Appellants Brief — Exxon Corp. v. Hunt
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Supreme Court, U.S.
FILED
AUG | 1985
No. 84-978 JOSEPH F. spp
he om . |
IN THE er
Supreme Court of the Gnited States
OCTOBER TERM 1985
EXXON CORPORATION, THE BF GOODRICH COMPANY,
UNION CARBIDE CORPORATION, MONSANTO COMPANY
AND TENNECO CHEMICALS, INC.,
Appellants,
VS.
ROBERT HUNT, Administrator of New Jersey Spill
Compensation Fund; CLIFFORD A. GOLDMAN, Treasury of
the State of New Jersey; SIDNEY GLASER, Director of the
Division of Taxation; JERRY F. ENGLISH, Commissioner of
Environmental Protection; and THE STATE OF NEW
JERSEY,
Appellees.
Appeal From the Supreme Court of New Jersey
BRIEF OF APPELLANTS
—
DANIEL M. GRIBBON JOHN J. CARLIN, JR.
E. EDWARD BRUCE LISA J. POLLAK
DAVID F. WILLIAMS MARTIN CRONIN
COVINGTON & BURLING FARRELL, CURTIS, CARLIN &
1201 Pennsylvania Ave., N.W. DAVIDSON
P.O Box 7566 43 Maple Avenue
Washington, D.C. 20044 P.O. Box 145
(202) 662-6000 Morristown, New Jersey 07960
(201)267-8130
Attorneys for Appellants
BEST AVAILABLE COPY
QUESTION PRESENTED
When Congress established a federal Superfund financed by
a tax on oil and chemicals, it expressly preempted States from
requiring contributions to funds the “purpose” of which is to
pay cleanup costs and damages which “may be compensated”
under Superfund. New Jersey requires operators of major oil
and chemical facilities to contribute to a Spill Fund the prin-
cipal purpose of which is the payment of cleanup costs and
damages at sites which are eligible for compensation from the
federal Superfund. The question thus presented is:
Whether the New Jersey Spill Fund is preempted because its
purpose is to pay cleanup costs and damages which are eligible
for payment from and thus “may be compensated” under Su-
perfund or whether, as New Jersey contends and .ts Supreme
Court held, federal preemption only precludes disbursements
by Spill Fund for such cleanup costs as “are actually paid” by
Superfund?*
*The names of all parties are set forth in the caption of the case. The
appendix to the Jurisdictional Statement, pp. la-14a, lists all parent com-
panies, subsidiaries (except wholly owned) and affiliates as required by Rule
28.1.
»
.
TABLE OF CONTENTS
Page
ee ei a ean easaeeeebudeseeces 1
ae ea ek wdaeeeéeeeeeeee 2
CONSTITUTIONAL AND STATUTORY PROVISIONS IN-
ee nabeneeecnee 2
re 4
CS 6
i ahaa pened eee nse S)
I. PREEMPTION PRINCIPLES REQUIRE AP-
PLICATION OF SECTION 114(c) IN ACCOR-
DANCE WITH THE STRUCTURE OF CERCLA
AND THE PLAIN MEANING OF THE SEC-
TREE BURIED occcccccececcccccccosccccecess 9
II. PREEMPTION OF STATE FUNDS WAS AN ES-
SENTIAL ELEMENT OF THE COMPREHEN-
SIVE FEDERAL-STATE SCHEME EMBODIED
tt EPPPPTTTTTTTTTrr rT ri Tere TTT ee 12
A. Superfund Expenditures Are Directed at Clean-
ing Up Eligible Sites through Coordinated
Federal-State Procedures and Priorities ...... 12
B. CERCLA Imposed a Special Tax on Oil and
Chemicals which Was Not to Be Increased by
Duplicative State Taxes ..............00005: 16
C. Section 114(c) Was Designed Both to Protect the
Coordinated Federal and State Procedures of
CERCLA and to Ensure that Oil and Chemicals
Would Not Be Burdened by Duplicative State
ME CcudkekabeRakenaecbacdecavececesces 20
III. THE PLAIN MEANING OF SECTION 114(c)
SHOWS THAT NEW JERSEY SPILL FUND IS
PE sc cncicueeaddhcekshaetvsccteceee 22
A. The Purpose of New Jersey's Spill Fund Is to Pay
for Cleanup Costs and Damages which Are Eligi-
ble for Compensation under CERCLA ....... 22
Table of Contents Continued
Page
B. The Plain Meaning of “May Be Compensated”
Requires Preemption of New Jersey's Spill Fund 24
C. New Jersey’s Construction of Section 114(c) Ren-
Be EE doncncuckiasbanecccetane 28
D. The Solicitor General’s Suggestion That Section
114(c) Preempts Only State Funds Established to
Pay Third-Party Costs is Without Merit ..... 29
E. The Rationale for the New Jersey Supreme
Court’s Avoidance of the Plain Meaning of the
Terms of Section 114(c) Was Mistaken ....... 32
1. The New Jersey Court Both Misunderstood
and Gave Undue Weight to the Debate be-
tween Senators Randolph and Bradley .... 32
2. Statements by a Subsequent Congressional
Should Not Be Relied upon to Contradict the
Plain Meaning of Section 114(c) .......... 33
3. EPA’s Guidance Memorandum Does Not
Provide a Reliable Basis for Construing Sec-
EE a caduidduabeweieawntekeeunce 33
IV. THE LEGISLATIVE HISTORY OF CERCLA
CONFIRMS APPELLANTS’ INTERPRETA-
TION OF BECTION 114(C) ...........,...0.5. 36
A. Congress Intended to Preempt Special Funds
whose Purpose Was to Pay for All Response
Costs and Damages which are Eligible for Com-
pensation under CERCLA, Even if They Are
PE EE “Sock cndesebuseuecesees. 37
B. The Exchange between Senators Randolph and
Bradley Is Consistent with the Prior Legislative
History Regarding the Interpretation of Section
DE S404 s sebecedca ven deeseucé-veceduscshve 43
ET ce kdddu ccdanudienkecadasten euneaua 47
iv
TABLE OF AUTHORITIES
CASES: Page
Adamo Wrecking Co. v. United States, 434 U.S. 275
En hniindeeesdeenvis ceuersieeues enn nee 35
Aloha Airlines, Inc. v. Director of Taxation, 464 U.S. 7
GD. Néakeesedsananasvausdadeuatesdecss 7, 9, 11, 12
Arizona Public Service Co. v. Snead, 441 U.S. 141(1979) 12
Bennett v. Panama Canal, 475 F.2d 1280 (D.C. Cir. 1973) 26
Bowsher v. Merck & Co., 460 U.S. 824 (1983) ...... 25, 28
Bureau of Alcohol, Jobs & Firearms v. FLRA, 464 U.S.
ED did 3c ocu'n-6uo ce sacaiocwnine seeececeeey 35
Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450
ff PPro rere rey rier. repre 10
Connecticut Department of Income Maintenance v.
Heckler, U.S. —_, 105 S. Ct. 2210 (1985)... 29
Consumer Prod. Safety Comm’n v. GTE Sylvania, 447
ee ED ss Fxcen det teadtaneeacasesieenss 33
Exxon Corp. v. Hunt, 683 F.2d 69 (3d Cir. 1982), cert.
denied, 459 U.S. 1104 (1983) .............e0eee- 5
FCC v. RCA Corp., 346 U.S. 86 (1952) .............. 34
Florida Lime & Avocado Growers v. Paul, 373 U.S. 132
DE vceanvceseeccsebbedunbushens aueauoneens 10
Goolsby v. Blumenthal, 581 F.2d 455 (5th Cir. 1978), cert.
Gonted, 446 U.B. GIO (IGTE) ... cc ccccvcccccccess 34
Griffin v. Oceanic Contractors, Inc., 458 U.S. 564 (1982) 25
Huron Portland Cement Co. v. Detroit, 362 U.S. 440
GE shbdevessuvctcccunnnsabeGenseeancnenasees 10
In re Aloha Airlines Inc., 65 Haw. 1, 647 P. 2d 263
eer err reer Tre Ty rT eee il
International Brotherhood of Teamsters v. Daniel, 439
GED 6 Guns Waunn cundkasnnedebuneess 34, 36
Investment Company Institute v. Camp, 401 U.S. 617
ere ee he Te Tee 35
John Reiner & Co. v. United States, 325 F.2d 438 (Ct. Cl.
1963), cert. denied, 377 U.S. 931 (1964) .......... 26
Table of Authorities Continued
Page
Jones v. Rath Packing Co., 430 U.S. 519 (1977) ...... 10
Kraft v. Board of Education, 247 F. Supp. 21 (D.D.C.
1965), cert. denied, 386 U.S. 958 (1967) .......... 26
Landreth Timber Co. v. Landreth, __ U.S. ___., 105 S..
ee eee 25
Metropolitan Life Ins. Co. v. Massachusetts, ___. U.S.
, 105 S. Ct. 2380 (1985) ............ 9, 11, 25, 29
Milwaukee v. Illinois, 451 U.S. 304 (1981) ........... 33
Montana v. Blackfeet Tribe of Indians, ___. U.S. —__,
105 S. Ct. 2399 (1985), affirming 729 F.2d 1192 (9th
Se EE sash euneenddecdwandutesed chuassues 36
New Jersey v. United States, 16 Envtl. Rep. Cas. [BNA]
ERE EEE 6G Kbc cs SeSRdebarcesdencinn 34, 36
Northern Colo. Water Conservancy Dist. v. F.E.R.C.,
ope Ff ko | er re 35
Park’n Fly Dollar Park v. Park and Fly, ___. U.S. —_,
ND eels vnuicignddessucees¥es 25
Perez v. Campbell, 402 U.S. 637 (1971) .............. 10
Piper v. Chris-Craft Indus., Inc., 480 U.S. 1 (1977) .. 35
Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) . 11
Shaw v. Delta Air Lines, 463 U.S. 85 (1983) ......... 11
Skidmore v. Swift & Co., 323 U.S. 134 (1944) ........ 35
South Carolina v. Regan, U.S. _—., 1048S. Ct. 1107
ec utsehh stunnenretustbaeewbasktehede es 33
Thompson v. Carroll’s Lessee, 22 How. 422 (1860) .... 26
TVA v. Hill, 487 U.S. 153 (1978) ........... cece eee 36
United Housing Foundation, Inc. v. Forman, 421 U.S.
gE Oe ert oe Pere rer Te eee eee 36
United States v. Menasche, 348 U.S. 528 (1955) ...... 28
United States v. Thoman, 156 U.S. 353 (1895) ....... 26
Veterans Admin. Med. Cent. v. Federal Labor Rel. Auth.,
ee ee ED “vcs wynaeeedccecescs 34
Table of Authorities Continued
UNITED STATES CONSTITUTION AND STATUTES:
United States Constitution, Article VI, Cl. 2 ........ 2
Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. § 9601 et
Se BENS ROMS RAN 00 ON 60h bed ates seers seins passim
En oun ccdecsankeeebsounnes 30
i dd redduaceu awd eekbeeuen 30
Eo wcinekcsecedcsceesneceake 17
42 U.S.C. § 9601(21) ......... Jageanntaaeaalaid 30
Se ED oie ccnccccncesicesder 12, 13, 17
gE ere 12, 13, 17
Se ee 12
42 U.S.C. § 9604, Section 104 .................. 14, 20
42 U.S.C. § 9604(a), Section 104(a) .............. 14, 16
42 U.S.C. § 9604(c), Section 104(c) .............. 14, 20
42 U.S.C. § 9604(d), Section 104(d) .. ........ 14-15, 20
42 U.S.C. § 9605, Section 105 ............... 13, 14, 22
es el ieabuaeess 13
42 U.S.C. § 9607(a), Section 107(a) .............. 16, 20
ER ee ae ae 20
i ok Sas ns nes keuceaks 12, 15, 30
NERS Fe ee are yen ae 12, 30
i a ee oe 12
is in le oa ee eee 16
Oe i i ae 30
ey EE beet iWecdugcucnsesnbaeeyceea 16
Fe ats es ME BOO oc cccccccvvcsesceses 20
42 U.S.C. § 9614(a), Section 114(a) ................ 20
42 U.S.C. § 9614(b), Section 114(b) ............. passim
42 U.S.C. § 9614(c), Section 114(c) ............. passim
ee Se EE Sodan uc ch cn ateneeskesruaeeus 20
Oe ey FEED ee dap iticesn idan 17
vii
Table of Authorities Continued
Page
EE c.ucdbeceesiveuentesatesa 18, 19, 21
EE SD re oe er Cera ee 17, 21
Federal Water Pollution Control Act, 33 U.S.C.
i sensi rieeauligtant caked keahanks kuweed 4,12
Internal Revenue Code of 1954, 26 U.S.C. § 4611..... 16
ER sh ee ee ee 16-17
Resource Conservation and Recovery Act, 42 U.S.C.
