# Appellants Brief — Exxon Corp. v. Hunt

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appellants Brief
- **Published:** January 1, 1986
- **Citation:** 475 U.S. 355

## Text

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BEST AVAILABLE COPY

QUESTION PRESENTED

Whether the Supreme Court of New Jersey correctly
determined that the Comprehensive Environmental Re-
sponse, Compensation and Liability Act of 1980 (also
known as ‘‘Superfund”), which prohibited special State
taxes only for the purpose of financing ‘‘claims which may
be compensated” by Superfund, 42 U.S.C. § 9614(c), does
not preempt the taxing provisions of the New Jersey Spill
Compensation and Control Act, N.J.S.A. 58:10-23.11 et seq.,
insofar as the State Spill Fund supported by the tax is
used to finance claims either not covered or not actually

compensated by Superfund?

STATEMENT OF THE CASE
SUMMARY OF ARGUMENT

ii

TABLE OF CONTENTS

Page

ARGUMENT

I.

IT.

CONCLUSION

THE LANGUAGE OF 42 U.S.C. § 9614(c)
AND THE STRUCTURE OF THE SUPER-
FUND ACT CONTEMPLATE CONTIN-
UED STATE TAXATION TO FINANCE
STATE HAZARDOUS WASTE PRO-
GRAM COSTS EITHER NOT COVERED
OR NOT ACTUALLY COMPENSATED

17

BY SUPERFUND

THE LEGISLATIVE HISTORY OF THE
SUPERFUND ACT SUPPORTS NEW
JERSEY’S INTERPRETATION OF 42
U.S.C. § 9614/c)

28

48

TABLE OF AUTHORITIES
CASES

Aloha Airlines, Inc. v. Director of Taxation, 464

U.S. 7 (1983)
Andrus v. Shell Oil Co., 446 U.S. 657 (1980)

Askew v. American Waterways Operators, Inc.,

411 U.S. 325 (1973)
Bell v. New Jersey, 461 U.S. 773 (1983)

Cabell v. Markham, 148 F.2d 737 (2d Cir. 1945),

aff'd 326 U.S. 404 (1945)

47

Chemical Mfrs. Ass’n v. Natural Res. Defense

Coun., 105 S.Ct. 1102 (1985)

28

iil

TABLE OF AUTHORITIES—Continued

Page
Chevron, U.S.A., Inc. v. Natural Resources De-

fense Council, 104 S.Ct. 2778 (1984) 47
Chicago & North Western Transportation Co. v.

Kalo Brick & Tile Co., 450 U.S. 311 (1981) 18
C.ILR. v. Engle, 464 U.S. 206 (1984) 47
Exxon Corp. v. Hunt, 683 F.2d 69 (3rd. Cir. 1982),

cert. denied 459 U.S. 1104 (1983) 12
Fidelity Federal Sav. é Loan Ass’n v. De La

Cuesta, 458 U.S. 141 (1982) 17
Himes v. Davidowitz, 312 U.S. 52 (1941) 17

Jones v. Rath Packing Co., 430 U.S. 519 (1977) 17, 18, 24
Kelly v. State of Washington, 302 U.S. 1 (1937) 18, 20

Maryland v. Louisiana, 451 U.S. 725 (1981) 17
Metropolitan Life Ins. Co. v. Massachusetts, 105

S.Ct. 2380 (1985) 14, 18, 19, 20
NLRB v. Lion Oil Co., 352 U.S. 282 (1957) 47
New Jersey v. Ruckelshaus, Civil Action No. 84-

1668 ‘D.N.J. 1984) 5
North Haven Board of Ed. v. Bell, 456 U.S. 512

(1982) .. 45
Russello v. United States, 464 U.S. 16 (1983) 00.) 29
Seatrain Shipbuilding Corp. v. Shell Oil Co., 444

U.S. 572 (1980) 44
Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983) 17, 20
Stafford v. Briggs, 444 U.S. 527 (1980) 28
United States v. Fisher, 2 Cranch 358, 2 L.Ed. 304

(1805) 28

Watt v. Alaska, 451 U.S. 259 (1981) 28, 44, 47

TABLE OF AUTHORITIES—Continued

STATUTES

Page

Comprehensive Environmental Response, Com-
pensation and Liability Act of 1980, 42 U.S.C.

§ 9601 et seq.

42 U.9.C. § 9601(4)
42 U.S.C. § 9601(6)

42 U.98.C. § 9601(14)

42 U.S.C. § 9601(23)
42 U.S.C. § 9601(24)

42 U.S.C. § 9604(c)

3, 15, 21

42 U.S.C. § 9604/e) (1)
42 U.S.C. § 9604(c) (3)
42 U.S.C. § 9605

3, 10, 20
3, 15, 46

4,13

42 U.S.C. § 9605(8) .

42 U.S.C. § 9605(8) (A)
42 U.S.C. § 9605(8) (B)
42 U.S.C. § 9607(f)

3, 20, 47

42 U.S.C. § 9611
42 U.S.C. § 9611(a)

42 U.S.C. § 9611(e) (2)
42 U.S.C. § 9612

42 U.S.C. § 9614(a)

42 U.S.C. § 9614(b)

42 U.S.C. § 9614(c)

passim

40

42 U.S.C. § 9614(a)

TABLE OF AUTHORITIES—Continued

Page
42 U.S.C. § 9631 2
26 U.S.C. § 4611 et seq. bike
26 U.S.C. § 4661 et seq. 2
Clean Water Act, 33 U.S.C. § 1321 3
Airport Development Acceleration Act of 1973, 49
U.S.C. § 1513 (a) 19
New Jersey Spill Compensation and Control Act,
N.J.S.A. 58 :10-23.11 et seq. 1
N.J.S.A. 58:10-23.11a 21
N.J.S.A. 58 :10-23.11b(k) 2
N.J.S.A. 58 :10-23.11b(1) 1
N.J.S.A. 58 :10-23.11f 11, 22
N.J.S.A. 58 :10-23.11g 2,15
N.J.S.A. 58 :10-23.11g(a) 1, 21
N.J.S.A. 58:10-23.11h 1, 2,12
N.J.S.A. 58 :10-23.11k to N.J.S.A. 58:10-23.11q —.. 45
N.J.S.A. 58 :10-23.110 1, 2, 15
New Jersey Hazardous Discharge Bond Act, P.L.
1981, ¢. 275 22
REGULATORY MATERIAL
National Contingency Plan,
40 C.F.R. Part 300 (1984) 5
40 C.F.R. § 300.65 20, 24

40 C.F.R. § 300.65(a) 5

40 C.F.R. § 300.67
40 C.F.R. § 300.68
40 C.F.R. § 300.68(a)
40 C.F.R. § 300.68(d)
47 Fed.
47 Fed.
47 Fed.
47 Fed.
48 Fed.
48 Fed.
50 Fed.
50 Fed.

H.R. 85, 96th Cong., 2d Sess. (1980)

§ 104

§ 104(f) (1)

§ 105
§ 110

§ 110(a)
§ 110(a) (1)
§ 110(a) (2)
§ 110(b)
§ 302(a)

§ 531

TABLE OF AUTHORITIES—Continued

Reg.
Reg.
Reg.
Req.
Reg.
Reg.
Reg.
Reg.

vi

5, 14, 20, 24

26

31187 (1982)

24

31195 (1982)

31196 (1982)

31199 (1982)

40658 (1983)
40659 (1983) ....

9593 (1985)

9595 (1985)

LEGISLATIVE HISTORY

passim

30

30, 40

30

25

7,16

31

31
7, 32

7, 32

31

vii

TABLE OF AUTHORITIES—Continued

Page
H.R. 85, 96th Cong., Ist Sess. (1979) 29

§ 103(a) 31
H.R. 7020, 96th Cong., 2d Sess. (1980) 6, 8, 29, 36, 39
S. 1341, 96th Cong., Ist Sess. (1979) 6, 7, 8, 35, 38

§ 607 35

§ 612 35

Ne i te 7

§612(b) ......... 8, 36
S. 1480, 96th Cong., 2d Sess. (1980) ........ passim

PO (GS OF 37

I TE italien sienvitinsiinaitbiaat 37

Amend. No. 2387 —___. 25, 39
H.R. Rep. 96-172, Part I, 96th Cong., 1st Sess.

(1979) .30, 34
H.R. Rep. 98-890, 98th Cong., 2d Sess. (1984) 00. 16, 44
S. Rep. 96-848, 96th Cong., 2d Sess. (1980) 4
S. Rep. 98-631, 98th Cong., 2nd Sess. (1984) 16, 43
Library of Congress, Senate Comm. on Environ-

ment and Public Works, 97th Cong., 2d Sess., A

Legislative History of the Comprehensive En-

vironmental Response, Compensation and Lia-

bility Act of 1980 (Superfund), Public Law

96-510 (Comm. Print 1983) :

Vol. 1 4,6, passim

Vol. 2 3,4, passim

Vol. 3 6,7, passim

viii

TABLE OF AUTHORITIES—Continued

Page
The Environmental Energy Response Act:
Hearings on S. 1480 Before the Senate Commit-
tee on Finance, 96th Cong., 2d Sess. (Comm.
Print 1980) 22
Hearings on S. 1480 Before the Senate Committee
on Commerce, Science and Transportation, 96th
Cong., 2nd Sess (Comm. Print 1980) 2, 37
MISCELLANEOUS
Black’s Law Dictionary (5th Ed. 1979) 0. .23, 26
Eckhardt, ‘‘The Unfinished Business of Hazard-
ous Waste Control,” 33 Baylor Law Rev. 253
i RA Pea Se ney enna ane 3
Executive Order No. 12316, 46 Fed. Reg. 4223
(1981) 4
Frankfurter, ‘‘Some Reflections on the Reading
of Statutes,” 47 Col. Law Rev. 527 (1947) 28
Webster’s Third New International Dictionary
(1976) 23, 26

STATEMENT OF THE CASE

In 1977 the New Jersey Legislature adopted the Spill
Compensation and Control Act (‘Spill Act’’), N.J.S.A.
58 :10-23.11 et seq., to protect the citizens and environment
of the State from damage resulting from discharges of
petroleum and other hazardous substances. To finance the
spill prevention and cleanup program created by the Spill
Act, the Legislature imposed a tax upon major petroleum
and chemical facilities. N.J.S.A. 58:10-23.11h; see also
N.J.S.A. 58:10-23.11b(1) for the definition of ‘‘major facil-
ity.’’ The tax was levied on a per barrel basis for petro-
leum, and on either a per barrel or percentage of fair mar-
ket value basis for hazardous substances. N.J.S.A. 58:
10-23.11h. The Spill Act provides for the revenues gener-
ated by the tax to be credited to the Spill Compensation
Fund (‘‘Spill Fund”) which is authorized to finance spill
response and waste site cleanup costs incurred by the De-
partment of Environmental Protection; certain damage
claims resulting from hazardous discharges;' the person-
nel and equipment costs of the Department of Environ-
mental Protection associated with the enforcement of the
Spill Act; the administrative costs of the Spill Fund; and
research concerning pollution and cieanup techniques, in-
cluding ocean pollution. N.J.S.A. 58:10-23.1lo. From 1977
through 1980, the Spill Fund provided the primary source
of revenue for New Jersey’s petroleum spill! and hazard-
ous waste cleanup program.

