Amicus Curiae Brief — Alcan Aluminum Corp. v. United States

NO. 96-1494

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IN THE

Supreme Court of the United States

October Term, 1997

ALCAN ALUMINUM CORPORATION,

Petitioner,

v.

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF AMICI CURIAE OF THE FOOD INDUSTRY

ENVIRONMENTAL COUNCIL, THE NATIONAL

RESTAURANT ASSOCIATION, THE AMERICAN

COKE AND COAL CHEMICALS INSTITUTE, THE

NATIONAL OILSEED PROCESSORS ASSOCIATION,

AND THE NATIONAL SCHOOL BOARDS

ASSOCIATION IN SUPPORT OF PETITIONER

Peter G. Kilgore

1200 Seventeenth St., N.W.

Washington, D.C. 20036-3097

202-331-5900

Attorney for Amici Curiae

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II.

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IV.

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QUESTIONS PRESENTED

Whether The United States Court Of Appeals For

The Third Circuit Erred In Holding That Causation

Is Not An Element Of CERCLA Section 107(a)

Liability.

Whether the United States Court of Appeals For

The Third Circuit Erred In Holding That

Concentration Thresholds Are Not Implicit In The

Definition of Hazardous Substances In CERCLA

Section 101(14), Thereby Expanding The Definition

To Encompass Everything In The Universe.

Whether The United States Court Of Appeals For

The Third Circuit Erred In Shifting The Burden To

Alcan To Prove The Absence Of Causation In Order

To Limit Or Avoid CERCLA Section 107(a) Liability

And Ease Government Enforcement Efforts.

Whether The United States Court Of Appeals For

The Third Circuit Erred In Requiring Alcan To Prove

Its Emulsion As A Whole Was Environmentally

Harmless In Order To Limit Or Avoid CERCLA

Section 107(a) Liability, Even Though The Emulsion

Contained None Of The Hazardous Substances

Which Triggered EPA’s CERCLA Response.

Whether The United States Court Of Appeals For

The Third Circuit Erred In Ignoring Alcan’s Motion

To Dismiss For Lack Of Subject Matter Jurisdiction

And Thus Failing To Apply To CERCLA The Strong

Presumption Against Retroactivity In The Manner

Articulated By This Court In Landgraf v. USI Film

Productions, 511 U.S. 244 (1994).

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LIST OF PARTIES

United States of America, Plaintiff.

Alcan Aluminum Corp.; BASF Corp.; Beazer

Materials and Services, Inc.; Borg-Warner Corp.;

Carrier Corp.; Chemical Leaman Tank Lines, Inc.;

Chemical Management, Inc.; Chrysler Motors Corp.,

Dana Corp., Dart Industries, Inc.; Exxon Corp.; Ford

Motor Company; Goulds Pumps, Inc.; Hitchcock Gas

Engine Company, Ingersoll-Rand; NEAPCO, Inc.;

Rome Strip Steel Co., Inc.; Stanley Works, Inc.; TRW,

Inc.; United Technologies, Defendants.

——————

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TABLE OF CONTENTS

Page

QUESTIONS PRESENTED...........0cccccccesceseseseeeees i

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TABLE OF AUTHORITIES. ..........cccccceccececescecesees. iv

STATEMENT OF INTEREST OF

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SUMMARY OF ARGUMEDT...........cccccsesceceeeeeeee. 5

|RSS SRE OF a a Sree Oe aap oe

A. This Court Should Grant Alcan’s

Petition Because The Facts Leading

To The Imposition Of Joint And Several

Liability In This Case Are Not Unique

To Alcan And, Therefore, This Case

Has Wide-Spread Application................... 6

B. This Court Should Grant Alcan’s Petition

Because The Facts Present The Issues In

A Clear And Precise Manner .................... 8

C. This Court Should Grant Alcan’s Petition

To Insure That The Thousands Who Are

Being Abused As A Result Of The Liability

Scheme Have An Effective Right Of Appeal

Which Is Presently Denied Them By The

Untenable Risk Of Joint And Several

ES SATA SAAR SES RNIN IRIE OL CD 10

D. This Court Should Grant Alcan’s Petition

Because This Case Presents The Issue

Of Whether The Retroactive Application

Of CERCLA Under The Facts Of This Case

Constitutes A Due Process Violation ........ 1]

