Contributed By Greenberg Traurig, LLP
The United States generally regulates environmental impacts through medium-specific regulatory programmes. A federal programme provides a minimum regulatory structure, but in most circumstances a state may have its programme approved to substitute for the federal programme or obtain delegation of the federal programme to the state regulatory agency.
The United States Environmental Protection Agency (EPA) administers most federal programmes, but not all. For example, the United States Fish and Wildlife Service administers most of the Endangered Species Act, an important restriction on new land, energy and infrastructure development in much of the country. Similarly, the United States Army Corps of Engineers permits structures or works in the navigable waters of the United States (that is, any stream large enough to support navigation by canoe) and discharges of dredged or fill material into wetlands and smaller streams sufficiently connected to navigable waters to be subject to federal jurisdiction.
For ongoing operations with emissions to the environment – air emissions, water discharges, or land-based waste disposal, for example – the regulatory programme will require a permit with a defined term such as five or ten years that must be renewed on whatever terms are appropriate at the time of renewal. Permits will include limitations (i) based on the performance achieved by the control technology on which the regulator predicates the limit or (ii) based on a back-calculation of the emissions limitation necessary to achieve a particular ambient quality, such as a maximum air pollutant concentration in the ambient air or a maximum in-stream concentration of a water pollutant.
A short and incomplete list of federal statutes addressing ongoing operations includes:
Certain environmental regulatory programmes require review of new projects or major modifications to existing facilities before construction begins. In particular, the National Environmental Policy Act (NEPA) requires the preparation of an environmental impact statement (EIS) for any major federal action (a permit, a grant, an actual federal construction project) that will have a significant impact on the environment. The EIS offers an integrated analysis of all the direct and many indirect environmental impacts of the action that the federal decision-maker must consider before taking action. However, NEPA includes no substantive standards. Many states have parallel requirements, although the extent to which the state environmental review programmes impose substantive constraints, and the extent to which they apply to private projects, varies from state to state.
The United States has spent a great deal of effort over the past four decades cleaning up contaminated sites. Typically, for an operation that is subject to an obligation to clean up the land on which it operates under the solid or hazardous waste regulatory scheme governing that operation – as would be the case for a commercial hazardous waste management facility or an industrial facility that managed its own wastes – that regulatory programme will govern. Other current or legacy contamination is addressed through a series of federal or state statutory requirements.
The nation’s most hazardous sites are addressed under the federal Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA or “Superfund”). CERCLA establishes a regulatory programme under which sites require investigation, which require clean-up and what the clean-up is that must be performed. Importantly, the statute establishes a liability scheme under which the government may direct a “responsible party” to take the “response action” selected by the government or the government may implement the response itself using government funds – the Hazardous Substance Response Superfund – and may sue the responsible parties to recover the government's costs. Responsible parties are generally jointly and severally liable, and may pursue contribution or cost recovery claims against each other. The liability scheme can operate independent of the regulatory programme, so that costs incurred by another private party or by a state under a state programme can be recovered from a responsible party under CERCLA. Thus, addressing, allocating, or avoiding CERCLA or CERCLA-type liability is a major issue in many transactions involving real property or businesses that own real property.
CERCLA does not address releases of petroleum. The Clean Water Act and the Oil Pollution Act of 1990 are the oil spill clean-up statutes.
Most states have site contamination programmes of their own. Many have “Little Superfund” statutes roughly analogous to CERCLA. Many also have a voluntary response statute that allows resolution of liability for site contamination by a party that agrees to conduct a voluntary clean-up.
Some state and federal statutes, among them CERCLA and the Oil Pollution Act (OPA), permit the recovery by “natural resource trustees” – specified state or federal officials – of damage to natural resources from releases of hazardous substances or petroleum. CERCLA only permits recovery by the trustees for damages to the public. The OPA permits certain private damages as well.
Most states have tailored regulatory programmes for specific extractive industries in addition to, or in lieu of, general regulation under the medium-specific environmental laws.
Constitutional due process rights assure some kind of hearing before a regulatory decision or promptly afterward and an opportunity at some point for judicial review. The federal Administrative Procedure Act and some of the federal environmental statutes specify when, how and who may exercise those rights. State statutes do the same for state regulatory programmes. Because most federal environmental permit decisions are made by state regulators under approved or delegated programmes, the administrative hearing and the opportunity for judicial review are in the state system under state law. These systems vary substantially in whether administrative hearings are trial-type proceedings, what rights third parties have, whether the parties can develop evidence or are restricted to a previously developed administrative record, whether review is deferential or de novo and, importantly, when review must be sought at the administrative or judicial level. Actions become administratively final and unappealable very promptly in most programmes; limitations periods as short as 30 days are not uncommon and they are not uniform across states and sometimes across programmes. Which decisions are final for purposes of review also varies across jurisdictions and programmes.
In June 2016, Congress passed and President Obama signed the Frank R Lautenberg Chemical Safety Act (LCSA). The LCSA significantly amended the Toxic Substances Control Act (TSCA) to enlarge the reach of federal chemical regulation. The TSCA only called for an EPA review of proposals to manufacture or import a new chemical. The LCSA extends that review process over time to chemicals already in commerce.
