CERCLA Update

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Title:
CERCLA Update
Date:
July 1, 2001
Area(s) of Practice:
Environmental Law

Limiting Superfund Liability
On May 22, 2001, the U.S. House of Representatives passed a bill that would amend the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA" or "Superfund"). This bill, the Small Business Liability Protection Act (H.R. 1831), is designed to relieve small businesses from liability by creating two exemptions under CERCLA. Currently, CERCLA imposes joint and several liability on all generators of hazardous substances, and large companies often seek contribution of cleanup costs from small businesses that sent small amounts of hazardous substances to disposal sites. Sponsors of the bill include Hon. Frank Pallone and Hon. Bill Pascrell of New Jersey.

The first exemption is a de micromis exemption, which would protect persons from liability for response costs at a facility on the National Priorities List ("NPL") if the amount attributable to the person is less than 110 gallons of liquid/200 pounds of solid materials, and all or part of the disposal, treatment or transport occurred before April 1, 2001.

The second proposed exemption is a municipal solid waste exemption. This provision would exempt from liability businesses with not more than 100 full-time employees which disposed municipal solid waste at NPL facilities. For the purposes of this exemption, "municipal solid waste" is limited in scope to waste material typical of single family household waste, with a level of hazardous substances associated with such household waste. Examples include food and yard waste, paper, disposable diapers, cosmetics, and elementary and secondary school laboratory waste.

EPA Administrator Christine Whitman has praised the bipartisan sponsors of the new bill, commenting, "we have been encouraging Congress to enact legislation to assist EPA in providing relief to small businesses ... This measure will promote cleanup and reduce needless lawsuits by drawing a bright line between large contributors of toxic waste and small businesses that disposed small amounts of waste or ordinary trash."

Site Cleanup to Residential Standards Not Necessary
The United States Court of Appeals, Sixth Circuit, recently held that a former owner/operator's responsibility for remediation costs could be limited to those costs necessary to achieve an industrial cleanup standard. The City of Detroit condemned a historically industrial tract to clear flight paths for a municipal airport. The city demolished the existing factory and buildings, which included the remediation of polychlorinated biphenyls ("PCBs"), petroleum, ethyl benzene, toluene, and xylene. The city sought cost recovery under the CERCLA, 42 U.S.C. §9601 et seq., and Michigan State law.

The Court noted that State law allowed a responsible party to select a cleanup standard appropriate in light of the use of the site and that, under both State law and CERCLA, recoverable remediation costs must be "necessary." Considering the historically industrial use of the site, the Court agreed with the district court's determination that a former owner/operator's responsibility for future costs should be limited to those necessary to achieve an industrial cleanup standard, stating that requiring more (i.e., cleanup to residential standards) would be "an unwarranted windfall to the beneficiary of the cleanup." City of Detroit v. Simon, 2001 WL 369946 (6th Cir. 2001).

Incentives for Residential Development of Contaminated Sites
Bills introduced in the New Jersey Assembly and Senate would expand the Brownfields redevelopment agreement program to include contaminated property developed for residential purposes. The program currently is available to developers of contaminated sites intended for commercial use only. The program allows the State and a redeveloper to enter into an agreement to reimburse the developer for up to 75% of remediation costs from revenues derived from new State taxes generated from redevelopment at the site. Specifically, the proposed legislation would allow the State to enter an agreement to reimburse a developer upon the issuance of a permit for construction of one or more new residences. The bills also would expand the list of taxes that could be considered in estimating the amount of new State revenue to be derived from the redevelopment project to include sales and use taxes for construction materials and realty transfer fees paid to the State.

Assembly bill A-3455, introduced in April 2001, is in the Assembly Appropriations Committee. Senate bill S-2359 was introduced in May 2001 and referred to the Senate Environment Committee.