Protecting Your Bottom Line When Facing Potential Superfund Liability: Critical First Steps

Profession:Anderson Kill & Olick, P.C.

Article by John G. Nevius and Peter A. Halprin* Originally published in Anderson Kill & Ollick's Real Estate & Construction Advisor, Spring 2010

You and your company are facing Superfund liability. What can you do to manage your costs? Depending on the history of the site, you may be able to draw on general liability insurance, other people's insurance or contributions from other potentially responsible parties. Integrating these sources of funding with practical cost-savings and oversight of environmental consultants can ease the Superfund burden. You need experienced professionals to advise on oversight and to evaluate and tap potential resources. A fully coordinated approach would involve these professionals in not only overseeing investigation and cleanup, but doing so in a way that satisfies the community and regulators without paying a fortune.

Superfund Liability Has Long Tentacles

Risk of Superfund liability may be on the rise after a long period of relative inactivity. In early March 2010, the U.S. Environmental Protection Agency (EPA) announced that the Gowanus Canal in Brooklyn had been designated a Superfund site. Heavily polluted with industrial waste and sewage since the first World War, the canal, according to the EPA estimate, would take over 10 years to be cleaned up at a projected cost in excess of $300 million. Nine other sites in seven states — Alaska, Florida, Illinois, Michigan, North Carolina, Oregon and Texas — were also recently designated as Superfund sites.

Superfund liability has long tentacles. The Superfund Enforcement program achieves its site-cleanup objective by finding the companies or people responsible (or "potentially" responsible) for contamination at a site and negotiating with them to either clean up the site or contribute clean-up funds for remediation activity undertaken by another party. Joint and several Superfund liability may be triggered if:

Hazardous Substances are present at a facility there is a Release or possible Release of these Hazardous Substances Response Costs are incurred or anticipated the defendant is a liable party — that is, one that owns, operates or causes waste to be sent to, or disposed of, at the site. Moreover, the definition of a liable party recently broadened. In February 2010, the United States District Court for the Northern District of Illinois held that the lessor of equipment used at a contaminated site was liable as a facility "Owner" under the Comprehensive Environmental...

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