Navigating the New Reality of Equipment Leasing and CERCLA Liability

The federal judicial remedy provided in Atlantic Research will allow a landowner ' including an adjacent landowner ' to address contaminated land (and structures on the land) in federal court under CERCLA. This remedy is available even if neither the federal government nor a state brings an enforcement action. The decision puts to rest an issue that has been controversial ' and unsettled ' since the 1980 enactment of the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. '9601 et seq. It also opens the way for billions of dollars of payments by the federal government for actions of the military and other agencies.

Such contamination is widespread, particularly with respect to older commercial and industrial locations. Thus, parties who lease equipment that become real estate fixtures face substantially greater risks that they may be parties to costly environmental litigation. Such claims to clean up contaminated property and structures can be brought regardless of fault or actual control of equipment or the land on which that fixture sits.

In the short run, the decision will potentially unearth billions of dollars in new environmental lawsuits. In the longer term, it should affect the way most real estate sales and lease documents are drafted and transactions structured, at least those forms and transactions involving sophisticated participants in the real estate market.

Atlantic Research Operations

Atlantic retrofitted rocket motors for the United States from 1981 through 1986 at a facility in Camden, AR. As part of this work, high-pressure water spray was used to remove the old rocket fuel. The old propellant was removed, collected, and burned. The residue from this burning contaminated the soil and groundwater. Atlantic voluntarily investigated and cleaned up the contamination, incurring significant costs. It subsequently sued the United States, seeking to recover some of these costs.

Thousands of Similar Situations

Hundreds of similar filed cases exist around the country, as well as thousands of unfiled similar claims. Many of them involve claims against the United States brought by manufacturers instrumental in the massive and rapid industrial mobilization that occurred during World War II and in the Cold War that followed it. The United States was intimately involved in this mobilization, allocating critical materials for production and at times deciding key issues of waste disposal at specific factories. See, e.g., FMC Corp v. U.S. Dep't of Commerce, 29 F.3d 833 (3d Cir. 1994) (en banc) (government dictated details of production of high-tenacity rayon for tires during WWII). This was particularly true in the case of nuclear weapons production. The military also contaminated many of its bases during the course of the operation and maintenance of military equipment ranging from ships, to aircraft, to rifles.

Commercial Realities of High Cleanup Costs

Substantial controversy and litigation have arisen about financial responsibility for these cleanup costs and how such costs should be allocated. The commercial real estate market tries to factor in these costs, but such costs are driven up by uncertainties about the extent and sources of underlying contamination, timing of cleanup, cleanup standards, and allocation of financial responsibility. The federal Environmental Protection Agency ('EPA'), state agencies, and local regulatory authorities have all tried to protect the public from such contamination, but have often done so in ways that have resulted in years of delay and uncertainty. As a result, transactions involving contaminated property became even more difficult than the likely cleanup costs warranted.

In most litigated cases, the federal and state governments have successfully insisted that all parties who ever owned or ever occupied a piece of contaminated property faced retroactive, strict joint and several liability. This meant that all these parties potentially faced the full cleanup cost of contaminated property, regardless of how fleeting or inconsequential their involvement with that property or any waste disposed of there. Consequently, providing for an effective judicial resolution of financial responsibility among responsible parties is critical.

CERCLA is written as a strict liability statute, which means that a person can be liable without fault. Subject to very few defenses, '107(a), 42 U.S.C. '9607(a), makes current and past owners of contaminated property, current and past 'operators' of contaminated property, and those who 'arranged for disposal' of hazardous substances at a property, all potentially liable for all the costs of responding to (i.e., cleaning up) such hazardous substances.

When first enacted in 1980, CERCLA did not contain a specific contribution provision, though some courts held that a party that was partially responsible for contamination at a site could bring a CERCLA cost recovery action under '107(a) of CERCLA. See City of New York v. Exxon, 633 F.Supp. 609, 615-18 (S.D.N.Y. 1986) (allowing the city to sue industrial parties whose wastes had been dumped at city landfills without the industrial parties' knowledge).

In 1986, Congress amended CERCLA and added a specific contribution provision, '113(f). After the amendment, most federal courts held that a party who was partially responsible for contamination at a property could only bring a contribution action and could not maintain an action under '107. This case law trend substantially restricted recoveries to parties undertaking voluntary cleanups, as the courts subsequently held that a party could not recover attorneys' fees while successfully bringing a contribution action, Key Tronics Corp. v. United States, 511 U.S. 809, 114 S.Ct. 1960 (1994), and could only recover from another party once the plaintiff had paid more than its 'proportionate share.' Atlantic Research, 127 S.Ct. at 2338; United States v. Davis, 261 F.3d 1, 47-49 (1st Cir. 2001) (discussing fair share and contribution).

