MARCH/APRIL 2007
Last issue’s Of Counsel column (“Sorting Out SREA,” January/February 2007) explained how courts have applied some provisions of the Superfund Recycling Equity Act to scrap recyclers. It should surprise no one, however, that other aspects of the regulations are still open to interpretation. Specifically, recyclers are looking for guidance on what courts consider a “minor amount” of nonrecyclable material, whether the term “bits and pieces” of scrap encompasses powdery or liquid forms of metal, and what actions constitute taking “reasonable care” to ensure that companies are in environmental compliance.
Though no courts have ruled on these issues as of yet, the U.S. EPA has provided some indication of its regulatory intentions.
A Minor Matter
SREA specifies that recyclable material may have “minor amounts of [nonrecyclable] material incident to or adhering to scrap material as a result of its normal and customary use prior to becoming scrap,” but the law does not define what constitutes a minor amount.
With its August 2002 publication of Superfund Recycling Equity Act of 1999: Factors to Consider in a CERCLA Enforcement Case, the EPA has provided one standard its regional offices can follow in evaluating SREA compliance. The publication advises the regions to compare the volume or weight of the recyclable material to the total volume or weight of the scrap and determine on a case-by-case basis whether a recycling transaction involves minor amounts of nonrecyclable material.
This broad guideline has resulted in widely varying evaluations. Take the example of insulating material. The EPA has determined that residual amounts of insulating material that remain adhered to recyclable material following its stripping or chopping are minor amounts. But it also might call fully intact insulation minor amounts when it’s not possible to mechanically remove the insulation from the recyclable material.
At least one recycler is trying to make the case for an even broader definition. In California Department of Toxic Substances Control v. Interstate Non-Ferrous Corp., a defendant has argued that minor amounts should cover both the insulation adhering to copper wire and the bottom ash created by incinerating the insulation. The defendant argues that the law should categorize bottom ash in the same way as nonrecyclable material created in the battery recycling process, which typically does not affect the battery recycler’s SREA exemption. A decision in the case is still pending.
How Big is a Bit?
SREA defines scrap metal as “bits and pieces” of metal including, but not limited to, bars, turnings, rods, sheets, and wires. In its August 2002 guidance document, the EPA confirms that in evaluating SREA compliance regarding materials that do not fit neatly into the statutory definition of scrap, it will consider the size of the material, whether it is combined with other materials, and its physical state (i.e., solid versus liquid).
Elsewhere the document reveals further clues to the EPA’s interpretation of what constitutes scrap bits and pieces. The agency will not likely consider powdery or dust-like materials to be bits and pieces, for example, and liquid mercury is equally unlikely to meet its definition of scrap. The EPA has provided no explanation for why it differentiates these materials from other scrap.
Reasonable Care
Perhaps of greatest interest to recyclers is how the EPA and the federal courts will interpret the “reasonable care” standard that went into effect Feb. 27, 2000. From that date forward, SREA has required recyclers to exercise reasonable care in determining whether a facility that handles, processes, reclaims, or otherwise manages their recyclable material complies with applicable environmental laws.
The EPA’s reasonable-care criteria include, but are not limited to, (1) the price paid in the recycling transaction; (2) the ability of the recycler to detect the nature of the consuming facility’s handling, processing, reclamation, or other management activities associated with recyclable material; and (3) the result of inquiries made to environmental agencies regarding the facility’s past and current environmental compliance.
To date, the EPA has issued no guidance interpreting the reasonable-care standard, nor have there been any federal court decisions on the topic. The legislative history of SREA indicates, though, that lawmakers intended recyclers to judge reasonable care based on industry practices and standards at the time of the transaction.
It could be difficult for recyclers to stay abreast of industry standards and practices for each recycling transaction given the dynamic nature of the industry. Products such as ISRI’s reasonable care compliance reports, which a company can use to assess whether a specific facility has complied with environmental laws, can help recyclers meet the standard while this and the act’s other unanswered questions make their way slowly through the courts.
Nathan Hunt is an associate in the environmental practice of Thompson Hine LLP in Dayton, Ohio. Reach him at 937/443-6908 or nathan.hunt@thompsonhine.com.
Last issue’s Of Counsel column (“Sorting Out SREA,” January/February 2007) explained how courts have applied some provisions of the Superfund Recycling Equity Act to scrap recyclers. It should surprise no one, however, that other aspects of the regulations are still open to interpretation. Specifically, recyclers are looking for guidance on what courts consider a “minor amount” of nonrecyclable material, whether the term “bits and pieces” of scrap encompasses powdery or liquid forms of metal, and what actions constitute taking “reasonable care” to ensure that companies are in environmental compliance.