Do you understand your company’s downstream environmental liability?
Scrap metals produced by manufacturers are generally coated with hazardous substances such as paint, cutting fluids, galvanization and other noxious materials. There are a myriad of federal, state and local laws, regulations and case law placing responsibility for the proper handling, shipping, storage and recycling of it squarely on the shoulders of the producers from the time it leaves the plant until ultimately reaching a mill where it is melted. Fines, penalties, cleanup costs, attorney fees and bad publicity are some of the unpleasant circumstances suffered by offenders.
Some manufacturers believe the Superfund Recycling Equity Act eliminates their liability.
On November 29, 1999, President Clinton signed the Superfund Recycling Equity Act (SREA) into law. SREA serves to correct the unintended consequence of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) that discourage recycling of metals due to the potential environmental and legal costs of a cleanup. Because of these liabilities, SREA offers a measure of protection for companies that thoroughly investigate the recycling processes they elect to use for their scrap materials. Part of the investigation requires that your company ensure the environmental compliance status of any service you employ to recycle it. READ THE ENTIRE ACT HERE – very ambiguous.
In order to be afforded relief from liability, you must be able to demonstrate:
- The recyclable materials meet a commercial specification grade
- A market exists for the recyclable material
- The recyclable material could have been a replacement for virgin raw material
- “Reasonable care” has been exercised to determine that the accepting facility was in compliance with substantive federal, state or local environmental laws or regulations
The burden of proof lies with the producers of the material. According to the EPA - Materials Recovery and Waste Management Division, “It’s up to the generator of the scrap metal materials to ensure that the recycler/processor to whom they sell their materials are legit and properly recycling them. In a Superfund situation, the producer has joint and several liabilities for the cleanup. It is prudent to have an audit trail and to vet the recyclers, not just for potential Superfund liability, but for state and local laws and regulations for which producers have downstream environmental liability too.”
Below is the last paragraph of SREA. The burden of proof is on the producer:
Nevertheless, the retrospective application of the exemption to pending actions does not result in an automatic exemption because any party seeking to avoid liability under Section 127 must prove by a preponderance of the evidence all of the exemption requirements. In addition, the exemption does not apply retroactively to actions resolved before the passage of SREA.
The EPA, Department of Energy, Department of Transportation and Department of Energy, the Department of Health & Human Services, the National Institute of Health and other federal entities all have different definitions, regulations, fines and penalties for the proper handling and disposition of your scrap metal, as does each state and locality. Having a 3rd party subject matter expert physically vet your recyclers demonstrates good faith, diligence and that you care.
MAJOR FABRICATED METALS MANUFACTURER -
Annual Report and Risk Concerns/Named as Party to Superfund:
Read an excerpt from Valmont Industries’ Annual Report – the Risk Factors section. They are a publicly traded producer of fabricated steel goods, and list the potential of being named in Superfund cleanups as one of their major concerns. Better safe than sorry…Link to Annual Report