PE dich vatdvtadiuheersiahecbeneseues 4
Tax Injunction Act, 28 U.S.C. § 13841 ............... 5
TERRES oa 2
NEW JERSEY STATUTES:
New Jersey Spill Compensation and Control Act, NJS
EE NE, din 6t66 cc ctccnesscesececees passim
SE i. nosh neads owedeses 64debeabenen 25
ecto it cekewkeanadenen 3, 22, 3)
gic coececedidbsccckshavehoans 23, 31
ee Je deueae 3, 22, 31
cei pccceckscbedubeanavaeasacans 31
es a cask cee euleaee 22, 23, 31
ee we we wanewes 3, 4, 24
LEGISLATIVE MATERIALS:
H.R. 85, 96th Cong. 2d Sess. (1980) .............. passim
H.R. 2948, 99th Cong., Ist Sess. (1985) ............. 17
H.R. 4566, 96th Cong., Ist Sess. (1979) ............. 37
H.R. 4571, 96th Cong., lst Sess. (1979) ............. 37
H.R. 5640, 98th Cong., 2d Sess. (1984) .............. 17
H.R. 7020, 96th Cong., 2d Sess. (1980) ......... 17, 37, 42
H.R. Rep. No. 172, Part I, 96th Cong., 1st Sess.
DE chit Leeks ede e eee d beeps iesedees 19, 38
H.R. Rep. No. 172, Part 2, 96th Cong. 2d Sess. 8 (1980) 38
H.R. Rep. No. 890, Part 2, 98th Cong. 2d Sess. (1984) 33
H.R. Rep. No. 890, Part 2, 98th Cong. 2d Sess. 22 (1984) 17
Table of Authorities Continued
Page
S. 51, 99th Cong. Ist Sess. (1985) ..............2000- 17
S. 1341, 96th Cong. Ist Sess. (1979) ............ 37, 38, 42
S. 1480, 96th Cong. 2d Sess.
SR Okesbe bs 646060660660 17, 18, 37, 40, 41, 42
S. 2892, 98th Cong. 2d Sess. (1984) ................. 17
S. Rep. No. 848, 96th Cong. 2d Sess 20 (1980) ...... 17, 40
S. Rep. No. 631, 98th Cong. 2d Sess. 42 (1984) ....... 17
S. Rep. No. 73, 99th Cong. 1st Sess. 13-14 (1985) .... 17
ED occ cncccecndusctcusesbesce 40
ee he 40
126 Cong. Rec. 26196 (1980) ...........ccececccees 15, 39
Be Gs SO MP CUED oo cc ccccccccsenvccscscss 39
ESS Comm. Bibs. BERT CGE)... ccc ccccccesccccece 39
136 Come. Moc. BEBOP (ISRO) .. 0... cc cccscccccccecs 19, 39
Ba GAG, TOO, TP PE GUD ccc cccccccsccccccnsecce 15
126 Cong. Rec. 26765 (1980) .......... cece cc ccccecs 16
126 Cong. Rec. 2676B (1980) ...... ccc cccccccccces 15, 16
126 Cong. Rec. 27086 (1980) ..............ceeeeeeeee 41
126 Comg. Ree. SUBIG (1980) ...... ccc cece cccccces 18
SP GN, HU, PEED oc vive ccsvcecccccssscess 18
126 Comm. Rec. SUGGO (1980) .. 0. cece cc cccccccccss 19
mommy. Hae. SIRE (ISD) .. 2. ccccccccccccccces 44
SP GD, MOOR EES CEOD oc ccc cccccccccccccccecs 42
ee Ge, SOO, BESO CUOOOD oo ccc ccc cccccccccccceces 42
131 Cong. Rec. E3252 (daily ed. July 11, 1985) ....... 17
Staff of Joint Committee on Taxation, 99th as lst
Sess., Background and Issues Relating to... Su-
perfund, 21 (Committee Print 1985) .............
Library of Congress, Senate Comm. on Environment and
Public Works, 97th Cong., 2d Sess., A Legislative
History of the Comprehensive Environmental Re-
sponse, Compensation, and Liability Act of 1980 (Su-
perfund), Public Law 96-510 (Committee Print
1983)
en eeeerereneneveeeeeeeeeeeeeeeeeeeeeeeeeeee
Table of Authorities Continued
Page
The Environmental Energy Response Act: Hearings on
S. 1480, Before the Senate Committee on Finance,
96th Cong., 2d Sess. 591 (1980) ................. 41
REGULATIONS:
ee easedeneteateceeces 36
Ne re eee male 14
Ne ec beekenheapen 14
RES TO ae a 14
GD C.F.B. Pmt SEO, AMMOMEEE BD a... ccccccccccccccs 13
MISCELLANEOUS:
Exec. Order No. 12286, 46 Fed. Reg. 9901 (1981) .... 33
Exec. Order No. 12316, 46 Fed. Reg. 42237 (1981) .. 13, 34
ee ee asic cascdeccedcnchveuscosies 14
i Bs SE bias bn ccecadensacsecweeses 25
FB GE we osc ccvcesedvcsscessens 14
Se SI, MED ccceccccdivenevessadossese 13
48 Fed. Reg. 40669 (1983), amended by 49 Fed. Reg. 19482
ithe eet ini we enki edad esesg tee ke 25
PTT eee 13
SF Bs ED 6 wa dices cvpecccdescccscces 13
FF ED 6 ccvewscccdivcccdsscccccues 14
Fp acc scacaccncsesscnenacesens 13
2. § § | POPPI TTT TTC TTT TT Tre 14
Grad, A Legislative History of the Comprehensive En-
vironmental Response, Compensation, and Liability
(“Superfund”) Act of 1980, 8 Colum. J. of Envt’] Law
DEED 6c van Nandietbevueseaseaeseeeciesnsesns 18
>.
ae %
IN THE
Supreme Court of the United States
OCTOBER TERM 1985
No. 84-978
EXXON CORPORATION, THE BF GOODRICH COMPANY,
UNION CARBIDE CORPORATION, MONSANTO COMPANY
AND TENNECO CHEMICALS, INC.,
Appellants,
VS.
ROBERT HUNT, Administrator of New Jersey Spill
Compensation Fund; CLIFFORD A. GOLDMAN, Treasurer of
the State of New Jersey; SIDNEY GLASER, Director of the
Division of Taxation; JERRY F. ENGLISH, Commissioner of.
Environmental Protection; and THE STATE OF NEW JERSEY,
Appellees.
Appeal from the Supreme Court of New Jersey
BRIEF OF APPELLANTS
OPINIONS BELOW
The opinions of the lower courts are:
Supreme Court of New Jersey, 97 N.J. 526, 481 A.2d 271,
reprinted in the appendix to the jurisdictional statement (J.S.)
at 15a-36a;
Appellate Division of the Superior Court of New Jersey, 190
N.J. Super. 131, J.S. 37a-46a; and
Tax Court of New Jersey, 4 N.J. Tax 294, J.S. 47a-78a.
JURISDICTION
On September 19, 1984, the Supreme Court of New Jersey
entered a judgment affirming the New Jersey Superior Court,
Appellate Division, which in turn had affirmed the summary
judgment of the New Jersey Tax Court entered against ap-
pellants. On November 19, 1984, a timely notice of appeal to
this Court was filed by appellants in the New Jersey Supreme
Court.
The jurisdiction of this Court is invoked pursuant to 28
U.S.C. § 1257(2).
This Court noted probable jurisdiction on June 17, 1985.
CONSTITUTIONAL AND STATUTORY PROVISIONS
INVOLVED
The Supremacy Clause of the United States Constitution,
Article VI, Cl. 2, provides as follows:
This Constitution, and the Laws of the United States
which shall be made in Pursuance thereof; and all Treaties
made, or which shall be made, under the Authority of the
United States, shall be the supreme Law of the Land; and
the Judges in every State shall be bound thereby, any
Thing in the Constitution or Laws of any State to the
Contrary Notwithstanding.
Pertinent parts of the Comprehensive Environmental! Re-
sponse, Compensation, and Liability Act of 1980, 42 U.S.C.
§ 9601 et seg. (CERCLA), are set out in full in the appendix to
the jurisdictional statement (J.S. 96a-167a). Sections 114(b)
and (c) of CERCLA, 42 U.S.C. §§ 9514(b) & (c), provide as
follows:
(b) Any person who receives compensation for removal
costs or damages or claims pursuant to this chapter shall
be precluded from recovering compensation for the same
removal costs or damages or claims pursuant to any other
State or Federal law. Any person who receives compensa-
tion for removal costs or damages or claims pursuant to
any other Federal or State law shall be precluded from
receiving compensation for the same removal costs or
damages or claims as provided in this chapter.
(ec) Except as provided in this chapter, no person may
be required to contribute to any fund, the purpose of
which is to pay compensation for claims for any costs of
response or damages or claims which may be compensated
under this subchapter. Nothing in this section shall pre-
clude any State from using general revenues for such a
fund, or from imposing a tax or fee upon any person or
upon any substance in order to finance the purchase or
prepositioning of hazardous substance response equip-
ment or other preparations for the response to a release of
hazardous substances which affects such State.
Relevant parts of the New Jersey Spill Compensation and
Control Act, NJS 58:10-23.11 et seq. (Spill Fund), are set out in
the appendix to the jurisdictional statement (J.S. 83a-95a).
Sections 58:10-23.11f, h and z of that statute provide in perti-
nent part as follows:
f. Removal of hazardous substances and actions to mini-
mize damage from discharges shall, to the greatest extent
possible, be in accordance with the National Contingency
Plan for removal of oil and hazardous substances estab-
lished pursuant to section 311(c)(2) of the Federal Water
Pollution Act Amendments of 1972 (P.L. 92-500, 33
U.S.C. 1251 et seq.).
h. There is hereby levied upon each owner or operator
of one or more major facilities a tax to insure compensa-
tion for cleanup costs and damages associated with any
discharge of hazardous substances to be paid by the trans-
feree
z. If the United States Congress enacts legislation
providing compensation for the discharge of petroleum
mine to what degree that legislation provides the needed
protection for our citizens, businesses and environment
and shall make the appropriate recommendations to the
Legislature for amendments to this act.
STATEMENT OF THE CASE
There has in recent years developed an increasing awareness
of and concern with the potential damage to the environment
caused by the release of hazardous substances. In 1972,
through passage of one part of the Federal Water Pollution
Control Act, 33 U.S.C. § 1321 (Clean Water Act), Congress
first addressed this problem. That act, however, dealt only with
discharges into navigable waters. In 1976, Congress enacted
the Resource Conservation and Recovery Act, 42 U.S.C.
§ 6901 et seq. (RCRA), to regulate the future handling of haz-
ardous wastes on land. RCRA did not deal with non-waste
toxic materials, nor did it provide for the cleanup of existing
hazardous waste sites.
Thus, neither the Clean Water Act nor RCRA was designed
to be a comprehensive federal response to the hazardous waste
problem. Moreover, by the late 1970's a few States had adopted
panies operating in interstate commerce.
New Jersey was one of those States. In 1977, its Spill Fund
Act was passed. As more fully described below, pp. 22-24, that
Act established a State-administered fund supported by a tax
levied upon operators of major facilities in New Jersey used to
produce or store petroleum or chemical products. The stated
purpose of this fund is to finance hazardous waste cleanup and
pay related damages. The New Jersey Act explicitly requires
the State, in pursuing such cleanup, to act in accordance with
the “National Contingency Plan” as established under the
Clean Water Act.
a)
A number of bills were introduced in the 96th Congress that
recognized that existing federal programs did not comprehen-
sively deal with the cleanup of hazardous substances and that
pointed to the dangers posed by the emerging patchwork of
variant State statutory approaches to this problem. U1-
timately, on December 11, 1980, as one of the last acts of the
96th Congress, CERCLA was enacted as a compromise meas-
ure drawing elements from these predecessor bills.
CERCLA established a $1.6 billion “Superfund,” 86% of
which is financed by a tax on oil and certain chemicals. The
principal purpose of Superfund is to pay for hazardous waste
cleanup and related damages to natural resources held in trust
by the federal or State governments. CERCLA also directed
that the National Contingency Plan established under the
Clean Water Act be revised to provide procedures and estab-
lish priorities for responding to the release of hazardous sub-
stances. CERCLA provides that State cleanup expenditures,
if undertaken in a manner consistent with the revised National
Contingency Plan, are compensable by Superfund.
A key provision of CERCLA—and the one that gives rise to
this suit—is Section 114(c). It preempts States from maintain-
ing special funds for the “purpose” of paying compensation for
hazardous substance cleanup costs, damages or claims which
“may be compensated” under CERCLA.
Proceedings Below
Soon after CERCLA was enacted, appellants filed a com-
plaint in the United States District Court for the District of
New Jersey contending that Spill Fund was preempted by
Section 114(c). That court dismissed appellants’ suit on the
basis of the Tax Injunction Act, 28 U.S.C. § 1341. The Third
Circuit affirmed, albeit on the additional ground that plaintiffs’
claim did not “arise under” federal law. Exxon Corp. v. Hunt,
683 F.2d 69 (3d Cir. 1982). This Court denied certiorari. 459
U.S. 1104 (1983).
