United States v. CDMG Realty Co

Opinions of the United
1996 Decisions States Court of Appeals
for the Third Circuit
9-27-1996
USA v. CDMG Realty Co
Precedential or Non-Precedential:
Docket 95-5505
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UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________
NO. 95-5505
___________
UNITED STATES OF AMERICA
v.
CDMG REALTY CO., a limited partnership; HELEN E. RINGLIEB,
individually, and as general partner in CDMG REALTY CO.;
HMAT ASSOCIATES, INC.; TOWNSHIP OF PARSIPPANY-TROY HILLS;
ALLIED-SIGNAL, INC; BEAZER MATERIALS & SERVICES, INC.;
CIBA-GEIGY CORPORATION; HOECHST CELANESE CORP.; OCCIDENTAL
CHEMICAL CORP.; PFIZER, INC.; CARL GULICK, INC.; BECTON
DICKINSON, INC.; WARNER-LAMBERT COMPANY; AMERICAN TELEPHONE
AND TELEGRAPH COMPANY; BROWNING-FERRIS INDUSTRIES OF NORTH
JERSEY, INC.; INDUSTRIAL CIRCUITS COMPANY; AUTOMATIC SWITCH
COMPANY; ROWE INTERNATIONAL INC.; HOSOKAWA MICRON INTERNATIONAL
INC.; SCOVILL INC.; K-H CORPORATION ON BEHALF OF MAGOR CAR;
LESLIE CONTROLS COMPANY, INC.; NESOR ALLOY CORPORATION; SANDOZ
PHARMACEUTICALS CORPORATION; KIDDE INDUSTRIES, INC. (named
in the complaint as Hanson Industries); RAYONIER INC.,
(formerly ITT Rayonier, Inc.); WAGNER ELECTRIC CORPORATION
(named in the Complaint as Cooper Industries, Inc.); THE
SHERWIN-WILLIAMS COMPANY; KDI/TRIANGLE ELECTRONICS, INC.;
STATE OF NEW JERSEY DEPARTMENT OF TRANSPORTATION; JOHN DUSENBURY
COMPANY; SAFETY LIGHT CORPORATION, (named in the Complaint as USR
Industries, Inc.); THE BOC GROUP, INC.; L.E. CARPENTER & CO.;
THE MENNEN COMPANY; METEM CORPORATION; NSK CORPORATION; CERAMIC
MAGNETICS, INC.; AIR PRODUCTS & CHEMICALS, INC.; ROCKLAND
CORPORATION; SIKA CORPORATION; CARBONE USA CORPORATION;
NEW JERSEY TRANSIT CORPORATION; NEW JERSEY BUS OPERATIONS, INC.
v.
THE SHARKEY LANDFILL AGREEMENT GROUP, an organization of
Defendants in Civil Action Number 89-4246 (NHP), for
themselves and on behalf of other Settling Defendants whose
contribution claims they may assert pursuant to an
assignment of rights and HOECHST CELANESE CORPORATION, one of
its members; BEAZER MATERIALS & SERVICES, INC.; OCCIDENTAL
CHEMICAL
CORPORATION; HMAT ASSOCIATES, INC.,
Third-Party Plaintiffs
v.
ADRON, INC.; AMERACE CORPORATION and SEQUA CORPORATION;
AIR PRODUCTS & CHEMICALS, INC.; BASIC, INC.; THE BOC GROUP, INC.;
CARBONE U.S.A. CORP.; CERAMIC MAGNETICS, INC.; COLLOID CHEMICAL,
INC.; COOPER INDUSTRIES, INC.; HANSON INDUSTRIES; INTERNATIONAL
ENGRAVING CORP.; INTERNATIONAL PAPER COMPANY; ITT RAYONIER, INC.;
JOHN DUSENBURY COMPANY, INC.; KDI/TRIANGLE ELECTRONICS INC.;
L.E. CARPENTER & CO.; LITTON SYSTEMS, INC.;
THE MENNEN COMPANY; METEM CORPORATION;
NEW JERSEY TRANSIT CORPORATION; NEW JERSEY TRANSIT BUS COMPANY,
INC.; NSK CORPORATION; OLD DEERFIELD FABRICS, INC.;
PANTASOTE INC.; PQ CORPORATION; PRECISION MANUFACTURING CO., INC;
ROCKLAND CORPORATION; SANDOZ PHARMACEUTICALS CORPORATION; THE
SHERWIN-WILLIAMS COMPANY; SIKA CORPORATION; USR INDUSTRIES, INC.
