The Significance of Environmental Liabilities for Governmental Entities

The costs of meeting the federal environmental mandates that pertain to drinking water systems, sewage treatment plants, solid waste incinerators and vehicle emission programs are significant for local governments. However, these costs pale in comparison to the potential liability that some governments face under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 the Act. Escalating environmental concern over past and present landfill operations has begun to create a financial burden never anticipated by state and local governments. Residues from hazardous waste, toxic pollutants and other environmentally sensitive products have penetrated many underground municipal landfill liners, creating significant environmental damage. Even though the number of operating landfills has declined from nearly 18,000 in 1970 to just about 6,000 today, many landfills are, or were at one time, managed by government agencies.1 Superfund legislation has allowed the Environmental Protection Agency (EPA) to target landfillaffiliated state and local governments as potentially responsible parties (PRPs) for future remediation costs. The National Priorities List (NPL) is a list of hazardous sites that the EPA considers to be the most seriously contaminated sites in the country. Presently, about 250 of the 1,387 landfill sites on the program's NPL are current or former landfills, or open dumps operated by local governments.2 During the 1990s, the number of sites added to the NPL has been decreasing due to a number of factors, including a new EPA administrative policy that requires a Governor's Letter of Approval before a site is listed. However, the U.S. General Accounting Office GAO) believes that as many as 2,300 sites could be added to the NPL from the inventory of sites undergoing or awaiting evaluation.3 Overview of Congressional Remediation & Enforcement Acts Several congressional initiatives have expanded corporate and governmental exposure to environmental liability. One of the most important sources of federal environmental regulation is the Resource Conservation and Recovery Act (RCRA) of 1976. Congressional intent was to ensure that solid and hazardous wastes are managed properly so that human health and the environment are protected, and to reduce or eliminate the generation of hazardous wastes wherever feasible.4 In 1976, Congress enacted the Toxic Substances Control Act to control the environmental impact of technological advancement within the chemical industry. According to the Senate Commerce Committee, a vast array of new chemicals were being developed and pesticide laws were not keeping pace.5 In 1980, Congress enacted the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) to protect the public from directly absorbing the economic consequences of environmental damage. CERCLA imposes hazardous waste-site cleanup liability on a broadly defined group of PRPs. Within this act, Congress established the program, which is outlined in Figure 1. The fund is designed to absorb cleanup costs when a responsible party cannot be found or the legal process becomes too time-consuming. is replenished from taxes on petrochemical feedstocks, crude oil, general corporate income and general congressional funds. In addition to tax revenues, the is also replenished by CERCLA penalties, cost-recoveries and penalties recovered under the oil and hazardous substance spill provisions of the Clean Water Act. The program was reauthorized and further expanded in 1986 by the Amendments and Reauthorization Act (SARA). The amendments authorized a $8.5 billion replenishment and transferred the fund to the IRS section of the U.S. Code. RCRA, CERCLA and SARA expanded environmental loss because liability is retroactive, strict and joint. This suggests the following: 1. New liability can be imposed retroactively on persons who at the time they acted. …