ELR Citation: ELR 20404
No(s). C 89-1709 SC (D. Ariz. Jan 19, 1993)

The court holds that a testamentary trustee is liable under Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) §107 as an "owner" of a contaminated landfill, even though the trustee held only bare legal title to the landfill. The deceased former owner of the landfill sold it with a repurchase option. The bank named as executor exercised the repurchase option and the property was conveyed to the bank as trustee by warranty deed. As trustee, the bank continued leasing the site to the existing disposal operator until the city of Phoenix, Arizona, acquired the land by condemnation and later sought reimbursement from the deceased's estate for CERCLA response costs. The court first holds that the undisputed evidence shows that the trustee bank was not involved in the day-to-day administration of the landfill, and thus, is not liable as an "operator" under CERCLA. The trustee did not enter into or negotiate contracts, did not know the identity or the nature of the landfill operator's customers, and had communication with the operator's personnel limited to matters involving the estate, such as tax questions.

The court next holds that a trustee may be an "owner" for purposes of CERCLA §107 liability, even though the trustee holds bare legal title. First, CERCLA imposes no culpability requirement for ownership liability. CERCLA's legislative history indicates that Congress intended that any titleholder is an "owner" for liability purposes. Further, U.S. Environmental Protection Agency's (EPA's) interpretation of CERCLA's provisions is entitled to considerable deference, and EPA's practice is to argue that trustees are "owners" under CERCLA. Moreover, a proposed EPA rule that addresses the liability of secured creditors is not controlling where a trustee, as here, is not also a secured creditor. In United States v. Burns, No. C-88-94-L (D.N.H. Sept. 12, 1988), the only court that has squarely addressed the question of trustee liability as an "owner" under CERCLA held that a trustee is an owner under CERCLA. Although it may seem unjust to subject trustees that are not involved in the contamination of property to liability for cleanup that, in some cases, may exceed the value of the trust's assets, Congress could have exempted uninvolved trustees from CERCLA's "owner" liability if it wanted to. Finally, the court holds that the trustee is collaterally estopped from denying that it is the deceased's trustee, because the bank argued in the previous condemnation proceeding that it, as trustee, was the record owner of the property.

Counsel for Plaintiff
Craig J. Reece, Ass't City Attorney
City Attorney's Office
251 W. Washington St., Ste. 800, Phoenix AZ 85003
(602) 495-5879

Counsel for Defendants
Charles W. Jirauch
Streich & Lang
P.O. Box 471, Phoenix AZ 85001
(602) 229-5503