In April 2016, the United States signed the Paris Agreement on Climate Change, accepting the agreement in September 2016. The Agreement has come into force. The United States had proposed to meet its obligations primarily by implementing the Obama administration’s Clean Power Plan, a set of regulations adopted under the Clean Air Act and other laws. The central regulation, Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units (ESPS), 80 Fed Reg 64,662 (23 October 2015), is under review in the Court of Appeals for the District of Columbia Circuit, which denied a stay of the ESPS’s effectiveness. On a petition for certiorari from that denial of a stay, the Supreme Court reversed, so the rule is now stayed – Chamber of Commerce v EPA, No 15A787 (US 9 February 2016).
In June 2015, the EPA and the Corps of Engineers issued a rule purporting to define the extent of federal regulatory jurisdiction over “waters of the United States.” This is an important regulatory issue in many western and southern states because it would limit encroachment on wetlands otherwise not subject to regulation. Northeastern states typically regulate all water, including groundwater, under state law, so the rule has less impact there, but the rule-making took on political significance as a symbol for some of regulatory overreach. The rule has been challenged in various courts and the Court of Appeals for the Sixth Circuit has consolidated review – State of Ohio v United States Dept of Def, 817 F3d 261 (6th Cir 2016). The rule is stayed pending that review.
The Trump administration has expressed a purpose to “deconstruct the administrative state.” It has particularly expressed scepticism about the reality of climate change, or at least climate change induced by human activity. Moreover, as a candidate, President Trump criticised Clean Air Act regulation as an impediment to revival of the coal-mining industry. Scott Pruitt, the new administrator of the EPA, is a long-time critic of the agency.
An effort by the administration to withdraw or modify many regulations under the Clean Air Act and Clean Water Act can be expected, and to devolve as much regulatory authority as possible to the states. This effort will meet resistance. A confident prediction cannot be made as to whether the courts will hold that the government must regulate in certain areas because of statutory mandates.
Most environmental statutes in the United States contain a “citizen suit” provision that allows any person adversely affected by government action or inaction or by a private violation of that statute to sue for an order (i) directing the regulator to fulfil any non-discretionary duty or (ii) enjoin a regulated entity from violating the statute, the implementing regulations, any administrative orders, or a permit. These provisions grant the court discretion to award attorneys’ fees and litigation expenses to the prevailing party. An NGO can assert these rights on behalf of a member with standing. Notice that citizen suits against states can only proceed in state court, whereas citizen suits against federal regulators may only be brought in federal court.
Similarly, an NGO may petition for review of a regulation if one of its members is adversely affected by the rule.
A person adversely affected by a permitting decision – including, for example, a neighbour of the permitted facility – may appeal the permit in most jurisdictions. An NGO may do so if one of its members has standing.
The key bodies are as follows:
Each regulatory statute typically requires the regulated entity to maintain books and records for specified periods and to allow the regulator access to them upon demand. In addition, undertaking a regulated activity entails a consent to inspections and other entries.
Regulated entities typically have reporting obligations when an incident occurs, often on a very tight schedule. Failure to report in a timely way may itself be a violation.
In the event that the regulators seek to investigate or enforce outside the context of a permit or other approval, the statute will provide the right to the administrative agency to issue an order for access or the regulator must seek a search warrant.
Different agencies take different approaches to enforcement. However, almost all encourage voluntary disclosure of violations and entry into compliance orders of some sort. Typically, a person who makes a voluntary disclosure not otherwise required promptly after discovering non-compliance can avoid penalties beyond disgorging the costs avoided by non-compliance.
In almost all jurisdictions, correction of non-compliance requires some sort of compliance instrument. If one has simply had an excursion beyond a permit limit, that may be the payment of a consent assessment of a civil penalty. If, however, one must take steps to come into compliance, an administrative consent order or even a judicial consent decree will be necessary.
Criminal sanctions are available under most statutes. While prosecutions are not common, they are also not rare. There will be a few hundred environmental prosecutions in the United States each year.
A permit is required to emit pollutants to the air in masses or concentrations above certain thresholds that vary by substance and jurisdiction. Approvals are required to import vehicles to assure that the engines comply with the Clean Air Act. A permit is also required to demolish a building containing asbestos in some cases.
A permit is required to discharge a water pollutant from a “point source” to a water of the United States. This includes stormwater from a construction site or a site in industrial use. Many states regulate waters other than waters of the United States or discharges to groundwater. A local permit is typically required to discharge waste-water, including sanitary sewage, through an on-lot sewage system into the groundwater.
A permit is required to import or manufacture a new chemical.
Permits are required to treat, store or dispose of solid waste and in most jurisdictions to transport it as well. If the waste is regulated as hazardous, those permits are onerous and special rules apply to the way the waste may be accumulated at the site of generation; transportation for treatment, storage or disposal requires use of a manifest returned to the generator so the generator can know if waste has gone astray. Underground injection wells for management of wastes require a permit.
Permits are required for development that encroaches on a wetland or a surface water that counts as a “water of the United States.” Separate approvals apply for docks, piers and other works or structures in the navigable waters of the United States. Many states require permits for dams, bridges, culverts, or other stream encroachments, even in small streams. Water withdrawals require state permits in many jurisdictions.
Permits are required to 'take' individuals of an endangered species or to encroach on the species’ habitat. Similarly, approvals are required to disturb marine mammals.
Coal mines, rock mines, mineral mines and oil and gas wells require state permits in most cases.
Major federal actions significantly affecting the environment require an environmental impact assessment. These typically include permits, grants of funding, construction contracting, or similar kinds of actions by a federal agency.