After dismissal in the district court, appellants filed a com-
plaint in the New Jersey Tax Court. On cross motions for
summary judgment, that court dismissed the counts of ap-
pellants’ complaint which alleged that Spill Fund was pre-
empted. Although recognizing that the purpose of Spill Fund is
to finance cleanup costs and damages which “may be compen-
sated” under CERCLA in the sense that they are eligible for
compensation under the statute, the Tax Court ruled that
Section 114(c) only precludes the use of State funds to pay fur
cleanup and damages which are actually compensated under
CERCLA.
The decision of the Tax Court was appealed to the Appellate
Division of the Superior Court. On June 22, 1983, ea ate
affirmed the judgment of the Tax Court.
September 19, 1984, he Sugueme Cont af as
firmed the judgments of the Tax Court and the Appellate
Division. The State Supreme Court concluded that
“(t}he Spill Fund tax imposed on plaintiffs is not pre-
empted by Section 114(c) of (CERCLA) insofar as Spill
Fund is used to compensate hazardous-waste cleanup
costs and related claims that are either not covered or not
actually paid under (CERCLA). The underlying intent of
[(CERCLA|, as well as the legislative history, mandates a
conclusion of no preemption.” J.S. 36a (emphasis added).
During the pendency of this litigation, appellants have con-
tinued to pay taxes under protest into the New Jersey Spill
Fund. The total of their payments between CERCLAS enact-
ment and year-end 1984 exceeds $9,000,000.
SUMMARY OF ARGUMENT
When Congress adopted CERCLA as a “comprehensive”
federal-State program designed to clean up hazardous waste
through a federal Superfund, it expressly preempted State
funds not drawn from general revenues whose purpose was to
pay claims which may be compensated under Superfund. The
principal purpose of the New Jersey Spill Fund is to pay such
claims.
Accordingly, this is an express preemption case. Under the
principles recently articulated in Aloha Airlines, Inc. v. Direc-
tor of Taxation, 464 U.S. 7 (1983), a court’s function in such a
case is to analyze the statute as Congress has written it.
Consciously ignoring Aloha, the New Jersey Supreme Court
instead “harmonize[d]” CERCLA and the New Jersey Spill
Fund in accordance with its own assessment of State and
federal interests and thereby left the State law intact.
The New Jersey Supreme Court first erred in focusing its
inquiry on the uses to which the New Jersey Spill Fund had
been or might be put rather than the purpose of the exaction, as
required by Section 114(c). It then transmuted the phrase
“may be compensated,” which broadly establishes the scope of
preemption under Section 114(c), into the wholly different
phrase “are actually paid.” In this fashion, it made Section
114(c) a mere reiteration of the prohibition of duplicative com-
pensation contained in Section 114(b) and rendered mean-
ingless the provisos to Section 114(c) regarding permitted uses
of general revenues and special-fund financing of response
equipment.
Preemption of the New Jersey Spill Fund is not only express-
ly required, but also it effectively implements the intention of
Congress as reflected in CERCLA and in its legislative history.
CERCLA was the first “comprehensive” response by Con-
gress to the national problem of cleaning up hazardous waste
sites and spills. All of the bills which preceded its enactment
contemplated some type of “Superfund” derived from a tax on
oil and chemicals. Congress directed the federal government,
in close cooperation with the States, to develop procedures and
priorities for the expenditures of these Superfund monies. At
the same time, it provided for federal-State coordination with
respect to expenditures to clean up priority sites.
Section 114(c) protects this statutory scheme. To preserve
the figure which it selected as the appropriate tax to impose on
oil and chemicals to create a cleanup fund during the first five
years of CERCLA, Congress preempted all special State funds
whose purpose was to clean up Superfund-eligible sites; inev-
itably, like New Jersey’s existing fund, such funds would be
raised by taxes on the same products which financed Super-
fund. Moreover, the whole program of federal-State priorities
for Superfund expenditures and oversight of cleanup opera-
tions at Superfund-eligible sites could have been disrupted by
States’ pursuit of their own cleanup priorities undertaken
through procedures not coordinated with the federal govern-
ment and financed by their own special funds.
A construction of Section 114(c) as preempting special State
funds whose purpose is to finance any cleanup costs and
damages that are eligible for CERCLA compensation is there-
fore essential, even though there may be potential costs which
are eligible for compensation under CERCLA but will not
actually be compensated. It was precisely because Congress
recognized that not every cleanup cost or damage claim could
or should be compensated by funds drawn from special taxes on
oil and chemicals during the first five years of CERCLA that it
imposed the limitations upon States embodied in Section
114(c).
New Jersey's view—that, if CERCLA priorities dictate that
no Superfund monies are immediately available for a Super-
fund-eligible site, the State should be able to clean up the site
with its own special fund monies—ignores Congress’ imposi-
tion of limits on oil and chemical taxes and its prioritization of
the manner in which monies drawn from this source should be
spent.
The legislative history of the “may be compensated” formula-
tion of preemption leaves no doubt but that Congress intended
to preempt all claims which could be “asserted” or were com-
pensable under CERCLA, whether or not they would actually
be paid. The dialogue between Senators Bradley and Randolph
upon which the lower court relied is consistent with this legis-
lative history; to the extent either Senator indicated that State
funds could be used: for cleanup costs not actually paid by
CERCLA, they were referring to monies collected before the
statute’s effective date or from non-preempted funds.
The subsequent 1984 congressional committee report and
EPA guidance memorandum upon which the lower court relied
do not justify disregard of the structure and language of
CERCLA and its legislative history. Comments in con-
gressional committee reports are not valid legislative history
as to earlier enactments, and EPA has no delegated authority
to enforce or interpret Section 114(c).
ARGUMENT
I. PREEMPTION PRINCIPLES REQUIRE APPLICA-
TION OF SECTION 114(c) IN ACCORDANCE WITH
THE STRUCTURE OF CERCLA AND THE PLAIN
MEANING OF THE SECTION’S TERMS.
This is an express preemption case, governed by the princi-
ples recently articulated in Aloha Airlines v. Director of Taxa-
tion, 464 U.S. 7 (1983). Section 114(c) of CERCLA indisputa-
bly preempts State funds if their “purpose” is “to pay
compensation for claims for any costs of response [7.e., cleanup]
or damages or claims which may be compensated under”
CERCLA. As an express preemption case, the obligation of
the courts is to read the terms of the statute and apply them in
accordance with their “common-sense meaning” used “in the
normal sense.” Metropolitan Life Ins. Co. v. Massachusetts,
U.S. , 105 S. Ct. 2380, 2389 (1985).
The New Jersey Supreme Court approached this case on a
wholly different premise. It held that “courts faced with poten-
tially conflicting state and federal statutes must attempt to
harmonize them whenever possible.” J.S. 23a. It also asserted
that “preemption of state law by federal statute is not favored
‘in the absence of persuasive reasons . . . that Congress has
unmistakenly so ordained.’”/d. On this premise, the court dis-
regarded Congress’ explicit preemption of State funds whose
10
“purpose” was to pay claims which are covered by CERCLA
when it held that
“{a]lthough it may be true that many of the purposes to
which Superfund moneys are put overlap with the pur-
poses of Spill Fund, this fact alone does not require a
conclusicn of preemption.” J.S. 26a.
On the same premise, the court ignored the structure of
CERCLA, transmuted the phrase “may be compensated” into
“actually paid,” and thereby concluded that Section 114(c)
effects “ne preemption” of New Jersey's fund.!
All but one of the preemption cases referred to by the New
Jersey court to justify this approach to construing Section
114(c) dealt with situations where there was no express pre-
emption by a federal statute and where this Court was accord-
ingly itself required to determine whether a State scheme
could co-exist with a federal one.* Here, of cour'se, Congress’
'The lower court conceded that the phrase “may be compensated under
[CERCLA]. . . may appear to be clear language at first glance.” J.S. 24a
(emphasis in original). However, it ultimately held that it could “hardly
conclude that it conveys a clear and unambiguous meaning in light of the
purposes and spirit of [CERCLA] as a whole.” /d.(emphasis in original).
Referring to what it termed “Judge Learned Hand's ubiquitous observation
of some forty years ago [that] [t]here is no surer way to misread any docu-
ment then to read it literally” (id.), the New Jersey court found that the
phrase “may be compensated” was sufficiently ambiguous that room existed
to permit the “harmoniz{ation]” of CERCLA and the New Jersey Spill Fund
in a fashion which left the latter available to pay any and all cleanup costs, so
long as it did not duplicate payments actually made by federal Superfund.
*Chicago & N.W. Transp. Co. v. Kalo Brick & Tile Co., 450 U.S. 311, 317
(1981); Perez v. Campbell, 402 U.S. 637, 644 (1971); Florida Lime & Avocado
Growers v. Paul, 373 U.S. 132, 142 (1963); Huron Portland Cement Co. v.
Detroit, 362 U.S. 440 (1960).
Jones v. Rath Packing Co., 430 U.S. 519 (1977), the single express preemp-
tion case cited by the New Jersey Supreme Court (J.S. 24a), illustrates the
strict adherence to statutory language required by this Court in such cases.
In Rath, the Court addressed an express preemption provision that pro-
hibited state regulation of meat packaging and labeling that differed from
federal regulations. Once the Court had determined that California’s require-
ments differed from federal requirements, its job was complete. “This ex-
plicit pre-emption provision dictate{d] the result in the controversy.” Jd. at
530-31.
iat, Meira il a Se
11
intent is statutorily expressed. Thus, courts must apply the
language employed by Congress and assume that the ordinary
meaning of that language accurately expresses the legislative
purpose. Shaw v. Delta Air Lines, 463 U.S. 85, 97 (1983);
Metropolitan Life Ins. Co. v. Massachusetts, 105 S. Ct. at
2390.
In Aloha Airlines, Inc. v. Director of Taxation, 464 U.S. at
12, this Court articulated the principle which the court below
consciously ignored:*
“(W]hen a federal statute unambiguously forbids the
States to impose a particular kind of tax on an industry
affecting interstate commerce, courts need not look
beyond the plain language of the federal statute to deter-
mine whether a state statute that imposes such a tax is
preempted.”
In concluding that the plain language of the federal statute
preempted a Hawaii State tax, the Court admonished the
Hawaii Supreme Court for “failing to give effect to the plain
meaning of the federal act” by ignoring the distinction between
express and implied preemption:
“The Hawaii Supreme Court apparently considered it-
self obliged by Rice v. Santa Fe Elevator Corp., 331 U.S.
218 (1947), and its progeny to examine thoroughly Con-
gress’s intentions before declaring Haw. Rev. Stat. § 239-6
pre-empted. Jn re Aloha Airlines, Inc. 65 Haw. 1, 13-16,
647 P.2d 263, 272-273 (1982). Rice and its progeny,
however, involved the implicit pre-emption of state stat-
utes. Rules developed in these cases apply when a court
must decide whether a state law should be preempted
even though Congress has not expressly legislated pre-
emption. These rules, therefore, have little application
34loha was decided after this case was argued but before it was decided by
the New Jersey Supreme Court. Appellants informed that court by letter of
the Aloha opinion. However, the court's opinion makes no reference to Aloha.
12
when a court confronts a federal statute like § 1513(a) that
explicitly preempts state laws.” Jd. at 12 n.5.
See also, Arizona Public Service Co. v. Snead, 441 U.S. 141,
149-50 (1979).
In similarly ignoring the well established distinction be-
tween express and implied preemption, the New Jersey Su-
preme Court mistakenly undertook to “harmonize” the federal
and State schemes in accordance with its own assessment of
their respective interests. Proper application of the Aloha
principles requires in this case that the scope of the preemption
be determined by an analysis of the statute as Congress wrote
it. So applied, these principles dictate the conclusion that New
Jersey’s fund is preempted by Section 114(c).
Il. PREEMPTION OF STATE FUNDS WAS AN ESSEN-
TIAL ELEMENT OF THE COMPREHENSIVE
FEDERAL-STATE SCHEME EMBODIED IN
CERCLA.
A. Superfund Expenditures Are Directed at Cleaning
Up Eligible Sites through Coordinated Federal-
State Procedures and._Priorities.
The Superfund created by CERCLA has two principal pur-
poses: (1) Payment of “response costs,” 42 U.S.C. § 9611(a)(1)
& (2)—i.e., the costs either of removing hazardous substances
or of taking long-term remedial action to ensure that those
substances do not damage the public health, welfare or en-
vironment, 42 U.S.C. §§ 9601(23), (24), (25)}—and (2) the pay-
ment of damages to federal or state governments caused by
injury to or destruction of natural resources under their trust-
eeship as a result of the release of hazardous substances, 42
U.S.C. § 9611(a)(3) & (b).*
‘In addition to response costs and natural resource damages, Superfund is
also available for paying other claims under very limited circumstances. 42
U.S.C. § 9611(a)(3) permits the payment of any claim authorized by subsec-
tion (b). 42 U.S.C. § 9611(b), refers, inter alia, to “claims asserted and
compensable but unsatisfied under Section 311 of the Clean Water Act, 33
U.S.C. § 1321.” 33 U.S.C. §§ 1321(i) deseribes such claims. Moreover, 42
U.S.C. §§ 9611(a)(4) & (c) permits Superfund payment of miscellaneous
“costs” pertaining to specified studies and programs.
