## Facts

- A 117-acre farm in St. Mary’s County, Maryland (the California Maryland Drum site) contained drums and wastes with hazardous substances.
- The site was owned by Herschel and Nellie McLeod until December 1980; hazardous wastes were dumped there during their ownership.
- Maryland Bank & Trust Company (MB&T) financed refuse-related businesses associated with the McLeods and later financed Mark McLeod’s purchase of the property, taking a mortgage in December 1980.
- After Mark McLeod defaulted, MB&T foreclosed and bought the property at a foreclosure sale in May 1982, taking and retaining legal title.
- EPA inspected and sampled the site in 1983, conducted a federally funded removal action, incurred response costs, and demanded reimbursement from MB&T.
- The United States sued MB&T under CERCLA § 107 to recover response costs; MB&T sought summary judgment, and the United States sought partial summary judgment on liability.

## Issues

1. Whether MB&T, after acquiring title by foreclosure, was liable as a current “owner” under CERCLA § 107(a)(1) for response costs even though disposal occurred before its ownership.
2. Whether CERCLA’s secured-creditor exemption for holders of indicia of ownership to protect a security interest shielded MB&T after it purchased and retained title.
3. Whether CERCLA may impose cleanup liability on a current owner where the hazardous waste disposal occurred before CERCLA’s enactment and before the owner acquired title.

## Decision

- MB&T’s motion for summary judgment was denied.
- The United States’ motion for partial summary judgment on liability was granted.
- The court held MB&T liable under CERCLA § 107(a)(1) as the current owner of a facility from which there was a release or threat of release and for which EPA incurred response costs.
- The secured-creditor exemption did not protect MB&T because it had purchased the property at foreclosure and continued to hold title, rather than merely holding indicia of ownership to protect a security interest.
- The case proceeded on the amount and recoverability of response costs, not on liability.

## Legal Principles

- CERCLA § 107(a)(1) imposes strict liability on current owners of facilities where hazardous substances have come to be located, without requiring proof that the owner caused the disposal.
- Liability for a current owner does not turn on when hazardous substances were deposited; ownership at the relevant time, coupled with a release or threatened release and incurred response costs, can establish liability.
- CERCLA may reach sites contaminated before its enactment because the statute targets existing releases or threats of release and assigns cleanup costs to persons within § 107(a)’s categories.
- The secured-creditor exemption in CERCLA’s owner/operator definition is limited to those holding indicia of ownership primarily to protect a security interest and not participating in management; a lender that takes and retains title through foreclosure falls outside the exemption.

## Conclusion

The court ruled that a bank that foreclosed and took title to contaminated property was liable as a current owner under CERCLA for EPA response costs, and it could not invoke the secured-creditor exemption after becoming and remaining the property’s titleholder.


United States v. Maryland Bank & Tr. Co., 632 F. Supp. 573 (D. Md. 1986)