Background Note | HBS Case Collection | February 1994 (Revised August 1994)

Note on Contingent Environmental Liabilities

by Richard H.K. Vietor and Forest L. Reinhardt

Abstract

Addresses contingent environmental liabilities that are the result of unforeseen environmental risks where the dollar amount of such liabilities is unknown and depends on future events. In contrast, fines for violating environmental laws are liabilities, but are not considered contingent liabilities as such fines are relatively predictable. Covers liabilities under common law doctrines (including toxic torts), the Resource Conservation and Recovery Act (RCA), and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). In particular, discusses lender liability issues as of 1993 and briefly discusses financial reporting requirements. Concludes with a discussion of strategies for managing such liabilities.

Keywords: Legal Liability; Risk Management; Natural Environment; Laws and Statutes; Pollution and Pollutants; Governance Compliance; United States;

Citation:

Vietor, Richard H.K., and Forest L. Reinhardt. "Note on Contingent Environmental Liabilities." Harvard Business School Background Note 794-098, February 1994. (Revised August 1994.)