Former Owner Environmental Liability for Passive Waste Migration
Co-Written By Ms Toby Mallen
"Something is rotten in the state of Denmark." Hamlet, Act I, Scene 4
In a ruling that should be of great interest
to the owners of retail centers upon which environmental contamination has
been discovered,† the 9th Circuit Court of Appeal has held that former
property owners may be liable for the ìpassiveî migration of waste
occurring while they owned a property, even if the waste was placed on the
property prior to their ownership.† The 9th Circuit's ruling in
Carson Harbor Village Ltd.† v. Unocal Corp. 227 F.3d 1196 (9th Cir.†
2000), aligns the court with the 4th Circuit, which also has adopted a
position that passive migration can lead to liability for previous land
owners, and against the 2nd, 3rd, and 6th Circuits, which have indicated
that passive migration of materials will not be a sufficient basis for
liability.
Under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.† Section
9601 et. seq.† (CERCLA), parties can be liable for clean up costs if
they owned or operated a property† ìat the time of the disposal of
any hazardous substance.î In Carson Harbor, the 9th Circuit focused on the
definition of the term ìdisposal,î holding that, as used in that section
of CERCLA, ìdisposalî includes passive migration, in addition to the
movement of waste resulting from active-owner participation.
This means that, under Carson Harbor,
current land owners (or other potentially responsible parties) may be
permitted to seek contribution for clean up costs from prior owners who
owned the property while pollutants passively migrated over their property.††
In support of this holding, the court reasoned that, in passing the
regulatory scheme implemented by CERCLA, Congress intended to ìensure
prompt cleanup by drawing in all 'potentially responsible parties.'î
This holding could be extremely important to
shopping center developers who discover environmental conditions on their
property.† Often those who were originally responsible for such
environmental conditions may be unavailable or insolvent.† However,
previous owners (even those who were not aware of such conditions) may
provide another source of cleanup funding.
Factual Background
In Carson Harbor, the current property
owner, Carson Harbor Village Ltd. (Carson), operated a mobile home park on
70 acres of the land in the City of Carson, California.† The land was
previously owned (and the trailer park operated), by a general partnership
run by two individuals, Braley and Smith (Partnership Defendants).†
Between 1945 and 1983, Unocal Corporation (Unocal) also held a leasehold
interest in the property and used it for petroleum production.† Unocal
operated a number of oil wells, pipelines, above-ground storage tanks and
production facilities on the property.
An undeveloped open flow wetlands area
covered approximately 17 acres of the property.† Storm water controlled
by the City of Carson, the City of Compton, the County of Los Angeles and
runoff from property owned by Caltrans (collectively, the Government
Defendants) drained into these wetlands.
During a refinancing of the property in
1993, Carson's lender commissioned an environmental assessment that
revealed slag and tar-like material in the wetlands.† This material
contained elevated levels of petroleum hydrocarbons and lead.†
Subsequent investigations revealed...
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