Potentially Responsible Parties in the United States

Potentially Responsible Parties (PRPs) in Environmental Law

Persons who fit into any of the categories Congress established in the Comprehensive Environmental Response, Compensation, and Liability Act to force cleanup of abandoned hazardous waste sites. A person includes any form of business, city, state and federal governmental agencies, individuals, and in some situations, officers, trustees, and other representatives of any of the above.

The law is designed to find as many solvent parties as possible with a connection to the disposal of hazardous waste at a particular site. The parties fall into these classes: (1) present owners and operators of the facility,

(2) those who owned or operated the facility when the disposal occurred,

(3) transporters, and (4) arrangers for disposal.

Defenses to liability include acts of God (such as a tornado, hurricane, or forest fire), acts of war, and acts of a third party totally unrelated to the potentially responsible party. The statute also exempts certain parties from being responsible for cleanup: transporters who did not select the waste disposal facility, generators of used oil, and governmental bodies that own the property because it was abandoned or seized to satisfy tax delinquency. Wrongdoing plays no role in the determination process. A relationship to the property or waste is sufficient to impose liability, regardless of whether the actions were legal when they were taken.

Successor and Officer/Director Liability

Businesses may take a number of forms: partnerships, corporations, or proprietorships. Corporations in particular are considered totally separate legal persons. If the corporation is run properly, only the corporation, not the officers and directors, is responsible for its actions. However, certain situations may trigger personal liability for officers and directors of a corporation. The general rule in law is that if the officers and directors ignore the corporation’s existence by acting as if they are personally responsible for the company’s debts, or if they are intending to defraud creditors, a court can “pierce the corporate veil” to reach the officers and directors for personal liability.

In environmental law, it is not uncommon for the EPA or other enforcing agency to try to hold the officers and directors responsible as owners or operators of an abandoned hazardous waste site, particularly if the corporation has no assets. Courts apply established principles when deciding whether to impose personal liability. If the officers or directors actively participated in waste management decisions, for example, it is likely that they will be personally liable. When a proprietorship (sole ownership) sells its assets or when the entire business is sold and then ceases to exist, the government will usually pursue the successor company, even if it did not exist at the time the waste disposal occurred.

Courts consider a number of factors when deciding what to do with successor companies. One is whether the business is simply a continuation of the earlier enterprise. Another is the agreement that outlined the terms of the sale. If the new company agreed to assume the debts and liabilities of the earlier business, it will be liable. If the new company continues the same waste disposal practices, again, it would probably be liable. Often, however, the issue of liability is murky. The courts look at the facts of each situation to determine the result.

Owners and Operators in General

One class of potentially responsible parties is current owners and operators of the site. The current owner or operator may not be disposing of hazardous waste on the property and may not even know that the hazardous waste is there. In some cases, the owner or operator may be able to prove that it is an innocent purchaser and should not be held responsible.

The theory behind including current owners and operators of the property is that the cleanup of the property will benefit them; therefore, they should pay. The distinction between owning and operating a facility is not as obvious as it seems. For example, an owner, for the purpose of the statute, may be a person who is leasing the property. An operator may be a trustee of a trust that has the facility as one of the assets. The key to determining the owner and operator is not only its legal status, but also its activities on the property. A landlord who allows a lessee to manufacture and dispose of hazardous waste on the property will still be the owner because of title to the land. But the factory owner will be both owner and operator of the facility for purposes of the cleanup, because the lease is broad enough to allow the manufacturer to act as if the property belongs to it as well as operate the enterprise there. Lenders may also wind up being owners or operators under the law. The statute exempts lenders that only hold title as an indication of their security interest, but if the lender exercises too much control over the operation or use of the property, it, too, may be considered an owner or operator [see lender liability].

Past owners and operators are also potentially responsible parties, but there is more of a logical connection with them. The persons who can be liable because of past ownership/operation of the facility owned or operated the site during the time disposal occurred. In a narrow sense, this definition excludes the person who owned the property between the time of the disposal and the current owner from the group of potentially responsible parties. Realistically, though, the government can also pursue the interim owner because the term disposal includes leaching, escaping, migrating, and so forth. So if the government could demonstrate that the waste was moving during the time the interim owner had the property, that person could also be a potentially responsible party.

Transporters and Arrangers for Disposal

Persons or businesses that hauled hazardous substances to the disposal site are also potentially responsible parties unless the transporter did not select the site. For example, a generator hired a transporter to carry the waste to a hazardous waste facility and did not specify which one. The transporter is an arranger for disposal if he chose the facility, and he is also liable as a transporter. The question of selection is a factual issue.

The biggest class of potential responsible parties, however, is the arranger category. It includes the generators (originators of the waste) and anyone else who may have been involved in getting it to the hazardous waste facility.

In some cases, it is easy to determine whether a party is an arranger. For example, a person who sends trichlorethane to a waste facility is arranging for its disposal. However, an intermediary may wind up being the arranger. A recycling facility may accept someone’s batteries and crack them open, use the lead and dispose of the electrolyte. The recycler is an arranger for the electrolyte disposal. Occasionally, parties become arrangers when they are merely stepping in to clean up a property. For example, if a lender forecloses on a property and hires a company to take care of drums of solvent, it becomes an arranger of disposal. Also, if a person voluntarily cleaned up someone else’s spill of a hazardous substance and sent the waste to a facility, that person became an arranger.

Consequences of Being a Potentially Responsible Party

Consequences of Being a Potentially Responsible Party

The number of potentially responsible parties available to sue for the cost of cleaning up a hazardous waste facility varies greatly from site to site. The statute that creates the duty to pay for the remediation, the Comprehensive Environmental Response, Compensation, and Liability Act, provides that the potentially responsible parties are responsible, both separately and together, for the cost of cleaning up the mess.

P
otentially responsible parties are encouraged to form groups to negotiate with the government. They may use allocation methods to decide what everyone is responsible for, or they may ask the government to assist them with the allocation [see nonbinding allocation of responsibility]. If they cannot demonstrate a basis for separating the harm caused by their waste from other waste, the government will maintain that they are all responsible for all of the costs. In some cases, the cooperating parties will do whatever is necessary to clean up the site, then sue other potentially responsible parties for contributions to the cost [see contribution costs].
Based on “Environment and the Law. A Dictionary”.