Superfund Legislative Settlement
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Superfund Legislative Settlement


– So, Superfund is a really
interesting settlement, as the panel gets ready. It’s a legislated settlement where, unlike certainly unlike
the Gulf Oil Spill, establishing liability
was very much central to the settlement, and a huge amount of creativity was involved, and we’re lucky to Barry Breen who currently runs the
Superfund program at EPA, longtime friend, wonderful expert. He’s the acting administrator
for the EPA office of Land and Emergency Management. Commentators include Judge Nancy Firestone of the US Court of Federal Claims, who played a key role in developing many of the concepts in the law
and then implementing them. And David Farer of Greenbaum,
Rowe, Smith, and Davis. These are all my old
friends, whom I invited. David has been a Superfund practitioner and expert for many years and will give the state’s perspective. Barry? – Thanks, David, and I’m gonna stand here ’cause I wanna be able to see the slides. What a service from both the center and the law school to
pull the meeting together. And there are a number of
Superfund national world global experts in the room,
on the panel, certainly, and in the room as a whole. And we’re so looking forward to it. I’ve been looking forward
to this for weeks, David. So thank you. I’m gonna experiment for a minute to make sure I know how to advance. Okay, so one thing about the title, I just wanna point out to you this date. Is my? Well, I’m gonna do it
without, there we go. But the Superfund statute dates from 1980. That’ll become important momentarily, and I wanted to point out that the first word is comprehensive. There is some doubt about that, but we’ll come up. So outline for the next few minutes, we’re gonna talk about some context, we’re gonna talk about the nature and scope of corporate liability, and then the scope of injuries. What CERCLA covers and what it doesn’t. So first, the introduction and context. This chart is up here,
it’s a little fuzzy, that’s partly intentionally. I really just wanted
you to see the forest. We can come back if we
need to see the trees. This is from EPA’s website,
it went up last month. On the left hand side are the axis of hundreds of millions
of dollars per year in Superfund private part commitments and arrayed across the
horizontal axis are year by year. So, for the last 10 or so years, even in the lowest points, Superfund is doing about
a half a billion dollars of business a year in terms of getting private party commitments. And in some years it spikes to over two and a half or even $3 billion. So that as of right now, in
this 38 year old statute, it’s one of these workhorses
of environmental law, private parties are
performing the response action at about 60% of the
ongoing remedial actions. So for the most part,
Superfund cleanups get done by private parties and that’s due, in no small part, to the liability system. And it would be quick to recognize that there are many people, many institutions, who get to share credit in that. So Congress, of course,
and the Executive Branch, and then the courts, and the states, and some private entities. So I have picked out to walk you through, 12 attractive features
that makes Superfund an attractive system for federal and state government plaintiffs. I don’t think there’s
magic about the number 12. I think other people could pick out more, but I went ahead and picked out 12. So we’ll walk through. The first thing everybody
says about Superfund liability is that it is strict, retroactive,
and joint and several. Strict, that means
without regard to fault, without regard to negligence. It’s easy to take that for granted, but it’s not the background
in American tort law. Background rules would normally apply, liability for negligence
or for intentional torts, but not necessarily a
strict liability system. And retroactive liability
is not in the canons of construction for federal statutes. Most federal statutes
would be presumptively interpreted prospectively only
for forward, future conduct. But there is enough indicia
of Congressional intent that Superfund applies retroactively, meaning even if the conduct
was entirely before 1980, liability can still attach. And then we said three
things everybody says are strict, retroactive,
and joint and several. Superfund has a presumption of
joint and several liability. By that we mean that any one liable party could be responsible for the full amount. Several liability, similar name, completely different concept, would mean each liable party is liable for only its comparative responsibility share. It’s clear that Superfund
has a presumption of joint and several liability. It’s equally clear the
third Restatement of Torts says that there’s been a
decades long movement away from joint and several
liability in state common law, but Superfund preserves
that for government, for plaintiffs generally
particularly government plaintiffs. And so that strict, retroactive, and joint and several liability. Then there’s a more favorable causation standard under Superfund. One leading treatise says it’s all you have to show is that the defendant put hazardous
substances at a sight, not that those particular
hazardous substances are traceable to the need for the release. So it’s a particularly
favorable causation standard. One casebook says it shifts
the burden onto the defendants, and there are very few
defenses and exclusions. So it’s quite common for
there to be a large pool of responsible parties. That’s the fourth and fifth thing. The sixth thing is there is a presumption for government plaintiffs of consistency with the federal guidelines. This is the National Contingency Plan. Like a good EPA lawyer, I
don’t travel without it. And the National Contingency Plan, the governments, state and federal, get to have this
presumption of consistency. For environmental lawyers,