In 2004, the Justice Department reversed its long-standing position on these issues and urged the Supreme Court to hold that no contribution claim could be brought under '113(f) in the absence of a civil action under ”106 and 107, which courts had held could only be brought by the federal or state government. In Cooper Industries v. Aviall, 543 U.S. 157, 125 S.Ct. 577 (2004), the Court agreed, but declined to address the related issue of whether a potentially responsible party might instead have a claim under '107, as some courts had held before '113 was enacted in 1986.

As a result, there was serious question as to whether a party conducting a voluntary cleanup in the absence of enforcement litigation had any effective federal judicial remedy to force other responsible parties to help pay for such cleanup. These uncertainties created problems in negotiating voluntary cleanups with the EPA as well as with states and private parties. The problem became particularly pronounced in connection with federal property because the Justice Department refuses to file suit for the EPA against another federal agency for cost recovery.

Since the 2004 Aviall decision, several Courts of Appeal reconsidered the earlier line of cases limiting private parties to contribution claims. In doing so, the appellate courts focused on whether responsible parties could bring some action under '107. Atlantic Research, 127 S.Ct. at 2334; Consolidated Edison Co. of N.Y. v. UGI Utilities, Inc., 423 F. 3d 90 (2d Cir. 2005); Metropolitan Water Reclamation Dist. Of Greater Chicago v. North American Galvanizing & Coatings, Inc., 473 F.3d 824 (7th Cir. 2007). At least one circuit, however, accepted the reading of CERCLA urged by the administration, effectively leaving many parties without any effective judicial remedy. E.I. DuPont de Nemours & Co. v. United States, 460 F.3d 515 (3d Cir. 2006), vacated and remanded, 127 S.Ct. 2971, 551 U.S. __ (2007) (cleanup costs for defense production during WWII and aftermath). In Atlantic Research, the Supreme Court resolved this split among the circuits.

Federal Judicial Remedy for Private Party Environmental Cleanups Confirmed

The issue presented in the Supreme Court can be simply stated: Does CERCLA provide a federal judicial remedy for a party conducting a voluntary cleanup of hazardous substances in the absence of enforcement action under CERCLA by the EPA or a state agency?

The Supreme Court answered 'yes' to this question when it affirmed the Eighth Circuit. The Eighth Circuit held that '107 of CERCLA authorizes cost recovery by a private party conducting a voluntary cleanup, even in the absence of EPA or state enforcement action.

Section 107 thus provides a federal judicial remedy allowing a party conducting a voluntary cleanup to recover its cleanup costs against responsible parties under CERCLA, even if the party bringing the suit is also partially responsible. The Court indicated that the contribution provision may come into play in counterclaims and in the allocation of the cleanup costs.

The Court stated that this remedy overlaps with, but is distinct from, the contribution remedy in '113(f). The practical significance of the differing remedies includes different statutes of limitation and potentially different measures for recovery.

Real-World Significance of Decision

This decision is a significant help to landowners voluntarily cleaning up environmentally distressed property, allowing them to recover some cleanup expenses for existing contamination caused in whole or in part by others. By the same token, it may allow unexpected and often unwarranted claims to be brought against equipment leasing firms, as explained in more detail below and in next month's article.

The decision is also likely to increase the number of private-party CERCLA lawsuits, particularly where the federal government has potential liability for contamination. Because of Aviall, many such cases were either stayed or not filed, until the uncertainty about a federal judicial remedy was resolved.

The Court's decision affects almost every commercial and industrial real estate contract. It also leaves unsettled many related legal issues such as:

1) How should the courts allocate liability among parties?

2) Who bears the risk if a responsible party is unable to pay the damages?

3) Are cleanup settlements for a site really final for a settling party if they don't include all of the parties?

Until case law becomes much clearer, if you have a claim, it will be critical to file it under both ”107 and 113 of CERCLA, and to do so, if possible, within three years of its accrual, the applicable limitation under '113, even though '107 claims have a six-year statute of limitation. (The accrual dates also differ.) The case law is unclear as to which statute of limitation should govern in a case of overlapping claims, or whether one governs for one kind of expense and the other for a different kind of expense.

