De Minimis Parties in the United States

De Minimis/De Micromis Parties in Environmental Law

Persons who sent only small amounts of waste to a particular hazardous waste site. Under the terms of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), anyone who has any connection with a hazardous waste site may be liable to clean up the entire problem. See potentially responsible parties. At many hazardous waste sites, however, parties whose contributions were minimal may be considered de minimis or de micromis parties and allowed special settlement options.

According to the Environmental Protection Agency (EPA), de minimis parties at various sites have contributed amounts equal to .07 to 10 percent of total waste, with a mean of 1.059 percent. De micromis parties contributed even less. The EPA determines who de minimis or de micromis parties are at any given Superfund site.

Benefits of Being Designated a De Minimis or De Micromis Party

The Comprehensive Environmental Response, Compensation, and Liability Act has frightening aspects to it. Fault has nothing to do with liability, and once a person is named as a potentially responsible party, he may be responsible for cleaning up the entire site.

As an example, suppose that in 1978 a symphony orchestra disposed of several containers of cleaning fluid, a hazardous substance [see hazardous substances], at a landfill that is now an abandoned hazardous waste site. The EPA has the right under the statute to require the orchestra to clean up the entire site. If the orchestra is named as a potentially responsible party, it could be forced into years of negotiations and litigation costs, not to mention expenses for the work done at the site.

But it is likely that the EPA may decide not to pursue the orchestra. Even so, the musicians’ nightmare is far from over, because the law allows any party that has acted to clean up the site to sue other potentially responsible parties for contribution to the cleanup. It also allows lawsuits by parties to recover their costs. Thus the orchestra could be forced to pay even though the EPA itself had declined to bring it into the cleanup activities.

Fortunately, CERCLA provides relief to small contributors of waste at Superfund sites through the de minimis and de micromis designations. However, the EPA has to take action to provide it. If a party is determined by the agency to be a de minimis party, the EPA can work out an agreement with that party early in the cleanup process. The agreement may be either a consent decree or an administrative order.

Settlements with de minimis parties are advantageous to both the EPA and the parties. The EPA reduces the number of parties involved, gains instant cash for the Superfund or the cleanup, and can point to some resolution in the case. The de minimis parties escape from the proceedings, pay a determined amount, and obtain protection from the government against other parties that might otherwise sue them later. Thus, if the EPA decides the orchestra is a de minimis party and settles with it, other parties at the site cannot sue it for a share of their cleanup costs. The orchestra will pay once and walk away from the site.

The settlement amount required from a de minimis party is based on the government’s estimate of the costs to clean up the hazardous wastes. If the government has not yet selected a remedy at the site, it will consider the costs at similar sites to obtain a figure. The de minimis party must then pay the percentage for which it is determined to be responsible. Frequently, though, the cleanup costs more than was originally thought, and in that case, the government has the right to sue the parties for the additional costs. However, the government will trade that right in the settlement agreement if the party pays an additional sum called a premium. The premium usually ranges from 50 to 100 percent of the calculated cost. Therefore, if the government decides a party’s share of a cleanup is $1,000, the party will pay an additional $500 to $1,000 to obtain a covenant not to sue. The EPA guidance makes it clear that the amount of the premium will determine how broad the covenant not to sue will be.

The most recent guidance on settlements with de minimis contributors of waste to Superfund sites describes how the EPA determines who may qualify. Besides the volume of waste contributed, the EPA considers its toxicity.

At any site hazardous enough to be on the federal list, much of the waste is toxic. The issue, then, is whether the waste contributed by a specific party is significantly more toxic or has potential for significantly greater hazardous effects than other waste at the site. Because the emphasis is on early settlement, the EPA may not have enough information at the time to accurately calculate the volume of waste contributed by a given party. Therefore, the EPA may estimate.

Once the calculations or estimates of total wastes are made, the EPA considers individual contributions. Sometimes a facility has no idea it is a potentially responsible party until the EPA notifies it. If it has evidence it contributed relatively small amounts of waste, it can present that to the EPA. Based on the total volume of waste, the EPA will set a cutoff for de minimis parties. If a party can show it is below that amount, which has traditionally varied from .07 percent to 10 percent, it can try to cash out of the cleanup.

Another class of de minimis parties is landowners. The current landowner of a Superfund site may be liable for cleanup of the property, whether or not he helped create the problem. However, the statute provides a defense to liability: the innocent purchaser defense.

The importance of this provision is illustrated in the following example. A local company took industrial wastes to a local farm where the farm owner allowed the wastes to be dumped in a lagoon. Later the farm owner died and the property was sold. The new owner did not know about the arrangement with the now defunct company, had never allowed dumping, and had done nothing to cause a problem. But, unless he can prove his innocence, he may be liable for the entire cost of the cleanup.

