Friday, July 21, 2017
The issues associated with spray-drift of dicamba have generated numerous questions to me. I devoted a blog post to the issue last week. Since then I have received more calls and emails from farmers experiencing drift issues. One farmer raised an interesting question – does the drift of dicamba constitute a hazardous waste that is regulated under federal law? That’s an interesting question and the focus of today’s blog post.
Comprehensive Environmental Response Compensation & Liability Act (CERCLA)
Hazardous waste is regulated by the federal CERCLA. CERCLA became law in late 1980, set as a goal the initiation and establishment of a comprehensive response and financing mechanism to abate and control problems associated with abandoned and inactive hazardous waste disposal sites. In general, CERCLA was enacted as a response to several then high-profile hazardous waste trouble spots such as Love Canal in New York and the Valley of the Drums in Kentucky. While CERCLA focuses on hazardous waste sites, it can have significant ramifications for agricultural operations because the term “hazardous waste” has been defined to include most pesticides, fertilizers, and other chemicals commonly used on farms and ranches. See, e.g., 40 C.F.R. § 261. As such, CERCLA liability is a concern any time that agricultural land is purchased or leased.
CERCLA Components. There are four basic components to CERCLA. First, the statute sets up an information gathering and analysis system to allow state and federal governments to determine more accurately the danger level at various disposal sites and to develop cleanup priorities accordingly. 42 U.S.C. § 9604. The EPA is authorized to designate as hazardous any substance which, when released into the environment, may present a “substantial danger” to public health and welfare, or to the environment. The act requires notification of any release into the environment of these substances. The act requires owners and operators of hazardous waste storage, treatment, and disposal sites to provide EPA with notification of the volumes and composition of hazardous wastes that can be found at their facility, and of any known or possible releases. The EPA uses this information to develop a national priorities list (NPL) in order to prioritize hazardous waste sites from those most dangerous and in need of immediate cleanup to those least dangerous and not as urgently in need of cleanup.
With respect to releases of hazardous substances, CERCLA provides that any person in charge of a “facility” from which a hazardous substance has been released in a reportable quantity must immediately notify the National Response Center. 42 U.S.C. § 9603(a) (2008). Releases that exceed 100 pounds per day must be reported. A key question of major importance to agriculture is whether large-scale livestock/poultry confinement operations operated by individual growers pursuant to contractual arrangements with vertically integrated firms constitute a single “facility,” or whether each confinement structure on a farm is a separate facility. In Sierra Club, Inc. v. Tyson Foods, Inc., 299 F. Supp. 2d 693 (W.D. Ky. 2003), the court held that Tyson was an operator of the chicken farms at issue pursuant to the production contracts with growers and that an entire chicken farm site is a facility from which releases must be reported under CERCLA. In a later case, Sierra Club v. Seaboard Farms, Inc., 387 F.3d 1167 (10th Cir. 2004), the United States Court of Appeals for the Tenth Circuit ruled similarly that the term “facility,” as defined in CERCLA, meant any site or area where hazardous substances come to be located. As a result, a large-scale confinement hog operation was held to be subject to CERCLAs reporting requirements for ammonia emissions that exceeded the per-day limit for the operation as a whole, even though no single “facility” at the operation exceeded the limit. The rulings make it much more likely that large-scale confinement operations will be subject to the reporting requirements of CERCLA.
Second, CERCLA established two funds: (1) the hazardous substance response trust fund (“Superfund”) which is funded by taxes on crude oil and chemicals and finances the government's response costs and damage claims for injury to or destruction or loss of natural resources; and (2) the post-closure liability trust fund which is financed by taxes on hazardous wastes and out of which payments are made to cover the costs of response damages or other compensation for injury or loss to natural resources.