and TOWNSHIP OF BLOOMFIELD; TOWN OF BOONTON; TOWNSHIP OF BOONTON;
BOROUGH OF BUTLER; TOWNSHIP OF THE BOROUGH OF CALDWELL;
TOWNSHIP OF CHATHAM; CITY OF CLIFTON; TOWNSHIP OF DENVILLE;
TOWN OF DOVER; TOWNSHIP OF EAST HANOVER; COUNTY OF ESSEX;
TOWNSHIP OF FAIRFIELD; TOWNSHIP OF GLEN RIDGE BOROUGH;
BOROUGH OF HALEDON; TOWNSHIP OF HANOVER; CITY OF JERSEY CITY;
BOROUGH OF KINNELON; BOROUGH OF LINCOLN PARK;
TOWNSHIP OF LITTLE FALLS; TOWNSHIP OF LIVINGSTON; TOWNSHIP
OF MILLBURN; TOWNSHIP OF MINE HILL; TOWNSHIP OF MONTCLAIR;
TOWNSHIP OF MONTVILLE; TOWNSHIP OF MORRIS; TOWN OF MORRISTOWN;
BOROUGH OF MOUNTAIN LAKES; TOWNSHIP OF PEQUAMNOCK; BOROUGH OF
POMPTON LAKES; BOROUGH OF PROSPECT PARK; TOWNSHIP OF RANDOLPH;
BOROUGH OF RIVERDALE; TOWNSHIP OF ROCKAWAY; CITY OF SUMMIT;
BOROUGH OF TOTOWA; BOROUGH OF VICTORY GARDENS; TOWNSHIP OF WEST
CALDWELL; TOWNSHIP OF WEST ORANGE; BOROUGH OF WHARTON; VINCENT
APICE AND SON; FRANK M. BACE DISPOSAL, INC.; CALDWELL TRUCKING
CO., INC.; CARNER BROS., INC.; CENTRAL WASTE AND MILL SERVICE,
INC.; CHATHAM DISPOSAL COMPANY; CHEM-QUID DISPOSAL, INC.;
CARMEL CHIULLO; JOHN COSTA; JOSEPH DEFRIETAS; DELL & SONS;
DENVILLE DISPOSAL CO., INC.; DIMARCO SANITATION; SAM FIORENZO;
FRANK'S SANITATION SERVICE; GARBCO ASSOCIATES, INC.; B. HORSTMANN
SEPTIC TANK SERVICE; DANIEL JACKSON; J.M.S. SANITATION CO.;
R. LOBOSCO AND SONS, INC.; MARANGI SANITATION, INC.;
FRANK J. MARINARO; MERCER WASTE REMOVAL CO.;
ANTHONY MIELE; MORRIS COUNTY; WEST ESSEX DISPOSAL CO., INC.;
STATE OF NEW JERSEY DEPARTMENT OF TRANSPORTATION;
HELEN ELAINE RINGLIEB and TOWNSHIP OF ESSEX FELLS;
HARDING TOWNSHIP; MADISON BOROUGH;
BOROUGH OF NEW PROVIDENCE; ROSELAND BOROUGH; UNION COUNTY;
WAYNE TOWNSHIP; DOWEL ASSOCIATES, a general partnership;
HERBERT M. IRIS, individually and as a general partner in DOWEL
ASSOCIATES; LESTE Z. LIEBERMAN, individually and as general
partner in DOWEL ASSOCIATES,
Third-Party Defendants
(Newark N.J. D.C. Civil No. 89-cv-04246)
STATE OF NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION
v.
CIBA-GEIGY CORPORATION, INC.; CURTISS-WRIGHT CORPORATION;
HOECHST-CELANESE CORPORATION; KETCHAM AND MC DOUGALL, INC.;
PFIZER, INC.; OCCIDENTAL PETROLEUM CORPORATION; KOPPERS
COMPANY, INC.; SHARKEY FARMS, INC.; NICHOLAS ENTERPRISES,
INC.; PARKER CHEMICAL COMPANY; CHEMICAL WASTE MANAGEMENT, INC.
(NEWARK N.J. D.C. Civil No. 89-cv-04281)
HMAT Associates, Inc., Appellant
_________________________________________
On Appeal From the United States District Court
For the District of New Jersey
_________________________________________
Argued: March 18, 1996
Before: BECKER, McKEE, and McKAY,
Circuit Judges.
(Filed September 27, l996)
JAMES J. PERICONI, ESQUIRE (ARGUED)
Periconi & Rothberg, P.C.
230 Park Avenue, Suite 615
New York, NY 19169
Attorneys for Third-Party Plaintiff/Appellant
R. BRUCE MORRISON, ESQUIRE
DAVID B. FARER, ESQUIRE (ARGUED)
JOHN P. QUIRKE, ESQUIRE
Farer Siegal Fersko
A Professional Association
600 South Avenue
P.O. Box 580
Westfield, NJ 07091
Attorneys for Third-Party Defendants/Appellees
_________________________
OPINION OF THE COURT
_________________________
BECKER, Circuit Judge.
This appeal requires us to determine the meaning of the word
"disposal" in the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), 42 U.S.C. § 9601 et
seq. Plaintiff HMAT Associates, the current owner of
contaminated property, was sued by the United States under CERCLA
for the costs of cleaning up the site. HMAT sought contribution
from Defendant Dowel Associates, the company that sold the land
to HMAT, on the ground that Dowel was a prior owner "at the time
of disposal," see 42 U.S.C. § 9607(a)(2). HMAT concedes that no
one dumped waste at the property during Dowel's ownership, but
offers two reasons why "disposal" took place during Dowel's
tenure. HMAT first advances a "passive" disposal theory: that
"disposal" occurred because contamination dumped in the land
prior to Dowel's purchase of the property spread during Dowel's
ownership. HMAT also offers an "active" disposal theory: that a
soil investigation conducted by Dowel to determine whether the
land could support construction caused the dispersal of
contaminants, and that this constitutes "disposal."
On cross-motions for summary judgment, the district court
ruled in favor of Dowel. The court rejected HMAT's argument that
the spread of contamination unaided by human conduct can confer
CERCLA liability and held that any disturbance of contaminants
caused by Dowel's soil testing was too insignificant to amount to
"disposal." HMAT appeals the court's grant of Dowel's summary
judgment motion and the denial of its own motion.
We hold that the passive migration of contamination dumped
in the land prior to Dowel's ownership does not constitute
disposal. Finding it unnecessary to reach the question whether
the movement of contaminants unaided by human conduct can ever
constitute "disposal," we conclude that the language of CERCLA's
"disposal" definition cannot encompass the spreading of waste at
issue here. This conclusion is based on an examination of
CERCLA's text, is supported by the structure of the statute, and
is consistent with CERCLA's purposes.
Regarding Dowel's soil testing, we hold that there is no
threshold level of disturbance required to constitute "disposal,"
and that HMAT has identified evidence that would justify a
factfinder's conclusion that contaminants were spread in the
testing. We also hold, however, that because CERCLA clearly
contemplates that prospective purchasers be allowed to conduct
soil investigations to determine whether property is
contaminated, a plaintiff must show not only that a soil
investigation has caused the spread of contaminants, but also
that the investigation was conducted negligently.
