Who qualifies as an “owner” under CERCLA and the Texas SWDA?

CERCLA defines “owner” in a circular manner as “any person owning” the site in question.  The Texas SWDA provides no definition of an “owner.”  This has led to various disputes as to what an “owner” encompasses. 

For instance, the Ninth Circuit narrowly construed “owner” to mean the holder in fee title to the property or its equivalent.   The court reasoned that in establishing “owner” liability under CERCLA, Congress did not say “de facto owner,” or “possessor,” or “person with some incidents or attributes of ownership,” as it has in other legislation.  Instead it used the unmodified term “owner” which when used alone, imports an absolute owner.  With respect to a lease, a district court in the Ninth Circuit held that to be an “owner,” the person must hold fee title or an equivalent “bundle of rights” in the property.  A lease merely confers a possessory interest in property, as opposed to title ownership, and therefore a lessee did not qualify as an owner for purposes of CERCLA liability. 

However, the Second Circuit has interpreted “owners” much more broadly.  For instance, it recognized that a lessee could be deemed an “owner” under certain circumstances.   The court stated that:

Certain lessees may have the requisite indicia of ownership vis-à-vis the record owner to be de facto owners and therefore strictly liable. Such would probably be true of a lessee with the proverbial 99–year lease. While we need not define with specificity those factors that might transform a lessee into an owner, we note several that we think could be important, specifically:

  • Whether the lease is for an extensive term and admits of no rights in theowner/lessor to determine how the property is used;
  • Whether the lease cannot be terminated by the owner before it expires by its terms;
  • Whether the lessee has the right to sublet all or some of the property without notifying the owner;
  • Whether the lessee is responsible for payment of all taxes, assessments, insurance, and operation and maintenance costs; and
  • Whether the lessee is responsible for making all structural and other repairs.

This non-exclusive list is meant to reinforce the point that the critical question is whether the lessee’s status is that of a de facto owner and not whether it exercises control over the facility.

Similarly, a district court within the Fifth Circuit has held that even though a defendant did not have title to the property, the defendant was a lessee who asserted control over the property, and, as such, was an “owner” under CERCLA § 107(a)(1).

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