Dry cleaners have operated in nearly every town for decades. The solvent most of them used, perchloroethylene or PCE, does a great job removing grease and stains from clothes. But when PCE leaks from a dry cleaner’s equipment – and it often does – it sinks through the soil, dissolves into groundwater, and can travel far beyond the property line. Cleaning up that contamination costs millions. The question for property owners, buyers, and neighbors is simple: who foots the bill? The answer, under environmental liability law, is not always the party that spilled the chemical. It is often the party that simply owns the land.
PCE is classified as a hazardous substance under both federal and state laws. That classification triggers a legal framework known as strict liability. Strict liability means you do not have to prove that the landowner or operator was negligent. You do not need to show they knew about the leak or that they did anything wrong. If PCE is found in the soil or groundwater on a property, the current owner, the past owner who was in control when the spill happened, and anyone who arranged for the disposal of the solvent can all be held responsible for cleanup costs. This is not a fault-based system. It is a cost-recovery system designed to make the environment whole as quickly as possible, even if that means forcing an innocent buyer to pay for someone else’s mess.
The main federal law driving this is the Comprehensive Environmental Response, Compensation, and Liability Act, known as CERCLA or Superfund. Under CERCLA, four categories of parties can be liable: the current owner or operator of the contaminated property, the owner or operator at the time the contamination occurred, anyone who generated the hazardous substance and sent it to the site, and anyone who transported it. For a typical dry cleaner, the generator is the dry-cleaning business itself. The operator is the person running the machines. But if the dry cleaner was a tenant, the landlord who owns the building and the land underneath is also a current owner. If that landlord bought the property after the dry cleaner had already closed and left behind leaking equipment, the landlord is still on the hook. CERCLA does not require the contamination to have happened on your watch.
State laws often add another layer. Many states have their own superfund programs that mirror or expand federal liability. Some states impose strict liability that is even broader, holding lenders or property managers responsible in certain situations. Others have special funds financed by dry-cleaning industry fees that pay for cleanup of historic contamination, but those funds are limited and often require the responsible party to contribute to the deductible. Even when state funds are available, the property owner may still face lawsuits from neighbors whose wells have been contaminated or from nearby businesses whose property values have dropped.
Insurance coverage is another battleground. Old general liability policies from the 1970s and 1980s sometimes had pollution exclusions that barred coverage for gradual leaks, but many policies from that era did not. The result is decades of litigation between property owners and their insurance carriers over whether a PCE leak that started in 1985 and was discovered in 2005 is covered. The direct, no-nonsense reality is that property owners cannot count on insurance to pay. They must assume they will bear the cost themselves unless they can prove the policy specifically covers long-term groundwater contamination.
For anyone buying or selling commercial property that ever housed a dry cleaner – or that is adjacent to one – the practical takeaway is clear. Phase I environmental site assessments are not optional. They are a cheap form of insurance. If the assessment turns up evidence of a past dry cleaner, a Phase II investigation with soil borings and groundwater monitoring wells is the next step. If PCE is found, the seller may have to remediate before the sale closes, or the buyer must negotiate a price reduction and a plan for cleanup. In many cases, the only way to limit future liability is to obtain a covenant not to sue from the state environmental agency after remediation is complete. That covenant protects the current owner but does not protect against claims from third parties.
The bottom line is that groundwater and soil contamination from dry cleaner solvents is a classic example of environmental liability’s harshest rule: the polluter pays, but if the polluter is gone, bankrupt, or impossible to find, the landowner pays. Innocence is not a defense. Ignorance is not a defense. The only defense is a clean property, proven by testing, documented with regulatory sign-off, and protected by careful contracts.