13
In establishing Superfund, Congress ensured that it was
directed toward the sites which most urgently needed atten-
tion. CERCLA thus required the President, sorne of whose
responsibilities have been delegated to the Environmental Pro-
tection Agency (EPA) while others have been assigned to other
federal agencies,*® to revise and republish the National Con-
tingency Plan (NCP) previously established under the Clean
Water Act to include a “national hazardous substance response
plan.” 42 U.S.C. § 9605. EPA must include within that plan,
inter alia, “criteria for determining priorities among [sites]
.. . throughout the United States for the purpose of taking
remedial action and, to the extent practicable ... for the
purpose of taking removal action.”* 42 U.S.C. § 9605(8)(A).
CERCLA requires that these priorities be based upon care-
ful consideration of inpvc from affected States; for this reason
each State must “est.vlish and submit for consideration . . .
priorities for remedial action among known [sites]. . . in that
State based upon the criteria set forth in” the NCP. 42 U.S.C.
§ 9605(8)(B). Ultimately, CERCLA required the establish-
ment of a list of at least 400 high priority sites, including among
the top 100 at least one such site designated by each State. Jd.
The list identifying high priority sites is an annually revised
appendix to the NCP and has come to be known as the “Nation-
al Priorities List” or “NPL.” There are currently 540 sites on
the NPL, of which 85 are located in New Jersey.* Moreover,
°Exec. Order No. 12316, 46 Fed. Reg. 42237 (1981).
&* ‘Remove’ or ‘removal’ means the cieanup or removal of released hazard-
ous substances from the environment. . . .” 42 U.S.C. § 9601(23).
“*Remedy’ or ‘remedial action’ means those actions. . . taken instead of or
in addition to removal actions . . . to prevent or minimize the release of
hazardous substances so that they do not migrate to cause substantial danger
to present or future public health or welfare or the environment.” 42 U.S.C.
§ 9601(24).
740 C.F.R. Part 300, Appendix B.
*48 Fed. Reg. 40658, 40669-40673 (1983); 49 Fed. Reg. 19480, 19482 (1984);
49 Fed. Reg. 37070, 37083-37085 (1984); 50 Fed. Reg. 6320, 6321-6322 (1985).
14
EPA has proposed to include on the NPL an additional 274
sites, of which 12 are New Jersey sites.’
The NCP provides that “removal” actions may be under-
taken at any site at Superfund expense. Longer term, more
ment only at NPL sites. See 40 C.F.R. $§ 300.65, .67, .68.
Just as Section 105 of CERCLA contemplates federal-State
cooperation in the pnoritization of hazardous waste sites, Sec-
tion 104 of the Act, 42 U.S.C. § 9604, provides for coordinated
federal-State response actions to clean up such sites with Su-
perfund assistance. Section 104(a)(1) authorizes the federal
government to act “consistent[ly] with the [NCP] to. . . take
{necessary} response measure(s] . . . to protect the public
health or welfare or the environment. . . .” However, the Unit-
ed States may not undertake long-term remedial (as opposed to
removal) actions, unless the State first enters into a contract or
cooperative agreement that it will assure all future mainte-
nance of such actions and certifies the availability of a hazard-
ous waste disposal facility. 42 U.S.C. § 9604(c)(3). States
must also assure payment of at least 10% of the cleanup costs.
Id." In short, State cooperation with the federal government is
essential to conduct cleanup pursuant to CERCLA.
Indeed, Section 104 contemplates that in many instances the
"48 Fed. Reg. 9311, 9812 (1983); 49 Fed. Reg. 40320, 40326-40341 (1984); 50
Fed. Reg. 14115, 14121-14122 (1985).
EPA estimates that, on the basis of its current criteria, between 1400 and
2200 sites will ultimately be added to the NPL. Staff of Joint Committee on
Taxation, 99th Cong., Ist Sess., Background and Issues Relating To . . .
Superfund, at 21 (Committee Print 1985).
“Indeed, unless emergency circumstances require it, the federal govern-
ment may not undertake even removal actions at a cost of more than $1 million
or which require more than six months unless the State complies with 42
U.S.C. § 9604(eK3).
"When the site in question was owned by the State or one of its political
subdivisions, it must pay at least 50% of the remedial costs.
15
tion 104(d)(1) permits the federal government to “enter into a
contract or cooperative agreement with such State” to arrange
for cleanup and to permit the State “to be reimbursed for the
reasonable response costs thereof from [Superfund]” pursuant
to Section 111(a)(1), 42 U.S.C. § 9611(a)(1). In this fashion,
CERCLA assures that State cleanup activities at Superfund-
eligible sites will be conducted in a manner which complies with
federal standards, including those set forth in the NCP.
CERCLA thus constitutes a determination by Congress
that a comprehensive and coordinated federal-State approach
to hazardous substance cleanup was necessary to address this
nationwide problem, as opposed to a proliferation of conflict-
ing, piece-meal and duplicative State schemes. As stated by
Congressman Biaggi, one of the principal drafters of one of
CERCLAYS predecessor bills, “the effect is to provide a uni-
arr seaplane sans nga Aphis diealacaiabaaaaaia
liability and compensation. .
This view was also expressed in the House of Represen-
tatives’ rejection of a substitute bill offered by Congressman
Stockman, 126 Cong. Rec. 26769 (1980), reprinted in 2 Legis.
Hist. at 328, which in lieu of a federal Superfund proposed a
system of federal grants for State cleanup. Jd. 26757-26758,
reprinted in 2 Legis. Hist. at 295-298. Successfully opposing
the Stockman proposal, Congressman La Falce stated:
. . . we cannot have this comprehensive approach if
we allow each State to work its own will and come up with
some patchwork quilt across the entire United States of 50
differing laws, 50 differing laws dealing with the taxation
of the oil and chemical companies, 50 differing sets of laws
126 Cong. Rec. 26196 (1980), reprinted in 2 Library of Congress, Sen.
Comm. on Environment and Pubsic Works, 97th Cong., 2d Sess., A Legis-
lative History of the Comprehensive Environmental Response, Compensa-
tion, and Liability Act of 1980 (Superfund), Public Law 96-510 at 902 (Com-
mittee Print 1983) (hereinafter “Legis. Hist.”).
16
ing with every single aspect of this problem.” /d. at 26765,
reprinted in 2 Legis. Hist. at 317.
See also id. at 26769 (remarks of Rep. Martin), reprinted in 2
Legis. Hist. at 325-327.
In sum, CERCLA envisions a coordinated federal-State
scheme: expenditures from Superfund for long-term remedies
of hazardous waste sites are channeled to sites identified on the
NPL established by the federal government in cooperation
with the States; all response costs, whether “remedy” or
“removal,” in order to be compensated by Superfund must be
federally approved to insure that they are consistent with the
NCP.*
B. CERCLA Imposed a Special Tax on Oil and Chemicals
which Was Not to Be Increased by Duplicative State
Taxes.
Eighty-six percent of Superfund derives from a tax imposed
upon oil and designated chemicals. Section 211 of CERCLA
amended the Internal Revenue Code of 1954 to add two new
“environmental taxes:” 26 U.S.C. § 4611, which imposed a tax
of .79 cent per barrel on all crude oil received at United States
refineries and on petroleum products entering the United
States for consumption, use, or warehousing; and 26 U.S.C.
for contributing to hazardous waste sites of liability for their cleanup. In-
stead, it provided that ultimate liability would fall upon those who were
responsible for owning or operating such sites or for generating or transport-
ing the wastes found in them. See CERCLA § 107(a), 42 U.S.C. § 9607(a).
Superfund will not finance any government response costs unless it is first
determined that corrective action will not be taken by responsible parties. 42
U.S.C. § 9604(a)(1). Likewise, claimants against Superfund must first make
a demand for payment upon responsibie parties, if identifiable, before they
can have recourse to Superfund. 42 U.S.C. § 9612(a). Moreover, any claims
paid by Superfund give the United States, by subrogation, the right to
recover any response costs or damage payments from the party responsible
under Section 107. 42 U.S.C. § 9612(c\1).
17
§ 4661, which similarly imposed a tax varying in amounts from
$4.87 to $.24 per ton on 42 designated chemical feedstocks."
These special levies on petroleum and chemicals were de-
signed to raise $1.38 billion over five years. 42 U.S.C. § 9653.
With additionai appropriations from general revenues of $44
million a year for five years, 42 U.S.C. § 9631(b\(2), CERCLA
created a federal Superfund of $1.6 billion.
The three bills which were reported out of committee prior to
the enactment of CERCLA—S. 1480, H.R. 7020, and H.R.
&85—all provided for a federal Superfund created from special
levies imposed upon oil and chemicals."* This was justified, at
least in part, on the basis of the ease of collection from a limited
group of taxpayers; this group was not, by any means, viewed
as the sole contributor to the hazardous waste problem which
Superfund addresses."* S. Rep. No. 848, 96th Cong. 2d Sess.
pp. 19-20 (1980), reprinted in 1 Legis. Hist. at 326-27.
“Oil is not a hazardous substance eligible for cleanup under CERCLA. 42
U.S.C. § 9601(14), (23), (24). Nonetheless, because oil is sometimes used as a
feedstock from which such substances are created, it and designated chem-
cals were taxed to provide monies for Superfund.
"See 1 Legis. Hist. at 501-509 (S. 1480); 2 Legis. Hist. at 448-459 (H.R.
7020), id. at 742-754 (H.R. 85). S. 1341, the administration’s proposal, also
contemplated such a fund. 3 Legis. Hist. at 45-48.
“S. 1480 originally envisioned a tax imposed upon 260,000 generators of
hazardous waste. Even though these parties were responsible, in significant
measure, for creation of the hazardous waste problem addressed by the bill. it
was ultimately amended to impose only a feedstock tax upon oi! and chem-
cals. See p. 40, infra.
Proposals in the most recent sessions of Congress to amend CERCLA
recognize the narrowness of the tax base of Superfund under existing law and
uniformly recommend expanding substantially the group of taxpayers paying
into the fund. See, ¢.g., S. Rep. No. 73, 99th Cong. ist Sess. 13-14 (1985)
(report of Senate Finance Committee accompanying S. 51); S. Rep. No. 631,
98th Cong. 2d Sess. 42 (1984) (report of Senate Committee on Environment
and Public Works accompanying S. 2892); H.R. Rep. No. 890, Part 2, 98th
Cong. 2d Sess. 22-23 (1984) (report of House Committee on Ways and Means
accompanying H.R. 5640); 131 Cong. Rec. E3252 (daily ed. July 11, 1985)
(remarks of Rep. Hall after introducing H.R. 2948).
18
One of the most contentious parts of the debate surrounding
the passage of CERCLA concerned the size of Superfund and
the relative share which the manufacturers and importers of oi!
and chemicals should be required to contribute. The bill even-
tually enacted as CERCLA was a last-minute compromise
arranged by Senators Stafford, Randolph and others when it
became clear, following the 1980 election, that S. 1480 would
not pass Congress. In the interest of crafting a bill acceptable
to the majority, the drafters of the Stafford-Randolph compro-
mise reduced the size of the fund reported in S. 1480 to the $1.6
billion eventually adopted. See 126 Cong. Rec. 30936, reprinted
im 1 Legis. Hist. 696 (remarks of Sen. Stafford).'” In addition,
they included Section 114(c) to preempt similar state funds."
In imposing CERCLA’: special tax burden upon oil and
chemicals, care was taken to ensure that these products would
net be made unduly expensive and thus be placed at a competi-
tive disadvantage in the international marketplace or cause
domestic consumers to pay sharply higher prices. For exam-
ple, Title III of the Act requires the submission of a report to
Congress regarding experience under CERCLA which must,
among other things, address “the impact of the taxes imposed
by title II of this Act on the nation’s balance of trade with other
countries. . . .” 42 U.S.C. § 9651(aX(1)(F). Additionally, this
report must consider whether “the tax burden falls on the
substances and parties which create the problems addressed
by this Act” and the “administrative and reporting burdens on
Government and industry.” Id. at § (G).
‘This reduction resulted from the adoption of an amendment proposed
during the floor debate by Senator Helms. 126 Cong. Rec. 30936, 30937
(1980), reprinted in | Legis. Hist. at 698, 699. The importance of reducing the
size of the fund to ensure passage of CERCLA is underlined by the fact that
the Heims amendment was the only one that the floor managers allowed to be
considered. /d. at 30916 (remarks of Sen. Baker) reprinted in 1 Legis. Hist.
