Court: Court of Appeals for the Sixth Circuit; September 4, 2001; Federal Appellate Court
Bob’s Beverage, Inc. and Ullman Oil, Inc. appeal the district court's ruling that found no liability against Albatross, Ltd. and the Merkel Defendants regarding a cost recovery claim. The court affirmed the denial of this claim. The property in question, located at 6949812 East Washington Street, was purchased by Raymond and Nancy Hitchcox in 1960, who built a warehouse and installed a septic system. In 1974, the Hitchcoxes leased the property to Acme, Inc., which utilized chlorinated solvents and caustic soda in its operations. The Acme Defendants initially discharged wastewater into the septic system, which led to contamination of the soil with hazardous substances. Subsequently, they discharged untreated wastewater onto the property and stored leaking drums of hazardous materials outside. The Acme Defendants abandoned these drums when they ceased operations, leading to identified contamination hotspots. In 1981, Huntington National Bank acquired the property and sold it to the Merkel Defendants in 1982. The Merkel Defendants conducted no environmental investigation prior to their purchase and found approximately twenty-five leaking drums on the property, along with a non-functional septic system. They later discovered significant contamination when upgrading the septic system, indicating prior improper disposal of materials.
Dry wells on the Property were bypassed, and a pipe was connected from the septic tank directly to a stream. No environmental tests were conducted during the septic installation, and upon upgrading the system, the Merkel Defendants installed a leach field where waste drums had been stored, moving significant soil in the process. In September 1987, six drums of waste oil were removed from the Property. Bob’s Beverage, Inc. purchased the Property in May 1988 without conducting an environmental assessment, unaware of subsurface fuel oil. Ullman Oil, Inc. began operating the Property on July 8, 1988, using it for petroleum storage and office space, and neither appellant handled chlorinated solvents there. In November 1988, contamination with CVOCs and heavy metals was detected in the drinking water, prompting Ullman to notify the Ohio EPA and implement interim remedial measures, including supplying alternate water to affected residents. Bob’s Beverage later entered a Consent Order with the Ohio EPA to conduct a Remedial Investigation and Feasibility Study, which has been completed and accepted, although a final remedy has yet to be determined.
The Appellants filed a complaint against the Merkel Defendants on March 12, 1997, citing violations of CERCLA. After the district court denied a motion to dismiss from the Merkel Defendants, they filed a cross claim against the Acme Defendants. Summary judgment motions by all parties were denied due to unresolved factual issues regarding hazardous waste disposal during ownership. A trial on the Appellants’ CERCLA claims occurred from February 22-24, 1999, resulting in a judgment against the Acme Defendants for $411,467.44, while the Merkel Defendants were found not liable. The Appellants appealed this finding, arguing that the trial court erred in denying their cost recovery claim against the Merkel Defendants.
To establish a prima facie cost recovery claim under CERCLA § 107(a), a plaintiff must demonstrate: (1) a release or threatened release occurred at a "facility"; (2) this caused the plaintiff's response costs; (3) the costs were necessary and consistent with the National Contingency Plan; and (4) the defendant is a potentially responsible party.
The district court established that the Property qualifies as a "facility" under CERCLA, and it ruled that any releases during the Merkel Defendants' ownership did not result in the Appellants incurring response costs. The Appellants contended that the court erred, referencing Control Data Corp. v. S.C.S.C. Corp., asserting that CERCLA does not necessitate proving actual harm at the liability stage. However, the court clarified that CERCLA requires a demonstration that the defendant's release or threatened release caused harm in the form of response costs. The court found no evidence linking the Merkel Defendants' releases to an increase in the Appellants’ response costs, suggesting that any release associated with the septic system's replacement might have even reduced these costs. Consequently, the Appellants failed to establish their cost recovery claim, leading to the affirmation of the district court's decision.
Furthermore, even if causation were established, the Appellants could not satisfy the fourth prong of cost recovery under CERCLA. They argued that the Merkel Defendants were responsible for two instances of hazardous substance disposal: the septic tank replacement and the failure to remove known contaminants, leading to the passive migration of CVOCs. Under CERCLA, a "Disposal" involves any action that allows hazardous waste to enter the environment. Despite these claims, the court indicated that the Appellants did not adequately demonstrate that these actions constituted a Disposal under the definitions provided by CERCLA, thus reinforcing the district court's ruling.
United States v. 150 Acres of Land, 204 F.3d 698 (6th Cir. 2000) establishes that "Disposal" and "release" are distinct concepts under CERCLA, with "release" encompassing a broader range of actions. A "Disposal" necessitates "active human conduct" linked to the introduction of substances into the environment, while cross-contamination from prior ownership also qualifies as a Disposal. The Merkel Defendants were not found liable for Disposal in two claims: first, the replacement of a septic tank did not cause additional contamination, as chlorinated volatile organic compounds (CVOCs) were already present and no active conduct contributed further to the contamination; second, the argument that passive migration of hazardous substances during their ownership constituted Disposal was rejected, as passive migration is not recognized as Disposal under CERCLA. Consequently, the district court’s determination of no liability for the Merkel Defendants is upheld. The Appellants proceeded under 42 U.S.C. § 9607(a) because they were deemed innocent landowners under 42 U.S.C. § 9607(b)(3). The definition of "release" includes various forms of hazardous substance discharge into the environment, as outlined in 42 U.S.C. § 9601(22).
