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current double-hull tanks provide much greater protection against
leaks, significant risks still exist. Both the owner of the land
and the tenant are liable under California law for the cost of
cleanup, even through the tenant whose tanks leak generally is
liable under the terms of the lease or under California’s
equitable indemnity laws to reimburse cleanup costs paid by the
landlord. See, e.g., Meghrig v. KFC Western, 516 U.S. 479 (1996)
(reciting that owner ordered by California regulatory authorities
to clean up prior owner’s petroleum contamination); First San
Diego Properties v. Exxon Co., 859 F. Supp. 1313 (S.D. Cal. 1994)
(innocent current owner seeking indemnity from prior owner and
operator who caused contamination is not liable to prior operator
for contribution); Zands v. Nelson, 797 F. Supp. 805 (S.D. Cal.
1992) (owner and operator jointly and severally liable to clean
up petroleum contamination); Mangini v. Aerojet-Gen. Corp., 227
Cal. App. 3d 1248, 1273-1274 (1991) (doctrine of equitable
indemnity under California law). Because of the substantial cost
of cleaning up soil and groundwater contamination, the landlord
assumes significant risk when the tenant does not have the
financial wherewithal to respond in damages for the cost of
cleaning up a petroleum leak.
In addition, property containing underground petroleum
storage tanks may become stigmatized because of concern of
potential buyers about soil and groundwater contamination.
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