562; Grad, A Legislative History of the Comprehensive Environmental Re-
sponse, Compensation and Liability (“Superfund”) Act of 1980, 8 Colum. J. of
Envt'l Law 1, 20-22 (1982).
“See discussion at pages 37-43, infra.
19
Senator Cannon, one of the persons principally responsible
for the evolution of Section 114(c), see pp. 41-42, infra, empha-
sized that the size of the tax burden imposed upon oil and
chemicals by CERCLA was of critical concern to those in-
volved in the final evolution of the statute:
“I strongly support the goal of making the environment
safer from pollution by hazardous substances, but this
goal must be carried out carefully in order not to have
unintended and potentially disastrous impacts on the
commerce of this country. It is for that reason that we
drafted and submitted amendments responding to con-
cerns raised in the Commerce Committee hearings.”
126 Cong. Rec. 30950 (1980), reprinted in 1 Legis. Hist. at 734.
Thus, as finally enacted, CERCLA reflected Congress judg-
ment that, for at least an initial five-year experimental period,
a tax on oil and chemicals should contribute $1.38 billion to a
federal Superfund and States should not add to that burden by
creating their own duplicate funds, a point which even New
Jersey has been forced to acknowledge. See New Jersey Mo-
tion to Dismiss or Affirm, p. 5: “Congress . . . was concerned
that States would levy taxes on the chemical and petroleum
industries to finance State programs that merely duplicated
federal funds.”
C. Section 114(c) Was Designed Both to Protect the Coor-
dinated Federal and State Procedures of CERCLA and
to Ensure that Oil and Chemicals Would Not Be Bur-
dened by Duplicative State Taxes.
After establishing CERCLA as a “comprehensive” federal-
State venture, Congress in Section 114, 42 U.S.C. § 9614, fixed
“While Section 114(c) preempts the creation of all State hazardous sub-
stance funds, it is clear that the avoidance of additional special taxes on oil and
chemicals was of major concern to Congress. It was generally assumed, on
the basis of past experience and political reality, that contributions to any
State funds were highly likely to come from the same oil and chemical
producers or importers that were to bear the major financial burden of
Superfund. See, ¢.g., 126 Cong. Rec. 26209 (1980) (remarks of Rep.
Cleveland), reprinted in 2 Legis. Hist. at 939; H.R. Rep. No. 172, Part I, 96th
Cong., Ist Sess. 22 (1979), reprinted in 2 Legis. Hist. at 532.
the relationships between the federal and existing or future
State schemes. In Section 114(c), as well as in other subsec-
tions,” it permitted States to operate in areas not covered by
the federal statute, but barred them from doing so where they
would duplicate or potentially undermine the experimental
Superfund.
As noted above, access to the federal Superfund for reim-
bursment of cleanup costs and natural resource damages can be
obtained only through coordinated federal-State procedures. If
States were permitted to create their own special funds for the
purpose of financing cleanup at Superfund-eligible sites within
procedures and priorities of CERCLA—for example, by rely-
ing upon their own funds to pursue cleanup through their own
unsupervised procedures and refusing to enter into the cooper-
ative agreements with EPA required by Sections 104(c) & (d)
as a precondition to governmental action under Section 104.
Thus, Congress provided in Section 114(c) that “no person may
be required to contribute to any [other] fund, the purpose of
which is to pay compensation for claims for any costs of re-
sponse or damages or claims which may be compensated under
[(CERCLA].”
revenues, whether via taxes or borrowings, to create such
funds for cleanup: “Nothing in this section [114(c)] shall pre-
clude any State from using general revenues for such a fund.
.. .” Resort to such revenues would impose no special burden
_ "Recognizing that Section 107 of CERCLA imposed direct liability upon
sibility for owners of vessels and of sites capable of releasing hazardous
substances, 42 U.S.C. § 9608, Congress provided that States could not
—
21
on oil and chemical products in the manner feared by Con-
gress.*! Moreover, if precluded from drawing monies from spe-
cial groups of taxpayers and instead forced to divert limited
State general revenues to finance their own cleanup efforts,
States would have every incentive to participate in CERCLA
and to coordinate their actions with the federal government.
Finally in Section 114(c), Congress recognized that a special
tax or fee might appropriately be imposed “upon any person or
upon any substance in order to finance the purchase or preposi-
tioning of hazardous substance response equipment or other
preparations for the response to a release of hazardous sub-
stances which affects [a] State.” Allowing States to impose
special taxes to raise these monies would not destroy State
incentives to participate in CERCLA, as would be the case if
they were allowed to use special funds for cleanup.
Thus, the preemption expressed in Section 114(c) reflects a
particular concern on the part of Congress with respect ta
special funds. Superfund, the centerpiece of CERCLA, was a
novel five-year experiment in federal-State cooperation;” State
cooperation was deemed essential to the success of that experi-
ment.” States’ preoccupation with their individual funds, par-
ticularly if such funds became numerous, could skew the re-
sults of this experiment and impose a duplicative burden upon
the same products which Congress taxed to establish
Superfund.
21In any event, Congress can be presumed to have been reluctant under
established principles of federalism to dictate to the States the uses which
could be made of general revenues.
“The novel character of CERCLA is reflected in its five-year “sunset
provision,” 42 U.S.C. § 9653, as well as the previously noted sections of the
Act requiring the submission to Congress of reports having to do with the
new uncharted areas encompassed by CERCLA.
“The comprehensive report to be submitted to Congress must address |
“the record of State participation in the system of response, liability, and
compensation established by” CERCLA. 42 U.S.C. § 9651(a)(1)(E).
22
Ill. THE PLAIN MEANING OF SECTION 114(c) SHOWS
THAT NEW JERSEY SPILL FUND IS
PREEMPTED.
A. The Purpose of New Jersey’s Spill Fund Is to Pay for
Cleanup Costs and Damages which Are Eligible for
Compensation under CERCLA.
New Jersey has done the very thing that Section 114(c)
forbids. Its Spill Fund is financed by a tax upon petroleum and
chemical products, NJS 58:10-23.11h(b), and has as its prin-
cipal purpose the financing of cleanup costs undertaken by
New Jersey at the very sites which are eligible for federal
Superfund compensation.
NJS 58:10-23.11h(a) provides that the purpose of the tax
imposed by New Jersey is “to insure compensation for cleanup
costs and damages associated with any discharge of hazardous
substances.” Similarly, the first-listed allowable disbursement
from the fund, see id. at § 23.110(1), are “costs incurred under
section 7 of this act,” NJS 58:10-23.11f, and Section 7, in turn,
provides for reimbursement to New Jersey’s Department of
Environmental Protection (DEP) for its cleanup costs. More-
over, Section 7 provides that such cleanup costs shall, “to the
greatest extent possible, be in accordance with the National
Contingency Plan [NCP]” which is now administered pursuant
to Section 105 of CERCLA. Of course, the NCP-consistent
expenditures at which Spill Fund was targeted are the very
expenses which “may be compensated” under CERCLA. See
pp. 12-14, supra.*
*Spill Fund has subsidiary purposes that do not duplicate those of
CERCLA. Unlike CERCLA, under Spill Fund, oil and petroleum products
are considered “hazardous substances.” Thus, under Spill Fund, unlike
CERCLA, oil spill cleanup can be compensated. Moreover, while some of the
“damages” which may be compensated by Spill Fund, NJS 58:10-23.11o,
include the destruction of natural resources held in trust by the State and
would be included within the allowable damages charged against Superfund,
NJS 58:10-23.11g(a)(1) & (2), other damages covered by Spill Fund would not
be compensable under CERCLA. Finally, the New Jersey fund can also be
used for certain administrative and research costs. However, the New Jersey
-.w i en et ee Pee ee ee
0 ee te ea re
a re
23
New Jersey ignores the stated purpose of the tax imposed to
create Spill Fund and contends that the statute is to be judged
solely by the way in which the State has chosen to make
expenditures from the fund. (N.J. Motion to Dismiss, pp. 9 and
15). Under this reasoning, New Jersey can collect a tax de-
signed by its legislature for a preempted purpose so long as the
monies are not improperly expended. But Section 114(c) pre-
empts on the basis of the “purpose” of the tax when enacted,
not subsequent decisions by administrators as to how monies
are spent.
Thus, the dispositive fact here is that when Spill Fund was
enacted in 1977, the tax rate which it imposed upon oil and
chemicals was fixed to accomplish the Act’s broad purpose of
cleaning up hazardous waste sites in accordance with the NCP.
That rate has never been reduced, even though CERCLA now
directs that Superfund monies shall be expended at these sites
consistent with the NCP.
The fact is, New Jersey foresaw the possibility that “Con-
gress [might] enact[] legislation providing compensation for
the discharge of petroleum and hazardous products” and the
legislature directed that, in the event of such federal legisla-
tion, there should be both a determination as to “what degree
that legislation provides the needed protection for [New Jer-
sey’s] citizens, businesses and environment” and “appropriate
recommendations to the Legislature for amendments to [Spill
Fund].” NJS 58:10-23.11z. However, despite CERCLA’ im-
position of a $1.38 billion tax upon oil and chemicals and despite
its targeting of these monies at the same sites which are the
Act specifically provides that these research costs cannot exceed the amount
of interest which is credited to the fund. NJS 58:10-23.110(3) & (5).
The record before the Tax Court at the time of its decision disclosed that
cleanup of oil spills constituted only 1% of the expenditures from Spill Fund
and that the damages and administrative and research costs totalled less than
5%. Doubtless because of their de minimis proportions, New Jersey does not
contend and the State Supreme Court did not hold that these incidental
purposes save Spill Fund from the preemption of Section 114(c).
24
focus of New Jersey's Spill Fund, no amendments have been
made to the New Jersey Act to conform it to CERCLA. Thus,
appellants have been forced to continue to pay taxes to New
Jersey whose purpose is to finance cleanup costs and damages
which are now eligible for compensation under CERCLA.
B. The Plain Meaning of “May Be Compensated” Re-
quires Preemption of New Jersey’s Spill Fund.
While it appears to be common ground that the purpose of
Spill Fund brings it within the ambit of Section 114(c), ap-
pellants and the State disagree as to the meaning of the phrase
“may be compensated” as used in that section.
Appellants contend that this term connotes eligibility for,
rather than actual payment of, compensation under CERCLA:
all State response costs that are consistent with the NCP—
“removal” costs, no matter where incurred, and all State
“remedial” costs at sites meeting the criteria set forth in the
NCP for inclusion on the NPL—are eligible for compensation
and thus “may be compensated” under CERCLA within the
meaning of the preemptive language of Section 114(c).> New
Jersey's Spill Fund is invalid under this formulation, because
the very purpose of the New Jersey statute is to fund cleanup
expenditures consistent with the NCP.
New Jersey argues that Section 114(c) does not bar special
tax funding of State cleanup expenditures on Superfund-eligi-
ble sites, even those which are incurred at National Priorities
List sites, since “inclusion on the NPL does not guarantee that
compensation will be provided but merely constitutes the first
step for qualifying for Superfund financed remedial action.”
Motion to Dismiss or Affirm at 20. Thus, New Jersey contends
that Section 114(c) only preempts disbursements from State
funds for cleanup costs which are actually compensated by
federal Superfund. Jd. According to the State, if CERCLA
priorities dictate that there are inadequate Superfund monies
presently available to clean up a site, the State can use its own
*See pp. 12-15, supra.
et te ee ed Oe rE LR ree Ne ee ek TF tne ee or Re + eet em ak
+ DE A ie eS as
25
special fund for this purpose. To justify this approach, New
Jersey interprets the phrase “may be compensated” as though
it reads “are” or “are actually compensated.””
It is axiomatic that “the starting point in every case involving
construction of the statute is the language itself.” Landreth
Timber Co. v. Landreth, U.S. ___, 1058S. Ct. 2297, 2301-
02 (1985). See also Bowsher v. Merck & Co., 460 U.S. 824, 830
(1983); Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570
(1982). Preemption cases, like all others, give this Court “no
choice but to ‘begin with the language employed by Congress
and the assumption that the ordinary meaning of that language
accurately expresses the legislative purpose.” Metropolitan
Life Ins. Co. v. Massachusetts, U.S. , 105 S. Ct. at
2389, citing Park’n Fly Dollar Park v. Park and Fly, ___U.S.
—___., 105 S. Ct. 658, 662 (1985).2’ The plain meaning of the
term “may be compensated” supports appellants’ reading of the
statute and is inconsistent with the view advocated by New
Jersey.
“May be” plainly connotes the potential for compensation
under CERCLA, not its certainty as argued by New Jersey.
°The Motion to Dismiss or Affirm (p. 10-11 n.*) implies that no Spill Fund
money has been expended on Superfund-eligible sites and expressly states
that no Spill Fund money has been spent on sites receiving federal funds. This
is simply not so. The official reports filed by the State Auditor in accordance
with NJS 52:24-4.2 and lodged by appellants with the Court reveal that in the
fiscal years ending June 30, 1981 and June 30, 1982, out of $33,432,300
expended from Spill Fund, $31,453,500—or more than 90%—was spent on 10
sites which are included on the NPL. Auditor's Report, May 13, 1983,
Schedule I, p. 11. Indeed, $30,905,600 was spent on two sites which actually
received federal monies, albeit in amounts that were far less than those spent
by New Jersey on these sites. Jd. & id. at 12, Schedule II. See 48 Fed. Reg.