Prudent Steps in Real Estate and Fixture Transactions

If you lease, finance, or purchase real estate, including equipment that becomes a real estate fixture, consider the following actions, based on the Atlantic Research decision:

1) Expand environmental due diligence. Under CERCLA '101(20), a party who conducts effective pre-transactional environmental due diligence (as defined by EPA regulatory standards) prior to buying real property may have a defense against CERCLA cost recovery claims, whether brought by neighbors, tenants, or prior or later owners. Consequently, full compliance with the EPA's All Appropriate Inquiry ('AAI') standard is likely to become much more important. See 40 C.F.R. Part 312 (2007). That regulation relies upon the American Society of Testing and Materials ('ASTM') standard for such work, ASTM 1527-05. It is important to comply with the most recent ASTM standard and to do the work within six months before the closing, as required in the rule. If you are an equipment leasing firm, this may be a very new and unexpected step.

2) Strengthen contractual language, as needed, when drafting lease, finance, or sale documents, so the parties understand how the cleanup of pre-existing contamination is to be addressed, with special attention to waivers of CERCLA remedies, attorneys' fees, and indemnity provisions. This step includes revising equipment leases where the leased equipment becomes a fixture, because the statutory definition of a 'facility' under '101(9) of CERCLA expressly includes 'equipment':

a) Draft explicit waivers of judicial remedies if that is the parties' intent. Courts are likely to demand a very specific showing that a party has consciously waived such judicial remedies, similar to the great detail required for an effective jury trial waiver. Thus, a sale contract might have to recite that the property is purchased 'as is, where is, with all faults,' with a full opportunity for effective environmental due diligence, and with full awareness of, and a conscious decision to surrender, the judicial remedies a party may have under CERCLA '107, and equivalent state law, in the event contamination is later discovered at the property.

b) Negotiate an attorneys' fees recovery provision. Without it, private parties bringing cost recovery actions cannot recover attorneys' fees under Key Tronic Corp v. United States, 511 U.S. 809, 114 S.Ct. 1960 (1994).

c) Review indemnity provisions in land sale and lease and equipment lease agreement forms. These provisions will take on increased importance in light of the Court's revival of private cost recovery claims under '107. The judicial remedy provided by CERCLA is not a blank check for any remedial work the site owner or tenant wants to conduct. Rather, such work must conform to the National Contingency Plan, which includes a requirement that the public, including neighbors and other responsible parties, have an opportunity to comment on the proposed remedial work and its appropriateness. Thus, indemnity provisions will remain very important, as they may provide a broader remedy than '107 claims or an exclusive remedy, depending on the wording.

3) Hire seasoned environmental lawyers and field consultants to evaluate your transaction as early in a deal as feasible to assess potential environmental liability, the viability of lawsuits, if any, the potential for recovery of costs, and the possibility of future liability on sale of the contaminated land.

Conclusion

The Supreme Court's decision in Atlantic Research should help protect landowners who find they hold property contaminated by others. By the same token, it may allow substantial ' and unexpected ' environmental claims to proceed against equipment leasing companies where their equipment have become fixtures at contaminated sites.

Although the decision provides a new federal remedy for private parties, it is no substitute for making good business decisions about leasing, financing, or purchasing land. It also fails to answer many of the questions that parties should negotiate in their real estate and equipment leasing contracts.

Next month, the authors will suggest specific steps for those in the equipment leasing field to protect themselves against unexpected and costly environmental claims, which are likely to proliferate in the near future.

Russell V. Randle ([email protected]) is a partner at Patton Boggs LLP in the Washington, DC, office. For more than 25 years, he has litigated and negotiated major environmental cleanups and helped clients review, negotiate, and structure real estate and corporate transactions in order to redevelop and transfer environmentally distressed property. David G. Mayer ([email protected]) is a partner in the firm's Dallas office, where he practices with the Business Group, with emphasis on domestic and international asset-based financing/leasing, corporate finance, and project development and finance. His areas of focus include energy, infrastructure, technology, and aviation.

The Supreme Court's unanimous recent decision in United States v. Atlantic Research Corporation , 127 S.Ct. 2331, 551 U.S. ____ (2007), No. 06-562 (June 11, 2007) potentially affects every commercial real estate transaction in the United States, including those involving fixtures and leased equipment. This decision does so because the Court confirmed that a private party cleaning up contaminated land has an effective judicial remedy under federal law. Because of the breadth of the law under which it was decided ' the Comprehensive Environmental Response, Compensation and Liability Act ('CERCLA') or Superfund, 42 U.S.C. '9601, et seq. ' this decision affects not only owners and occupiers of land, but also the owners and users of leased equipment ' fixtures ' located on such land.

