CERCLA Contribution and Trust Funds: A Matter for State Law
The Second Circuit Court of Appeals in New York recently held that the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund, does not require contribution from beneficiaries of a responsible party’s estate.
In Asarco LLC v. Goodwin, the appeals court noted that as part of Asarco’s Chapter 11 bankruptcy, Asarco paid the United States, the State of Washington, and the Port of Everett, Washington, $50.2 million to resolve certain environmental claims arising from the release of hazardous substances at two sites in Washington State.
Having emerged from bankruptcy, Asarco sought contribution from the Trustees of the residual trusts created by the will of John D. Rockefeller, whose current beneficiaries are his great-grandchildren. Asarco alleged that the remediation costs were fairly attributable to the activities of corporations controlled by Rockefeller as owner and operator of the contaminated sites.
Under CERCLA, the following parties are responsible for clean-up costs: (1) current owners or operators of facilities or sites from which a release of hazardous substances has occurred; (2) past owners or operators of a facility or site at the time of a release of a hazardous substance; (3) parties who arranged for the disposal or transport of hazardous substances; and (4) parties who accepted hazardous substances for transport and selected the site.
Asarco contended that the court should craft a rule under CERCLA mandating that a decedent’s personal liability is transferred to those who benefit from the decedent’s estate, a rule known as the “trust fund doctrine.” The court noted that CERCLA was silent as to contribution claims brought against trusts. The court went on to state that since CERCLA is a comprehensive and detailed law, state law governs matters left unaddressed under the federal program. As a result, the court noted that state probate law governs whether liability may be imposed against the beneficiaries of Rockefeller’s estate and turned to New York law in order to address Asarco’s arguments.
Although the court assumed, for the purpose of addressing other issues, that New York law permits the imposition of liability against Rockefeller’s trust, it stopped short of certifying the issue to the New York Court of Appeals for its definitive resolution. When faced with the possibility of future CERCLA liability, it is important to be aware of the state probate laws pertaining to trust beneficiaries where the trust includes assets coming from environmentally sensitive businesses.
As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.