March 2011

Holders of Possessory Interests in Land are not “Owners” Under CERCLA

March 15, 2011, by Meyers Nave

The Ninth Circuit held yesterday in City of Los Angeles v. San Pedro Boat Works that permittees, easement holders, licensees and other holders of mere possessory interests are not “owners” for purposes of liability under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”).

CERCLA imposes liability for environmental contamination on four classes of persons, including any person who owned or operated the facility at the time the hazardous substances were disposed. In City of Los Angeles, the City sued BCI Coca-Cola Bottling Company of Los Angeles ("BCI") for contamination caused by the operation of a boatworks facility in the Port of Los Angeles. The City alleged that BCI’s predecessor-in-interest was liable as an owner under CERCLA because it had held revocable permits to operate the boatworks facility.

As in past CERCLA cases, the Ninth Circuit looked to common law to determine whether BCI’s predecessor-in-interest was an owner under CERCLA. The Court found that under California common law, the holder of a revocable permit holds merely a possessory interest in real property, similar to that of an easement holder or licensee. Because possessory interests are distinct from ownership interests under common law, the Court held that BCI’s predecessor-in-interest was not a former owner of the boatworks, and BCI was not liable for the City’s cleanup costs under CERCLA.

While it is clear from the Court’s holding that owner liability under CERCLA does not extend to easements, licenses and permits, the Court left open the question as to whether owner liability may extend to leases or other property interests less than fee title.

Solar Development Promoted By Department of Conservation for Williamson Act Land

March 23, 2011, by Meyers Nave

The California Department of Conservation just issued the opinion "Considerations in Siting Solar Facilities on Land Enrolled in the Williamson Act" ("Opinion"), which provides suggestions to cities and counties for permitting solar development on property under contract of the California Land Conservation Act ("Act"). While the Opinion discusses nonrenewal and cancelling Act contracts as options to permit solar development, the critical part of the Opinion discuses how to determine if solar development is a compatible use for agricultural land under the Act. It provides guidelines and suggestions on the criteria that counties should follow in determining if solar development is a compatible use and suggests that solar development should be approved even if inconsistent with principles of compatibility, so long as certain criteria are met. Ultimately, it opines that the Act should not be an impediment to solar development.

As background, the Act promotes land conservation, with an emphasis on agricultural conservation. (California Government Code Section 51200 et seq.). It provides property tax relief to owners in exchange for an agreement that the land will not be developed or otherwise converted to another use for periods of 9 or 20 years. Currently, approximately 17 percent of California’s total acreage (or approximately 16.6 million acres) is restricted by Williamson Act contracts.

For the full opinion, click here.

Proposed Law Gives Attorney's Fees to Successful Bid Challenger

March 29, 2011, by Meyers Nave

A new bill (A.B. 457) was recently introduced in the California Legislature that would provide attorney's fees to a public works bidder who is not awarded a contract for a public project, but who successfully challenges the bidding process for the project in court.

A.B. 457 would enact Public Contract Code 5111, which as drafted would state "If a contract is entered into under Section 5110 pending final decision on a challenge to the intended or actual award of the contract, and if the contract is later determined to be invalid due to errors or omissions of the public entity, a bidder who successfully challenges the intended or actual award of that contract shall be entitled to recover costs and attorney's fees incurred in pursuing that challenge."

Not surprisingly, A.B. 457 is supported by various associations that represent contractors and the construction industry. And, since the proposed law is likely to result in an increase in bid protests and subsequent lawsuits against public entities, and resulting project delays, as well as the potential for attorney's fees liability, various public entity associations oppose it.

The bill was scheduled for a committee hearing on March 22, 2011, but that hearing was cancelled. You can follow the status of A.B. 457 here.