Daily Development for
Friday, April 10, 1998

by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law

CERCLA; RESPONSIBLE PARTY; PASSIVE MIGRATION: Past owners of a Superfund site, who did not themselves contribute to the hazardous substances at the site but who may have owned the property during a period in which these substances spread through “passive migration,” are not “owners or operators at the time of disposal” and are not liable under CERCLA.

ABB Industrial Systems, Inc. v. Prime Technology, Inc., et al., 120 F.3d 351 (2d Cir. 1997).

Since the passage of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) in 1980, courts have construed the Act’s liability provisions broadly. One of the most far-reaching of these decisions was Nurad, Inc. v. William E. Hooper & Sons Co., 966 F.2d 837 (4th Cir. 1992), in which the Fourth Circuit held that past owners of Superfund site could be liable for costs of the clean-up even if they did not actively contribute any hazardous waste to the site, so long as hazardous substances at the site underwent “passive migration” during the time of their ownership. Four years later, the Third Circuit held that passive migration was not sufficient to make prior owners liable. United States v. CDMG Realty Co., 96 F.3d 706 (3rd Cir. 1996).

In the present case the Second Circuit has addressed the topic and, siding with the Third, has held that passive migration alone will not subject a past owner to Superfund liability. The court relied on the statute’s definition of “disposal” as the “discharge, deposit, injection, dumping, spilling, leaking, or placing” of hazardous substances so that they may enter the environment. It held that this definition does not include the “gradual spreading of hazardous chemicals already in the ground.” ABB Industrial Systems, 120 F.3d at 358. Moreover, it found that CERCLA’s basic policy of imposing the costs of clean-up on those who caused the pollution requires that those who merely held the property and did not contribute hazardous substances to the site should not be held liable. Id. The court narrowly construed the Fourth Circuit’s Nurad decision as applying only to sites with leaking barrels and “expressed no opinion” on whether passive migration in this context would create CERCLA liability. Id. at 358 n.3. The Second Circuit’s decision is significant for property owners who are concerned about CERCLA liability, especially those who at one time owned a present-day Superfund site.

Comment: Although this decision is welcome news, and appears on its surface to make eminent good sense, keep in mind that we’re talking the “Never Never Land” of CERCLA here. CERCLA is all about liability without fault. A present owner of contaminated property is liable for clean up costs virtually regardless of how the contamination happened. Certainly the owner is liable for clean up of “migrating gook.” So, although we might be tempted to say that prior owners have no liability because the gook migrated during their tenure, it may actually make more sense to say that than to have a situation where the prior owners are not liable to clean up that gook but the present ones are.

If both parties are liable, then the policy of CERCLA to spread across the private community of land investors the public cost of cleaning up land is more readily accomplished. To limit liability for migrating gook only to the present owners is to saddle them with a greater burden. It would make little sense, of course, to give one a “priority” claim for reimbursement from the other. If both are innocent, then the editor assumes that some equitable way of dividing the costs between them could be devised. The editor is not sufficiently knowledgeable about CERCLA to know how the Third Circuit works out contribution issues between an innocent prior owner and an innocent present owner.

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