Thus, although we agree with the district court that HMAT's
passive theory is not viable, HMAT may be able to proceed on its
active theory. Accordingly, we will vacate the district court's
grant of summary judgment to Dowel and remand for further
proceedings consistent with this opinion.
I. Facts and Procedural History
The property at issue in this case, a ten-acre parcel of
land in Morris County, New Jersey, was once part of the Sharkey's
Farm Landfill (Sharkey's Landfill). Sharkey's Landfill operated
as a municipal landfill from 1945 until 1972. During its
operation, the landfill received waste from several counties in
northern New Jersey. In addition to accepting municipal solid
waste, the landfill received approximately 750,000 pounds of
hazardous chemical waste from Ciba-Geigy Company, a large
pharmaceutical concern. Additional chemical waste from other
sources may also have been deposited there. For example, Koppers
Chemical Company allegedly disposed of about 3,000,000 gallons of
wastewater of unknown composition in the landfill. Between 1966
and 1972, county and state agencies received steady complaints
about odors, smoke from fires, lack of proper cover, and the
presence of dead animals in the landfill. The landfill was
closed to further disposal in 1972.
The Environmental Protection Agency (EPA) and the New Jersey
Department of Environmental Protection and Energy (NJDEPE) began
investigating Sharkey's Landfill in the mid to late 1970s. In
1982, the EPA placed Sharkey's Landfill on the National
Priorities List of Hazardous Waste Sites.
In December 1981, Dowel purchased the property. The land
was vacant at the time of purchase, and it remained vacant during
Dowel's ownership. Neither Dowel nor any other person deposited
waste at the site during Dowel's term of ownership. Dowel's only
activity on the land was a soil investigation, conducted in
September 1981 (three months prior to finalizing its purchase) to
determine the land's ability to support construction. The soil
investigation, which was performed by Thor Engineering, involved
nine drill borings, each twelve to eighteen feet into the ground.
Thor's logs show that its equipment bored through various waste
materials and groundwater and that several of the boreholes
"caved" during the testing. App. 120.
In November 1983, the NJDEPE notified Dowel that it was
investigating the property and that Dowel should cease any
planned activities at the site. In 1984, the EPA notified Dowel
that Dowel was potentially liable for the cleanup costs of the
site and invited it to undertake voluntary cleanup. App. 273.
In 1987, Dowel sold the property to HMAT. In the contract
of sale, Dowel fully disclosed that the property was part of the
Sharkey Landfill, that the landfill was under investigation by
state and federal environmental authorities, and that the
property was part of a possible Superfund site. App. 282.
In October 1989, EPA and NJDEPE commenced actions against
parties potentially liable for the costs of cleaning up the
Sharkey Landfill and seeking a declaration of future liability.
HMAT, as the current owner of the property, was named as a
defendant under CERCLA § 107(a)(1), 42 U.S.C. § 9607(a)(1).
Dowel was not sued. However, HMAT filed a third-party suit
against Dowel, seeking contribution from Dowel as a former owner
of the property "at the time of disposal" pursuant to CERCLA §§
107(a)(2) and 113(f). HMAT also pled state law claims.
Dowel moved for summary judgment, arguing that under CERCLA,
prior owners are only liable if they actively engage in waste
disposal during their ownership of the property. HMAT also moved
for summary judgment. HMAT challenged Dowel's reading of CERCLA,
contending that prior owners are liable if they fail to stop the
migration of contaminants on their property. In addition, HMAT
argued that Dowel actively engaged in waste disposal within the
meaning of CERCLA: HMAT submitted an affidavit from Laura
Truettner, an expert environmental consultant, which asserted
that Dowel's drill borings exacerbated contamination by mixing,
shifting, and spreading waste materials. In response, Dowel
submitted an affidavit from Peter Wilner, the principal of Thor
Engineering, stating that the boring did not spread or mix any
materials. HMAT then submitted another affidavit from Truettner,
which contended that Wilner's affidavit contains misleading
statements and directly contradicts the contemporaneous record of
the drilling.
As we have noted, the district court granted Dowel's motion
in full and denied HMAT's cross-motion. The court reasoned that
mere ownership of previously contaminated property does not
trigger liability under CERCLA, and that, even accepting HMAT's
version of the facts, Dowel's drilling activities did not cause a
significant enough disturbance to trigger liability. HMAT
appeals the district court's rulings on its CERCLA claims
(although it accepts the district court's conclusion that Dowel
is not liable under state law). We exercise plenary review over
the district court's summary judgment rulings. See, e.g., United
States v. Capital Blue Cross, 992 F.2d 1270, 1271-72 (3d Cir.
1993).
II. Passive Spreading in a Landfill as Disposal
A. Introduction
CERCLA is a broad and complex statute aimed at the dangers
posed by hazardous waste sites. Among other things, CERCLA
provides a cause of action to recover "response costs" incurred
in remedying an environmental hazard, 42 U.S.C. § 9607, and
allows those liable for response costs to seek contribution from
other liable parties, id. § 9613(f). A plaintiff must meet four
elements to establish CERCLA liability: (1) that hazardous
substances were disposed of at a "facility"; (2) that there has
been a "release" or "threatened release" of hazardous substances
from the facility into the environment; (3) that the release or
threatened release has required or will require the expenditure
of "response costs"; and (4) that the defendant falls within one
of four categories of responsible parties. Id. § 9607(a); seeUnited
States v. Alcan Aluminum Corp., 964 F.2d 252, 258-59 (3d
Cir.), reh'g and reh'g in banc denied, 964 F.2d 271 (3d Cir.
1992). If these requirements are met, responsible parties are
liable for response costs regardless of their intent. See id. at
259 ("CERCLA imposes strict liability on responsible parties.").
The parties agree that the first three requirements are met.
