Responsibility for Site Contamination

Abstract

This chapter examines the importance of including a strong liability framework in any national legislation for site contamination. It considers the elements commonly used in national liability frameworks, identifying the advantages and disadvantages of each. The discussion refers to concepts such as strict liability, polluter pays, joint and several liability and proportionate liability. The merits of the traditional ‘command and control’ approach and the more recent ‘voluntary cleanup’ approach are compared. The problem of funding the remediation of ‘orphan’ sites is also considered.

5.1 Introduction

The inclusion of a strong legal framework for the imposition of responsibility for remediation is essential to the effectiveness of domestic legislation on site contamination. However, the unique complexities of the site contamination issue make the allocation of responsibility a challenge for lawmakers. As Berveling (2005: 156) notes,

a substantial time difference can occur between the action of contamination and its manifestation as a problem, raising difficulties in attributing liability.

‘Historical contamination’ is the term used to describe contamination that has been caused by past (often industrial) activities on a site, and can be distinguished from ‘new’ contamination. It presents a particular problem for many countries because the party or parties involved in the contamination may no longer exist, may be insolvent, or may have been state-owned. To complicate matters further, successive site owners, occupiers and other parties may unwittingly exacerbate or contribute to the contamination over time. The question then arises as to who should bear the cost of remediation, whether the costs are to be shared between parties, and if so, how.

This chapter first considers why the range of parties potentially responsible for contaminated site cleanup should be clearly defined in legislation. The relative strengths and weaknesses of the various types of liability that might be used in site contamination law are briefly discussed. Both traditional and more conventional mechanisms for imposing responsibility for site contamination are examined, noting the benefits of a combined approach. Lastly, consideration is given to the issue of financing the cleanup of ‘orphan’ sites.

5.2 Definition of Responsible Parties

In domestic site contamination law, a clear method of allocating responsibility to relevant parties for identifying, managing, remediating and monitoring contaminated sites is essential to the effectiveness of the overall site contamination regime (Berveling 2005: 2). It is important to ensure that parties responsible for the contamination of a site, instead of the taxpayer, assume liability for its remediation wherever possible (Preston 2009; Berveling 2005: 157). This principle of ‘polluter pays’ is widely recognised and implemented in relation to contaminated sites in developed countries (CCME 2006: principle 1; Environmental Liability Directive 2004, art. 1). However, application of the ‘polluter pays’ principle may not always be feasible in countries where publicly-owned operators have caused most of the site contamination. In those countries, governments will generally remain responsible for funding remediation works (Boyd 1999: 6–7).

The ‘Recommended Principles on Contaminated Sites Liability’, originally developed by the Canadian Council of Ministers of the Environment in 1993 and revised in 2006, comprise a set of 14 principles that are intended to form the basis of future provincial legislation on the issue. The Recommended Principles are outlined in Case Study 5.1 below.

The CCME’s Recommended Principle 6 promotes the identification of specific classes of ‘potentially responsible’ parties as the most effective way of casting a wide net for liability. According to the CCME, these classes could include present owners, previous owners, tenants and other occupiers (both previous and present), lenders, receivers/receiver-managers/other trustees, manufacturers, distributors, generators, transporters, corporate directors and officers, parent corporations and a ‘catch-all clause’ to catch other potentially responsible persons who would not otherwise be caught in the liability net (CCME 2006).

In the United Kingdom, a broad range of parties may be identified as potentially responsible and made to take remedial action or pay for remediation works (e.g., under Part 2A, Environmental Protection Act 1990). These include parties who are, or have been, involved with the relevant site at some point, who could be held responsible in the absence of the actual polluter. It is not yet clear how large the pool of potentially responsible parties will actually be in practice, although the 2007 National Grid decision clarified the point that, in the absence of clear statutory wording on the issue, the identity of a polluter should not be enlarged to include successors to a company whose identity is different from that of the polluter itself. More recent decisions have imposed liability on the original polluters and the developers (see, e.g., Corby Group Litigation v Corby Borough Council 2008; Thornton 2009: 13).

