Municipalities in the Mire: The City of Portland as an Illustration of the Plight of Municipalities Under the Federal Hazardous Waste Cleanup Statute

Citizens of Portland, Oregon are suing the City of Portland for violating the City’s governing charter. The citizens claim that the City was using money collected for the sole purpose of sewage treatment to fund, among other things, the cleanup of a federally designated hazardous waste site in Portland Harbor.[i] The City claimed that it used the sewage treatment fund because it feared that other parties potentially responsible for the pollution in the Harbor would be able to use payments clearly from a different City department to shift their liability to the City.[ii]  The City’s fears emerge from the difficult position local governments occupy as a result of the Comprehensive Environmental Response Compensation and Control Act (CERCLA),[iii] also known as the Superfund Act, the federal law that governs cleanups of released hazardous chemicals.

CERCLA gave the federal government the power to find municipalities liable for the cleanup of hazardous waste sites.[iv] That law has put municipalities in a precarious position. To encourage rapid clean up, CERCLA has authorized the Environmental Protection Agency (EPA) to require potentially responsible parties to aid in the cleanup efforts. Failure to aid the EPA in the early stages of the cleanup allows the EPA to bring an action and recover up to triple the cost of clean up in punitive damages, which makes it less advantageous to raise the few defenses that exist to CERCLA strict liability.[v] CERCLA holds three types of parties strictly liable for the release of hazardous waste. These three parties are: (1) owners or operator of the land that the hazardous waste came from, (2) transporters of hazardous waste, and (3) generators of hazardous waste.[vi] Parties are effectively presumed liable to get them to respond to the EPA’s orders and more effectively clean up the waste site.

The impact on cities is that they are often forced to spend money in cleanup efforts before there has been a formal determination of liability.[vii] This may be potentially problematic for local officials who do not just have to worry about the EPA’s ordered cleanup, but must also be concerned about being sued by other potentially responsible parties to contribute to their payments for the cleanup.[viii] Thus municipalities can be forced into being the largest contributor to multimillion dollar clean efforts with the average cleanup costing about $25 million.[ix] The city may be able to bring actions in contribution or get refunded for their efforts, the fact remains that they are forced to foot a lot of money quickly. This can easily strain city budgets that have never really been robust and have become more vulnerable since the financial crisis.[x] For example, Portland has already paid $52 million dollars, or the equivalent of 10% of their annual general fund budget, for the cleanup project.[xi]

The EPA has attempted to lessen the negative impact on municipalities through policy directives. The EPA can use its discretion to not sue municipalities unless it is clear that their municipal solid waste, i.e. a generic term that covers typical household waste, is indeed hazardous or other activities of the municipality did result in the release of hazardous waste.[xii] The EPA also enters settlement agreements that assign cities their share of liability and protect cities from contribution actions from other potentially responsible parties.[xiii] In the settlement agreement, the EPA considers the city’s financial ability to pay and allows the city to use its employee’s work to make in-kind payments such as running their own cleanup projects.[xiv] However, as the Portland case makes clear, CERCLA is still straining city administrations despite these protections suggesting that the EPA’s protective policies are insufficient.

A way to avoid putting cities in Portland’s position is to reform CERCA. One way the current scheme falls short is hardly unique to municipal administration. CERCLA does not protect parties in settlement negotiations, nor parties who are cooperating with the EPA, but have not yet reached a settlement from contribution actions from other potentially responsible parties. CERCLA should offer a statutory immunity from contribution actions for potentially responsible parties, not just cities, that are engaged in good faith efforts to settle and contribute their fair share. This immunity would serve to reduce third party litigation costs and other transactions costs that worried the City of Portland. This idea is not new. It was proposed in a sweeping amendment to CERCLA in the early 1993 where the protection was only extended to municipalities.[xv] The bill died in committee.[xvi]

Cities can be protected in other ways. In 1994, the Clinton Administration proposed sweeping amendments to CERCLA that would cap the liability of municipalities at 10% of the cost of cleaning up a site and create an exemption for municipal solid waste.[xvii] While the administration passed the Superfund Amendment and Reform Act in 1994, the act did not include the proposed limits on municipal liability due to resistance from industry and Republicans.[xviii] Other amendments have passed have provided exemptions to small businesses and individuals for municipal solid waste, but not providing the same protection for municipalities.[xix]

Municipalities should have greater protection, because they have responsibilities beyond the cleanup effort and profit-making. They must find a way to fund expensive federal cleanup projects while still providing basic services. As the Portland case shows, cities are often not set up to handle large hazardous waste response programs. The result is that cities often struggle to meet the demands of CERCLA liability and may find themselves in very difficult positions.

