The Emerging Non-Expansive View of CERCLA Liability: The Decline of Tanglewood East

The specter of environmental harm used to frighten courts and spawned a generation of decisions extending Superfund liability to virtually any party with a nexus to a site that was contaminated.   One case that signaled just how willing courts were to impose a broad view of environmental liability was the 1988 decision by the Fifth Circuit in Tanglewood East Homeowners v. Charles-Thomas, Inc..  In that case, the court affirmed that a CERCLA cause of action could be stated merely by alleging that a former owner which did not know that its property was contaminated had graded and filled that property as part of a residential development project.    

That courts take a different approach to environmental claims today is readily evident in the recent decision by a federal court in New Jersey in  Heller Urban Renewal, LLC v. FER Boulevard Realty Corp.   There, the current owner of a contaminated property sued the former owner to recover what was alleged to be $25 million in future PCB cleanup costs.  The former owner alleged that it had not used PCBs on the property and that it had already undertaken a cleanup pursuant to a NJ DEP order.   Although the current owner’s complaint alleged that the former owner had used piping from which there had been leaks of PCBs and had moved large quantities of contaminated soil when it undertook the  earlier cleanup, the court dismissed the case.  According to the court, it was not clear that there was a basis to allege that the former owner’s use of piping or the movement of the soils had allowed the escape of PCBs into the environment and thereby constitute “disposal” within the meaning of CERCLA.

Juxtaposing Tanglewood East with Heller leaves no doubt that the way courts approach environmental cases has dramatically evolved over the past decades.   In the early days of Superfund, courts perceived environmental risks as being of such a present danger that it was imperative to cast the net of liability as broadly as possibly.  Environmental decisions today have moved beyond that expansive reading of environmental liability.  Indeed, one could argue that the Heller decision reflects a surprisingly parsimonious view of what constitutes sufficient allegations to plead a CERCLA claim.  At the summary judgment stage, the result in Heller might well be appropriate, but surely the current owner in Heller should be afforded the opportunity to conduct some discovery  before the Court concludes that no PCBs in fact escaped into the environment during the former owner’s use of the piping and its relocation of large quantities of contaminated soil.