Today, a comprehensive web of environmental laws regulate the use, disposal and remediation of hazardous materials. This regulatory scheme includes federal laws (such as CERCLA, SARA, RCRA, the Clean Air Act, the Clean Water Act and the National Environmental Policy Act) and a whole host of state statutes (including such California statutes as the Porter Cologne Water Quality Act, the Carpenter-Presley-Tanner Hazardous Substance Account Act (California Superfund), the Underground Storage Tank Act, the California Clean Air Act, the Air Toxics "Hot Spot" Act, Proposition 65 and the Hazardous Waste Control Law).

Although the terminology used in each of these statutes varies, the basic message they convey is:

  • Any person who participates in, exercises control over or has responsibility for controlling a hazardous material activity may become liable for the consequences of such activity; and
  • The cost of remediating environmental contamination may be imposed upon all persons who 1) actively or passively participate in the activity, 2) profited from an activity that caused the contamination, or 3) will benefit economically from the remediation of the contamination. This Bulletin will briefly discuss the legal basis for subjecting corporations, shareholders, and directors to liability for the environmental issues affecting a corporation and will suggest numerous strategies that can be employed to limit such liability.

Corporate Liability

A corporation which uses hazardous materials can face a number of potential environmental issues. In addition to liability for contamination caused by a release of hazardous materials, a corporation which uses hazardous materials may face civil and criminal penalties if it fails to obtain required permits and approvals for its storage, use, transportation, discharge and disposal of hazardous materials or if it transfers hazardous waste to an unreliable waste disposal company. A corporation which uses hazardous materials may also face toxic tort suits if it exposes its employees or customers to hazardous materials, fails to provide adequate employee training or fails to provide required notice of hazardous materials dangers to employees, customers, neighbors or the public.