Frequently Asked Questions About the
Washington State Model Toxics Control Act
Why
should I care about MTCA?
The Washington State Model Toxics Control Act, Chapter
70.105D RCW ("MTCA" or the "Act") creates a comprehensive
regulatory scheme to identify, investigate, and clean up contaminated
properties that are, or may be, a threat to human health or the environment.
The cost of cleaning up such properties can be extraordinarily high.
MTCA was approved by state voters as an initiative in
1988 and adopted by the legislature in 1989 in order to raise funds
to clean up contaminated sites and to prevent the creation of future
hazardous waste sites. Since the adoption of MTCA, private parties
that are potentially liable under the Act have funded most of the
cleanups conducted in Washington.
MTCA's liability reach is so extensive that nearly any
person with any connection to a contaminated property is potentially
liable for the entire cost of the cleanup. Understanding and controlling
that risk is essential.
Who
administers and enforces MTCA?
The Washington State Department of Ecology ("Ecology")
is the lead agency responsible for the implementation and enforcement
of MTCA. Ecology has promulgated detailed regulations that supplement
the Act. These regulations are found at Chapter 173-340 WAC. Ecology
has also published various policy documents and technical memoranda
that help explain how Ecology interprets and applies MTCA. These documents
are available online at http://www.ecy.wa.gov/programs/tcp/policies/tcppoly.html.
Local governments sometimes impose conditions on development
permits requiring the applicant to undertake remedial action in compliance
with MTCA, but usually defer oversight of the remedial action to Ecology.
Does
MTCA differ from CERCLA?
MTCA is the state counterpart to the federal Superfund
law, also known as the Comprehensive Environmental Response, Compensation
and Liability Act ("CERCLA"). One of the biggest differences
between the two acts is that MTCA treats petroleum as a regulated
hazardous substance. This is significant because petroleum products
are the only substances of concern at many contaminated sites such
as gas stations, and properties with old heating fuel tanks.
Another difference is that MTCA allows potentially liable
persons to recover attorneys' fees and expenses spent litigating liability
and damages with other potentially liable persons. CERCLA does not
allow recovery of such attorneys' fees or expenses.
Finally, as a result of a recent decision issued by
the United States Supreme Court, CERCLA may no longer allow private
parties to recover remedial action costs expended in the course of
performing a voluntary clean up. MTCA is unlikely to be interpreted
in a like manner because it expressly authorizes any person to bring
a claim for contribution against any other person liable under the
Act, regardless of the claiming party's own liability.
For all of these reasons, most cost recovery actions
in Washington are brought under MTCA rather than CERCLA.
Top
How
and when must a release be reported to Ecology?
MTCA requires owners and operators to report the discovery
of hazardous substances that had been previously released on or under
their property. Releases occurring because of current practices must
be reported under other laws. Generally, an owner or operator must
report a release within 90 days after its discovery if that release
"may be a threat to human health or the environment." This
determination requires discretion and professional judgment. Not every
discovery of contamination is a reportable event. Moreover, persons
other than owners or operators, such as prospective purchasers or
environmental consulting firms retained by an owner or operator, have
no legal obligation to report discovered releases.
Who
is liable for the costs of investigating and cleaning up a contaminated
site?
Current and former owners and operators of contaminated
property are the primary suspects in any MTCA case. MTCA imposes strict
liability upon various categories of persons including: (i) current
owners and operators of contaminated property; (ii) persons who owned
or operated the contaminated property at the time hazardous substances
were disposed or released at the property; (iii) generators of hazardous
substances; and (iv) certain transporters of hazardous substances.
Each person liable under MTCA is strictly liable, jointly and severally,
for all remedial action costs, and for all natural resource damages,
resulting from the release or threatened release of hazardous substances.
This liability regime is extremely harsh and unforgiving, so it is
imperative that buyers, lenders, and investors conduct thorough due
diligence before closing any real estate transaction.
If
multiple persons are liable, how much will any one person be required
to pay?
If more than one person is liable for a given site,
MTCA requires that a court apportion liability among the liable persons
based on any equitable factors that the court finds appropriate. These
factors often include the relative responsibility of each liable person
for causing the contamination in the first place; the length of time
each liable person owned or operated the property during the time
it was contaminated; the degree to which each liable person acted
to remediate the contamination; and the level of cooperation displayed
by the liable person. A court may also consider the economic benefit
that a clean site affords the current owner.
Top
Are
there any defenses to MTCA liability?
MTCA insulates a few limited classes of persons from
its broad liability scheme. The most commonly asserted liability exemptions
are known as the third party defense, innocent landowner defense,
and migrating groundwater plume defense.
The third party defense applies only if the potentially
liable person can show that the release of hazardous substances was
caused solely by an act or omission of a third party not in a contractual
relationship with the liable party. Agents and employees of the potentially
liable person are not considered third parties. This defense is construed
narrowly and will not protect a person who buys contaminated property
from a person responsible for the contamination because the buyer
will be deemed to be in a contractual relationship with the seller.
The innocent purchaser defense was created to fill in
the gap created by the narrow construction of the third party defense.
The innocent purchaser defense protects persons who buy contaminated
property with no knowledge of the contamination. To benefit from this
defense, the potentially liable person must have undertaken, at the
time of acquisition, all appropriate inquiry into the previous ownership
and uses of the property consistent with good commercial or customary
practice. In most real estate transactions, a buyer can satisfy this
appropriate inquiry element by retaining a qualified environmental
professional to conduct a Phase I Environmental Site Assessment of
the property in question.
The migrating groundwater plume defense is relatively
new and applies where property has become contaminated solely as a
result of groundwater migration from a source off of the property.
This exemption is available only where the owner or operator of the
property can demonstrate that he or she did not: (i) use the hazardous
substance in a manner likely to cause a release of the hazardous substance;
(ii) cause or contribute to the release of the hazardous substance;
(iii) engage in activities that damage or interfere with remedial
measures installed on the property; or (iv) expose humans or the environment
to the contaminated groundwater that has migrated onto the property.
Top
Can
Ecology order me to perform a cleanup?
Ecology has broad enforcement authority under MTCA,
including the power to issue enforcement orders and to enter agreed
orders and consent decrees. Where a potentially liable person fails
or refuses to take appropriate action in response to a contaminated
site, Ecology may issue an enforcement order requiring the potentially
liable person to undertake immediate investigation or cleanup of the
property. If the potentially liable person does not respond to the
enforcement order, the potentially liable person faces possible treble
damages and civil penalties of up to $25,000 per day for continued
violation of the order.
Where a potentially liable person is willing to cooperate
with Ecology, the agency may offer to enter an agreed order with the
potentially liable person setting forth the terms and conditions under
which the investigation and cleanup of the property will occur. Negotiation
of an agreed order typically begins when Ecology provides the potentially
liable person with a draft agreed order consistent with a model that
has been previously approved by the Washington State Attorney General's
Office. The potentially liable person may then respond by suggesting
alternative language or different terms. After the potentially liable
person and Ecology reach agreement on its terms, the agreed order
is released for public comment. The agreed order is not effective
until it is signed by the potentially liable person and Ecology. As
with enforcement orders, there are severe penalties for failure to
comply with an agreed order, including damages and civil penalties.
The most formal method for proceeding with the cleanup
of contaminated property is by means of a consent decree. A consent
decree is a legal agreement that is filed in court. Like an agreed
order, the terms and conditions of a consent decree are negotiated
between the potentially liable person and Ecology. An Assistant Attorney
General will usually represent Ecology in those proceedings. Consent
decrees, like agreed orders, are subject to public comment. The main
advantage of a consent decree, as opposed to an agreed order, is that
a consent decree settles the MTCA liability of the potentially liable
person and protects the potentially liable person from being sued
for contribution by other persons that incur cleanup costs at the
site.
Top
Can
I perform a cleanup without Ecology involvement?
The vast majority of the cleanups conducted in Washington
are performed voluntarily, without an Ecology enforcement order, agreed
order, or consent decree. Many of those cleanups are performed with
Ecology technical assistance under its Voluntary Cleanup Program.
Smaller, routine cleanups are sometimes performed with no Ecology
involvement at all. Regardless of whether Ecology is involved, all
cleanups must comply with MTCA and Ecology's cleanup regulations and
all cleanup actions must be reported to Ecology.
The main advantage of voluntary cleanups is that they
allow a potentially liable person to control the degree of Ecology
involvement in the remedial action, which can save time and money.
Ecology charges a modest application fee for entry into the Voluntary
Cleanup Program and applies those fees against its oversight charges,
which must be paid by the applicant. At complex sites, Ecology's oversight
charges can be quite high because of the volume of data and reports
that are submitted for Ecology review.
The major disadvantage of voluntary cleanups is that
the party conducting the cleanup does not receive any binding agency
assurances as to the adequacy of the remedial action. To compensate
for this risk, Ecology has developed various opinion letters that
it can issue under the Voluntary Cleanup Program in response to a
proposed or completed remedial action or cleanup action.
One of these letters, commonly known as a "no further
action determination," is widely accepted by buyers, sellers,
developers, and lenders as a measure of comfort that a voluntary cleanup
action meets with Ecology approval, and that no further work is necessary
at a contaminated site. Until recently, Ecology would sometimes issue
a no further action determination for a cleanup of only a portion
of a site or a cleanup of less than all affected environmental media
at a site. Ecology has recently tightened its policy, and will now
issue a no further action determination only after a contaminated
site is cleaned up in its entirety. A less than complete cleanup will
no longer qualify for a no further action determination, but may still
qualify for one of Ecology's new opinion letters. None of the Ecology
opinion letters constitutes a settlement with Ecology and Ecology
always reserves the right to order additional work if it later determines
that contamination at the site threatens human health or the environment.
Top
Can
I recover money I spend investigating or cleaning up a contaminated
site?
MTCA creates a private right of action enabling persons
who are faced with a contaminated site to bring an action in court
against one or more potentially liable persons to recover the costs
they spend at the site or to obtain a court order directing the potentially
liable persons to take action to investigate or clean up the site.
The plaintiff in a cost recovery action bears the burden of demonstrating
that any remedial action it took at the site is the "substantial
equivalent" of a remedial action conducted or supervised by Ecology.
In practice, this means that the remedial action must comply with
Ecology's cleanup regulations. The statute of limitations for cost
recovery actions is three years after the date that cleanup standards
are met at the property in question.
Anyone considering a cost recovery action should be
aware of the notice requirements contained in Ecology's cleanup regulations.
The potential plaintiff must provide advance public notice of any
proposed cleanup action and post a sign at the site during performance
of the work indicating what work is being conducted at the site and
identifying a person to contact for more information. The advance
notice must be sent to Ecology, the local health department, the local
municipal authority, the owner of the site, and all known potentially
liable persons.
In a cost recovery action, the court will apportion
liability among all liable persons based on any equitable factors
that the court considers appropriate. The plaintiff may be assigned
a share if it meets the definition of a MTCA liable party. The factors
the court will consider usually include the relative responsibility
of each liable person for causing the contamination in the first place,
the length of time each liable person owned or operated the property
during the time it was contaminated, the degree to which each liable
person acted to remediate the contamination, and the level of cooperation
displayed by the liable person.
Under MTCA, the party that prevails in a cost recovery
action is entitled to recover its reasonable attorneys' fees as well
as its litigation expenses. Recoverable litigation expenses are construed
broadly and can include witness fees, deposition expenses, copying
expenses, transcript fees, and expert witness fees.
Can
my lender be liable if it loans me money to buy contaminated property?
Lenders are generally immune from MTCA liability so
long as they maintain the role of a traditional lender, which means
their ownership interest in the contaminated property is limited to
a form of security such as a deed of trust. A lender can fall out
of this safe harbor if it becomes actively involved in the management
of the contaminated property, such as by taking over the day-to-day
operations of a failing shopping center. However, a lender may temporarily
assume such control over a contaminated property if it is necessary
to preserve the value of its collateral or to mitigate any default
by the borrower. A lender cannot assume such operational control for
more than a year before foreclosure and must seek to sell or divest
the contaminated property at the earliest practicable, commercially
reasonable time, but no later than five years after foreclosure.
Can
I make an insurance claim for contamination found on my property?
Anyone faced with the daunting prospect of paying for
an expensive cleanup should carefully investigate the possibility
of tendering a claim to one or more of its insurance carriers. Commercial
general liability policies did not clearly exclude coverage for cleanup
costs until the mid 1980s. If contamination at a commercial site was
present before the mid 1980s, there may be a viable insurance claim.
As for residential sites, some homeowners' policies did not exclude
coverage for cleanup costs until the late 1990s. For these reasons,
historic insurance policies are a valuable asset that should be kept
in a safe place, even after the insured property is sold.
For More Information Contact: Howard
F. Jensen.
Top
|