This month, we explain the Atlantic Research decision and some of the basic steps a party to a commercial real estate transaction should take to help protect itself from unexpected CERCLA claims resulting from this decision. In next month's issue, we will explain detailed steps tailored to help those in the equipment leasing field protect against such claims, which are now a larger risk for those leasing fixtures.

Overview

The federal judicial remedy provided in Atlantic Research will allow a landowner ' including an adjacent landowner ' to address contaminated land (and structures on the land) in federal court under CERCLA. This remedy is available even if neither the federal government nor a state brings an enforcement action. The decision puts to rest an issue that has been controversial ' and unsettled ' since the 1980 enactment of the federal Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. '9601 et seq. It also opens the way for billions of dollars of payments by the federal government for actions of the military and other agencies.

Such contamination is widespread, particularly with respect to older commercial and industrial locations. Thus, parties who lease equipment that become real estate fixtures face substantially greater risks that they may be parties to costly environmental litigation. Such claims to clean up contaminated property and structures can be brought regardless of fault or actual control of equipment or the land on which that fixture sits.

In the short run, the decision will potentially unearth billions of dollars in new environmental lawsuits. In the longer term, it should affect the way most real estate sales and lease documents are drafted and transactions structured, at least those forms and transactions involving sophisticated participants in the real estate market.

Atlantic Research Operations

Atlantic retrofitted rocket motors for the United States from 1981 through 1986 at a facility in Camden, AR. As part of this work, high-pressure water spray was used to remove the old rocket fuel. The old propellant was removed, collected, and burned. The residue from this burning contaminated the soil and groundwater. Atlantic voluntarily investigated and cleaned up the contamination, incurring significant costs. It subsequently sued the United States, seeking to recover some of these costs.

Thousands of Similar Situations

Hundreds of similar filed cases exist around the country, as well as thousands of unfiled similar claims. Many of them involve claims against the United States brought by manufacturers instrumental in the massive and rapid industrial mobilization that occurred during World War II and in the Cold War that followed it. The United States was intimately involved in this mobilization, allocating critical materials for production and at times deciding key issues of waste disposal at specific factories. See, e.g., FMC Corp v. U.S. Dep't of Commerce , 29 F.3d 833 (3d Cir. 1994) ( en banc ) (government dictated details of production of high-tenacity rayon for tires during WWII). This was particularly true in the case of nuclear weapons production. The military also contaminated many of its bases during the course of the operation and maintenance of military equipment ranging from ships, to aircraft, to rifles.

Commercial Realities of High Cleanup Costs

Substantial controversy and litigation have arisen about financial responsibility for these cleanup costs and how such costs should be allocated. The commercial real estate market tries to factor in these costs, but such costs are driven up by uncertainties about the extent and sources of underlying contamination, timing of cleanup, cleanup standards, and allocation of financial responsibility. The federal Environmental Protection Agency ('EPA'), state agencies, and local regulatory authorities have all tried to protect the public from such contamination, but have often done so in ways that have resulted in years of delay and uncertainty. As a result, transactions involving contaminated property became even more difficult than the likely cleanup costs warranted.

In most litigated cases, the federal and state governments have successfully insisted that all parties who ever owned or ever occupied a piece of contaminated property faced retroactive, strict joint and several liability. This meant that all these parties potentially faced the full cleanup cost of contaminated property, regardless of how fleeting or inconsequential their involvement with that property or any waste disposed of there. Consequently, providing for an effective judicial resolution of financial responsibility among responsible parties is critical.

CERCLA is written as a strict liability statute, which means that a person can be liable without fault. Subject to very few defenses, '107(a), 42 U.S.C. '9607(a), makes current and past owners of contaminated property, current and past 'operators' of contaminated property, and those who 'arranged for disposal' of hazardous substances at a property, all potentially liable for all the costs of responding to (i.e., cleaning up) such hazardous substances.

When first enacted in 1980, CERCLA did not contain a specific contribution provision, though some courts held that a party that was partially responsible for contamination at a site could bring a CERCLA cost recovery action under '107(a) of CERCLA. See City of New York v. Exxon , 633 F.Supp. 609, 615-18 (S.D.N.Y. 1986) (allowing the city to sue industrial parties whose wastes had been dumped at city landfills without the industrial parties' knowledge).

