Superfund Relief at Last

January/February 2000 

After battling almost six years and through parts of four Congresses, the scrap recycling industry has finally won relief from third-party liability under Superfund.

On Nov. 29, President Clinton signed H.R. 3194, the omnibus spending bill, which contained the Superfund Recycling Equity Act of 1999. This act, originally introduced as a freestanding bill, had been previously passed by the House as part of H.R. 3194 on Nov. 18, followed by the Senate as part of S. 1948 on Nov. 19.

The Superfund Recycling Equity Act corrects a misinterpretation of the original Superfund act’s liability provisions under which recyclers have been held accountable for the actions of those who purchase their goods. This legislation clarifies Superfund to state that recycling is not disposal and shipping for recycling is not arranging for disposal.

As a result, recyclers will no longer be held responsible for cleaning up contaminated sites when the sites’ owners or operators caused the contamination. The new law applies to both past (retroactive) and future (prospective) transactions involving scrap metals, plastics, paper, glass, textiles, rubber, and batteries.

This liability relief removes an impediment to reaching America’s recycling goals while saving many recycling businesses. Approximately two-thirds of ISRI’s members had been named PRPs—potentially responsible parties—in Superfund litigation due largely to the misinterpretation of the original law.

Without passage of the Superfund Recycling Equity Act, scrap recyclers could have been liable for penalties of at least $170 million over a five-to-10-year period, according to the U.S. EPA. Given that the majority of ReMA member companies are classified as small businesses, penalties of such magnitude would have bankrupted many scrap recycling firms.

What You Need to Know 

To get the full benefit from the Superfund Recycling Equity Act, scrap recyclers must have a clear understanding of what the law does and doesn’t do. This Q&A addresses the most important issues.

1) When does the bill become effective? 

 The bill became law Nov. 29, 1999. The provisions that apply 90 days after the “enactment date” become effective Feb. 27, 2000.

2) What types of materials qualify for the liability exemption? 

The bill provides liability relief for those who arrange for the recycling of the following “recyclable materials”: scrap paper, scrap plastics, scrap glass, scrap textiles, scrap rubber (other than whole tires), scrap metal, and spent lead-acid, spent nickel-cadmium, and other spent batteries. The term “recyclable materials” includes minor amounts of material incident to or adhering to the scrap material as a result of its normal and customary use prior to becoming scrap. Whole tires and shipping containers with capacity between 30 and 3,000 liters (which have hazardous substances in them) are excluded from the definition, so arranging for recycling of these materials is not afforded any relief from liability. Furthermore, any item that is contaminated with PCBs at a concentration of more than 50 ppm at the time of the transaction does not qualify as recyclable material.

3) What isn’t covered under the new law?

The new law does not exempt from Superfund liability anyone who owns or operates a contaminated facility, nor does it exempt from liability contamination caused in whole or in part by wastes (versus recyclable material) generated by a scrap recycling facility.

4) How does the new law affect pending litigation?

If the U.S. government has filed a complaint (that is, a judicial action or lawsuit) in a federal district court against a scrap recycling facility, the facility is not automatically relieved of liability under the new law. Again, this only applies to complaints filed by the U.S. government. The liability relief afforded by the new law, however, does apply to any pending judicial action by a private party, whether it was brought in a trial or appellate court. The same holds true for any pending administrative actions brought by any government agency. For example, the mere receipt of a §104/106 letter is not a concluded administrative action, so relief is still available in such cases. 

5) If you’ve already settled, can you seek a refund?

No. The new law does not change any concluded judicial or administrative action. Concluded action means any lawsuit in which a final judgment has been entered or any administrative action that has been resolved by consent decree, filed in a court of law, and approved by such court. This applies to concluded litigation with the government or with a private party.

6) Do I automatically qualify for the liability relief granted by the new law? 

No. To be afforded relief from liability you must be able to demonstrate that you have met several conditions regarding the recycling transaction. The conditions vary depending on when the transaction took place and the recyclable material involved.

