Bad Policy: CERCLA's Amended Liability for New Purchasers

Abstract

I. INTRODUCTION One of the most significant environmental issues facing the United States today is the abandonment or underutilization of land feared to be contaminated by hazardous materials. Such sites, known as brownfields, are blamed for a variety of ills. Beyond posing risks to human health, their disuse also contributes to the loss of municipal tax bases and helps fuel both urban sprawl and the destruction of open space. (1) A number of people and institutions have sought to identify ways to encourage the clean-up of brownfields and return them to productive use. (2) Many commentators have concluded that one of the most significant impediments to brownfield redevelopment has been the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), (3) commonly called Superfund. (4) Congress enacted CERCLA in 1980 to address the consequences of decades of careless hazardous waste disposal practices. CERCLA aimed to: (1) prevent further contamination and release of hazardous material by requiring prompt clean-up of existing hazardous sites and (2) deter future hazardous materials releases by imposing high liability costs on careless waste management practices. (5) Congress advanced these two aims by creating a broad class of jointly and severally liable parties. Liability attached not only to those who were directly involved in the production, transportation, or management of the waste released; it also attached to the owner of the property from which a release of hazardous materials was taking place or at least threatened. Thus, a property owner would be liable even if the hazardous materials were deposited on the site long before he took title to the property. (6) This broad CERCLA liability alone would have deterred the purchase of any property potentially subject to CERCLA. But reality proved even worse for prospective brownfields purchasers. Cleaning up a given CERCLA site turned out to take more time and money than most people expected. Predictably, this further deterred acquisition and development of brownfields. Some commentators and policy makers argued that amending CERCLA was the only way to render brownfields attractive to developers. Among other things, they contended that the Act should be amended to relieve prospective property purchasers from liability. (7) The reasoning was straightforward enough: if developers shied away from brownfields because of fear of CERCLA liability, remove that liability. Only then would significant brownfield development take place. Congress eventually endorsed the idea. In early 2002, President Bush signed the Brownfields Revitalization and Environmental Restoration Act of 2001 (8) (BRERA) into law. Among other things, BRERA amended CERCLA to relieve a certain class of property owners from liability under the Act (the Amendment), namely those owners who were not otherwise liable under the Act (as operators, arrangers, etc.) and who took title after January 11, 2002. (9) This article challenges the Congressional and commentator wisdom that changing CERCLA to relieve prospective property purchasers from liability is good policy. I will argue that the Amendment is actually bad policy. Previous commentators have touched on earlier proposals to free prospective purchasers from CERCLA liability. (10) Instead, this article offers the first focused and sustained analysis of the current liability relief. Rather than addressing the subject as a proposal in the abstract, this article analyzes liability relief as it has now been enacted into law. Amending CERCLA to shield prospective purchasers from liability was a mistake. The Amendment removed an important disincentive to the release of hazardous materials. It gave a windfall to property owners who acquired title with knowledge of their potential liability after CERCLA's 1980 enactment. This windfall is unfair because it is arbitrary. It is also potentially inefficient. …