On May 20, 1996, the Federal District Court, Southern District of Alabama, in United States v. Olin Corp., held that the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) could not be applied retroactively and, in certain cases, could violate the Commerce Clause of the U.S. Constitution. This surprising and controversial ruling was based on two recent Supreme Court cases dealing with retroactivity and the Commerce Clause, respectively.
In Olin, the United States and Olin reaching an out-of-state settlement and submitted a joint motion for approval of a consent decree. prior to signing the decree, the Court requested briefing on certain issues relating to the constitutionality of CERCLA. First, the Court considered whether, given the standard set for in Landgraf v. USI Film Prods., CERCLA should have retroactive application. Specifically, the Court found that the language and legislative history of CERCLA does not demonstrate "clear congressional intent for retroactivity...," essentially the Landgraf standard. Additionally, the Court found that retroactive application of CERCLA was too egregious to be acceptable under Landgraf. Accordingly, the Court held that CERCLA cannot apply to events that took place prior to 1980, the year CERCLA was enacted.
The Court also held that the federal government could not apply CERCLA to matters that do not involve interstate commerce. Replying on the U.S. Supreme Court's decision in United States v. Lopez, the Court considered whether the United States Environmental Protection Agency could bring an action under CERCLA to force a private party to clean up closed industrial waste sites. Because the plants at issue in Olin were non-operational and because the contaminants did not, and could not, travel across state lines, the Court found that this case does not involve "interstate commerce." Applying the interpretation of the Commerce Clause presented in Lopez -- Congress cannot regulate purely intrastate activities -- the Court found that "EPA's attempt in this case to apply CERCLA liability against [Olin] would exceed the power of Congress under the Commerce Clause."
Based on these rulings, the Court not only refused to sign the consent decree, but also dismissed the government's case. Reportedly, the Attorney General's office will appeal this decision to the Eleventh Circuit Court of Appeals. Based upon numerous and well-established court decisions to the contrary, one must question whether the opinion will be widely accepted and speculate that it may be reversed on appeal.
