To paraphrase Shakespeare, United States v. Sterling Centrecorp, Inc., is a great feast of legal argument.  The PRP in that case purchased the assets of a mining company whose operations in California had caused releases of arsenic.  That PRP was found to be liable for CERCLA response costs under no fewer than four discrete legal theories –(1) explicit assumption of  liabilities, (2) implicit assumption of liabilities, (3) de facto merger, and (4) operator liability — suggesting there are many ways a party can lose the same case.

In reaching its conclusions, the court had to navigate through a veritable obstacle course of arguments, including assertions that the court lacked jurisdiction, that it was not possible for a company to assume after-enacted statutory liabilities such as CERCLA, and that Canadian, not Californian, corporate norms should apply in determining whether to pierce the corporate veil.  Perhaps the most novel entry in in this hurleyburley of legal contention was the claim that CERCLA is unconstitutional based on the Supreme Court decision on Obamacare, Nat’l Fed of Indep. Business v. Sebelius.   There, the Supreme Court ruled that the Commerce Clause would not support the individual mandate in the Patient Protection and Affordable Care Act .   According to the PRP in Sterling Centrecorp , CERCLA suffered the same constitutional defect.  Just as individuals who had done nothing to obtain insurance could not be required under the Commerce Clause to obtain health insurance, so PRPs who were doing nothing to address historical contamination were not engaged in interstate commerce and could not be compelled under the Commerce Clause to become active in addressing that contamination.  The district court made short shrift of this argument.  Factually, the court noted that the PRP had not been inactive when it facilitated the release of hazardous substances; legally, the court rejected the suggestion that not buying health care was comparable to not cleaning up a contaminated waste site a party owned or operated.  As the court explained, there were numerous decisions ruling that CERCLA was a constitutional exercise of commerce clause power and that the Supreme Court had ruled that regulation hazardous waste and groundwater contamination were articles of commerce subject to Commerce Clause regulation.

Sometimes one strong argument is better than a lot of ingenious arguments.

 

Topics:  CERCLA, Commerce Clause, Contaminated Properties, Discharge of Pollutants, Environmental Liability, Hazardous Substances

Published In: Business Organization Updates, Civil Procedure Updates, Constitutional Law Updates, Environmental Updates, Commercial Real Estate Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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