Case Study 5.1: Recommended Principles on Contaminated Sites Liability (Canada)

Recommendations have been made on key principles for legislation and policy on liability for contaminated site remediation in Canada. In 2006, the Canadian Council of Ministers of the Environment (CCME) revised the key document, Recommended Principles on Contaminated Sites Liability, to facilitate the implementation of a more consistent approach to contaminated sites liability across Canada. Although the ‘recommended principles’ take the form of ‘statements of the policy options’ rather than draft legislative provisions, they are intended to provide a model framework on which individual provincial governments can develop legislation and regulations (CCME 2006: 3).

The recommendations include more general, ‘underlying principles’ to guide the legislative design, as well as ‘specific principles’ on substantive issues. In brief, the ‘underlying principles’ (Principles 1–5) include the following:

• The polluter pays principle should be paramount in designing contaminated sites remediation policy and legislation;

• The principle of ‘fairness’ should also guide governments in their allocation of liability;

• The openness and accessibility of the remediation process, and the degree to which it encourages public participation, are fundamental to the development and operation of policy and legislation;

• The principle of ‘beneficiary pays’ should be applied to prevent unjust enrichment from remediation works; and

• The principle of sustainable development should guide government policy and legislation on contaminated sites remediation, by integrating environmental, human health and economic concerns.

The ‘specific principles’ (Principles 6–14) recommended by the CCME are as follows:

• A broad net should be cast to determine potentially responsible parties for remediation, but lenders, receivers and trustees should in general be conditionally exempt from personal liability;

• Remediation legislation should provide the necessary authority and means to enable the recovery of public funds expended on site remediation from those responsible for the contamination;

• Governments should strive to formulate an approach which will facilitate the efficient remediation of sites and fair allocation of liability, and avoid costly litigation wherever possible;

• A list of ‘liability allocation factors’ should be used to allocate liability to responsible parties depending on their specific circumstances, level of involvement, and contributions by other parties;

• Alternative dispute resolution procedures should be made available by governments as a means to resolve issues of liability for contaminated sites, with a ‘default’ of joint and several liability among all responsible parties if the negotiation process should fail;

• Governments should retain the power to designate sites as ‘contaminated’, but should do so in accordance with a clearly stated designation policy, based on risks to human health and the environment and with provisions for public consultation and notice;

• A responsible party should be issued with an official certificate of compliance by the relevant regulatory authority once the site has been remediated to required standards, but that certificate should not exclude prospective liability;

• Benchmarks should be developed (with ‘full public input’) for the remediation of contaminated sites, which will vary depending on the land usage and location of particular sites. This would allow remediation plans or orders to be tailored to individual sites; and

• The liability associated with a contaminated site should be transferable between parties so as to facilitate site remediation, but must be done in compliance with all relevant legislation and subject to full disclosure of site information.

While most of the recommended principles were not contentious, there were a few, such as the question of joint and several liability, and the list of ‘potentially responsible parties’, which caused considerable debate among stakeholders.

5.3 Nature of Liability

The nature of the liability to be imposed for remediation of contaminated sites has always been a controversial issue. Developed countries continue to debate the most appropriate and effective method for imposing liability (Boyd 1999: 6; Richardson 2002: 303). Possible options for imposing liability for contaminated sites essentially include strict liability, fault-based liability, joint and several liability, and/or proportionate liability. Waite (2005: 40) describes a spectrum of liability in relation to environmental harm, ranging from ‘no liability’ to ‘absolute liability’. Some countries (e.g., the United States) employ a combination of liability methods, whereas others (e.g., Member States of the European Union) use one predominant method.

5.3.1 Retrospectivity

One of the problems with existing environmental protection laws in many countries is that they do not adequately address historical site contamination. This is in part because most environmental protection laws are designed to have prospective, not retrospective, effect. As Fowler (2007: 3–4) observes,

There are still numerous jurisdictions that continue to rely on their powers to regulate polluting activities under their general environmental protection legislation, believing these to be sufficient to enable them to address the problem of site contamination. At present, this attitude is also almost universally adopted in developing countries, where the nature and extent of site contamination problems is only poorly understood.

