SREA Creates CERCLA-liability Exemption & Recycler Obligations—Part 1: The Exemptions
The "Superfund Recycling Equity Act" (SREA) became law on Nov. 20, 1999, when President Clinton signed it. Pub. Law 106-113, 113 Stat. 1501A-598.
The SREA exempts from liability under the Comprehensive Environmental Response Compensation and Liability Act (CERCLA or Superfund, 42 U.S.C. §9601 et seq) parties that arrange for recycling or transportation of "recyclable materials." Thus, parties that arrange for recycling are no longer liable under Superfund if there is a release of a hazardous substance at the recycling, or consuming, facility.
The exemption applies to "recyclable materials," which include "scrap paper, scrap plastic, scrap glass, scrap metal, or spent lead-acid, spent nickel-cadmium, and other spent batteries, as well as minor amounts of material incident to or adhering to scrap material as a result of its normal" use prior to becoming scrap. The exemption does not apply to "shipping containers of a capacity from 30 liters to 3000 liters, whether intact or not, having any hazardous substance (but not metal bits and pieces or hazardous substances that form an integral part of the container) contained in or adhering" to the shipping container.
I. General Requirements for Exemption to Apply
For the exemption to be effective, the recycler generally must demonstrate, by a preponderance of the evidence, that materials are being recycled. To make this demonstration, the recycler must show that:
- the recyclable materials met a commercial specification;
- a market existed for the recyclable material;
- a substantial portion of the recyclable material was made available as a feedstock for the manufacture of a new, salable product; and
- the recyclable material could have been a replacement or substitute for a virgin material, or the product made from the recyclable material could have been a replacement or substitute, in whole or in part, for a product made from virgin raw materials.
Generally, the exemption applies in a retroactive manner, and will relieve recyclers from liability for all historic recycling activity. The only caveat is that the exemption does not apply to concluded administrative or judicial actions or to pending judicial actions brought by the U.S. EPA.
Interestingly, EPA is already challenging the meaning of this "pending action" clause, asserting in briefs filed in United States v. A-L Processors, S.D. Ohio, No. C-3:91-309, that if the EPA commenced an action against any party at a site, then all parties in the action, whether joined by EPA or a private party, are barred from claiming the exemption.
II. Additional Requirements for Scrap Metal and Batteries
Parties that recycle scrap metal and spent batteries also must show that they were in compliance with all applicable regulations or standards regarding the storage, transportation, management, or other activities associated with managing the materials. Also, the exemption does not apply to scrap metal recyclers that melt the metal prior to arranging for recycling. (Melting metals solely for the purpose of separating materials with different metal points is permitted, and such activity remains within the exemption.)
Finally, the exemption does not apply to spent battery recyclers if they recover valuable components from the batteries prior to arranging for recycling.
Part 2 will cover exemption exceptions and preservation.
About the author: David G. Butterworth is a member of the firm of Butterworth & Campbell PC, in Philadelphia, PA. Formerly an environmental chemist, Butterworth specializes in environmental law, including the remediation and redevelopment of property, permitting, compliance, enforcement, Superfund, and environmental risk management in financial and business transactions. Contact: Tel:: 215-567-7644; E-mail: dgbutterworth@bclaw.org; Internet: www.bclaw.org.