40669 (1983), amended by 49 Fed. Reg. 19482 (1984); 48 Fed. Reg. 37082
(1984).
2"In Metropolitan Life, this Court broadly read the preemption clause of
the federal statute there at issue, but ultimately found the challenged State
action not to be preempted by virtue of an explicit exception to the preemp-
tion clause. Here, New Jersey has never contended that Spill Fund falls
within any such exceptions.
26
See Bennett v. Panama Canal, 475 F.2d 1280 (D.C. Cir. 1973);
John Reiner & Co. v. United States, 325 F.2d 438, 441 (Ct. Cl.
1963), cert. denied, 377 U.S. 931 (1964). Thus, eligibility for
compensation was the focus of Section 114(c)’s preemption, not
actual payment. Had Congress intended that Section 114(c) be
interpreted in the manner advocated by New Jersey, it surely
would have used the terms “are” or “are actually” to modify the
term “compensated.”™
Second, as we emphasized in Part III.A. above, Congress
preempted State funds on the basis of their “purpose” when
established by the State legislature, not the spending decisions
made by fund administrators. Because Section 114(c) focused
on the legislative purpose of State funds, Congress had to
describe prospectively and in general terms the type of claims
which could not be paid by them. Thus, it preempted funds
whose purpose was to pay claims which “may be compensated”
under CERCLA, .e., claims of the type that would be eligible
for compensation under the federal Act.
*The lower court found ambiguity in Congress’ use of the term “may” by
relying on cases like Kraft v. Board of Education, 247 F. Supp. 21, 24-25
(D.D.C. 1965), cert. denied, 386 U.S. 958 (1967) (J.S. 25a), where “shall” has
been substituted for “may” in situations involving the delegation of minis-
terial power to a public officiai. The Kraft line of cases is distinguishable on
two separate grounds.
First, the mere substitution of the word “shall” for “may” in Section 114(c)
would be awkward; if Congress had intended to achieve the result reached by
the lower court, it would have preempted funds whose “purpose” is to pay
“any costs of response or damages or claims which [are or are actually]
compensated,” not “which [shall be] compensated under this chapter.”
Second, the substitution of “shall” for “may” is only appropriate in cases
where courts decide that the legislature intended to impose a duty, rather
than confer discretion upon a public official. United States v. Thoman, 156
U.S. 353, 359 (1895). Even in such cases, this transformation of statutory
language is permissible only “where it is necessary to give effect to the clear
policy and intention of the Legislature. . . .” Only then can “such a liberty
. . . be taken with the plain words of the statute.” Jd., citing Thompson v.
Carroll’s Lessee, 22 How. 422, 434 (1860).
27
The “are actually compensated” construction of Section
114(c) imposed by the lower court, by contrast, is not a generic
description of the type of claims for which a State may not
create a fund. It thus provides no guidance to State legislatures
in their imposition of taxes. The “are actually compensated”
formulation of preemption is, instead, a direction to fund ad-
ministrators not to pay particular claims which have already
been compensated by Superfund.
Third, it is manifest that Congress intended to __cempt
some kinds of forced contributions to State funds when it
adopted Section 114(c). However, the “are actuuily compen-
sated” formulation of preemption would never result in pre-
emption. State funds whose purpose is to pay costs, damages
or claims which “are actually compensated” by Superfund need
no support from State taxes or other forms of forced contribu-
tion, since there would never be any net disbursements from
such funds. For Section 114(c) to have any meaning it must
preempt funds whose purpose is to pay costs, damages or
claims that “may be,” but are not actually compensated by”
Superfund.
Finally, as we have shown above in part II, respect for the
language in which Congress chose to cast the preemption
provisions of Section 114(c) is essential to fulfill the policies
underlying that section of discouraging States from resorting
to specially-raised funds that would allow them to pursue clean-
up priorities outside the comprehensive federal-State program
of CERCLA and of preventing duplicative taxation. Under
New Jersey’s view, States could maintain special funds of un-
limited sizes through taxation of the same oil and chemicals
which finance Superfund and could proceed independently
with cleanup, without any federal coordination, at Superfund-
eligible sites by using such funds.
C. New Jersey’s Construction of Section 114(c) Renders It
Meaningless. |
New Jersey's construction of Section 114(c) as barring only
disbursements from a special fund for cleanup costs which are
actually compensated by Superfund renders the section vir-
tually meaningless. This is so because the preceding section of
CERCLA, Section 114(b), 42 U.S.C. § 9614(b), insures that
response costs which are actually compensated by Superfund
may not also be compensated by State funds. It provides that
“[ajny person who receives compensation. . . pursuant to
[CERCLA] shall be precluded from recovering compen-
sation for the same removal cost or damages or claims
pursuant to any other State or Federal law.”
Thus, Section 114(b) performs the very function which New
Jersey would find in Section 114(c) by its “are actually compen-
sated” reading of the section. Since every provision of a statute
should, if possible, be construed to have meaning, Bowsher v.
Merck & Co. 460 U.S. 824, 833 (1983); United States v. Men-
asche, 348 U.S. 528, 538-39 (1955), New Jersey's reading of
Section 114(c) should be rejected.
Second, as previously noted, p. 21, supra, a proviso to Sec-
tion 114(c) makes clear that general revenues may be used for
purposes for which special funds may not be used: “Nothing in
nues for such a fund. .. .,” i.¢., to pay “response costs or
damages. . . which may be compensated” under Superfund. If,
as New Jersey argues, Section 114(c) only preempts State
special funds from paying response costs that are actually
compensated by Superfund, this proviso would mean that
States are free to create general revenue funds for State re-
sponse costs which are actually compensated by Superfund.
But Section 114(b) precludes such duplicate compensation by
both federal and State funds. For the general revenue proviso
to have any meaning, the “fund” to which it refers must be one
which permits the payment of monies that “may be,” but are
not actually compensated under Superfund.
Finally, Congress found it necessary in Section 114(c) to
make it explicit that
29
“Nothing in this section shall preclude any State from. .
imposing a tax or fee upon any person or upon any sub-
stance in order to finance the purchase of prepositioning of
hazardous substance response equipment or other prepa-
rations for the response to a release of hazardous sub-
stances which affects such State.”
This disclaimer as to the scope of the preemption clause also
has no meaning under New Jersey's view of Section 114(c).
Unless Congress intended Section 114(c) broadly to preempt
taxes or fees upon particular persons or substances to pay
State cleanup costs, there was no reason for it to make clear
that such special taxes or fees could be used for the State to
incur the limited costs described by this proviso to Section
114(c).
In Connecticut Department of Income Maintenance v.
Heckler, ___U.S. —_, 105 S. Ct. 2210, 2213 (1985), this
Court refused to construe a statute in a way that would render
“unnecessary and illogical” an express exception to its opera-
tion. Cf Metropolitan Life Ins. Co. v. Massachusetts, 105 S.
Ct. at 2390. Here, construing Section 114(c) as only preempt-
ing the use of special State funds to pay cleanup costs that are
actually compensated by federal Superfund would render
“unnecessary and illogical” the explicit provisos in that section
authorizing the use of general revenues for cleanup costs and of
D. The Solicitor General's Suggestion that Section 114(c)
Preempts Only State Funds Established to Pay Thi:d-
Party Costs is Without Merit.
In response to this Court's request for a brief amicus curiae
from the United States prior to the Court's decision to note
probable jurisdiction, the Solicitor General asserted an alter-
native analysis of Section 114(c). That analysis conceded the
preemptive purpose of Section 114(c) and did not endorse New
Jersey's “actually paid” construction of “may be compensated.”
However, it would on other grounds validate Spill Fund to the
extent it is used to pay New Jersey's, as opposed to third-
parties’, response costs and damages, even though they are
eligible for compensation by Superfund.
The Solicitor General argues that payment by a State fund of
cleanup expenses or damages incurred by the State is not
“compensation” for a “claim” within the meaning of Section
114(c). Thus, in his view, States are preempted only from
establishing special funds to pay response costs or damages
incurred by third parties. This view of the statute is untenable.
First, under CERCLA a “claim” is a “demand in writing for
a sum certain.” 42 U.S.C. § 9601(4). A “claimant” is “any
person who presents a claim for compensation. . . .” 42 U.S.C.
§ 9601(5). A “State” is specifically defined to be a “person”
within the meaning of the Act. 42 U.S.C. § 9601(21). Accord-
ingly, States must file “claims” for “cornpensation” when they
seek Superfund reimbursement. See 42 U. S.C. §§ 9611(ay(3) &
(b) regarding the assertion of “claims” by States against Super-
fund for natural resource damages. See also 42 U.S.C.
§ 9612(b(2)(C): “[N]o payment may be made on a claim as-
serted on behalf of [a] State or any of its agencies or subdivi-
sions unless the payment has been approved by [EPA].” There-
fore, when Congress barred the use of special State funds “to
pay compensation for claims for any costs of response or
damages,” it surely had in mind the types of claims for compen-
not limit that term to the payment of third party claims.
Second, under Section 114(b) “[aJny person who receives
compensation for removal costs or damages or claims pursuant
to any other . . . federal or State law shall be precluded from
receiving compensation for the same removal costs [etc.]” un-
der CERCLA. Congress surely intended that a State agency,
such as New Jersey's DEP, could not receive duplicative
“compensation” from both a state fund and Superfund. DEP
must, therefore, be a “person who receives compensation”
within the meaning of Section 114(b) and similarly must be a
recipient of “compensation” within the meaning of Section
114(c).
31
Third, the stated purpose of the tax levied by New Jersey
upon petroleum and chemicals to create Spill Fund “is to ensure
any discharge of hazardous substances. .. .” NJS
58:10-23.11h(a). The “compensation for [such] cleanup costs” is
received by DEP. See id. at 23.110(1), 23.11f.
The New Jersey fund is administered by an official appointed
by the State Treasurer, NJS 58:10-23.11}j. Spill Fund is strictly
liable, without regard to fault, for all cleanup and removal costs
and for all direct and indirect damages no matter by whom
sustained. NJS 58:10-23.1lg. DEP, under certain statutorily
defined circumstances, is expressly required to present claims
for compensation to the administrator of the New Jersey fund.
See, id. at 23.11f(c). Although the statute is silent as to the
precise procedures used by DEP under other circumstances
where it is authorized to draw money directly from the fund, id.
at 23.11f(a), it seems certain that they involve some sort of
“demand in writing for a sum certain”—i.e., a “claim” as de-
fined in CERCLA. In any case, it is inconceivable that Con-
gress intended the preemptive effect of Section 114(c) to turn
upon the administrative mechanisms adopted by a State for
purposes of paying response costs—i.e., whether the State
agency has to file claims or whether it can make direct with-
drawals without so filing.
Fourth, like the approach urged by New Jersey, the Solicitor
General's construction of the statute makes “unnecessary and
illogical” the explicit proviso in Section 114(c) allowing special
funds to finance State purchase of response equipment. If
Section 114(c) preempts only third-party response costs, there
was absolutely no need to authorize the limited State expen-
ditures from the special fund contemplated by this proviso.
Finally, the Solicitor General's approach to the statute would
not serve any of the policies which Congress sought to further
when it adopted Section 114(c)—i.e. to ensure that States
federal-state mechanisms of CERCLA and to limit the special
eral’s approach would leave the States free to create special
funds of unlimited size and allow them to pursue cleanup wholly
outside the framework of CERCLA.”
E. The Rationale for the New Jersey Supreme Court's
Avoidance of the Plain Meaning of the Terms of Sec-
tion 114(c) Was Mistaken.
1. The New Jersey Court Both Misunderstood and Gave
Undue Weight to the Debate Between Senators Ran-
dolph and Bradley.
A key element in the lower court's disregard of the explicit
terms of Section 114(c) was its reliance upon the exchange
between Senators Randolph and Bradley regarding preemp-
tion. We show in Part IV.B. below, pp. 43-46, that, properly
understood, this exchange recognizes that claims which are
eligible for compensation under CERCLA are preempted and
thus supports appellants’ reading of Section 114(c). In any
2. Statements by a Subsequent Congressional Commit-
tee Should Not Be Relied Upon to Contradict the
Plain Meaning of Section 114(c).
As further support for its decision, the New Jersey Supreme
Court referred to a bill introduced but not passed in 1984, four
years after CERCLA was enacted. It found in a House com-
mittee report relating to the bill (H.R. Rep. No. 890, Part I,
“The Solicitor General has also questioned the premise that the phrase
“may be compensated” modifies “response costs or damages.” He argues that
payments of “response costs” and “damages” are preempted, even if not
eligible for CERCLA compensation. While appellants would not be adver-
sely affected by this broad reading of Section 114(c), they do not embrace it.