If the landowner can prove his innocence, the statute will absolve him from all liability. However, the defense is one which must be proven, and that typically requires going to court. Given the lengthy litigation procedures involving Superfund sites, a landowner could expend great sums of money before being allowed to present a defense. The EPA has now issued a guidance document for settlement with current landowners designed to save innocent purchasers from litigation costs by giving them an opportunity to settle earlier in the process.

If the landowner can prove his innocence, the statute will absolve him from all liability. However, the defense is one which must be proven, and that typically requires going to court. Given the lengthy litigation procedures involving Superfund sites, a landowner could expend great sums of money before being allowed to present a defense. The EPA has now issued a guidance document for settlement with current landowners designed to save innocent purchasers from litigation costs by giving them an opportunity to settle earlier in the process.

The Comprehensive Environmental Response, Compensation, and Liability Act was amended in 1986 by the Superfund Amendments and Reauthorization Act. In addition to spelling out the defense that can prove innocence, a provision was added allowing settlement with landowners if the settlement involves only a minor portion of the response costs. Before it can settle with a landowner, the EPA must determine that (1) the owner did not conduct or permit the property to be used for creation, transportation, storage, treatment, or disposal of any hazardous substance; (2) the owner did not contribute to the release or threat of release of a hazardous substance; and (
3) the owner did not have actual or constructive knowledge about transportation, generation, storage, treatment, or disposal of hazardous substances at the property.

There are a number of possible readings of this settlement provision. The EPA has interpreted it to mean that the landowner must prove the same things to the agency that he would have to prove in court. This interpretation is the most favorable to the government, but the EPA’s power to settle such cases is entirely discretionary, so the landowner does not have much leverage. If the EPA decides to enter into negotiations, it will attempt to determine whether the landowner can prove he is an innocent purchaser. The more evidence of innocence he can provide, the guidance states, the better his settlement terms will be. A settlement might require little more from the landowner than providing access and not interfering with the cleanup. On the other hand, the landowner might have to pay a portion of the cleanup costs. The major advantage of settling with the government, however, is the contribution protection the landowner would receive against other potentially responsible parties. See contribution rights.

The EPA has created a subclass of de minimis parties called de micromis waste contributors, those that have sent “minuscule” amounts of hazardous waste to a listed site. In the past, the government has rarely pursued such parties, even though the statute authorizes it. The cost of suing everyone who may have sent something to a hazardous waste site is seldom justified when the government can simply sue the parties it believes contributed the most and/or are capable of paying the bill for the cleanup.

Thus the law does not excuse a person because he sent only a tiny amount of hazardous waste to a site, but the EPA may choose not to sue a person because the effort is not justified by the contribution. So, for example, a party who sent a can of used oil to a site one time may be ignored in favor of industries that sent large volumes of hazardous waste to the site. However, the statute is written in terms of joint and several liability, which means the used oil contributor could be responsible for cleaning up the entire mess. His liability, then, could simply seethe and wait while the EPA forces other parties to do the work and pay for the cleanup. After some of the work is finished, the parties that have paid can sue anyone else who is a potentially responsible party under the law, including the person who sent one can of used oil to the site. What often happens is the parties who have settled or paid for part of the costs will send letters to other parties, demanding a contribution.

The EPA determined that often persons who get such letters do not understand that they are not dealing with the government; nor do they realize that the government can give them relief. As a result, the EPA recently issued guidance on entering into settlements with de micromis parties based on this major premise: the EPA does not want potentially responsible parties determining how to enforce the law or who will pay for cleanup. Thus, if the EPA is aware of the letters, it can offer settlement orders or decrees to de micromis parties; the parties themselves can also come forward and ask for relief. The EPA is not required to seek out the parties, though, just as it is not required to settle with them.

Because the amounts of de micromis settlements will be extremely small in the big picture, EPA policy does not allow any negotiations. The de micromis parties must accept the document as it is written, paying a portion of the cleanup costs to receive both protection against other parties and a covenant not to sue from the government. Premiums are not necessary in this case.

In determining which parties are the de micromis parties, the EPA considers the toxicity of the waste they contributed along with the volume. The EPA estimates that at a site where all the wastes are similar, a de micromis party’s share would be about .001 percent. But at a site where there is a lot of variation in waste, the de micromis party may have contributed larger amounts of waste with lower toxicity. At those sites, the cutoff could be as high as .1 percent of the total volume at the site.

The EPA has not used de minimis settlements as much as many would like, but the public’s impatience with the Superfund program has begun to have an impact: emphasis is now being placed on working out agreements with small contributors as early as possible in the process.
Based on “Environment and the Law. A Dictionary”.