Environmental Liability 101

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Environmental Liability 101
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History lesson

• In the Good ole days

Waste stored and disposed of according to the
best practice of the time.
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History lesson
Federal Laws

• 1976 RCRA
• Resource Conservation and Recovery Act
• Rules for Hazardous Waste management phased
  in over 10 year period
• Cradle to Grave concept
• 1980 CERCLA
• Comprehensive Environmental Response,
  Compensation, and Liability Act

SUPERFUND
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CERCLA SUPERFUND

• Funded by tax on chemicals
• Set procedures to deal with Uncontrolled Waste
  Sites
• Defined Hazardous Substances, Pollutants and
  Contaminants
• Established Liability for releases .
• Strict, Joint, and Several .
• SECTION (107) Liability provisions
  incorporated into SC Hazardous Waste Management
  Act

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Uncontrolled Waste Site

• Any property where a release of Hazardous
  Substances, Pollutants or Contaminants was not
  permitted by RCRA (or other Federal Laws)
• Releases before 1980 predate RCRA regs.
• Releases after 1980 still occurring because small
  quantities / types of waste not regulated
• Also uncontrolled if federal permit not fulfilled

RCRA regulates large hazardous waste operations
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Hazardous Substances

• Hazardous Substance defined as anything listed in
  RCRA or 6 other laws.
• 800 listed substances
• Hazardous Substances not the same as Hazardous
  Wastes

All Haz. Waste are Haz. Substances
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Hazardous Substances

• RCRA Hazardous Waste requires certain
  concentrations amounts of material.

CERCLA Hazardous Substances can be any amount or
concentration
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CERCLA also includes Pollutants and Contaminants

• "Contaminant" includes, but is not limited to,
  any element, substance, compound, or mixture,
  including disease-causing agents, which after
  release into the environment and upon exposure,
  ingestion, inhalation, or assimilation into any
  organism, either directly from the environment or
  indirectly by ingestion through food chains, will
  or may reasonably be anticipated to cause death,
  disease, behavioral abnormalities, cancer,
  genetic mutation, physiological malfunctions,
  including malfunctions in reproduction, or
  physical deformations, in organisms or their
  offspring "contaminant" does not include
  petroleum, including crude oil or any fraction of
  crude oil, which is not otherwise specifically
  listed or designated as a hazardous substance
  under subparagraphs (A) through (F) of paragraph
  (14) of CERCLA, Section 101, 42 U.S.C. Section
  9601, et seq. and does not

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Petroleum Exclusion

• Not a Hazardous Substance or Contaminant
• Automotive, heating, cooking fuels
• Natural gas , crude oil, etc, unless RCRA-listed

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Hazardous Substances, Pollutants Contaminants

• Distinction Hazardous Substance and Pollutant
  Contaminant not important for todays
  discussion
• Substances of concern Almost everything,
  except petroleum
• Usually NOT animal septic wastes
• But, can include toxic byproductsor other
  substances contained in these wastes

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Releases

• Spills, drips, leaks, dumping, vapor emissions,
  waste water discharges,etc.

No release as long as everything stays inside
the building or container
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Releases According to Superfund

• Not naturally occurring substances
• unless higher concentrations due to human
  activities
• Typically not farm chemicals in normal usage
• But pesticides can be addressed
• Not discharges to the environment under a
  Federal permit
• DHEC issues permits for many Federal programs

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CERCLA
Compensation Liability Act

• Strict, Joint and Several Liability
• Codified by reference to other laws
• Upheld by 25 years of court rulings
• CERCLA Liability is Highly Contentious
• Structure encourages suits and countersuits to
  determine who pays what.

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Strict, Joint Several Liability
Strict The assessment of liability for damages
without requiring proof of negligence.
Responsible Parties are financially liable even
if the release was legal at the time.
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Strict, Joint Several Liability

• Joint and Several Parties who contribute to a
  site's pollution are each liable as if they alone
  polluted that site
• Does not require apportioned costs based on the
  amount of involvement w/ site.
• If multiple Responsible Parties, Agency can
  recover ALL costs from any of them.
• Responsible parties can drag in anyother
  responsible party to force payment of share of
  costs.

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Potentially Responsible Parties
PRP
Regardless of degree of involvement, any PRP can
be held 100 liable for the site.

• Same as the State VCP Responsible Parties (RP)
• Anyone (person/ company) connected in any way to
  causing the release of Hazardous Substances,
  Contaminants or Pollutants

• Generators of the Substance
• Transported and Arranged for Disposal at the
  Site

• Owned the property where the release occurred
• Parent or Subsidiary of any other PRP
• And

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You might bea PRP if

• You acquire property anytime AFTER the release

Pottery Barn Rule You Break It, You Buy
It. CERCLA RP Rule If it was ever Broke, You
Pay.
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Not an PRP Renters

• Renting Property Does not make You a PRP Unless
• Operate Processes that lead to Releases
• Or
• Make Management decisions about the Release

Analogy A landlord does not charge you for the
damages done by A previous tenant
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PRPs Getting caught

• We probably know about your release or we will
  find out about it
• Employees, Anonymous sources, etc.
• State law Must report lab results from
  groundwater samples and borings. (Any hole
  deeper than it is wide.)
• Environmental testing on Adjacent properties.

