LANDFILL OWNERS LIABILITY Reprinted by Zero Waste America
The following article is from Pennsylvania's Department of Environmental Protection "UPDATE", September 13, 1996:
Court Ruling Alters Superfund Landscape:
A federal judge's recent ruling against Waste Management Inc. has altered the Superfund landscape and has implication for large and small waste hauling companies throughout the nation, according to an attorney involved in the case.
In U.S. v. Keystone Sanitation Company, U.S. District Judge Sylvia Rambo ruled that Waste Management was liable as a successor for cleanup costs in a Pennsylvania landfill site. Waste Management maintained that it only purchased assets (trucks and customer lists) from Keystone Sanitation and had specifically excluded landfill real estate in its 1991 transaction.
The deal Waste Management structured with Keystone was typical of many such transaction it had entered into during the late 1980s and early 1990s as it increased its municipal waste business by acquiring hundreds of trash haulers across the country. In return for $3.1 million worth of its stock, Waste Management acquired Keystone's dumpsters, fleet of vehicles, and some 16,000 customers. At the time, Waste Management was aware that Keystone faced potential liability for its landfill operation and specifically structured the deal to assure any Superfund liability would stay behind.
In 1993, EPA sued Keystone and eight other generator companies who used the landfill. In turn, the eight generator defendants sued Waste Management, claiming it was a successor to Keystone and liable as well for cleanup expenses-now estimated at $15 million. Thomas W. Scott of the Harrisburg (PA) law firm Killian & Gephart, who represented the eight generators who sued Waste Management, successfully argued that the purchase transaction amounted to the consolidation or de facto merger of Keyston into Waste Management-thus making the latter liable as a successor. According to the court, under the Superfund law's remedial purpose, if a purchaser of assets "reaps the economic benefits of its predecessor's use of hazardous disposal methods" the purchaser is responsible for the cost of those benefits. For more information, contact: Thomas W. Scott or Jane G. Penny, 717 232-1851.