then have to dispose of the remaining hazardous wastes.⁴⁶ On the other hand, lead plate sellers, such as Lion Metals and Madewell, were selling useful products and, therefore, did not "arrange" for the disposal or treatment of wastes. Even though the batteries themselves were no longer useful, the lead plates could be placed directly in furnaces for smelting as a raw material ready for processing into a new useful product. Neither of the reclamation sites of the lead plate sellers were contaminated, and the lead plate sellers' reclamation process did not cause any pollution at the ILCO NPL CERCLA site. Thus, even before the SREA, the lead plate sellers should not have CERCLA liability as "arrangers."⁴⁷

[31 ELR 10870]

The court went on to conclude, however, that both the lead plate sellers and the seller of spent lead-acid batteries were exempt from CERCLA liability under the retroactive application of the new SREA "recycler" criteria—even if they were all considered "arrangers." The sale of lead plates was deemed to be the sale of "scrap metal." Both lead plate sellers were in compliance with applicable regulations,⁴⁸ and did not have an "objectively reasonable basis"⁴⁹ to believe that ILCO was not in compliance with environmental laws. Data from the regional U.S. Environmental Protection Agency (EPA) computer database was not available until 1990, after Madewell and the small Lion Metals company shipped its lead plates to ILCO in good faith.⁵⁰ The court also found that Jowers acted reasonably in contacting the state agency instead of the EPA after learning ILCO was on the NPL list, and in merely skimming articles with favorable headlines (that suggested ILCO was in compliance with antipollution deadlines and area children had acceptable lead levels). The Exide court thus allowed all three defendants to take advantage of the SREA exemption.⁵¹ In permitting retroactive application of the SREA exemption in contribution claims, the court distinguished this Exide case, in which a private action was consolidated with a U.S. action, from the United States v. Atlas Lederer Co.⁵² case (discussed below) where defendant companies filed cross-claims within the U.S. judicial action.⁵³

Retroactivity of the SREA Exemption

A statute is retroactive "if it attaches new legal consequences to prior acts. . . . The presumption is strong that new legislation is prospective and will not have retroactive effect unless Congress by its language clearly requires a certain result."⁵⁴ If a statute's retroactive effect would impair rights a party possessed when he acted, increase his liability for past conduct, or impose new duties with respect to transactions already completed, clear congressional intent is needed to support the conclusion that it is to be applied retroactively.⁵⁵ Explicit statutory language mandating retroactivity is not required, however, "if the courts are able to discern 'clearcongressional intent favoring such a result'"⁵⁶ or if the amendment is designed to clarify relevant law rather than make a substantive change in it. When a statute clarifies existing law, it is "retrospective" in application.⁵⁷ To ascertain congressional intent, jurists have used (1) the "textualist approach" by relying on the plain meaning of statutory words and judicial cannons of construction, with occasional use of existing case law; (2) the "purposive approach" by ascertaining whether a given interpretation would be consistent with the (remedial) purpose of the statute; and (3) the "intentionalist approach" by examining the legislative history to glean legislative intent.⁵⁸

CERCLA cases have long recognized the retroactive effect of its basic liability provisions.⁵⁹ This was deemed to be consistent with its legislative purpose "to spread the costs of responding to improper waste disposal among all parties that played a role in creating the hazardous condition.⁶⁰ It has been applied to cases in which the "release" of hazardous substance has occurred prior to the 1980 enactment of CERCLA, but the "damage" occurs or continues to occur after that date.⁶¹ In addition, the Superfund Amendments and Reauthorization Act of 1986 had been applied retrospectively.⁶² Hence, there is a history of recognizing retroactive application of CERCLA and its related amendments to achieve the broad remedial purposes of the enactments.