1 The types of damage claims covered by the Spill Act are set
forth in N.J.S.A. 58:10-23.11g(a) and include: 1) damage to
pee or real property; 2) damage to natural resources; 3)
oss of income or earning capacity due to damage to property
or natural resources; 4) loss of tax revenue by a State or local
government resulting from property damage for a period not
to exceed one year; and 5) interest costs on debts incurred to
remedy a discharge.

9

At the end of 1980, however, Congress recognized that
states acting alone could not adequately address the stag-
gering problems associated with the release of hazardous
substances into the environment. Consequently, Congress
adopted the Comprehensive Environmental Response, Com-
pensation and Liability Act (known as the ‘‘Superfund
Act’’ or ‘*‘CERCLA”’), 42 U.S.C. § 9601 et seq., to assist
the states in financing cleanups at the most severely dam
aged and highest priority sites throughout the nation.
Funding for this federal effort was provided by a $1.6 bil-
lion trust fund to be raised by placing a tax on crude oil
petroleum, and certain chemicals,’ and by transferring to
the fund appropriations from general federal revenues.
The tax was structured to provide 87.5% of the fund,
while general revenues were to make up the balance. The
federal tax took effect on April 1, 1981 and is scheduled to
expire, if not reauthorized by Congress, on September 30,
1985. 26 U.S.C. § 4611 et seq.; 26 U.S.C. § 4661 et seq.; 42
U.S.C. § 9631.

Unlike the Spill Act, the Superfund Act did not cover
cleanup expenses for oil spills or property damage claims
of any sort. Compare N.J.S.A. 58:10-23.11b(k) and 42
U.S.C. § 9601(14) ; N.J.S.A. 58:10-23.11(g) and (0) with 42
U.S.C. § 9611. Nor did the federal Act provide funding

2 26 U.S.C. § 4661 imposes a tax on 42 chemicals at specified
rates. Compare the New Jersey tax on “hazardous substances”
which saan substances designated as “hazardous” by the
Department of Environmental Protection and includes over 300
substances. N.J.S.A. 58:10-23.11b(k); N.J.S.A. 58:10-23.11h; see
also the Environmental Emergency Response Act: Hearings
on §$.1480, before the Senate Committee on Finance, 96th
Cong. 2d Sess., Comm. Print at 587 (1980) (testimony of Jerry
F. English, Commissioner of the New Jersey Department of
Environmental Protection).

3

for State personnel, equipment, or administrative costs.
Rather, the federal fund was designed to provide financ-
ing for: 1) emergency removal actions limited to $1 million
or six months unless specific findings justifying continued
action are made (42 U.S.C. § 9604(c)(1)); 2) up to 90%
of the cost of remedial actions at priority sites contam-
inated by hazardous substances (42 U.S.C. § 9604(c); see
also 42 U.S.C. § 9605(8)); and 3) claims by the state or
federal governments for damage to natural resources (42
U.S.C. § 9607(f)). See generally 42 U.S.C. § 9611.4 The
federal Act specifically obligated states to pay at least 10%
of all remedial actions, with the state share expanding to
50% or more for sites owned at the time of disposal by a
state or one of its political subdivisions. 42 U.S.C. § 9604
(c)(3). Moreover, the Act directed the States to assure
all future maintenance of the removal and remedial actions
finaneed by Superfund, including some—and perhaps all—
of the costs for this work. Jbid.’ In light of CERCLA’s
limitations, former Representative Eckhardt has observed
that the use of the term ‘‘comprehensive’’ in the Act’s
title is a misnomer. Eckhardt, ‘‘The Unfinished Business

3 In fact, a proposal by Representative Stockman to create a
grant program to support state hazardous waste site investiga-
tion and mitigation efforts was rejected. See 2 Library of Con-
gress, Sen. Comm. on Environment and Public Works, 97th
Cong., 2d Sess., “A Legislative History of the Comprehensive
Environmental Response, Compensation and Liability Act of
1980 (Superfund), P.L. 96-510” (hereinafter “Legis. Hist.’”’) at
295-336.

4 The Superfund may also be used for certain other matters,
such as the compensation of claims asserted prior to CERCLA’s
adoption under the Clean Water Act, 33 U.S.C. § 1321, and the
financing of epidemiologic studies. 42 U.S.C. § 9611.

5 Although the State of New Jersey has argued to the United
States Environmental Protection Agency (“EPA’’) that CERCLA
requires states to contribute only 10% of operation and main-
tenance costs, this argument has been rejected by EPA which
expects the States to finance the bulk of these costs.

4
of Hazardous Waste Control’’, 33 Baylor Law Rev. 253
(1981). The same could be said for the Act’s sobriquet:
‘‘Superfund.’’

Perhaps the clearest example of the non-comprehen-
sive nature of CERCLA can be found in 42 U.S.C. 4 96085.
There Congress directed the President (who in turn dele-
gated this responsibility to EPA in Executive Order No.
12316, August 14, 1981, 46 Fed. Reg. 42237) to revise the
National Contingency Plan (‘‘NCP’’) for the removal of
oil and hazardous substances to reflect and effectuate the
new powers and responsibilities created by CERCLA. The
NCP was to contain ‘‘criteria for determinixg priorities
among releases or threatened releases throughout the
United States for the purpose of taking remedial action
and, to the extent practicable taking into account the po-
tential urgency of such action, for the purpose of taking
removal action.” 42 U.S.C. §9605(8)(A).° See also 42
U.S.C. § 9605(8)(B) which mandated the compilation of a
National Priority List (‘‘NPL’’) containing at least 400
of the country ’s worst hazardous waste sites. This focus
on priority releases grew directiy out of the congressional
recognition that the amount of money made available to
Superfund would, in the words of Representative Volkmer,
‘*cover only the tip of the iceberg as far as complete clean-
up of all waste sites is concerned.” 2 Legis. Hist. 265.
See also S. Rep. No. 848, 96th Cong., 2d Sess. (1980) at 17,
reprinted in 1 Legis. Hist. 324, where it was noted in ref-
erence to the then proposed six-year, $4.1 billion Super-
fund that such an allotment ‘‘.. . will permit government
response only to the most significant releases. At this

6 “Removal” actions are immediate, emergency cleanup ac-
tions taken on a short-term basis to prevent or mitigate damage
to the public and the environment, while “remedial” actions
are long-term actions “consistent with permanent remedy.”
42 U.S.C. § 9601(23) and (24).

4)

level of funding, response will not be possible at a large
number of releases posing imminent or substantial threats
to public health or the environment.”

EPA has further clarified the priority system and the
limited availability of Superfund money in the NCP. 40
C.F.R. Part 300 (1984). Removal actions will be funded
only where the release or threat of a release is sufficiently
acute to demand immediate response. Examples of such
acute situations provided by EPA are those instances
where the release or threatened release will expose the food
chain to acutely toxic substances, contaminate drinking
water supplies, or result in a fire or explosion. 40 C.F.R.
§ 300.65(a). See also 40 C.F.R. § 300.67 and 47 Fed. Reg.
31199 (1982). As to remedial actions, funding is limited
to releases on the N.P.L. 40 C.F'.R. 4 300.68(a). The list-
ing of a site does not guarantee financing, however, be-
cause ‘‘eligibility of particular actions will be decided on a
case-by-case basis’’ since ‘‘current demands for response
and expected future demands exceed available funds.’’ 47
Fed. Reg. 31196 (1982). Moreover, in regard to claims
for damage to natural resources, Congress itself limited
the amount of money available to pay such claims to no
more than 15% of the Superfund (42 U.S.C. § 9611(e) (2) )
—an amount EPA has indicated it will not allocate for
such purposes. 50 Fed. Reg. 9595 (1985). Indeed, the
Agency did not even prepare proposed rules governing the
natural resource claims process despite congressional di-
rection to do so until New Jersey obtained an injunction
mandating this relief. New Jersey v. Ruckelshaus, Civil
Action No. 84-1668 (D.N.J. December 12, 1984) ; see 50 Fed.
Reg. 9593 (1985). Both the structure of CERCLA and
EPA’s administration and implementation of the Act thus
highlight the restricted nature of its coverage.

6

Many of the limitations contained in CERCLA were
the product of a last-minute compromise forged by a
group of senators during ibe lame duck session of the 96th
Congress which convened in late November 1980. 1 Legis.
Hist. VII; 1 Legis. Hist. 681 (remarks of Senator Ran-
caolph during floor debate on the compromise measure).
The compromise grew primarily out of four different bills
which had been considered by both houses of Congress
throughout the preceding two years. On the House side,
the two major proposals were H.R. 85 and H.R. 7020. As
passed by the House, H.R. 85 operated prospectively to
address spills of oil and hazardous substances into navi-
gable waters, and created a fund supported by fees and
general revenues to finance all government response costs
and certain specific damage claims resulting from the de-
struction of property and natural resources. 2 Legis. Hist.
1016-1114. H.R. 7020 was limited to abandoned hazardous
waste sites and proposed addressing the sites on a pri-
ority basis in cooperation with the states. 2 Legis. Hist.
391-463. The major Senate proposal was 8.1480 which
excluded coverage for oil spills, but otherwise addressed
all kinds of releases of other hazardous substances, includ-
ing spills and abandoned hazardous waste sites. 1 Legis.
Hist. 462-552. §.1480 also provided compensation for cer-
tain specific property damage, natural resource damage,
and medical claims incurred by victims of hazardous sub-
stance releases. The bill proposed by the Carter Admin-
istration, introduced in the Senate as 8.1341, addressed
spills into navigable waters of petroleum and other haz-
ardous substances as well as abandoned hazardous waste
sites. 3 Legis. Hist. 27-60.

It was in the context of the spill-oriented legislative
proposals that the suggestion of preempting state taxes

7

levied to support state response and damage funds first
arose. The genesis of the preemption provision is sig-
nificant because the spill bills anticipated that the funding
provided would cover all necessary costs involved in re-
sponding to future spills and in compensating the limited
kinds of property damage and natural resource claims pro-
posed for coverage. Under the major spill proposal, H.R.
85, states were preempted from levying taxes to pay for
‘‘losses’’ (including response costs) covered by the bill,
although states were permitted to impose special taxes to
finance the purchase and prepositioning of pollution clean-
up and removal equipment as well as claims and damages
not covered in the bill. §110(a) and (b) of H.R. 85, re-
printed at 2 Legis. Hist. 1051; 4 302(a) of H.R. 585, re-
printed at 2 Legis. Hist. 1074-1075; see also 2 Legis.
Hist. 903-907 (remarks of Representatives Biaggi, Florio
and Snyder). Insofar as 8.1341 dealt with spills, that
proposal also provided for the preemption of state taxes
to finance a fund to pay compensation for losses and costs
covered by the spill provisions of the bill. §¢612(a) of
S.1341, reprinted at 3 Legis. Hist. 57.

Preemption of state taxation to finance state spill
funds covering response costs and certain damage claims
was thought to be appropriate in the spill context because
the federal spill program was designed to cover future
spills ‘‘on an as-needed and comprehensive basis.” State-
ment of Thomas C. Jorling, Assistant. Administrator for
Water and Waste Management of EPA, before the Senate
Committee on Environment and Public Works, June 20,
1979, reprinted at 1 Legis. Hist. 124. Since all spills re-
quiring response would receive it under the legislative
proposals, no state funding was needed in that area. Ibid.
Nor would state financing be necessary for the property

8

and natural resource claims comprehensively covered by
the spill bills.