what we normally expect under the Air Act or the Water Act to the Safe Drinking Water Act, the big media statutes,
what we normally expect is a system in which the
federal government sets up a framework and states
can apply to be authorized to implement that framework. But it’s a sort of federal government has to approve state government execution. Not so in Superfund. In Superfund, right from the start, every state is able to
sue Superfund every time, and states can even pick and choose. Sometimes this, sometimes that, sometimes some combination of the other. And so it’s a low transactions cost system for states to pick up. All they have to do is do it. And then in addition, with
extremely rare exceptions, CERCLA never preempts state law, it always adds to, it’s one more choice a state government plaintiff could have. It’s not a system of
either express, preemption, or even field preemption. CERCLA’s just there for you. In addition to actual clean up cost, what it costs to send the bulldozers out, to take the soil up, the
dredges to clean the sediments, that kind of thing, in addition to those actual cleanup costs, as long as they’re documented, other important costs
can be covered, as well. Planning, oversight, enforcement, in some cases prejudgment interest, and that sort of thing. Declaratory judgements can
be available under Superfund, particularly for government plaintiffs, and the EPA has promulgated
model documents. Why would that matter? Well, because it lowers
transactions costs, and for the matter, they are written from the point of view of
a government plaintiff, so it creates a starting point. Although always, always you need agreement for a consent decree. By having this starting point, and its on the website, they’re easily accessible by everybody, it creates a sort of,
well here’s we start from, everything becomes a give from there. And so that can be quite helpful to state government plaintiffs. And then finally, an important
step that’s not as a parent at the outset, is that EPA and
states can offer incentives to settlers such as
contribution protection. By that we mean that by settling
with a few early settlers, they can be assured
that they won’t be sued by other defendants still in the mix. And this is important because there are at least two sources of
cost in a Superfund case. One is, how much does it cost to clean up? And the other is how much does
it cost to pay the lawyers? And by giving contribution protection, and only federal and state
government plaintiffs can do that, by giving that
contribution protection, you can incentivize settlers
to come early to the table and settle with the EPA or state. So I said there were 12, there probably are more, but it’s 12 that I
picked to get us started. And then, what does CERCLA
cover and what doesn’t it? Here’s where the word
comprehensive at the beginning might be of some question mark. So first, CERCLA covers response costs, including related enforcement costs. By response costs, we
mean what does it take to protect the environment, to make the public health protected, and the environment protected? EPA’s model document
includes some re-openers for unknown future injuries. And CERCLA covers natural resource damages and there are a number
of people in the room who know that, as best as
anybody in the world, the EPA, which is not typically a
natural resource damage trustee, the EPA website emphasizes
the word restore to distinguish between
natural resource damages and response costs. If response costs are
about getting contamination out of the environment,
filtering the ground water, cleaning up the dredge,
dredging the sediment, cleaning up the soil. If response costs are
about getting contamination out of the environment, natural resource damages
are about restoring, making the environment whole, putting the habitat back
to where the bird years, as Brian said, can be accommodated, as well as the reasonable
costs of damage assessment. So the two key things that CERCLA provides are the response costs, the cleanup costs, and natural resource damages. But there are things
that it doesn’t cover. CERCLA’s younger sibling with an attitude, the Oil Pollution Act, which
came 10 years after CERCLA, the Oil Pollution Act covers
petroleum, but not CERCLA. CERCLA doesn’t cover
petroleum, natural gas, or this broad narrative term, pollutants or contaminants. EPA can clean up using
government appropriations, EPA can clean up a
pollutant or a contaminant, but only hazardous substances
give way to liability. At the same time, hazardous substances includes an amazing amount. The National Contingency Plan, which I traveled with here today, has a partial list of hazardous substances that is seven pages long in the
code of federal regulations. So, Superfund covers a lot. Not absolutely everything,
maybe that word comprehensive was an optimistic one, but still, Superfund covers hazardous substances, but it doesn’t cover all
of that for everything. So I mentioned it covers
for clean up costs, response costs, and
natural resource damages. But for the most part, it
also covers health studies when done by applicable federal agencies, but for the most part, that’s it. So, for example, although
the Oil Pollution Act covers some private causes of action, like property damage,
and lost subsistence use, and even lost government revenues, and lost profits, all
that’s a very private cause of action, lost
profits and earning capacity. The Oil Pollution Act covers all of that, CERCLA covers none of that, and neither federal statute
covers some of the things that common law causes
of action can reach, like medical expenses, pain and suffering, wrongful death, and so on. So the comprehensive in
Comprehensive Environmental Response Compensation and Liability Act might be a bit of an overstatement. At the same time, while
CERCLA doesn’t do everything, what it does do, it does pretty well. CERCLA has injunctive relief. It’s available for the federal government, not for state governments, but there are ways to fill