7) What do I have to do to take advantage of the new law? 

 For past transactions, you must be able to demonstrate all the following:

• The recyclable material met a commercial specification. A commercial specification grade can include those published by industry trade associations (such as ReMA specifications) or other historically or widely used specifications.

• A market existed for the recyclable material involved in the transaction. Evidence of a market can include, but is not limited to, a third-party published price (including a negative price), a market with more than one buyer or seller for which there is a documentable price, and a history of trade in the recyclable material.

• A substantial portion of the recyclable material was made available for use as a feedstock for the manufacture of a new salable product. No single benchmark or recovery rate is appropriate given variable market conditions, changes in technology, and differences between commodities. Instead, a common-sense evaluation of how much of the material is recovered is appropriate. Furthermore, it is not necessary that the recycler who arranged for recycling document that a substantial portion of the recyclable material was actually used to make a new product. Instead, the recycler need only be prepared to demonstrate that it is common practice for recyclable materials that he handles to be made available for use in the manufacture of a new saleable product.

• The recyclable material could have been a replacement or substitute for a virgin material, or the product to be made from the recyclable material could have been a replacement or substitute for a product made, in whole or in part, from a virgin raw material. It is the intent of this provision that the recycler be able to demonstrate the general use for which the feedstock material was utilized, not to show that a specific unit was incorporated into a new unit. In addition, this provision acknowledges that modern technology has developed to the point where some consuming facilities exclusively use recyclable materials as their raw material feedstock. Thus, the fact that the recyclable material did not directly displace a virgin material as the raw material feedstock should not be evidence that this requirement was not met.

• For metals, the recycler did not melt the scrap metal prior to the transaction. The following actions are not considered “melting”: welding, torch cutting, sweating, and other similar activities. For future transactions, a recycler must also demonstrate that its own facility was in compliance with any applicable regulations promulgated after this law was enacted.

• For batteries, the recycler did not recover the valuable components of a battery. The liability relief applies only to those who collected, stored, or transported spent batteries. The liability relief provisions do not apply if a facility recovered the valuable components of a battery that refer to the breaking of the battery itself. For lead-acid batteries, a recycler must show that he or she met the federal environmental regulations in effect at the time of the transaction. For nickel-cadmium and other types of batteries, federal regulations must be in effect, and the recycler must show he or she was in compliance with the applicable regulations.

For future transactions, you must be able to demonstrate that you took reasonable care to determine the environmental compliance status of the facility to which the recyclable material was sent. This requirement is applicable 90 days after the enactment date of the new law (Feb. 27, 2000).

8) If my transaction is deemed to be “arranging for recycling,” do I have to worry about what the consuming facility does with my product?

Yes. To be afforded the relief granted by the new law, you cannot send your material to a facility that you had an objectively reasonable basis to believe was not in substantive compliance with environmental laws and regulations. Additionally, for transactions occurring 90 days after the enactment date, the responsibility for determining the environmental compliance status of the consuming facility increases. At that time, you will be required to exercise “reasonable care” to determine that the consuming facility is in compliance with substantive provisions of any federal, state, or local environmental law or regulation, compliance order, or decree applicable to the direct handling, processing, reclamation, storage, or other management activities associated with the recyclable material.

In determining whether a recycler exercised reasonable care, the criteria to be applied will be considered in the context of the time of the transaction. Reasonable care will be determined using a variety of factors specified below, of which no single factor is determinant:

• Price paid in the recycling transaction. One should look not only at whether the price bore a reasonable relationship to other transactions for similar materials at the time of the transaction in question but should also take into account the circumstances surrounding the individual transaction, such as whether it was part of a long-term deal involving significant quantities. In addition, market conditions vary considerably over any given time period for any given commodity. Thus, when determining whether the price paid was reasonable, general market conditions and variations should be considered.

• Ability of the recycler to detect the nature of the consuming facility’s operations concerning its handling, processing, reclamation, or other management activities associated with recyclable material. This provision acknowledges the fact that a small company may be able to determine less information about the consuming facility’s operation than a large company. Thus, the size of an individual facility may be an important factor in the facility’s ability to detect the nature of the consuming facility’s operations.

