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Under CERCLA, Subcontractor Can't Recover From Landowner Who Has 'Borne The Costs Of Its Actions'

Tuesday, December 05, 2017

A court of appeals considered whether a landowner’s CERCLA liability persists until all parties who performed environmental cleanup—including subcontractors with whom it has no contract privity—are paid in full. The short answer is “no.”

Facts: Landowner Norampac Industries, Inc. (Norampac) executed a soil contaminant cleanup project, governed by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), on a piece of land in Erie County, New York. Norampac contracted with AAA Environmental, Inc. (AAA) to excavate and remove the contaminated soil, and AAA in turn subcontracted with Price Trucking Corp. (Price) to haul and dispose of the soil.

In total, Norampac paid AAA more than $3 million for its services, but the contractor failed to pay several of its subs, including Price. When AAA stopped paying, Norampac stepped in and paid Price directly for its final stages of work. Nevertheless, when Price completed the work, it was still owed more than $600,000. Unable to recover from AAA, Price sought recovery against Norampac under CERCLA liability.

A district court decided that CERCLA imposes a direct liability between owners and subs on a CERCLA cleanup project even when the owner has paid a general contractor in full for the sub’s work. But the U.S. Court of Appeals for the Second Circuit reversed that ruling.

Covering cleanup costs discharges o[...]

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