Contractor Liability Under CERCLA

• Author: By Robert Denney
• Pages: 31-36

THE CONSTRUCTION LAWYER 31Summer 2020

Published in The Construction Lawyer, Volume 40, Number 3 Summer2020. © 2020 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion

thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

Contractor Liability Under CERCLA

By Robert Denney

ENVIRONMENTAL CLEAN-UP

Robert Denney is a 2020 graduate of the University of

Virginia School of Law. He plans to join the Atlanta ofce

of Jones Day as an associate this fall.

Between 1942 and 1953, over

21,000 tons of hazardous

chemicals were dumped into

the abandoned Love Canal

site in upstate New York. The

resulting landll was covered

and extensively developed into

a residential area. However, in

the 1970s, it was discovered

that toxic chemicals from the

landfill had migrated into

sewers and nearby creeks and

caused severe health problems

in the local population. This

discovery required the evacuation of the area and led Presi-

dent Jimmy Carter to issue two emergency declarations.

1

It

also prompted Congress, in 1980, to enact the Comprehen-

sive Environmental Response, Compensation and Liability

Act (CERCLA).

2

CERCLA established requirements for the

cleanup of hazardous waste, and it also created a nancing

mechanism to manage abandoned hazardous waste disposal

sites.3 CERCLA enshrines the “polluter pays” principle.4 At

rst glance, one might think that the harsh liability regime that

CERCLA imposes is only pertinent to the owner of the site.

However, as this article will discuss, contractors engaged in

routine activities at construction sites can also be liable under

the statute. CERCLA imposes liability for cleanup on four

categories of potentially responsible parties, including (1) the

current owner and operator of the hazardous waste facility,

(2) the past owner or operator of the hazardous waste facility,

(3) anyone who “arranged for” the treatment or disposal of

hazardous materials, and (4) transporters of these hazardous

materials.5 This article rst explains how contractors can be

deemed potentially responsible parties under CERCLA and

then discusses ways contractors can protect themselves from

possible liability.

Potential for Contractor Liability Under CERCLA

CERCLA liability is retroactive, joint and several, and

strict. Therefore, once an entity is identied as a poten-

tially responsible party (PRP), the probability that it will

not be found liable is slim.6 CERCLA casts a wide lia-

bility net, and section 107 denes the four categories of

PRPs: (1) the current owner and operator of the hazard-

ous waste facility, (2) the past owner or operator of the

hazardous waste facility, (3) anyone who “arranged for”

the treatment or disposal of hazardous materials, and

(4) transporters of these hazardous materials.7 CERCLA

does contain a few narrow exemptions to this harsh liabil-

ity regime, including for households that send their trash

to municipal dumps.8

In many cases, it would seem straightforward to identify

a PRP under one of the four categories imposed by section

107. For example, identifying the current owner of a facility

leaves little room for interpretation, and past owners can be

identied through a title search.9 However, the identication

process is quickly muddied when many different parties have

come into contact with the site, and a prototypical example

of this complication comes with construction projects. CER-

CLA, of course, does not explicitly dene when contractors

and subcontractors at construction sites could be deemed

PRPs.10 But case law shows that contractor liability under

CERCLA is highly fact-specic and depends on the work

that the contractor performed. Contractors can potentially

be held liable as operators (both past and present), arrang-

ers, and transporters.

Operator Liability

CERCLA imposes liability on both current and former

“operator[s]” of the hazardous waste “facility” at issue. While

the rst PRP category imposes liability on the current “owner

and operator,” courts have held that the “owner” and “oper-

ator” do not have to be the same person.11 Moreover, the

second PRP category imposes liability on those who “owned

or operated” the facility when the hazardous materials were

disposed of.

12

The statute denes “facility” in a broad and

detailed manner to include “any building, structure, installa-

tion, ... or ... any site or area where a hazardous substance

has been deposited, stored, disposed of, or placed, or other-

wise come to be located.”13

The term “operator,” however, is dened tautologically

as “any person . . . operating a facility.”14 The U.S. Supreme

Court discussed and expanded on this statutory denition in

United States v. Bestfoods.

15

Specically, the Court explained

that an “operator” as used in the context of CERCLA “must

manage, direct, or conduct operations specically related to

pollution, that is, operations having to do with the leakage

or disposal of hazardous waste, or decisions about compli-

ance with environmental regulations.”16 Therefore, the term

“operator” “obviously mean[s] something more than mere

mechanical activation of pumps and valves, and must be

read to contemplate ‘operation’ as including the exercise of

direction over the facility’s activities.”

17

While this denition is

clearly more helpful than the denition provided in CERCLA,

Robert Denney