The Third Circuit recently concluded that the owner of a remediated site could be liable under Section 107(a) of CERCLA for remediation costs incurred prior to its acquisition of the property. Pa. Dep’t of Envtl. Prot. v. Trainer Custom Chem. LLC 906 F.3d 85 (3d Cir. 2018).
The facts of the case are straightforward enough. Trainer Custom Chemical (“Trainer”) purchased property (“the Site”) at a tax sale knowing that it was contaminated. At the time of purchase, the Pennsylvania Department of Environmental Protection (PDEP) had spent more than $800,000.00 in remediation costs. When Trainer’s activities on the Site caused PDEP to spend additional money, PDEP initiated a cost recovery action under CERCLA and the Pennsylvania Hazardous Sites Cleanup Act (HSCA). In the action, PDEP sought to recover both pre- and post-acquisition remediation costs, which amounted to more than $930,000.00.
Relying on a decision from the Ninth Circuit that found that owner/operator status is determined at the time of cleanup, the district court concluded that PDEP could only recover post-acquisition costs from Trainer. The Third Circuit found the Ninth Circuit’s ruling inapplicable and instead looked to CERLCA’s definition of owner/operator. Finding no temporal limitation in the definition, the Third Circuit held that PDEP could recover both pre- and post-acquisition remediation costs from Trainer. In other words, the Third Circuit imposed liability on Trainer for more than $930,000.00 in remediation costs, roughly 85% of which were incurred prior to its acquisition of the property.
For more information on the Third Circuit’s decision, please see our most recent Environment Client Update.