Staff report

To: Works Committee and Policy and Finance Committee

From: City Solicitor

Subject: Toronto Integrated Solid Waste Resource Management ("TIRM") Process Category 2, Proven Disposal Capacity Legal Issues Arising from Solid Waste Disposal in the United States

July 18, 2000

Purpose:
The purpose of this report is to provide the Committees with general information on the legal context for the disposal of municipal solid waste in the United States.

Financial Implications and Impact Statement:
There are no direct financial impacts arising from this report.

Recommendations:
It is recommended that this report be received for information.

Background:
At the joint meeting of the Works and Policy and Finance Committees on June 22 and 23, 2000, the matter of the legal issues relating to the disposal of municipal solid waste in the United States was raised.

Comments:
This report sets out in writing for the information of the Committees the legal issues in general relating to the disposal of municipal solid waste in the United States. In this respect, attached to this report as an Appendix is the content of a memorandum prepared by external counsel on the two primary issues, namely, the application of Superfund legislation (i.e., generator liability) and the risk of the border closing to the shipment of waste.

Contact:
James Anderson
Director, Municipal Law
416-392-8059
(fax) 416-397-5624
janders1@toronto.ca

H.W.O. Doyle,
City Solicitor

APPENDIX
ISSUES ARISING FROM DISPOSAL OF TORONTO MUNICIPAL SOLID WASTE IN THE UNITED STATES

As requested, we wish to provide a summary for the joint meeting of the Works and Policy and Finance Committees the two primary legal issues of concern regarding the shipment of Toronto municipal solid waste to the United States, as it is contemplated under two of the proposals received in the TIRM process.

Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")

Under CERCLA, also commonly known as Superfund the U.S. Environmental Protection Agency ("EPA") is authorized to compel persons responsible for the disposal of hazardous substances to perform clean-up actions to address releases or threatened releases of such substances. The EPA may also perform the necessary action itself, and seek reimbursement from responsible parties. In addition, under the statute, private parties that incur response costs, either directly or as a result of an EPA order or lawsuit, may seek contribution from other responsible parties. CERCLA does not create legal obligations to undertake clean-up of a contaminated site in the absence of a government order or lawsuit.

CERCLA applies to "hazardous substances". Based on information from staff, we understand that Torontos waste does not contain infectious materials, scrap tires, PCBs, asbestos, used oil, lead acid batteries or yard waste, other than in minimal quantities typically found in household garbage. These types of materials are subject to other regulations, and may give rise to additional liabilities, if shipped in material amounts. However, the definition of "hazardous substance" includes many substances that are typically found in Torontos municipal solid waste, in small quantities. Court decisions under CERCLA have held municipalities liable as "arrangers" and responsible for remediation of a Superfund site, even if they sent only municipal solid waste to a disposal facility, as long as the waste contained hazardous substances. The fact that these substances may have been present in the municipal solid waste in minimal quantities is not a defence. An arranger includes a generator of waste who contracts with a third party for disposal of that waste.

Liability under CERCLA is strict, meaning that it is imposed without regard to fault. The fact that the City of Toronto was not involved in the management of the site, and was not responsible for any of the environmental damage that may have resulted from a leaking site does not provide any defence. Conducting due diligence reviews of the site, while useful from a practical standpoint, also does not provide a defence should the site become a Superfund site.

Liability is joint and several, if the environmental harm is "indivisible". Indivisible means that the environmental damage cannot be specifically allocated to particular waste shipments. Typically, in sites involving landfills and migrating leachate, the environmental harm is found to be indivisible. Under joint and several liability, any one responsible party may be held liable for clean-up of the entire site. It is this joint and several liability that gives rise to the significant number of lawsuits under CERCLA between potentially responsible parties over the allocation of clean up costs.

CERCLA is not a typical regulatory statute, in that it does not impose fines and/or penalties for solid waste management and disposal activities. Penalties are available for failing to comply with a government order under CERCLA, but not directly for the environmental damage itself.

Similar provisions exist under Michigan State law.

The U.S. EPA has exercised its enforcement discretion, in general, not to pursue municipalities in CERCLA cases. However, this has not precluded industrial defendants from bringing contribution claims against municipalities with respect to Superfund sites to which both have contributed waste. Under a new EPA policy, the EPA is offering settlements to municipalities based on a unit cost formula derived from the average cost of closure activities at municipal solid waste landfills. This policy has the effect of limiting municipalities contributions to clean-up to $5.30 U.S. per tonne. Provided these settlements are endorsed through the courts by a consent decree, they have the effect of limiting municipalities liability to the dollar amounts calculated, even as regards other industrial responsible parties. Because the contribution provisions are statutory, binding settlement that would protect against contribution actions requires a court hearing, to which other potentially responsible parties may make submissions. Court decisions are mixed on the acceptability of settlements under this policy.

U.S. customers of landfill sites deal with this potential liability in two ways. First, customers may obtain a full indemnity from the landfill site operator for any potential liability under CERCLA. Second, landfill customers may undertake due diligence reviews of the landfill operations, including periodic updates through monitoring reports and site visits where necessary, to ensure that the site is well run. This substantially reduces the risk of the site being named as a Superfund site under CERCLA, and therefore the risk of liability.

By way of contrast, persons disposing of waste at approved sites in Ontario have a statutory protection under the Environmental Protection Act. Pursuant to Section 42 of that Act, upon waste being accepted at an approved waste disposal site, ownership of the waste is transferred to the owner of the site. This has the effect of eliminating the potential for the waste generators to be subject to clean-up orders or other direct liability. This ownership transfer also effectively eliminates liability to third parties, such as landowners adjacent to the waste disposal site.

Control of Waste Flow Into Michigan

The issue of the control of the flow of waste into the State of Michigan (and elsewhere in the United States) has been around for at least ten years. In the early 1990s, Michigan attempted to impose flow control, which attempt was rejected by the United States Supreme Court in 1992. Recent cases in Virginia and Wisconsin have affirmed that decision. Absent empowering legislation by the U.S. Federal Government, states do not have the authority to restrict inter-state commerce with respect to waste. Despite several attempts in both the House and the Senate, to date no legislation has been passed giving authority to the states to restrict inter-state flow of waste.

The governor of the state of Michigan has created the Michigan Solid Waste Importation Task Force to provide recommendations regarding the control of inter-state and international waste imports. The Task Force is expected to report in late 2000. Despite the creation of the task force, a bill has been introduced into the State legislature purporting to prohibit the import of waste unless the jurisdiction has solid waste laws that are at least as stringent as Michigans. This type of legislation was expressly rejected by the Seventh Circuit court with respect to a similar initiative from the state of Wisconsin.

It is possible that Congress will pass empowering legislation at some point in the near future. The current chair of the House Commerce Committee is retiring, and both the Republican and Democrat nominees for Chair have publicly supported flow control legislation. It is too early to predict what shape such legislation may take. Legislation may include annual caps on waste import numbers, placing limits on super exporters such as New York City, proving exemptions based on existing community agreements and a number of other possibilities.

We are not aware of any current proposal regarding border closure of the international border between Canada and the United States. In the new Canadian Environmental Protection Act the Canadian Federal government has provided for the possibility of notification requirements for non hazardous waste, similar to those already in place for hazardous waste. There is no information as to when, or even if, such notification requirements will be put in place.