In the 9th Circuit, Under CERCLA, the Cleanup Hitter or Liable Owner is the One on Deck When the Cleanup Occurs, Not When the Suit is Instituted

Believe it or not, in the 30 years of recorded decisions under CERCLA, the issue of who is an “owner” has not been decided, according to the Ninth Circuit Court of Appeals in California v. Hearthside Residential Corp., case number 09-55389 (Decided July 22, 2010).

CERCLA Section 107(a)(1) imposes liability on the current “owner and operator of a . . . facility.” 42 U.S.C. § 9607(a)(1). In the Hearthside case, Hearthside Residential Corporation (“Hearthside”) sold the property in question before the State of California sued it for reimbursement of clean-up costs. The Ninth Circuit determined that ownership for the purposes of CERCLA liability must be determined at the time of cleanup. The Court distinguished United States v. Fleet Factors Corp., 901 F.2d 1550, 1554 (11th Cir. 1990), abrogation on other grounds by statute recognized in Monarch Tile, Inc. v. City of Florence, 212 F.3d 1219, 1221 n.2 (11th Cir. 2000) by noting that Fleet Factors did not decide the temporal feature of when one is an owner for CERCLA liability. Other courts have interpreted the Fleet Factors case to impose owner liability on a party that owned or operated the facility at the time of the filing of the complaint. The Ninth Circuit noted that the Fourth and Sixth Circuits, while not squarely deciding the issue, in dicta suggested that the liable owner was an owner at the time of remediation or cleanup.

The Hearthside decision comes on the heels of two decisions recently decided by Judge Robert Bryan in the Western District of Washington State, in United States v. Washington State Department of Transportation, and discussed in an earlier blog determining what is a “‘facility’ under CERCLA and interpreting ‘arrranger.'” Judge Bryan’s “facility” decision was a case of first impression, while his “arranger” opinion built on the U.S. Supreme Court decision in Burlington Northern v. United States, 129 S.Ct. 1870, 1875-76 (2009).

Notwithstanding thirty years of CERCLA decisions, the courts are only now coming to determine the meanings of basic terms like “arranger,” “facility,” and “owner.” Clearly it pays to follow basic law school advice and read the statute!

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