The SREA provides that the recycling exemption "shall not affect any concluded judicial or administrative action or any pending judicial action initiated by the United States prior to enactment of this section."⁶³ The exemption does not apply to any past or pending U.S. government response cost suits.⁶⁴ Using the "expressio unius et exclusio altrius" cannon of construction, Congress could have carved out other exceptions, but did not do so. Consequently, the exemption should apply to other types of pending actions. This interpretation is also consistent with the remedial purpose of the statute "to remove the disincentives and impediments to recycling created as an unintended consequence of the 1980 Superfund liability provisions."⁶⁵ In light of the remedial purpose to promote conservation and recycling, a rational basis exists for the SREA exemption and its retroactive application. [31 ELR 10871] In accord, the SREA liability exemption for arrangers of recycling does not violate the Fifth Amendment's due process requirements.⁶⁶

Legislative History

The SREA was six years in the making when it passed and was initially part of a broader effort to reform the scope of CERCLA liability. Because the SREA was ultimately a rider to the Omnibus Budget Appropriations Act of 1999,⁶⁷ scant 1999 legislative history exists, but Sen. Trent Lott (R-Miss.) acquired senatorial consent to insert the Act's prior legislative history into the record.⁶⁸ That history includes five congressional committee reports, with the report from the Committee on Energy and Commerce providing that the exemption was to apply retroactively and prospectively to all transactions satisfying the statutory criteria.⁶⁹ According to that history, the Act was intended to provide the recycler relief from liability in "any pending judicial action, whether it was brought in a trial or appellate court, by a private party . . . regardless of whether or not the original lawsuit was brought by the United States."⁷⁰ Bill sponsors Senator Lott and Sen. Blanche Lambert Lincoln (D-Ark.) stated that they intended the exemption to apply to all pending private actions, including third-party actions and joinder of defendants by a private party.⁷¹

Cases Interpreting the Retroactive Application of the SREA

Thus far SREA litigation has dealt primarily with the issue of when the SREA recycling exemption is retroactive. Of the reported claims examining the retroactive application of the SREA exemption, most have applied it retroactively; one deemed the private claims to be pendent to a U.S. initiated judicial action. In support of the retroactive application, some courts have cited the need to "clarify" conflicting case law concerning the application of CERCLA to individuals involved in recycling activities.

In the first appellate case (Gould II) recognizing retroactive application of the SREA to a pending lead battery case, the Third Circuit found such application consistent with the remedial purpose of the SREA. Marjol Battery and Equipment Company had operated a battery breaking (recycling) facility from 1961 to 1980. It broke open battery casings to remove the lead and other recycling components. The casings themselves, however, were not initially recycled (even after recyclable plastic casings were developed). These casings, along with their toxic substance residue, were stockpiled in a manner that allowed migration of the toxic substances into the environment. Marjol ignored repeated orders by the Pennsylvania Department of Environmental Resources (DER) to reduce the off-site migration of those chemicals or cease operation. Gould, Inc., acquired Marjol in 1980. Unable to comply with the DER's remedial demands, it shut down the site. Under a 1988 EPA Consent Agreement and Order, Gould agreed to conduct site stabilization activities to contain the lead and other hazardous substances. In 1990, a second Consent Order was issued by EPA and the DER under RCRA to engage in a facility investigation and corrective measure study. Gould subsequently identified 240 potentially responsible parties (PRPs) against whom it initiated CERCLA § 107(a)(4)(b) cost recovery and § 113 contribution claims.⁷² The district court issued summary judgment on the cost recovery claims and allocated 25% to other parties on the contribution claims. Gould, Inc. eventually settled with all but four defendants.

The SREA was passed after those four defendants (who now claim an SREA exemption as recyclers of lead-spent batteries) filed notice of appeal. The Third Circuit cited as persuasive Senator Lott's belief that a pending third-party action is a "private action" to which the SREA recycling exemption applies, even if the original action were initiated by the United States.⁷³ The two EPA actions taken in this Gould II case were administrative actions—consent decrees—rather than U.S. original actions in court. Consequently, this court allowed the SREA exemption to be applied retroactively to thisprivate contribution action, concluding that if "the Act applies retroactively even to private-party actions prompted by exempted federal judicial actions, it makes no sense to conclude that it does not apply retroactively to private actions prompted by non-exempt administrative actions."⁷⁴ The contribution allocation was vacated and the case was remanded to determine if each defendant satisfied the SREA arranger criteria for the liability exemption from CERCLA.