• Results of inquiries made to the appropriate federal, state, or local environmental agencies regarding the consuming facility’s past and current compliance with substantive environmental requirements applicable to activities associated with the recyclable material. This provision only requires a recycler to make reasonable inquiries (these need not be made before every transaction). Inquiries need only be made to those agencies having primary responsibilities over environmental matters related to the handling, processing, etc., of the materials involved in the recycling transaction.

Procedural or administrative provisions are not viewed as “substantive provisions” in order to protect one who arranges for recycling from losing the protection afforded by the new law due to a record keeping error, missed deadline, or similar infraction on the part of the consuming facility that is out of control of the recycler arranging for recycling.

9) If I sell to a broker, do I have to evaluate the environmental compliance status of the receiving consuming facility?

Technically, it is the responsibility of the broker, not the original recycler who entered into the transaction with the broker, to take reasonable care to determine the compliance status of the consuming facility. Likewise, a recycler may sell material to a consuming facility that in turn arranges for recycling of all or part of that material to another consuming facility. Nonetheless, you may want to consider making your own inquiry for an added level of confidence.

10) When does the exemption not apply? 

A recycler’s claim to an exemption from Superfund liability can be denied if the government (or other party bringing an action against the recycler) can demonstrate one of the following:

• The recycler knew that the material would not be recycled. It is important to note that it is not necessary that every component of the recyclable material be recycled and actually find its way into a new product in order to meet the requirement that the material be recycled.

• The recycler knew that the recyclable material would be burned as fuel or for energy recovery. Smelting, refining, sweating, melting and other operations that are conducted by a consuming facility for purposes of material recovery are not considered incineration, nor would they be categorized as burning as fuel or for energy recovery.

• The recycler intentionally added hazardous substances to the recyclable material in order to dispose or otherwise rid himself or herself of the substance.

• The recycler failed to exercise reasonable care with respect to the management and handling of the recyclable material. This provision is intended to mean that reasonable care is to be judged based on industry practices and standards at the time of the transaction. Thus, to determine if a recycler failed to exercise reasonable care with respect to the management and handling of the recyclable material, one should look to the usual and customary management and handling practices in the industry at the time of the transaction. This includes such practices as source control programs and compliance with applicable laws and regulations. See the related story on compliance for more information.

Compliance Assistance: To help members comply with the new law, ReMA is developing a compliance package that will include tips and resources to evaluate the compliance status of consuming facilities. In addition, ReMA is developing a model compliance status certification that recyclers can use to assist in this endeavor. This compliance package will also include checklists and other tools to help members evaluate their own compliance record. This important document will be released in time for the ReMA winter membership conference, Jan. 22-24, at the Fontainebleau Hilton Resort & Towers, Miami Beach. There, ReMA will hold a briefing to review the new law and all of the implications for future activities.

Questions? If you need assistance or have a question, contact Scott Horne (202/662-8513), Tracy Mattson (202/662-8533), Mark Reiter (202/662-8517), or Clare Hessler (202/662-8514). Copies of the legislation can be obtained from ISRI’s Web site, www. isri.org, or by contacting Russ Harrison (202/662-8548; fax, 202/626-0948); e-mail: russharrison@isri.org).

Anatomy of a Victory

In its efforts to win passage of the Superfund Recycling Equity Act, the scrap industry faced formidable opposition in both government and business circles. This chronology shows how the industry survived the gauntlet of challenges to finally achieve Superfund reform for recyclers.

Aug. 5: Sens. Trent Lott (R-Miss.), Tom Daschle (D-S.D.), John Chafee (R-R.I.), Max Baucus (D-Mont.), John Warner (R-Va.), and Blanche Lincoln (D-Ark.) introduce S. 1528, the Superfund Recycling Equity Act of 1999.

