Environmental Law: Liability for Cleanups Under CERCLA
Introduction
CERCLA is the commonly used acronym for the Comprehensive Environmental Response, Compensation, and Liability Act. This law gives government broad powers to address the issues of hazardous waste, particularly polluted industrial or storage sites that are no longer active. Before CERCLA, government had only limited ability to address disused or abandoned property containing hazardous substances. Under CERCLA the government may compel a party potentially responsible for the waste to undertake cleanup efforts. In the alternative, it can perform the cleanup itself and recover the cleanup costs from potentially responsible parties. Parties from whom the government pursues cleanup costs can seek relief from payment by identifying another party responsible for the waste.
Who Must Pay?
Congress passed CERCLA, or the Superfund law, in 1980 to strengthen the government's power to address hazardous waste. Prior to that time, the Resource Conservation and Recovery Act of 1976 (RCRA) had been the government's main source of power in this area. But RCRA was primarily useful in regulating the production and handling of wastes at active sites. It gave government only limited power to address sites that were disused or abandoned. CERCLA filled this gap in the law, empowering government to identify potentially responsible parties (PRPs) and compel them to perform the cleanup, or, to clean up the site itself and charge PRPs for the costs. Costs that are not recovered from PRPs are paid from the Hazardous Substance Trust Fund, the so-called Superfund, which is funded through taxes on hazardous waste producers and handlers and federal appropriations.
Liability under CERCLA is triggered by the "release" of a "hazardous substance" into the environment. It can be a past or present release. The EPA has developed a broad list of substances it considers to be hazardous. EPA regulations list hundreds of these by name; others are described in relation to their use, to make the list as inclusive as possible. There are four classes of potentially responsible parties who may be held liable: 1) the current owner or operator of the site; 2) a person who owned the site at the time any hazardous waste was disposed of there; 3) a person who arranged for the disposal of a hazardous substance; and 4) a person who transported the substance to the site.
CERCLA applies strict liability, which means that the government does not need to show fault or negligence on the part of the potentially responsible party. For example, if the PRP had stored hazardous waste in containers that ruptured, it would not matter that the manufacturer of the container had assured the PRP that the containers would not rupture and would last indefinitely--the PRP could still be held liable. CERCLA also applies joint and several liability, which means that each PRP is responsible for all of the damage caused. If only one PRP is found, it can be forced to pay the total cost; if others are identified, they will have to come up with the total together. In the latter situation, each will be able to argue why its contribution should be minimal or zero.
The statute provides a narrow exception from liability if the release of the hazardous substance resulted through an act of God (such as a tornado), an act of war, or an act of a third party. In the final situation, the third party cannot be acting as the agent or employee of, or under a contract with, the PRP. Further, the PRP must have exercised due care and taken precautions against foreseeable acts or omissions by third parties that could lead to the release of a hazardous substance.
CERCLA requires persons responsible for hazardous waste to report a release of such waste to the government's National Response Center. Only releases that involve a "reportable quantity" are subject to the reporting requirement. The list of hazardous substances compiled by the EPA includes the reportable quantity. The more dangerous the hazardous substance, the smaller the reportable quantity will be. Failure to report the release of a reportable quantity of hazardous waste subjects the responsible party to fines or imprisonment.
Government policy under CERCLA is to pursue private party cleanup whenever possible. The federal and state governments work together to achieve this goal. When the government determines that a site contains hazardous waste that must be removed, it may issue an order to any potentially responsible party to commence the cleanup. If the PRP refuses to do so, it may be fined up to $25,000 per day, and up to triple the amount of the total cleanup cost if the government is forced to handle the waste removal. In order to recover its costs, the government's cleanup effort must meet substantive and procedural requirements promulgated by the EPA. Private parties, including PRPs, may also sue other PRPs to recover cleanup costs. Courts will then apportion the costs in light of each party's contribution to the hazardous waste problem.
Liability under CERCLA has proven very controversial and almost always ends up in litigation. Parties sue because the reach of the statute and the costs involved often work apparent injustice: a party that views itself as having little or no role in the release of hazardous wastes may be charged with full cleanup costs amounting to millions of dollars. Property owners, for example, are among the classes of persons who may be held responsible. In some cases, however, such as when a bank takes land through foreclosure, the bank may have had no knowledge of the activities at issue. To protect such persons, Congress added an innocent landowner exception to the law. A person claiming the exception may still be liable, however, if the person had reason to know of the hazardous waste disposal, or failed to make an appropriate inquiry as to activities and conditions on the property.
Members of the other classes of responsible parties under the law have also contested liability. Persons who arrange for the disposal of a hazardous substance can be held liable under CERCLA. Thus, those who send their waste to an off-site disposal facility that they do not own may be held liable if the facility releases the substance into the environment. Courts have found liability even in cases where the arranged disposal is part of an effort to recycle a hazardous material, such as lead batteries.
Some cases have raised the question of whether disposing of a hazardous substance includes the sale of a product that has hazardous ingredients, such as a wood treatment. In these cases the courts tend to hold against liability where the seller has distributed a useful substance for a useful purpose. Courts, however, will probably see through efforts to avoid liability where a person or company tries to characterize arrangements for the disposal of hazardous waste as the sale of a product.
Petroleum, including crude oil and its fractions, is one substance that is specifically excluded from the definition of hazardous substance in CERCLA. Even here, however, there may be some question as to liability. For example, the petroleum may contain or be contaminated with other hazardous substances. Several courts have required persons releasing used motor oil into the environment to prove that they are excluded from the law. With its broad reach and huge potential costs, CERCLA remains a powerful and controversial law.
Conclusion
CERCLA is an important law for the cleanup of polluted sites, but a potentially devastating one for those who own or have owned the land, or who have transported hazardous substances. Individuals or companies that have arguably contributed little, or not at all, to a polluted site may be found liable for the full cost of its cleanup. A potentially responsible party may be able to prove it is not liable, but the case will be complex with large costs in the balance. Parties that may face CERCLA liability are well advised to seek the advice of experienced counsel.
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