Third, CERCLA provides the federal government with authority to respond to emergencies involving hazardous substances and to clean up leaking disposal sites. The EPA is given authority to require parties responsible for contamination to clean up the contamination or reimburse EPA for the costs of remediation. If the liable or “potentially responsible party” cannot be found or cannot afford to pay, then EPA may use the Superfund to clean up the contamination.
Fourth, the statute holds persons responsible for releases of hazardous material liable for cleanup and restitution costs. Liability is strict, joint and several, and can be applied retroactively to those having no continuing control over the hazardous substance. However, liable parties at a multi-party Superfund site are not jointly and severally liable if a reasonable basis exists to apportion their liability. See, e.g., Burlington Northern and Santa Fe Railway Co., et al. v. United States et al., 129 S. Ct. 1870 (2009). But, state law still might provide for joint and several liability.
Elements of Liability. The government must establish four elements to prevail against a party under CERCLA. For example, the government must establish that the site in question is a covered facility subject to CERCLA regulation. The government must also establish that a release or threatened release of a hazardous substance has occurred which caused the U.S. to incur “response costs.” The government need not prove that a particular defendant’s waste caused the government to incur response costs. In addition, the defendant must be a “covered person” (also termed a “potentially responsible party”). If the four elements are proved, the defendant is strictly liable (absent a statutory defense).
Typically, the government has little trouble establishing the first three elements. Consequently, most CERCLA litigation concerns the issue of whether the defendant is a “covered person” as defined by CERCLA. A current owner or operator of a “covered facility” is a covered person. This includes such individuals as tenants, as well as bankers, insurers and other lenders that finance the purchase of the land, limited partners and stockholders, officers and employees, and may also include easement holders. Also deemed to be a “covered person” is any owner or operator of the site at the time of disposal, any person who arranged for disposal or treatment of hazardous substances at the site, and any person who transported hazardous substances to the site. Persons or entities serving as an executor, administrator, conservator or trustee whether serving as an individual or as a corporate fiduciary may also be deemed a “current owner or operator” and, as such, be a “covered person.” For example, in a 1994 case, the court held that a conservator or executor could be held liable as an owner under CERCLA by virtue of leasing a ranch. Castlerock Estates, Inc. v. Estate of Markham, 871 F. Supp. 360 (N.D. Calif. 1994). The environmental contamination at issue was caused by dipping cattle over a period of several years. The current owner of the ranch was obligated to pay the cleanup costs under CERCLA and sought to recover the cleanup costs from a bank that had acquired another bank that had served as conservator and executor for one of the owners of the ranch who had become disabled. While the court noted that bare legal title held by a conservator or executor was inadequate to make the conservator or executor liable for cleanup costs, the court noted that liability could attach if there were additional “indicia of ownership.” The court said that could come from leasing the ranch (which occurred for three years), the granting of additional powers to the fiduciary (which had occurred) or participation in the operation of the ranch. The court ultimately concluded that there was sufficient evidence to go to trial as to the fiduciary's liabilities. Consequently, fiduciaries of property in current use may want to consider executing an indemnity agreement with the operator concerning indemnification for liability arising from environmental problems caused by the operator's use.
Pesticide Exemption. There can be no recovery of response costs or damages under CERCLA from the application of a pesticide product registered under the Federal Insecticide, Fungicide, Rodenticide Act (FIFRA). This is known as the “pesticide exemption.” However, one federal court has construed the pesticide exemption narrowly to not apply to the application of pesticides to unauthorized crops and in a manner that caused off-site drift. See, e.g., United States v. Tropical Fruit, S.E., 96 F. Supp. 2d 71 (D. P.R. 2000). The court held that a farmer’s improper application of pesticides was inconsistent with the product label and rendered the farmer a potentially responsible party for an “escape” of a hazardous substance.
The dicamba drift matter is a big issue in certain parts of the country right now. The recent question concerning drift and hazardous waste is an interesting one. While CERCLA contains a “pesticide exemption” there is potential for CERCLA liability when it can be established that dicamba isn’t applied in accordance with label directions.