The Third-Party Defense to Hazardous Waste Liability: Narrowing the Contractual Relationship Exception

Abstract

This article focuses on one of the defenses to CERCLA liability, specifically, the third-party defense set forth in section 107(b)(3) of the Act [CERCLA § 107(b)(3), 42 U.S.C. § 9607(b)(3) (1982)] ... The particular concern of this article is with the meaning of the contractual relationship exception contained within the third-party defense provision. Although a partial definition of the term "contractual relationship" was added by the 1986 CERCLA amendments, this exception, if misapplied, could make the already narrow third-party defense overly narrow. Potential for such misapplication by the courts is present because the contractual relationship exception remains inadequately defined even after the 1986 CERCLA amendments. The position taken in this article is that the contractual relationship exception has indeed been misapplied by a number of courts and that the interpretation given the exception by these courts is unnecessarily and unfairly broad. While this article may seem to be devoted to a narrowly framed minutia of the overall CERCLA program, the topic is not unimportant to the vast number of individuals and companies dealing with hazardous substances or with property on which hazardous substances are being or were disposed.