Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

More than 20 years ago, in the Tanglewood East decision, the 5^th Circuit Court of Appeals held that a developers could potentially be liable under CERCLA for conducting site development activities that moved contamination on the site, exacerbated conditions, and required additional cleanup. There have not been many reported cases on this issue since then, so the decision earlier this week in Saline River Properties v. Johnson Controls seemed noteworthy. 

The factual discussion was pretty sparse, but it seems undisputed that Johnson Controls had previously owned the property, the property was contaminated, and Johnson Controls was remediating it under a state administrative order. Saline became the operator of the property and at some point “destroy[ed] the building slab.” Johnson Controls alleged that this resulted in migration of contamination that would not otherwise have occurred. 

For the court, these allegations were sufficient for Johnson Controls’ claim to survive Saline’s summary judgment motion.  The court distinguished cases holding that “passive migration” does not constitute disposal:

Here, more is alleged than just passive migration. [Johnson Controls] alleges that Saline took the affirmative action of breaking up the concrete slab, which caused hazardous substances beneath the barrier to migrate into additional soils and groundwater. The Court concludes that [Johnson Controls] has created a genuine issue of material fact as to whether Saline caused a release or disposal at the facility.

I don’t regard the decision as a surprise, but it is a useful lesson (if costly to Saline) for developers.  Perform your due diligence before purchasing contaminated property and make certain that your redevelopment plans are appropriate given site conditions.

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In a recent decision, the 7^th Circuit Court of Appeals confirmed that neither CERCLA nor RCRA provide convenient ways for the buyer of a building containing asbestos to finance the abatement of that asbestos. In Sycamore Industrial Park Associates v. Ericsson, the seller of the building replaced the old heating equipment shortly prior to sale, but left the old system, including piping, in place. The buyer sought to make the seller pay for the asbestos abatement on the ground that the seller has disposed of the old equipment by abandoning it in place when it installed the new system. The 7^th Circuit didn’t buy it.

The Court acknowledged that there might be a close question as to whether the asbestos constituted a solid or hazardous waste or RCRA and CERCLA. However, the Court concluded that it need not answer the question, because the seller had not “disposed” of the material. The Court concluded that, where all of the asbestos was either inside the building or inside a pipe chase, there “is no real threat that asbestos ‘or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters….” 

The Court did indicate that the intent of the seller may be relevant; it gave the example that a person looking to avoid liability for a toxic retaining pond, could not sell the entire property, including the pond, as a means of avoiding such liability. It described this situation as the “malicious motive case.” Absent such a malicious motive, however, sale of property including toxic or hazardous material does not put a person into the category of potentially responsible parties.

Similar to its analysis of the “disposal” question, the Court also concluded that there was no release or threat of release that would subject a person to CERCLA liability. “We reaffirm that when there is no emission into the outside environment,… there is no release or threatened release, and thus there can be no liability under CERCLA. 

The Court reached the same conclusion under RCRA. First, utilizing the same analysis as under CERCLA, it found that there had been no disposal by the seller. It also rejected the allegation that the seller had handled or stored the asbestos, concluding that “RCRA requires active involvement in handling or storing of materials for liability.”

In short, if the asbestos isn’t walking out the door, it may be a problem inside a building, but CERCLA and RCRA won’t help the building owner pay to fix that problem.

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