States may have similar statutes requiring review. Pennsylvania has a constitutional provision requiring review.
One obtains permits by application to the permitting agency. Some permits permit the applicant or a person opposing the permit to demand an evidentiary hearing before the permit is issued. Some jurisdictions permit that evidentiary hearing at an administrative level after the permit is issued in a specialised tribunal.
The permittee and often third parties have a right to administrative or judicial review of a final permitting decision. In the federal court system, the person challenging action must have the minimum constitutional stake in the challenged decision to have standing; otherwise, the matter is not a case or controversy within the meaning of Article III. In state courts, standing is sometimes merely a prudential requirement and the legislature may grant standing broadly to “any citizen,” for example.
Permitting is not integrated. A facility will ordinarily require multiple permits from different bureaus within the environmental agency and perhaps from different agencies. If not every required permit is issued by the state or the United States then the facility may require some state and some federal permits.
Local governments often do not regulate the environmental aspects of a facility when the state or the federal government does. However, municipalities that have land use regulation – and not all municipalities do – will issue land use approvals. Considerations for land use approvals of a large facility often blur into environmental concerns.
The transferability of environmental permits varies from state to state and from programme to programme. Most often when a permitted facility or activity is transferred, the permit must be reissued to the new owner or operator. That may or may not be an occasion for the imposition of new permit conditions, depending on the law of the permitting jurisdiction. One can avoid this problem by transferring the permit-holder (the corporation or other business entity). Some jurisdictions require notice of that transaction. Only a few require compliance steps at that point. So, for example, the New Jersey Industrial Site Recovery Act and the Connecticut Transfer Act would require an investigation of any sites owned by a corporation for contamination in the event that the corporation is sold.
Permits are almost always time-limited, but may be renewed.
Permit conditions may not be arbitrary, capricious, an abuse of discretion, or contrary to law – or some similar formulation in the law of the permitting jurisdiction. Accordingly, a condition may be onerous, but it cannot be arbitrarily onerous, and has to be onerous for a good reason.
Failure to have a proper permit or to comply with the terms of that permit gives rise to exposure to civil penalties. Each day of non-compliance is typically a separate violation. The same problem can give rise to multiple violations, so a wastewater treatment plant upset can lead to an exceedance of the permit limit for suspended solids, biological oxygen demand, temperature and be associated with a failure to report the violation. Daily penalty amounts vary by statute, but are usually in the tens of thousands of dollars.
Most agencies have a penalty policy that governs their willingness to settle enforcement matters. For routine violations, they may assess a nominal penalty unless the permittee appears to be in chronic non-compliance. A more serious penalty will begin with the benefits of non-compliance and add enhancements for other factors.
In a litigated penalty case, the agency may seek the statutory maximum.
In a case of contumacious or particularly serious violation, the regulatory agency may refer the matter for criminal prosecution. Prosecutors typically seek to prosecute individuals – corporate officers or responsible people – in addition to the business entity. Sanctions may include incarceration and fines.
In many jurisdictions, all environmental permits require an environmental compliance history review. One may not be able to obtain any permit anywhere in the state if one has an outstanding violation of the environmental laws in that state or a bad history of non-compliance anywhere. A federal criminal conviction debars the defendant from doing business with the federal government and the same is true in some states.
Environmental law in the United States, at some level, may be seen as an elaboration on the English common law of public nuisance. The government can usually assert a statutory provision to obtain a court order requiring a person who has caused pollution that remains evident in the environment to abate the public nuisance. In some circumstances, the administrative agency may itself issue an administrative order to the same effect. The authorities vary from state to state, from the federal government to state government, and across types of pollution.
When the pollution causes personal injury or property damage, with limited exceptions, common law tort principles – and at times statutory rights – allow private plaintiffs to recover money damages for those harms. If the harm is irreparable then an injunction to abate the pollution may be available.
Generally, responsibility for an environmental condition rests with the current owner or operator of the land or facility where that condition exists, even if a predecessor is the original cause. See under 11 Contaminated Land. By contrast, liability for non-compliance generally rests with the person who caused the non-compliance. Thus, if a person spills a pollutant, only the spiller is generally liable unless the spill causes a continuing condition.
When the business entity changes hands, that does not affect the liability of the business entity. So, if a corporation operates a facility and that facility experiences an air pollution incident, the liability for any damages caused by that incident remains with the corporation even if all the stock is sold to a new owner.
An environmental incident can, in general, give rise to common law tort claims for nuisance, trespass, negligence and, in some cases, strict liability for an abnormally dangerous activity. Nuisance is an unreasonable interference with the use or enjoyment of land. Trespass is an unprivileged interference with a land-occupier’s right to exclusive possession of property. Negligence is a failure to take due care to avoid injury to another. Strict liability is imposed when the defendant’s activity poses an abnormal risk to others; the typical example would be blasting. When the incident or damage arises from the sale or distribution of a product, like asbestos-containing insulation or a chemical for consumer use, product liability theories may apply.
These theories all depend upon state law, so the specific law applicable to each claim varies from state to state. However, in almost all jurisdictions, a tort claim requires proof of a causal connection between the alleged tort and damages suffered by the plaintiff. Damages generally fall into two categories: losses due to a personal injury (an illness, for example) and losses due to property damage (a reduction in value, for example, or the imposition of additional costs).