the gap for state governments, including a companion statute, the Resource Conservation and Recovery Act where states could use a
federal cause of action through the citizen supervision and through state law,
statutory, and common law. So where does that leave us? I wanted to go back to a slide early on, which was this one. Which is that CERCLA Superfund
has attractive features for governmental plaintiffs,
federal and state. EPA gets to take a little
bit of credit of some of it. Congress gets to take a lot
of credit for a lot of it. The courts get to take a lot of credit. And states get to take a lot of credit, as well as some private parties. So with that, I’ll turn
it over to Nancy and David and I’ll come join you over there. – Well, it’s very nice to be here. David and I go even further before the amendments to Superfund, which is how we became friendly is when the Superfund
amendments were passed in 1986. It was a major sort of education
campaign that took place. I was working, at the time,
at the Department of Justice and I had the task of
being DOJ representative on Superfund Reauthorization. Now, you’ll remember 1986, it’s a republican administration, Ronald Reagan is President
of the United States, and there’s a major effort at
what is known as tort reform. And so, we are doing
Superfund reauthorization at a time when joint and
several and perpetual liability is to a favorite topic. And so, there were three women, actually, who were involved in that
Superfund reauthorization. Myself, a woman named Linda Fisher, who became the Deputy
Administrator of EPA, and a woman named Anne Shields, who eventually because Chief of Staff to the Department of the
Interior when David was there. And we were the three girls against 500 registered
lobbyists in 1986, okay? (men chuckling) And literally, we were
girls at the time, alright? So, no program is perfect,
but how did Superfund sort of become, in a way, a very good success story, alright? One advantage, different than many others, is no one’s in favor of
hazardous waste, okay? You don’t have people who smoke it, use it, find it attractive,
can sell it in any way. It’s hazardous waste, and that is helpful. ‘Cause everybody knew
hazardous waste was a problem, and we knew that this was not
a regulatory program, okay? We weren’t regulating,
we were gonna clean up. Because we were having,
really, the beginning in a way what has now become
post-industrial America, alright? And there was a legacy of
post-industrial America, just a bunch of crap that had
been left all over the place. Some of it, by the way, caused
by other environmental laws. If you can’t put it in the air and you can’t put it in the water, you’re gonna put it on the land, alright? So we were a little bit of
a victim of our own success in a sort of regard. So the theory of Superfund was, and how do you get a
statute like this passed? It’s public hysteria, alright. There was a woman named Lois Gibbs, she lived in Buffalo, New York, and I have to say, that’s
the interesting thing in terms of where we sort
of are with these ads and so forth, we didn’t have a media that was so divisive, alright? So everybody was watching the same news, and it’s very interesting
when that happens, because you then don’t
have sort of groups. But you couldn’t get
much of a constituency in favor of waste. It just didn’t ring true. Superfund reauthorization
comes about in 1986, and why do we need it reauthorized? Because it was funded by a
tax on the petroleum industry. The petroleum industry,
and this is an example, it’s sort of, kind of how
do you want to deal with these kinds of schemes? The petroleum industry,
which already noted, doesn’t pay in this program. That was the pass they got. You pay a tax, you get a pass, alright? And that money was then
used to cover the folks who were going to be liable. Now here’s the dilemma you
have in this litigation, as well as in this statute, we’re bringing together, not one industry, we’re bringing together everybody. Transporters, alright? That’s Joe, okay? We then have generators, the Fortune 500, as well as everybody
else who generates waste. And we have the waste owners, who always conveniently disappear, okay? It’s just easy to just say, I’m walking, unless it was a company owned site. And so for us, and we were
in the litigation group before this legislation gets started, joint and several
liability is now critical, it’s absolutely the key to this system. Because we have to find a way to clean up what had been identified
as over 1,000 terrible, hazardous waste sites. Finding people who were liable, and if we had a traditional
liability scheme where we had a fingerprint waste, it could’ve never been done. We also knew we couldn’t
make it a government program. We don’t have enough people, we didn’t have enough skills
in order to get the job done. So we wanted private
people to do the work. So we come to the 1986 reauthorization to reauthorize the tax, okay? Which is now expired. But the theory was, is we need that money from
the oil industry, alright? We’re going to get it reauthorized and we’re in a very blessed period. And the best part of
that blessed period is we had very intelligent people in Congress at the time, alright? George Mitchell is the minority leader, formal federal judge. You can sit down and talk about joint and several liability, alright? We would have meetings
with people sitting down and actually talking about, I don’t like joint and several liability. And so the reason we have a
settlement program in Superfund is really because of Al
Simpson from Wyoming. Al Simpson said, “I think it’s unfair.” And I’m in a closet with the man, which today would have been problematic. (group laughing)
But then, no one thought twice about it. I’m teasing, nothing obviously happened. But what I’m suggesting is,
(all chuckling) – Thank you for clarifying.
