LPDD Model Law: CERCLA Liability Limitation for Renewable Energy and Carbon Capture

This model law would amend the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA” or “Superfund”), 42 U.S.C. § 9601-28, to limit liability for persons who own, operate, lease property for, construct or finance certain renewable energy and carbon capture projects.

Under the model law, a developer who wants to construct and operate a renewable energy or carbon capture project on or adjacent to contaminated property (e.g., a brownfield, Superfund site, abandoned mine) would ask for a determination from EPA, a State or Indian tribe. The developer would provide information about the property and renewable energy or carbon capture project. The EPA, State or Indian tribe would determine whether constructing and operating the project on the property (1) is consistent with protecting human health and the environment from hazardous substances, pollutants or contaminants at the property, and (2) will not impede the performance of a state or Federal cleanup or natural resource restoration. As long as the developer acts in accordance with the determination, and all conditions in it, the developer is not liable as an owner or operator under CERCLA § 107.

If a developer violates a condition in a determination and, for example, causes a release of hazardous substances, the developer would be liable under CERCLA for costs of response. However, if EPA, for example, mistakenly does not include a condition in the determination (e.g., don’t put a footing in area X), and the developer puts a footing in area X and causes a release of hazardous substances, the developer is not liable. The cost of responding to the release might fall on the EPA, a State or Indian tribe, other PRPs, the Superfund Trust Fund or, ultimately, taxpayers. In this case, the Superfund Trust Fund and taxpayers could be viewed as insurers.

This model law was written by Frank Fritz, a senior fellow and adjunct professor at William S. Boyd School of Law in Las Vegas, Nevada.