A Dark Cloud Disperses

Yet, for nearly two decades, ISRI members and other recyclers contend, they were treated by the U.S. Environmental Protection Agency’s Superfund law as waste disposal companies and prosecuted under third-party liability statutes applicable to companies that disposed of waste in Superfund landfills.

Thus, scrap companies that shipped materials to smelters or mills that later became Superfund sites found themselves named by the EPA as “jointly liable” parties, and were sued for significant (often bankruptcy-inducing) amounts of money, prosecuted absurdly as companies that disposed of waste materials at the sites.

After years of seeking Superfund reform or relief, an effort spearheaded by ISRI was finally successful in convincing both Chambers of Congress and a presidential administration that justice was not being served. On November 19, President Clinton signed into law a 2000 budget bill that also contained the long sought-after Superfund relief sought by scrap recyclers.

 Years In The Making

The passage of the Superfund Recycling Equity Act is being considered by scrap recyclers as an act of justice—defined by dictionaries as “fairness,” “rightfulness,” and “the use of authority to uphold what is just.”

It was a sad lesson for recyclers, however, to learn that justice is not always delivered swiftly as it works its way through three branches of government. According to ISRI executive director Robin Wiener and ISRI manager of legislative and international affairs Mark Reiter, a series of judicial rulings in the 1980s created the third-party liability situations that recyclers held were unfair (and unintended by the EPA).

“Essentially, third-party [liability] imposes liability on those parties who shipped materials to a site for disposal or treatment that later becomes a Superfund site,” says ISRI executive director Robin Wiener. “Owners and operators of the site are the ‘first party,’ those who shipped material are ‘third parties.’”

After court interpretations began upholding scrap shippers as responsible third parties, the EPA began identifying and prosecuting scrap third parties on a regular basis, ensnaring scrap recyclers in Superfund site clean-up lawsuits throughout the U.S. “In terms of the number of companies who were involved, I have seen estimates that between one-half and two-thirds of scrap processing companies have been named at some point,” says Wiener.

The U.S. EPA has estimated that scrap recyclers were involved in late 1999 in pending third-party liability suits that would have seen payments of $170 million going from recycling companies to Superfund clean-up efforts.

Among the inequities cited by recyclers was that suppliers of virgin ores and materials were not eligible for third-party prosecution.

Obtaining a remedy for the unintended third-party prosecutions turned out to involve a lengthy trail of failed reform efforts and negotiations with a series of congressional leaders in several sessions of Congress.

Throughout much of the 1990s, ISRI worked in cooperation with several other industry trade groups in an effort to seek wider, more comprehensive Superfund reform. Eventually, however, the decision was made to leverage the bipartisan support the recycling industry enjoys to seek a separate reform bill for scrap recyclers caught in third-party liability situations.

 Breaking Away

“During the previous Congressional session in 1998, the decision to separate from other reform efforts was made under the name Operation Breakout,” says Wiener. “We would have preferred the more comprehensive reform, but it became apparent that a Superfund bill was not likely to be passed so we went to our membership and explained why comprehensive reform was probably not achievable.”

The recycling industry, unlike some of the other industries seeking reform, was able to draw upon support from environmental lobbying groups and from a wider range of Democratic representatives and Senators.

“It’s important to note that our support has always been bipartisan,” says Reiter. “We have never tried to present this as power position as one side against another.

The vote in the Senate for the Superfund Recycling Equity Act “had a final count of 69 senators, almost equally divided between Democrats and Republicans,” notes Wiener.

“It is a very unique coalition,” says Wiener of the Act’s supporters. “It is perhaps the only example of the environmental community and industry coming together on a solution on Superfund or other environmental problems.”

But while the logic to seek reform separately was sound, the decision to do so was not taken lightly, both Wiener and Reiter say.

“We presented our members with plusses and minuses,” says Reiter of the “Breakout” decision, “because the minuses when we lost were very serious.” Reiter claims that despite the 1998 “Operation Breakout” effort, ISRI entered the 1999 legislative season again with “hopes that Congress would be able to get a comprehensive bill going.”