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iv

TABLE OF AUTHORITIES

CASES

Adickes v. S.H. Kress & Co.,

SOG U3. 164 1IDTA, icsssciiecinisimnerees 8

B.F. Goodrich Co. v. Betkoski, et al.,

99 F.Seb SOS (ad Car. IGG), nice cecscsecsenscnnesacecsoes 6-8

Dedham Water Co. v. Cumberland Farms Dairy,

GSS FD TEAS Ct Car, - FOGG) asics cccneviscassesiacs 6

Farmland Industries v. Morrison-Quirk Grain Corp.,

O87 F.2d 1535S Cth Cie. 1998) in ccsccsccccscisenccascisce 7

Landgraf v. USI Film Productions,

EE UF. BG CII vvcnessnscnccevecssesencpasdsveconcenyees 9,11,12

New York v. Ludlow’s Sanitary Landfill, Inc.,

No. 86-CV-853 (N.D.N.Y. filed July 24, 1986).... 6

United States v. Alcan Aluminum Corp.,

O90 F.2ak 711 £ad Cae. FGFS). cccvsarsneewvsscrssrsoriseesess 7

United States v. Alcan Aluminum Corp.,

O64 F.2d 2SS Cok Car. BGG) nn seccnsvscecevacesvsersdsiorns: 12

United States v. Olin Corp.,

927 F.Supp. 1502 (S.D. Ala. 1996).................4 11,12

Usery v. Turner Elkhorn Mining Co.

BBD UDG. 3 LETS ivcvncccsscdsncaccvssivnsincrsnctigmersintisenie 12

STATUTES

BD TEAS. BGO veces exncrtorsipisnnavacrntenpecrsnnsastawavixesss passim

i ate Reh RA or inl

OTHER AUTHORITY

Hearings before the Subcommittee on Commerce,

Trade, and Hazardous Materials of the Committee

on Commerce, House of Representatives, 104th

Congress, First Session on Liability, Superfund

Reauthorization (Part 3), June 22 and

July 18, 1995, Serial No 104-54

]

STATEMENT OF INTEREST OF AMICI CURIAE’

The Food Industry Environmental Council (FIEC) is

a coalition of trade associations and companies in the

food processing industry. The member organizations

of FIEC include, but are not limited to, the following

associations:

¢ American Frozen Food Institute (AFFI) is the

national trade association representing frozen

food manufacturers, their suppliers, and

marketers. Its members are responsible for

approximately 90% of the frozen food produced

annually in the United States valued at more

than $60 billion dollars;

« American Meat Institute (AMI) established in

1906 is the nation’s oldest and largest meat

industry trade association with some 900

members. AMI represents the interests of

packers and processors of beef, pork, lamb,

veal and turkey products and their suppliers

throughout North America;

« Grocery Manufacturers of America (GMA)

member companies have sales of $400 billion

dollars, representing the largest volume of all

food and consumer packaged goods sold in the

United States;

‘Both the Petitioner, Alcan Aluminum Corporation, and the

Respondent, United States, have consented in writing to the

filing of this amicus curiae brief in support of Petitioner. In

addition, respondents Beazer Materials and Services, Inc.,

Exxon Corporation, and Ford Motor Company have also

consented to the filing of this amicus brief. The letters of

consent have been filed with this Brief.

2

Institute of Shortening and Edible Oils (ISEO) is

a trade association which represents the refiners

of approximately 90-95%, or 17 billion pounds,

of the edible fats and oils produced domestically;

International Dairy Foods Association (IDFA) is

an international trade association comprised of

three organizations: Milk Industry Foundation,

the National Cheese Institute and _ the

International Ice Cream Association, and is

affiliated with the American Butter Institute.

Together these organizations represent 85% of

the dairy products consumed in the United

States;

International Institute of Ammonia Refrigeration

(LAR) is a non-profit trade association which has

1100 member companies that range from small,

family owned businesses to large corporate

entities;

Midwest Food Processors Association (MWFPA)

represents processors of canned and frozen

food products located in Illinois, Minnesota

and Wisconsin;

National Confectioners Association (NCA) and the

Chocolate Manufacturers Association (CMA)

represent 100 manufacturers and almost 300

other associated firms that produce the vast

majority of chocolate and non-chocolate candy

manufactured in the United States; and

National Food Processors Association (NFPA)

members include over 500 companies who

manufacture $400 billion dollars of processed

food products.

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The National Restaurant Association (Restaurant

Association) is the leading national association for the

$290 billion food service industry in the United States.