Their dispute concerns whether Dowel is a responsible party.
CERCLA makes four classes of people liable for response costs or
contribution: the current owner or operator of a facility, id. §
9607(a)(1); any person who owned or operated the facility "at the
time of disposal" of a hazardous substance, id. § 9607(a)(2); any
person who arranged for disposal or treatment, or arranged for
transport for disposal or treatment of hazardous substances at
the facility, § 9607(a)(3); and any person who accepts or
accepted hazardous substances for transport to sites selected by
such person, Id. § 9607(a)(4). HMAT contends that Dowel is
liable as a person who owned or operated the facility "at the
time of disposal" of a hazardous substance.
CERCLA defines "disposal" by incorporating the definition
used by the Resource Conservation and Recovery Act (RCRA). See42 U.S.C. §
9601(29) ("The terms 'disposal', 'hazardous waste',
and 'treatment' shall have the meaning provided in section 1004
of the Solid Waste Disposal Act."). Under RCRA,
The term "disposal" means the discharge, deposit,
injection, dumping, spilling, leaking, or placing of
any solid waste or hazardous waste into or on any land
or water so that such solid waste or hazardous waste or
any constituent thereof may enter the environment or be
emitted into the air or discharged into any waters,
including ground waters.
42 U.S.C. § 6903(3). Focusing on the breadth of this definition,
HMAT reads "disposal" to encompass the passive migration of
contaminants. HMAT offers no evidence that any passive migration
has occurred here but asks us to take judicial notice that waste
tends to spread once it is put in the ground, See Office of
Remedial Response, United States Environmental Protection Agency,
Superfund Exposure Assessment Manual 8 (1988) [Hereinafter
Superfund Manual] (waste in landfills tends to migrate due to,
inter alia, rain, groundwater movement, and wind) and waste
therefore must have spread during the six years Dowel owned the
property. Several courts have been sympathetic to this argument.
See United States v. Waste Indus., Inc., 734 F.2d 159, 164-65
(4th Cir. 1984) (migration of hazardous substances can constitute
disposal under RCRA); CPC International, Inc. v. Aerojet-General
Corp., 759 F. Supp. 1269, 1278 (W.D. Mich. 1991) (the unchecked
spread of contaminated groundwater qualifies as disposal under
CERCLA); Stanley Works v. Snydergeneral Corp., 781 F. Supp. 659,
662-64 (E.D. Cal. 1990) (ongoing migration of hazardous
substances constitutes disposal under CERCLA); United States v.
Price, 523 F. Supp. 1055, 1071 (D.N.J. 1981) (spreading of
hazardous substances constitutes disposal under RCRA), aff'd, 688
F.2d 204 (3d Cir. 1982); cf. Nurad, Inc. v. William E. Hooper &
Sons Co., 966 F.2d 837, 845-46 (4th Cir.) (leaking from tanks
that were deposited prior to the defendants' ownership
constitutes disposal subjecting the defendant to CERCLA
liability), cert. denied sub nom. Mumaw v. Nurad, Inc., 506 U.S.
940 (1992); State of New York v. Almy Bros., Inc., 866 F. Supp.
668, 676-77 (N.D.N.Y. 1994) (gradual leaking from drums deposited
prior to the defendants' ownership constitutes disposal under
CERCLA); In re Hemingway Transport, Inc., 108 B.R. 378, 382
(Bankr. D. Mass. 1989) (leaking drums constitute CERCLA
disposal), aff'd, 126 B.R. 650 (D. Mass. 1991), aff'd, 954 F.2d 1
(1st Cir. 1992).
We are unpersuaded. A thorough examination of the text and
structure of CERCLA convinces us that the passive migration of
contaminants alleged here does not constitute disposal. Our
conclusion is based on the plain meaning of the words used in the
disposal definition and is supported by the structure of CERCLA's
liability scheme. We also believe that our interpretation is
consistent with CERCLA's purposes.
B. The Language
1. The Definition of "Disposal"
The definition of disposal begins with "the discharge,
deposit, injection, dumping, spilling, leaking, or placing of any
solid waste or hazardous waste into or on any land or water." 42
U.S.C. § 6903(3). Courts holding that passive migration can
constitute disposal have focused on the words "leaking" and
"spilling," terms that generally do not denote active conduct.
See CPC International, Inc. v. Aerojet-General Corp., 759 F.
Supp. 1269, 1278 (W.D. Mich. 1991); United States v. Price, 523
F. Supp. 1055, 1071 (D.N.J. 1981), aff'd, 688 F.2d 204 (3d Cir.
1982).
We think there is a strong argument, however, that in the
context of this definition, "leaking" and "spilling" should be
read to require affirmative human action. Both "leaking" and
"spilling" also have meanings that require some active human
conduct. "Leak" can be defined as "to permit to enter or escape
through a leak." Webster's Third New International Dictionary,
Unabridged 1285 (Philip Babcock Gove & the Mirriam-Webster
Editorial Staff eds., 1986) [hereinafter Webster's]. Similarly,
"spill" can mean "to cause or allow to pour, splash, or fall
out." Id. at 2195. Meaning derives from context, hence the
constructional canon noscitur a sociis, which states that one may
infer meaning by examining the surrounding words. The words
surrounding "leaking" and "spilling" -- "discharge," "deposit,"
"injection," "dumping," and "placing" -- all envision a human
actor. In the context of these other words, then, Congress may
have intended active meanings of "leaking" and "spilling." SeeEcodyne
Corp. v. Shah, 718 F. Supp. 1454, 1457 (N.D. Cal. 1989);
Robert L. Bronston, Note, The Case Against Intermediate Owner
Liability for Passive Migration of Hazardous Waste, 93 Mich. L.
Rev. 609, 616 (1994).