– Al Simpson and I, yes. Al Simpson and I, and he’s saying to me, “If you come up with a
Superfund settlement program, “I’ll go along with the liability scheme.” And the idea was exactly
what Barry is saying. What we’re going to do is we’re going to have
a De Minimis provision, which was, how you’re gonna get the one barrel generator out of there. There was always this mythological person who only brought one barrel to the site and he had every
representative on the hill just telling his tale. We were going to have to have, though, a way to get people out. We were going to commit to identifying as many PRPs as possible, generators, transporters,
as well as site owners. We were going to also make sure that EPA had the ability, and I don’t think it does it very often, to do a non-binding
allocation of responsibility. If you want us to figure
out what you’re liable for as part of the cleanup, we will do that. And finally, what we were
gonna do, is two other things. Barry, Barry Frank, Barney Frank has a
constituent in Cambridge who, unfortunately, had bought
their bicycle repair shop on top of a CERCLA site, alright? And that guy said, I had no, I just didn’t know. How did I know that? And Barney Frank said, we need an innocent land owner provision. We need a proviso in which
we are going to make sure that somebody who
inadvertently purchases a site isn’t going to be liable, and then finally, we needed this concept of contribution protection. If you settle with us, then you’re not gonna be
liable to anybody else. Now, the negative things that we had to convince the hill to
keep in order to do that was not only joint and several liability, and perpetual liability. ‘Cause we actually put in, we lease provisions that said, by law, you can’t walk away forever. But we also needed
pre-enforcement review provisions which precluded you from
challenging your liability, or challenging the cleanup. Because once lawyers get involved, and I think it was very nice that our keynote speaker spoke so highly of us, we engage in a lot of
transactional issues, and delay is one of them. And so it was very imperative
that we got it done. So the focus that we had was on cleanups. The focus that we had was to make sure that we had incentives for settlement, that is unique in the law, and it has been phenomenally successful. Now, I mean, people can
criticize the program, but what I will say is you don’t see people marching in the street saying, let’s address those hazardous waste sites. Now maybe it’s gotten too, we’ve become too
complacent, that’s possible. But I will say, there was a study done, it was done in a 2007 report to Congress that was done by what was called the Superfunds Settlements Project, which is made of industry
together with non-profits, and I basically said, almost all of the sites,
and there were over 1,000, have been at least for
the most part controlled. There may be some debate,
but for the most part. And it’s been done, it’s estimated, to 20, 30% less in cost
than it would have been had private party, I
mean had the government undertaken those tasks. And so, I compliment the
people who have done this work for doing a phenomenal job. But I will say, the only
way you get settlements is if you have a very Draconian
liability scheme, okay? If people think they can
get out from liability, it’s worth the risk to litigate. It’s only when they realize
there’s a real cost if I lose, does it bring it there. So I’m gonna take two
minutes and change topics very, very quickly. Because the same time he
1986 amendments are going on for CERCLA reauthorization, there is Congress also considering the issue of vaccine
damage liability, alright? And I don’t know how
many of you are familiar with the Vaccine Act. It so happens that that
is the statutory scheme that is in my court, is the
Court of Federal Claims. And it’s worth nothing that
both of the CERCLA amendments as well as he ’86 Vaccine Acts were actually pretty progressive times to figure out ways to
deal with liability issues in the context of public
health and exposure. By 1986, several major
manufacturers of vaccines, as well as doctors and nurses, no longer wanted to
administer vaccines any longer because they were all being sued; why? Because there are a certain
percentage of people who really do have negative
reactions to vaccines, and so what Congress came up with was a liability scheme
that took liability away from the people who give the shots and the people who make the vaccines, and made the United States the first place you come to make a claim. I raise that because it strikes me as, this is a sort of potential model, almost in the opioid situation, where there may be legitimate
uses, but the abuse, I mean you have to
recognize the health of it. In ’86 the statute passes
and this is how it works, before you can sue a doctor
or a vaccine manufacturer, you must file a claim
against the United States, it’s really HHS in my court, in the Court of Federal Claims. That, there is by HHS, the
statute had originally, and HHS has expanded it, has actually identified a table of vaccines that are covered. How may of you had a flu shot? You’re covered. How many of you had a sore
arm from your flu shot? You’re covered. Alright, so the HHS identifies vaccines and identifies expose, I
mean I don’t wanna say, adverse reactions that can
be, even in some instances, as difficult as death,
but fairly rare, alright? And you, if it’s on the table, the vaccine’s one the table and the response is on the table, then you will be compensated
by the United States, alright? How are you compensated? Every time you had that flu vaccine, you have paid an Excise tax. That Excise tax had created a fund, that fund is administered by
the Department of Treasury, but HHS is the one who
is reviewing the claims. If you come to my court
and it’s a table case, you will get paid. If you have a response
that is not on the table, alright, but it is a response, you can also pursue your case, but then you need to prove causation. Both general causation, can this vaccine cause this reaction? And specific causation, did
it actually cause it to you? Still, though, a little bit more of a liberal causation standard than the regular tort case, alright? It doesn’t have to be proven
to a medical certainty, but it has to be a reasonable, I don’t even know how to explain it. It’s sort of you, it has