The Restaurant Association represents, inter alia,

restaurant members, including fast food chains as

well as traditional formal sit-down dining restaurants.

The Restaurant Association’s members number almost

30,000.

The American Coke and Coal Chemicals Institute

(ACCCI) is a non-profit trade association that represents

merchant producers of metallurgical coke (both furnace

and foundry coke); coke sales agents; integrated steel

producers; producers and processors of chemicals

derived from the distillation of coal and coal tar: and

suppliers to these various producers and processors.

The National Oilseed Processors Association

(NOPA) is a trade association comprised of 13 regular

and 25 associate member companies with plants

engaged in the processing of vegetable meals and oils

from oilseeds. NOPA's 13 regular member companies

process an estimated 1.1 billion bushels of oilseeds

annually at 67 plants in 22 states, employing an

estimated 4,250 workers.

The interest of ACCCI and NOPA in this case stems

from the fact that while the majority of their members'

waste streams are non-hazardous in nature, the waste

streams may contain trace compounds of elements that

are defined as hazardous substances under the

Comprehensive Environmental Response, Compensation

and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq.

(such as below background metals), which are naturally

occurring and pose no threat to human health or the

environment. ACCCI and NOPA are concerned that the

Third Circuit's failure to focus on whether the hazardous

substances in the Alcan Emulsion caused response costs

at the Butler Tunnel Mine Site could result in its

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members bearing the bulk of remediation costs caused

by the wastes of other parties.

The National School Boards Association (NSBA) is

a not-for-profit organization representing forty-nine

state school board associations, the Hawaii State

Board of Education, and the boards of education of

the District of Columbia, the U.S. Virgin Islands,

Guam and the Commonwealth of Puerto Rico. The

NSBA represents approximately 97,000 of the nation’s

school board members, who, in turn, govern the

schools attended by 97% of all United States public

school children.

Public schools in the United States ae presently

charged with one of this nation’s most important

responsibilities--the | educational and _s personal

development of our children. The goals of the NSBA

are to educate our children in order that they can

successfully compete in a global economy and

participate in the growth of our nation in a manner

that will almost certainly be far more demanding than

in the past. Having been charged with this task,

NSBA’s members have not been immune from the

financial restraints that have impacted NSBA’s entire

economy. In many respects, our members’ difficulties

have been exacerbated by the need to develop an

expanded curriculum consistent with the need for

global understanding, the need to participate in

retraining programs as life-time careers become less

likely, and the need to face the reality that the property

tax base which is the primary income source for most

of its members is becoming a strained resource.

The Third Circuit’s ruling in this case is of serious

concern to the NSBA and its members for a number of

reasons. First, the Third Circuit’s ruling poses the

threat of substantial financial hardships on our public

schools that has no reasonable relationship to any

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harm they caused. Second, the standard adopted by

the Third Circuit is inconsistent with responsible

environmental policy. Finally, the Third Circuit’s

decision is in fundamental conflict with the underlying

intention of the polluters pay scheme. By exposing

schools to environmental liability for which they are not

responsible, the Third Circuit has simply introduced

into an already strained property tax base,

environmental liability of others.

SUMMARY OF ARGUMENT

Amici strongly urge this Court to grant Alcan

Aluminum Corporation’s Petition for Writ of Certiorar

for a number of reasons. First, the fact that there is

no quantitative threshold associated with the

definition of hazardous substance in CERCLA

combined with the fact that there is no causation

requirement, mean that virtually everything in the

universe is a hazardous substance and liability is

automatically imposed regardless of how innocuous

the waste. This liability scheme is unreasonable and

is not what Congress intended.

Second, the facts in this case present the legal

issues of no causation, no limitations to the definition

of hazardous substance as well as the issue of

retroactivity in the clearest form possible. Therefore,

this Court is presented with the opportunity to

address and resolve these issues clearly.

Third, Amici encourage this Court to grant Alcan’s

Petition to protect the rights of those who are

effectively denied their fundamental right of appeal

due to the likelihood and extent of liability.

Lastly, Amici ask this Court to grant Alcan’s

Petition because this case presents the issue not only

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of whether CERCLA may be applied retroactively, but

whether it is Constitutional to apply the statute

retroactively in a situation where Alcan is being held

liable for the costs of remediating conditions not

associated with its actions.

ARGUMENT

A. This Court Should Grant Alcan’s Petition

Because The Facts Leading To The Imposition

Of Joint And Several Liability In This Case Are

Not Unique To Alcan And, Therefore, This Case

Has Wide-Spread Application.

