United States of America
This case arose when the Hearthside Residential Corporation purchased a tract of wetlands in Huntington Beach, California. When Hearthside purchased the land, it was aware that the tract was contaminated with polychlorinated biphenyls ("PCBs"), a toxic chemical regulated under CERCLA. The tract was adjacent to several residential parcels owned by other entities, and the California Department of Toxic Substances Control ("DTSC") alleged that PCBs had migrated from Hearthside's tract to the residential parcels, contaminating them as well. Hearthside agreed to remediate its own tract of land, but refused to clean the PCBs from the residential parcels. Despite its assertion that Hearthside bore responsibility for cleanup, DTSC employed a third party to remediate the residential sites. In October 2006, DTSC brought a complaint against Hearthside seeking to recover the costs of the residential site remediation. Hearthside disputed liability, claiming that "owner and operator" status was determined when the suit was filedten months after it had sold the landnot when it owned the property three years prior, when the costs to remediate were incurred. The district court granted partial summary judgment to DTSC, determining that Hearthside was the owner of the tract for CERCLA liability purposes because it was the owner when response costs were incurred. The court certified its finding for immediate appeal, and the Ninth Circuit reviewed the decision on this interlocutory basis. The Ninth Circuit agreed with the lower court and affirmed its judgment. The court gave three reasons for its finding that owners at the time when response costs are incurred are rightfully considered the "owners" responsible for remediation. First, the court found that defining owners as "owners-at-cleanup" best meshed with statute of limitations contained in CERCLA, which starts running when a remediation action begins. Since the statute of limitations is intended to give defendants "the protections of predictability and promptness", the court reasoned that it only made sense to apply it to the site's owner when the statute began to run. In so doing, the statute would apply to the party with the evidence to defend against a claim, which is also the party most in need of the statute's protections. The court noted that finding the opposite would allow the owners of remediated sites to quickly sell them before the CERCLA statute of limitations began to runsubjecting a later owner with no information about the contamination to liability. Such a finding, according to the court, would be an unwise and untoward result. The court found that Hearthside's position provided every incentive to a landowner to delay remediation until it could sell the land and transfer CERCLA liability. Accordingly, the court ruled that any delay an owner might manufacture to give it more time to sell the land contravened the purpose of CERCLA. Noting that Hearthside's argument did just that, the court rejected it in favor of DTSC's position that owners-at-cleanup are owners for CERCLA purposes. It held that Hearthside was indeed the owner of the contaminated tract which DTSC alleged produced the pollution under the residential parcels, and remanded the case to the district court to determine if, and to what degree, Hearthside would be responsible for those parcels' remediation.