Municipal Environmental Liability
Under Superfund

By GREGORY L. CLAPPER, CSP, CHCM
Loss Control Manager, Management Services, Inc.

The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §9601 et seq., commonly referred to as Superfund, is possibly the most significant federal law imposing liability for the cleanup of hazardous substances. This program has two components: a federal cleanup fund of $8.5 billion through 1991 and a strict liability scheme to enable the EPA to recover cleanup costs from responsible parties. The parties responsible for payment of cleanup costs are jointly and severally liable for those costs which means that any one party, regardless of the amount to which it contributed to the total problem, may be required to pay the entire cost of cleanup. You must also be aware that Superfund creates liability for local governments in the same manner as it does for private parties.

Careless handling and disposal of hazardous substances can have disastrous results for municipalities. Not only are they subject to fines for improper disposal, they can be liable for potentially enormous cleanup costs. The fact that a municipality may have perceived its actions as appropriate when wastes were disposed of does not, because of the strict liability concept, offer any protection or immunity under Superfund.

Any transaction that could lead to future Superfund liability should be thoroughly investigated because prevention of liability is far more prudent and less costly than defense.

One of the most common types of transactions is hazardous waste disposal by an outside company. Waste generated by a municipality remains the responsibility of the municipality, regardless of who takes it where. If the site where your wastes are being disposed of becomes involved in a Superfund case, your municipality will also be involved in that case.

Hazardous wastes are required to be disposed of in specific ways and at specific sites. Those sites must be licensed and regulated in accordance with Environmental Protection Agency requirements. A municipality must do everything it can to avoid sending wastes to questionable disposal facilities.

A municipality can also incur liability for cleanup costs via its acquisition of land or other facilities having environmental contamination. A municipality, as the current owner of the property, can become liable for cleanup of the contamination even if the contamination was caused by a prior owner and was totally unknown to the municipality at the time of acquisition.

It is therefore suggested that property acquisitions be approached carefully. Toxic waste problems should be considered and investigated prior to any property acquisition. If an investigation provides evidence of the presence of toxic waste, the purchase price and arrangements should reflect the problem or, if the parties cannot agree to a resolution of the problem, it may be necessary to cancel the planned acquisition.

A municipality's involuntary acquisition of contaminated land or facilities may, however, be defensible. An "involuntary acquisition" is created, for example, when a municipality acquires property as a result of an owner's failure to pay property taxes. There may also be some consideration if land was purchased without knowledge of a toxic waste problem, provided the new owner took immediate steps to mitigate the problem after it became known.

Civil and Criminal Penalties Under the Federal Environmental Laws: The remote yet real possibility that public (and private) officials can be held personally liable for environmental problems is causing increasing concern. Legal precedent has established the following factors supporting individual liability:

1. The ability to make timely discovery of the problem;

2. The power to direct the activities of the persons who control the mechanisms causing the pollution; and

3. The ability to prevent and abate damage.

Liability prevention measures should focus on two concepts: first of all, the best defense is a program of regulatory compliance. The government or a private citizen will have more difficulty prosecuting a public official who is making a good faith effort to comply with the law, rather than a public official who is not making such effort. Secondly, in order to make that good faith effort, you will need to know your current regulatory status. As you make such an assessment, be prepared to take immediate steps toward correction of problems you find. The failure to abate a recognized hazard is the quickest route to personal liability. •

September 1990 / Illinois Municipal Review / Page 21