Chapter 13 - § 13.2 • THE LEGAL FRAMEWORK: AN OVERVIEW OF ENVIRONMENTAL LAWS AND REGULATIONS

• Jurisdiction: Colorado

§ 13.2 • THE LEGAL FRAMEWORK: AN OVERVIEW OF ENVIRONMENTAL LAWS AND REGULATIONS

The web of environmental laws facing the construction manager is daunting and complex. These laws are found in the ordinances of local municipalities, state statutes, and the acts of the United States Congress. They often overlap. They are full of ambiguities and counterintuitive details. They are backed up by enforcement mechanisms that are among the most onerous in the regulatory world.

This section of this chapter discusses the basic features of the federal environmental statutes most often encountered in the construction industry. Please use it with caution. Laws change, often dramatically, and sometimes local and state rules prove more important for a particular problem than the federal statutes described here. Practitioners must attack each problem on its merits, of course, and careful research at all levels of regulation is needed in every instance.

§ 13.2.1-Hazardous Materials: CERCLA and RCRA

In the context of environmental regulation, hazardous materials encompass a wide variety of chemical products encountered at construction sites. "Hazardous substances" generally are governed by one federal statute, while "hazardous wastes" are regulated by another and state statutes. In addition, hundreds of specific substances are regulated for exposure in the workplace.

The Comprehensive Environmental Response, Compensation, and Liability Act and the Regulation of Hazardous Substances

The most important federal law that creates environmental liability for construction sites is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).¹ CERCLA imposes liability on specific persons for costs incurred to respond to an actual or threatened "release" of a "hazardous substance" from a "facility," whether active or inactive. This liability is formidable for the construction company: it is strict, joint and several, and retroactive, and defenses are very limited.

Definitions

A "release" is broadly defined under CERCLA to include any "spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment."² "Hazardous substances" are defined by reference to other federal environmental laws, including the Federal Water Pollution Control Act, Solid Waste Disposal Act, Clean Air Act, and Toxic Substances Control Act, which identify hundreds of substances as dangerous to health and the environment.³ U.S. Environmental Protection Agency (EPA) regulations further identify as hazardous substances "elements, compounds, mixtures, solutions, and substances which, when released into the environment may present substantial danger to the public health or welfare or the environment."⁴ Many ordinary substances used for cleaning, painting, and similar activities are hazardous substances.

Many of the materials used or encountered at a construction site, ranging from solvents and glues to insulating materials, fall within these definitions. When these materials find their way into the environment, they are "released" under this statute.

A CERCLA "facility" is also very broadly defined. It includes

(A) any building, structure, installation, equipment, pipe or pipeline, . . . well, pit, pond, lagoon, impoundment, ditch, landfill, storage container, motor vehicle, rolling stock, or aircraft, or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located; but does not include any consumer product in consumer use or any vessel.⁵

Construction sites easily fall within this definition.

Persons Liable

The classes of "persons" liable under CERCLA are as comprehensive as the definitions just described. Liable parties include the current owner and operator of a vessel or a facility; all past owners or operators of a facility who owned the facility at the time of disposal of any hazardous substance; anyone who arranged for disposal or treatment of a hazardous substance at such a facility, commonly called a "generator" or "arranger"; and any person who accepts hazardous substances for transport to disposal sites or treatment facilities from which there is a release or a threatened release.⁶ Liable parties under CERCLA are often called "PRPs" or "potentially responsible parties," a regulatory shorthand for their status early in the CERCLA process.

It is easy to fit many of the players in a construction project within these groups of liable parties. For example, in Kaiser Aluminum & Chemical Corp. v. Catellus Development Corp.,⁷ an excavation contractor removed soil that had been contaminated by another party's prior use of the soil-containing property. The contractor placed the excavated soil on-site and commingled it with uncontaminated soil. Because of its own activities, the contractor was held to be an operator and transporter with regard to a release of hazardous substances.⁸

Relief

A liable party under the statute may be responsible for all response costs incurred by the federal or state governments that are not inconsistent with the National Contingency Plan (NCP),⁹ as well as any other necessary response costs incurred by any other person consistent with the NCP;¹⁰ damages for injury to or loss of natural resources and damage assessment;¹¹ and costs of any health assessment or health effects study by the Agency for Toxic Substances and Disease Registry.¹² These costs can be staggering, running easily into the millions of dollars.