to be enough evidence from enough people to suggest that that is a likely scenario. Those vaccine cases are
the most well known. The most well known situation of that was the Autism Omnibus
proceeding, alright? There was, we’re now living
in this anti-vaxxing world, a very frightening time. It all started with people saying, it was a doctor in England who has actually lost his license, he may be in prison, saw a correlation between two-year-olds
who got a vaccination and demonstrating Autism. He took that correlation
to mean causation, and people said, well I’m not gonna have my kid have a vaccination. And then people,
unfortunately, who had children with Austism sued. We had over 5,000 claims, and that proceeding took place with represented of
plaintiffs and so forth, but ultimately it was determined that there was no evidence to
support that and they lost. But it is so far, there have
been, from what I understand, over 15,000 claims in
addition to those filed. About $3 billion has been paid out. All of this information is on my court, the United States Court of
Federal Claims’ website, and I commend people how the statute works and so forth to look at it. We only have eight special masters. We now, because we’ve
added a bunch of vaccines but haven’t had it’s special masters, there’s now an effort to get more of them. They are the ones who deal firsthand with the claims when they come in. There’s a whole special settlement unit that kind of helps to process them all that does the cases
where HHS agrees to pay or a settlement is possible. And it has at times been
a criticized program, but I would have to say, this anti-vaxxing thing
is deeply concerning, but it is an amazing program
that has allowed vaccines to be manufactured and
doctors to give them. One final note for the
lawyers in the room, unique to any law in the United States, you are compensated as an attorney, attorney’s fees are reimbursable
whether you win or not, so long as you have a reasonable case. It’s to encourage people
to have the vaccines done. If you think there’s a
problem, you can sue, and then you get your attorney’s fees. And there’s a whole table in DC, where many of us are from, there’s something called the Laffey table, which sets the lawyer’s fees
if you prevail in a case, and our court has a similar thing for attorney’s fees, as well. So, I tried to do that quickly, okay. – And you did.
– Alright. – And you did, so some commentary from the state perspective, also from the private party perspective. But first of all, thank you to David for putting together this
very exciting program. I’m delighted to be a part of it and it’s a real pleasure to be up here with Barry and Nancy, given their long history on these issues. So we have this very powerful federal law that’s being used in the way
that you’ve heard described. We then also have very
similar laws in every state. CERLA-like, Superfund-like
laws in every state. They’re typically called CERCLA-analogs. And they provide the same sort of power to the sate governments to pursue parties to clean up sites under state law, and they also provide some very powerful private party clauses of
action, as does the federal law. You heard Nancy talking about
how the federal government would carefully research parties that they think are responsible parties or have established
responsible parties, or RPs. At the beginning, they’re only potentially responsible parties, or PRPs. And the same thing happens
at the state level. For example, in New Jersey, which has been a primary
focus of my career and work, we have the Spill
Compensation and Control Act. In fact, the Spill Act, as it’s called, predated CERCLA by four years. We had a strict liability
environmental cleanup law in 1976. CERCLA was 1980. It’s a law that covers, not
just the hazardous substances of CERCLA, but all hazardous substances, including all petroleum products. And in fact, we already have a standard for one of one of the PFAS substances. You may have all, we keep having
these emerging contaminants of concern, you know. We think we’ve got to maturity in the environmental law field, the litigations have played out, what’s gonna happen to all
the environmental litigators. And then all of a sudden, we start to hear about these per and polyfluoroalkyl substances, PFASes, that are extremely toxic
and extremely dangerous, and it’s the new wave of
contaminant of concern. New Jersey already has a cleanup standard for one of them, PFNA,
and we’re beyond the point where substances can be
analyzed to the parts per million or billion. We typically look at ground
water in parts per billion and soil in parts per million. For PFAS, we’re looking at
levels in the parts per trillion as the cleanup levels. And in fact, with a cleanup
standard at 13 for PFNA in New Jersey, the detection
limits get all the way down to five or six parts per trillion. The science is amazing, it’s always changing the practice. At any rate, I digress a little, but you have a very broad, in New Jersey, a very broad range of
hazardous substances, and you have a very powerful
private party cause of action, which I started to talk about. Both under federal law and state law, the government brings its
case against private parties, companies, governmental entities. And those parties have
to start to negotiate because of the joint and
several liability standard. But, do they leave it there? No, where you’ve got
a multi million dollar or billion dollar cleanup site, what are you gonna do? You’re gonna look for
other responsible parties, and you turn around and you
start third party actions. It’s another area of cost, investment. Everyone uses the word transactional cost, it’s another huge area
of transactional cost, bringing in other parties
who the primary group thinks are responsible or has
established are responsible. Now, under CERCLA, there are
various statutes of limitations that have been added. I’ll tell you right now in New Jersey, our state Supreme Court has
held that under the Spill Act, there is no statute of
limitations under our Spill Act, either for the government to bring cases or for private parties who’ve
cleaned up to bring cases. So, I really wanna stress this point that we’ve got the government
going after private parties, and we’ve got private parties going after other private parties and municipalities. You heard about natural