[…] In order to address ‘historic’ site contamination, there is a need to be able to impose liability on responsible parties retrospectively, including where those parties did not act contrary to any law in place at the time of committing the acts or omissions that have resulted in site contamination. General environmental protection legislation does not normally provide for such retrospectivity and this must therefore be provided for in specific provisions addressed to the problem of historic site contamination.

However, even laws that have been specifically designed to ensure the cleanup of contaminated sites may not go far enough. For example, the absence of a retrospectivity clause is viewed as a major limitation to the scope of the European Directive on Environmental Liability (2004) which consequently does not cover the hundreds of thousands of contaminated sites that already existed across the EU prior to the Directive’s entry into force (Layard 2006: 138).

Retrospective liability for site contamination is controversial, mainly because the contamination may have been lawfully caused at the time, or the responsible parties may have had little or no role in the actual contamination (World Bank 2007). There may be other consequences, including decreased property values for contaminated sites and a preference by developers for pristine ‘greenfield’ sites instead of potentially contaminated sites so as to avoid any possible future liability (World Bank 2007).

However, despite the harshness of retrospective liability, it ‘has, in some countries, coerced industries into better environmental behavior and substantially minimized major health risks’ (World Bank 2007). According to the World Bank (2007), retrospective liability is now considered ‘the hallmark of modern soil statutes’. The United States was an early pioneer in the application of retrospective liability for contaminated sites, with the enactment in 1980 of its federal Comprehensive Environmental Response, Compensation and Liability Act (CERCLA, also known as ‘Superfund’). A more recent example is Germany’s federal Soil Protection Act 1998, which was specifically designed to address historical (as distinct from new) site contamination within its general soil protection framework.

Retrospective liability can be essential to avoid unnecessary delays to site remediation and, wherever possible, to avoid the allocation of remediation costs to the taxpayer. In developing countries and those with economies in transition, much of the historical contamination may have been caused by state-owned operators, such as utility providers. In this instance, there may be little choice but to use public funds for site remediation. However, in countries where state-owned activities are not the major cause of historical contamination, retrospectivity should be a key feature of statutory liability.

5.3.2 Strict Liability

The concept of strict liability was famously enunciated in the 1868 English case, Rylands v Fletcher, in which the House of Lords held that a property owner was strictly liable for the consequences of unduly dangerous activities or structures maintained on their land. In general, strict liability requires only proof that the relevant party committed the relevant acts or omissions that have given rise to the property damage. It can be distinguished from fault-based liability (i.e. negligence), whereby a person is liable for any harm caused by a breach of their duty of care to another person. To establish negligence, the victim of the breach may face a heavy burden of having to prove that a duty of care existed, and that the breach caused the relevant harm.

In the context of site contamination, strict liability relieves the claimant or enforcement authority of the obligation to prove that the contamination resulted from negligence, or that the party’s conduct was intentional. Such a burden of proof would be particularly difficult to overcome in relation to environmental harm, as it may not be possible to establish fault of the defendant. Application of the strict liability rule allows liability for contamination to be determined relatively promptly and without the need for protracted litigation (Kingsbury 1998).

There are other benefits to the use of strict liability in site contamination legislation. The application of strict liability rules may help to reduce the likelihood of orphan sites by deterring wrongful behavior (Alberini and Austin 2001). It can also help ‘internalise’ remediation costs (i.e., making polluters pay, and others connected with the relevant site), rather than placing that burden on the community as a whole (Bergkamp 2001: 5). Arguably, parties carrying out an inherently dangerous activity should bear the costs of any consequent harm to property and the environment. In addition, according to Faure (2009: 145), the strict liability rule offers an in-principle guarantee to the victim that they will receive compensation.

Strict liability is a central tenet of the European Directive on Environmental Liability and numerous national environmental laws, including CERCLA in the United States (sect. 107(a), CERCLA; Faure 2009: 138). Even before the European Liability Directive, strict liability was a particularly common concept in soil pollution statutes and case law, in countries such as the United Kingdom, Germany, Sweden and France (Faure 2009). However, courts in Australia and Canada have been reluctant to apply the strict liability rule in the specific context of site contamination (e.g., Burnie Port Authority v General Jones Pty Ltd 1994; Smith v Inco Ltd 2011).

