Wednesday, July 28, 2010

Ninth Circuit Decides CERCLA Current Owner Issue

In State of California Department of Toxic Substances Control v. Hearthside Residential Corp., the Ninth Circuit answers one of the unanswered questions of CERCLA liability -- is the "current owner" of a CERCLA facility, one of the four categories of responsible parties, the owner at the time a lawsuit is filed, or at some other time? The Ninth Circuit holds that the "current owner" is the owner at the time that response costs are incurred. The decision also provides a very handy statement of the various purposes of CERCLA, and will probably be cited far more for those purposes than for its holding. The decision makes sense, because costs are usually incurred from the time of discovery of a release, and any other rule would create a game of hot potato in which parties have an incentive to transfer the property after discovery of contamination but before a lawsuit is filed. One interesting ramification is that because costs may be incurred over a long period of time, there may be more than one "current owner," and perhaps many.