11: Limiting Liability for Polluted Property
of the most significant parts of HB
2776 was limiting liability for both lenders
and fiduciaries (the responsible governing officers
of a corporation, partnership or sole proprietorship
who finance the redevelopment of toxic sites).
The Independent Bankers Association of Texas and
the Texas Association of Bankers both lobbied
in the House and Senate to pass the bill. Proponents
said this provision would allow lenders to loan
money on polluted property, or to foreclose on
property without fear of incurring liability.
The arguments against extending this freedom from
liability seem obvious, but bear repeating. Limiting
polluter liability overturns of decades of legal
precedent. The Superfund program and American
tort law establish the principle that landowners
are responsible for cleaning up the remains of
polluting activities, and pass that liability
on to future owners who may purchase the property.
The longstanding argument is that the polluter
has harmed not just him or herself through their
activities, but that they have had a negative
impact on nearby citizens or property. Historically
U.S. and Texas laws required that polluters pay
to clean up the harm they've caused, and mandated
that anyone who purchases polluted property assume
the same responsibility.
When a polluter is unavailable or unable to pay
to clean up a contaminated site, the costs of
the cleanup are paid by the state or federal government.
Prior to HB 2776, the main way polluters escaped
paying for cleanup was filing bankruptcy -- polluters
could vacate debts or settle them for pennies
on the dollar. The economic bust of the late 1980s
in Texas left many vacant polluted industrial
sites with no solvent owner to petition for cleanup.
The federal and state
Superfund programs pay for cleanup where there
is no individual owner able to pay.
Texas' state Superfund program will cost $60 million
this biennium. (1) HB 2776 created a brand new classes of non-liable fiduciaries
and owners in Texas, thus limiting the pool of
"potentially responsible parties" who could be
pursued to pay for hazardous waste cleanup on
these properties. This creates a long-term trend
toward greater and greater public financing for
pollution cleanup. The math is easy: the smaller
the pool of potentially liable parties, the greater
the likelihood that the state will ultimately
be required to pick up the tab for cleaning any
Profit Socializing Cost
HB 2776 also limited liability in other ways.
For starters, it allowed companies that entered
the state's "voluntary" cleanup program to sell
their property without conferring liability for
cleanup onto the purchaser. In another twist,
the same provision allowed banks to foreclose
on polluted properties without incurring responsibility
for cleaning up the pollution.
Prior to HB 2776, the state required owners of
polluted property to pay for the full cost of
the cleanup. This bill created new loopholes to
absolve polluters from liability, loopholes that
were much more favorable to industry and property
owners. These included: "covenants not to sue,"
mixed (i.e., partially public) funding for cleanup
projects, and "partial settlements" where the
polluter pays less than the full cost of the cleanup.
The prevailing trend here is for the public to
pick up an increasing portion of the tab for privately
generated pollution, in the guise of "settlements"
Another limitation on liability in HB 2776 was
labeled the "Innocent Property
Owners" program. TThe idea behind the initiative
was reasonable on the surface: that property owners
whose land was polluted by somebody else shouldn't
be liable for cleaning it up. The bill authorized
the TNRCC to issue "certificates of innocence"
to applicants if their property is contaminated
as a result of a release or migration of contaminants
from a source or sources not located on the property,
if the applicant did not cause or contribute themselves
to the contamination. As of October 1999, 69 certificates
had been issued under this program.
This provision poses numerous real problems. First,
it overturns longstanding Texas law that historically
holds all property owners responsible for cleanup
of their own property. Existing statutes already
allow the owner of property that has been contaminated
by someone else to force the polluter to pay damages.
But for participants in the Innocent Property
Owners program, HB 2776 took the onus of cleaning
up contaminated property entirely off the owners.
In the long term, this increases the likelihood
that taxpayers must finance cleanup of these sites.
Second, while some industrial sites have been
rejected, some "innocent owners" have operations
that may themselves pollute. Companies that have
received certificates of innocence include a dry-cleaners,
a concrete plant, an ink manufacturer and a chemical
Finally, the vast majority of innocence certificates
approved by TNRCC have been for residential developments,
apartment complexes, or shopping centers and retail
outlets -- in other words, places where people
are likely to come into close proximity to the
contaminated land. HB 2776 limited the likelihood
that polluted land would be cleaned up by the
responsible parties & instead shifted the cleanup
costs to the taxpayer.
Public Input on Hazardous Waste Cleanup
HB 2776 also went a long way toward limiting significant
public input into the state's Superfund hazardous
waste cleanup process. It allowed the TNRCC Executive
Director to remove facilities from the state Superfund
list even if the request came from someone other
than the landowner. Moreover, it changed the requirements
for de-listing facilities. Previously, sites could
only be taken off the Superfund list after a public
contested case hearing in which neighbors of the
site had the right to inquire as to the sufficiency
and quality of the cleanup.
Arguments were made during the legislative session
on why limiting contested case hearings might
harm the public interest: The owner of a contaminated
site "might seek to have the land use of a property
changed from residential to light industrial because
the standards for cleaning up such a site would
not be as stringent and therefore would be less
expensive. Neighbors of the site, however, might
not want their children growing up next to a partially
re-mediated site. They should be able to present
their views in a serious forum such as a contested
case hearing, rather than a public meeting which
has no legally binding consequences." (2)
These arguments were ignored and New language
in HB 2776 required only a "public meeting" of
the Bush appointed three member TNRCC Commission.
The Public's Right to Know
In a move designed to lower polluters' profiles
with the public, HB 2776 ended the state's longstanding
practice of filing state liens at the local county
courthouse on properties where state funds were
used to clean up hazardous waste. The liens had
ensured that future property owners were aware
of their liability for cleanup costs, and made
public information about which properties and
property owners owed the state money for hazardous
waste cleanup. After Governor Bush signed this
bill, TNRCC merely sent the owners a written bill
in the mail, which continued the Bush administration
goal of limiting public information about pollution
in their communities.
final chapter of the Superfund a Super Deal
for Texas Polluters PEER will examine the
relationship between political contributions to
George Bush and the polluting industries which
supported and benefited from this legislation.
with TNRCC Superfund division employee, 12/14/99.
Research Organization Bill Analysis, HB 2776,
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