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Gilroy Canning Co. v. California Canners & Growers

ELR Citation: 29 ELR 20217
Nos. C 97-20035 PVT, 15 F. Supp. 2d 943/(N.D. Cal., 07/21/1998)

The court holds that a canning company may seek cleanup and abatement costs from the former owner of its canning operation site under the Resource Conservation and Recovery Act (RCRA). The court first holds that the canning company's post-filing cleanup costs are not clearly barred by RCRA. Although the primary relief available to a private party under RCRA is a mandatory injunction, the U.S. Supreme Court left it open for lower courts to determine whether a private party may retroactively recover cleanup costs incurred after properly commencing a RCRA suit or invoking RCRA's statutory process. Thus, the former owner's liability does not rest on whether or not an injunction can be enforced only against its insurance carriers.

Next, the court holds that the "as is" clause contained in the purchase agreement between the former owner and a subsequent owner does not bind the canning company from bringing any claims against the former owner because there is no privity between them. Even if privity existed, the "as is" clause is preempted by RCRA and, therefore, is unenforceable. Courts have held that "as is" agreements do not overcome the Comprehensive Environmental Response, Compensation, and Liability Act's (CERCLA's) strict liability scheme because they would circumvent the intent and language of CERCLA. RCRA, like CERCLA, is a strict liability statute, and the former owner does not argue that RCRA should be distinguished from CERCLA in relation to this issue. The court then holds that the canning company is not barred under RCRA §7002(b)(2)(B) on the grounds that state environmental agencies are diligently enforcing investigation and remediation at the site. RCRA §7002(b)(2)(B) is irrelevant because it refers to the "Administrator," who is defined as the Administrator of the U.S. Environmental Protection Agency (EPA). Neither of the state environmental agencies involved in this case qualify as the EPA Administrator. The court also holds that the canning company is not barred under RCRA §7002(b)(2)(C). The orders and directives of the state environmental agencies are considered state administrative actions and do not constitute diligent prosecution under this section.

[Counsel not available at this printing.]