This interpretation, however, has not been uniform. In Atlas Lederer Co.,⁷⁵ SREA § 127(e) was interpreted to preclude retroactive use of the exemption with private cross-claims and third-party claims for contribution related to a U.S. initiated "judicial action." Intending to recycle lead, Livingston sold spent batteries to the United Scrap Lead Company. The U.S. government initiated a suit against Livingston under CERCLA § 107(a)(3). Other parties filed cross-claims and third-party claims against Livingston for contribution in that suit. The SREA statutory exemption, however, does not apply to a "pending judicial action initiated by the United States,"⁷⁶ and the court characterized all claims as falling within the umbrella of a judicial action brought by the U.S. government, noting that an "action" may be comprised of many "claims." The court refused to apply the SREA exemption retroactively to any part of the claims filed against Livingston, reasoning that "it would be incongruous to permit the United States to pursue a CERCLA action against Respondent Group while, at the [31 ELR 10872] same time, prohibiting members of that Group from seeking contribution through cross-claims and third-party claims."⁷⁷ Livingston's supplemental Motion for Summary Judgment seeking retroactive application of the SREA exemption was thus denied, as was its earlier attempt to characterize its actions under a pre-existing "useful product" defense.⁷⁸

In contrast, the SREA exemption has retroactive application in pending cost recovery actions initiated by a state, according to the court in Department of Toxic Substance Control (DTSC) v. Interstate Nonferrous Corp.⁷⁹ California's DTSC brought a suit for cost recovery, declaratory relief, and injunctive relief under CERCLA §§ 107(a) and 113(g) against 11 scrap metal dealers associated with a contaminated site known as the "Mobile Smelting Property." The U.S. government allegedly sold scrap metal to one defendant. Two of the other 10 scrap metal dealers, who brought the metal to the site so it could be smelted or burned to recover the metal, settled with DTSC. The DTSC unsuccessfully sought a partial summary judgment to prevent retroactive effect of the SREA on its claim against the remaining scrap metal defendants. The state could not show that its rights were substantially impaired by the exemption's retroactive application. In reaching this conclusion, the court pointed to the statement of statutory purpose and headings to infer that the SREA was intended to be a clarification of CERCLA rather than a change in the law,⁸⁰ a view not necessarily shared by other courts. More importantly, the SREA statute explicitly stated that the recycler exemption did not apply to pending judicial actions initiated by the U.S. government, but the statute did not include a similar explicit provision excusing state-initiated claims from the retroactive effect of the recycler exemption.⁸¹

The New Jersey District Court in Morton International, Inc v. A.E. Staley Manufacturing Co.⁸² also held that the exemption was retroactive in contribution claims of private suits pending at the enactment of the SREA. Since 1929, various companies had engaged in mercury processing and manufacturing activities, including Velsicol Chemical Corporation, a predecessor in interest to Morton International, Inc. The Ventron/Velsicol Superfund Site was contaminated with significant mercury and other hazardous substances, and for several thousand feet of Berry's Creek, the mercury concentration was the "highest found in fresh water sediments in the world."⁸³ Morton incurred substantial investigation and remediation costs and then sought contribution under CERCLA, RCRA, and the New Jersey Spill Compensation and Control Act⁸⁴ from other PRPs who arranged for the disposal or treatment of mercury (or otherwise contributed to the site contamination). After discovery was closed, the defendants filed a motion to amend their answers to add the SREA defense and a claim for attorneys fees. The district court granted the SREA defense request to amend their answers, deeming the exemption to be retroactive for pending claims.⁸⁵

SREA also permits recovery of "all reasonable costs of defending that action, including reasonable attorney's [fees] and expert witness fees" by any party who is exempt from liability because of the SREA.⁸⁶ This distinct SREA provision is not in the same section as the "pending claims" provision discussed above. Courts seem much more reluctant to apply this provision retroactively. The Morton court concluded that this provision is not simply a clarification of preexisting law, but makes a substantial change in the scope of liability of parties who initiate suits for contribution. It would thus be unfair to apply the attorneys fees provision retroactively to pending claims in the absence of clear congressional intent.⁸⁷ Similarly, although the Exide court applied the recycler exemption retroactively, it refused to give retroactive application to the attorneys fees provision. Retroactive application would result in "manifest injustice" because "there was no notice to the plaintiffs of the fee-shifting provision before the commencement of [this] action" and therefore such an award of any such fees "is not reasonable."⁸⁸

Conclusion

The goal of improving the environment by minimizing waste and encouraging recycling is fostered by the SREA. No doubt some businesses will unethically attempt to disguise hazardous disposals under the recycling umbrella and other businesses—who acted in good faith—will have to absorb more than they initially anticipated would be their "fair share" of cleanup costs because of the retroactive application of the SREA. However, if individuals arranging for and facilitating the legitimate recycling of goods do not have to live in fear of CERCLA's strict liability provision, the probability that the materials will be recycled is enhanced. Recycling diminishes the amount of hazardous and nonhazardous materials that end up in permitted facilities or landfills while extending the life of forests and other primary virgin resources. It is far better that businesses be encouraged to pay for recycling and to investigate their contractees' environmental compliance than to pay for cleaning up toxic waste sites at a later date. Rather than diluting the original intent of CERCLA, the SREA augments it by encouraging recycling as an alternative to the mere disposal of hazardous substances.