But we need not address this question in the broad terms of
whether disposal always requires active human conduct. Even if
it does not, we conclude that the passive migration at issue in
this case cannot constitute disposal. While "leaking" and
"spilling" may not require affirmative human conduct, neither
word denotes the gradual spreading of contamination alleged here.
A common definition of "leak" -- and the one most favorable to
HMAT -- is "to enter or escape through a hole, crevice, or other
opening." Webster's, supra at 1285. This definition requires
that a substance "leak" from some opening. For example, the
definition would encompass the escape of waste through a hole in
a drum. But HMAT has offered no evidence of leaking drums.
Compare, e.g., Nurad, Inc. v. William E. Hooper & Sons Co., 966
F.2d 837, 846 (4th Cir.) (the plaintiff presented evidence
showing that tanks had leaked), cert. denied sub nom. Mumaw v.
Nurad, Inc., 506 U.S. 940 (1992). And there is no other evidence
that waste escaped from any opening during Dowel's ownership.
The definition of "spilling" is also unavailing. Although
"spilling" too sometimes denotes the movement of liquid in the
absence of human action, such a definition does not cover the
spreading of waste at issue here. Passive definitions of "spill"
suggest a rapid torrent, not gradual passive migration over the
course of several years. See Webster's, supra at 2195 (defining
"spill" as, inter alia, "to flow, run, or fall out, over, or off
with waste, loss, or scattering as the result" and as "to come,
go, or pass with a turbulent rush[; to] pour in an unrestrained,
profuse, or disorderly manner"). Consider, for example, an "oil
spill."
2. A Comparison With "Release"
It is especially unjustified to stretch the meanings of
"leaking" and "spilling" to encompass the passive migration that
generally occurs in landfills in view of the fact that another
word used in CERCLA, "release," shows that Congress knew
precisely how to refer to this spreading of waste. A prior owner
who owned a waste site at the time of "disposal" is only liable
in the event of a "release" or "threatened release." 42 U.S.C. §
9607. CERCLA defines release in relevant part as follows:
The term "release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing
into the environment (including the abandonment or
discarding of barrels, containers, and other closed
receptacles containing any hazardous substance or
pollutant or contaminant) . . . .
42 U.S.C. § 9601(22). The definition of "release" is thus
broader than that of "disposal": "release" encompasses
"disposing" and some elements of the "disposal" definition and
also includes some additional terms.
Most importantly, the definition of "release" includes the
term "leaching," which is not mentioned in the definition of
"disposal." "Leaching" is "the process or an instance of
separating the soluble components from some material by
percolation." Webster's, supra at 1282. Leaching of
contaminants from rain and groundwater movement is a principal
cause of contaminant movement in landfills, see Superfund Manual,
supra at 8, and is the most predominant cause of groundwater
contamination from landfills, Edward Repa & Charles Kufs,
Leachate Plume Management 2 (1985). The word "leaching" is
commonly used in the environmental context to describe this
migration of contaminants. See, e.g., Steven Ferrey, The Toxic
Time Bomb: Municipal Liability for the Cleanup of Hazardous
Waste, 57 Geo. Wash. L. Rev. 197, 207 n.34 (1988) ("Leachate is
liquid or water soluble contaminated substances that migrate away
from the point source of contamination in groundwater or surface
water, often influenced by rain and normal water table
activities. Such a phenomenon is described as 'leaching' of
contaminants.") Congress's use of the term "leaching" in the
definition of "release" demonstrates that it was aware of the
concept of passive migration in landfills and that it knew how to
explicitly refer to that concept.
. Yet Congress made prior owners liable only if they owned
land at the time of "disposal," not at the time of "release."
3. "At the Time of Disposal"
Our conclusion that the meaning of the words in the
"disposal" definition cannot cover the passive migration alleged
in this case is buttressed by the language of CERCLA's liability
provision. If the spreading of contaminants is constant, as HMAT
would have us assume, characterizing liable parties as "any
person who at the time of disposal . . . owned or operated any
facility," 42 U.S.C. § 9607(a)(2), would be a rather complicated
way of making liable all people who owned or operated a facility
after the introduction of waste into the facility. See Snediker
Developers Ltd. Partnership v. Evans, 773 F. Supp. 984, 989 (E.D.
Mich. 1991); Ecodyne Corp. v. Shah, 718 F. Supp. 1454, 1457 (N.D.
Cal. 1989); In re Diamond Reo Trucks, Inc., 115 B.R. 559, 565
(Bankr. W.D. Mich. 1990). Furthermore, there would be no need
for the separate responsible party category of current owner or
operator, id. § 9607(a)(1). See Ecodyne Corp., 718 F. Supp. at
1457. Although CERCLA is not written with great clarity, we
will not impute to Congress an intent to set up a simple
liability scheme through a convoluted methodology.
C. Structure: The Innocent Owner Defense
Our conclusion that the language of CERCLA's definition of
"disposal" does not include the passive migration alleged here is
also supported by a significant aspect of CERCLA's liability
scheme, the innocent owner defense. Since the 1986 Superfund
Amendments and Reauthorization Act (SARA), Pub. L. No. 99-499,
100 Stat. 1613 (1986) (codified at 42 U.S.C. §§ 9601-9675),
CERCLA has exempted certain "innocent owners" from liability.
CERCLA provides a defense to liability if the defendant can
prove that the release or threatened release was caused solely by
an act or omission of a third party. 42 U.S.C. § 9607(b)(3).
The defense is generally not available if the third party causing
the release is in the chain of title with the defendant. See 42
U.S.C. § 9601(35)(A). However, the defense is available in such
circumstances if the person claiming the defense is an "innocent
owner." To establish the innocent owner defense the defendant
must show that "the real property on which the facility is
located was acquired by the defendant after the disposal or
placement of the hazardous substance on, in, or at the facility"
and that "[a]t the time the defendant acquired the facility the
defendant did not know and had no reason to know that any
hazardous substance which is the subject of the release or
threatened release was disposed of on, in, or at the facility."
