Local Government Cost Recovery

The 1999-2001 state budget created a new mechanism to help local governments (LGUs) recover costs of environmental cleanup on properties the LGU acquires involuntarily. If an LGU acquires property through tax delinquency, bankruptcy proceedings, condemnation, eminent domain (according to Ch. 32, Wis. Stats. [exit DNR]), escheat, for slum clearance or blight elimination, by using Stewardship funds, or from another eligible LGU, the LGU is authorized to take action to recover costs it incurs in investigating and cleaning up a property on which a hazardous substance has been discharged (s. 292.33, Wis. Stats. [exit DNR]).

This action may be initiated against one or more of the following persons:

1. a person who causes or caused the discharge of a hazardous substance on the property; and
2. a person who, at the time the property is acquired by the LGU, possesses or controls the hazardous substance that was discharged on the property.

If the person that caused the discharge is not known or financially able to pay for all or a portion of the costs, the LGU may recover those costs from the person from whom the LGU acquired the property.

If a responsible party that caused the discharge is known and able to pay all or a portion of the costs, the person that last possessed the property before the LGU acquired the property is only responsible to pay any costs not recoverable from the persons that caused the discharge of the hazardous substance.

An LGU cannot recover costs from a responsible person who qualifies for an exemption under the Spill Law [exit DNR]. The LGUs can recover the following reasonable and necessary costs that it incurs:

• investigating environmental contamination on the property and planning remedial activities;
• conducting remedial activities to restore the property for its intended future use;
• administering the investigation or remedial activities; and
• bringing the cost recovery action, including costs, disbursement and engineering fees, but not attorney fees.

Recoverable costs are reduced by the increase in fair market value of the property after completion of the cleanup activities. In addition, if an LGU that recovers costs received any state funds for the investigation, remediation and administration of the investigation or remedial activities – other than state-funded response program funds under the hazardous substance spills and environmental repair statute – the LGU is required to reimburse the state for those granted funds.

A cost recovery action by the local government has to be started within six years after the date the local government completes the remedial activities.

Local governments could use the cost recovery procedures described above instead of or in addition to the existing negotiation and cost recovery procedures laid out in s. 292.35, Wis. Stats. [exit DNR] The negotiation and cost recovery procedures in s. 292.33, Wis. Stats. [exit DNR] authorize LGUs to negotiate with parties responsible for hazardous substance spills to allow those parties to share the costs of, and cooperate in, cleanup action on contaminated land owned by the LGU.

This provision also applies to landfills owned by LGUs. This process is conducted with the help of an umpire but without direct involvement in the negotiations by the DNR or the Wisconsin Department of Justice.