Property Contamination, Environmental Remediation, and Cost Recovery Actions
Apr. 10th, 2024 12:00 pm
Dealing with environmental contamination can be a challenge for property owners, often resulting in costly cleanup liabilities. When contamination occurs, a cost recovery action may be initiated to address the issue and to ensure that responsible parties ultimately bear the financial burden of remediation. Understanding how these actions proceed and what steps property owners can take to limit their liabilities is crucial in returning a contaminated property to its proper condition for future development or conservation.
What is a cost recovery action?
Cost recovery actions typically arise in response to chemical or petroleum spills that have contaminated soil, water, or even the air. The objective is for any spill/discharge to be cleaned up, and for the property to be remediated (returned to its pre-contaminated state), while holding accountable the party responsible for the contamination.[1]
How does the federal government get involved?
Under federal law, citizens can bring actions under the Resource Conservation and Recovery Act (RCRA), the Comprehensive Environmental Response Compensation and Liability Act (CERCLA), the Clean Water Act, and the Clean Air Act, among other federal statutes, to recover the costs incurred for cleaning up a contaminated property. The Environmental Protection Agency (EPA) is the federal agency that gets involved with these actions, too, or will initiate the suits itself. Most federal cost recovery actions arise under CERCLA, where the EPA can utilize the court system to either (1) conduct the cleanup and seek recovery of costs from the responsible party; (2) compel the responsible party to perform the cleanup, or (3) can enter settlement with the responsible party to perform all or portions of the cleanup. If there are no responsible parties to hold accountable, or if the cleanup response is seriously urgent, the EPA can utilize the Hazardous Substance Superfund, which finances cleanup and enforcement actions. The EPA can still seek recovery of these costs in subsequent cost recovery actions.[2]
How does New York State get involved?
At the state level, the New York State Department of Environmental Conservation (DEC) plays a key role in overseeing the cleanup process and often initiates legal proceedings to recover the costs associated with remediation efforts. After being made aware of potential hazardous waste disposal at a site, the DEC investigates to confirm the presence of hazardous waste, and classifies the threat to public health and the environment. Sites can receive several classifications:
- Class 1: Causing, or presenting imminent danger of irreversible damage to the public health or environment, requiring immediate action.
- Class 2: Poses a significant threat to the public health or environment, requiring action.
- Class 3: Does not present a significant threat to the public health or environment, may defer action.
- Class 4: The site is properly closed/remediated, requiring continued management.
- Class 5: The site is properly closed/remediated, does not require continued management.[3]
Once the DEC determines a site requires action, remediation may play out either with the known responsible party paying for or performing the investigation and cleanup, or the DEC performs the cleanup, and seeks to recover costs from the responsible party after the fact.
What types of costs can a government agency recover?
State and federal agencies can recover a variety of costs in these actions. For example, courts have allowed the EPA to recover costs such as: planning and implementing cleanup actions, investigation and monitoring efforts, contractor costs, annual allocation costs, and indirect costs needed to support the cleanup work.[4] Private citizens bringing cost recover actions under federal law can recover similar types of costs. The DEC may recover similar costs, as well.
What can property owners do to help?
Prior to the initiation of any cost recovery action, property owners should be aware of their reporting requirements. For example, NY law requires releases of petroleum, chemicals, and materials that may cause environmental damage to be reported, and the property owner or party responsible for the release is required to do the reporting upon discovery.
Once a cost recovery action is initiated, property owners must take proactive steps to limit their liabilities and work cooperatively with state or federal agencies to remediate the contamination. This may involve conducting site assessments, implementing remediation measures, and documenting compliance with regulatory requirements. Property owners should also maintain open communication with regulators and provide timely updates on remediation progress.
Effective communication and collaboration with government agencies are essential for resolving cost recovery actions and remediating contaminated property. Property owners should be prepared to engage in negotiations with regulators, provide relevant documentation and evidence, and explore potential settlement options to reach a mutually acceptable resolution. By demonstrating a proactive and cooperative approach to cleanup efforts, property owners can minimize legal risks and expedite the remediation process.
Conclusion
Cost recovery actions are aimed at holding responsible parties accountable for cleanup costs and restoring contaminated property to its original state. Property owners facing such actions must be proactive in understanding their legal obligations, seeking professional guidance when necessary, and working collaboratively with government agencies. By taking proactive steps to limit their liabilities and demonstrate compliance with regulatory requirements, property owners can navigate cost recovery actions successfully and ensure the timely and effective remediation of contaminated sites.
If you have questions about the process or need assistance with a contaminated site and are subject to or potentially subject to a cost recovery action, please contact Jacob H. Zoghlin, Esq. or Mindy L. Zoghlin, Esq.
[4] https://www.epa.gov/enforcement/superfund-cost-recovery
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