Because CERCLA conditions the innocent owner defense on the
defendant's having purchased the property "after the disposal" of
hazardous waste at the property, "disposal" cannot constitute the
allegedly constant spreading of contaminants. Otherwise, the
defense would almost never apply, as there would generally be no
point "after disposal." See United States v. Petersen Sand and
Gravel, Inc., 806 F. Supp. 1346, 1351-52 (N.D. Ill. 1992); In re
Diamond Reo Trucks, Inc. v. City of Lansing, 115 B.R. 559, 566
n.3 (Bankr. W.D. Mich. 1990); Bronston, supra at 627-28. We
think it unlikely that Congress would create a basically useless
defense.
The innocent owner defense's apparent limitation to current
owners also supports the conclusion that "disposal" does not
encompass the passive spreading alleged here. The provision
establishing the innocent owner defense states: "Nothing in this
paragraph or in section 9607(b)(3) of this title [, which
provides the causation defenses including the third party
defense,] shall diminish the liability of any previous owner or
operator who would be otherwise liable under this chapter." 42
U.S.C. § 9601(35)(C). This language certainly suggests that the
innocent owner defense is unavailable to prior owners or
operators.
While the question whether the innocent owner defense is
available only to present owners is not before us -- and we do
not decide the issue -- we note that such a limitation makes
sense only if passive spreading of waste in a landfill is not
included in disposal. If passive migration is excluded from
"disposal," past owners will generally only be liable as owners
"at the time of disposal" when they have committed or allowed
affirmative acts of disposal on their property. They would thus
have little need for the innocent owner defense, which requires,
inter alia, that a defendant did not "cause[] or contribute[] to
the release or threatened release," 42 U.S.C. § 9601(35)(D);
"exercised due care with respect to the hazardous substance
concerned," id. § 9607(b)(3)(a); and "took precautions against
foreseeable acts or omissions of any such third party [causing
the release] and the consequences that could foreseeably result
from such acts or omissions," id. § 9607(b)(3)(b). On the other
hand, if prior owners were liable because waste spread during
their tenure and the innocent owner defense is available only to
current owners, prior owners would be in a significantly worse
position than current owners: they would be liable for passive
migration of waste even if they had no reason to know of the
waste's presence. We do not believe that this was Congress's
intent.
D. CERCLA's Purposes
We have explained our confidence that the meaning of the
words defining "disposal" does not encompass the gradual
spreading of waste in a landfill and that this conclusion is
supported by the structure of the innocent owner defense. We
also conclude that this reading of "disposal" is consistent with
CERCLA's purposes.
Congress enacted CERCLA with two principal goals in minds --
to facilitate the cleanup of potentially dangerous hazardous
waste sites, Tippins Inc. v. USX Corp., 37 F.3d 87, 92 (3d Cir.
1994), and to force polluters to pay the costs associated with
their pollution, United States v. Alcan Aluminum, 964 F.2d 252,
257-58 (3d Cir. 1992). See United States v. USX Corp., 68 F.3d
811, 814 (3d Cir. 1995). Our holding is clearly consistent with
the latter purpose. Those who owned previously contaminated
property where waste spread without their aid cannot reasonably
be characterized as "polluters"; excluding them from liability
will not let those who cause the pollution off the hook. And,
many of these owners will pay for the pollution: if they
disclose the fact that the land contains waste, their selling
price will reflect the cost of CERCLA liability. If they have
knowledge of contamination and do not disclose it to a
transferee, they are liable for response costs even after the
transfer. 42 U.S.C. § 9601(35)(C). The only prior owners who
will not pay any cleanup costs are those who bought and sold the
land with no knowledge that the land is contaminated.
And our holding will not undermine the goal of facilitating
the cleanup of potentially dangerous hazardous waste sites. Even
if owners of previously contaminated land can evade liability by
transferring the land, ample incentives remain to promote
cleanup. See United States v. Petersen Sand and Gravel, Inc.,
806 F. Supp. 1346, 1353 (N.D. Ill. 1992); Bronston, supra at 637-
40. Present owners and operators remain strictly liable for
the costs of cleanup, 42 U.S.C. § 9607(a)(1), as do some prior
owners, id. § 9607(a)(2), people who arranged for disposal, id. §
9607(a)(3), and transporters of hazardous substances, id. §
9607(a)(4). Moreover, a number of provisions ensure that
contamination will be discovered and the fact of contamination
disclosed if the land is transferred. CERCLA imposes criminal
liability (including prison sentences) for failure to report a
"release" of hazardous substances above a certain threshold. See42 U.S.C.
§ 9603. As mentioned, if an owner transfers land that
it knows to be contaminated without disclosing the contamination,
it remains liable even after the transfer. 42 U.S.C. §
9601(35)(C). In addition, the innocent owner defense encourages
potential buyers to investigate the possibility of contamination
before a purchase. See 42 U.S.C. § 9601(35)(B) (in order to
claim the innocent owner defense, a defendant must have
undertaken all appropriate inquiry).
Thus, for the reasons we have stated, we agree with the
district court that HMAT cannot proceed on its "passive" theory
of disposal: the movement of contaminants alleged here does not
constitute "disposal." However, because we conclude that HMAT
may proceed on its "active" theory of disposal, the issue to
which we now turn, we will vacate the court's order granting
summary judgment to Dowel on HMAT's CERCLA claim.
III. Soil Investigation as Disposal
Having concluded that passive migration does not constitute
disposal, we now consider HMAT's other asserted basis of
liability. HMAT argues that Dowel's soil investigation, which
was meant to determine the land's ability to support
construction, caused the mixing, shifting, and spreading of
contaminants and that this constitutes disposal. Although the
district court suggested that HMAT's evidence of spreading was
"speculative," it did not resolve whether the evidence was
sufficient to allow a factfinder to conclude that the drilling
caused any subsurface mixing. Instead, the court concluded that
even accepting HMAT's version of events, Dowel's drilling "fell
short of that conduct accepted as being enough of a disturbance
to constitute disposal." According to the district court, only
"significant disturbance of already contaminated soil constitutes
disposal."