In 1986, Congress amended CERCLA and added a specific contribution provision, '113(f). After the amendment, most federal courts held that a party who was partially responsible for contamination at a property could only bring a contribution action and could not maintain an action under '107. This case law trend substantially restricted recoveries to parties undertaking voluntary cleanups, as the courts subsequently held that a party could not recover attorneys' fees while successfully bringing a contribution action, Key Tronics Corp. v. United States , 511 U.S. 809, 114 S.Ct. 1960 (1994), and could only recover from another party once the plaintiff had paid more than its 'proportionate share.' Atlantic Research, 127 S.Ct. at 2338; United States v. Davis , 261 F.3d 1, 47-49 (1st Cir. 2001) (discussing fair share and contribution).

In 2004, the Justice Department reversed its long-standing position on these issues and urged the Supreme Court to hold that no contribution claim could be brought under '113(f) in the absence of a civil action under ”106 and 107, which courts had held could only be brought by the federal or state government. In Cooper Industries v. Aviall , 543 U.S. 157, 125 S.Ct. 577 (2004), the Court agreed, but declined to address the related issue of whether a potentially responsible party might instead have a claim under '107, as some courts had held before '113 was enacted in 1986.

As a result, there was serious question as to whether a party conducting a voluntary cleanup in the absence of enforcement litigation had any effective federal judicial remedy to force other responsible parties to help pay for such cleanup. These uncertainties created problems in negotiating voluntary cleanups with the EPA as well as with states and private parties. The problem became particularly pronounced in connection with federal property because the Justice Department refuses to file suit for the EPA against another federal agency for cost recovery.

Since the 2004 Aviall decision, several Courts of Appeal reconsidered the earlier line of cases limiting private parties to contribution claims. In doing so, the appellate courts focused on whether responsible parties could bring some action under '107. Atlantic Research, 127 S.Ct. at 2334; Consolidated Edison Co. of N.Y. v. UGI Utilities, Inc. , 423 F. 3d 90 (2d Cir. 2005); Metropolitan Water Reclamation Dist. Of Greater Chicago v. North American Galvanizing & Coatings, Inc. , 473 F.3d 824 (7th Cir. 2007). At least one circuit, however, accepted the reading of CERCLA urged by the administration, effectively leaving many parties without any effective judicial remedy. E.I. DuPont de Nemours & Co. v. United States , 460 F.3d 515 (3d Cir. 2006), vacated and remanded , 127 S.Ct. 2971, 551 U.S. __ (2007) (cleanup costs for defense production during WWII and aftermath). In Atlantic Research, the Supreme Court resolved this split among the circuits.

Federal Judicial Remedy for Private Party Environmental Cleanups Confirmed

The issue presented in the Supreme Court can be simply stated: Does CERCLA provide a federal judicial remedy for a party conducting a voluntary cleanup of hazardous substances in the absence of enforcement action under CERCLA by the EPA or a state agency?

The Supreme Court answered 'yes' to this question when it affirmed the Eighth Circuit. The Eighth Circuit held that '107 of CERCLA authorizes cost recovery by a private party conducting a voluntary cleanup, even in the absence of EPA or state enforcement action.

Section 107 thus provides a federal judicial remedy allowing a party conducting a voluntary cleanup to recover its cleanup costs against responsible parties under CERCLA, even if the party bringing the suit is also partially responsible. The Court indicated that the contribution provision may come into play in counterclaims and in the allocation of the cleanup costs.

The Court stated that this remedy overlaps with, but is distinct from, the contribution remedy in '113(f). The practical significance of the differing remedies includes different statutes of limitation and potentially different measures for recovery.

Real-World Significance of Decision

This decision is a significant help to landowners voluntarily cleaning up environmentally distressed property, allowing them to recover some cleanup expenses for existing contamination caused in whole or in part by others. By the same token, it may allow unexpected and often unwarranted claims to be brought against equipment leasing firms, as explained in more detail below and in next month's article.

The decision is also likely to increase the number of private-party CERCLA lawsuits, particularly where the federal government has potential liability for contamination. Because of Aviall, many such cases were either stayed or not filed, until the uncertainty about a federal judicial remedy was resolved.

The Court's decision affects almost every commercial and industrial real estate contract. It also leaves unsettled many related legal issues such as:

1) How should the courts allocate liability among parties?

2) Who bears the risk if a responsible party is unable to pay the damages?