5.3.3 Fault-Based Liability

In contrast to strict liability, fault-based liability is imposed only where it can be shown that the defendant was negligent and that their act or omission actually caused the harm in question. In this instance, the plaintiff needs to demonstrate the negligence or fault on the part of the defendant, the damage suffered, and a causal link between the conduct and the damage (Faure 2003: 100). Fault is determined on the basis of whether or not the person to whom the damage is attributed observed the prescribed duty of care in carrying out the relevant activity (Kummer Peiry 2005: 1).

According to Bergkamp (2001: 3), the distinction between fault-based and strict liability

is relevant to what could be called ‘unavoidable damage’, damage that cannot be prevented by taking reasonable care or, in economic terms, damage whose cost [sic] are less than the cost of preventing it.

In recent years, fault-based liability has become less widely used in domestic regulatory regimes for site contamination or environmental harm, in light of the growing preference for strict liability. In the European Union, fault-based liability is generally imposed only where a non-hazardous activity has caused environmental harm, such as harm to biodiversity (EUROPA 2004).

5.3.4 Joint and Several Liability

Joint and several liability can make any one (or all) of the potentially responsible parties liable for the entire cleanup costs at a site. This option has attracted criticism for allowing governments to look to the nearest and most convenient ‘deep pocket’ to pay for site contamination, even though that party may not have been directly involved or even aware of the occurrence of the contamination (CCME 2006: 7). As Page (1997: 80, citing Wilkerson and Church 1989) observes,

joint and several liability provides the government with a powerful tool to collect the funds needed for cleanup, particularly when the government cannot find the parties who contributed most of the toxic substances to the site or when these parties are not able to pay for the cleanup. In these situations, the amount that the parties pay for the cleanup may be unrelated to the proportional share of that party’s contribution, even when they have minimal connection to the contamination event.

One of the potential advantages of having joint and several liability—even if only as a form of ‘back-up’ liability—is that it can be used as an incentive for potentially responsible parties to resolve liability among themselves and without recourse to litigation (Sigman and Stafford 2011). It is also considered a useful technique in situations where it can be proven that each defendant contributed to the site contamination, but the exact contribution of each is difficult to demonstrate, particularly when the injury is indivisible (World Bank 2007). However, it could not be applied to sites where there are many different (and usually unidentifiable) contributors to the site contamination, such as landfill sites (UNEP/ADEME 2005: 44).

A case study of the federal approach to allocating liability for site contamination in the United States is provided below (Case Study 5.2), and includes a discussion of how joint and several liability is applied. The US can be considered a pioneer in the development of its liability regime for contaminated sites, which is now over 30 years old and has evolved significantly over time. The case study examines other key features of the statutory framework, such as strict liability and retrospectivity, and demonstrates the complexities of the liability allocation process.

Case Study 5.2: United States—Federal Liability Regime

The United States’ federal contaminated sites legislation, the Comprehensive Environmental Response, Compensation and Liability Act 1980 (CERCLA), has been noted since its enactment for the complex liability framework it creates (Dixon 1995: 1; Judy and Probst 2011: 199). CERCLA operates alongside the Resource Conservation and Recovery Act 1976 (RCRA), which provides a system for managing waste disposal and hazardous wastes. The role of RCRA is to help prevent site contamination from occurring, to impose remediation responsibilities as permit conditions, and in some cases to compel remediation. Essentially, RCRA applies when sites are still operational and licensed, whereas CERCLA applies to abandoned or inactive sites. CERCLA is the focus of this discussion on liability for contaminated site remediation in the United States.

The broad liability scheme provided by CERCLA represents an attempt to both maximise the cleanup prospects for contaminated sites, whilst minimising the cost to taxpayers on the basis of the ‘polluter pays’ principle. According to Judy and Probst (2011: 193, 213), CERCLA aims to achieve this by encouraging PRPs to reach settlement with the United States Environmental Protection Agency (USEPA), compensating government action, rewarding voluntary cleanup and, if necessary, forcing cleanup by PRPs. While the CERCLA liability provisions have sometimes been criticised as ‘draconian’, they are also considered to have been highly successful in making PRPs carry out site cleanups themselves, or meet the costs of such work (Judy and Probst 2011: 215).