A. No Threshold to Disposal
We disagree with the district court's reading of "disposal."
Under 42 U.S.C. § 6903(3), "disposal" is defined in part as the
"discharge" or "placing" of waste "into or on any land or water."
"Disposal" thus includes not only the initial introduction of
contaminants onto a property but also the spreading of
contaminants due to subsequent activity. See Webster's, supra at
644 (defining "discharge" in part as "to set at liberty,"
"release from confinement, custody, or care," "pour forth," or
"emit"); id. at 1727 (defining "place" in part as "cause to rest
or lie"); Kaiser Aluminum & Chemical Corp. v. Catellus
Development Corp., 976 F.2d 1338, 1342-43 (9th Cir. 1992)
("CERCLA's definition of 'disposal' expressly encompasses the
'placing of any . . . hazardous waste . . . on any land.' 42
U.S.C. § 6903(3). Congress did not limit the term to the initial
introduction of hazardous material onto property."); Tanglewood
East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568, 1573 (5th
Cir. 1988) ("[T]his definition of disposal does not limit
disposal to a one-time occurrence -- there may be other disposals
when hazardous substances are moved, dispersed, or released
during landfill excavations and fillings.").
Although the cases cited above involved a greater
disturbance of contaminants than that alleged here, the dispersal
of contaminants need not reach a particular threshold level in
order to constitute "disposal." "Disposal" consists of "the
discharge . . . or placing of any solid waste or hazardous waste
into or on any land or water." 42 U.S.C. § 6903(3) (emphasis
added). There is no exception for de minimis disturbances. Cf.United
States v. Alcan Aluminum Corp., 964 F.2d 252, 260 (3d Cir.
1992) ("[C]ourts that have addressed this issue [whether the term
"hazardous substance" includes any quantitative requirement] have
almost uniformly held that CERCLA liability does not depend on
the existence of a threshold quantity of a hazardous
substance."). The fact that a defendant's dispersal of
contaminants is trivial may provide a ground to allocate less
liability to that defendant, but it is not a defense to
liability.
B. The Evidence
The evidence presented by both parties shows that a genuine
issue of material fact remains as to whether Dowel's drilling
caused the dispersal of contaminants. HMAT presented the
drilling logs and report of Thor Engineering, the firm that
performed Dowel's soil test. According to these documents, Thor
made nine drill borings twelve to eighteen feet into the ground
and extracted columns of soil for study. The drill bored through
garbage, miscellaneous fill from the dump, cinders, a black
substance that appeared to be petroleum-based, and ground water.
The documents show that al least three of the holes "caved"
during drilling. App. 120.
HMAT also submitted an affidavit from Laura Truettner, an
expert environmental consultant, which asserted that Dowel's
drilling spread contamination. First, because Thor's logs show
that the drill encountered waste materials, natural soil, and
groundwater, and that several boreholes "caved," Truettner
concludes that mixing of these materials occurred. Second,
Thor's report and logs show no evidence that the drilling
equipment was decontaminated between boreholes and before the
equipment was moved from the landfill. Thus, Truettner
maintains, it is probable that contaminated material was spread
between boreholes and along roads used for access by the drilling
equipment.
Dowel, in response, submitted an affidavit from Peter
Wilner, the principal of Thor Engineering. Wilner states that he
personally directed and oversaw the drilling at issue. He
asserts that "no drills were used; no 'cuttings' were generated;
no soils or other materials were in any way spread around the
premises; and no holes were left open, allowing for any
infiltration of foreign materials." He also claims that "The
'open' boring method used for the . . . borings performed at the
Premises does not cause the underground mixing or shifting of
subsurface materials."
HMAT then submitted another affidavit from Truettner.
Truettner contends that Wilner's affidavit contains misleading
statements and directly contradicts the contemporaneous record of
the drilling. She first casts doubt on Wilner's claim that he
was present during the drilling, pointing out that the drilling
logs indicate the presence of several people but make no mention
of Wilner. She represents that it is industry practice to list
all representatives at the site during the drilling.
Truettner then states that, although Wilner's statement that
no drills were used is technically correct because a "split spoon
sampler" was used, the distinction is irrelevant: materials were
disturbed and a hole was created. According to Truettner, "anytype of
sampling activity generates cuttings because the split
spoon sampler knocks material off the borehole walls."
Furthermore, Truettner attacks the implications of Wilner's
statement that no holes were left open. According to Truettner,
in order for the holes to have been closed one of three things
would have had to occur: (1) the holes were filled with material
brought from off-site; (2) they were filled with material from
the site itself; or (3) they were allowed to collapse in on
themselves. Truettner contends that the first scenario is
unlikely in light of the documentary evidence: the cost estimate
of the drilling does not reflect the costs of fill material and
labor. And, if either of the other two scenarios occurred, the
act of filling the holes would cause mixing of materials on the
property.
Finally, Truettner asserts that Wilner's statement that
Thor's boring method does not cause mixing of subsurface of
material is contradicted by the drilling logs, which show that at
least three of the holes "caved." "The process of caving,"
Truettner states, "will absolutely cause the mixing and shifting
of subsurface materials."
Given this evidence, a genuine dispute remains as to whether
Dowel's drilling caused the dispersal of contaminants. A factual
dispute is genuine if the evidence is such that a reasonable
factfinder could find in favor the nonmoving party. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). HMAT's evidence
that Thor's equipment went through waste, soil, and groundwater
and that several boreholes "caved", in combination with its
expert's opinion, is sufficient to support a finding that a
dispersal of contaminants occurred. Dowel's evidence, that
despite the contact between its equipment, waste, soil, and
groundwater, its boring method caused no mixing, is sufficient to
support the opposite finding. Thus summary judgment in favor of
either party is inappropriate.