1. 42 U.S.C. § 9627(a), ELR STAT. CERCLA § 127(a).

2. Id. § 9627(a)(1), ELR STAT. CERCLA § 127(a)(1).

3. Pub. L. No. 106-113, Div. B, § 1000(a)(9), 113 Stat. 1536 (as introduced on Nov. 17, 1999).

4. See 42 U.S.C. § 9607(a)(1)-(4), ELR STAT. CERCLA § 107(a)(1)-(4).

5. United States v. Reilly Tar & Chem. Corp., 546 F. Supp. 1100, 1112, 12 ELR 20954, 20957 (D. Minn. 1982) (interpreting congressional committee reports).

6. See United States v. Conservation Chem. Co., 619 F. Supp. 162, 214, 16 ELR 20193, 20215 (W.D. Mo. 1985) (discussing various (unsuccessful) constitutional challenges to CERCLA, including a finding that joint and several liability does not violate the equal protection clause); but see United States v. ASARCO Inc., No. CV91-342-N-EJL, 1999 U.S. Dist. LEXIS 18924 (D. Idaho 1999) (where natural resource damages are divisible (rather than joint and several), trustees cannot recover for damages prior to the enactment of CERCLA).

7. CERCLA does not specifically state that (joint and several) strict liability exists, but that standard has been widely applied to potentially responsible parties (PRPs). The Superfund Amendments and Reauthorization Act of 1986 clarified the application of joint and several liability of PRPs under contribution actions. 42 U.S.C. § 9613(f)(1), ELR STAT. CERCLA § 113(f)(1).

8. Id. § 9607(b), ELR STAT. CERCLA § 107(b).

9. Id. § 9601(35), ELR STAT. CERCLA § 101(35).

10. Id. § 9601(20)(A), ELR STAT. CERCLA § 101(20)(A).

11. Id. § 9601(20)(B), ELR STAT. CERCLA § 101(20)(B).

12. Id. § 9607(i), ELR STAT. CERCLA § 107(i).

13. Id. § 9601(10), ELR STAT. CERCLA § 101(10).

14. Id. § 9627(b), ELR STAT. CERCLA § 127(b).

15. Id. This provision, however, excludes from the definition of recyclable material certain large shipping containers having hazardous substances or containing high concentrations of polychlorinated biphenyls (PCBs).

16. Id. § 9627(c)(2), (3), (4), ELR STAT. CERCLA § 127(c)(2), (3), (4).

17. Id. § 9627(c)(1), ELR STAT. CERCLA § 127(c)(1).

18. 232 F.3d 162, 31 ELR 20251 (3d Cir. 2000).

19. Id. at 171-72, 31 ELR at 20253-54.

20. 42 U.S.C. § 9627(c)(6), ELR STAT. CERCLA § 127(c)(6). The "reasonable care" requirement is similar to that required for an "innocent purchaser defense." Criteria includes (1) price paid for the recycling transaction; (2) ability to determine the recycler's operations concerning handling, processing, and reclamation of recyclable material; and (3) past and current compliance record (based on inquiry to appropriate governmental agencies).

21. Id. § 9627(f)(1)(C), ELR STAT. CERCLA § 127(f)(1)(C).

22. Id. § 9627(f)(1)(A)(i), (iii), ELR STAT. CERCLA § 127(f)(1)(A)(i), (iii).

23. Id. § 9627(c), ELR STAT. CERCLA § 127(c).

24. Id. § 9627(f)(1)(B), (1)(A)(ii), ELR STAT. CERCLA § 127(f)(1)(B), (1)(A)(ii).

25. Id. § 9627(k), ELR STAT. CERCLA § 127(k).

26. The SREA does not protect the recycler or arranger from potential RCRA liability under the Solid Waste Disposal Act. Id. Even though CERCLA and RCRA may use some of the same terminology, such terms have been defined or interpreted differently. Courts have found the statutory and regulatory differences in regulating wastes under these two acts significant. B.F. Goodrich Co. v. Murtha, 958 F.2d 1192, 1202, 22 ELR 20683, 20687 (2d Cir. 1992).

