The majority of legislation dealing with environmental problems has been enacted within the past four decades. Although the Environmental Protection Agency (EPA) was created in 1970 at the federal level to oversee such problems, several other federal agencies’ areas of concern generally overlap. The federal laws were created to encourage state and local governments to enact their own legislation.
CERCLA— SUPERFUND
The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) was created in 1980. It established a fund of $9 billion, called the Superfund, to clean up uncontrolled hazardous waste sites and to respond to spills. It created a process for identifying potentially responsible parties (PRPs) and ordering them to take responsibility for the cleanup action. CERCLA is administered and enforced by the EPA.
Liability
Landowners are liable under CERCLA when a release (or a threat of release) of a hazardous substance has occurred on their property. Regardless of whether the contamination is the result of the landowner’s actions or those of others, the owner can be held responsible for the cleanup. This liability includes the cleanup not only of the landowner’s property but also of any neighboring property that has been contaminated. A landowner who is not responsible for the contamination can seek recovery reimbursement for the cleanup cost from previous landowners, any other responsible party, or the Superfund. However, if other parties are not available, even a landowner who did not cause the problem could be solely responsible for the costs.
Once the EPA determines that hazardous material has been released into the environment, it is authorized to begin remedial action. First, it attempts to identify the PRPs. If the PRPs agree to cooperate in the cleanup, they must agree about how to divide the cost. If the PRPs do not voluntarily undertake the cleanup, the EPA may hire its own contractors to do the necessary work. The EPA then bills the PRPs for the cost. If the PRPs refuse to pay, the EPA can seek damages in court for up to three times the actual cost of the cleanup.
Liability under the Superfund is considered to be strict, joint and several, and retroactive. Strict liability means that the owner is responsible to the injured party without excuse. Joint and several liability means that each of the individual owners is personally responsible for the total damages. If only one of the owners is financially able to handle the total damages, that owner must pay the total and collect the proportionate shares from the other owners whenever possible. Retroactive liability means that the liability is not limited to the current owner but includes people who have owned the site in the past.
Superfund Amendments and Reauthorization Act
In 1986, the U.S. Congress reauthorized the Superfund Amendments and Reauthorization Act (SARA). The amended statute contains stronger cleanup standards for contaminated sites and five times the funding of the original Superfund, which expired in September 1985.
The amended act also sought to clarify the obligations of lenders. As mentioned, liability under the Superfund extends to both the present and all previous owners of the contaminated site. Real estate lenders found themselves either as present owners or somewhere in the chain of ownership through foreclosure proceedings.
The amendments created a concept called innocent landowner immunity. It was recognized that in certain cases, a landowner in the chain of ownership was completely innocent of all wrongdoing and therefore should not be held liable. The innocent landowner immunity clause established the criteria by which to judge whether a person or business could be exempted from liability. The criteria included the following:
IN PRACTICE The EPA has conducted a number of studies to determine the impact on surrounding property values with regard to proximity to landfills and hazardous waste sites. In the report “Challenges in Applying Property Value Studies to Assess the Benefits of the Superfund Program,” released January 2009, the EPA concluded the following:
