Is there any caselaw which has interpreted the fiduciary liability exemption under CERCLA?

There is very little case law which has addressed the fiduciary liability exemption under CERCLA.  The majority of cases which have discussed the exemptions concern estate and trust beneficiaries.  In some of those cases, the courts have applied to the so-called “trust fund” theory in which beneficiaries or heirs of an estate are deemed to hold the assets received from the liable party’s estate in trust for the benefit of satisfying the environmental liabilities. 

For instance, in North Carolina ex rel. Howes v. W.R. Peel, Sr. Trust, a district court held a testamentary beneficiary liable for the CERCLA liability of a decedent based upon the “trust fund” theory.   The court reasoned:

Because the decedent would be liable were he alive, his estate beneficiaries hold the assets received from the estates in trust to satisfy his environmental liabilities.  While some assets of the estate devolved to individual beneficiaries, the bulk of the estate’s assets flowed to the Trust. Defendant not only is an individual beneficiary under the decedent’s will, but also she is an income beneficiary of the Trust.  Therefore, Defendant is liable to the extent of the assets she received from the estate of the decedent.

A number of other courts have similarly applied the “trust fund” theory as well.   In United States v. Martell, the court reasoned that the theory:

Furthers CERCLA’s remedial purpose so as to ensure a responsible party bears the costs of remedying the harm associated with the disposal of hazardous waste.  Where the decedent would be liable were he alive, the plaintiff should be allowed to look to the decedent’s assets, in the hands of the estate or the estate’s beneficiaries, to satisfy that liability.

Some courts have also stated that the trust fund theory also serves the equitable purpose by preventing a decedent’s beneficiaries from realizing the pecuniary benefit that would result from retaining assets otherwise subject to historic environmental liabilities.

However, the court in Norfolk S. Ry. Co. v. Shulimson Bros. Co., declined to find distributees of two estates accountable under a trust fund theory.   The court concluded that fully distributed and closed estates whose beneficiaries were not involved in the activities which gave rise to the liability by any method other than inheritance are not subject to liability under CERCLA.  

The Third Circuit has noted that the possibility of a CERCLA claim arising long after the settlement of the estate would hang as a dark cloud over any settlement, thereby compromising the goals of certainty and promptness in the settlement and distribution of decedent’s estates.

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