ELR Citation: ELR 20358
No(s). 84-7925 (2d Cir. Apr 4, 1985)

The court holds that a real estate corporation and its individual owner are liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) for state response costs concerning, and under New York nuisance law for the abatement of, hazardous waste pollution at a disposal site purchased by the corporation. Initially the court holds that the district court properly awarded the state response costs under CERCLA §107(a)(4)(A). It rules that the expenses incurred in investigating and supervising cleanup of the site qualify as response costs. It also rules that defendant is an "owner" of the facility under §107(a)(1). The court also rules that §107 makes owners liable regardless of causation. Congress expressly addressed causation in the affirmative defenses in §107(b), and the legislative history and remedial purposes of CERCLA support this conclusion. The court concludes that, given these rulings, it need not address whether defendant is liable under CERCLA §107(a)(2) for continued dumping by a third party after defendant took title.

The court further holds that there have been releases and are threats of further releases of hazardous substances at the site. Evidence of leaking tanks and pipelines, seepage from past chemical spills, leaking drums, corroding storage tanks, and defendant's lack of expertise in containing the contamination suffice.

The court also holds that the fact that the site does not appear on the CERCLA national priorities list (NPL) does not render the state's response action inconsistent with the national contingency plan (NCP) and thus ineligible for cost recovery. It rules that NPL listing is not a general requisite for consistency with the NCP, but rather a limitation only on long-term "remedial" actions. The language of the statute, its legislative history, and the purposes of CERCLA all indicate that Congress intended to allow recovery of the costs of short-term "removal" actions at sites not listed on the NPL. The court also holds that federal authorization or supervision are not prerequisites to recovery of the state's costs, ruling that as to state cost recovery actions, the consistency requirement addresses only the cost-effectiveness criteria of the NCP. The court further holds that defendant is not protected by the third-party defenses of §107(b).

Turning to plaintiff's claims for injunctive relief under CERCLA and state nuisance law, the court first holds that the CERCLA claim is invalid. Congress expressly gave injunctive power solely to the federal government in §106. It generally is not appropriate for a court to infer a grant of such power, and the legislative history confirms that Congress did not intend to make it available to the states. The court upholds the grant of injunctive relief under state common law of public nuisance, however. The district court properly exercised pendent jurisdiction over the claim, and that defendant is clearly liable under New York law for maintenance of a public nuisance. Defendant was aware of the dangerous condition on the land and failed to abate it. The release or threatened release of hazardous substances is a public nuisance under New York law, and the district court also could have based such a ruling on a nuisance per se theory as a result of defendant's violation of state hazardous waste laws, or on an abnormally dangerous activity theory.

The court holds defendant shareholder liable under CERCLA §107 as an "operator." As an owning shareholder who managed the real estate company's operations, defendant qualifies as an operator. The court declines plaintiff's invitation to pierce the corporate veil in order to find defendant liable for abatement of the pollution, but rules that a corporate officer who participated in the corporation's tortious acts may nonetheless, be individually liable for abatement of a nuisance. Finally, the court notes that in enforcing the abatement injunction, the district court should keep in mind principles of equity and not allow the costs imposed on the individual defendant to become disproportionate.

Counsel for Appellant
David H. Peirez, William R. Ginsberg, Charles A. Singer
Peirez & Reisman
1301 Franklin Ave., Garden City NY 11530
(516) 746-7799

Counsel for Appellee
Gordon J. Johnson, Robert Abrams, Attorney General; James A. Sevinsky, Stuart Miller, Nancy Stearns
Office of the Attorney General of New York
Two World Trade Center, New York NY 10047
(212) 488-4141

Counsel for Amicus Curiae United States
F. Henry Habicht II, Ass't Attorney General; Nancy B. Firestone, Diane Donley, Donald T. Hornstein
Land and Natural Resources Division
Department of Justice, Washington DC 20530
(202) 633-2701

Before Feinberg, Oakes, and Newman, JJ.