The limitless definition of hazardous substance in

CERCLA, which includes virtually everything in the

universe, has been widely used to trap many of amici’s

members in the expansive CERCLA lability scheme.

This is the case even though the likelihood was remote

that the constituents of their waste streams were

related to the environmental problems that triggered

the CERCLA remediation.

CERCLA’s present liability scheme is not limited to

amici’s industries or even business in general. In fact,

the present state of the law has not permitted anyone

to escape liability. For example, in one case in

upstate New York, schools, meat. markets, fabric

stores, kennels, civic clubs, hardware stores, and even

individuals were targeted as fourth party defendants

in New York v. Ludlow’s Sanitary Landfill, Inc., No. 86-

CV-853 (N.D.N.Y. filed July 24, 1986). A recent case

in the Second Circuit, B.F. Goodrich Co. v. Betkoski, et

al., 99 F.3d 505 (2d Cir. 1996), sets forth a legal

standard for liability that puts no limitations on

CERCLA liability once again. In contrast with both

the First Circuit in Dedham Water Co. v. Cumberland

Farms Dairy, 889 F.2d 1146 (lst Cir. 1989) and the

7

Eighth Circuit in Farmland Industries v. Morrison-

Quirk Grain Corp., 987 F.2d 1335 (8th Cir,. 1993), the

Second Circuit has rejected specific causation as a

requirement for the imposition of liability noting:

“Significantly, it is ‘not required that the [plaintiff]

show that a specific defendant’s waste caused the

incurrence of clean-up costs.” Id. at 514, quoting

United States v. Alcan Aluminum Corp., 990 F.2d 711,

721 (2d Cir. 1993). Unlike the Third Circuit, the

Second Circuit in Betkoski, which involved private

parties as well as the United States, apparently treats

both private parties and the United States the same

and requires neither to show causation, leaving it

exclusively up to defendants to raise the issue of

causation’s absence and thereby shoulder the burden

of proof in order to escape liability.

For many, the ability to escape liability is not an

economically realistic alternative no matter how

unlikely it is that their waste was related to the

problems requiring remediation. The legal expenses

associated with meeting their burden both with

respect to lawyers and experts forces defendants to

accept the best deal they are offered to avoid the risk

of being held jointly and severally liable. As the facts

of this case illustrate, that almost certainly means

defendants will pay a share that is far in excess of any

contribution their waste had to the harm at the site.

In addition, the Second Circuit in Betkosk reiterated

and expanded the definition of hazardous substances to

be totally encompassing. The district court, applying

common sense, had rejected the notion that a party

could be held automatically jointly and severally liable

even though it disposed of a material that was not

recognized as hazardous in any other context. Rejecting

the notion that there were any quantitative limits to the

definition, the Second Circuit, following the Alcan

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doctrine, held that liability was immediate if the material

contained any hazardous substance even if the material

actually disposed itself posed no hazard. 99 F.3d at

517. Under this simplistic logic, used decaffeinated

coffee grounds that had trace levels of TCE could be the

basis for the immediate imposition of joint and several

liability although no one could seriously contend the

coffee grounds were hazardous.

The combination of these two legal notions, the

absence of causation and a boundless definition of

hazardous substance, create potentially devastating

legal exposure to virtually everyone. Courts which have

adopted this conclusion cite as a legal basis a legislative

history that has been recognized as vague and

contradictory at best. This reasoning is questionable

and requires the thoughtful review of this Court.

B. This Court Should Grant Alcan’s Petition

Because The Facts Present The Issues In A

Clear And Precise Manner.

The procedural context of this case, that is, that the

district court’s decision against Alcan was rendered in

the context of a motion for summary judgment,

eliminates any question of a factual dispute since

reasonable inferences must be resolved in favor of

Alcan. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158-

59 (1970). In addition, the United States has not

disputed any of the critical facts. The facts of this case

are simple and straightforward. The only constituents

that are the basis for CERCLA liability are trace metal

compounds which are below background. The levels of

these metals are lower than those present in air,

garden soil, and many common foods. If there is any

example that stretches the statutory meaning to its

extreme, these facts certainly do.

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Further, there is no metals problem of any kind at

the site and none of the constituents that triggered the

CERCLA remediation were contained in the Emulsion

which was primarily water with a small percentage,

five percent (5%), of mineral oil, a biodegradable oil

similar to petroleum jelly, in suspension.

