Contractual Indemnifications for Environmental Liabilities
| Publication year | 1992 |
| Pages | 943 |
| Citation | Vol. 21 No. 5 Pg. 943 |
1992, May, Pg. 943. Contractual Indemnifications for Environmental Liabilities
Not so long ago, in an era more interested in concentrating on industrial, corporate and personal economic growth, positions advanced by environmentalists frequently were viewed as noble goals that could be reached only in a perfect world. Thus, these positions were ignored or not taken seriously. Then, the scenery began to change with the enactment of and amendments to environmental laws such as the Clean Water Act,(fn1) Clean Air Act,(fn2) Resource Conservation and Recovery Act,(fn3) Toxic Substances Control Act(fn4) and Rivers and Harbors Act.(fn5) In 1980, the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA")(fn6) was enacted. CERCLA dramatically changed how the environment, attendant remedial actions and liability are viewed.
While the myriad federal, state and local environmental laws and implementing regulations have raised consciousness about the relationship between humans and the environment, they also have had a profound effect on the structure of business transactions. As a result of the great liability arising from the failure to acknowledge and address environmental laws, increasing attention is being directed at ways to mitigate environmental liabilities.
This article focuses on the issues of environmental liability and indemnification---the contractual ability, or inability, to disclaim or limit responsibility for compliance with environmental laws. It cites pertinent provisions of CERCLA to illustrate both the need and the difficulty of obtaining contractual environmental indemnifications. However, the concepts presented also can be applied to attempts at indemnification and limitations of liability under other environmental laws.
CERCLA mandates that the following entities---known as potentially responsible parties---are covered by its expansive umbrella: (1) present owners and operators; (2) any person who, at the time of disposal of any hazardous substance, owned or operated any facility at which hazardous substances were disposed; (3) any person who, by any degree of involvement, arranged for the disposal, treatment or transport of hazardous substances; and (4) any person who accepts or has accepted any hazardous substances for transport to disposal or treatment facilities selected by such a person from which there is a release or threatened release of a hazardous substance.(fn7)
Pursuant to CERCLA, in the event of a release or threatened release of a hazardous substance, these persons are liable for all costs of response, removal or remedial action, as well as damages and resulting costs for assessing injury to or destruction or loss of natural resources. They are further liable for the costs of any health assessment or health effects study.(fn8) Depending on the magnitude of the environmental problem, these costs can be staggering.
CERCLA definitions are accorded extremely broad parameters. For example, "facility" is defined to include any site or area where...
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