Appeal from the United States District Court for the Central District of California. D.C. No. CV-91-04785-TJH. Terry J. Hatter, District Judge, Presiding.
Before: Alex Kozinski and Stephen S. Trott, Circuit Judges, and Spencer M. Williams,*fn* District Judge. Opinion by Judge Kozinski.
We must decide whether the holder of an easement burdening land which contains a hazardous waste facility is, by virtue of that interest alone, liable for cleanup costs as an "owner" or "operator" under the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. § 9601 et seq.
Appellant, Long Beach Unified School District ("the district"), bought land from the Dorothy B. Godwin California Living Trust and the Grover Godwin California Trust ("the trusts"). Before the sale, this land was leased to the Schafer Bros. Transfer and Piano Moving Company ("Schafer Bros."), which maintained a waste pit on it.
The district knew about this pit before closing the deal because the trusts' site assessment had revealed the contamination, ER 4, and had estimated that decontamination would cost $249,000. Id. As a condition of the sale, the district required the trusts to put $250,000 in escrow for cleanup. ER 5.
This amount turned out to be not nearly enough. Though it paid for an expert evaluation of the site, nothing was left to even start a cleanup. And so, apparently through its own short-sightedness, the school district was left holding a rather contaminated bag. It responded, as people with toxic waste-ridden property are wont to, by bringing a CERCLA action in federal district court.*fn1
Happily, the obvious CERCLA defendants - the seller and the tenant who polluted the land - both settled, SER 1-2, agreeing to pay a substantial share of the anticipated cleanup costs. See SER 8-10.*fn2 The case continues against the two remaining defendants, Mobil Oil Corp. and Powerine Oil Co. (collectively "M&P"). Their tie here is not that they helped pollute the property - plaintiff never even alleges this. Rather, each held an easement to run a pipeline across the property and the district says this makes them automatically "owners" or "operators" under 42 U.S.C. § 9607. ER 7.
M&P filed 12(b)(6) motions to dismiss for failure to state a claim, ER 24, 28, which the district court granted. ER 62. We review such decisions de novo, accepting the plaintiff's allegations as true and construing them in the light most favorable to the district. Ascon Properties, Inc. v. Mobil Oil Co., 866 F.2d 1149, 1152 (9th Cir. 1989).
CERCLA liability has been described as "a black hole that indiscriminately devours all who come near it." Jerry L. Anderson, The Hazardous Waste Land, 13 Va. Envtl. L.J. 1, 6-7 (1993). For example, CERCLA has been read as a strict liability statute. See, e.g., General Elec. Co. v. Litton Indus. Automation Sys., Inc., 920 F.2d 1415, 1418 (8th Cir. 1990); United States v. Monsanto Co., 858 F.2d 160, 167 & n.11 (4th Cir. 1988); New York v. Shore Realty Corp., 759 F.2d 1032, 1044 (2d Cir. 1985); Violet v. Picillo, 648 F. Supp. 1283, 1290 (D.R.I. 1986); United States v. Conservation Chem. Co., 619 F. Supp. 162, 204 (W.D. Mo. 1985). It has been applied retroactively, see, e.g., United States v. Northeastern Pharmaceutical & Chem. Co., 810 F.2d 726, 733, 737 (8th Cir. 1986); United States v. Shell Oil Co., 605 F. Supp. 1064, 1073 (D. Colo. 1985); Ohio ex rel. Brown v. Georgeoff, 562 F. Supp. 1300, 1314 (N.D. Ohio 1983), a policy that has attracted criticism. See, e.g., Anderson, 13 Va. Envtl. L.J. at 19 ("Much of the roulette wheel nature of CERCLA's liability results from its retroactivity"); see also Developments in the Law - Toxic Waste Litigation, 99 Harv. L. Rev. 1458, 1540-42 (1986) (though retroactive application is the best approach to spreading cleanup costs, Congress should recognize the limits of what retroactivity can accomplish). And it has corroded the corporate veil, see, e.g., United States v. Carolina Transformer Co., 739 F. Supp. 1030, 1036-38 (E.D.N.C. 1989), a policy that also has drawn criticism. See, e.g., Anderson, 13 Va. Envtl. L.J. at 39; Lynda J. Oswald, Strict Liability of Individuals Under CERCLA: A Normative Analysis, 20 B.C. Envtl. Aff. L. Rev. 579 (1993). But see Joslyn Mfg. Co. v. T.L. James & Co., 893 F.2d 80 (5th Cir. 1990) (refusing to pierce corporate veil to reach parent company).
Nevertheless, CERCLA liability is not unlimited. Specifically, the statute imposes no liability under 42 U.S.C. § 9607 (a) unless four elements are satisfied:
(1) the waste disposal site is a "facility" . . . ; (2) a "release" or "threatened release" of any "hazardous substance" from the facility has occurred . . . ; and (3) such "release" or "threatened release" has caused the plaintiff to incur response costs . . . . In addition,  the defendant must fall ...