There is no causal connection between the

constituents of the Alcan Emulsion and _ the

constituents that triggered the CERCLA response

action. Consequently, both the legal issues of

causation and the appropriate extent of the

definitional section of the statute are presented in the

clearest form possible.

These facts also present the issue of whether

CERCLA can be construed to apply retroactively

consistent with this Court’s direction in Landgraf v.

USI Film Productions, 511 U.S. 244 (1994) in the

clearest fashion, since none of Alcan’s actions would

have resulted in liability prior to CERCLA’s enactment.

The contamination was at a third party site, not on

Alcan’s property. Alcan’s actions were consistent with

all legal standards, and to the extent it was paying to

have its waste oil recovered at a state licensed recycler

rather than simply discarded certainly establishes its

conduct as exemplary for its time. Finally, there is no

causal connection between the response costs at

which CERCLA was directed and the Alcan Emulsion.

In sum, without CERCLA Alcan would not be in its

current situation of being liable for problems created

by the wastes and malfeasance of others.

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C. This Court Should Grant Alcan’s Petition To

Insure That The Thousands Who Are Being

Abused As A Result Of The Liability Scheme

Have An Effective Right Of Appeal Which Is

Presently Denied Them By The Untenable Risk

Of Joint And Several Liability.

One of the preeminent tenets of our legal system is

that incorrect construction or interpretation of statutes

is the subject of review by appellate courts and

ultimately by this Court. This notion of appellate review

is an integral part of our legal system. Yet, in the

context of the Superfund liability scheme as applied by

many courts, this right has no practical value because

the enormous litigation costs and the potential for

extensive liability have resulted in many forgoing their

right to fair treatment and due process. Instead, many

parties settle, accepting the best deal possible because

of the economics. One Congressman has described

Superfund as “a lottery system cloaked with the

trappings of lawyers and courts designed to shake

people down for money.” (Hearings before the

Subcommittee on Commerce, Trade, and Hazardous

Materials of the Committee on Commerce, House of

Representatives, 104th Congress, First Session on

Liability, Superfund Reauthorization (Part 3), June 22

and July 18, 1995, Serial No 104-54, Comments of

Chair Michael G. Oxley, Ohio Representative, at p.2.)

(Appendix A-1.)

The procedural history of this case demonstrates

the time, money, and sheer will power required to

sustain a Superfund lawsuit to the point that it is ripe

for review by this Court. The claim for recoupment was

initiated in 1985. This response action was initiated by

the United States in 1989. Only after two hearings at

the trial level, as well as two appellate reviews, is this

case finally before this Court. It has been more than a

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decade since the United States initiated its cost

recovery actions. For most people, even large

companies, absorbing the legal expenses for that period

of time can be economically devastating. Add to that

fact that the defendant must be willing to run the risk

of liability disproportionate to its contribution to a site

in an unpredictable legal climate in which the standard

that will eventually be applied to a case, even after

appellate review, is uncertain. This scenario practically

forecloses effective appellate review.

The fact that Alcan has been willing to bear those

costs and run the risks is remarkable. The fact that

Alcan has done so to provide this Court with a unique

opportunity to focus its attention on critical legal

issues surrounding CERCLA presents a _ rare

opportunity for this Court to exercise its review of a

statute that has a troubled and controversial history.

Amici strongly urge this Court to take this opportunity

to review the compelling issues presented by this case.

The likelihood that such an opportunity will present

itself again is remote.

D. This Court Should Grant Alcan’s Petition

Because This Case Presents The Issue Of

Whether The Retroactive Application Of

CERCLA Under The Facts Of This Case

Constitutes A Due Process Violation.

Alcan has raised the issue of whether CERCLA

may be applied retroactively based on this Court’s

decision in Landgraf v. USI Film Productions, 511 U.S.

244 (1994), and the decision in United States v. Olin

Corp., 927 F.Supp. 1502 (S.D. Ala. 1996).* In

*Alcan raised this issue by Motion in the Third Circuit. The

Court, however, failed to acknowledge the Motion in

affirming the lower court without opinion.

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Landgraf, this Court held that the strong presumption

against retroactivity may only be rebutted by clear

evidence that Congress intended for the statute to

apply retroactively. Landgraf, 511 U.S. at 262. In

Olin, which is presently on appeal in the Eleventh

Circuit, the district court held that CERCLA may not

be applied retroactively under the Landgraf standard.

