1. Home
  2. Knowledge Base
  3. Business Law
  4. Environmental Protection Law
  5. Comprehensive Environmental Response Compensation and Liability Act (CERCLA)

Comprehensive Environmental Response Compensation and Liability Act (CERCLA)

Cite this article as: Jason Mance Gordon, "Comprehensive Environmental Response Compensation and Liability Act (CERCLA)," in The Business Professor, updated January 22, 2015, last accessed April 2, 2020, https://thebusinessprofessor.com/knowledge-base/comprehensive-environmental-response-compensation-and-liability-act-cercla/.
Video Thumbnail
Comprehensive Environmental Response Compensation and Liability Act (CERCLA)
This video explains what is the Comprehensive Environmental Response Compensation and Liability Act (CERCLA).



What is the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)?

In 1980, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) to address cleanup cost of unsafe hazardous waste dumps or spills. CERCLA allocates billions of dollars under a congressional authorization for environmental cleanup of dangerous hazardous wastes. This is known as the “Superfund”. The continued funding of the superfund is through civil actions against polluters and three separate taxes levied on chemicals, petroleum products, and general corporate profits. The superfund pays for cleanups where private parties are insolvent or the responsible party is unknown. It advances money to the EPA for cleanups pending recovery of costs, which often leads to suits for reimbursement from the responsible parties.

•    Note: Funds allocated to the superfund are largely depleted and the long-term sustainability of the program is consistently in question.

Liability Under CERCLA

CERCLA imposes strict liability on those responsible for unauthorized discharges of hazardous waste. Federal and state agencies charged with managing natural resources may sue a responsible party to force clean up of hazardous substances and to recover any damages to the natural resources. Liability also includes the cost of remediation of the waste itself. Responsible parties include:

•    Owner Operators – Those who currently (or previously) operate or own waste disposal sites during the time that the pollution occurred. An “operator” is someone who directs the workings of, manages, or conducts operations specifically related to pollution. Responsible parties also include owners or operators who learned of the pollution and did not disclose that information prior to transferring the land.

⁃    Note: CERCLA exempts people who hold indicia of ownership to protect a security interest without participating in management of a facility. This provision generally protects banks holding a security interest in contaminate property.

•    Arranger Liability – Those who arrange for disposal of wastes may be responsible parties. Most courts hold that an intent to dispose of the waste is necessary for liability. The intent inquiry is only relevant for determining if an individual is a responsible party. After that step, the responsible party is strictly liable and intent to have disposed of the waste in a different manner is irrelevant.

•    Transporters – Transporters of hazardous wastes are only liable if they actively and substantially participate in the decision-making process that ultimately identifies a facility for disposal. It does not need to be an independent decision to select the particular site, but the transporter must have a significant influence in the selection process for liability.

The responsible party may be able to seek contribution from former owners of the polluted land for any damages paid. A finding that harm is divisible lets responsible parties divide liability. Responsible parties have the burden of showing their waste and cleanup costs are divisible from other parties. This avoids the unfair consequences and prevents a party from escaping liability when other parties are insolvent or cannot be found.

Defenses to CERCLA Liability

The purchaser of contaminated property may escape liability through a number of defenses, as follows:

•    Good Faith – The owner had no knowledge of the waste at the time of purchase and used due diligence in checking the land for toxic hazards.

•    Force Majeure – The pollution was caused by an act of God (natural occurrence) or was caused during war.

•    Third Party Liable – The pollution was the result of an act or omission of an identifiable third party. A responsible party may avoid liability if it can show that someone else was the sole cause of the harm, it was not the responsible party’s employee or agent, and the acts or omission causing the pollution did not occur in connection with a contractual relationship with the responsible party. Finally, the potentially responsible party must also show that she exercised due care with respect to the discharge of a hazardous substance and took precautions against foreseeable acts or missions of the polluter.

Individuals can purchase CERCLA insurance for potential liability.

•    Discussion: What do you think about the CERCLA protections? Do you think the superfund program is adequate to provide for hazardous waste cleanup? Do you think the liability provisions are fair and serve the intended purpose? How do you feel about the available defenses to personal liability under CERCLA?

•    Practice Question: ABC Corp purchases land from 123 Corp. ABC continues using the land in the same manner as used by 123 Corp. Several years later, ABC becomes aware that the land is contaminated? What potential liability does ABC face? What are their options for deferring or sharing liability with 123 Corp?

Was this article helpful?