Nation’s High Court May Clarify CERCLA Cleanup Liabilities for Tenants and Subtenants
Last week, the United States Supreme Court was asked to consider whether former tenants and sublessees of a Superfund site may be liable for recovery costs – even though these parties were not technically “owners” under the meaning of CERCLA.
In Next Millenium Realty LLC v. Adchem Corporation, No. 17-____, the Petitioners were the fee owners of real property that became contaminated with tetrachloroethylene (“PCE”), a chemical commonly used by dry cleaners. The Petitioners asserted that a tenant and its subtenant were in exclusive control of the property at the time PCE was released. As the current fee owners, however, the State of New York ordered the Petitioners to clean up the site, and the Petitioners filed an action to recover these costs from the former tenants and subtenants.
The trial court and United States Court of Appeals, Second Circuit ruled against the Petitioners, finding that the tenants were not “de facto” owners under CERCLA. The Second Circuit declined to consider whether the tenants’ control of the site rendered them responsible owners, finding that such a determination would conflate “owner liability” with “operator liability.” (Next Millenium Realty, LLC v. Adchem Corp., 690 Fed.Appx.710, 714 (2nd Cir. 2017).)
The Petitioners seek the Supreme Court’s resolution of a circuit split in their favor. The Ninth Circuit, according to Petitioners, apply common law principles in determining property ownership for the purposes of CERCLA. In contrast, the Second Circuit’s approach imposes owner liability on a property owner that has no control over the actions of a subtenant, nor even site control.
Four Supreme Court Justices must agree to consider this case. Otherwise, the Second Circuit’s ruling stands.