Causation is a key defence in environmental cases. This generally requires proving that a completed route of exposure to a pollutant exists, that exposure actually occurred and that the exposure caused an alleged harm. Statutes at times shift that burden of proof, establishing presumptions in favour of the plaintiff. So, for example, a neighbour within a specified radius of a natural gas well in Pennsylvania benefits from a presumption that the natural gas activity caused any diminution of the quantity or quality of water available from a well, spring, or stream occurring within a specified time from drilling or completion of the well. That simply shifts the burden of persuasion to the defendant.
Most states impose a relatively short limitations period on actions for personal injuries or property damage; two years is a common length. The time generally runs from when the plaintiff acquires the right to sue. Environmental torts may be hard to detect; contamination of one’s well is much more subtle than an automobile accident. Many states apply the “discovery rule” to torts such as these and the limitations period begins to run from the time when the plaintiff knew, or in the exercise of reasonable diligence ought to have known, of his or her right to bring suit. For torts arising from exposure to a release of a hazardous substance, Section 309 of CERCLA requires application of the discovery rule to state law torts. Even so, expiry of the limitations period is a common defence in environmental toxic tort cases.
Each state has its own leading cases for addressing environmental incidents and damages. Among the cases often cited are Exxon Shipping Co v Baker, 554 US 471 (2008) for natural resources damages; in re Oil Spill by Oil Rig Deepwater Horizon in Gulf of Mexico, on 20 April 2010, 21 F Supp 3d 657 (ED La 2014) concerning corporate liability; and in re Three Mile Island Litigation, 557 F Supp 96 (MD Pa 1982) concerning environmental class actions.
A corporation that owns or operates the facility that caused the environmental damage or non-compliance will almost uniformly be responsible for that damage or non-compliance. It may be subject not only to tort claims, but also to claims for injunctive relief, administrative penalties, judicially imposed civil penalties and fines. Moreover, a corporation that is guilty of criminal violation of a federal environmental statute will be debarred from doing business with the federal government. It may also be debarred from public contracts in some states and may be disabled from obtaining new, modified, or renewed environmental permits.
An issue arises as to whether a current corporation is a successor to a corporation that is responsible for environmental damage or breaches of environmental law. In general, corporate successor liability is a matter for the state law of the law of incorporation of the corporation. The federal courts will generally apply that state law in federal environmental cases.
When corporations merge, the liabilities of both corporations generally remain with the successor. However, when an acquiring corporation purchases only the assets of the seller, the liabilities remain with the seller. In many states, the purchase of assets with consideration consisting at least partially of stock in the acquiring entity will be treated as a de facto merger and liabilities will pass. When the consideration is cash, liabilities generally do not.
Liability of shareholders or corporate parents varies from state to state and, when liability is statutory, statute to statute. In the absence of specific guidance, many courts will follow United States v Bestfoods, 524 US 51 (1998), holding that a corporate parent is not liable under CERCLA as an owner of its subsidiary’s facility or as an operator of that facility unless its behaviour with respect to the subsidiary was idiosyncratic.
However, some state statutes specifically list corporate shareholders as people responsible for a violation. Further, the human agent who actually causes the damage or the non-compliance is himself or herself individually liable, even if he or she happens to be a shareholder. Moreover, under the responsible corporate officer doctrine set out in United States v Park, 421 US 658 (1975), a corporate officer can be responsible, in that case criminally, when that officer should have known about the violation and should have taken steps to avoid or abate it. The Clean Air Act and certain other environmental permitting programmes require the permit application and certain periodic certifications to be signed by a responsible corporate officer. An officer’s status as a shareholder does not insulate him or her from liability. Difficulty arises when the responsible corporate officer can be said to be an agent not of the subsidiary, but of the parent.
See 6.2 Shareholder or Parent Company Liability. If a natural person is liable, he or she is subject to the same liabilities and penalties as the corporation. In addition, when the violation gives rise to criminal liability, the individual may be subject to incarceration.
One can insure against some liabilities. One cannot typically insure against criminal liability.
Lenders are typically not liable for environmental damage or breaches of environmental law unless they directed the act that gave rise to the damage or non-compliance. So, for example, if a lender refuses to extend credit necessary to keep pollution control equipment operating, that would generally not give rise to liability, although peculiar circumstances could arise. However, if the lender had the right under the loan agreement to direct, and in fact did direct, the borrower to turn off the pollution control equipment, the lender would have a less strong position.
The issue of lender liability has been addressed specifically in the context of contaminated land. CERCLA was amended in 1996 largely to exempt lenders, even foreclosing lenders, from liability as owners or operators of their borrowers’ facilities provided that they acted as secured lenders, not as investors – Pub L No 104-208, §§ 2501-05, 11 Stat 3009, 3009-462 to 469 (30 September 1996). Many states have adopted similar lender liability protections. To reiterate, a lender engaged in an aggressive workout or that takes control of a facility in foreclosure can face liability if it steps beyond the role of secured lender. Recall that the only reason anyone would consider pursuing the lender is that (i) an incident occurred and (ii) no one else is available to pay. All the lender’s actions will be reviewed in hindsight.
Lenders often conduct diligence before extending credit to understand the risk and properly to value any collateral. They may also include covenants limiting the use of the property or policing housekeeping and compliance. Insurance may be available.
Prudent lenders will have policies in place tailored to the particular state in which they are operating and often to the sort of business in which the borrower is engaged.