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PRPs Consequences

• Once release reported, either
• enforcement action to force testing and clean-up
  OR
• Use of State/ Federal Funds to do the work
• Based on priority of site, but eventually.
• Followed by COST RECOVERY ACTION

By Law, can recover 3X the amount spent
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How Not to be a PRP

• Old way Run away from the property

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Non Responsible Parties

• 3 categories of NRP
• Innocent Landowner
• Contiguous Landowner
• Bona Fide Prospective Purchaser
• Cannot have affiliation with PRPs
• Direct / Indirect Familial
• Contractual / Corporate / Financial

NRP
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Innocent Landowner NRP

• Someone who acquires property without any
  reason to know it had contamination release
• Almost impossible defense to establish today

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Contiguous Landowner NRP

• Owns property contaminated by the substances
  moving onto or under their property
• Have to take reasonablesteps to prevent
• Category does not apply if there is reason to
  know about contamination prior to purchase

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Bona Fide Potential Purchaser NRP

• Applies to Property Purchased after January 11,
  2002
• Must meet criteria set by Law
• All releases before purchase
• Appropriate care to stop continuing/ threatened
  releases, human/ environmental exposure
• Cooperate with RPs or enforcement response
  actions
• All Appropriate Inquiry

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All Appropriate Inquiry

• Demonstrates that the previous ownership, use,
  and environmental conditions were properly
  evaluated before acquisition
• Standard set by the EPA
• All Appropriate Inquiries Final Rule
• Effective November 1, 2006
• Until then, can use ASTM E1527-05 Phase I
  Environmental Site Assessment Process

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All Appropriate Inquiry

• Must do prior to acquiring property
• Must be conducted or updated within 1 year prior
  to acquisition
• Some parts must be updated within 6 months
• Exemption for Non-Commercial/ Non-Government
  buying residential for residential use
• Site Inspection Title Search
• Further work if Site Inspection finds something

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All Appropriate Inquiry

• Requires an Environmental Professional must
• Interview past and present owners, operators and
  occupants
• review historical sources of information
• review federal, state, tribal and local
  government records
• visually inspect facility and adjoining
  properties

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All Appropriate Inquiry (cont.)

• Environmental Professional must interview
  adjacent landowners if the property is abandoned.
• Buyer has responsibility to
• have searches for environmental cleanup liens
• Find commonly known or reasonably ascertainable
  information.

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All Appropriate Inquiry (cont.)

• Must have an assessment of the relationship of
  the purchase price to the fair market value of
  the property,if the property was not
  contaminated

If its too good to be true
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Windfall liens

• It is perfectly OK to buy Suspect Property at
  cheap prices
• IF EPA or State has spent money on the site,
• May be subject to Windfall Lien
• Repayment of funds to government
• Negotiate with EPA or State for discount on the
  lien before buying the site

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Liability Protection

• If you are a NRP
• Innocent Landowner
• Contiguous Property Owner
• Bona Fide Prospective Purchaser
• US EPA No Agreement with the Agency is
  Necessary
• No CERCLA Liability under Federal Statutes

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Liability Protection

• Under SC law, Not Absolved of Liability even if
  meet EPAs definition of NRP

• Take your chances
• Purchase Property and hope that the State never
  comes calling

ORApply for a Voluntary Cleanup Contract
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Brownfields

• Are real properties, for which the expansion,
  redevelopment, or reuse may be complicated by the
  presence or potential presence of a hazardous
  substance, pollutant, or contaminant.
• US EPA

Any property with known or suspected
environmental contamination can be considered a
Brownfield under SCs VCP (Except for
Petroleum-Only Sites).
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Voluntary Cleanup Contracts
VCC

• Under a VCC, you agree to do some environmental
  work on the property
• Usually filling in data gaps
• Sometimes waste removal or capping
• The State accepts your work for Cost
  Contribution

We reach a settlement accepting your
environmental costs as payment of potential
liability
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VCC Benefits

• Liability Protections
• from State Superfund Actions
• Third-Party Liability
• Cost Contribution Protection from RPs lawsuits
• Benefits transferable to new owner
• (not an RP)

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State Superfund Liability Protection

• If there was a release of Hazardous Substances,
  DHEC will not pursue NRP for
• Future Response Costs (unless NRP causes it)

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Cost Contribution Protection

• DHEC will notify all known PRPs for the property
  that the State is considering a Settlement with
  NRP.
• PRPs have 30 days to file objection, otherwise
  they forfeit all rights to seek cost
  contributions from the NRP
• Objection must show that NRP is fraudulent in
  obtaining the contract.

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Third Party Liability Protection

• Third Parties Adjacent property owners and
  anyone potentially affected by the release
• Under State law, NRPs are not liable to third
  party claims effective with 2005 contracts
• Requires that NRPs conduct environmental work on
  the property

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Liability Protections
Disclaimers

• Protections only apply if NRPs complete all terms
  of the contract and are issued a CERTIFICATE OF
  COMPLETION.

The Department has discretion whether to enter
into any VCC.