Academic journal article Environmental Law

Contractual Relationships under Cercla: Restoring Cercla's Innocent Landowner Defense, One Circuit at a Time

Academic journal article Environmental Law

Contractual Relationships under Cercla: Restoring Cercla's Innocent Landowner Defense, One Circuit at a Time

Article excerpt

  I. INTRODUCTION                                                 1077  II. BACKGROUND                                                   1079      A. CERCLA and SARA Amendments                                1080      B. Third Party Defense                                       1081      C. Innocent Landowner Defense                                1082 III. CIRCUIT SPLIT                                                1084      A. Second Circuit                                            1085      B. Ninth Circuit                                             1089         1. Westside Delivery Analysis                             1090         2. So Does a Tax Deed Really Create a "Contractual        1091            Relationship"?            a. One-Transaction View                                1092            b. Two-transaction View                                1093            c. Ninth Circuit Finds the Existence of Contractual    1093            Relationship Regardless of One or Two            Transactions         3. Should a Tax Sale Create the Requisite Contractual     1094            Relationship?  IV. NINTH CIRCUIT VIEW IS CORRECT                                1096      A. Overview                                                  1096      B. Argument                                                  1098   V. WHY "IN CONNECTION WITH A CONTRACTUAL RELATIONSHIP"          1100      SHOULD NOT BE LIMITED      TO ONLY THOSE RELATED DIRECTLY TO CONTAMINATION      A Basic Statutory Construction Supports the Ninth Circuit    1101        Reasoning        1. Plain Meaning                                           1101        2. Purpose                                                 1102        3. Statute as a Whole                                      1102      B. Loopholes and Anomalous Results Created by the Second     1103         Circuit's Interpretation and Westside Delivery's Reading         of CERCLA  VI. CONCLUSION                                                   1104 

I. INTRODUCTION

The Comprehensive Environmental Response, Compensation, and Liability Act, (1) as amended by the Superfund Amendments and Reauthorization Act (2) (collectively CERCLA), is arguably the closest thing to capitalistic environmental justice in our modern scheme of environmental legislation. Liability is draconian and exceptions are specific and limited. (3) This scheme is supported by the statute's purpose: "to provide for liability, compensation, cleanup, and emergency response for hazardous substances released into the environment and the cleanup of inactive hazardous waste disposal sites." (4) Liability is thus designed to generate remediation and cost recovery, which often exceeds millions of dollars. (5) By forcing polluters to supply considerable funds to remedy their contamination, this statute aims to hit polluters where it counts--in the proverbial pocketbook. Companies have thus sought to avoid CERCLA's reach, and one of the last undecided grounds involves what sort of property acquisition could lead to liability.

CERCLA liability centers on contaminated property and an entity's relationship to that contamination or property. (6) Because property ownership, including acquisition, is the groundwork for liability, several affirmative defenses revolve around the context behind property acquisition. This article will focus on the third party liability defense from CERCLA liability, for when contamination of the property occurs after acquisition, (7) and the innocent landowner defense, for when the property was already contaminated at the time of purchase. (8) The innocent landowner defense in particular asks if the purchase of the contaminated property involved a contractual relationship between the former, polluting landower and the present owner. (9) Following the Ninth Circuit's recent opinion in California Department of Toxic Substances Control [upsilon]. Westside Delivery, (10) a clear, if perhaps subtle, circuit split arose on the issue of what satisfies the "in connection with a contractual relationship" language under CERCLA's often unforgiving structure of strict liability. …

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