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The Liability Scheme
The liability scheme of CERCLA can be summarized in four words: joint, several, strict, and retroactive. Liability will attach to any party that has any connection with a site that contains hazardous materials. For CERCLA purposes “connection” means owning the property, operating the property, or having brought materials to the property, and there was a release from the property that prompted investigation and remediation.
An entity that undertakes the investigation and remediation at the site (i.e., the government or a private party) may sue any PRP connected to the site in a “cost recovery” litigation. “Joint & Several” liability means that every PRP is liable for the entire cost incurred for investigation and cleanup. Thus, if one PRP who contributed 99 of the contamination at the site has dissolved or otherwise cannot pay its share, but two other financially viable PRPs remain, each of whom contributed only 0.5 of the contamination, those two viable parties will each be required to participate in paying not a combined 1 , but 100 of the cleanup cost (although they may argue with one another over how to split that cost). Given that the average cost of a cleanup initiated by EPA under CERCLA amounted to about $30,000,000 in the 1990s, this division of responsibility among PRPs often led to expensive and protracted litigation.
“Strict” liability means that the manner in which the PRP managed the site or the contamination makes no difference to liability: one need not have been negligent nor have intended to cause a release of contamination in order to be subject to liability. Thus, the mere fact that a release occurred from a property which required cleanup makes all connected parties responsible for the cleanup cost. “Retroactive” liability arises in the context of a site operating prior to CERCLA’s 1980 passage, even if managed lawfully and pursuant to current state of the practice. Retroactive laws are usually considered unconstitutional, but the government argued and the courts agreed that CERCLA’s retroactivity withstands constitutional scrutiny because it is a “remedial” statute.
The Love Canal case from western New York state during the late 1970s could be considered the “granddaddy” of hazardous waste sites that gave birth to CERCLA. This was the first high profile failure of an institutional control: the breach of a cap over an old hazardous waste landfill on a property which contained a deed restriction that was supposed to bar such an event. Congress over-reacted to the Love Canal incident with the passage of CERCLA. One of the great, regrettable, and unintended results of this well-motivated statute was the boarding up of properties. CERCLA’s draconian liability scheme inhibited property owners from putting Brownfield properties on the market for development lest they be stuck with this liability and similarly inhibited purchasers from acquiring and developing these properties for fear of inheriting such liability.
The National Brownfield Association, an organization made up of stakeholders in Brownfield properties, recently conducted a survey that tracked the sale and development of industrial properties from pre-1980 (when CERCLA was enacted) until the late 1990s. In the 10 years before the enactment of CERCLA, the survey found a steady increase in the purchase and development of industrial properties. With the passage of CERCLA, however, came a precipitous decline. Then, in the mid 1990s, when the states became more aware of a Brownfields problem created by the CERCLA liability scheme, and they started enacting voluntary cleanup initiatives, a renaissance emerged in the development and marketing of environmentally impaired properties. This trend has continued with the enactment and signature in January, 2002, of the Small Business Liability Relief and Brownfields Revitalization Act (the Brownfields Revitalization Act).