The Controlled Allocation of Liability Act (CALA) Program

What Is CALA?

The Controlled Allocation of Liability Act (CALA) is a voluntary process that allows PLPs to petition for an allocation of liability as an alternative to the strict, joint and several liability scheme 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 throughout the CALA process.

CALA Legislation

The Montana Legislature added the Controlled Allocation of Liability Act (CALA; §§ 75-10-742 through 752, Montana Code Annotated (MCA)) to the Comprehensive Environmental Cleanup and Responsibility Act (CECRA; §§ 75-10-701 through 752, MCA), the state Superfund law, in 1997. The Department administers CALA including the orphan share fund it establishes.

CALA History

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 two 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.

There are two other facilities that are in the allocation process but at which allocation is not yet complete.

The CMC Asbestos Bozeman facility is located in downtown Bozeman (Gallatin County).

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 2007, is approximately 5.5 million dollars.

In the absence of a demonstrated hardship, claims for orphan share reimbursement may not be submitted until the cleanup is complete. This ensures that facilities are fully remediated before reimbursement. The result is that a PLP could be expending costs it anticipates being reimbursed for some time before the PLP actually submits a claim.