Although the proposed spill legislation affected state
taxation, the preemption was admittedly narrow in scope
and prevented states from imposing special taxes only to
the extent that those taxes would be dedicated to duplicat-
ing elements already provided for in the federal legisla-
tion. As Representative Biaggi, the sponsor and floor
manager of H.R. 85 stated, ‘‘. . . it is not the intent of H.R.
85 to preempt the States from financing by whatever means
they choose those activities which are not compensable
under H.R. 85.’’ 2 Legis. Hist. 907. And, as Representa-
tive Livingston added, ‘‘This bill does not totally preempt
the field: it o ly preempts State and local enactments which
would duplicate the purpose of the funds established in
H.R. 85.’’ 2 Legis. Hist. 920. Under the proposed spill
legislation, therefore, states could impose taxes to finance
special funds for spill-related costs and claims not covered
by the federal program.

Where abandoned sites were concerned, however, none
of the major legislative proposals that pre-dated the com-
promise measure that became CERCLA contained tax ex-
emption provisions. See H.R. 7020 as passed (2 Legis.
Hist. 391-463) ; 8.1480 as passed (1 Legis. Hist. 462-552) ;
and 8.1341 as introduced at §612(b) (3 Legis. Hist. 57).
The rationale for not preempting state taxation in this
area was that the abandoned site proposals—S.1480 and
part of §.1341 in particular—required state cost-sharing
and provided a level of funding that, ‘‘fell far short of
what would be needed to cleanup all the sites that will need
some kind of remedial action in the next few years.” State-
ment. of Swep T. Davis, Associate Assistant Administrator
for Water and Waste Management of EPA, recorded in

9

Hearings on 8.1480 before the Senate Committee on Com-
merce, Science and Transportation, 96th Cong., 2nd Sess.
(September 11-12, 1980), Comm. Print at 175. Since a
comprehensive program covering all response costs was
not achievable given budget constraints in the abandoned
site area, preemption of state taxation was at first thought
to be completely inappropriate. Jbid. See also Jorling
Statement, 1 Legis. Hist. 124.

In the course of preparing the compromise measure,
however, a provision affecting state taxation was inserted
in CERCLA even though the legislation addressed aban-
doned sites as well as non-petroleum hazardous spills.
Modeled after the preemption provisions contained in the
spill proposals, the language utilized in the compromise
similarly limited the preemption of state taxation to only
those areas covered by the federal program:

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 com-
pensated under this subchapter. Nothing in this sec-
tion shall preclude any State from using general reve-
nues for such a fund, or from imposing a tax or fee
upon any person or upon any substance in order to
finance the purchase of prepositioning of hazardous
substance response equipment or other preparations
for the response to a release of hazardous substances
which affects such State. [42 U.S.C. § 9614(e); em-
phasis added].

Given the restricted nature of CERCLA coverage—
particularly as restricted in terms of response costs where
coverage was not intended to be comprehensive, but to ad-
dress only the worst releases of hazardous substances na-
tionwide—the language of 42 U.S.C. 4 9614(c) had even a
narrower impact in the context of CERCLA than similar

10

language had had in the more comprehensive oil spill leg-
islation. The language of 42 U.S.C. § 9614(c) thus allows
New Jersey to continue collecting the Spill Fund tax to fi-
nance items not covered by Superfund such as oil spill re-
sponse costs, property damage and loss of earnings or tax
revenue claims, State administrative costs, State cost-shar-
ing and maintenance costs under CERCLA, and remedial
actions at New Jersey sites not included on the NPL.
Moreover, the ‘‘may be compensated” language used in 42 .
U.S.C. §9614(c) would also allow the State to use Spill
Fund moneys to pay costs where Superfund financing
proves inadequate or is not made available—.e., where
State requests for removal actions are denied or limited by
cost or duration under 42 U.S.C. § 9604(c) (1), or where fed-
eral funding for remedial actions is either not provided to
a site on the NPL or is cut off prior to completion of
necessary cleanup work.

The legislative history discussing the compromise lan-
guage supports this interpretation. Obviously concerned
about the impact of the provision on the State’s Spill Fund,
Senator Bill Bradley of New Jersey questioned Senator
Jennings Randolph of West Virginia, a sponsor of the
Superfund effort and Chairman of the Committee on En-
vironment and Public Works which had primary responsi-
bility for the measure in the Senate, as to the future of
state taxes on industry to finance State response funds if
the foregoing provision were adopted. Included in the
colloquy between the two senators were the following re-
marks:

MR. RANDOLPH. * * * What this bill does is pro-
hibit a State from requiring any person to contribute
to any fund if the purpose of that fund is to compen-
sate for a claim paid for under the provisions of this
bill.

11

MR. BRADLEY. Am I correct in assuming that mon-
eys expended by State funds can be used to provide
the required 10 percent State match?

MR. RANDOLPH. That is correct.

MR. BRADLEY. And am [ 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 reimburse-
ment ?-

MR. RANDOLPH. That is correct.

MR. BRADLEY. Finally, if the Federal Government
determines that the needs at other sites require that
Federal efforts be terminated at the first site before

that site is completed, may a State fund complete the
effort?

MR. RANDOLPH. This legislation would permit that
to happen. [126 Cong. Rec. 30949 (1980), reprinted
at 1 Legis. Hist. 732-733].

Given the narrow scope of the language used in 42
U.S.C. § 9614(c) and the guidance of the foregoing collo-
quy, once the Superfund Act was adopted New Jersey be-
gan to administer the Spill Act to supplement rather than
to duplicate federal cleanup efforts. The State had the
flexibility to adapt its program in this way because the
New Jersey Legislature had vested broad discretion in the
Department of Environmental Protection to select the
type and extent of cleanup and related activities to be fi-
nanced by the Spill Act tax. N.J.S.A. 58:10-23.11f. In
the post-Superfund era, therefore, New Jersey has sought
to maximize the infusion of federal dollars into the State
for cleanup activities, and has devoted its Spill Fund to
items not covered by the federal Act or to items where
federal financing is unavailable.’

7 Appellants’ suggestion to the contrary (Exxon brief at 25,
fn.26), is both incorrect and unsupported by the record in this

(Continued on following page)

12

Following the adoption of the Superfund Act, how-
ever, New Jersey’s right to continue the collection of the
Spill Fund tax was challenged by the Exxon Corporation
and four other owners of ‘‘major facilities” responsible
for paying the tax (referred to collectively as ‘‘Exxon”)
on the sole ground that N.J.S.A. 58:10-23.11h was pre-
empted by the language contained in § 114(c) of the Super-
fund Act, codified at 42 U.S.C. §9614(c). Following an
unsuecessful attempt to raise this challenge in federal court
(see Exxon Corp. v. Hunt, 683 F.2d 69 (3rd Cir. 1982),
cert. denied, 459 U.S. 1104 (1983)), Exxon pursued the
matter through the New Jersey court system. Upon re-
viewing cross-motions for summary judgment on a limited
record, the Tax Court of New Jersey upheld the validity
of the Spill Fund tax. Exxon Corp. v. Hunt, 4 N.J. Tax
294 (1982) (reprinted in the appendix attached to Appel-

(Continued from previous page}

case. Moreover, Exxon’s reliance on reports prepared by the
New Jersey State Auditor for fiscal years 1981 and 1982 and
lodged by appellants with the Court is misplaced; those re-
ports simply do not demonstrete, as Exxon asserts, that New
Jersey has improperly used Spill Fund moneys subsequent to the
adoption of 42 U.S.C. § 9614(c). First, the reports include fiscal
year 1981 which extended from July 1, 1980 to June 30, 1981.
The Superfund Act was not even in existence for almost half of
this period, and the federal tax designed to support the program
was not imposed until April 1981. The Superfund program was
thus a nullity for most—if not all—of this period. Furthermore,
the Auditor’s reports do not indicate when the tax moneys ex-
pended for cleanup purposes were collected. If collected prior
to the effective date of CERCLA, there would be no preemp-
tion whatsoever in regard to their use. In addition, Exxon failed
to mention that the NPL was not promulgated until September
8, 1983 (48 Fed. Reg. 40658)—well after the alleged misspend-
ing of funds occurred. These and other items not addressed by
Exxon or by the Auditor’s reports (such as the accounting pro-
cedures used by the Spill Fund and the source of the federal
funds obtained for cleanup purposes) demonstrate that Exxon’s
assertions about Spill Fund expenditures are unsupported and
must be rejected as lacking in foundation.

13
lant Exxon’s Jurisdictional Statement (‘‘JSa”) at JSa47
to JSa78). This determination was subsequently affirmed
by both the Appellate Division of the Superior Court,
Exxon Corp. v. Hunt, 190 N.J. Super. 131, 462 A.2d 1983
(App. Div. 1983) (reprinted at JSa37 to JSa46) and by
the Supreme Court of New Jersey, Exxon Corp. v. Hunt,

97 N.J. 526, 481 A.2d 271 (1984) (reprinted as JSal5 to
JSa36).

In upholding the Spill Fund tax against Exxon’s chal-
lenge, the Supreme Court of New Jersey focused on the
“may be compensated” language of 4 114(c) and the Su-
perfund statutory scheme which addressed priority sites to
the exclusion of other problem areas. See 42 U.S.C. 4 9605;
40 C.F.R. § 300.68. In light of the limited coverage of
CERCLA, the Supreme Court of New Jersey echoed the
conclusion of the Tax Court which had found that “[i]t
simply strains credulity to say that hazardous waste sites
and spills not meeting the [priority list] criteria are
claims which ‘may be compensated’ under [Superfund].”
97 N.J. at 543 (JSa34). Based on this realistic analysis
of Superfund coverage, the court below rejected Exxon’s
broad preemption claim and endorsed ‘‘The more logical
conclusion ... that Congress contemplated that the federal
government would attempt to deal with the problems of
the most seriously affected sites ... and to allow states to
maintain a compensation fund . . . to conduct their own
cleanup efforts on those sites not receiving Superfund
compensation and to provide for their cooperative program
components including their 10% share of cleanup costs,
related administrative costs for equipment and personnel,
and other program features not covered by Superfund.
...? OT N.J. 543-544 (JSa35).

Dissatisfied with this result, Exxon filed a Notice of
Appeal from the judgment of the Supreme Court of New

14

Jersey on November 19, 1984. After requesting and re-
ceiving the views of the Solicitor General as to the issues
involved in this appeal, the Court noted probable jurisdic-
tion on June 17, 1985. This brief is submitted on behalf
of appellees who urge affirmance of the judgment below.

fy.
Vv

SUMMARY OF ARGUMENT

In construing explicit preemption provisions, the
Court must give effect to the will of Congress and not
enlarge the preemptive scope of a federal statute beyond
that intended by Congress. Metropolitan Life Ins. Co. v.
Massachusetts, 105 S.Ct. 2380, 2390 (1985). Even in ex-
plicit preemption cases, therefore, there is a presumption
against the complete displacement of state regulation,
particularly where Congress has used statutory language
effecting only limited preemption and leaving room for
state action. Ibid.

In adopting the Superfund Act, Congress placed an
extremely narrow limitation on the power of the states
to impose special taxes. 42 U.S.C. 4 9614(c). States were
prohibited only from levying taxes for the purpose of
compensating “claims for any costs of response or dam-
ages or claims which may be compensated under this sub-
chapter.” Jbid. This provision limits the preemption of
state taxation to the areas covered by Congress on the
federal level. Correspondingly, all areas not covered by
Superfund may properly be financed by state funds sup-
ported by special taxes.