Here, it suffices to show chat the avowed purpose of New Jersey's Spill Fund
was to raise money to expend on State cleanup and damages at Superfund-
eligible sites.
98th Cong., 2d Sess. (1984)) authority for its conclusion that
CERCLA preempts State funds only when they are expended
for cleanup activities actually compensated by Superfund. J.S.
30a-3la & n.8.
The views of a subsequent Congress at best “form a hazard-
ous basis for inferring the intent of an earlier one.” Consumer
Prod. Safety Comm'n v. GTE Sylvania, 447 U.S. 102, 119
(1980); South Carolina v. Regan, ___. U.S. —__., 104 S.. Ct.
1107, 1115 n.7 (1984). This is especially true when those views
are set forth only in legislative reports, id.; a fortiori, reports
which have not led to the enactment of legislation are a most
precarious basis upon which to interpret prior legisiation. M il-
waukee v. Illinois, 451 U.S. 304, 332 n.24 (1981).
Moreover, as the report itself reveals, the dispute between
appellants and New Jersey as to the scope of CERCLA’ pre-
emption was known to its authors. H.R. Rep. No. 890 at 58-59.
This further diminishes the report's reliability as a fair and
objective guide to an earlier Congress’ intentions.
3. EPA’S Guidance Memorandum Does Not Provide a
Reliable Basis for Construing Section 114(c).
The New Jersey Supreme Court also relied upon a comment
contained in an unpublished EPA memorandum.” The “Execu-
tive Summary” to this memorandum states that Section 114(c)
of Superfund “does not apply to State funds which are used ***
*** To compensate damage claims and to remove or remedy
releases of hazardous substances eligible to be financed by
[Superfund] but for which no federal reimbursement is
provided.” J.A. 10-11. The lower court erred in giving weight
to this interpretation.
"Office of Emergency and Remedial Response, U.S. Environmental Pro-
States Under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980 (P.L. 96-510) (March 1982), J.A. 4-11.
While implementation of various provisions of CERCLA has
been delegated to EPA, Section 114(c) is not one of them.”
Thus, in adopting the position of the federal defendants and
dismissing the complaint in New Jersey v. United States, 16
Envtl. Rep. Cas. [BNA] 1846 (D.D.C. 1981), the court stated:
“It is undenied that the United States has genuinely taken
no position on the scope of Section 114(c), and does not
even have in place an administrative mechanism for for-
mulating an authoritative position on the section. There
has been no delegation of power from the President to any
agency to enforce the section, as there has been with
other provisions in the Superfund iegislation, see Exec.
Order 12286, 46 Fed. Reg. 9901 (1981), and there is no
expectation that such a delegation will occur soon.” /d. at
1849.
Since EPA has not been delegated the authority to enforce
Section 114(c), no particular deference should be accorded to
its interpretation. /nternational Brotherhood of Teamsters v.
Daniel, 439 U.S. 551, 565-67 & n.21 (1979); Goolsby v. Blum-
enthal, 581 F.2d 455, 480 (Sth Cir. 1978), cert. denied, 444 U.S.
970 (1979); Veterans Admin. Med. Cent. v. Federal Labor Rel.
Auth., 732 F.2d 1128, 1132 n.7 (2d Cir. 1984)." Thus, the
question presented in this case is one of statutory construction
readily Seollly casentiide of judical resolution without assistance
from an administrative agency. Bureau of Alcohol, Jobs &
Firearms v. FLRA, 464 U.S. 89 (1983); Piper v. Chris-Craft
Indus., Inc., 480 U.S. 1, 41 n.27 (1977).
There are other factors which further erode the deference
which should be accorded the EPA comments. The relative
"See Exec. Order No. 12316, 46 Fed. Reg. 42237 (1981); Exec. Order No.
12286, 46 Fed. Reg. 9901 (1981).
“The decision by both Congress and the President not to delegate au-
thority to EPA regarding the preemption issue undoubtedly stemmed from
its lack of expertise with respect to such questions. An agency's lack of
expertise constitutes a further ground not to defer to its interpretation of a
statute. FCC v. RCA Corp., 346 U.S. 86, 91 (1952).
35
weight to be given to the judgment of an administrative agency
in a particular case depends upon “the thoroughness evident in
its consideration, the validity of reasoning, its consistency with
earlier and later pronouncements, and all those factors which
give it power to persuade, if lacking power to control.” Skid-
more v. Swift & Co., 323 U.S. 134, 140 (1944).
The EPA memorandum is deficient in all these respects. It
was issued by a lower official of the EPA. It was not preceded
by any notice or comment. On its face, the memorandum shows
that it is not based on any analysis of Section 114(c).
The stated purpose of the EPA memorandum is to provide
instructions to EPA regional offices on the use of cooperative
agreements and contracts with States for planning and imple-
menting remedial or certain cleanup actions under CERCLA.
Nowhere in the body of the document is there any mention of
preemption of State taxation. That subject is outside the scope
of the memorandum.
The “executive summary” assertion as to Section 114(c) is;
therefore, wholly gratuitous, and is not supported by any
policy, legal or other rationale. Where an agency does not
reveal the reasoning that went into its interpretation of a
statute, its position should be accorded little deference. SEC v.
Sloan, 436 U.S. 103, 117-18 (1978); Adamo Wrecking Co. v.
United States, 434 U.S. 275, 287 n.5 (1978); Investment Com-
pany Institute v. Camp, 401 U.S. 617, 627 (1971); Northern
Colo. Water Conservancy Dist. v. FERC, 730 F.2d 1509, 1519
(D.C. Cir. 1984).*
In addition, the EPA memorandum is contrary to the posi-
tion which the agency itself has previously taken. In pro-
An additional ground for refusing to credit the interpretation of Section
114(c) set forth in the EPA memorandum is its imprecision in discussing the
preemptive effect of that section. The EPA memorandum asserts that State
funds are noi ,reempted “where no federal reimbursement is provided,”
whereas Section 114(c) defines preemption in terms of claims which “may be
compensated” under CERCLA. The term “reimbursement” is not defined in
CERCLA nor is it used in Section 114(c).
36
mulgating the NCP, EPA encouraged States only to “under-
take response actions which are not eligible for federal
funding.” 40 C.F.R. § 300.24(c) (emphasis added). The guid-
ance memorandum’ assertion that States may use their own
funds for response costs which are “eligible to be financed by
{Superfund]” is thus inconsistent with the NCP itself.
Finally, EPA’s position in the guidance memorandum de-
parts from the position asserted on its behalf by the Depart-
ment of Justice in New Jersey v. United States. The inconsis-
tent views which have been taken as to the EPA’s authority to
interpret Section 114(c), as well as the meaning which should
be given to it, show that the view expressed in the EPA
guidance memorandum is not entitled to any weight in this
Court. Montana v. Blackfeet Tribe of Indians, U.S. ;
105 S. Ct. 2399, 2404-05 n.7 (1985), affirming 729 F.2d 1192,
1202 (9th Cir. 1984); International Brotherhood of Teamsters v.
Daniel, 439 U.S. at 565-67 n.20; United Housing Foundation,
Inc. v. Forman, 421 U.S. 837, 858 n.25 (1975).
IV. THE LEGISLATIVE HISTORY OF CERCLA CON-
FIRMS APPELLANTS’ INTERPRETATION OF SEC-
TION 114(c).
The structure of CERCLA and the plain meaning of the
language of Section 114(c) so clearly evidence the intention of
Congress to prevent duplicative taxation of oil and chemicals to
support State funds whose purposes are covered by Superfund
that no recourse to the legislative history of the section is
necessary. Cf. TVA v. Hill, 437 U.S. 153, 184 n.29 (1978). In any
event, that legislative history negates both New Jersey’s inter-
pretation that preemption is limited to claims “actually paid,”
as well as the Solicitor General’s argument that Section 114(c)
does not preempt a special fund to the extent it is used to pay
cleanup costs and damages incurred directly by a State.
A. Congress Intended to Preempt Special Funds whose
Purpose Was to Pay for All Response Costs and
Damages which are Eligible for Compensation under
CERCLA, Even if They Are Not “Actually Paid.”
CERCLA was a compromise achieved on the basis of four
predecessor bills: H.R. 7020, 96th Cong. 2d Sess. (1980) (inac-
37
tive waste sites); H.R. 85, 96th Cong. 2d Sess. (1980) (spills of
oil and hazardous substances into navigable waters); S. 1341,
96th Cong. 1st Sess. (1979) (oil and hazardous waste and inac-
tive sites);* S. 1480, 96th Cong. 2d Sess. (1980) (coverage was
basically the same as CERCLA as eventually passed). See 1
Legis. Hist. at V-VII.
Both H.R. 85 and S. 1341, the administration’s proposal,
contained preemption provisions.* Section 612(a) of S. 134i
provided that:
“(1) No action may be brought in any court of the
United States, or of any State or political subdivision
thereof, for damages for an economic loss or cost de-
scribed in subsection (a) of section 607 of this title, a claim
for which may be asserted under this title, and
“(2) No person may be required to contribute to any
fund, the purpose of which is to pay compensation for such
a loss or cost, nor to establish or maintain evidence of
financial responsibility relating to the satisfaction of a
claim for such a loss or cost. . . .”*
Thus, S. 1341 clearly contemplated the preemption of payment
of “claims . . . which may be asserted”—i.e., those which were
eligible for compensation—as opposed to those which would be
actually paid.
Moreover, under Section 607(a) of S. 1341, States could as-
sert claims against the fund for removal costs associated with
oil or hazardous substance spills. Jd. § 607(a). Thus, S. 1341's
preemption provision clearly applied to contributions to a State
fund, the purpose of which was to pay for claims by States for
removal costs relating to oil or hazardous substance spills.
“4S. 1341 was also introduced in the House of Representatives as H.R. 4566
and H.R. 4571, both of the 96th Cong., 1st Sess. (1979). See, 3 Legis. Hist. 23.
*Neither H.R. 7020 nor S. 1480 as originally reported preempted state
funds.
%3 Legis. Hist. 57.
38
H.R. 85's preemption provis.ons were similar to the one
finally adopted as Section 114(c). This bill created two funds,
one for cleanup of spills of petroleum and the other for hazard-
ous substances in navigable waters. §§ 521, 522, reprinted in 2
Legis. Hist. at 873-77. Mandatory contributions into State
funds to finance the removal of both oil and other hazardous
substances were preempted by Sections 110 and 302, respec-
tively. These sections of the bill provided that “no person may
be required to contribute to any fund, the purpose of which is to
compensate for a loss which is a compensable damage under
title V . . .” of the bill. §§ 110(a)(2), 302(a) (emphasis added),
reprinted in 2 Legis. Hist. at 1051, 1075.
Title V of H.R. 85, in turn, expressly defined “compensable
damages” as including damages which could be “asserted for
. . . removal costs. . . [or] injury to, or destruction of, natural
resources. . . .”*’ Thus, just like S. 1341, H.R. 85 preempted
the payment for all cleanup and natural resource damages
which could be “asserted” under the bill, not merely those
which would be actually paid.
Moreover, the House Merchant Marine and Fisheries Com-
mictee Report on H.R. &5 provides that a
“State can and is expected to be a claimant under the
legislation. . . . Once a State expends money for removal
costs, it may claim ~ompensation for that item of damages
under the procedures outlined in the bill.” H.R. Rep. No.
172, Part 1, 96th Cong., 1st Sess. 23 (1979), reprinted in 2
Legis. Hist. at 533.
Since “compensable damages” under H.R. 85 included State
claims for removal costs, the legislative history of H.R. 85
refutes the Solicitor General's argument that the New Jersey
Fund is not preempted from paying State claims for cleanup
costs.
**§ 531(a)(1)(A), reprinted in 2 Legis. Hist. at 877, id. § 301(a)(1), re-
printed in 2 Legis. Hist. at 826-27; see H.R. Rep. No. 172, Part 2, 96th Cong.,
2d Sess. 8 (1980), reprinted in 2 Legis. Hist. at 619.
39
The sponsors of H.R. 85 clearly articulated in debate the
broad scope of its preemption provisions. For example, Mr.
Biaggi, the bill’s sponsor, stated that H.R. 85
“prohibit([s] a State from requiring any person to contrib-
ute to any fund if the purpose of that fund is to compensate
for an oil spill damage claim as defined in Title V of the bill.
Thus, the State cannot impose a fee or a tax on oil if that
fee or tax is to go into a fund and the fund is for the
purpose of paying oilspill damage claims.” 126 Cong. Rec.
26196-26197 (1980), reprinted in 2 Legis. Hist. at 903.
In response to a question by Rep. Florio, Rep. Biaggi stated
that “the purpose of [§ 110] is to prohibit States from creating
duplicate funds to pay damages compensable under H.R. 85.”
Id. at 26196-26197, reprinted in 2 Legis. Hist. at 904. Mr.
Biaggi clearly intended to eliminate duplicative State funds:
“A patchwork of oil spill liability and compensation laws
on the Federal and State levels can only create excessive
bureaucracies and a quilt of paperwork which would
stretch beyond the imagination.
