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New York v. Lashins Arcade Co.

ELR Citation: 26 ELR 21506
Nos. No. 95-7716, 91 F.3d 353/43 ERC 1001/(2d Cir., 08/05/1996) Decision at 25 ELR 20145 aff'd

The court holds that the current owner of a shopping center is not liable under §107(a) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for costs New York and the U.S. Environmental Protection Agency (EPA) incurred in investigating and cleaning up groundwater contamination caused by a dry cleaning business that had leased a portion of the shopping center from prior owners. The court first holds that because New York has established a prima facie case against the current owner under §107, the current owner may be held strictly liable for New York's response costs unless it can satisfy one of CERCLA's affirmative defenses. The court next holds that the current owner's contractual relationship with the prior owner does not disqualify it from asserting a third-party defense under §107(b)(3). The straightforward sale of the shopping center did not relate to hazardous substances or vest the current owner with authority to exert some element of control over the prior owner's activities. The court holds that the current owner meets the §107(b)(3) requirement that it take adequate precautions against actions by a third party that would lead to a release of hazardous waste, given that the last release in this case occurred more than 15 years before the current owner purchased the shopping center. The court next holds that the current owner exercised due care with respect to the hazardous substance concerned. The due care mandate of §107(b)(3) does not require the current owner to pay, after purchasing the shopping center, some or all of the costs of EPA's and New York's ongoing remedial investigation/feasibility. The court notes that it is counterintuitive to suppose that a defendant is required to pay some or all of those response costs in order to establish the affirmative defense provided by §107(b)(3), thereby rendering the affirmative defense partly or entirely academic.

[Prior decisions in this litigation are published at 25 ELR 20145 and 25 ELR 21376.]

Counsel for Plaintiffs
Robert E. Hernan, Ass't Attorney General
Attorney General's Office
New York State Department of Law
The Capitol, Albany NY 12224
(518) 474-7124

Counsel for Defendants
Daniel Riesel
Sive, Paget & Riesel
460 Park Ave., New York NY 10022
(212) 421-2150

Before Mahoney, Walker, and Calabresi, JJ.