See 5.2 Types of Liability For Environmental Incidents or Damage.
Exemplary or punitive damages are rare and typically apply only to intentional bad acts. The circumstances in which they are permissible vary state to state. The Supreme Court has expressed certain constitutional limits on the relationship between a punitive damages award and the underlying compensatory damages. See, eg, Exxon Shipping Co v Baker, 554 US 471 (2008) (reducing punitive damages award to victims of Exxon Valdez oil spill).
Class actions are sometimes available. However, a class generally must have commonality in injuries and damages among members of the class. That can be difficult to show in an environmental toxic tort because the damage to each person and each property can often be said to be unique.
In re Oil Spill by Oil Rig Deepwater Horizon in Gulf of Mexico, on 20 April 2010, 21 F Supp 3d 657 (ED La 2014).
Order Granting the United States Motion to Enter Proposed Amended Consent Decree, in re Volkswagen “Clean Diesel” Marketing, Sales Practices, And Products Liability Litigation, No 2672 CRB (JSC) (ND Cal 25 October 2016).
Perrine v EI du Pont de Nemours & Co, 225 W Va 482, 694 SE2d 815 (2010).
As between the parties to an indemnification or other contractual undertaking, the contract will generally govern. Without more, an indemnification or contractual undertaking will not make the indemnitor liable under an environmental statute. The indemnitor would have to be a regulated person under whatever statute applies.
On the other hand, if the contract amounts to an assumption of responsibility, rather than just an indemnification, regulators may be convinced to pursue the assuming party first. In almost no circumstances can a contract absolve the indemnitee of any liability it had to the regulators or even to third persons as the result of the indemnitee’s environmental non-compliance or damage.
Insurance is available. The precise terms are negotiated and vary from time to time.
Covered risks include tort liability, clean-up liability, natural resource damages, certain sorts of civil penalties and sometimes cost overruns on clean-up projects.
The key federal laws addressing contaminated land are the Resource Conservation and Recovery Act (RCRA), 42 USC §§ 6901-91i, and CERCLA, 42 USC §§ 9601-75. The RCRA addresses the clean-up of solid waste management units at facilities that require a hazardous waste treatment, storage, or disposal permit for any reason, as well as abatement of violations of permit standards at existing facilities. In addition, the RCRA includes provisions addressing the operation of and corrective action at underground storage tanks containing hazardous substances and petroleum; CERCLA does not address clean-up of petroleum.
CERCLA addresses clean-up of releases of hazardous substances.
Section 311 of the Clean Water Act, 33 USC § 1321, addresses clean-up of spills of oil and hazardous substances to the navigable waters of the United States. The Oil Pollution Act, 33 USC § 2701, also addresses oil spills.
Clean-ups of recent spills of polychlorinated biphenyls (PCBs) present a special case and they are cleaned up under the Toxic Substances Control Act. Asbestos in buildings is remediated under the Clean Air Act.
Each state has at least one statute that governs clean-up of contaminated land. It may have a structure similar to CERCLA, but some states have solid waste regulatory statutes with clean-up provisions or water quality protection laws that regulate pollution of groundwater as well as surface water.
Much of the contaminated site clean-up activity that has occurred over the past two decades has taken place under state voluntary response programmes. These statutes offer varying degrees of liability protection if a remediator voluntarily conducts a clean-up. Under the 2002 amendments to CERCLA, the Small Business Liability Relief and Brownfields Revitalization Act, the federal clean-up programmes generally respect state voluntary responses.
The EPA maintains a large database of potentially contaminated sites called the CERCLA Information System (CERCLIS). Sites on CERCLIS are eventually screened using the procedures in subpart E of the National Oil and Hazardous Substance Contingency Plan, 40 CFR §§ 300.400 to .440. Sites that may qualify as among the nation’s most hazardous sites are ranked using the Hazard Ranking System, 40 CFR pt 300, app B. The HRS is a 'cookbook'-style scoring process that generates a unitless score between 0 and 100. Sites that score greater than 28.5 are proposed for inclusion on the National Priorities List (NPL), 40 CFR pt 300, app A, unless they are deferred to an RCRA clean-up or a state clean-up.
A site included on the NPL must eventually be subject of a remedial investigation and feasibility study. The outcome of the feasibility study is a proposed plan for the clean-up evaluated against nine selection criteria. The lead agency – typically the EPA, but possibly also the Forest Service, the Department of Energy, or the Department of Defense – must select a remedy for each site on the NPL.
Facilities that require a permit under the RCRA must inventory the historical solid waste management units on the facility. If any of them have experienced or are experiencing releases of hazardous constituents, the RCRA permit will include a provision requiring corrective action.
Petroleum is not a “hazardous substance.” Tanks containing petroleum or hazardous substances are separately regulated. A tank that has experienced a leak is subject to a corrective action obligation under Title IX of the RCRA and many state laws.
Some states maintain lists of contaminated sites analogous to the National Priorities List maintained under CERCLA. State programmes address sites on these lists. Those programmes may resemble CERCLA, but many states rely more heavily on voluntary response or "brownfields" programmes to facilitate private clean-ups when commercial pressures make remediation economically helpful.
Specific legal authorities differ, but if the condition of land (i) poses a threat of migration of contamination beyond the property boundaries, (ii) poses a risk to human health or the environment, or (iii) violates a clean-up standard, a state or federal government can require remediation. That is not always true for contamination within a building or contamination that is naturally occurring.