The term "recyclable material" has not been uniformly interpreted in different environmental acts. Under RCRA, the D.C. Circuit Court of Appeals concluded that secondary materials "destined for recycling" are not "discarded materials" and, thus, are not solid "waste" under 42 U.S.C. § 6903(27), ELR STAT. RCRA § 1004(27). Instead, "the producer saves them; rather than abandoning them, the producer reuses them," as the court recently concluded in vacating the U.S. Environmental Protection Agency (EPA) Land Disposal Restrictions Phase IV Rule related to residual materials generated in mining and mineral processing operations in Association of Battery Recyclers, Inc. v. EPA, 208 F.3d 1047, 1051, 30 ELR 20512, 20513 (D.C. Cir. 2000). That rule had distinguished waste from nonwaste based on the manner of storage prior to recycling where byproducts exhibited characteristics of hazardous waste. The history and structure of RCRA have lead that court to conclude that EPA's regulatory authority under RCRA is "limited to materials that are 'discarded' by virtue of being disposed of, abandoned or thrown away" and that EPA lacked authority to regulate "secondary materials" reused within an ongoing industrial process. Id. at 1051-52, 30 ELR at 20513 (referencing American Mining Congress v. EPA, 824 F.2d 1177, 1193, 17 ELR 21064, 21073 (D.C. Cir. 1987)).

However, other courts have held that the Solid Waste Disposal Act's "recycling exemption" should not apply to "reclaimed materials." See Catellus Dev. Corp. v. United States, 34 F.3d 748, 24 ELR 21371 (9th Cir. 1994). In that case, General Automotive, which operated an auto parts store, collected car batteries as trade-ins from customers and then sent them to a battery cracking plant after the majority of the lead was extracted; the lead-contaminated casings were sent to Catellus' property. Catellus was allowed to seek recovery or CERCLA response costs from General Automotive prior to the passage of the SREA.

27. 42 U.S.C. § 9607(a)(4), ELR STAT. CERCLA § 107(a)(4).

28. See United States v. Petersen Sand & Gravel, Inc., 806 F. Supp. 1346, 1356, 23 ELR 20480, 20480 (N.D. Ill. 1992); United States v. Western Processing Co., 756 F. Supp. 1416, 21 ELR 20855 (W.D. Wash. 1991).

29. See United States v. USX Corp., 68 F.3d 811, 820, 26 ELR 20030, 20034 (3d Cir. 1995).

30. See Tippins Inc. v. USX Corp., 37 F.3d 87, 94-96, 24 ELR 21486, 21489-90 (3d Cir. 1994) and Peterson Sand & Gravel, 806 F. Supp. at 1356, 23 ELR at 20484, requiring active participation in the selection process before CERCLA liability would attach.

31. See State ex rel. Brown v. Georgeoff, 562 F. Supp. 1300, 1314 (N.D. Ohio 1983).

32. 42 U.S.C. § 9607(a)(3), ELR STAT. CERCLA § 107(a)(3).

33. Id. § 9601(29), ELR STAT. CERCLA § 101(29).

34. See United States v. Gordon Stafford, Inc., 952 F. Supp. 337, 27 ELR 20914 (N.D. W. Va. 1997), and United States v. Northeastern Pharmaceutical & Chem. Co., 810 F.2d 726, 744, 17 ELR 20603, 20612 (8th Cir. 1986).

35. For CERCLA legislative history and the pre-SREA scope of CERCLA § 107(a) liability for a person that has "arranged for disposal or treatment" of hazardous substances, see United States v. Aceto Agric. Chem. Corp., 872 F.2d 1373, 19 ELR 21038 (8th Cir. 1989). But see Florida Power & Light Co. v. Allis Chalmers Corp., 27 Env't Rep. Cas. (BNA) 1558, 18 ELR 20998 (S.D. Fla. 1988) (where the power company bought transformers (containing mineral oil with PCBs) and used them for 40 years before disposing of them, the original seller of the transformers should not be liable for the cleanup costs).

36. Department of Toxic Substance Control v. Interstate Non-Ferrous Corp. 99 F. Supp. 2d 1123, 1144, 30 ELR 20580, 20589 (E.D. Cal. 2000).

