Pa. Dep't of Envtl. Prot. v. Trainer Custom Chem., LLC
906 F.3d 85 (2018)
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Rule of Law:
Under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), a current owner of a contaminated property is strictly liable for 'all costs' of removal or remedial action, regardless of whether those costs were incurred before or after the owner acquired the property.
Facts:
- Stoney Creek Technologies (SCT) owned a property, the Stoney Creek Site, where it manufactured chemicals and stored millions of gallons of hazardous substances.
- In 2007, Pennsylvania's Department of Environmental Protection (PADEP) determined the Site posed a substantial danger and, along with the EPA, initiated environmental cleanup actions.
- By 2009, PADEP had incurred over $818,000 in response costs, primarily for electricity to power safety equipment, because SCT was financially unable to pay.
- Due to SCT's delinquent property taxes, the Site was sold at a tax sale in October 2012 for $20,000 to Jeremy Hunter and James Halkias, who titled the property in the name of their newly formed company, Trainer Custom Chemical, LLC (Trainer).
- The purchase agreement for the Site explicitly stated that it had ongoing 'environmental issues ... [and] environmental remediation.'
- After acquiring the property, Hunter and/or Halkias demolished structures on the Site, which caused further contamination, including spills from storage tanks and the disturbance of asbestos-containing materials.
Procedural Posture:
- Pennsylvania's Department of Environmental Protection (PADEP) sued Trainer Custom Chemical, LLC, Jeremy Hunter, and James Halkias in federal district court under CERCLA and HSCA to recover cleanup costs.
- PADEP moved for summary judgment, seeking to hold the defendants jointly and severally liable for all response costs.
- The U.S. District Court granted summary judgment in part and denied it in part, holding Trainer liable for response costs incurred after it took ownership but not for costs incurred beforehand.
- The District Court denied summary judgment on the issue of damages, finding a genuine dispute of material fact.
- At PADEP's request, the District Court certified for interlocutory appeal the legal issue of whether an owner is liable for pre-acquisition response costs.
- PADEP (as appellant) petitioned the U.S. Court of Appeals for the Third Circuit for permission to appeal, which was granted, with Trainer, Hunter, and Halkias as appellees.
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Issue:
Does a current owner's liability under Section 107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and Pennsylvania's Hazardous Sites Cleanup Act (HSCA) extend to all environmental response costs, including those incurred before the owner acquired the property?
Opinions:
Majority - Jordan, Circuit Judge.
Yes. A current owner of real property is liable under both CERCLA and HSCA for all response costs in an environmental cleanup, including costs incurred before the owner acquired the property. The plain text of CERCLA § 107(a) states that a current owner shall be liable for 'all costs' of removal or remedial action. The term 'all costs' is unambiguous and does not contain a temporal limitation distinguishing between costs incurred before and after the change of ownership. The structure of CERCLA reinforces this interpretation, as Congress explicitly created specific defenses to liability (such as the innocent owner defense and the bona fide prospective purchaser defense) but did not create an exception for pre-acquisition costs. The existence of these specific defenses, along with the right to seek contribution from other responsible parties under § 113(f), indicates that Congress intended 'all costs' to be comprehensive, with potential unfairness to be addressed through these other statutory mechanisms, not by judicially narrowing the scope of liability.
Analysis:
This decision reaffirms and clarifies the strict and retroactive nature of current owner liability under CERCLA. By interpreting 'all costs' in Section 107(a) to be without temporal limitation, the court places a significant burden on prospective purchasers of potentially contaminated land to conduct thorough due diligence. The ruling solidifies that statutory defenses, such as the bona fide prospective purchaser defense, or contribution actions against other responsible parties, are the proper avenues for a current owner to mitigate liability, rather than challenging the scope of the costs themselves. This reinforces CERCLA's primary goal of ensuring that cleanup costs are borne by parties associated with the property, thereby encouraging the cleanup of hazardous waste sites.