A eareful analysis of CERCLA reveals that the avail-
ability of Superfund financing is restricted to priority
sites or releases of national significance. 42 U.S.C. § 9605
(8); 40 C.F.R. § 300.68(a). Moreover, no federal com-

15

pensation whatsoever is provided for petroleum spills or
nongovernmental third party damage claims. 42 U.S.C.
§ 9601(14); 42 U.S.C. 49611. This narrow federal cover-
age thus leaves many areas open for financing on the state
level through special taxes.

The tax levied under the New Jersey Spill Act may
consequently be used to fund all authorized state costs
excluded from federal coverage. Compare N.J.SA. 58:10-
23.11(g) and (o) with 42 U.S.C. § 9611. Authorized state
costs ineligible for federal financing include expenditures
incurred in responding to petroleum spills, the administra-
tive expenses incurred in implementing the Spill Act by
the Spill Fund and the Department of Environmental
Protection, and equipment and personnel costs. In addi-
tion, the Spill Fund may be used for the payment of dam-
age claims, including claims for damage to property, loss
of earnings, and loss of tax revenues. Compare N.J.S.A.
58 :10-23.11(g) and (0) with 42 U.S.C. § 9611. Moreover,
the State tax may also be used to finance the 10% or
greater state share required for federal action under
CERCLA, 42 U.S.C. §9604(c), because such an expense
is statutorily ineligible for federal compensation. Like-
wise, special state taxes may be used to provide mainte-
nance costs incurred by the states at Superfund sites. See
42 U.S.C. §9604(c)(3). These areas alone support the
validity of the Spill Fund tax.

State taxes may also be used to supplement federal
response efforts, however, because the “may be compen-
sated” formulation limits federal preemption to instances
where there is some likelihood or probability of Super-
fund financing. Where federal regulations establish cri-
teria that must be met to qualify for Superfund compen-
sation, sites failing to meet these standards are not eli-

16

gible for federal funding and thus fall outside of the pre-
emptive seope of 42 U.S.C. §9614(c). Moreover, where
EPA rejects State requests for Superfund financing, such
rejections are tantamount to declarations of ineligibility.
Special state taxes may thus be used to support all such
work not actually compensated by Superfund. State taxa-
tion is limited, therefore, only for the purpose of financ-
ing costs that are realistically eligible for federal funding.

This construction is amply supported by the legisla-
tive history. All of the precursors to 42 U.S.C. § 9614(c)
similarly limited the preemption of state taxation only
to those areas covered on the federal level. See, e.g.,
§110(a) of H.R. 85, reprinted at 2 Legis. Hist. 1051; re-
marks of Representatives Biaggi, Florio, and Snyder, re-
printed at 2 Legis. Hist. 903-907. States were thus free
to use special state taxes to supplement—albeit not to
duplicate—federal coverage. This narrow scope of pre-
emption was carried over into 42 U.S.C. 4 9614(c), as dem-
onstrated conclusively by the remarks cf Senators Ran-
dolph and Bradley. According to the colloquy between
these two senators, states may levy. special taxes “to cover
expenses and economic loss not covered under the provi-
sions of this bill...” 1 Legis. Hist. 732. This interpre-
tation has recently been confirmed in both the Senate and
the House where committees dealing with proposed Super-
fund reauthorization legislation have attempted to dispe!
“any cloud of uncertainty over the legitimacy” of continued
state taxation under 42 U.S.C. §9614(c). See Superfund
Amendments of 1984, Sen. Rep. No. 98-631, 98th Cong.,
2nd Sess. (September 21, 1984), Comm. Print at 35-36;
Superfund Expansion and Protection Act of 1984, H. Rep.
No. 98-890, Part 1, 98th Cong., 2ud Sess. (July 15, 1984),
Comm, Print at 58-59. Both of these reports reaffirm the

17

construction of 42 U.S.C. §9614(c) provided in the Brad-
ley/Randolph colloquy.

The intent of Congress was thus fulfilled by the Su-
preme Court of New Jersey when it upheld the Spill Fund
tax. As a result, this Court should affirm the judgment
helow.

ARGUMENT
POINT I

THE LANGUAGE OF 42 U.S.C. §9614(c) AND

THE STRUCTURE OF THE SUPERFUND ACT

CONTEMPLATE CONTINUED STATE TAXA-

TION TO FINANCE STATE HAZARDOUS

WASTE PROGRAM COSTS EITHER NOT COV-

ERED OR NOT ACTUALLY COMPENSATED

BY SUPERFUND.

The primary thrust of preemption analysis is to de-
termine the intent of Congress in enacting the federal
statute in issue. Shaw v. Delta Air Lines, Inc., 463 U.S.
85, 95 (1983); Fidelity Federal Sav. & Loan Ass’n v.
De La Cuesta, 458 U.S. 141, 152 (1982). For until that
intent is ascertained, it is impossible to decide whether
the state enactment “stands as an obstacle to the accom-
plishment and execution of the full purposes and object-
ives of Congress,” and thus must be invalidated under the
Supremacy Clause. Jones v. Rath Packing Co., 430 U.S.
519, 526 (1977), quoting Himes v. Davidowitz, 312 U.S. 52,
67 (1941).

In reviewing a preemption challenge, however, state
legislation is presumed valid and preemption is disfavored,
to be found only in the clearest cases of conflict. Mary-
land v. Louistana, 451 U.S. (25, 746-747 (1981). This rule
applies even in “explicit” preemption cases such as the

18

instant matter where the scope of preemption contained
in a particular congressional enactment is in question.
The Court recently affirmed this principle in Metropolt-
tan Life Ins. Co. v. Massachusetts, 105 S.Ct. 2380, 2390
(1985), when it upheld a Massachusetts statute because
the state legislation fell outside of the explicit preemp-
tion language contained in the federal Employee Retire-
ment Income Security Act of 1974 (“ERISA”). Even in
eases involving express preemption clauses, therefore,
“ft]he presumption is against pre-emption,” and the Court
is ‘‘not inclined to read limitations into federal statutes
in order to enlarge their preemptive scope.” Jbtd.

Preemption analysis generally follows a two-tiered
format. First, a court will ascertain the scope and mean-
ing of the two statutes in question; secondly, a court will
determine whether the State enactment necessarily con-
flicts with its federal counterpart, or can coexist with it
without impeding the federal objective. Chicago & North
Western Transportation Co. v. Kalo Brick & Tile Co., 450
U.S. 311, 317 (1981). Such an inquiry is not restricted
to analyzing the statutory language alone, but requires
a court “to consider the relationship between state and
federal laws as they are interpreted and applied, not
merely as they are written.” Jones v. Rath Packing Co.,
supra, 430 U.S. at 526. In comparing the operation and
effect of state and federal enactments, particularly where
federal preemption is explicitly narrow and partial in
scope, it is important to keep in mind that, “Congress may
circumscribe its regulation and occupy only a limited field.
When it does so, state regulation outside that limited field
... is not forbidden or displaced.” Kelly v. State of Wash-
ington, 302 U.S. 1, 10 (1937). See also Askew v. American
Waterways Operators, Inc., 411 U.S. 325, 332 (1973).

19

Nothing in Aloha Airlines, Inc. v. Director of Paxa-
tion, 464 U.S. 7 (1983), requires deviation in this case from
either the presumption against preemption or the two-
tiered method of analysis previously followed by this Court
and used below by the Supreme Court of New Jersey. For
in Aloha Airlines the Court indicated that where an ex-
press preemption provision clearly and unambiguously
forbids precisely the kind of state action under attack,
the state statute can be invalidated without further re-
course to legislative history or rules developed in cases
where the scope of federal preemption is much less clear.
Ibid. at 12. Since the explicit preemption language in
issue here differs from that involved in Aloha Airlines
in that 42 U.S.C. §9614(c) does not categorically prevent
all state taxation of a particular category, but rather is
much more circumscribed in nature, the truncated review
that proved sufficient in Aloha Airlines is inappropriate
in this context.’

As in all cases involving explicit preemption clauses
where the task before the Court is one of statutory con-

8 Compare 49 U.S.C. § 1513(a) which provides that, “No State
. . . Shall levy or collect a tax, fee, head charge, or other charge,
directly or indirectly, on persons traveling in air commerce or
on the carriage of persons traveling in air commerce or on the
sale of air transportation or on the gross receipts derived there-
from . . .”” with the language of 42 U.S.C. § 9614(c) which pro-
vides that, ‘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 sub-
chapter.” (Emphasis added). The italicized language of 42
U.S.C. § 9614(c) limits the preemptive scope of the provision
and compels resort to the rest of the Superfund Act to deter-
nine the extent of federal coverage and—derivatively—the ex-
tent of federal preemption. In such circumstances where Con-
gress has consciously chosen co se language to limit the
scope of preemption, and a traditional function of state gov-
ernment (i.e., taxation) is at stake, the presumption against
preemption is particularly strong. See Metropolitan Life Ins.
Co. v. Massachusetts, supra, 105 S.Ct. at 2389-2390.

20

struction, the starting point for analysis is the language
of the federal statute. See Metropolitan Life Ins. Co. v.
Massachusetts, supra, 105 S.Ct. at 2386-2389; Shaw v.
Delta Air Lines, Inc., supra, 463 U.S. at 95. At issue here
is the following language contained in 42 U.S.C. § 9614(c) :
Except as provided in this Act, no person may be re-
quired to contribute to any Fund, the purpose of which
is to pay compensation for claims for any costs of re-

sponse or damages or claims which may be compen-
sated under this subchapter.

This provision, by its own terms, restricts state taxa-
tion if the purpose of the tax is to finance a fund used to
pay claims ‘‘which may be compensated under this sub-
chapter.’’ Although not a paragon of legislative drafting,
this language limits the preemption of state taxation to
the areas Congress decided to cover on the federa! level.
A corollary of this limitation is that Congress thus left to
the states the power to tax industry for claims excluded
from coverage by Superfund. For, when Congress cireum-
scribes its coverage in this manner, ‘‘state regulation out-
side that limited field ... is not forbidden or displaced.’’
Kelly v. State of Washington, supra, 302 U.S. at 10; see
also Shaw v. Delta Air Lines, Inc., supra, 463 U.S. at 97fn.
17. (state anti-discrimination employment law preempted
only insofar as it related to pension plans covered by
ERISA and thus continued to apply to other aspects of the
employment relationship such as hiring, promotions and
salaries).

As noted above, Superfund provides limited financing
for certain removal actions involving acute toxicity (42
U.S.C. § 9604(¢) (1) ; 40 C.F.R. 300.65), for remedial actions
at sites on the NPL (40 C.F.R § 300.68(a)), and for claims
brought by the state or federal governments for damage
to natural resources (42 U.S.C. §9607(f)). 42 U.S.C.
§ 9611. No federal financing in any of these areas is pro-

——_- —-

—— or

21

vided for petroleum releases, however. 42 U.S.C. 4 9601
(14). CERCLA thus leaves completely untouched many
categories of expenditures covered by Spill Fund. These
categories include the cost of remedying petroleum spills;
the payment of damage claims, including claims for dam-
age to property, loss of earnings, and loss of tax revenues;
and nongovernmental claims for damage to natural re-
sources. Compare 42 U.S.C. § 9611 with N.J.S.A. 58:10-
23.11g(a). Moreover, the Spill Fund also finances other
costs excluded from federal coverage such as personnel
and equipment costs incurred by the Department of En-
vironmental Protection in operating the State response
program, and the administrative costs of the Spill Fund.
Although Exxon has referred to these purposer of the Spill
Fund as “‘incidental’’ (Exxon brief at 22-23, fn. 24), New
Jersey rejects this characterization as inconsistent with
the State statutory scheme. Petroleum spills in particular
are an integral part of the coverage provided by Spill
I'und,’? as are administrative expenses which support the
operation of both the Spill Fund and the Department of
Environmental Protection’s hazardous site cleanup pro-
gram.