CERCLA has some innovative features that make it distinctive from other national liability frameworks elsewhere in the world. A key feature of the CERCLA liability regime is the wide range of PRPs that can be held responsible for site cleanup. It identifies four categories of PRPs, including the current site owner or operator; a previous site owner or operator who owned/operated the site at the time of the disposal; generators of hazardous substances; and transporters of hazardous substances to the relevant site (sects. 101(20)(a) and 107(a)). Liability under CERCLA is retrospective, strict, and joint and several.

The use of retrospective, strict, joint and several liability in CERCLA has attracted controversy, as it can make parties who have had a relatively minor role in the contamination, fully liable for its cleanup. However, another key feature of CERCLA is that it allows PRPs who are held liable for site cleanups to seek contributions from other parties involved in the contamination. In addition, the US Government has gradually introduced statutory liability protections for some parties to help counteract the potentially harsh effect of CERCLA (Judy and Probst 2011: 196–197). These features of the federal liability regime are discussed in more detail below.

The first step for USEPA in the regulatory enforcement process is to identify any PRPs that fall into the four categories of liability, and determine the nature and extent of their individual contribution to the relevant contamination. It does this by carrying out interviews, onsite investigations and title searches, reviewing records, and requesting information from various other sources. The second step is to determine whether the PRPs have any potential defences to liability, and whether any limitations to, or exemptions from, liability apply.

Potentially responsible parties are liable under CERCLA for all costs incurred by USEPA or “any person” in taking removal or remedial actions at the relevant site, as long as those actions are consistent with the NCP (sects. 107(a)(4)(a) and 107(a)(4)(b), CERCLA); natural resource damages (sect. 107(a)(4)(c)); and the costs of any health assessments carried out for a site (sect. 107(a)(4)(d)). The retrospective effect of CERCLA means that PRPs can be held liable for contamination that occurred prior to its enactment in 1980 (USEPA 2012a, b). Liability is also strict, so a PRP cannot argue that they were not negligent, or that they were operating within industry standards when the contamination occurred (Judy and Probst 2011: 195).

PRPs are joint and severally liable for Superfund cleanup costs, meaning that any one PRP may be held liable for the entire cleanup of the site where the harm caused by multiple parties cannot be separated (Burlington N. & Santa Fe Railway Co. v. United States 2009; Judy and Probst 2011: 195, 225). This mechanism allows USEPA to pursue all PRPs at the outset of the site cleanup process, if by doing so it can maximise the likelihood of remedial action being taken, and/or cleanup costs being repaid, in a timely fashion.

Critics argue that joint and several liability results in PRPs with the ‘deepest pockets’ being targeted (see, e.g., Lyons 1986–1987; Richardson 2002: 320–321), and subsequent lengthy and costly litigation between the PRPs to sort out their contributions to the costs (see generally, Dixon 1995). However, Judy and Probst (2011: 233) suggest that there is some recent evidence to refute the claim that joint and several liability leads inevitably to protracted litigation.

The ‘contribution’ provision of CERCLA allows a PRP who has been held liable by USEPA for remedial actions and/or costs to seek contribution from other PRPs for an ‘equitable share’ of these costs (sect. 113(f)(3)(B)). They can do so whether their liability has been allocated through litigation, or in a settlement agreement with USEPA. In the 2004 case of Cooper Industries, Inc. v. Aviall Services, Inc., the Supreme Court held that a PRP who had undertaken site cleanup voluntarily, in the absence of either settlement or litigation, could not seek contribution from other PRPs under CERCLA. They were only entitled to do so if they had been sued by, or had entered into a settlement agreement with, the government regarding site cleanup.

The narrow judicial interpretation of Section 113 in the Aviall case prompted PRPs to try using the cost recovery provision of CERCLA as an alternative means of seeking contributions from other PRPs. In the U.S. Supreme Court’s United States v. Atlantic Research Corporation (2007) decision, a PRP succeeded in using Section 107 to recover from other parties the costs it had incurred by voluntarily undertaking site cleanup. This decision suggested that PRPs would still have a private cause of action against other PRPs if they could not make use of Section 113.