CERCLA has come to be recognized as a statute that is designed to protect the health of our country through the cleanup of hazardous waste.[xx] It should not be allowed to continue to place our cities in unnecessarily difficult situations. There are possible solutions to Portland’s problem. Cooperating parties can be rewarded for cooperation by receiving protection from contribution actions while they reach a settlement with the EPA. Municipal liability can be capped, or municipalities can be granted a statutorily guaranteed exemption from liability for municipal solid waste. However, those solutions must come from Congress as administrative policies have only alleviated the symptoms not cured the problem.

 

 Brian Kempfer is a General Member on MJEAL. He can be reached at bekempf@umich.edu.

 


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

[i] Steve Law, City May Repay Ratepayers for Cleanup, http://portlandtribune.com/pt/9-news/212941-71372-city-may-repay-ratepayers-for-cleanup, Portland Tribune (6 March 2014). Interestingly this was not the original complaint of the lawsuit but was discovered during the trial proceedings.

[ii] Id.

[iii] 42 U.S.C. § 9601 et seq. (2006).

[iv] Previously enacted legislation has exempted municipalities. G. Nelson Smith, III, “Trashing the Town and Making It Pay: The Problem with the Municipal Liability Scheme Under CERCLA,” 26 Conn. L. Rev. 585, 590 (1994).

[v] The three primary defenses are that the release was caused by an act of God, an act of war, or the negligent intervention of third party. See 42 U.S.C. 9607(d); 28 U.S.C. § 9607(c)(3).

[vi] 42 U.S.C. § 9607(a); Walter E. Mugdan, Allocation of Superfund Liability: Capping the Municipalities Share, 5 Fordham Envtl.. L. Rev. 334, 335 (2011) available at http://ir.lawnet.fordham.edu/cgi/viewcontent.cgi?article=1365&context=elr.

[vii] See Law,  City May Repay Ratepayers for Cleanup, supra.

[viii] Id.

[ix] Mugdan, “Allocation of Superfund Liability,” 5 Fordham Envtl.. L. Rev. at 337n.14.

[x] See e.g. Jeanette Neumann, Major U.S. Cities Still Not Recovered From Crisis, Wall St. J. Blog (11 Nov. 2013), http://blogs.wsj.com/economics/2013/11/11/major-u-s-cities-still-not-recovered-from-crisis/. Noting many of America’s largest cities have not yet recovered from the recession.

[xi] The figure represents 1.5% of the city’s total annual budget, but the expenditures have been spread out over several years. Law, “City May Repay Ratepayers for Cleanup,” supra.; see City of Portland Oregon Budget in Brief FY 2013-2014, http://www.portlandoregon.gov/cbo/article/480620.

[xii] Susan E. Bowman and Bruce S. Gilbert, Interim Guidance on the Municipal Solid Waste Exception Under CERCLA § 107(p), 9, U.S. Environmental Protection Agency (August 20, 2003), http://www2.epa.gov/sites/production/files/documents/interim-msw-exempt.pdf.

[xiii] Id.; 42 U.S.C. § 9613(f)(2); 42 U.S.C. § 9622(h)(4); David B. Van Slyke, Municipalities and CERCLA: The Cost Allocation Conundrum, 5 Vil. Envtl.. L. Rev. 53, 59n.21 (1994), available at http://digitalcommons.law.villanova.edu/cgi/viewcontent.cgi?article=1248&context=elj.

[xiv] Van Slyke, Municipalities and CERCLA, 5 Vil. Envtl.. L. Rev. at 71.

[xv] Id. at 76.

[xvi] S.343 – Toxic Cleanup Equity and Acceleration Act of 1993, Cogress.gov, http://beta.congress.gov/bill/103rd-congress/senate-bill/343.

[xvii] Mugdan, “Allocation of Superfund Liability,” 5 Fordham Envtl.. L. Rev. at 341.

[xviii] John H. Cushman, Jr., Congress Forgoes Its Bid to Hasten Cleanup of Dumps, New York Times (6 Oct. 1994), http://www.nytimes.com/1994/10/06/us/congress-forgoes-its-bid-to-hasten-cleanup-of-dumps.html?scp=8&sq=clinton%20superfund%20bill&st=cse.

[xix] See Bowman and Gilbert, Interim Guidance on the Municipal Solid Waste Exception Under CERCLA § 107(p), at 2, 9.

[xx] Karl S. Bourdeau and Steven M. Jawetz, 25 Years of CERCLA Liability: Progress Made, Progress Needed, 37 Envtl. Rep. 97 at *5,(BNA 2006), available at http://www.bdlaw.com/assets/attachments/104.pdf.

 

 

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