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...