However, a controversial effect of the Atlantic Research Corporation ruling was that it potentially exposed PRPs who had already settled with USEPA to cost recovery action from other PRPs (Yeboah 2008: 280, 288). The Federal Government was concerned that the decision would enable PRPs to pursue parties who wanted to settle their liability issues with USEPA, when those parties had previously been protected from lawsuits by CERCLA. USEPA therefore moved to clarify certain contribution rights and protection from claims in its model settlement agreements (USEPA 2009: 2). In the recent case of Solutia, Inc. v. McWane, Inc. (2012), the 11th Circuit Court of Appeals held that a party seeking contribution under Section 113 could not simultaneously pursue cost recovery under Section 107. It held that Section 113 was the only appropriate avenue for recouping costs for PRPs who have incurred remedial costs under a consent decree.

There are very few explicit defences to Superfund liability in CERCLA. These are limited to situations where the PRP can prove that the contamination was caused by an act of God, act of war, or an act or omission of a third party with whom the PRP had no contractual relationship (sect. 107(b)(1)-(3), CERCLA). Where a PRP relies on the latter defence, they must show that (a) they exercised due care with respect to the relevant hazardous substance, taking into account its characteristics, and in light of all relevant facts and circumstances; and (b) they took precautions against foreseeable acts or omissions of the third party, and any foreseeable consequences of those acts or omissions (sect. 107(b)(3), CERCLA).

Several types of PRPs have only limited liability, or are effectively exempt from liability, for site cleanup costs under CERCLA. These include ‘de minimis’ parties (sect. 122(g), CERCLA) and ‘de micromis’ parties (sect. 107(o), CERCLA) who contribute only a very small amount of the waste or are unable to pay part of the cleanup costs; municipal solid waste facilities (sect. 107(p)); and owners of property located above contaminated aquifers (USEPA 2012a). In addition, the Brownfields Act 2002 amended CERCLA to include liability protection for ‘bona fide’ prospective purchasers, contiguous property owners and innocent landowners. Together, these are known as ‘landowner liability protections’.

Liability protection is afforded to a bona fide prospective purchaser who acquires a property, even if they know or suspect that contamination exists on the property, as long as all hazardous substance disposals ceased at the site prior to the acquisition (sects. 101(40)(A) and 107(r), CERCLA). Contiguous property owners are also entitled to liability protection, provided their property is not the source of the contamination, and they have not known about, contributed to, or consented to the contamination in any way (sect. 107(q)(1)(A)(i), CERCLA). Innocent landowners are protected from liability where they have acquired a property without knowing of the contamination, unless they subsequently cause or contribute to contamination themselves (sects. 101(35)(A)(i) and 107(3)(b), CERCLA).

Landowners in these three categories must meet essential ‘threshold criteria’ and ongoing statutory obligations (also known as ‘common elements’) in order to qualify for liability protection (USEPA 2003: 2). They must have made ‘all appropriate inquiries’ into the environmental condition of the property and any potential liability prior to acquiring their property; demonstrate no affiliation with any other PRP; comply with any land use restrictions and institutional controls that apply to the site; take reasonable steps regarding hazardous substances on their property; provide cooperation, assistance and access to the relevant site for cleanup (and, if applicable, operation and maintenance) purposes; comply with information requests; and provide legally required notices (if applicable) (sects. 101(4)(B)-(H), 107(q)(1)(A), and 101(35)(A)-(B), CERCLA).

USEPA has an ‘enforcement first’ policy, whereby it will invoke its statutory powers wherever necessary to secure cleanup by PRPs before using federal funds for site remediation (USEPA 2002). However, CERCLA gives the Federal Government wide powers to carry out site assessment and remedial action itself if necessary, at the cost of the PRPs (Judy and Probst 2011: 194–195). USEPA has authority to act on the Federal Government’s behalf at any site in the United States where contamination is suspected, not only at NPL sites. It can recover from PRPs the costs of any measures taken to assess and clean up a site that are consistent with the NCP (sects. 105 and 107(a)(4)(B), CERCLA).

