Every business should be concerned about environmental issues. Compliance with environmental laws can be a significant and expensive part of business operations. Both the seller and the buyer should address compliance with federal and state environmental laws and regulations and should evaluate their respective risks of liability. Potential liabilities and costs of compliance may exceed the purchase price.
Many asset purchases will include the purchase of real property. Buyers in transactions of this nature must concern themselves with both federal and state environmental protection laws, which may impose liabilities on current owners even if the predecessors were the polluters.
The federal law is known as the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. §§ 9601 et seq. and it empowers the Environmental Protection Agency (EPA) to impose civil penalties on owners of polluted land. The Massachusetts Department of Environmental Protection (DEP) has concurrent jurisdiction and will also impose liabilities on owners of polluted land under the Massachusetts clean up law, G.L. c. 21E. (Chapter 21E).
Liability under CERCLA and Chapter 21E is based on status. Liability will be imposed without regard to fault and runs to the current owner or operator of the contaminated property. Moreover, the liability is joint and several, so the current owner or operator of contaminated property may be responsible for the full amount of response costs where it cannot be determined which parties caused the injury to the property.