resource damage laws on the federal level, and as you heard in the Gulf discussion already, there are natural resource
damage laws on the state level. They are also the source of a good deal of negotiation and litigation. One interesting thing that was happening in New Jersey for a while, New Jersey was the first state to pass a transaction triggered environmental law. It was originally called ECRA, the Environmental Cleanup
Responsibility Act. It was revised some years later and is now the Industrial
Site Recovery Act, or ISRA. It requires to this day that when you’re selling a
property or a business in a very broad array of
industrial categories, you have to do an environmental audit, and if necessary, a cleanup
as part of the transaction, so that the cleanup occurs
when the money is on the table. Until recently, fairly recently, this was a program overseen by our Department of
Environmental Protection, they are the ones who had to issue the final sign off letter, the no further action letter. And in New Jersey, that required not only finishing the environmental cleanup, but also settling any natural
resource damage claims. So that was very interesting. You couldn’t get your
No Further Action Letter and finish the environmental proceedings until the NRDs were dealt with, and they were virtually always dealt with on a monetary basis, not
through a supplemental project through various calculations. That actually, the NRD part
of the New Jersey system isn’t working that way
anymore because New Jersey is also one of the states that’s started to privatize certain aspects
of environmental cleanup, so now the consultants who’ve
been working on the cleanups, a certain of them get licensed as licensed site
remediation professionals, and they stand in the shoes of the state in issuing certain sign offs, so that now you don’t get
a No Further Action letter from DEP, you get a Response
Action Outcome letter from an LSRP whose work is then reviewed at some point by DEP, but
they decoupled NRD settlements form this process. I thought it was an
interesting way to make sure that NRDs got dealt with up front. One of the things we
were asked to think about in the context of our discussion was the societal liability question, the socialization of cleanup costs. Is this the way to do it? Was this the right way
to get cleanups done? Well, certainly imposing the joint and several liability scheme has worked in terms of enforcement. And I think we all know that
enforcement is necessary to get people to comply with the law. At the same time, Congress made a decision when Superfund passed, right? We heard about a tax that was
imposed on a certain industry, on the petroleum industry,
to fund this Superfund, which provided the governmental funding for cleaning up sites. But the decision was made,
not to impose a general tax on the public or on business. So, instead, for 150 years
of heavy industrialization, the decision was to target
certain other parties and leave it to those parties
to pursue third parties to collect their liability, their contribution to liability. So instead of the government saying, okay we’ve got a lot of polluted sites, let’s fund the cleanup by taxing, we’re gonna target these
particular parties, parties who owned and operated properties while they got contaminated. Nancy was talking about landfill operators and those who bring contamination to those sites, the transporters. Those who created the
waste, the waste generators. All of these parties are deemed liable under the Superfund law, under the strict and
several liability standard. And that’s the decision that was made. So, those parties then, in turn, turned to the third parties to get them into the mix, and that’s where we get into transactional costs being significant. We also have situation where you’re a private party counselor, where you have clients who come to you in the case where
they’ve been involved in, been dragged into a Superfund CERCLA suit, and there’s nothing
that they’ve done wrong. They’ve generated a particular waste, they had the permit to handle the waste, they sent it to a waste disposal facility that was a licensed
waste disposal facility, they’ve got the bills of lading for having transported the waste there, and when that waste facility
has a problem and leaks, the liability is not just in the hands of the waste disposal company, it’s also liability of the
party who generated waste, even though they followed
all of the rules. So it’s a hard discussion
to have with clients who say, why in the strict, why should I be liable when
I did everything correctly? Because a decision was made. We’re gonna have this kind
of a liability scheme. So, as a result, we have these situations where transactional costs are significant. The federal government on
the Superfund cases often has dozens, if not hundreds, of parties who are responsible parties. Those groups organize into committees to deal with how they’re going to allocate liability among them. You heard all of the complex issues going on in the Gulf
Spill on a mega-level. These kind of situations go
on at a much smaller level in these groups of responsible parties who’ve been targeted to clean up sites. You get 100 or more lawyers in a room, respond, the PRP group gets divided into all sorts of different categories, there’s a generator’s group, there’s a ranger group,
there’s owner-operator groups. You know, they get divided up into private parties,
governmental parties. They get divided up into the amounts of hazardous substances that were sent, the toxicity, cooperating parties, non-cooperating parties, ability to pay. And then you go through the
complex allocation system, not unlike, not nearly as
complicated as what you’re hearing discussed by the Gulf Oil Spill, but complicated enough that
you get a whole sub-specialty of experts, practitioners,
you get PRP group leaders, or common counsel. You get allocators, third party neutrals doing the kind of work we heard the Gulf Spill folks talking about and technical consultants. So simply getting named
in one of these lawsuits bring quite substantial
transactional costs and it’s a torturous process. But in the end, cleanups get done, the liabilities get
allocated, and we go on. – [Man] I was gonna say, and college educations get paid for. (all laughing)
– Yes, a lot of college, too. – It was the Lawyer’s Relief Act of ’86, I do remember.