As a general matter, under virtually all state and federal programmes, the person who owns contaminated land and the person who conducts operations on that land is liable for remediation.
With specific respect to CERCLA, Section 107(a) of the statute, 42 USC § 9607(a), makes liable four types of person. These people are often called “potentially responsible parties”, or PRPs, when their liability is only alleged and RPs when their liability has been adjudicated. The four categories are:
In order to be liable, a person must have one of those relationships to the facility and the facility must experience a release or a threatened release of a hazardous substance that causes the incurrence of costs of response. However, the defendant need not have any relationship to the hazardous substance that is released; if Company A arranged for disposal of Substance A at a landfill and the landfill is leaching Substance B into the groundwater, Company A is nevertheless liable (unless it has a separate defence) for the remediation of the landfill.
Liability under CERCLA is typically strict and joint and several. However, a defendant may establish as an affirmative defence that its contribution to the harm is divisible or that a reasonable basis exists to apportion the harms caused by multiple defendants, in which case the liability will be several. See, eg, Burlington N & Santa Fe Ry Co v United States, 556 US 599 (2009). That defence has succeeded in very few cases.
Section 107(a) recites that liability under CERCLA is only subject to the defences set out in Section 107(b), 42 USC § 9607(b): that the release is the result of (i) an act of God, (ii) an act of war, or (iii) an act of a third party with whom the defendant has no direct or indirect contractual relationship. In fact, the statute provides certain other full or partial defences, but equitable defences like unclean hands or caveat emptor, for example, do not apply.
Liability under CERCLA Section 107(a)(1-4)(A) is to the United States, a state, or an Indian tribe for all costs of a “removal or remedial action” incurred by the plaintiff “not inconsistent” with the National Contingency Plan (NCP), 40 CFR pt 300. “Removal or remedial action” are the two categories of “response actions,” the latter being a permanent clean-up and the former being anything other than a permanent clean-up. Section 107(a)(1-4)(B) makes the defendant liable to any other person for any costs of response incurred consistently with the NCP. The difference is that consistency of the clean-up with the regulations is an affirmative defence when the plaintiff is a government and part of the plaintiff’s prima facie case if the plaintiff is any other person.
Section 106(a) of CERCLA authorises the United States (but not a state or tribe) to require a person responsible under Section 107(a) actually to implement the response. The first sentence permits the government – typically the EPA – to issue an administrative order requiring work. Failure to comply risks daily statutory penalties and, if the government implements the work itself, punitive damages equal to three times the costs incurred by the government. Pre-enforcement review is not available, 42 USC § 9613(h), so the ordered party must comply and seek to recover its costs for an improper order from the government under Section 106(b)(2), or it must risk those penalties and punitive damages to litigate the propriety of the order. See, eg, Gen Elec Co v Jackson, 610 F3d 110 (DC Cir 2010), cert denied, 131 S Ct 2959 (2011).
The United States (but not a state) may also seek an injunction to require work under the second sentence of Section 106(a). That injunction requires proof that the work ordered is necessary to abate a danger or threat to health or the environment and that the requested judicial order is what the public interest and the equities of the case require. See, eg, United States v P HGlatfelter Co, 768 F3d 662 (7th Cir 2014).
Most states rely heavily on voluntary response programmes to obtain clean-ups. Under these programmes, a private party – typically someone engaged in a transaction involving the real estate – wishes to resolve the question of what remediation will be required and often wishes to implement the remediation on a commercial timeframe, rather than a regulatory one. Section 128 of CERCLA encourages states to adopt voluntary response programmes to facilitate clean-ups in these circumstances and then allows the EPA to enter into agreements with a state under which satisfaction of the voluntary response programme will satisfy CERCLA for the most part (42 USC § 9627).
More than one person can be liable under CERCLA and most state programmes. Care must be taken here with US legal terms. Liability under CERCLA, and most other contamination statutes, is joint and several, meaning that each responsible party is liable for all costs of response and response actions. Courts allocate among jointly and severally liable parties in a contribution action. They apportion liability when the liability should not be joint and should only be several.
A court may allocate costs among jointly and severally liable parties when they pursue contribution claims against each other. The allocation does not affect the ability of the underlying plaintiff (typically the government) to obtain full relief from any of the responsible parties without regard to the allocation. Under CERCLA, the court is to allocate using “such equitable factors as the court determines are appropriate,” 42 USC § 9613(f)(1). Many parties and courts refer to the “Gore factors,” a list of allocation factors contained in an unsuccessful amendment to the original CERCLA bill, 126 Cong Rec 26,781 (1980), but cited by some of the early courts faced with CERCLA allocation cases, see, eg, United States v A & F Materials Co, 578 F Supp 1249, 1256 (SD Ill 1984). But the Gore factors are not law and often unhelpful. A court may use any factors, or even just one factor, to allocate. See, eg, Envtl Transp Sys, Inc v Ensco, Inc, 969 F2d 503 (7th Cir 1992). A party’s negligent or intentionally tortious behaviour can provide that factor. See, eg, NCR Corp v Geo A Whiting Paper Co, 768 F3d 682 (7th Cir 2014).
Apportionment is a defence to the government’s underlying claim under Section 106 or 107. CERCLA courts conventionally follow the analysis of Section 433A of the Restatement (Second) of Torts and apportion liability only when a reasonable basis exists to divide or apportion the causal connection of each party to the harm posed by the site, Burlington N & Santa Fe Ry Co v United States, 556 US 599 (2009).
