July 02, 2018

In Brief

John Jacus

CERCLA, contractual relationship

 

Cal. Dep’t of Toxic Substances Control v. Westside Delivery, LLC, 888 F.3d 1085 (9th Cir. 2018).

In a case involving a question of first impression, the Ninth Circuit reversed the district court’s grant of summary judgment in a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) action for recovery of response costs, holding that a defendant that purchased contaminated property under California’s tax sale system is not entitled to the statutory third-party defense. The court observed that CERCLA’s broad definition of “contractual relationship” includes voluntary and involuntary transfers of possession from one party to another, and, under the statute, only government entities are protected from liability for involuntary transfers of contaminated property. Additionally, because the release of hazardous pollutants occurred on the site while the previous owner held title, the court found that the polluting activities occurred “in connection with” the contractual relationship with the defendant, barring the innocent landowner defense. The court also held that Congress intended CERCLA’s innocent landowner defense to apply in very narrow instances—when the buyer is without actual or constructive knowledge of the contamination—and observed that a private purchaser of a tax defaulted property “should be more wary of preexisting contamination than a typical land purchaser.”

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