“How can the various affected industries and transporta-
tion modes be able to cope with 50 or more liability and
compensation schemes and funds which I am sure are
going to be varied and complex? The burden we are impos-
ing —if we do not preempt State laws in this field—will
only create a greater burden on you and I—the paying
consumer. I sympathize with those who advocate State’s
rights, but I have considerably more sympathy for the
paying consumer.”
125 Cong. Rec. 385 (1979), reprinted in 2 Legis. Hist. at 470.
“Accord id. at 26209, reprinted in 2 Legis. Hist. at 939 (remarks of Rep.
Cleveland); id. at 26207, reprinted in 2 Legis. Hist. at 932 (remarks of Rep.
Roberts); id. at 26198, reprinted in 2 Legis. Hist. at 906 (remarks of Rep.
Snyder).
40
S. 1480, as originally introduced contemplated the collection
of fees from at least 260,000 generators of hazardous waste.
However, the bill, as reported out of Committee in July 1980,
imposed only a tax on basic feedstocks (primary pe-
trochemicals, inorganic raw materials and oil), thereby reduc-
ing the number of taxpayers to less than 1,000. See S. Rep.
96-848, 96th Cong. 2d Sess. 20 (1980), reprinted in 1 Legis.
Hist. at 327. The bill at this stage did not contain a preemption
clause.
The first proposed amendment to S. 1480 which involved
preemption of State funds was introduced in August 1980 by
Senator Magnuson. 126 Cong. Rec. 21071 (1980), reprinted in 3
Legis. Hist. at 70. Section 15 of his amendment provided that
“no person may be required to contribute to any fund by any
Federal, State, or other law, the purpose of which is to pay
compensation for any loss which may be compensated under
this title.” 3 Legis. Hist. at 107 (emphasis added). Senator
Magnuson’s version of preemption was the first to use the “may
be compensated” formulation.
His proposal was never acted upon. It did, however, prompt a
written objection from the head of the New Jersey DEP dated
September 11, 1980, to this formulation of preemption of State
funds:
“In any discussion of preemption it is important to point
out that the language is critical: some ways of drafting it
are much worse than others. The formula used in Sen.
Magnuson’s amendment, which is virtually the sare as
that in the House oil-spill bill, H.R. 85, prohibits the
creation of duplicative funds ‘the purpose of which is to
pay compensation for any loss which may be compensated
under this title.” The Environmental Energy Response
Act: Hearings on S. 1480, Senate Committee on Finance,
96th Cong. 2d Sess. 591 (1980) (emphasis added).
Thus, New Jersey recognized that the “may be compen-
sated” formulation of preemption proposed by Senator Magnu-
son was “virtually the same” as H.R. 85, which, as shown
41
above, embodied the concept of eligibility for compensation,
rather than actual payment. New Jersey made it very clear
that it opposed this type of preemption:
“The effect of this kind of language we have termed ‘swiss-
cheese preemption,’ because it would shoot holes in State
laws only to the extent incidents or damages are compen-
sable under the federal law, leaving the rest intact.” Jd.
New Jersey itself therefore understood, contrary to its pres-
ent arguments and the holding of the lower courts, that the
“may be compensated” version of preemption implied general
eligibility for compensation—not “actual compensation”—and
would preempt aspects of the New Jersey Spill Fund.
On September 24, 1980, Senator Cannon also introduced
proposed amendments to S. 1480, one of which provided for the
preemption of duplicative State funds. His explanation for this
amendment stated:
“This amendment provides that claims that may be
asserted under this act (other than claims relating to
closed hazardous waste disposal facilities) may not be
asserted under other laws and that the states are pre-
empted from establishing funds or imposing financial re-
sponsibility requirements for such claims. . . . This
amendment is consistent with both S. 1341, the admin-
istration’s proposal, and H.R. 85, the House companion
bill which passed the House on September 19, 1980.”
Like all other predecessor versions of preemption, the one
proposed by Senator Cannon contemplated the payment of any
claims which might be “asserted” under the statute, not mere-
ly those which would actually be paid.
CERCLA, as finally enacted, was introduced i: the Senate
on November 24, 1980, as an amendment to H.R. 7020.* The
126 Cong. Rec. 27086 (1980), reprinted in 3 Legis. Hist. at 186 (ernphasis
added).
“See 126 Cong. Rec. 30987 (1980), reprinted in i Legis. Hist. at 771-772.
42
terms of Section 114(c) of the Act derived from the amend-
ments proposed by Senator Magnuson and Senator Cannon to
bring S. 1480 into conformity with the preemption provisions of
H.R. 85 and S. 1341.
This is confirmed by the introductory remarks of Rep. Florio
when CERCLA was sent to the House for a vote:
“Regarding the preemption language contained in these
amendments, I would point out that some States, includ-
ing my own State of New Jersey, have successful spill
funds and that while States may not create duplicate
funds to pay damages compensable under this bill, there
is no preemption of the State’s ability to collect taxes on
fees for other costs associated with releases that are not
compensable damages as defined in this legislation. . . .”
(emphasis added).
126 Cong. Rec. 31965 (1980), reprinted in 1 Legis. Hist. at 780.
As the above discussion makes clear, there was a consistent
understanding by all of the drafters of preemption provisions of
the bills which preceded CERCLA that State funds would be
preempted from paying cleanup costs or damages which were
eligible for compensation by Superfund. From 8. 1341's pre-
emption of “claims . . . which may be asserted,” through H.R.
85's preemption of “compensable damages” defined as damages
which could be “asserted,” through the “may be compensated”
formulation as first proposed by Senator Magnuson and as
ultimately set forth in Section 114(c), the preemption language
was carefully chosen to include all claims that could be asserted
under CERCLA, whether or not such claims were actually
paid.
B. The Exchange between Senators Randolph and
Bradley Is Consistent with the Prior Legislative His-
tory Regarding the Interpretation of Section 114(c).
The final debate in the Senate on CERCLA took place on
November 24, 1980, and included the colloquy between Sen-
ators Randolph and Bradley upon which the lower court placed
43
such heavy reliance. However, contrary to its holding, that
debate indicates that Section 114(c) preempts New Jersey’s
Spill Fund.
The remarks exchanged between the two Senators ad-
dressed three separate issues: (1) the effect of Section 114(c) on
the ability of a State to collect taxes for a special fund for
payment of claims compensable under CERCLA; (2) the issue
whether temporary borrowing would be permitted from a
State fund established for non-preempted purposes; and (3) the
limitations, if any, upon a State’s use of monies in its fund
collected prior to the effective date of Section 114(c).
In the first segment of their dialogue, the Senators re-
affirmed that the effect of Section 114(c) was to prohibit States
from requiring contributions to special funds for items which
would be eligible for compensation under Superfund. After
mentioning the existence of the New Jersey Spill Fund and
several other State funds, Senator Bradley inquired:
“MR. BRADLEY...
-
Am I correct in understanding that it is the purpose of this
legislation to prohibit States from requiring any person to
contribute to a fund for the purpose of reimbursing claims
already provided for in this legislation?
MR. RANDOLPH. Yes, that is the clear intent. The
purpose is to prohibit States from creating duplicate funds
to pay damage compensable under this bill.
MR. BRADLEY. However, there is no such preemption of
a State’s ability to collect such taxes or fees for other costs
associated with releases that are not compensable
damages as defined in this legislation.
MR. RANDOLPH. The Senator is correct.”*!
“1126 Cong. Rec. 30949 (1980) (emphasis added), reprinted in 1 Legis. Hist.
at 731.
44
Thus, consistent with all other legislative history, both Sen-
ators recognized that state funds were preempted from impos-
ing special taxes to pay claims which were “compensable”
under CERCLA—1.e., ones eligible for compensation—rather
than claims which are actually paid.
In the second segment of their dialogue, the Senators at-
tested that State funds designed to cover expenses and eco-
nomic losses not covered by CERCLA, could temporarily be
used to provide immediate, up-front capital for cleanup com-
pensable by Superfund, provided reimbursement was prom-
ptly sought thereafter from the federal fund. As Senator Ran-
dolph pointed out, such an inquiry raised a question of
bookkeeping rather than one of preemption.”
Finally, in the third segment of their dialogue, the Senators
reaffirmed that Section 114(c) of Superfund was a limitation on
a State’s taxing power, not its spending of monies collected
prior to CERCLA. Both Senators were well aware that several
States with existing State funds had accumulated substantial
monies in their funds prior to Superfund, and that questions
would arise as to how these pre-Superfund monies could be
spent in light of Section 114(c).
Senator Bradley noted that New Jersey had an existing
fund.* At the time of the legislative debates, New Jersey had
approximately $25 million accumulated in this Fund. See 1
Legis. Hist. at 459, 2 Legis. Hist. at 116-17. Section 114(c)
places no limitation on expenditures of monies if accumulated
by a State prior to the effective date of Section 114(c) or from
taxes that do not violate Section 114(c). Senator Randolph
made clear that these prior monies could be expended for a
State’s 10% share of remedial costs, expenditures for cleanup
efforts not actually paid by the federal Fund or expenditures
for State completion of cleanup at sites where federal efforts
have been terminated:
“Id., reprinted in 1 Legis. Hist. at 732.
*Jd., reprinted in 1 Legis. Hist. at 731.
45
“MR. RANDOLPH. Mr. President, let me state cate-
gorically that there is nothing in this bill that affects the
uses to which a State may put the existing cleanup fund.
This bill is silent on that subject. Thus a State may, after
enactment of this bill, continue to spend its existing funds
for any purpose that is lawful under the State law.
If, after enactment of this bill, a State continued to pay
claims from a State fund, that would not be contrary to
any provision of this bill. What this bill does is prohibit a
State from requiring any person to contribute to any fund
if the purpose of that fund is to compensate for a claim paid
for under the provisions of this bill. Thus the State cannot
receive a fee or a tax on a substance if that fee or tax is to
go into a fund and the fund is for the purpose of paying
oilspill damage claims.
Putting it simply, this is a prohibition against double
taxation for the same purposes. It is not a prohibition on
the uses a State may make of its money, nor does it
prohibit a State from imposing taxes or fees for other
purposes connected with cleanup or restoration activities
such as the purchase of pollution abatement equipment or
the hiring or training of personnel for pollution prevention
programs.
In summary, Mr. President, this preemption provision
is narrow in scope and limited to the particular purpose of
preventing double taxation.
MR. BRADLEY. Am I correct in assuming that
moneys expended by State funds can be used to provide
the required 10 percent State match?
MR. RANDOLEFH. That is correct.
MR. BRADLEY. And am I also correct in noting that
State funds are preempted only for efforts which are in
fact paid for by the Federal fund and that there would be
no preemption for efforts which are eligible for Federal
funds but for which there is no reimbursement?
46
MR. RANDOLPH. That is correct.”
Id., reprinted in 1 Legis. Hist. at 732-33.
Unlike the initial portion of the dialogue, where Senator
Bradley focused upon the purpose of State funds, in this por-
tion he focused upon the uses of State funds, which can include
monies collected prior to CERCLA or those drawn from gener-
al revenues. Even such funds are precluded by Section 114(b)
from making the payments described by Senator Bradley—
i.e., where the “efforts . . . are in fact paid for by the federal
funds.” And, of course, it is true that pre-existing funds and
monies drawn from general revenues are precluded neither by
Section 114(b) nor Section 114(c) from paying for “efforts which
are eligible for federal funds but for which there is no reim-
bursement,” in the language of Senator Bradley.
Thus, the most reasonable and the only internally consistent
interpretation to be given the above questions raised by Sen-
ator Bradley and the answers of Senator Randolph is that they
addressed the extent to which Sections 114(b) and 114(c) re-
stricted the expenditure of State funds or monies collected |
prior to Superfund or from taxes which did not violate Section
114(c).
In sum, the entire legislative history, iicluding the Ran-
dolph-Bradley dialogue, leaves no doubt but that Section 114(c)
was intended to prohibit the collection of special taxes for a
state fund which, like that of New Jersey, has as its purpose the
compensation of cleanup costs and damages which “may be
compensated” under CERCLA.
47
CONCLUSION
The decision of the Supreme Court of New Jersey should be
reversed and the case remanded for determination of the
amounts due appellants by reason of the Spill Fund taxes that
were unlawfully imposed on them.
Respectfully submitted,
DANIEL M. GRIBBON JOHN J. CARLIN, JR.
E. EDWARD BRUCE Counsel of Record
DAVID F. WILLIAMS LISA J. POLLAK
COVINGTON & BURLING MARTIN CRONIN
1201 Pennsylvania Ave., FARRELL, CURTIS, CARLIN
N.W. & DAVIDSON
P.O. Box 7566 43 Maple Avenue
Washington, D.C. 20044 P.O. Box 145
(202) 662-6000 Morristown, New Jersey
07960 2
(201) 267-8130
Attorneys for Appellants
August 1, 1985
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.