– Ha, right. – One thing I just wanted to add– – Yeah.
– That is different than I remember when
Ken Feinberg was talking and that is, insurance is
very much involved in CERCLA. There as actually during ’86, an amendment that was being posed from the insurance industry to say that insurance money could not be used to pay for Superfund cleanups. And that got a fair amount of traction until actually a few of us said, and now I’m at the Court of Claims, but it would have been an
interesting takings claim, of to say that the
government has now taken away my contractual liability. So they were persuaded a
little bit by that theory not to do that, but insurance, Barry and I were involved in a major site that involved, ’cause there’s also federal facilities involved to have their own cleanup liabilities. But I mean, settlements
will have to go to places at a certain amount to
places like Lloyd’s of London and so forth as to whether or not they’re gonna be willing
to go along with it. – Yeah.
– Mm-hmm. – The company’s at a certain level, and at a certain point it
gets pushed beyond that. – Right, right, and early
on in the liability scheme when parties would be sued,
either by the governments or by other private parties, one of the first places they would turn would be to their insurance carriers under their business liability policies or their property policies, and those policies were
found by courts to, in many instances, cover
to the extent of policy, contamination and the cleanup costs, and then the insurance
industry in the ’80s went through a series of exclusion clauses that kept getting knocked
down by the courts, and they ultimately came
up with by the mid-’80s what’s called the Absolute
Pollution Exclusion that really is a clause that’s held up. So that these days, in the modern era, if you really want coverage for potential environmental liabilities, you have to buy a specific
pollution legal liability policy, which is highly negotiated, for which the background due diligence has to be quite detailed
and they’re hard to come by and they have limited terms. – [Man] So let’s open it up for questions, starting with mine. This was called a Superfund, and at the time it was created, Nancy, was it envisioned that this would really be primarily a private
party funded cleanup effort? There was this notion of a
Superfund of federal dollars that were able to pay for cleanups where there were orphans or whatever. It seems as though that
has sunk below the waves, that concept, and I don’t think the tax is being paid anymore?
– It isn’t. – [Man] And there isn’t any
more money in the Superfund. But just curious, because that would have been potentially a way
to have thought about what David was just talking about, socialization to some extent. Although he makes the important point, it wasn’t a general tax, although that was considered in 1986, I think, a general tax in order to potentially socialize the liability. – I would say you have to, I mean it’s really timing is everything. This statute is passed in 1980, in the waning days of the
Carter Administration. It is written by a group
of very intelligent people from have a perspective of polluter pays, and that concept we made. And so, I mean there was a
gentleman named Tony Roisman who was a Public Interest lawyer who was working at the department, was very influential in writing it, based it on some very New
Jersey and other laws. And the notion was no, that it was going to be a polluter pay. I mean what was complicated,
– Yeah. – Is it’s the only statute
in which so many people from different walks of life have to come into a room together, alright, and try to figure it out. But no, that was always the thought, and then it became a gospel that we would focus it on, the fund would only be
there to do orphan sites, and to use from what
we called at the time, Nixed funding for missing
people in the program to make the deal go. – So two thoughts. One is to elaborate on Nancy’s point, that it’s enacted in the closing days in a lame duck Congress in which there’s a contemporaneous
letter from the Senate Chairman and ranking member who are
about to change places, because the Senate switched. And they write to their House counterpart, this bill didn’t pass the
Senate because most support it, it passed because most
agreed not to oppose it. And so it’s that fragile
moment to moment coalition, and the tax was, at the time,
an essential ingredient, but the tax has not been
collected since the end of 1995. – Right.
