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FULL OF SCRAP Splitting legal hairs over what’s useful and what’s waste

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Lawsuits often are decided on narrow, hair-splitting issues. Lawyers regard these as the only matters to be resolved. The rest of us might wonder why a judge or other highly educated and highly paid members of our society spend so much time trying, in a sense, to count the number of angels (or devils, for that matter) on the head of a pin.

Such was the case with a ruling by the U.S. Court of Appeals for the Ninth Circuit last November. It reversed a U.S. District Court's decision that absolved suppliers of scrap to the now-defunct Alco Pacific Inc. lead smelter in Carson, Calif., from any responsibility for clean-up costs—not that any clean-up work has been undertaken yet.

Alco Pacific operated a smelter in the Los Angeles area from 1950 to 1990 that processed lead-acid vehicle batteries and wheel weights, as well as lead slag and dross, into lead ingot. When the Department of Toxic Substances Control (DTSC) of the California Environmental Protection Agency tested the soil and found it loaded with lead, the one-acre lot was designated a hazardous waste site. Because the smelter has been shut down for almost two decades, it is now an orphan site. It has not been added to the federal government's Superfund list, so it is up to California to find the funds to clean it up.

To accomplish that, the DTSC sued the idled smelter, its former owner and the companies that supplied it with lead, including Davis Wire Corp. (now part of Davis Walker Corp.), Exide Technologies, J.L. Shepherd Associates Inc., Lead Products Co. Inc., Pasminco Inc., P. Kay Metal Supply Inc., Quemetco Inc. and RSR Corp. The state agency sued under provisions of the federal Comprehensive Environmental Response, Compensation and Liability Act (Superfund), which allows government agencies to recover clean-up costs if they can show that the metals were not "useful products" and thus can be called waste.

The so-called useful products doctrine has emerged over the years from case law—rulings in other court cases—and not legislation. In a nutshell, if the products were sold for value and not for disposal, then they are useful and not waste. That's part of the basis for the argument that the Institute of Scrap Recycling Industries (ISRI) and the Bureau of International Recycling (BIR) have made over the past decade when environmental regulators blindly labeled scrap metals and other recyclable commodities as waste. Neither ISRI nor BIR are involved in the California lawsuit, it should be noted.

Some of the scrap, like wheel weights and the plates from auto batteries, did not pose much of a problem for the appeals court justices. But they found that the lower court had failed to resolve whether dross and slag are "useful products." The California environmental agency had argued in the lower court that slag and dross did not fit the definition of scrap and were instead by-products of a metallurgical process. The district court disagreed, but the appeals court agreed with the state agency. Slag and dross are by-products, not the defendants' principal products, and could be classified as waste.

If the materials are by-products, does that make them waste? Steel sheet clips baled and sold as factory bundles each month are by-products, but we see steelmakers clamoring to get their hands on that "waste." So are the dross, slags, skimmings and other by-products of a metals refiner waste? We don't know, the appeals court judges said, and passed the buck back to the district court.

For some of the defendants—Davis, Pasminco and P. Kay Metal—the appeals court said "a reasonable fact finder" might decide that they sent dross and slag to the smelter for treatment and disposal. For others, that distinction is not as clear; it's a "close question," the appeals court said, for companies like Quemetco, whose primary business is selling recycled lead products.

Quemetco and the others sold dross and slag to Alco. The lead refiner bought those materials. If the metal had no value, why would the company have paid for it? Hence, it would seem to be a useful product. Not necessarily, the appeals court said. "A reasonable finder of fact could conclude . . . that almost all of the transactions were intended as arrangement for the disposal and treatment of a hazardous substance."

The trash I generate at home each week is not hazardous waste (at least, I hope not), but I put it at the curb and pay the local waste hauler to collect and deposit it at a trash-to-steam plant. By the court's reasoning, should he be paying me for providing feedstock to the county's waste-to-energy plant? I doubt that he will buy my argument.

On the other hand, why should the judges buy the argument that dross or slag are waste? Alco paid its suppliers for that material and recovered useful lead. Would it be better to have shipped the slag with a 30-percent lead content to a hazardous waste landfill and instead promote the mining of more primary lead to meet demand for the metal? If it was copper, gold or another metal more valuable than lead, would the answer be a landfill? I doubt it. A pound of dross with a 30-percent gold content, if it existed, would contain nearly 5 ounces of precious metal. That's more than $3,500 of waste. You can dump that on my front lawn any day.


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