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Tuesday, May 7, 2024
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Case Studies |
Minor Chemical Waste Problem
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Case:
Sam Wilson is the gift planner for Local Food Bank. His organization feeds over 4,000 people each week through gifts of food products that are given to those in need. Sam also shares the Food Bank story through a newsletter and direct mail.
A donor named John Green who previously made small gifts to the Food Bank called Sam. John and Sam visited briefly and then John noted that he greatly appreciated the efforts of the Food Bank to reduce hunger in their city. Sam agreed that reducing hunger was an important service, since those in greatest need were children and the very senior adults.
John continued and noted that he might be willing to make a larger gift, since he was very interested in helping those in need. Sam asked about the larger gift, and John said, "Well, it is property that I have owned for ten years. It is development property, and could some day be sold for commercial development."
Sam replied, " That sounds like a wonderful gift. Is there any development on the property now?"
John, "No, this is bare ground, with no buildings. But it is a fine property. A fine property."
Sam, "So you have owned it for ten years. Who did you buy it from?"
John, "Well, it was jointly owned by a couple of companies."
Sam, "Which companies would those be?"
John, "Oh, it was owned by TUV Oil and XYZ Chemical companies."
Question:
Should Local Food Bank accept this property gift?
Solution:
To protect the environment, the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) was enacted by Congress on December 11, 1980. CERCLA was later amended by the Superfund Amendments and Reauthorization Act (SARA) on October 17, 1986.
The basic purpose of CERCLA, commonly known as Superfund, was to locate, investigate, and clean up the worst sites across the country. In addition, CERCLA assigns the ultimate costs of cleaning up such disposal sites to the parties responsible for the contamination. This is sometimes referred to as the "polluter pays" principle. However, in many cases, a subsequent property owner or operator pays and not the original polluter. This reality is what understandably scares potential new property owners and operators, e.g., charitable organizations. CERCLA provides the EPA with authority to investigate contaminated sites and either (a) clean up a contaminated property itself using federal money and then demand reimbursement from one or more "potentially responsible parties" (PRP), or (b) demand that a PRP clean it up in the first instance.
In general, there are four potential classes of PRPs. They are as follows: (a) a current owner or operator of the facility where the release of hazardous substances has occurred, (b) a past facility owner or operator at the time the release occurred, (c) the party that arranged for disposal or treatment of the hazardous substance at the facility, and (d) the party that transported the hazardous substance to the facility, if it selected the facility. In the charitable contribution of property context, a charity may qualify under (a) or (b) as a current or past owner. In addition, CERCLA is a "strict liability" statute. In other words, if a PRP is determined to fall within CERCLA's scope, then that PRP is liable for cleaning the site, even if that PRP did not cause or even know about the contamination. CERCLA's strict liability is also "joint and several."
In order to steer clear of CERCLA liability, Local Food Bank should not own or operate property contaminated by hazardous substances. Therefore, Local Food Bank should require an Environmental Impact Survey (EIS) for this proposed gift of commercial real estate. The EIS should include a soil and groundwater sampling to test for any contamination. If John Green will not permit these tests, Local Food Bank should not move forward with the gift.
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