– So what’s happening now, every year, starting in 1996, is Congress appropriates
money into the trust fund from the general revenue, and so it’s the same way
your income tax and mine, and everybody else’s
goes to fund government, about a billion to 1.1 billion goes into the Superfund every year. – And the state analogs
basically followed that model of not funding cleanups, except
for certain specific funds, and many states have underground
storage tank cleanup funds particularly for residential
owners and the like, but generally it’s been the same scheme. – [Man] Questions? Charlie? – [Charlie] I hate to speak twice, but so you said the
purpose of this conference is looking at these different
regimes throughout the years of how to handle this. I guess I can make the point that I don’t think has been made, which is people often criticize Superfund for being incredibly
high transaction cost. It seems to me as a matter of history, those up there who would disagree, but because that fragile moment in 1980 results in a bill that had stripped out strict liability, and stripped
out the (mumbles) CERCLA and said, instead, to look
to how the Clean Water Act does it under the 3:11 provision, it took like 10, 15 years for
litigation to finally confirm what the standards were. It seems to me that people
were looking at Superfund as a model for how to handle some of these complex health issues. That the history of these similar programs in New Jersey and elsewhere were, I’m not sure of New Jersey’s, but where the standard of liability was in the statute in the first place, that that might result in a less transaction cost high regime if people were to look at
Superfund as being a model. – Yeah, yeah, and a lot
of the state programs have the liability, most of
them have a liability standard baked into the statute. – You couldn’t do that. I mean you couldn’t get it through, but I will say, having
spent a lot of time working on reauthorization, because
by that time even in ’86 there had been enough lawsuits that had established joint
and several liability and retroactive lability, that I was very careful when I was helping to draft legislative history
to write this clarifies and confirms what is, in
fact, the law of the case law to make sure that we
were not reopening issues by not using those
words joint and several. The closest we got was getting
contribution protection, which would have made no sense in a scheme that did not have joint
and several liability as a matter of law. – [Man] I have another question, but I’ll ask, or the floor is
open for others other than me. I wanna ask you guys
something that came up with the Gulf Oil Spill, and that is the NRD as
applied under Superfund. – Yeah.
– We heard quite an extraordinary tale about
a remarkable in many ways NRD settlement in connection
with an enforcement action. NRD was an important
part of the Superfund law that really had a different
flavor than the cleanup itself, but seems to have not been successful. I’m curious if you agree, and if so, and you were back
at it from the beginning, how would you potentially
make it work better now that we see that it
actually can work better? – Do you wanna start, David? – Well one of the reasons I brought up the New Jersey example
during the period of time when in order to wrap up a
transaction triggered cleanup you had to complete the NRD settlement, there could have been or there
could still be some aspect of an NRD requirement leading
up to one of the key points along the circle process.
– Sure. – Whether it’s the rod or whether it’s– – [Man] But it’s always
been treated as something that other people worry about later. – Right, and part of that
is because the trustees aren’t actually sitting
at the table with you. – Right.
– Right? So if they could somehow
be involved in the process, that would be one way to
go back and restructure. – [Man] Were you saying,
just a clarification, in the New Jersey example that people essentially monetize it and there’s a payment made for NRD as opposed to the actual application of restoration activities? – For many cases where the
natural resource damage was relatively mild.
– Mm. – And the state wanted to monetize it and get the money into the treasury. – Mm-hmm.
– That that’s how it was happening, so, yeah.
– That’s interesting. – So in fact the vast
majority of the cases we were closing under our ISRA program, the NRD damages wound up
being relatively small sums. – Nancy?
– I would just say, having working on it at the time, I mean the focus was on
sort of the industrial sites and they were all largely on the east. New Jersey was very well known for having an extra
large collection of sites because they are the ones who began working on it earlier on. When we got to the west and
some of the mining sites, then the issue became more prevalent. But it does matter just to
use the Hamilton expression we all now use, who is in the room. That natural resource,
EPA runs this program, and they don’t necessarily bring in– – Right.
– Their brothers and sisters from Interior and NOAA Unless the state really, probably, put some pressure on
– Yeah. To say there’s a natural
resource damage component because they, the state,
will be the beneficiary of any reclamation that takes place, yeah. – And it is the case in almost every site, EPA is not a Natural Resource Trustee. I think the Gulf Oil
Spill is the exception. – Yeah.
– But other than that, we are not, and so the fire service and– – [Man] And maybe that wasn’t a good idea. – I don’t know.
– Yeah. – They’re not in the room.
– Yeah. Interesting.
– Yeah. – [Man] Okay, let’s
than our fabulous panel. That was really interesting.
(all applauding)

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