MUNICIPAL LIABILITY UNDER SUPERFUND

By DENNIS G. WALSH of Klein, Thorpe and Jenkins, Ltd.

In 1980, as a response to the Love Canal crisis in Upstate New York, Congress adopted the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), otherwise known as Superfund. In it. Congress places the burden of cleaning up the hazardous waste dump sites in the United States on those persons and entities responsible for creating them. Clean up cost estimates have been as-high as $44 billion.

In general, liability under CERCLA depends upon a relationship with the waste dump site, either as an owner or past owner, or as an operator, generator, or transporter. Specifically, the Act identifies four classes of "potentially responsible parties" (PRPs):

1. The owner and operator of a vessel or a facility;

2. Any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of;

3. Any person who by contract, agreement or otherwise arranged for disposal or treatment, or arranged with a transporter for transport for disposal or treatment, of hazardous substances owned or possessed by such person, or by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances;

4. Any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels, or sites selected by such person, from which there is a release, or a threatened release which causes the incurrence of response costs, of a hazardous substance.

It is clear from the definition of "person" under Superfund that municipalities are explicitly included as PRPs for purposes of liability. Thus, local governments are commonly identified as PRPs relating to municipal landfills that they own or owned. In addition, as part of their traditional functions, municipalities of all sizes have generated, collected and transported community waste which contain hazardous substances to landfills.

Until recently, the brunt of Superfund's heavy liability burden has been borne by the private sector. For most larger industrial corporations, Superfund problems are a fact of everyday life which they are increasingly adept at handling. As these corporations suffer growing economic stress, however, they have begun to search for other "deep pockets" to help shoulder the multi-billion dollar clean-up costs and have launched a major campaign to persuade the EPA to draw local governments into the liability scheme more routinely than has been the case thus far.

EPA's history has been more sympathetic to the plight of municipal PRPs, however, and in the past they have taken a more hands off approach to municipalities that are generators and/or transporters of municipal solid waste. In 1989, for example, the EPA issued an "Interim Policy On CERCLA Settlements Involving Municipalities Or Municipal Wastes" which indicates that EPA will generally decline to issue liability notices to anyone whose only involvement with the site is the generation and transportation of municipal solid waste and sewer sludge in the absence of site — specific evidence that such materials were derived from an industrial process. EPA, however, will treat local government owners and/or operators of Superfund sites in the same manner it would treat private parties in the same position and when local governments have generated and/or transported typical hazardous wastes at a Superfund site, they will be treated in the same way as any other generator or transporter of such materials.

Even the so-called "victory" for local governments relating to municipal solid waste, however, was short lived, as the Interim Policy has provoked a series of third party contribution claims brought against local governments by private corporations sued by EPA as PRPs. Such suits seek hundreds of millions of dollars from cities and villages that are generally small to midsize and involve these local governments in lengthy litigation that they can ill afford. As a result, organizations of local government have been lobbying both EPA and Congress for a change in the Superfund statute to provide an exemption from liability for government and private parties that have disposed of only municipal solid waste at a Superfund site. Both industry

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and environmental groups opposed an outright exemption for municipal solid waste, however, and there have been a number of bills introduced to Congress to address this issue.

In February of this year, the Clinton administration completed its proposal to reform CERCLA. Under the proposal, all municipalities that generated or transported waste to a site would be grouped together and would have their cost allocation capped at 10% of the total response cost. Additionally, municipalities that owned or operated Superfund sites would be subject to an ability-to-pay test, based on factors such as their ability to raise taxes and bond ratings.

As currently written, the Superfund law now provides a couple provisions that are beneficial to limiting a local government's exposure under the Act. For example, a noted exemption from the broad definition of "owner or operator" is found for units of state or local governments which "acquire" ownership or control involuntarily through bankruptcy, tax delinquency, abandonment or other circumstances in which the government involuntarily acquires title by virtue of its function as sovereign. The exclusion provided for under this provision, however, does not apply to any local government which has caused or contributed to the release or threatened release of a hazardous substance from the facility.

Another provision under Superfund that exempts state and local governments from liability is applicable when the municipality is taking actions "in response to an emergency created by the release or threatened release of a hazardous substance generated by or from a facility owned by another person." This exemption, commonly known as "the good Samaritan defense," does not preclude liability for costs and damages as a result of "gross negligence or intentional misconduct by the state or local government." For the purpose of the preceding sentence, "reckless, willful or wanton misconduct" constitutes gross negligence.

The good Samaritan defense should help alleviate the concern that because CERCLA's stringent liability scheme applies to such a broad range of circumstances, a local government could be liable under the statute for the cost of rectifying innocent mistakes made by police, fire fighters or other public employees called upon to respond to emergencies such as fires or explosions which result in the release of hazardous substances. While this exemption should prove relatively clear cut and easy to assert in true emergency situations, it remains to be seen how far it will extend to actions taken in anticipation of an emergency which are designed to forestall its occurrence.

Page 10 / Illinois Municipal review / May 1994