CERCLA also specifically requires states to provide
at least 10% of the cost of remedial actions. 42 U.S.C.
5 9604(c). Since these costs are not eligible for Super-

9 The Spill Act placed special emphasis on providing a fund
to address petroleum spills because of the fear that such a spill
would serio’ !y damage the waters and beaches of the New
Jersey shore, thus interfering with the State’s lucrative tourist
industry. N.J.S.A. 58:10-23.11a. That New Jersey has not suf-
fered a catastrophic oil spill since the Spill Act was adopted
neither renders this purpose of the Act “incidental,” nor re-
moves the need to collect taxes to provide a contingency fund
for use in the event of a serious petroleum spill. The tax court
noted this important fact in its opinion upholding the Spill
Fund tax (JSa75).

22

fund financing, a state may levy its own tax to fund these
expenditures." Furthermore, since the Spill Act in
N.J.S.A. 58:10-23.11f vests the Department of Environ-
mental Protection with discretion in financing cleanup ac-
tions, this flexible grant of authority allows the Depart-
ment to use Spill Fund moneys to provide New Jersey’s
cost share under CERCLA. Any doubt that may have
existed concerning this use of the Spill Fund was removed
by the New Jersey Legislature when it adopted the Haz-
ardous Discharge Bond Act, P.L., 1981, c. 275. This Act pro-
vided for the sale of bonds to finance a fund supplemen-
tary to Spill Fund, and authorized the use of money ob-
tained under the Act to pay the non-federal share of any
federal cleanup program ‘‘if moneys available pursuant
to P.L. 1976, c. 141 [Spill Act] are currently insufficient
to cover the share.’’ Ibid. at § 15. Since New Jersey cur-
rently has 85 sites on the NPL and 12 more have been pro-
posed for addition to the list, the State share of the cost
of remedial actions has been a significant expense of the
Spill Fund, and is expected to constitute a significant ex-
penditure in the future if Superfund is reauthorized. More-
over, as remedial and removal actions are concluded at
New Jersey sites, it is anticipated that the costs of main-
taining these sites will become a significant non-federal
cost of the State’s hazardous waste cleanup program.

10 Interestingly, Dr. Louis Fernandez, Vice Chairman of Mon-
santo Company, a party to this litigation, submitted a state-
ment on behalf of the Chemical Manufacturers Association to
the Senate Committee on Finance during the Committee’s
hearings on S.1480—a statement that supported preemption
“except to the extent used to raise money for matching pur-
poses under this legislation.” Hearings on S.1480 before the
Committee on Finance, United States Senate, 96th Cong., 2d
Sess; September 11-12, 1980, Comm. Print at 209. Appellants’
position in this case, however, does not recognize the state
share of the cost of remedial actions as a legitimate object of
state taxation.

23

The plain language of 42 U.S.C. §9614(c) thus per-
mits states to impose taxes to finance all of the elements
of state hazardous waste programs not covered by Super-
fund. Under the New Jersey Spill Act, therefore, the
State may continue to levy its tax on petroleum and haz-
ardous substances to finance a whole host of items, includ-
ing State response to petroleum spills; administrative, per-
sonnel, and equipment costs incurred by the Spill Fund
and the Department of Environmental Protection; prop-
erty damage claims; the New Jersey share of the cost of
Superfund remedial actions; and State maintenance costs
at Superfund sites.

While the areas of Spill Fund ‘spending that fall be-
yond the scope of federal coverage would alone sustain
the validity of the New Jersey tax, the language used by
Congress in 42 U.S.C. § 9614(¢c)—when analyzed against
limitations in Superfund coverage imposed by EPA—
allows the states to supplement federal cleanup efforts by
financing costs not actually compensated by Superfund.
This is so because the “may be compensated” formulation
limits federal preemption to instances where there is some
likelihood or probability of Superfund financing. See
Webster's Third New International Dictionary (1976) at
1396, which defines ‘‘may” as “in some degree likely to”;
see also Black’s Law Dictionary (5th ed. 1979) at 883,
which defines “may” as “an auxiliary verb qualifying the
meaning of another verb by expressing . . . possibility [er]
probability . . .” Where federal regulations establish cri-
teria that must be met to qualify for Superfund financing,
therefore, sites that fail to meet these standards are not
eligible for federal funding and thus fall outside of the
preemptive scope of 42 U.S.C. § 9614(c).

Perhaps the clearest example of this point involves
federal funding for remedial actions where the NCP pro-

24

vides that Superfund financing will be made available only
to sites on the NPL. 40 C.F.R. 4 300.68(a). Remedial ac-
tions at New Jersey sites not included on the NPL could
thus be financed by the Spill Fund since there is no reason-
able likelihood under the federal program that such sites
would receive Superfund financing. State funding of re-
medial actions at non-NPL sites would be used to clean up
problem areas of local—but not national—significance. A
similar analysis applies to removal actions that fail to
qualify under the “acute toxicity” test established by EPA
in the NCP as a prerequisite to federal funding. 40 C.F.R.
§ 300.65. As noted above, EPA’s implementation of the
Superfund program is relevant to the issue of preemption
because courts must ‘‘consider the relationship between
state and federal laws as they are interpreted and applied,
not merely as they are written.” Jones v. Rath Packing
Co., supra, 430 U.S. at 526.

In addition, where EPA rejects state requests for
Superfund financing for emergency removal actions, for
remedial actions at NPL sites,"' or for damage to natural
resources, such rejections effectively foreclose the pos-
sibility of federal financing for the requested action. Since
a rejection is tantamount to a declaration of ineligibility
for federal financing, State funds should be permitted to
finance all work for which a rejection is received. See
the introduction to the NCP, 47 Fed. Reg. 31195 to 31196,

11 EPA has indicated that inclusion on the NPL is merely the
first step in qualifying for Superfund-financed remedial action;
it is not a guarantee that compensation will be provided. For,
as EPA has stated, “If a release is included on the NPL but a
later remedial investigation discloses the hazard to be less
significant than —— thought to be, a decision may be
made not to provide Fund financed remedial response.” 47
Fed. Reg. 31187 (1982). See also 48 Fed. Reg. 40659 (1983)
(“Inclusion of a site on the NPL does not establish that EPA
necessarily will undertake response actions.”).

25
where EPA noted that ‘‘eligibility” for Superfund finane-
ing will be decided on a case-by-case basis since insuffi-
cient funding was available to support all sites in need of
cleanup.

The use by Congress of the ‘‘may be compensated”
language is particularly telling in this regard. Congress
selected this formulation over ‘‘may be asserted” which
would have prevented the use of state taxes to finance any
claim which could conceivably have been brought under
Superfund, regardless of its chances for eventual financ-
ing.’ By utilizing “may be compensated” instead, how-
ever, Congress limited preemption to those areas where
there was a realistic chance of federal financing. Once that
opportunity is foreclosed and ineligibility established for
any specific action, though, the “may be compensated”
formulation allows state funds to pick up the slack. It
was precisely this situation that the Supreme Court of
New Jersey addressed when it found that the Spill Fund
could be used to finance hazardous waste cleanup costs
and related claims “not actually paid under Superfund.”
(JSa36).

This “actual compensation” test, however, presup-
poses that states will request Superfund financing when-
ever a site or release falls reasonably within the criteria
used to establish NPL ranking for remedial actions, or
within the acute toxicity criteria used to determine federal
funding for removal actions. To the extent that New
Jersey sites remain realistically eligible for federal financ-
ing, therefore, Spill Fund revenues could not be used to
support independent, state-sponsored cleanup efforts at

12 The “may be asserted” formulation was proposed by Senator

Cannon in Amend. No. 2387 to 5.1480, reprinted at 3 Legis.

ty 185-186. See also § 110 of H.R. 85, reprinted at 2 Legis.
ist. 1051.

26

those sites. This, then, is the real thrust of 42 U.S.C.
§ 9614(c)—to channel the states into the Superfund pro-
gram for acutely hazardous and national priority sites.
Congress thus used 42 U.S.C. §9614(c) to promote na-
tional uniformity in responding to priority sites—at least
to the extent that federal financing would be made avail-
able to support such a program. States that want to main-
tain their own funds supported by special taxes must thus
maximize their participation in the Superfund program
and cannot use their funds to cireumvent federal regula-
tory requirements or other entanglements regarding sites
realistically eligible for federal financing.” Should a state
want to embark upon such an independent program, how-
ever, it would be required to finance it through general
revenues, as allowed by the second sentence of 42 U.S.C.
§ 9614(c) (“Nothing in this section shall preclude any State
from using general revenues for such a fund... .”).

The actual compensation test thus encompasses the
concept of compensability because it restricts the use of
state taxes to finance costs realistically eligible for Super-
fund financing unless and until a determination of in-
eligibility is made. Although the “may” in “may be com-
pensated” could conceivably be interpreted as “shall” (see
Webster's Third New International Dictionary (1976) at
1396 which notes that ‘‘may” often means ‘‘shall” when
used in statutes; see also Black’s Law Dictionary (5th ed.

13° Just such a situation occurred in New Jersey when the State
wanted to deviate from EPA’s policy of allowing potentially
responsible parties to conduct the remedial investigation/
feasibility study (“RI/FS”; see 40 C.F.R. § 300.68(d)) at an NPL
site. In order to ensure prem con gee as opposed to private
party control of the RI/FS process, New Jersey withdrew its
request for Superfund financing. Because it appeared that the
cost of the study realistically could have been financed under
the federal program, the Attorney General’s Office advised the
Spill Fund not to pay for the RI/FS. General revenues were
used instead.

27

1979) at 883 which notes that “may” and “shall” are fre-
quently used interchangeably, and advises that the mean-
ing of “may” should be sought in its context rather than
through resort to grammar), it need not be given anything
other than its common meaning of “likely to” to support
the validity of the Spill Fund tax and the judgment to
this effect rendered below.

Although Exxon argues that the “actual compensa-
tion” test makes 42 U.S.C. § 9614(b) and (c) impermissibly
redundant, this is not the case.“ For 42 U.S.C. §9614(b)
prevents double recoveries for the same claims no matter
what the source of compensation, and does not refer solely
to governmental funds. If a person—including a state
government—were to obtain complete compensation for
response costs from a responsible party through a state
court common law nuisance action, for example, this sec-
tion would prevent a duplicate recovery under Superfund.
By prohibiting double recoveries categorically regardless
of source, 42 U.S.C. §9614(b) fosters the conservation
of livaited financial resources available for compensating
clains, protects the subrogation rights of the Superfund,
anc promotes the early election of remedies by claimants.
In no way can it be deemed to be redundant of 42 U.S.C.
§ 9614(c) which addresses entirely different concerns re-
lated to state taxation, as noted above.

