These are difficult economic times. In the best of economic periods, environmental costs are overwhelming for many companies. In a prolonged financial downturn, it is an even more difficult burden for many companies to shoulder their own environmental remediation requirements. Where there are co-liable parties, that burden can be crushing if the other potentially responsible party (PRP) either seeks refuge in bankruptcy or to restructure themselves so as to protect themselves from the crushing environmental costs. Under many environmental statutes, particularly those with joint and several liability, an insolvent co-PRP’s liability is normally transferred by operation of law to the remaining PRP. The purpose of this article is to address steps to consider if co-liable PRP is either showing signs of economic distress or has already filed in bankruptcy.
Environmental Enforcement Is Down but Not Out
Although environmental prosecution of hazardous waste sites is less frequent than 10 years ago, the overall number of environmental prosecutions and enforcement actions has remained largely steady. The Government Accounting Office (GAO) undertakes yearly surveys of the United States Department of Justice (Lands and Natural Resources Division), of the United States Environmental Protection Agency (USEPA), and of the Fish and Wildlife offices, too. What these surveys reveal is that in the 1990s the mix of environmental enforcement was largely hazardous waste sites under Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA), with a much smaller portion of prosecution under the Clean Air Act (CAA) and Federal Water Pollution Control Act (FWPCA). For the last year or two, the ratios have switched to a heavier percentage of CAA and FWPCA, and fewer CERCLA and RCRA. Notably, the overall number of prosecutions and, critically, the number of multiparty prosecutions is not significantly diminished from where they were 10 years ago.
Common Strategies for Companies Facing Unbearable Environmental Costs
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