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California Dep't of Toxic Substances Control v. Westside Delivery, LLC

ELR Citation: 48 ELR 20072
Nos. 16-56558, (9th Cir., 04/27/2018)

The Ninth Circuit held that a property owner who purchased the site at a tax sale is not entitled to CERCLA's third-party defense to liability for cleanup costs. The purchaser had a "contractual relationship" with the prior owner by virtue of the tax sale. Given the breadth of CERCLA's definition of "contractual relationship" and the stringent requirements that Congress set out for ensuring that only truly "innocent" purchasers would be able to avoid liability, the court reasoned it is likely that Congress intended for the innocent-landowner defense to be the sole defense available to a private purchaser of land contaminated by a previous owner or possessor. At the very least, Congress did not mean to treat tax-sale purchasers differently from typical purchasers, which is why it defined "contractual relationship" broadly enough to include the relationship between a tax-sale purchaser and the pre-tax-sale owner of tax-defaulted property. In addition, the previous owner caused contamination at the site "in connection with" its contractual relationship with the purchaser. The “in connection with” condition is intended to filter out those situations in which the previous owner's polluting acts or omissions were unrelated to its status as a landowner. Here, the prior owner owned the land at issue during the release of hazardous pollutants. The court, therefore, reversed and remanded a lower court's grant of summary judgment in favor of the owner.