44 642 U.S.C. § 9614(b) provides in full that:

Any jones 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
pw other Federal or State law shall be precluded from re-
ceiving compensation for the same removal costs or dam-
ages or claims as provided in this chapter.

28

In conclusion, the preemptive scope of 42 U.S.C.
§ 9614(c) is limited by its own terms and the structure
of the Act and its implementing regulations to those costs
covered or actually compensated by the Superfund. Con-
sequently, the decision of the Supreme Court of New Jer-
sey should be affirmed.

POINT II
THE LEGISLATIVE HISTORY OF THE SU-
PERFUND ACT SUPPORTS NEW JERSEY’S
INTERPRETATION OF 42 U.S.C. § 9614(c).

In interpreting statutes, the duty of the Court is to
enforce the will of Congress. Chemical Mfrs. Ass’n v.
Natural Res. Defense Council, 105 S.Ct. 1102, 1108 (1985).
Although the Court starts the process of statutory con-
struction with the language of the statute, its analysis
does not necessarily end there. Rather, the Court also
considers the object and policy of the statute as well as
its legislative history. Stafford v. Briggs, 444 U.S. 527,
536-537 (1980). Indeed, all materials relevant to deter-
mining legislative intent should be reviewed. Watt v.
Alaska, 451 U.S. 259, 265-266 (1981); Andrus v. Shell Oil
Co., 446 U.S. 657, 666 fn.8 (1980). For, as Chief Justice
Marshall declared in the early days of this Court, “[wJhere
the mind labours to discover the design of the legislature,
it seizes every thing from which aid can be derived.” Jbid.,
citing United States v. Fisher, 2 Cranch 358, 386, 2 L.Ed.
304 (1805). See also Frankfurter, ‘‘Some Reflections on
the Reading of Statutes,” 47 Col. Law Rev. 527, 541 (1947).
To understand the scope and meaning of 42 U.S.C. § 9614
(ec), therefore, resort to the legislative history of the pro-
vision is necessary. Indeed, the evolution of the provision
may be the best available guide to legislative intent. See
generaliy Chemical Mfrs. Ass’n v. Natural Res. Defense

29
Ceuncil, supra, 105 S.Ct. at 1108; Russello v. United States,
464 1S. 16, 23 (1983).

The Superfund Act was adopted in the waning hours
of the 96th Congress to provide a “first step to respond
to the severe threats posed by spills, leaks and releases
of hazardous substances, as well as toxic dumpsites.”
1 Legis. Hist. 711 (remarks of Senator Mitchell). The
road to passage, however, “was neither easy nor direct.”
1 Legis. Hist. V (preface to legislative history of Super-
fund prepared by the Congressional Research Service).
Indeed, the Act was an eleventh hour compromise forged
primarily in the Senate on the basis of four predecessor
bills: H.R. 85 which addressed spills into navigable wa-
ters of oil and hazardous substances; H.R. 7020 which was
confined to abandoned hazardous waste sites; 8S. 1480 which
addressed all releases of nonpetroleum hazardous sub-
stances (including spills and abandoned sites) and pro-
vided for vietim compensation; and S. 1341 which was
proposed by the Carter Administration and combined cov-
erage in one bill for oil and hazardous substance spills as
well as abandoned sites. See generally, 1 Legis. Hist. V-
VII; 1 Legis. Hist. 681-773 (Senate debate) ; 1 Legis. Hist.
774-775 (letter transmitting the compromise measure from
the Senate to the House).

Despite the rushed and somewhat confusing cireum-
stances surrounding the enactment of CERCLA, the evo-
lution of the provision concerning state taxation can be
charted through the 96th Congress. The preemption of
state taxation and states response programs became a
central issue during consideration by the House of H.R.
85, the oilspill bill that eventually was broadened to in-
elnde spills of hazardous substances. Compare H.R. 85
as introduced on January 15, 1979 (2 Legis. Hist. 474-524)
with H.R. 85 as passed by the House on September 19,

30

1980 (2 Legis. Hist. 1016-1114). In H.R. 85, the House
proposed a national, comprehensive scheme of liability
and compensation to address pollution caused by spills
of oil and hazardous substances into navigable waters. ‘The
bill was intended te provide a uniform federal program
to replace the existing “patchwork quilt” of federal and
state laws in the area. 2 Legis. Hist. 527 (H. Rep. No.
96-172, part 1). The bill imposed strict liability on the
persons responsible for spills (4 104, reprinted at 2 Legis.
Hist. 1028-1033),'5 and also required vessels and other en-
tities involved in the transportation and handling of oil
and hazardous substances to obtain insurance to cover
damages and response costs resulting from spills (§ 105,
reprinted at 2 Legis. Hist. 1034-1037). To provide com-
pensation in those situations where a party responsible
for a spill was either unknown or incapable of financing
the costs of response and damages, however, H.R. 85 p.o-
posed the creation of a fund supported in large part by
fees on oil and certain chemicals (Title V, reprinted at
2 Legis. Hist. 1093-1104). Although some concern was
expressed about the impact of the fees on industry, no
adverse effect was anticipated. Indeed, the anticipated
impact of the fees was described as ‘‘minimal.” 2 Legis.
Hist. 567 (H. Rep. No. 96-172, part 1).

H.R. 85 made the fund “liable, without any limitation,
for all damages which are compensable damages under
title V of this Act, to the extent that the loss is not other-
wise compensated.” §104(f)(1), reprinted at 2 Legis.
Hist. 1031. “Compensable damages,” in turn, were de-
fined as “damages asserted for”:

1S Citations are to the oilspill portion of H.R. 85; parallel P
visions can be found relating to hazardous substance spills in
Title Ill, reprinted at 2 Legis. Hist. 1061-1090.

31

(A) removal costs,

(B) injury to, or destruction of, real or personal prop-
erty,

(C) injury to, or destruction of, natural resources,
and

(D) loss of profits or impairment of earning capacity
due to injury or destruction of real or personal
property or natural resources [subject to certain
conditions]. [§531, reprinted at 2 Legis. Hist.
1104].

This definition excluded damages which had been covered
in earlier versions of the bill, including the loss of use of
property or natural resources, and the loss of tax revenue
for a period of one year due to property damage. Com-
pare H.R. 85 as passed with § 103(a) of H.R. 85 as intro-
duced, reprinted at 2 Legis. Hist. 487.

Against the backdrop of the coverage provided in the
final version of H.R. 85, the House proposed the follow-
ing preemption language :

See. 110.(a) Exeept as provided in this title—

(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 described
in section 103(a), a claim for which may be asserte«!
under this title, and

(2) 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,
nor to establish or maintain evidence of financial re-
sponsibility relating to the satisfaction of a claim for
such a loss [reprinted at 2 Legis. Hist. 1051; emphasis
added }.

H.R. 85 went on to provide, however, that “Nothing in
subsection (a) shall preclude any State from imposing
a tax or fee upon any person or upon oil in order to finance
the purchase and prepositioning of oil pollution cleanup

32

and removal equipment.” §110(b), reprinted at 2 Legis.
Hist. 1051. See also §302(a) of H.R. 85 which imposes
substantially similar requirements in regard to hazardous
substance spills (2 Legis. Hist. 1074-1075).

The preemption provisions of H.R. 85 sparked a con-
siderable amount of concern and comment in the House.
During the course of debate on the measure, Representa-
tive Biaggi—the floor manager of the bill—noted the grow-
ing concern about the continuing existence of State funds
and stated that, ‘‘ What H.R. 85 does is to prohibit a State
from requiring any person to contribute to any fund if the
purpose of that fund is to compensate for an oil spill dam-
age claim as defined in title V of the bill.” 2 Legis. Hist.
903. This statement led to a colloquy between Representa-
tive Biaggi and Representative Florio from New Jersey
who was concerned about the impact of the provision on
New Jersey’s Spill Fund:

Mr. Florio ... Am I correct in understanding
that it is the purpose of section 110 to prohibit States
from requiring any person to contribute to a fund for

the purpose of reimbursing claims as described in
title V?

Mr. Biaggi. Yes, that is the clear intent. The
purpose is to prohibit States from creating duplicate
funds to pay damage compensable under H.R. 85.

Mr. Florio. However, there is no such preemption
of a State’s ability to collect such taxes or fees for
other costs associated with spills and discharges of
oils and hazardous substances that are not compens-
able damages as defined in this legislation or that do
not occur in or threaten the navigable waters of the
United States.

Mr. Biaggi. The gentleman is correct. [2 Legis.
Hist. 904].

The colloquy went on to establish that H.R. 85 would not
prevent states from levying taxes ‘‘to finance a State fund

33

designed to cover expenses and economic loss not covered
under the provisions of H.R. 85,” or from using such taxes
‘*to provide intermediate, up front capital to pay for [re-
sponse] activities and seek reimbursement from the Fund
established under H.R. 85.” Ibid. Moreover, the colloquy
stated that there would be no preemption whatsoever in
regard to the use of state taxes collected prior to the ef-
fective date of H.R. 85. 2 Legis. Hist. 905.

The meaning of the preemption provisions was further
clarified in the following colloquy between Representa-
tives Biaggi and Snyder:

Mr. Snyder. Further with respect to the existing
State fund, will it be permissible for the State of New
Hampshire to maintain that fund and continue raising
revenues for that fund and any purposes other than
those covered by H.R. 85? Specifically, I refer to
maintenance of a State staff as well as the purpose of
prepositioning of equipment and materials for clean-
up.

Mr. Biaggi. The preemption provision in H.R, 85
would not prohibit the maintenance and operation of
such a fund as the gentleman mentions for the purpos-
es he cites.

Mr. Snyder. In fact, cannot the State fund and
the revenue system supporting it be maintained and
used for any purpose, including compensation of
damages, and cleanup for which the fund created by
H.R. 85 is not available?

Mr. Biaggi. Again, I would say to the gentleman
that it is not the intent of H.R. 85 to preempt the
States from financing by whatever means they choose
those activities which are not compensable under H.R.
85. [2 Legis. Hist. 906-907].

See also the remarks of Representative Livingston to the
same effect at 2 Legis. Hist. 919-920.

Both colloquies echo the analysis of the preemption
provision contained in an earlier House report on H.R. 85

34

which noted that, ‘‘The States would be prohibited only
from duplicating the basic purposes of the Federal fund
.. 7 2 Legis. Hist. 532 (H. Rep. No. 96-172, part 1). More-
over, in regard to the language assuring states that they
could tax to finance the purchase and installation of pollu-
tion abatement equipment, the report stated that, ** by
singling out this particular State activity as not covered
under the preemption subsection, neither the Subcommittee
nor the Committee implies or intends to imply that other
State actions, not specifically enumerated, are prohibited.”
2 Legis. Hist. 533. See also 2 Legis. Hist. 562-563 (H. Rep.
No. 96-172, part 1).

From all of the above comments, it is clear that the
preemption provisions in H.R. 85 were intended merely
to prevent the states from duplicating what was envisioned
to be a comprehensive federal spill fund—comprehensive,
that is, within the scope of its coverage. The House ree-
ognized, however, that even the program it envisioned in
FLR. 85 would not address all of the kinds of damage re-
sulting from spills, and thus contemplated that States
would levy taxes to cover areas excluded from the pro-
posed federal scheme. Moreover, although the House spe-
cifically included a disclaimer in the preemption sections
of TLR. 85 allowing states to impose taxes for the purchase
and positioning of pollution abatement equipment, this
provision was intended to be illustrative of the acceptable
uses of a state tax, and was not the only purpose for which
a State tax was authorized.