Under CERCLA, although not necessarily all state laws, a liable person may seek contribution from any other liable person “during or after” an underlying enforcement action under Section 106 or 107, 42 USC § 9613(f)(1); Cooper Indus, Inc v Aviall Servs, Inc, 543 US 157 (2004). A private party that incurs costs under an administratively or judicially approved settlement may pursue contribution as well, 42 USC § 9613(f)(3)(B). However, a party that incurs costs before the filing of an enforcement action or other than under a settlement may not be able to sue for contribution. That person may be able to pursue a claim for cost recovery under section 107(a)(1-4)(B), United States v Atl Research Corp, 551 US 128 (2007). A person that incurs costs as the result of an improper administrative order may recover its costs from the Hazardous Substance Response Superfund once the work is complete, 42 USC § 9606(b)(2).
A contribution plaintiff may only recover if it can show that it has paid more than its equitable share. It may only recover the contribution defendant’s several share of that overpayment.
Courts will enforce contracts as among the parties to the contracts under CERCLA and virtually most other statutes. Thus, if a purchaser agrees to assume liability for contaminated land, it typically cannot use statutory claims to recover the costs it incurs back to the seller.
However, that contractual allocation of responsibility does not allow the seller to avoid CERCLA liability to the government or another plaintiff under Section 107, 42 USC § 9607(e)(1). In order to accomplish that transfer, the parties must enter into a settlement with the government under which the government agrees to look primarily or exclusively to the purchaser. These sorts of liability transfer settlements may also transfer liability to a contractor. State voluntary response programmes sometimes facilitate transfers.
The United States is a party to the United Nations Framework Convention on Climate Change and to the 2015 Paris Agreement. The Obama administration stated its intention to meet its obligations through a set of regulations – mostly implementing the Clean Air Act, 42 USC §§ 7401-7671q – known as the “Clean Power Plan.”
The Trump administration has stated its intention to withdraw many significant portions of the Clean Power Plan, especially the regulation of existing electricity generating units. That regulation would have established carbon dioxide equivalent emission budgets for each state. Moreover, the new EPA administrator, Scott Pruitt, has stated his scepticism that human activities cause climate change, although the EPA website still discusses the EPA’s climate change activities as of this writing. It is therefore unclear at this time how the United States will address climate change, or whether it will withdraw from the Paris Agreement.
The statute itself may require the EPA to regulate greenhouse gas emissions, however. In Massachusetts v Environmental Protection Agency, 549 US 497 (2007), the Supreme Court held improper the Bush administration’s decision that greenhouse gas emissions did not cause an endangerment to health and the environment in the context of regulating emissions from mobile sources like automobiles and trucks. Once the EPA made that endangerment finding, which it has done, the statute calls for regulation of greenhouse gas emissions as a pollutant from, among other things, stationary sources emitting more than 250 tonnes per year.
Certain states have independently regulated greenhouse gas emissions, most notably California and several northeastern states that have formed the Regional Greenhouse Gas Initiative (RGGI). California and the RGGI have cap-and-trade programmes in place.
It is not clear what steps the United States will take at this time. Market forces have driven significant substitution of natural gas for coal as a fuel for electricity generation and industrial production, resulting in a significant reduction in greenhouse gas emissions for that reason. The Trump administration has stated its intention to restore coal mining to prior levels, but it is not clear whether or how this would occur.
Cars and light trucks are subject to Corporate Average Fuel Economy standards.
There is no greenhouse gas emissions trading scheme under the federal Clean Air Act. California and the RGGI have greenhouse gas emissions trading.
In general, modification of a building that is constructed using asbestos-containing materials is subject to regulation under Section 112 of the Clean Air Act, 42 USC § 9611, because asbestos is a hazardous air pollutant. The Asbestos National Emission Standard for Hazardous Air Pollutants (NESHAP), 40 CFR §§ 61.140-.157, generally requires notice to the EPA before asbestos is disturbed and then prescribes certain standards for the work.
Asbestos is often subject to special disposal requirements under state law.
In many jurisdictions, sale of residential real estate requires a certification as to the presence or absence of asbestos by the seller.
Friable asbestos cannot be permitted to allow an air emission to the outside atmosphere under the Clean Air Act and many state laws.
Indoor air quality must meet standards of the Occupational Safety and Health Administration.
Landlords face tort exposure if they do not manage asbestos so that it does not expose tenants to asbestos fibres.
Asbestos litigation is quite common. The courts in jurisdictions with large numbers of asbestos claims typically handle those claims separately so they can be treated efficiently. Some large asbestos manufacturers have addressed their liability through bankruptcies. The result of those proceedings is to convert ordinary tort litigation into more of an administrative claims process.
Asbestos claims are, for the most part, governed by state law. States differ on this issue. They also differ on whether one injury (eg, pleural thickening) allows a claim for risk of other injuries (eg, mesothelioma), or whether the two injuries give rise to distinct claims. If the claims are not distinct, a mesothelioma claim may be time-barred because the plaintiff had notice of a less significant injury earlier.