C. Soil Investigation
As we have explained, HMAT has identified evidence from
which a factfinder could conclude that Dowel has caused a
dispersal of contaminants. Ordinarily, that would be sufficient
to submit the question of whether a "disposal" occurred to a
factfinder. However, this is not an ordinary case: the alleged
act of disposal consists of a soil investigation, and CERCLA
clearly contemplates that some soil investigation be allowed to
examine contaminated property. Thus, it is not enough for a
plaintiff to show that a soil investigation has caused the spread
of contaminants. Rather, we conclude that in order to establish
that "disposal" has occurred based on a soil investigation, a
plaintiff must also show that the investigation was conducted
negligently.
CERCLA's innocent owner defense encourages prospective
property buyers to conduct soil investigations. The innocent
owner defense requires, inter alia, that "[a]t the time the
defendant acquired the facility the defendant did not know and
had no reason to know that any hazardous substance which is the
subject of the release or threatened release was disposed of on,
in, or at the facility." 42 U.S.C. § 9601(35)(A)(i) (emphasis
added). CERCLA provides explicit guidance on how a defendant is
to establish that it had "no reason to know" of a prior disposal:
To establish that the defendant had no reason to
know . . . the defendant must have undertaken, at the
time of acquisition, all appropriate inquiry into the
previous ownership and uses of the property consistent
with good commercial or customary practice in an effort
to minimize liability. For purposes of the preceding
sentence the court shall take into account any
specialized knowledge or experience on the part of the
defendant, the relationship of the purchase price to
the value of the property if uncontaminated, commonly
known or reasonably ascertainable information about the
property, the obviousness of the presence or likely
presence of contamination at the property, and the
ability to detect such contamination by appropriate
inspection.
Id. § 9601(35)(b). CERCLA thus contemplates that prospective
purchasers "undertake[] . . . all appropriate inquiry" and will
engage in "appropriate inspection."
In order to give effect to the innocent owner defense and
its requirement that prospective purchasers engage in appropriate
inquiry and inspection, an "appropriate" soil investigation
cannot itself trigger CERCLA liability. Otherwise, prospective
purchasers who by diligently inspecting for contamination cause
the dispersal of any contaminants will find themselves liable for
causing a "disposal." And the innocent owner defense would offer
such prospective purchasers no protection: if they buy the
property after discovering contamination, they will be ineligible
for the defense because they will not be "innocent" (i.e., they
will "know and ha[ve] reason to know" of a prior disposal, id. §
9601(35)); if they do not buy the property, they will be
ineligible for the defense because they will not be "owners"
(i.e., they will not have "acquired the facility" as required by
42 U.S.C. § 9601(35)(A)). In order to give the defense effect,
then, an "appropriate" soil investigation cannot constitute
disposal.
But a party cannot escape liability for performing a soil
investigation negligently and thereby unnecessarily spreading
pollution. Several CERCLA provisions suggest that persons
otherwise insulated from CERCLA liability may nonetheless become
liable if they act negligently. In order to take advantage of a
third-party defense (i.e., that a release was caused solely by a
third party), a defendant must show that "he exercised due care
with respect to the hazardous substance concerned, taking into
consideration the characteristics of such hazardous substance, in
light of all relevant facts and circumstances." 42 U.S.C. §
9607(b)(3)(a). And another provision, 42 U.S.C. § 9607(d)(1),
insulates from liability actions consistent with the National
Contingency Plan unless they are negligently performed:
[N]o person shall be liable under this subchapter for
costs or damages as a result of rendering care,
assistance, or advice in accordance with the National
Contingency Plan ("NCP") or at the direction of an
onscene coordinator appointed under such a plan, with
respect to an incident creating a danger to public
health or welfare or the environment as a result of any
releases of a hazardous substance or threat thereof.
This paragraph shall not preclude liability for costs
or damages as the result of negligence on the part of
such person.
42 U.S.C. § 9697(D)(1). These provisions are themselves
inapplicable to the issue at hand. However, they express a
useful principle for determining when an action that is exempted
from liability becomes so inconsistent with CERCLA's purposes
that it is no longer so insulated, and this informs our judgment.
We conclude that only "appropriate" soil investigations -- i.e.,
those that do not negligently spread contamination -- fall
outside the definition of "disposal." Such a rule best
harmonizes CERCLA's clear intention to allow soil investigations
and its goal of remedying hazardous waste sites.
We recognize that the soil investigation at issue here was
not meant to discover the presence of contamination but was aimed
at assessing the land's ability to support construction.
However, we conclude that the purpose of the investigation is
irrelevant. Determining the motive of the investigating party
seems a costly and difficult inquiry. Moreover, we do not wish
to deter the productive use of property by discouraging soil
investigations aimed at assessing development possibilities.
In addition to applying the wrong test of "disposal," the
district court did not focus on whether Dowel's soil testing was
negligently performed, and we believe that the parties should
have a chance to add to the record on this issue. Therefore, we
will vacate the district court's order dismissing HMAT's CERCLA
claim and remand for further proceedings.
IV. Conclusion
For the foregoing reasons, the passive spreading of
contamination in a landfill does not constitute "disposal" under
CERCLA. Soil testing that disperses contaminants, however, may
constitute "disposal" and HMAT has identified evidence that would
justify a factfinder's conclusion that contaminants were
dispersed in Dowel's testing. Nevertheless, because CERCLA
contemplates that some soil investigation be allowed, HMAT must
show not only that the soil investigation caused the spread of
contaminants but also that the investigation was conducted
negligently. The judgment of the district court will therefore
be vacated and the case remanded for further proceedings
consistent with this opinion.