The facts of this case, however, also raise a

Constitutional issue with respect to retroactivity, which

is whether retroactive application of CERCLA under the

facts of this case constitutes a due process violation. As

this Court recognized in Usery v. Turner Elkhorn Mining

Co., 428 U.S. 1, 17 (1976), retroactive legislation must

satisfy the test of due process. Therefore, a statute

cannot be applied retroactively unless there is a

rational relationship between’ the _ retroactive

application of the statute and the congressional

purpose being forwarded. In this case, the Third

Circuit held that the government does not have to

prove causation in a CERCLA case. United States v.

Alcan Aluminum Corp., 964 F.2d 252 at 264 (3d Cir.

1992). However, the legitimate congressional purpose

behind CERCLA is to require parties who caused

environmental harm to pay for the remediation. This is

the whole notion of the “polluters pay” scheme which is

at the heart of the statute. Therefore, even if there is

no causation requirement implicit in the statute, there

must be causation in order for CERCLA to apply

retroactively and comply with due process.

In this case, it has been established that Alcan’s

Emulsion did not cause and was not capable of causing

the environmental harm responded to under CERCLA.

Therefore, to apply CERCLA retroactively in the context

of this case would violate the Due Process Clause.

een.

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CONCLUSION

For all of the foregoing reasons, The Food Industry

Environmental Council, The National Restaurant

Association, The American Coke And Coal Chemicals

Institute, The National Oilseed Processors Association,

And The National School Boards Association request

that this Honorable Court grant Petitioner Alcan

Aluminum Corporation’s Petition for Writ of Certiorari .

Respectfully submitted,

Peter G. Kilgore

1200 Seventeenth St., N.W.

Washington, D.C. 20036-3097

202-331-5900

Attorney for Amicus Curae The

Food Industry Environmental

Council, The National Restaurant

Association, The American Coke

And Coal Chemicals Institute, The

National Oilseed Processors

Association, and The National

School Boards Association

A-1

SUPERFUND REAUTHORIZATION

(Part 3)

HEARINGS

BEFORE THE

SUBCOMMITTEE ON

COMMERCE, TRADE, AND HAZARDOUS MATERIALS

OF THE

COMMITTEE ON COMMERCE

HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION

ON

LIABILITY

JUNE 22 AND JULY 18, 1995

Serial No. 104-54

Printed for the use of the Committee on Commerce

%

U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 1996

2105S59CC

For sale by the U.S. Government Printing Office

Superintendent of Documents, Congressional Sales Office, Washington, DC 20402

ISBN 0-16-052363-X

|

A-2

COMMITTEE ON COMMERCE

THOMAS J. BLILEY, Jr., Virginia, Chairman

* * *

SUBCOMMITTEE ON COMMERCE, TRADE, AND

HAZARDOUS MATERIALS

MICHAEL G. OXLEY, Ohio, Chairman

JACK FIELDS, Texas,

Vice Chairman

FRED UPTON, Michigan

BILL PAXON, New York

PAUL E. GILLMOR, Ohio

JAMES C. GREENWOOD,

Pennsylvania

MICHAEL D. CRAPO,

Idaho

BRIAN P. BILBRAY,

California

ED WHITFIELD, Kentucky

GREG GANSKE, lowa

DAN FRISA, New York

CHARLIE NORWOOD,

Georgia

RICK WHITE, Washington

THOMAS J. BLILEY, Jr.,

Virginia (Ex Officio)

W.J. “BILLY” TAUZIN,

Louisiana

ELIZABETH FURSE,

Oregon

EDWARD J. MARKEY,

Massachusetts

RICK BOUCHER, Virginia.

THOMAS J. MANTON,

New York

SHERROD BROWN, Ohio

BLANCHE LAMBERT

LINCOLN, Arkansas

PETER DEUTSCH, Florida

BART STUPAK, Michigan

BOBBY L. RUSH, Illinois

JOHN D. DINGELL,

Michigan (Ex Officio)

A-2

SUPERFUND REAUTHORIZATION

Liability

THURSDAY, JUNE 22, 1995

HOUSE OF REPRESENTATIVES,

COMMITTEE ON COMMERCE,

SUBCOMMITTEE ON COMMERCE, TRADE,

AND HAZARDOUS MATERIALS,

Washington, D.C.