Since a combination of the liability, insurance, and
funding provisions of H.R. 85 was expected to accommo-
date all future spills in terms of response costs and the
specified damages, there appeared to be no need for co-
extensive state programs. This point was emphasized

35

during consideration of S. 1341, the bill proposed by the
Carter Administration, which also contained a spill pro-
gram analogous to the coverage provided in H.R. 85. (3
Legis. Hist. 27-60). Under the spill provisions of S. 1341,
according to Thomas C. Jorling, Assistant Administrator,
Water and Waste Management, EPA, “all spills requiring
response would receive it, each spill would be completely
cleaned up, and any property damages and limited econom-
ic damages ... would be compensated. For these activ-
ities, then, no State authority or funds would be needed.’
1 Legis. Hist. 124 (written statement of Mr. Jorling sub-
mitted to the Subcommittee on I’nvironmental [Pollution
and Resource Protection, Committee on Environment and
Public Works). Mr. Jorling also noted, however, that
the spill portions of 8S. 1341 would preempt a state from
establishing a fund ‘‘which would duplicate the purposes
of the legislation but it does not preempt States for other
purposes.” 1 Legis. Hist. 112. His views are thus con-
sistent with those of Kepresentatives Biaggi, Florio, and
Snyder noted above. See also Statement of Swep T. Davis,
Associate Assistant Administrator for Water and Waste
Management of EPA, recorded in Hearings on S. 1480 be-
fore the Senate Committee on Commerce, Science and
Transportation, 96th Cong. 2nd Sess. (September 11-12,
1980), Comm. Print at 175.

In contrast to the spill-related preemption provision
of S. 1341, another section of that bill expressly narrowed
the scope of the spill provision and also disavowed any

16 The preemption provision of S. 1341 was contained in
§ 612 and used language similar to that included in H.R. 85.
S. 1341 provided in pertinent part that, “no person may be re-
quired to contribute to any fund, the purpose of which is to
pay compensation for such a loss or cost [described in sub-
section (a) of section 607 of this title] . . . 3 Legis. Hist. 57.

36
preemptive intent in regard to abandoned hazardous waste
sites:

Nothing in subsection (a) of this section shall pre-
clude or be interpreted to preempt any State from es-
tablishing liability funds, establishing limits of lia-
bility, setting financial responsibility requirements,
or imposing any taxes or fees upon any person, or upon
oil or hazardous substances for the purpose of estab-
lishing liability and compensation schemes for losses
or costs not compensated under this title which are
associated with pollution, or for any losses or costs
associated with releases of hazardous substances as
defined in section 601(0) 3) at uncontrolled hazard-
ous waste disposal sites. [§612(b), reprinted at 3
Legis. Hist. 57].

No preemption was proposed for abandoned sites because
‘‘The legislation focuses Federal assistance on those sites
presenting the most serious public health, safety or en-
vironmental problems: the States would have the re-
sponsiiblity for remedying the problems caused by the
vast majority of the remaining inactive and abandoned
sites.” Jorling Statement, supra, 1 Legis. Hist. 109-110.
Due to the limitations of the federal program for aban-
doned sites, therefore, ‘‘the Administration felt that pre-
emption would neither be equitable nor in the best interests
of public health and environmental protection.” Ibid. at
124. See also Davis comments, supra, Comm. Print at
175 (no preemption in regard to state taxation to remedy
abandoned sites because ‘‘we need that State program as
a complement to this program.”)

Congress at first agreed with the Administration that
there should be no preemption of state taxation in the
abandoned site area. Neither H.R. 7020 nor S. 1480 which
both addressed the abandoned site problem contained any
restriction on state taxation. See H.R. 7020 as passed by
the House, 2 Legis. Hist. 391-463; S. 1480 as reported, 1

37

Legis. Hist. 462-552. In August 1980, however, two amend-
ments containing preemption provisions were proposed
for addition to S. 1480—one by Senator Magnuson and the
other by Senator Gravel. Both of these amendments pro-
posed adding an oilspill title to S. 1480 and limitea pre-
emption to the oilspill context. They thus were consistent
in concept with the approach taken earlier by Congress and
the Administration which preempted state taxation to the
extent of federal coverage in the oilspill area, but rejected
preemption in regard to abandoned sites."’

On September 24, 1980, however, Senator Cannon pro-
posed a number of amendments to S. 1480 reflecting con-
cerns raised in hearings before the Commerce Committee.
3 Legis. Hist. 178-179. See also Hearings on S. 1480 be-
fore the Senate Committee on Commerce, Science and
Transportation, 96th Cong., 2nd Sess. (September 11-12,
1980), Comm. Print. Due to the extremely tight time-
frame, the amendments had not been considered in com-
mittee session. 3 Legis. Hist. 178. Senator Cannon, on
behalf of the Commerce Committee, thus invited comments
on the amendments. Jbid. Included in the group of 15
amendments was No. 2387 which proposed some limitations
on state taxation:

17 The Magnuson Amendment (No. 1958) is reprinted at 3
Legis. Hist. 70-113. In regard to preemption, § 15(a) of the
amendment provided in pertinent part 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.” Ibid
at 107. The Gravel Amendment (No. 1965) is reprinted at 3
Legis. Hist. 114-150. Its preemption provision was sweeping in
scope, stating that ‘States are hereby precluded from: 1) the
imposition of excise taxes or fees upon oil for purposes of fi-
nancing activities related to the cleanup of discharges and the
payment of damages caused by discharges.” Ibid. at 142 (em-
phasis added).

38

Sec. 8(a) Except as provided in this Act and subject
to the provisions of subsection (b) of this section—

(1) No action may be brought in any court of the
United States, or of any State or political subdivision
thereof, for costs or damages for which a claim may
be asserted under this Act, and

(2) No person may be required to contribute to
any fund, the purpose of which is to pay compensa-
tion for claims for such costs or damages, nor to es-
tablish or maintain financial responsibility relating to
the satisfaction of a claim for such costs or damages:
provided, however, that nothing in this subsection shall
preclude any State from imposing a tax or fee upon
any person or upon any hazardous substance in order
to finance the purchase or pre-positioning of hazard-
ous substance release cleanup equipment or other prep-
arations for the cleanup of a release of hazardous sub-
stances which affects such State.

(b) Nothing in subsection (a) shall preclude or
be interpreted to preempt any State from establish-
ing liability funds establishing limits of liability, set-
ting financial responsibility requirements, or imposing
any taxes upon any person, or upon oil or hazardous
substances for the purpose of establishing liability and
compensation schemes for losses and costs associated
with releases of hazardous substances at any closed
hazardous waste disposal facility. [3 Legis. Hist. 185-
186].

Although the precise impact of this language when
viewed against the federal coverage proposed in 8. 1480 is
far from clear, Senator Cannon intended it to be consistent
with both S. 1341 and H.R. 85. Explanation to Amendment
No. 2387, reprinted at 3 Legis. Hist. 186. In keeping with
this intent, the explanation accompanying the amendment
stated that, ‘‘The amendment would expressly not prevent
the states from providing remedies for damages not cov-
ered by S. 1480. In addition, states would specifically re-
tain their authority to impose taxes or fees for the pur-

ee

39
chase of cleanup equipment.” Jbid. The thrust of the
Cannon Amendments was thus to prevent overlapping,
duplicative, and unnecessary state programs. [bid.

Following the presidential election in November 1980,
the Senate stepped up its efforts to adopt some form of
Superfund bill before the end of the lame duck session. 1
Legis. Hist. VII. A group of senators led by Senators
Randolph and Stafford, the ranking members of the Sen-
ate Committee on Environment and Public Works, intro-
duced their first compromise measure on November 18,
1980. 3 Legis. Hist. 199-287. This proposal contained a
substitute to S. 1480 that combined those parts of H.R. 85,
H.R. 7020, and S. 1480 where the senators believed that
consensus existed. Of particular note is that the first sub-
stitute was silent in regard to state taxation. The only
mention of preemption was contained in ¢114(a) of the
substitute which assured states that they would not be pre-
empted from ‘‘imposing any additional liability or require-
ments with respect to the release of hazardous substances
within such State.” 3 Legis. Hist. 275.

When this substitute measure failed to yield the ex-
pected consensus, however, Senators Stafford and Ran-
dolph introduced a second proposal. 1 Legis. Hist. 560-
680. It was this second substitute to S. 1480, introduced on
November 24, 1980, and passed by the Senate on that same
day, which eventually became CERCLA. 1 Legis. Hist. VIL.
In regard to preemption, the conipromise retained § 114(a)
from the first Stafford/Randolph substitute, thus allowing
states to impose additional liability and other require-
ments regarding releases of hazardous substances. 42
U.S.C. §9614(a). This provision represented a rejection
of the Cannon proposal which had restricted a state’s op-
tions in this area. See Amend. No. 2387, reprinted at

40

3 Legis. Hist. 185-186. The Act did prevent states from
imposing financial responsibility requirements, however,
thus accepting the Cannon proposal in this regard. Ibid.
Compare 42 U.S.C. § 9614(d). Finally, the compromise did
contain the language in issue here—42 U.S.C. § 9614(¢)—
which obviously represented an accommodation between
those legislators who opposed the preemption of state tax-
ation altogether, and those like Senator Cannon and the
supporters of H.R. 85 who supported some limitations on
state taxation.

In preempting state taxation only to the extent that
such taxes would be used to finance ‘‘claims which may be
compensated under this subchapter,” however, Congress
linked preemption to the coverage provided by CERCLA,
paralleling the thrust of the preemption provisions pro-
posed eariier in H.R. 85. Despite this parallel, though, the
preemption effected by 42 U.S.C. § 9614(c) was even less
onerous than what had been proposed earlier in the oil-
spill context because—unlike H.R. 85—CERCLA was noi
intended to cover all ‘‘compensable damages” including re-
moval costs associated with future spills, but was designed
to address only those releases (including abandoned waste
sites) that qualified for national priority status. Compare
the priority focus of CERCLA, 42 U.S.C. § 9605(8), with
§ 104(f) (1) of H.R. 85 which made the fund liable for
all removal costs and specified damage claims resulting
from a spill (2 Legis. Hist. at 1031 and 1104). Since
CERCLA left far more to the states to cover on their own
than H.R. 85 had left, therefore, the preemption accom-
plished by 42 U.S.C. §9614(c) was correspondingly nar-
rower. Moreover, by choosing “may be compensated” over
other proposed formulations such as “may be asserted,”
Congress prevented the use of state funds only for those

41
claims that had a realistic chance for Superfund compen-

sation and not from financing all claims that conceivably
could be raised under CERCLA.

As incorporated in the Superfund Act, then, 42 U.S.C.
§ 9614(c) became an incentive to states to participate fully
in the federal cleanup program for priority sites. If states
maximized their use of Superfund, they could maintain
their own funds supported by state taxes to supplement
the federal program. Should states wish to start a com-
peting and duplicative program for priority sites, how-
ever, 42 U.S.C. § 9614(¢) would require such programs to
be financed by general revenues.

The legislative history recounted above demonstrates
that Congress fully intended to allow states to impose
special taxes to supplement federal cleanup efforts. For
it simply made no sense in the context of H.R. 85, and
makes no sense in the context of CERCLA, to preempt
state taxation for needed cleanup efforts and damage com-
pensation that would not be addressed by the federal pro-
gram.

