WMX liable/spread the word

Cliff & Lynn Landes (lynnlandes@earthlink.net)
Fri, 22 Jan 1999 16:14:19 -0500

Pennsylvania's Department of Environmental Regulation "UPDATE" Sept. 13,
1996 edition:


A federal judge's recent ruling against Waste Management Inc. has altered
the Superfund landscape and has implications 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
transactions it had entered into during the late 1980's and early 1990's 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 eighth 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 Keystone 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. Contact Thomas W. Scott or Jane G. Penny, (717) 232-1851.