The Controlled Allocation of Liability Act (CALA) Program
What Is CALA?
The Controlled Allocation of Liability Act (CALA) is a voluntary process that allows potentially liable persons (PLPs) to petition for an allocation of liability as an alternative to the strict, joint and several liability provisions included in CECRA. CALA provides a streamlined alternative to litigation that involves negotiations designed to allocate liability among persons involved at facilities requiring cleanup, including bankrupt or defunct persons. Cleanup of these facilities must occur concurrently with the CALA process and CALA provides the funding for the orphan share of the cleanup. Since CECRA cleanups typically involve historical contamination, liable persons often include entities that are bankrupt or defunct and not affiliated with any viable person by stock ownership. The share of cleanup costs for which these bankrupt or defunct persons are responsible is the orphan share. The Department represents the interests of the orphan share.
The Montana Legislature added the Controlled Allocation of Liability Act (CALA; §§ 75-10-742 through 751, Montana Code Annotated (MCA)) to the Comprehensive Environmental Cleanup and Responsibility Act (CECRA; §§ 75-10-701 through 757, MCA), the state Superfund law, in 1997. The Department administers CALA including the orphan share fund it establishes.
The 2009 Montana Legislature modified the statute to allow for the early reimbursement of the orphan share portion of the cost for completion of the remedial investigation and the feasibility study.
Under both state and federal Superfund, liability is strict, joint, and several (§ 75-10-715(1), MCA). In 1995, the Montana Legislature required a study of joint and several liability. The Department formed a study group around four stakeholder caucuses: public and environmental interest groups; potentially liable persons (PLPs) (including business and industry); state and federal agencies; and local governments. As a result of the committee’s work, two bills were proposed to the Legislature and ultimately, with minor modifications, were passed as CALA.
The CALA Process
CALA was designed to be a streamlined, voluntary allocation process. For facilities where a PLP does not initiate the CALA process, strict, joint and several liability remains. This flowchart outlines the basic CALA process. The flowchart does not include some details like the additional fifteen days the PLPs have to designate a lead person if the Department rejects their original choice. However, the flowchart does provide all the major steps in the CALA process. Any person who has been noticed as being potentially liable as well as any potentially liable person who has received approval of a voluntary cleanup plan can petition to initiate the CALA process. CALA includes fourteen factors to be considered in allocating liability. Based on these factors, causation weighs heavily in allocation, but is not the only factor considered.
Current CALA Facilities
The Department currently has three facilities that have completed allocations under CALA:
The Corbin Flats facility is located just south of Helena, in and near the town of Corbin, in Jefferson County.
The S&W Sawmill facility is located in Darby, south of Hamilton, in Ravalli County.
The CMC Asbestos Bozeman facility is located in downtown Bozeman (Gallatin County).
There is one other facility that is in the allocation process but at which allocation is not yet complete.
The Joslyn Street Tailings facility is located in Helena (Lewis and Clark County).
The Orphan Share Fund
The funding source known as the orphan share fund is a state special revenue fund created from a variety of sources. The legislature has allocated funds from the resource indemnity and groundwater assessment taxes and from the oil and natural gas production taxes. The balance of the orphan share fund, as of January 2009, is approximately 9.5 million dollars.
If the lead PLP demonstrates a financial hardship, the Department may allow the submission of claims and may reimburse the claims prior to the completion of remedial actions.
As of October 1, 2009, the revised statute allows for reimbursement of the orphan share portion of the costs associated at two other steps in the CECRA process: early reimbursement may occur upon completion and Department approval of a report evaluating the nature and extent of contamination (remedial investigation) and a report formulating and evaluating final remediation alternatives (feasibility study). This early reimbursement is limited to those eligible costs incurred by the lead liable person for the preparation of these reports. Any remaining eligible costs will be reimbursed upon completion of all remedial actions at the facility, except for operation and maintenance.