USEPA can also force unwilling PRPs to remediate a site where suspected or actual contamination poses an imminent or substantial danger to public health or the environment (sect. 106(a), CERCLA). USEPA exercises this power primarily by issuing unilateral administrative orders (UAOs), although in practice such orders are not frequently used (United States Government Accountability Office 2009: 4, cited by Judy and Probst 2011: 229). Nonetheless, the statutory power is a significant tool, as PRPs receiving UAOs may be ordered to pay treble damages if they do not comply with the terms of the orders (sect. 107(c)(3), CERCLA).

As Judy and Probst observe (2011: 195, citing the United States Government Accountability Office 2009: 10, 27), “[t]he liability scheme provides a strong incentive for PRPs to negotiate settlements with EPA, and it also provides incentives for pollution prevention and voluntary cleanup of sites not listed on the National Priorities List (NPL) or subject to federal enforcement”. PRPs are more likely to undertake site assessment and remediation voluntarily if they are given more control over the measures taken, and costs associated with those measures, under a settlement agreement (Judy and Probst 2011: 227). The prospect of regulatory enforcement action being taken against them, if settlement is not reached, provides further motivation.

In addition to creating a strong liability regime, CERCLA emphasises that negotiated settlements with PRPs should be attained wherever practicable and in the public interest, in order to expedite site cleanups and minimise litigation (sect. 122(a)). The result of this two-pronged statutory approach is that most site cleanups are achieved voluntarily, through negotiation with the PRPs and at their cost (Judy and Probst 2011: 194, 223). Most negotiated settlements are given effect through either a judicial consent decree (approved by the court) or administrative consent order (issued by USEPA), and the use of these instruments has risen significantly over time (Judy and Probst 2011: 223).

5.3.5 Proportionate Liability

Proportionate liability is sometimes seen as the answer to criticism of the joint and several model (e.g., Association of Municipalities of Ontario 2009: 4–5; Economic References Committee (Australian Senate) 2002: para 3.58). Under proportionate liability, each defendant is only required to contribute to the damages awarded in proportion to their degree of liability as decided by the court. Some vocal stakeholders in the United States and Canada (e.g., Association of Municipalities of Ontario 2009; American Tort Reform Association 2012) are now pressuring their governments to replace a joint and several liability scheme with proportionate liability.

It is also possible to apply proportionate liability to all instances where the defendant is, for example, less than 50% or 25% liable for the relevant damage. Where the defendant’s proportion of liability exceeds the chosen threshold, then joint and several liability can be applied (Underwood 2007: 1–2). This method of allocating liability is also loosely known as ‘modified proportionate liability’ (Association of Municipalities of Ontario 2009: 4–5).

5.4 Mechanisms for Imposing Responsibility

5.4.1 The ‘Command and Control’ Approach

The ‘command and control’ approach generally comprises a set standard (the ‘command’) and a ‘control’, which monitors and enforces the standard. The approach is based on the assumption that governments are best placed to formulate and enforce regulations for environmental protection (Mirovitskaya and Ascher 2001: 187). Traditional mechanisms for imposing responsibility for contaminated sites include ‘cleanup orders’, a broad term that includes assessment, investigation and remediation orders; taxes and penalties; and pollution abatement orders. By the late 1980s, the traditional approach was attracting widespread criticism for being ‘economically inefficient, excessively rigid, slow, uncoordinated, and, ultimately, ineffective’ (Kelemen 2004: 209). However, it still offers some advantages for managing site contamination when combined with other mechanisms.

5.4.2 Non-traditional Mechanisms

Non-traditional mechanisms for imposing responsibility for site contamination include incentives to motivate polluters to reduce the risks posed by their activities, facilities or products (Anderson 2002: 2). Incentives usually comprise financial rewards (such as remediation grants, tax relief, loans, subsidies or performance bonds) or exemptions from liability. Some of these are used widely in the United States, United Kingdom (see Luo et al. 2009: 1126) and some provinces of Canada (e.g., British Columbia).