Aspects of Liability

Liability under CERCLA is usually a foregone conclusion once one falls within one of the classes of liable parties. First, it is strict, because no showing of fault or negligence by the responsible party is necessary.¹³ Congress incorporated a policy decision in this statute that almost anyone who in some way was connected with the release or disposal of hazardous substances must pay for cleanup costs - as compared to the taxpayers in general, who are not required to pay. Even more alarming to small business is the fact that the liability is joint and several. Each PRP is held individually responsible for all cleanup costs and damages, unless it can be demonstrated that the harm is divisible or capable of apportionment among the PRPs.¹⁴ Finally, CERCLA imposes retroactive liability for disposal of hazardous substances. This means that parties may be liable for non-negligent and lawful acts that occurred prior to the enactment of CERCLA.¹⁵ Thus, for example, if a contractor disturbs a site at which solvents were released decades before by someone else, any one of the parties involved in that construction project - owner, architect, contractor, subcontractor - under some circumstances may be held individually responsible for all cleanup costs.

Defenses

Defenses are limited in a CERCLA action. They provide little comfort to contractors and others in the construction industry.

CERCLA contains three affirmative defenses, which must be established by a preponderance of the evidence. They include an act of God; an act of war; or an act or omission of a third party, other than an employee or agent of the defendant PRP, whose act or omission does not occur in connection with the contractual relationship with the defendant. Also, the third-party defense only applies if (1) the defendant exercises due care with respect to the hazardous substance, in light of all relevant circumstances, and (2) takes precautions against foreseeable acts or omissions of any third party and the foreseeable consequences that could result from such acts or omissions.¹⁶

The proof for these defenses is rarely established. For that reason, defenses rarely succeed. As an example, suppose that many years ago, the owner or operator contaminated the soil at a site. An unrelated contractor, perhaps years later, moves this soil around the site during current site-clearing activities. When the contractor is sued under CERCLA, it tries to assert the third-party defense, pointing to the previous owner or operator as the cause of the problem. Unfortunately, the prior owner or operator is not the "sole" cause of commingled releases at the site. The contractor, by virtue of its site clearing, is independently an "operator" or "arranger for disposal" at the site, and therefore the "contractual relationship" defense is of no use.

Innocent Purchaser and Storage Rules

The Superfund Amendments and Reauthorization Act of 1986,¹⁷ an amendment to CERCLA, defined the "contractual relationship" necessary for the third-party CERCLA defense to succeed for an "innocent purchaser" of land. A purchaser of contaminated land can avoid CERCLA liability by proving (1) that a contaminated site was acquired after disposal or placement of the hazardous substance, and (2) at the time of acquisition, the purchaser "did not know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the [site]."¹⁸

Liability of Bona Fide Prospective Purchaser (BFPP)

Under the Small Business Liability Relief and Brownfields Revitalization Act,¹⁹ Congress modified CERCLA in an effort to promote the redevelopment of brownfields. Under this Act, a party who qualifies as a BFPP receives federal liability relief if the party purchased contaminated property on or after January 11, 2002.²⁰ To qualify as a BFPP, the person must establish the following by a preponderance of the evidence:

1) The contamination occurred prior to the person's acquisition of the property;
2) The person made "all appropriate inquiries into the previous ownership and uses of the [property] in accordance with generally accepted good commercial and customary standards . . .";²¹
3) The person provided "all legally required notices with respect to the discovery or release of any hazardous substances . . .";²²
4) The person takes reasonable steps to stop a release and prevent a

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