Recyclers beware: You are exempt only if you can prove it

Serious recyclers should prepare a confidential audit of their operations and a “watch list” of potential sites for which there may be liability

The United States Environmental Protection Agency (USEPA) recently included the Chemetco site in Hartford, Ill., on the National Priorities List (NPL). NPL Sites are those facilities where USEPA has concluded that one or more hazardous substances has been released (or there is a substantial threat of a future release), that will cause someone to incur response costs under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA). Superfund Sites are not uncommon, but here, USEPA is seeking to impose cleanup liability on parties who were under the impression that they were exempt recyclers.

While Chemetco had described its operations as a secondary copper smelter and recycler involved in the production of copper anodes and cathodes, the Agency describes Chemetco’s process as accepting various metals for secondary smelting, and in the process, generating huge piles of waste slag effectively disposed at the Hartford, Ill., site. After a checkered environmental compliance history, and specifically after the discovery of untreated waste being unlawfully discharged, the Chemetco operators ceased all processing activities at the site in 2001 and sought bankruptcy protection. According to the Agency, the site contains 837,000 tons of slag, 35,000 tons of zinc oxide waste, 70,000 tons of refractory brick — all with high concentrations of Lead (Pb), Cadmium, Copper and Dioxin.

Despite the Exemption, recyclers may find it difficult to qualify — not because the materials involved were not “recyclable materials,” but because of the difficulty in proving that the transactions were “recycling transactions.” Moreover, given the reported poor environmental compliance status of the Chemetco site, otherwise exempt entities may find that the Agency challenges their purported exemption, and seeks reimbursement of the responses costs based solely on the sins of the site, and not of the recycler.

At this point, if a recycler has any potential exposure at this or any similar site for allegedly “arranging for disposal” of a hazardous substance, it is critical not to ignore the situation, but to make an affirmative claim — supported by a record — of its exempt status. That is, adequately describe the “recyclable material” and the “recyclable transaction” in an appropriate response to the Agency. Many recyclers revised their operations and contracts to refer to the Exemption when it was passed in 1999. Even if not, the materials and transactions may still qualify for the exemption. Do not waive it, and make a proper record.

Contributing Author

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William J. Anaya

Bill Anaya is an environmental Lawyer licensed in Illinois and Indiana and heads Arnstein &...

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