“In States We Trust? The Effect of Canandyne-Georgia v. Nationsbank, N.A. (South) on Liability Under the CERCLA Superfund.”

This comment was written by former staff member Jonathan Gray and appeared in JNREL Vol. 21 No. 1. This abstract was written by staff member Stephanie Wurdock.

In 1980, Congress passed the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") as a response to the Love Canal Disaster and its fallout. CERCLA provides the government with the tools to enforce cleanup of hazardous waste by imposing strict liability against any "owner or operator" of a facility that releases such materials. This begs the question: How does one define "owner or operator" and how does one apply the strict liability statute to a trust?

Because an inherent and indispensable characteristic of a trust is the division of legal and equitable interests, CERCLA presents the daunting possibility that a trustee, holding nothing more than a bare title in a violator's property, may find himself subject to liability. Often, it is a liability that that far exceeds the trust assets.

The 1999 case Canandyne-Georgia v. Nationsbank, N.A. (South), 183 F.3d 1269 (11th Cir. 1999) illustrates this concern. In Canandyne, the plaintiff corporation acquired a hazardous waste-generating pesticide business which it promptly sold. Several years later, the Environmental Protection Agency ("EPA") ordered Canandyne to undertake major steps toward cleaning up the surrounding property. After expending considerable time and resources in this effort, Canandyne sued Nationsbank, claiming that it had served as trustee at the time the property released the hazardous substances.

The Eleventh Circuit Court of Appeals in Canandyne determined that whether or not a party, specifically a trustee, is an "owner" for the purposes of CERCLA is a matter to be determined by state law. It logically follows that a trustee's liability will hinge on the jurisdiction's treatment of trustees as "owners" of property. This is problematic because it creates uncertainty for trustees, particularly when they have properties in multiple jurisdictions, subjecting them to liability under varying standards. It is a valid concern for conservators and executors, as well, who serve much the same role as trustees.

The Canandyne decision provides a frustrating answer to our initial query. The fact of the matter is that there is no clear, resolved definition of the word "owner." The use of differing standards creates uncertainty that must be remedied either by legislative amendment or judicial agreement. Without this needed change, there is simply too much uncertainty for efficient management of trusts and other estate planning devises.