Third Circuit Holds New Property Owner on the Hook for Old Cleanup Costs

David J. Oberly

Is a purchaser of contaminated property on the hook for environmental cleanup costs that take place prior to the time the property was acquired? In Pennsylvania Dept. of Environmental Protection v. Trainer Custom Chemical, LLC, No. 1702607 (3d Cir. Oct. 5, 2018), the Third Circuit Court of Appeals recently considered this issue—and answered the question in the affirmative, holding that a current owner of real property is liable under both the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”) and Pennsylvania’s Hazardous Sites Cleanup Act (“HSCA”) for all response costs in an environmental cleanup, including those costs incurred prior to the landowner’s purchase of the contaminated property. The Third Circuit’s decision is a noteworthy one—and one that undoubtedly has a significant impact on entities considering the purchase of property where hazardous substances have been released, as such purchasers run the significant risk of being on the hook for the entirety of the cost to remediate the contaminated property, including even those costs that were incurred prior to the time the buyer assumed ownership of the property. Continue reading “Third Circuit Holds New Property Owner on the Hook for Old Cleanup Costs”

Appellate Division Finds Coverage for EPA Claim through Company’s Historic Mergers and Acquisitions, Even Though the Bill of Sale Did Not Specifically Reference the Transfer of Insurance Rights

Kevin R. Doherty

Earlier this month, the New Jersey Appellate Division upheld a decision allowing Cooper Industries LLC (“Cooper”) access to insurance policies received through a series of mergers and acquisitions (“M&As”), even though the transfer of assets language in the relevant bill of sale did not specifically reference the transfer of insurance rights. Cooper was thus afforded liability coverage for a U.S. Environmental Protection Agency (“EPA”) action seeking substantial cleanup costs.

Cooper’s predecessor, McGraw-Edison Co. (“McGraw”), previously obtained a variety of liability insurance policies from various insurers throughout the 1970s and ‘80s. At issue in the case was whether McGraw’s right to these policies was properly transferred, through a series of corporate transactions, such that Cooper could now access them for the EPA claim. The lower court found the relevant bill of sale language to be ambiguous and relied on deposition testimony from employees to find, among other things, that all assets and liabilities were meant to be transferred, including insurance rights. Insurers appealed. Continue reading “Appellate Division Finds Coverage for EPA Claim through Company’s Historic Mergers and Acquisitions, Even Though the Bill of Sale Did Not Specifically Reference the Transfer of Insurance Rights”

Appellate Division Clears Way for Business Entities to Receive Brownfield Innocent Party Grants When Property Is Transferred among Family Members

Kevin R. Doherty

The New Jersey Appellate Division recently lessened the rigidity by which an innocent purchaser may be eligible for a so-called “Innocent Party Grant” to cover costs associated with the remediation of contaminated property. On September 20, 2017, the Court in Cedar Knolls 2006, LLC v. New Jersey Dep’t of Envtl. Prot.[1] reversed the New Jersey Department of Environmental Protection’s (“NJDEP”) attempt to limit Innocent Party Grants to natural persons, and found that an LLC may qualify as a “person” under the Brownfield and Contaminated Site Remediation Act, N.J.S.A. 58:10B-1, et seq. (“Brownfield Act”). Continue reading “Appellate Division Clears Way for Business Entities to Receive Brownfield Innocent Party Grants When Property Is Transferred among Family Members”