Court Rules Feds Liable For Pollution At Its Own Projects

June 14th, 2007

Usually when a toxic spill occurs, regulators can issue fines or take legal action to force companies to clean up emissions. Yesterday the U.S. Supreme Court turned the tables on the government by ruling that the government can be liable for a portion of costs incurred when contractors clean up toxic spills while doing work for federal agencies.

The court decided that the federal government is liable for costs incurred when Atlantic Research Corp., a Virginia-based government contractor, proactively cleaned up a site in Camden, Arkansas where rocket propellant had leaked from the worksite into the soil and groundwater. The company had been hired to retrofit rocket motors.

This is a case where a private entity chose to act based on its own commitment to environmental stewardship instead of waiting on government sanctions.

In short, the court’s decision says that the government is subject to its own environmental laws. The Bush administration opposed sharing the cleanup costs, arguing that Atlantic had no standing to sue because the federal regulators had not cited the company for any violations of federal law. It was a move widely seen as an attempt by government officials to avoid financial liability for pollution that happens during federally-sponsored projects.

The government is widely regarded as one of the nation’s leading polluters. The court’s unanimous decision is expected to impact several other federally-sponsored projects where the government’s position previously discouraged companies from removing contaminants. It is estimated that thousands of sites nationwide that are contaminated with hazardous materials could be cleaned up as a result of the decision. Waiting for regulators to initiate enforcement actions could mean years of delays. That’s why the court’s decision is so important, because now companies can proceed with clean up actions without waiting for prior federal approval.

In this case, the company was willing to act while regulators chose not to act. As I have previously noted more and more companies are taking proactive steps to show they have solid environmental stewardship practices, in accordance with their corporate governance commitments. Companies now want to avoid the perception that they pollute without regard to sustainability.

Now it’s the private sector that is moving to address sustainability issues, while the government is slow to respond. That is a trend that bodes well for the future.

Tags: environmental laws financial liability government sanctions regulators toxic spills

Entry Filed under: Sustainability, Corporate Responsibility, Corporate Governance