That never occurred, but “then something happened in the Senate without our input,” says Reiter. Senator John Chafee (R-R.I., since deceased) co-sponsored a Senate bill that addressed more comprehensive Superfund reform, but it soon became apparent that the bill did not have enough support to even leave committee.

With that bill stalled, Senate Majority Leader Trent Lott (R-Miss.) and Senate Minority Leader Tom Daschle (D-S.D.) “decided to introduce Senate Bill 1528, just for recycling,” says Reiter. “So they made the decision to break out and we got a call.”

Reiter notes that Chafee had been a long-time supporter of the recycling industry dating back to his days in Rhode Island politics. “It shouldn’t be so remarkable that Senator Chafee would have chosen to support a recycling bill,” he comments. “He had been a great defender of the environment, and his state saw itself as an innovator in the recycling area—he always took pride in that. In Senator Chafee’s eyes, introducing this bill did send a signal to Republicans—and Democrats too—that this bill was OK,” says Reiter.

ISRI member scrap recycling companies showed their support for the bill by flying into Washington on October 19, 1999 for a day of meetings with their state’s senators to seek co-sponsorships for the bill. More than 130 ISRI members met with elected officials on that day and helped to secure the sponsorships of more than 40 senators.

The bill was eventually co-sponsored in the Senate by 69 senators, and was part of an omnibus appropriations bill singed into law by President Clinton on November 29, 1999.

Opposition to the reform effort was minimal, with one representative (Sherwood Boehlert, R-N.Y.) attempting to solidify opposition to the bill, apparently in coordination with segments of the chemical industry and the solid waste disposal industry.

The Damage Avoided And The Damage Done

What benefits can scrap recyclers expect from reform?

The primary relief is from any future third-party liability suits, which have almost always seemed to blind-side business owners who shipped materials safe in the knowledge that they were being used as industrial feedstock.

Defendants in many pending cases will be helped by the new law, although that relief is not automatic in cases where the U.S. government has already filed a complaint.

The reform effort comes too late for companies that have already settled cases, and certainly for those that have filed for bankruptcy or dissolved due to third-party Superfund liability prosecutions.

Perhaps most important for scrap recyclers to note is that there are conditions attached to the third-party relief, and thus still some circumstances where scrap shippers could be prosecuted for their roles in creating a Superfund site.

Recyclers who have contaminated their own land, of course, will remain potential Superfund targets as first-party defendants, but there are several conditions that must be met to be covered by the new law in future third-party cases. According to an ISRI summary of the new law, recyclers questioned about their third-party involvement will have to demonstrate that:

• The recyclable material met a commercial specification, such as ISRI specifications

• A market existed for the materials shipped, with evidence such as third-party published pricing being acceptable

• A substantial portion of the material (no exact percentages are listed in the law) was usable as a feedstock

• The recyclable materials could be used as a replacement or substitute for virgin raw materials

• For metals, the recycler did not first melt the scrap (sweating is acceptable).

On an ongoing basis, recyclers (and brokers) also have a responsibility to “take reasonable care” to determine the environmental compliance status of consuming facilities. “The burden is on the scrap recycler to inquire as to the status of a consuming mills,” says Wiener. “They can contact federal, state and local authorities to see if there are any existing compliance orders, and there is also a condition to ask the owner about his own compliance record.”

“We’re developing detailed compliance assistance for our members so they can be empowered to seek liability relief,” says Wiener.

Reiter feels that justice may have been delayed for scrap recyclers in regard to Superfund reform, but that it was not denied. “What the bill does is, it says to Superfund site operators that you’re not going to have these guys’ pockets to pick anymore,” he declares. “If you create a Superfund site, you’re not going to get some of your money back for clean-up from our people. If you screw up, you pay the whole bill.”

“This is a pro-environment bill,” Reiter states. “From the scrap side, the incentive is to meet all the conditions of the bill. We believe that the public really gets a tremendous benefit from the bill.”

 The author is editor of Recycling Today.