Other non-traditional mechanisms may be as simple as requiring site operators or owners to provide detailed information to the public, or using the ‘threat’ of liability against polluters to promote action. The latter can be a powerful incentive to encourage potentially responsible parties to engage in better environmental practices and compensate affected parties (Anderson 2002: 7). In the site contamination context, this could encourage polluters to undertake the necessary remediation works within a prompt timeframe. Incentive-based mechanisms are arguably more cost-effective, wide-reaching and flexible than traditional approaches, with the further advantage of stimulating technological innovation (Anderson 2002: 2; Kelemen 2004: 209).

In the United Kingdom, the main driver of contaminated site remediation is the development process (Luo et al. 2009: 1128; Sheehan and Firth 2008). When development consent is sought by a site owner or developer, the local authority can require that remediation be undertaken and other specific conditions met prior to granting consent (Luo et al. 2009: 1128). The local authority also has the power to require site investigations, oversee remediation strategies and ensure that remediation is completed to an acceptable standard of quality.

Financial incentives, such as tax relief and remediation grants, play a significant role in the reuse of contaminated sites in the UK, although they are primarily directed at brownfields (Luo et al. 2009). Regulatory mechanisms such as enforcement orders, or ‘cleanup orders’, remain important as a safety net for contaminated sites that are not addressed through the planning process, are not sufficiently remediated, or where liability is disputed. Berveling (2005: 157) considers investigation and remediation orders to be among several ‘fundamental’ elements for ‘effective legislation dealing with the management and regulation of contaminated sites’.

5.4.3 Transfer of Liability

There is a growing trend in some developed countries whereby owners of contaminated sites are being allowed to transfer their responsibility contractually to other parties (e.g. purchasers), who then assume liability and engage in voluntary cleanups. For example, under Part 2A of the Environmental Protection Act (1990) (UK), the relevant statutory guidance allows for the transfer of liability to the buyer in certain circumstances (Department for Environment, Food and Rural Affairs (UK) 2012: 51). A transfer of liability may be permitted where a payment has been made between the parties for the purpose of site remediation, the buyer has been provided with information on the contamination that is not misleading, and the vendor no longer retains any interest in the land.

Full disclosure of information relating to the site contamination is usually required by the relevant legislation (e.g., sect. 30, Contaminated Sites Act 2003, Western Australia). In addition, transfers of liability can be made subject to certain conditions, such as the requirement of remediation to a specific standard, the capacity of the transferee, and regulatory compliance (Canadian Council of Ministers of the Environment 2006: 11–13; Environment Protection (Site Contamination) Amendment Act 2007 (South Australia). The ability to transfer liability for site contamination can improve legal certainty, thereby facilitating brownfield development (Canadian Environmental Law Association 2004: 7). However, any legislative provision allowing transfer of liability should be carefully drafted and clearly stipulate the type and extent of the liability being transferred, together with an enforcement mechanism should the transfer fail.

5.5 Remediation of ‘Orphan’ Sites

‘Orphan’ sites are those for which no identifiable party can be found to take responsibility for remediation, or where a responsible party can be found but is insolvent or otherwise unable to undertake remediation. In such cases, it is equally important to have measures in place to ensure that remediation proceeds (UNEP/ADEME 2005: 44). Orphan sites may remain contaminated and disused for a considerable time until public authorities assume responsibility for remediation themselves, or a developer considers the site presents a profitable redevelopment opportunity. Developers will remain reluctant to develop a contaminated site where liability issues remain unresolved, unless the relevant authority gives them an incentive to do so.

One option for addressing orphan sites is to create an industry fund to which all operators involved in a particular industry must contribute by way of a tax. A tax on the chemical and petroleum industries was a hallmark of the federal US legislation, CERCLA, in its early days. An industry tax was also selected as the funding source for the Orphan Site Reclamation Fund in British Columbia (Oil and Gas Commission Levy and Orphan Site Reclamation Fund Tax Regulation 1998). Alternatively, a tax can be imposed on domestic and industrial waste (UNEP/ADEME 2005: 47). Whatever type of tax is selected, remediation works on orphan sites are then financed from the dedicated fund. An industry tax is a politically sensitive issue which industry groups tend to firmly oppose, but perhaps no less so than a broad liability regime such as that in the United Kingdom.