Oct. 18: About 131 ReMA members visit Washington, D.C., to participate in ISRI’s Superfund fly-in. They’re briefed on how to meet with their senators and convince them to cosponsor S. 1528, which has 25 cosponsors.

Oct. 19: ReMA members visit their senators on Capitol Hill. By the end of the day, 16 additional senators agree to cosponsor S. 1528, bringing the total to 41. By Nov. 19, the number of cosponsors has risen to 69.

Oct. 20: ReMA meets with Speaker of the House Dennis Hastert (R-Ill.) and gains his support for the Superfund Recycling Equity Act. His support is a key element in Lott’s plan to add Superfund recycling language to an appropriations bill.

Oct. 29: Word spreads in Washington that the language of S. 1528 will be included in the D.C. Appropriations Bill, which is expected to move quickly through Congress and be signed by President Clinton.

Rep. Sherwood Boehlert (R-N.Y.) —chairman of one of the House subcommittees with Superfund jurisdiction—and his staff swing into action to vigorously oppose inclusion of S. 1528 in any appropriations bill. Seeking to hold S. 1528 hostage to comprehensive Superfund reform, they send out a battle call to lobbyists for the chemical industry, Waste Management Inc., and others.

Nov. 5: A letter signed by the Chemical Manufacturers Association, Business Roundtable, National Association of Manufacturers, and American Insurance Association is sent to every senator, attacking inclusion of S. 1528 in anything but a comprehensive Superfund reform bill. The letter accuses ReMA of making false statements about the need for Superfund relief for “junkyards.” ReMA responds with a polite but hard-hitting letter to every senator.

Nov. 8: Bad news—S. 1528 is removed from the D.C. Appropriations Bill. Boehlert and several other congressmen send a letter to the House Republican leadership seeking a meeting of the Republican Conference to discuss Superfund taxes and to oppose the recycling provision. ReMA grassroots are mobilized once again, this time to call key House Republicans and ask them to oppose Boehlert on the recycling issue.

Nov. 9: The Center for Race, Poverty & the Environment sends a letter to Capitol Hill saying that S. 1528 would adversely affect poor communities where many “junkyards” are located because there would be no money to clean up these sites. ReMA staff call the center to discuss S. 1528 and explain that the scrap recycling industry does not operate “junkyards” and that junkyards would not meet the conditions of the bill. The center does not accept ISRI’s explanations.

Nov. 10: ReMA discovers that the center and the Chemical Manufacturers Association both use the same public relations firm, John Adams Assocs. At the meeting of the Republican Conference, Boehlert loses on both the Superfund taxes and recycling provision issues.

Nov. 11-15: Tension rises in Washington as no appropriations bills move through Congress.

Nov. 15: John Adams Assocs. releases a poll that says more than 75 percent of Americans oppose the Superfund Recycling Equity Act. The Chemical Manufacturers Association, Business Roundtable, and American Insurance Association send another letter to Capitol Hill arguing that the facts contained in ISRI’s Nov. 5 letter are fraudulent.

Nov. 16: Having received a clandestine draft copy of the Nov. 15 letter, ReMA sends its response to the Hill, refuting the charges made in that letter. This is the last word in that battle. The environmental community learns that language it had recently negotiated with ReMA and the administration has inadvertently been omitted from the Superfund Recycling Equity Act as it might appear in an omnibus appropriations bill. The environmental community is livid. ReMA staff, along with the staff of Sens. Lott, Daschle, and Baucus, attempt to resolve the issue, but it is too late to add the omitted language. ReMA suggests that this omission could be corrected through a technical correction during the next session. Lott, Daschle, and Lincoln insert a colloquy to that effect into the Congressional Record.

Nov. 17: House and Senate conferences put together the omnibus appropriations bill, H.R. 3194, which contains five appropriations bills (including the D.C. Appropriations Bill) and the Superfund Recycling Equity Act.

Nov. 18: The House passes the FY 2000 omnibus appropriations bill. Several Midwest senators, upset about a dairy compact in the omnibus appropriations bill, and another senator, upset about the satellite TV bill, threaten to filibuster the omnibus bill.

