Liability Tools for Local Governments

State Tools

• Local Government Exemption from Wisconsin Law

Federal Tools

• Municipal Exemption under CERCLA
• Third-Party Defense to CERCLA Liability
• All Appropriate Inquiry

State Tools

Local Government Exemption from Wisconsin Law

In 1993, the Wisconsin Legislature created an environmental liability exemption for local governments (LGUs), including some economic development corporations, in s. 292.11(9)(e), Wis. Stats [exit DNR]. These laws are intended to help LGUs redevelop their brownfields, and it removes most environmental liability for LGUs that acquire property through the following methods:

• tax delinquency;
• bankruptcy proceedings;
• condemnation;
• eminent domain according to ch.32, Wis. Stats [exit DNR].;
• escheat;
• slum clearance or blight elimination;
• using Stewardship funds; or
• acquisition from another eligible LGU.

A local government is not responsible for investigating or cleaning up hazardous substances, including contaminated soil and groundwater, at property acquired through one of the above methods, as long as it:

• did not cause the contamination;
• restricts access in order to minimize costs or damages that may result from unauthorized access to the property;
• samples and analyzes any unidentified substances in containers that are stored above ground;
• removes and properly disposes of, or properly stores, any hazardous substances in above ground containers that are leaking or likely to leak;
• immediately reports the presence of hazardous substances to DNR; and
• takes any necessary actions to reduce to acceptable levels any substantial threats, if the local government plans to use the property.

For more information about this exemption, please see Liability Protection for Local Governmental Units and Economic Development Corporations (RR-579) [PDF 304KB].

Obtaining the Local Government Liability Exemption

The local government environmental liability exemption is statutory – you do not need DNR’s approval to obtain it.

However, upon request, DNR can provide a fee-based ($500) liability clarification letter that explains how the LGU exemption applies to a specific property. Use our Technical Assistance and Environmental Liability Clarification Request (Form 4400-237) [PDF 70KB] to request a liability clarification letter.

Federal Tools

Municipal Exemption under CERCLA

According to the Superfund law (Section 101(20)(D) of CERCLA), a “unit of state or local government which acquired ownership or control involuntarily through bankruptcy, tax delinquency, abandonment or other circumstances in which the government involuntarily acquires title by virtue of its function as a sovereign” is not considered to be an “owner” or “operator”.

In October 1995, the EPA issued a policy clarifying that when a municipality acquires property through tax delinquency, foreclosure, demolition lien foreclosure, escheat, abandonment, condemnation, or eminent domain, the municipality will not be held liable for contamination by the federal Superfund program.

This policy was adopted as law in the Asset Conservation, Lender Liability and Deposit Insurance Protection Act of 1996. The exemption also applies to municipalities that acquire property from a county that took the property through an involuntary action. Although tax foreclosure and other acquisitions of property by municipalities often require some action by the LGUs, they are still considered to be “involuntary acquisitions”. The EPA has concluded that it is not necessary for the municipality to be completely passive in order for the acquisition to be considered “involuntary” for purposes of CERCLA.

This exemption does not apply to a municipality that caused the spill. A municipality should ensure that it does not cause or contribute to an actual or potential release at a property that it has acquired involuntarily.

Third-Party Defense to CERCLA

Often under Superfund one private party sues another to obtain money to assist with cleanup costs. This is known as a “third-party” lawsuit. A municipality that acquires property involuntarily, or through the exercise of eminent domain by purchase or condemnation, can be protected from the “third-party” liability under CERCLA, if they meet certain minimum requirements.

All Appropriate Inquiry

All Appropriate Inquiry is a federal code (40 CFR, Part 312 [exit DNR]) promulgated by the Environmental Protection Agency (EPA) that establishes standards for conducting Phase I of an environmental site assessment. AAI is commonly done prior to commercial or industrial property transactions to assess the likelihood of contamination, and to begin collecting information about the liability for clean-up if contamination is found. Conducting AAI prior to purchase of a property provides a legal defense from CERCLA liability, even if the assessment identifies contamination.

For more information, please visit our Liability and AAI pages.

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