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10 steps to minimize, prevent Superfund liability

November 23, 2010
The process of dealing with a Superfund matter rarely would be described as pleasant. But ignoring the matter doesn't make it go away. Ten guidelines developed by the NADA help dealers navigate a Superfund issue. The Comprehensive Environmental Response, Cleanup and Liability Act (CERCLA, or Superfund) was enacted in 1980 to address abandoned waste sites and sites involving improper disposal activities. Such sites involve hazardous substances, a broad term for materials regulated by many federal environmental statutes. Note: Although used oil is not a hazardous waste under federal law, it is classified as a Superfund hazardous substance. Dealers risk liability for cleanup costs associated with hazardous substances sent for off-site management. They have been tied to dozens of sites nationwide as persons (e.g., individuals, corporations, partnerships) who "arranged for disposal or treatment" of hazardous substances-primarily used oil, but also paint wastes, batteries and antifreeze. Settlements have reached into the hundreds of thousands of dollars, plus legal fees and other costs. NADA's best ways to avoid Superfund liability 1. Minimize the use of hazardous materials by having service, prep and body personnel conduct periodic audits aimed at eliminating unnecessary hazardous materials. Doing so also reduces hazard communication (right-to-know)concerns. 2. Substitute nonhazardous for hazardous materials-use aqueous parts washers and citrus-based cleaners. 3. Manage hazardous substances on-site-rely on space heaters that burn used oil and paint waste, to reduce or eliminate off-site waste management. 4. Know your waste haulers and processors. Anyone who transports or manages the wastes a dealer send offsite should be financially sound and well-insured, and should operate a clean, responsible and legally compliant business. 5. Accept do-it-yourselfer (DIY) used oil. Used oil managed since 1993 is exempt from Superfund liability as long as the dealer (1) accepts DIY used oil, (2) complies with the EPA's used-oil management standards, and (3) doesn't mix used oil with other hazardous substances. Post a sign indicating the dealership accepts DIY used oil, then store any DIY used oil separately from the dealership's. Keep a log on who submitted the oil, the date and the amount. Never mix other wastes into the dealership's used-oil storage. If the dealer becomes involved in Superfund action: 6. Act in good faith to answer communications from the EPA and other potentially responsible parties (PRPs). A contribution will be sought toward the costs associated with cleaning up any site where the dealership allegedly sent hazardous materials. Technically, responsible parties are liable  strictly (without fault) and jointly and severally (all or any may be held for entirety) for cleanup costs, but typically, any shared costs would be proportionate to the amount of hazardous substances allegedly sent. Dealer also would be asked to sign an agreement that usually provides for certain releases from further liability. 7. Contact the Coalition or the NADA for advice and assistance. Dealers often can join together to share and minimize legal and other costs. Make sure someone attends all site-related meetings on the dealer's behalf. Carefully consider any de minimus or de micromis settlements, which offer the opportunity to settle early in exchange for a cost premium, and the risks of not settling. 8. Obtain and review insurance policies for the period in question. Though strict pollution exclusions often apply, coverage or representation pending a determination is possible. 9. Carefully review all records tying the dealership to the site (i.e., contracts, reports, PRP lists, invoices, shipping papers). Mistakes may result in overstated shares. Review and challenge, if necessary, the work done and any future work plans, using a technical expert if necessary. If the overall costs are too high, each share will be too high. Be sure all PRPs have been brought in. The more parties involved, the smaller each cost share would be. Review the formula used to calculate the dealer's share. Is the math correct? Are different hazardous materials assigned different per-unit costs? 10. Raise possible defenses early. A dealership is not a responsible party if it has nothing to do with a site. Did the dealership actually arrange for treatment or disposal? Is it a successor corporation? Does the used-oil exemption apply?