3) Are cleanup settlements for a site really final for a settling party if they don't include all of the parties?

Until case law becomes much clearer, if you have a claim, it will be critical to file it under both ”107 and 113 of CERCLA, and to do so, if possible, within three years of its accrual, the applicable limitation under '113, even though '107 claims have a six-year statute of limitation. (The accrual dates also differ.) The case law is unclear as to which statute of limitation should govern in a case of overlapping claims, or whether one governs for one kind of expense and the other for a different kind of expense.

Prudent Steps in Real Estate and Fixture Transactions

If you lease, finance, or purchase real estate, including equipment that becomes a real estate fixture, consider the following actions, based on the Atlantic Research decision:

1) Expand environmental due diligence. Under CERCLA '101(20), a party who conducts effective pre-transactional environmental due diligence (as defined by EPA regulatory standards) prior to buying real property may have a defense against CERCLA cost recovery claims, whether brought by neighbors, tenants, or prior or later owners. Consequently, full compliance with the EPA's All Appropriate Inquiry ('AAI') standard is likely to become much more important. See 40 C.F.R. Part 312 (2007). That regulation relies upon the American Society of Testing and Materials ('ASTM') standard for such work, ASTM 1527-05. It is important to comply with the most recent ASTM standard and to do the work within six months before the closing, as required in the rule. If you are an equipment leasing firm, this may be a very new and unexpected step.

2) Strengthen contractual language, as needed, when drafting lease, finance, or sale documents, so the parties understand how the cleanup of pre-existing contamination is to be addressed, with special attention to waivers of CERCLA remedies, attorneys' fees, and indemnity provisions. This step includes revising equipment leases where the leased equipment becomes a fixture, because the statutory definition of a 'facility' under '101(9) of CERCLA expressly includes 'equipment':

a) Draft explicit waivers of judicial remedies if that is the parties' intent. Courts are likely to demand a very specific showing that a party has consciously waived such judicial remedies, similar to the great detail required for an effective jury trial waiver. Thus, a sale contract might have to recite that the property is purchased 'as is, where is, with all faults,' with a full opportunity for effective environmental due diligence, and with full awareness of, and a conscious decision to surrender, the judicial remedies a party may have under CERCLA '107, and equivalent state law, in the event contamination is later discovered at the property.

b) Negotiate an attorneys' fees recovery provision. Without it, private parties bringing cost recovery actions cannot recover attorneys' fees under Key Tronic Corp v. United States, 511 U.S. 809, 114 S.Ct. 1960 (1994).

c) Review indemnity provisions in land sale and lease and equipment lease agreement forms. These provisions will take on increased importance in light of the Court's revival of private cost recovery claims under '107. The judicial remedy provided by CERCLA is not a blank check for any remedial work the site owner or tenant wants to conduct. Rather, such work must conform to the National Contingency Plan, which includes a requirement that the public, including neighbors and other responsible parties, have an opportunity to comment on the proposed remedial work and its appropriateness. Thus, indemnity provisions will remain very important, as they may provide a broader remedy than '107 claims or an exclusive remedy, depending on the wording.

3) Hire seasoned environmental lawyers and field consultants to evaluate your transaction as early in a deal as feasible to assess potential environmental liability, the viability of lawsuits, if any, the potential for recovery of costs, and the possibility of future liability on sale of the contaminated land.

Conclusion

The Supreme Court's decision in Atlantic Research should help protect landowners who find they hold property contaminated by others. By the same token, it may allow substantial ' and unexpected ' environmental claims to proceed against equipment leasing companies where their equipment have become fixtures at contaminated sites.

Although the decision provides a new federal remedy for private parties, it is no substitute for making good business decisions about leasing, financing, or purchasing land. It also fails to answer many of the questions that parties should negotiate in their real estate and equipment leasing contracts.

Next month, the authors will suggest specific steps for those in the equipment leasing field to protect themselves against unexpected and costly environmental claims, which are likely to proliferate in the near future.

Russell V. Randle ([email protected]) is a partner at Patton Boggs LLP in the Washington, DC, office. For more than 25 years, he has litigated and negotiated major environmental cleanups and helped clients review, negotiate, and structure real estate and corporate transactions in order to redevelop and transfer environmentally distressed property. David G. Mayer ([email protected]) is a partner in the firm's Dallas office, where he practices with the Business Group, with emphasis on domestic and international asset-based financing/leasing, corporate finance, and project development and finance. His areas of focus include energy, infrastructure, technology, and aviation.