Several recent decisions indicate that courts finally may be narrowing the broad reach of the Comprehensive Environmental Response Compensation and Liability Act ("CERCLA"). These decisions have revisited issues long thought settled, and may open up new opportunities to avoid the Superfund morass.
A very recent decision by the Second Circuit Court of Appeals in New York v. Lashins Arcade Co. has greatly expanded the opportunity for a current owner of contaminated property (and perhaps others) to argue that contamination was caused solely by a third party with whom the landowner had no contractual relationship.
Previously, courts had held that any contractual relationship with a responsible party would defeat this so-called "third party" defense. But in Lashins Arcade the Second Circuit rejected this approach as too strict. The court found the owner of a contaminated shopping arcade was not liable under CERCLA because the contamination had been caused solely by a former tenant (a dry cleaner) years before the current owner purchased the property. The court held that the contract for the sale of the land with the prior, responsible owner did not defeat the current owner's third-party defense because the contract itself had nothing to do with the disposal of hazardous substances. This broadening of the third-party defense also may prove useful in other contexts when companies are alleged to be owners or operators of contaminated property.
An even more important limit on CERCLA liability may have been created in the recent decision of the Massachusetts federal district court in Acushnet Co. v. Coaters, Inc. In that case, the court held that the private party plaintiff had to prove that the disposal of hazardous substances at the site by the defendant actually caused the plaintiff to incur damages in cleaning up the site.
Outside the Superfund context, plaintiffs typically must prove that the acts of the defendant in fact caused the harm complained of. Under CERCLA, however, courts previously had held there was no such "causation" requirement. According to prior CERCLA caselaw, it was enough to establish Superfund liability simply to show that the defendant had in fact arranged for the disposal of a hazardous substance at the site.
In Acushnet, the Massachusetts district court returned to the more traditional, common-sense, requirement of causation. The court held that the defendant was not liable with CERCLA because it had shown that the creosote-treated utility poles it sent to the site for disposal had not contributed to the contamination in the surrounding soil.
It may be too early to tell if these cases are part of a trend toward a more restricted view of Superfund liability. Nevertheless, Lashins Arcade and Acushnet (along with the recent decision in United States v. Olin Co. (see Environmental Update, June 1996), which departed from prior caselaw and held that CERCLA does not apply to pre-1980 hazardous waste disposal) indicate that courts are more willing to reconsider previous decisions that extended Superfund liability beyond what has traditionally been considered fair. Companies faced with the prospect of a Superfund litigation should consult with their attorneys to see if new challenges to old CERCLA ideas might now succeed.