SREA Exemption Granted in California Superfund Case

ISRI applauds Judge Steven Wilson for taking a step towards recognition of recycling transactions/arranging for recycling as being distinct from disposal.

In California, Judge Wilson released Quemetco Inc. and International Metals Ekco Ltd. from the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) liability for pollution of the former Exide Technologies lead smelter site, located in the city of Vernon. The California Department of Toxic Substances Control (DTSC) alleged that Quemetco and Ecko, among others, arranged for and/or transported hazardous substances to the site, leading to more than $136 million in cleanup costs. Quemetco and Ecko successfully argued for their exemption from liability under the Superfund Recycling Equity Act (SREA). Judge Wilson distinguished Quemetco and Ecko from the other defendants because they only sent spent lead-acid batteries to the site, any battery tops sent met the requirements for the “useful product” defense , and testimony from both Quemetco and Ecko showed that they intended to recycle, and not dispose of, the materials. Further, California DTSC failed to show that Quemetco and Ecko were excepted from SREA. The current parties to the case are awaiting Judge Wilson’s bench ruling in the trial’s third phase, the divisibility phase.

Passed into law on Nov. 29, 1999, SREA corrects an unintended consequence of Superfund that had resulted in hundreds of millions of dollars of Superfund liability being imposed on the recycling industry. Quemetco and Ecko’s exemption from liability under SREA is positive for the recycled materials industry.

Although due diligence/reasonable care was not part of Ekco’s and Quemetco’s successful defense, the SREA exemption requires a showing of “reasonable care” for all transactions occurring after Feb. 27, 2000. ReMA has its own compliance program to help members conduct environmental due diligence on their business partners and potentially meet SREA’s reasonable care requirement. For more information on the program, please visit the ISRI website. For questions, please contact ISRI’s Assistant General Counsel, Rebecca Andrechak at randrechak@isri.org.