The limited nature of the preemption accomplished by
42 U.S.C. § 9614(c) was confirmed in the Bradley/Ran-
dolph colloquy quoted above at pp. 10-11, reprinted at 1
Legis. Hist. 731-733. A close examination of the colloquy
reveals substantial similarities to the exchange of remarks
that took place earlier between Representatives Biaggi and
Florio in regard to the preemption provisions of H.R. 85.
Compare 1 Legis. Hist. 731-733 with 2 Legis. Hist. 903-905.
Both colloquies demonstrate that continued state taxation
was contemplated, and that preemption was intended to
reach only to the extent of federal coverage of the problem
areas sought to be remedied by the legislation. In Senator
Randolph’s words, ‘‘Any damage not reimbursed by this

42

bill fund may similarly be the proper subject of a State
fund if a State so chooses to construct its fund.” 1 Legis.
Hist. 732.

The Bradley/Randolph colloquy did establish that
there would be no preemption whatsoever of state fund
moneys collected prior to the effective date of the legisla-
tion. 1 Legis. Hist. 732. Contrary to Exxon’s assertions,
however, the colloquy also addressed the permissible scope
of state taxation after the adoption of CERCLA. That
this is so is clear from Senator Bradley’s question con-
cerning the propriety of using state funds to finance re-
sponse activities vp front in the absence of federal action,
and then seeking reimbursement from the federal fund:

Mr. BRADLEY. In the event I have described,
where a State or a contractor of the State is the re-
spondent to the release and incurs economic loss nor-
mally compensable under the provisions of this bill,
does this legislation intend that a State that has con-
tinued to collect taxes or fees to finance a State fund
designed to cover expenses and economic loss not cov-
ered under the provisions of this bill have the right to
use those State fund moneys to provide intermediate,
up front capital to pay for these activities and seek
reimbursement from the fund established under this
bill?

Mr. RANDOLPH. Nothing in the language or
intent of this bill would prohibit a State from using

its fund for the purposes you have inquired about... .

[1 Legis. Hist. 732, emphasis added).

Moreover, since the colloquy had already established that
there was no preemption at all for state taxes collected
prior to the adoption of CERCLA, the following statement
obviously refers to the collection of state taxes after the
enactment of CERCLA:

Mr. BRADLEY. And am I also correct in noting
that State funds are preempted only for efforts which

43

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 reimburse-
ment?

Mr. RANDOLPH. That is correct. [1 Legis. Hist.

733).
Similarly, the remarks confirming the use of state funds
to provide the state share of remedial costs and to com-
plete cleanup efforts terminated by the federal govern-
ment also referred to funds supported by state taxes levied
subsequent to the adoption of CERCLA. Ibid. lxxon’s
interpretation of the colloquy which limits it to the use of
state taxes collected before the enactment of CERCLA is
just plain wrong. As the above excerpts indicate, the col-
loquy supports New Jersey’s interpretation of 42 U.S.C.
§ 9614(c). See aiso the comments of Representative Florio
concerning the preemption provision during House debate
on CERCLA, 1 Legis. Hist. 780 (‘‘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 re-
leases that are not compensable damages as defined in this
legislation. It is also intended that state funds can be
used to provide the required 10-percent State match.”)

Both Houses of Congress have recently reconfirmed
the construction of 42 U.S.C. §9614(c) coutained in the
Bradley/Randolph colloquy and endorsed by the courts
below. In considering legislation to reauthorize Super-
fund, the Senate Committee on Environment and Public
Works has proposed aii amendment to 42 U.S.C. § 9614(c)
to clarify the ‘‘original intent of the provision.” Super-
fund Amendments of 1984, Sen. Rep. No. 98-631, 98th
Cong., 2nd Sess. (September 21, 1984), Comm. Print at 35-
36 and 245. As noted in the Committee Report:

44

The addition makes clear that in no way are States
prohibited from using special taxes to raise their own
funds if the funds are expended for costs at Superfund
sites under section 104/c)(3).... It also includes the
costs of responses supplemental in number or degree
to those taken under the Fund. State management
activities for hazardous substance programs would
also be appropriate. [Jbid. at 36].
This clarification was deemed necessary by the Committee
to clear up “[a]ny cloud of uncertainty over the legitimacy
of” state taxes that had been prompted by the instant liti-
gation. Jbid. A similar need to clarify existing law was
perceived in the House where the Committee on Energy
and Commerce has noted that, ‘‘The Committee believes
that the proper interpretation of current law is that its
preemption provision was intended only to preclude states
from imposing taxes or otherwise requiring contributions
to funds which would pay costs or damages that would be
actually compensated by Superfund.” Superfund Expan-
sion and Protection Act of 1984, H. Rep. No. 98-890, Part 1,
9th Cong. 2nd Sess. (July 15, 1984), Comm. Print at 58-59.

Although post-enactment legislative history such as
these recent committee reports may not be as persuasive
as contemporaneous legislative history, post-enactment his-
tory is nonetheless entitled to ‘‘significant weight.” Sea-
train Shipbuilding Corp. v. Shell Oil Co., 444 U.S. 572,
596 (1980). See also Bell v. New Jersey, 461 U.S. 773, 784-
785 (1983). Certainly, the consideration of these reports is
in keeping with this Court’s desire to review all material
relevant to the task of ascertaining legislative intent. See
Watt v. Alaska, supra, 451 U.S. at 265-266; Andrus v. Shell
Oil Co., supra, 446 U.S. at 666. The fact that the post en-
actment history refers to the instant controversy contrib-
utes rather than detracts from the weight that should be

45

accorded to the reports because the reference makes clear
that Congress knew about the dispute and sought to clarify
any misinterpretation of its original intent in adopting 42
U.S.C. §9614(c). See generally North Haven Bd. of Ed.
v. Bell, 456 U.S. 512, 535 (1982) ‘congressional awareness
of dispute as reflected in post-enactment developments
lends weight to interpretation of statute endorsed by
Court).

Both the contemporaneous and subsequent legislative
history thus support the conclusion reached below that New
Jersey may continue the Spill Fund tax to finance costs
not covered or actually compensated by Superfund. To
fulfill the will of Congress, therefore, this Court should
affirm the judgment of the New Jersey Supreme Court.

Before concluding, however, some mention must be
made of the interpretation of 42 U.S.C. § 9614(¢) urged by
the Solicitor General. The Solicitor General focuses on
the definition of “claim” contained in CERCLA which
means “a demand in writing for a sum certain.” 42 U.S.C.
§ 9601(4). Since governmental response costs are distinct
from claims on both the federal and State level because
they are paid directly from the trust funds established
for this purpose without resort to the claims process estab-
lished in both pieces of legislation, the Solicitor General
concludes that governmental response costs are completely
beyond the preemptive scope of 42 U.S.C. 4 9614(c). See
42 U.S.C. § 9611(a) in which the payment of governmental
response costs is explicitly distinguished from the payment
of claims; compare the claims processes in 42 U.S.C. 4 9612
and N.J.S.A. 58:10-23.11k through N.J.S.A. 58 :10-23.11q
which were not intended to be used for governmental re-

46

sponse costs.'"* Although this use of the “claims” language
differs from New Jersey’s reading of 42 U.S.C. § 9614(c),
it certainly is feasible and is consistent with New Jersey’s
interpretation to the extent that both are in keeping with
the narrow scope of preemption envisioned by Congress
and discussed above.

Insofar as third-party damage claims are concerned,
however, the Solicitor General finds this area totally pre-
empted by 42 U.S.C. §9614(c). For example, under the
Solicitor General’s reading, a nongovernmental party who
cleans up a site could not be compensated by a state fund
even if the cleanup was either not eligible for federal com-
pensation (e.g., site not on NPL), or if the request for re-
imbursement had been rejected by EPA. Similarly, states
would be precluded from financing third-party claims for
damage to natural resources, even though CERCLA spe-
cifically limits such claims to governmental entities. 42

18 The structure of both the federal and New Jersey acts dem-
onstrates that governmental response costs were not meant
to go through the claims process. In regard to CERCLA, Con-
gress has noted that governmental response costs were not
subject to the procedures for claimants seeking third party dam-
ages and response costs since such a process would preclude
timely governmental response. 1 Legis. Hist. 371 (Sen. Rep. No.
96-848). Similar reasoning applies to the Spill Act. Moreover,
the Superfund program in regard to response costs operates
in conjunction with the states through cooperative agreements
and contracts, not through claims. 42 U.S.C. § 9604(c) (3).
States thus agree to pay their percentage of remedial costs up
front and do not as a matter of course file claims for response
costs against Superfund. Finally, the federal program utilizes
these up front funding guarantees from the states and does
not operate on a reimbursement basis so that states typically
do not file claims for the reimbursement of moneys already
expended.

47

U.S.C. § 9607(f)."° Such a construction is at odds with
the language of 42 U.S.C. § 9614(c) and the legislative his-
tory recounted above which demonstrates that Congress
clearly contemplated that states would use their own tax-
supported funds to fill in those areas either not covered
or not actually compensated by Superfund. In keeping
with this legislative history and the language of the stat-
ute, New Jersey reads “which may be compensated under
this subchapter” to modify the entire phrase, “claims for
any costs of response or damages or claims.” While this
reading may not reflect the best grammatical usage, those
engaged in statutory construction should avoid both scho-
lastic strictness and making ‘‘a fortress of the dictionary.”
See Watt v. Alaska, supra, 451 U.S. at 266, citing Cabell
v. Markham, 148 F.2d 737, 739 (2d Cir. 1945) (L. Hand, J.),
aff'd 326 U.S. 404 (1945). As this Court recently observed
in Chevron, U.S.A., Inc. v. Natural Resources Defense
Council, 104 S.Ct. 2778, 2791 (1984), “We are not per-
suaded that parsing of general terms in the text of the
statute will reveal an actual intent of Congress.” When
the Court looks for “that interpretation which can most
fairly be said to be imbedded in the statute, in the sense
of being most harmonious with its scheme and with the
general purposes that Congress manifested,” C.J.R. v.
Engle, 464 U.S. 206, 217 (1984), quoting NLRB v. Lion Oil

19 In the course of developing the compromise that became
CERCLA, coverage for damages was severely restricted. As
enacted, CERCLA provides no compensation for property dam-
age or medical injuries, only damage to natural resources in-
curred by governmental entities. Consequently, the definition
of “damages” was restricted to mean “damages for injury or
loss of natural resources. . . .”” 42 U.S.C. § 9601(6).

48

Co., 352 U.S. 282, 297 (1957) (Frankfurter, J., concurring
in part and dissenting in part), New Jersey submits that
its interpretation of 42 U.S.C. 4 9614(c) is the only prof-
fered construction to meet this criteria. The State thus
urges the Court to affirm the judgment below.

)

CONCLUSION

For the foregoing reasons, the Court should affirm
the judgment of the Supreme Court of New Jersey.

Respectfully submitted,

Irwin lL. KIMMELMAN

Attorney General of New Jersey
Attorney for Appellees

Richard J. Hughes Justice Complex
CN 112

Trenton, New Jersey

(609) 292-1568

MicHazL R. Coz

First Assistant Attorney General
Of Counsel

Mary C. JacoBson

Deputy Attorney General
Counsel of Record and
On the Brief

Dated: September 24, 1985

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0157%3A08. Public record. Not legal advice.