The subcommittee met, pursuant to notice, at

10:25 am., in room 2123, Rayburn House Office

Building, Hon. Michael G. Oxley (chairman) presiding.

Members present: Representatives Oxley, Fields,

Upton, Crapo, Bilbray, Frisa, White, T auzin, Furse,

Markey, Boucher, Manton, Brown, Lincoln, Stupak,

Rush, Bliley, and Dingell.

Staff present: Nandan Kenkeremath, majority

counsel; James Barnette, majority counsel; Hough N.

Halpern, professional staff member; Richard A.

Frandsen, minority counsel; and David Tittsworth,

minority counsel.

MR. OXLEY. The subcommittee will come to order.

The Chair will recognize himself for an opening

statement. At the center of any discussion about

Superfund is its system of retroactive strict joint and

several liability. The administration and others have

told us that this system is effectively ensuring that the

taxpayer is not saddled with the cost of cleaning up

toxic waste sites. They argue that an army of lawyers

at the Department of Justice or in the States should

make liability retroactive for conduct that was legal or

even state-of-the-art management. They argue that

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only minor fixes are necessary and that somehow the

Superfund liability scheme is necessary for justice and

fairness.

Unfortunately, the Superfund’s record tells us a far

different story. It isn’t the polluter who pays when

businesses are forced to close their doors because of

liability that not only predates the current owners but

anyone still alive who ever worked at that company. It

isn’t the polluter who pays for huge tracts of land that

lie underdeveloped because of the fear of

environmental liability. And it isn’t the polluter who

pays higher prices for goods, services, and insurance

policies because virtually every business in America is

a potential target of a Superfund lawsuit. Rather, it is

the American consumer and taxpayer who pays for

Superfund through higher prices, lost opportunities,

and slowed economic growth.

We can no longer justify the absurd consequences

of the Superfund liability system. Every aspect of the

Superfund liability system must be reexamined as if

we were writing the law for the very first time. Some

would argue that only lenders need relief or only small

businesses or recyclers. The simple fact of the matter

is that single issue fixes do not address the

fundamental problem of Superfund: that it is a lottery

system cloaked with the trappings of lawyers and

courts designed to shake people down for money. Its

effects are so bizarre because Superfund’s liability

system is built on a premise as un-American as any I

know, that you are guilty until proven innocent.

Moreover, in the name of making the polluter pay,

Congress has imposed a system of wave upon wave of

litigation ensuring the highest transaction cost of any

environmental program.

Bi aie dita MLAS Matt Ne a Le

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At prior hearings we have noted that the amount of

man-hours devoted to Superfund by enforcement

lawyers at the Department of Justice exceeds all other

environmental programs for the years 1990 to 1992 by

a wide margin. This year alone the Department of

Justice has allocated over $32 million a year from the

Superfund budget for that purpose. This funding is in

addition to the almost $200 million that EPA admits

that it spends on its own enforcement activities.

Superfund really is a lawyer’s dream come true.

As I have indicated in the past, the idea behind

Superfund is not to make the program a scholarship

program for lawyers’ kids but in fact to clean up the

program and to clean up the dump sites, as we have

ied to do.

We have also noted that there is an inordinate

amount spent on noncleanup spending for fiscal year

1995 at NPL sites versus actual money for cleanup.

Federal noncleanup spending includes the cost of PRP

and insurer litigation and transaction costs of over $1

billion in Federal Government Adminisiration and

overhead costs of some $680 million. This is just for

the fiscal year.

A study by the Rand Corporation indicates that 36

percent of the approximately $11.3 billion spent by

the private sector at Superfund sites through 1991

went to transaction costs rather than cleanup. Last

Congress Mr. Dickerson from ARCO, a witnesses,

noted that his company was liable in cases because of

the acquisition and subsequent sales of companies

over 80 years ago.

What is the fundamental notion of fairness or

justice in this scheme? Why should we devote so

much of the legal system and the resources of

American business to support it? Clearly this liability

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system must change. We are committed to changing

it this year one way or the other. That is why

Chairman Bliley, Chairman Schuster, and I have

asked the appropriators to stop funding for Superfund

beyond December 31 if we have not passes reform

legislation. We will not have a Superfund program

that is not fair and reasonable. Substantial reform

and creative solutions are what is necessary to fix this

program. I hope that our witnesses will join us as we

try to develop those solutions, and I look forward to

hearing the testimony today.

With that, I recognize the gentleman from

Massachusetts, Mr. Markey, for an opening statement.