37. See Chatham Steel Corp. v. Brown, 858 F. Supp. 1130, 25 ELR 20061 (N.D. Fla. 1994) (upholding the retroactive effect of CERCLA), and Gould Inc. v. A&M Battery & Tire Service (Gould I), 933 F. Supp. 431, 26 ELR 21614 (M.D. Pa. 1996).

38. Gould I, 933 F. Supp. at 436, 26 ELR at 21616.

39. Gould Inc. v. A&M Battery & Tire Serv. (Gould II), 232 F.3d 162, 171, 31 ELR 20251 (3d Cir. 2000).

40. S. REP. NO. 103-349, at 140 (1994), 1994 WL 4545463, at * 132.

41. 42 U.S.C. § 9607(e), ELR STAT. CERCLA § 107(e).

42. No. 98-C-2886-5, 2001 U.S. Dist. LEXIS 4610 (N.D. Ala. Apr. 5, 2001).

43. United States v. Mountain Metal Co., No. 98-C-2562-S, 2001 U.S. Dist. LEXIS 4610 (N.D. Ala. Apr. 5, 2001).

44. Exide Corp., No. 98-C-2886-S, 2001 U.S. Dist. LEXIS 4610.

45. 858 F. Supp. 1130, 1141, 25 ELR 20061, 20065 (N.D. Fla. 1994).

46. See Exide Corp. 2001 U.S. Dist. LEXIS 4610, at * 18-22.

47. See id. at * 22-28.

48. They were in compliance with recycling regulation, as required by 42 U.S.C. § 9627(d), ELR STAT. CERCLA § 127(d), including the fact that neither melted the scrap metal before the transaction.

49. Id. § 9627(f), ELR STAT. CERCLA § 127(f), which looks to the size of the business, customary industry practices, and the price paid in the recycling transaction to help ascertain an "objective reasonable basis" for a recycler's decision to ship material to a particular site.

50. Madewell made lead plate shipments to ILCO from 1972 to 1980, and Lion Metals' only shipments were in 1984. Exide Corp., 2001 U.S. Dist. LEXIS 4610.

51. See id. at * 10-14, 39-41.

52. 97 F. Supp. 2d 830 (S.D. Ohio 2000).

53. Exide Corp., 2001 U.S. Dist. LEXIS 4610, at * 32.

54. Morton Int'l, Inc. v. A.E. Staley Mfg. Co., 106 F. Supp. 2d 737, 750 (D.N.J. 2000).

55. See Landgraf v. USI Film Prods., 511 U.S. 244, 269-70 (1998). The opinion provides a lengthy discussion of retroactive effect of statutes and concludes that the new jury trial provision of the Civil Rights Act of 1991 did not apply retroactively to pending cases.

56. United States v. Olin Corp., 107 F.3d 1506, 1513-14, 27 ELR 20778, 20781 (11th Cir. 1997), finding congressional intent for retroactive liability under CERCLA.

57. For an extensive discussion of principles used in determining legislative intent, retrospective versus retroactive application of statute, as well as the legislative history of the SREA, see also Department of Toxic Substances Control v. Interstate Non-Ferrous Corp., 99 F. Supp. 2d 1123, 1130-53, 30 ELR 20580, 20583-93 (E.D. Cal. 2000). In finding that the SREA was intended to clarify CERCLA, the court found "retrospective" application of the statute to be appropriate.

58. See Morton, 106 F. Supp. 2d at 753 n.17.

59. See generally United States v. Northeastern Pharmaceutical & Chem. Co., 810 F.2d 726, 744, 17 ELR 20603, 20612 (8th Cir. 1986) (examining the legislative history of CERCLA to rule in favor of retroactive application).

60. See United States v. Monsanto Co., 858 F.2d 160, 173-74, 19 ELR 20085, 20090-91 (4th Cir. 1988); see also United States v. Shell Oil, 841 F. Supp. 962, 24 ELR 20877 (C.D. Cal. 1993).

61. But a small minority of lower court cases have been reluctant to impose retroactive application, especially where the release occurred before the 1980 enactment of CERCLA, but damages continue after that date. See Idaho v. Bunker Hill Co., 635 F. Supp. 665, 675, 16 ELR 20879 (D. Idaho 1986) and United States v. ASARCO Inc., No. CV91-342-N-EJL, 1999 U.S. Dist. LEXIS 18924 (D. Idaho 1999) (holding that where natural resource damage is divisible (rather than joint and several), trustees should not be able to recover divisible damages that occurred prior to 1980).

