New York v. Shore Realty Corp. 759 F.2d 1032 (2d Cir. 1985)
Shore Realty and its owner LeoGrande bought some property
that they knew was contaminated by 70k gallons hazardous wastes.
The wastes were placed there illegally by two previous
Shore received a detailed report, which called the site a
"potential time bomb," and estimated that cleanup costs could
be as high as $1M.
Shore applied for a waiver of liability from the State
Department of Environmental Conservation (DEC), but the waiver was
denied. Shore took title to the property anyway.
After Shore took title, the tenants dumped another 90k
gallons of hazardous wastes on the site before their lease expired.
A month after the tenants were gone, New York sued Shore
under Comprehensive Environmental Response, Compensation, and Recovery
Act (CERCLA) to cleanup the site.
The Trial Court found Shore liable under CERCLA for
directing the State's response costs and issued an injunction under New
York nuisance laws directing Shore to remove the remaining hazardous
wastes. Shore appealed.
The Appellate Court affirmed.
Shore argued that they could not be held liable for
cleanup costs because they were not responsible for putting the wastes
there. However, the Appellate Court found that CERCLA holds four
classes of persons liable for cleanup costs:
The current owner and operator of a facility. (§107(a)(1))
Any person who at the time of disposal owned or operated
the facility. (§107(a)(2))
Any person who by contract or agreement arranged for
disposal or transport of the hazardous wastes. (§107(a)(3))
Any person who accepted the hazardous wastes for
transport or disposal. (§107(a)(4))
Shore argued that §107(a)(1) should be read to
cover only owners and operators at the time of disposal. However, the
Appellate Court rejected this argument and found that §107(a)(1)
unequivocally imposes strict liability on the current owner of the
facility, without regard to causation.
Shore also argued that under §107(b)(3), there was
an exception to liability for releases caused solely by third parties, as
long as the owner exercises due care. However, the Appellate Court found
that Shore was aware of the tenants' activities and continued to allow
them to dump wastes after Shore took title to the property, so they don't
qualify for the exception.
When CERCLA was amended, this exception was
clarified in §107(b)(3) (and (§101(35)(B)) to apply to
Did not have actual or constructive knowledge of the
presence of hazardous substances when they acquired the property.
Government entities who acquired the property through