Nov. 19: Shortly after 6 p.m., the Senate passes the omnibus appropriations bill, including the Superfund Recycling Equity Act.

Nov. 29: President Clinton signs the omnibus appropriations bill into law. •

Senate Supporters

ISRI owes a special debt of gratitude to six senators who were stalwart supporters and cosponsors of the Superfund Recycling Equity Act and who provided the leadership power to see the bill through the Senate. Those special elected leaders are: 

 Majority Leader Trent Lott (R-Miss.), Minority Leader Tom Daschle (D-S.D.), Blanche Lincoln (D-Ark.), John Warner (R-Va.), The late John H. Chafee (R-R.I.), Max S. Baucus (D-Mont.), Jeff Sessions (R-Ala.) 

Of course, it took more than these six senators to ensure Superfund reform for the scrap industry. The Superfund Recycling Equity Act credits much of its strength to the majority of cosponsors it gained in the Senate. Including the above six Senate leaders, the act ended up with 69 cosponsors. The following senators heard the needs of their scrap recycling constituents and voted to give them Superfund relief. Thank you.

Jon Kyl (R-Ariz.) 
Tim Hutchinson (R-Ark.)
Barbara Boxer (D-Calif.)
Dianne Feinstein (D-Calif.) 
Wayne Allard (R-Colo.)
Ben Nighthorse Campbell (R-Colo.) 
Christopher J. Dodd (D-Conn.) 
Joseph I. Lieberman (D-Conn.) 
Bob Graham (D-Fla.)
Connie Mack (R-Fla.) 
Max Cleland (D-Ga.) 
Paul Coverdell (R-Ga.) 
Daniel K. Akaka (D-Hawaii) 
Richard J. Durbin (D-Ill.)
Peter Fitzgerald (R-Ill.) 
Evan Bayh (D-Ind.) 
Richard G. Lugar (R-Ind.) 
Charles E. Grassley (R-Iowa) 
Tom Harkin (D-Iowa) 
Sam Brownback (R-Kan.) 
Pat Roberts (R-Kan.)
John B. Breaux (D-La.)
Mary L. Landrieu (D-La.) 
Susan Collins (R-Maine) 
Olympia J. Snowe (R-Maine) 
Barbara A. Mikulski (D-Md.)
Paul S. Sarbanes (D-Md.) 
Edward M. Kennedy (D-Mass.) 
John F. Kerry (D-Mass.) 
Spencer Abraham (R-Mich.) 
Carl Levin (D-Mich.) 
Rod Grams (R-Minn.) 
Thad Cochran (R-Miss.) 
Chuck Hagel (R-Neb.) 
Bob Kerrey (D-Neb.) 
Harry Reid (D-Nev.) 
Judd Gregg (R-N.H.)
Frank R. Lautenberg (D-N.J.) 
Jeff Bingaman (D-N.M.) 
Pete V. Domenici (R-N.M.) 
Daniel Patrick Moynihan (D-N.Y.)
Charles Schumer (D-N.Y.) 
John Edwards (D-N.C.) 
Jesse Helms (R-N.C.) 
Gordon H. Smith (R-Ore.) 
Ron Wyden (D-Ore.) 
Rick Santorum (R-Pa.) 
Arlen Specter (R-Pa.) 
Jack Reed (D-R.I.) 
Ernest F. Hollings (D-S.C.) 
Strom Thurmond (R-S.C.) 
Tim Johnson (D-S.D.)
Bill Frist (R-Tenn.) 
Fred Thompson (R-Tenn.) 
Kay Bailey Hutchison (R-Texas) 
Robert F. Bennett (R-Utah) 
James M. Jeffords (R-Vt.) 
Charles S. Robb (D-Va.) 
Slade Gorton (R-Wash.) 
Patty Murray (D-Wash.) 
John D. Rockefeller (D-W.Va.)
Russell D. Feingold (D-Wis.)