Real Estate Journal — Brokerage Directory — July 27 - August 9, 2018 — 3C


M id A tlantic

B rokerage D irectory

By Neil Andrew Stein, Esquire, Kaplin Stewart An old foe creates a potentially toxic relationship


fter 30 years of repre- senting developers and all manner of real estate

costs were incurred more than three years before the current owner took title. The District Court found that Trainer was not liable for response costs incurred prior to taking title. Specifically, the District Court held that CERCLA intended that the “current owner or operator” was the owner or op- erator when the response costs were incurred, not the owner or operator at the time DEP filed suit for reimbursement. The District Court found no Pennsylvania cases on point, so it relied upon a Ninth Circuit decision in a California case, which concluded that the date

response costs are incurred should govern responsibility in a manner consistent with the statute of limitations. The District Court agreed that the Ninth Circuit’s analysis made “common sense” and reasoned that although CERCLA im- poses broad liability, “strict li- ability is not limitless liability.” DEP’s would like the Third Circuit to broadly construe CERCLA, in a manner which would make the definition of “potentially responsible party” much more expansive. Such an interpretation would en- sure that Pennsylvania is fully reimbursed for its response

costs. DEP has also posited that CERCLA imposes liabil- ity on a current owner for “all” response costs, no matter when incurred. The property owner counters by arguing that while it may be a responsible party, it cannot be held liable for “all” response costs. The District Court agreed by finding the cur- rent property owner’s liability begins only when it takes title. Both sides have very logical arguments. In listening to the oral argument, it seemed to me as though the Third Circuit seemed persuaded by the no- tion that if a property has been increased in value because of a

government cleanup, and the current owner is the benefi- ciary of that increase in value, then it is logical that the cur- rent owner be responsible for the cleanup costs. I wonder the extent to which states or the federal govern- ment have significant unreim- bursed response costs that may give rise to similar lawsuits. If so, will transactions need to be unwound or will releases be invalidated? I will be anxiously awaiting this outcome. Neil Stein is a principal and member of the Land Use, Zoning & Develop- ment group. 

owners and uses, I have seen environ- mental issues evolve from deal killer to merely an af- t e r thought . Th o s e c o n - c e r n s a nd

Neil Stein

Brokerage Directory a section of the Mid Atlantic Real Estate Journal 350 Lincoln Street Suite 1105, Hingham, MA 02043 781-740-2900 fx: 781-740-2929 MARE journal.com Section Publishers Linda Christman lchristman@marejournal.com Kimberly Brunet kbrunet@marejournal.com Marisol Chase mchase@marejournal.com doubts of the past have given way to the innocent purchaser rule and Act 2. Such issues are also no longer daunting to lenders, now statutorily protected from post-foreclosure liability. Unfor- tunately, that may all change. On July 16, 2018, before the Third Circuit Court of Appeals, the Pennsylvania Department of Environmental Protection (DEP) argued that a chemical company should be liable for $900,000 in cleanup costs for a contaminated site if acquired southwest of Philadelphia. DEP argued that the District Court’s refusal to hold the com- pany liable under federal law posed severe consequences for Pennsylvania taxpayers. The District Court found that CERCLA’s (the Com- prehensive Environmental Response, Compensation, and Liability Act, a/k/a Superfund) definition of “current owner or operator” did not extend liabil- ity to a current property owner for response costs incurred prior to its ownership. The controversy arises from DEP’s suit against Trainer Custom Chemical for recov- ery of the Commonwealth’s cleanup costs which had been incurred when the facility was owned by a prior owner. The

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