Published in ABA Solid Waste News Vol 2, #2, 1999 By Richard J. Brickwedde

Late in 1999 as an amendment to other legislation, Congress passed and the President signed the Superfund Recycling Equity Act of 1999 (the "Act"). Long sought by the Institute of Scrap Recycling Industries (ISRI), the Act provides clear guidance for dealing with hazardous scrap to scrap dealers for the future, but a moras for both scrap dealers and those who pursue them with regard to scrap disposed of up to 90 days after the bill's enactment. This article simplifies the language of the Act. Before advising any client, the reader should review the actual law. The Act does not do everything ISRI had hoped the Act would do, but at least now with regard to future conduct scrap dealers will know what they have to do to protect themselves.

The purpose of the Act is to promote the reuse and recycling of scrap material in furtherance of the goals of (1) waste minimization and natural resource conservation while protecting human health and the environment and (2) to create greater equity in the statutory treatment of recycled versus virgin materials and to remove (3) disincentives and impediments to recycling created as an unintended consequence of the 1980 Superfund Liability Provisions.

The Act provides that for transactions occurring ninety (90) days or more after enactment of the act that if a person exercises reasonable care to determine that the facility where the recyclable material is handled, processed, reclaimed, or otherwise managed by another person would not be subject to CERCLA liability if that other person is in compliance with substantive federal, state or local environmental laws and orders applicable to the handling, processing, reclamation, storage or other management activities associated with the recyclable material.

Reasonable care is defined by using criteria including the price paid, the ability of the person to detect the nature of the consuming facility's operations activities associated with the recyclable material and the result of inquiries made to the appropriate federal, state or local environmental agencies regarding the consuming facility's past and current compliance with substantive provisions of federal, state and local laws or orders applicable to the recyclable material. If a permit is required, the permit must be in place. That is a substantive provision.

The only transactions covered by the Act are those which are in compliance with requirements of the Solid Waste Disposal Act (RCRA) subsequent to the enactment of the Act with regard to transactions occurring after the effective date of the RCRA regulations or standards. The person also cannot have melted the scrap metal prior to the transaction and cannot include sweating or thermal separation of two or more materials. Only scrap metal not excluded by regulation is subject to the Act.

In addition, spent batteries of all types shall be deemed to be arranged for recycling if the person can demonstrate that the batteries were shipped whole and the person was in compliance with applicable federal environmental regulations or standards regarding the storage, transport, management or other activities associated with the recycling of the batteries.

The exemptions in the act do not apply if there was an objectively reasonable basis to believe that the material would not be recycled, that it would be burned as fuel for energy recovery or incineration, that the material was salted with extraneous hazardous substances, or that the person failed to exercise reasonable care with regard to the management and handling of the recyclable materials, including adhering to customary industry practices current at the time of the recycling transaction designed to minimized through source control contamination of the recyclable material by hazardous substances.

The objectively reasonable basis takes into account the size of the business, customary industry practices, the prices involved, and the ability of the person to detect the nature of the consuming facility's operations.

The Act is not applicable to transactions where the United States has concluded or has pending a judicial action prior to the enactment of the Act. The EPA has been clear in several different situations that it is sticking to the letter of the law and will not drop pending litigation.

In US v. Atlas Lederer (USDC WD Ohio 2000), third party defendants moved to dismiss the third party claim because the U.S. had not sued them directly. The Court held it would be unfair where not all parties were sued by the United Sstates - to penalize those who were directly sued and have contributed to the remedy.

One caveat that all potential plaintiffs should review carefully and attorneys should review with their clients and follow up in writing: If a person sues for contribution under CERCLA and loses, that person will be liable for the cost of defending the action including all reasonable attorney's fees and expert witness fees.

The Superfund Recycling Act of 1999 is not a panacea for scrap dealers and in some ways for past scrap sales may even be a step backwards, but for most past scrap sales at least the rules are now clear and scrap dealers, the original environmentalists, now know what the rules are for the future.