Oritz v Fibreboard Corporation, 527 US 815 (1999) and Amchem Products, Incorporated v Windsor, 521 US 591 (1997) are large class-action settlements that the Supreme Court rejected because they would limit future claimants’ recovery. Notable state court cases include Braaten v Saberhagen Holdings, 165 Wash 2d 373 (2008); Simonetta v Viad Corp, 165 Wash 2d 341 (2008); and O’Neil v Crane Co, 53 Cal 4th 335 (2012).
Most states regulate all forms of waste disposal under state law. States differ on how to regulate municipal solid waste, construction and demolition debris, non-hazardous industrial wastes, fill and the like.
State laws are more uniform in their regulation of hazardous waste because of the overlay of the RCRA, 42 USC §§ 6901-91i. Hazardous waste is listed under the RCRA as the waste from a particular industrial process or is “characteristic” waste because it displays one of the regulatory characteristics of hazardousness: toxicity, reactivity, ignitability, or corrosivity. There are regulatory standards for making those determinations.
PCB-containing waste is separately regulated as chemical waste under the Toxic Substances Control Act.
Medical waste is separately regulated by some states.
Under CERCLA and similar state laws, liability for releases of hazardous substances from the disposal facility always remains with the arranger for disposal. That is true whether the release is of a substance contained in the arranger’s waste or some other hazardous substance. Liability also remains with the generator under Section 7003 of the RCRA, 42 USC § 6973.
Liability for some feature of the waste other than its hazardous substance content may not remain with the generator of the waste.
Programmes that call for recovery of wastes by the producer are limited and targeted. Many states have bottle laws that require beverage bottlers to take back bottles and cans sold to consumers.
Some voluntary programmes are common. For example, some manufacturers will receive returns of waste electronic devices. Some will receive waste pharmaceuticals.
States and municipalities impose reporting requirements and they tend to predominate over federal requirements.
Most permit programmes require reporting of exceedances of discharge or effluent limits. Hazardous waste must be accompanied by a uniform hazardous waste manifest, one copy of which is to be returned by the disposal facility to the generator; if that copy is not returned, the generator must file an exception report.
Catastrophic releases of toxic or hazardous materials must be reported immediately under the Emergency Planning and Community Right-to-Know Act. In addition, releases of toxic substances to any medium must be reported annually on the Toxics Release Inventory under the same statute.
Catastrophic spills to waterways must be reported immediately under the Clean Water Act and many state laws.
Many states and the federal government maintain public websites containing certain information about environmental permits and remediation sites. In addition, federal records are publicly available under the federal Freedom of Information Act. Some states have similar open records laws that make their records available. In general, all records of federal, state and local government agencies and special purpose authorities are subject to these laws. There are exceptions; for example, for records of criminal investigations and internal deliberations.
Corporations are required to disclose contingent liabilities, including environmental liabilities.
Environmental due diligence is typically conducted on M&A, finance and property transactions.
See above. A corporation remains responsible for historical violations even when its shares change hands. The purchaser of assets typically does not acquire liability for historical non-compliance. On the other hand, the purchaser of contaminated land becomes responsible for that land.
See above. The seller of a corporation retains responsibility for historic damage or non-compliance only if the seller had individual liability in the first place. The seller of assets would typically have that liability and therefore retains it.
A purchaser will often insist upon representations and warranties. It may then conduct a review of the records of the corporation and often public records concerning the corporation’s operations or assets. The nature of the investigation typically turns on the nature of the transaction.
In the specific case of the acquisition of real estate, one can avoid liability under CERCLA by conducting “all appropriate inquiry.” All appropriate inquiry is defined by regulation 40 CFR pt 312. If one does not discover contamination, then one can claim to be an innocent purchaser and avoid liability with respect to later-discovered contamination that had been present on the property but not found at the time of the acquisition, 42 USC § 9601(35). On the other hand, if one does find contamination and takes reasonable care with respect to that contamination, one can claim status as a bona fide prospective purchaser and avoid liability for that contamination. It is not clear what “reasonable care” entails, but compliance with a state voluntary response programme will probably suffice.
Some states have laws specifically requiring disclosure of environmental conditions in residential property, such as the presence of asbestos, radon, or urea formaldehyde foam insulation.
Contaminated sites or sites subject to RCRA permits often must have notices placed in the land records, even if the site is cleaned up.
A builder-vendor of a new home is typically strictly liable to the purchaser for undisclosed environmental conditions in many states. Otherwise, the doctrine of caveat emptor typically applies.
The representations and warranties vary with the nature of the transaction.
The bankruptcy code does not contain any provisions that are specific to environmental laws; however, over the years, a body of bankruptcy cases has evolved that does provide some guidance on how environmental obligations are affected or unaffected by a bankruptcy filing. The following are some of the main principles that have evolved:
From the perspective of the debtor, it is possible to use the bankruptcy claims estimation process to determine formally the amount due to a governmental agency on account of an environmental liability, so that the debtor can pay or otherwise restructure that debt as part of the bankruptcy process.
Green taxes are commonly defined as taxes levied on environmental pollutants, or on the services or goods whose use produces such pollutants. The most common example is a carbon tax, which is typically imposed on the carbon content of fossil fuels. While green taxes have been used in some countries, they are not currently enforced in the United States. The environmental tax policy in the United States can be more aptly analogised to a carrot, rather than a stick. The primary instruments of US environmental tax policy are tax credits, rebates and incentives; examples include renewable energy credits, solar energy incentives, energy-efficient commercial building tax deductions and energy investment tax credits.