62. See United States v. Tyson, No. 84-2663, 1989 U.S. Dist. LEXIS 15761, at * 23 (E.D. Pa. Sept. 29, 1989).

63. 42 U.S.C. § 9627(i), ELR STAT. CERCLA § 127(i).

64. Id.

65. Pub. L. No. 106-113, Div. B, § 1000(a)(9), 113 Stat. 1536 (as introduced on Nov. 17, 1999).

66. See Gould Inc. v. A&M Battery & Tire Serv. (Gould II), 232 F.3d 162, 170, 31 ELR 20251, 20253 (3d Cir. 2000).

67. S. 1948, 106th Cong. § 127 (1999).

68. See 145 CONG. REC. S14986-03, S15048 (daily ed. Nov. 19, 1999).

69. S. REP. NO. 103-349 (1994) (Committee on Environment and Public Works); S. REP. NO. 103-389 (1994) (Committee on Finance); H.R. REP. NO. 103-582(I) (1994) (Committee on Energy and Commerce, recommending passage of H.R. 3800); H.R. REP. NO. 103-582 (II) (1994) (Committee on Public Works and Transportation); H.R. REP. NO. 103-582 (III) (1994) (Ways and Means Committee).

70. Gould II, 232 F.3d at 162, 31 ELR at 20251.

71. See Morton Int'l, Inc. v. A.E. Staley Mfg. Co., 106 F. Supp. 2d 737, 755, 756 (D.N.J. 2000). For a more lengthy discussion of SREA legislative history and statutory construction of the retroactive effect, see Department of Toxic Substances Control v. Interstate Non-Ferrous Corp., 99 F. Supp. 2d 1123, 30 ELR 20580 (E.D. Cal. 2000).

72. Gould II, 232 F.3d at 167-68, 31 ELR at 20251-52.

73. 145 CONG. REC. S15050 (1999).

74. Gould II, 232 F.3d at 170, 31 ELR at 20253.

75. 97 F. Supp. 2d at 830.

76. 42 U.S.C. § 9627(i), ELR STAT. CERCLA § 127(i).

77. Atlas, 97 F. Supp. 2d at 833.

78. See id. at 832; but see Exide Corp. v. Aaron Scrap Metals, No. 98-C-2886-S, 2001 U.S. Dist. LEXIS 4610 (N.D. Ala. Apr. 5, 2001), in which the court recognized that spent lead-acid batteries were not "useful products" and, therefore, sellers of them were "arrangers" under CERCLA, but afforded one such seller an SREA recycler exemption.

79. 99 F. Supp. 2d 1123, 30 ELR 20580 (E.D. Cal. 2000).

80. See id., 99 F. Supp. 2d at 1137, 1143, 1151, 1153-54, 30 ELR at 20586, 20588, 20592, 20593, with the latter page noting that the statutory purpose refers to "unintended consequences" of CERCLA and the SREA was intended to correct "judicial misinterpretation."

81. See id., 99 F. Supp. 2d at 1153-54, 30 ELR at 20592.

82. 106 F. Supp. 2d 737 (D.N.J. 2000).

83. See id., 106 F. Supp. 2d at 742.

84. CERCLA: 42 U.S.C. §§ 9601-9675, ELR STAT. CERCLA §§ 101-405; RCRA: 42 U.S.C. §§ 6901-6992k, ELR STAT. RCRA §§ 1001-11011; New Jersey Spill Compensation and Control Act: N.J.S.A. 58:10-23.11 et seq.

85. 42 U.S.C. § 9627(i), ELR STAT. CERCLA § 127(i).

86. Id. § 9627(j), ELR STAT. CERCLA § 127(j), provides that "any person who commences an action in contribution against a person who is not liable by operation of this section shall be liable to that person for all reasonable cost of defending that action, including all reasonable attorney's and expert witness fees."

87. See Morton Int'l, 106 F. Supp. 2d at 758-59.

88. Exide Corp. v. Aaron Scrap Metals, No. 98-C-2886-S, 2001 U.S. Dist. LEXIS 4610, at * 42-43 (N.D. Ala. Apr. 5, 2001).