Taking Action -- Rejecting the Passive Disposal Theory of Prior Owner Liability Under CERCLA
By Craig May
INTRODUCTION
The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), commonly known as the Superfund law, is designed to promote the cleanup of hazardous waste sites. The law imposes cleanup liability on a wide range of parties, including the current owner or operator of property where a release of hazardous contaminants has occurred and the prior owner or operator at the time of disposal on the property. CERCLA has spawned a tremendous amount of litigation, and one issue that has been sharply contested is whether a prior owner of property on which there was pollution should be liable for cleanup, even if the owner did nothing actively to cause the pollution. Some have argued that the passive leaking of contaminants, or maybe even the migration of pollution through the soil, constitutes a “disposal” under the terms of CERCLA. Others have argued that only active conduct of prior owners should result in liability. Courts have wrestled with this issue for the past decade, and in the past six years, a sharp split in federal court decisions has emerged. This Note analyzes how courts have treated this issue and evaluates the different interpretations that have evolved. It concludes that the “active” interpretation has become, for good reason, the majority position in the federal courts.
In 1992, two well-reasoned, influential, yet conflicting decisions were handed down on the issue of whether “disposal” includes passive events. The U.S. Circuit Court of Appeals for the Fourth Circuit became the first federal circuit to rule on the question when it determined, in Nurad, Inc. v. William E. Hooper & Sons Co., that passive and unknown leaking from an underground storage tank constituted a “disposal” and imposed liability against the owner of the property at the time of the leak. Several months later, the Northern District of Illinois, in United States v. Petersen Sand & Gravel, Inc., reached the opposite conclusion on similar facts, deciding that a disposal requires active human behavior. At the time of the Petersen decision, cases were fairly evenly split on the issue, with some commentators asserting that the Nurad decision, given its appellate status, represented the majority view.
This Note argues that since Petersen the weight of authority has shifted, quite properly, to the “active” definition. Cases and significant commentary from the last six years have strongly favored the Petersen position, and a circuit split has emerged with the Second and Third Circuits recently adopting the active definition. Moreover, a close examination of recent cases favoring the passive definition clearly reveals the flaws that have caused it to lose favor. This Note begins by explaining the issue of liability for “disposal” under CERCLA and the arguments advanced by courts on both sides up through the Petersen case. It then examines commentary and cases since 1992, finding that the active definition has become the majority position. The issue remains controversial, however, and resolution of this conflict, either through a Supreme Court decision or by congressional amendment, seems unlikely. Thus, this Note concludes that the issue of passive disposal will continue to be fought in the lower courts, where the active interpretation should prevail most of the time.
The federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”), commonly known as the Superfund law, is designed to promote the cleanup of hazardous waste sites. The law imposes cleanup liability on a wide range of parties, including the current owner or operator of property where a release of hazardous contaminants has occurred and the prior owner or operator at the time of disposal on the property. CERCLA has spawned a tremendous amount of litigation, and one issue that has been sharply contested is whether a prior owner of property on which there was pollution should be liable for cleanup, even if the owner did nothing actively to cause the pollution. Some have argued that the passive leaking of contaminants, or maybe even the migration of pollution through the soil, constitutes a “disposal” under the terms of CERCLA. Others have argued that only active conduct of prior owners should result in liability. Courts have wrestled with this issue for the past decade, and in the past six years, a sharp split in federal court decisions has emerged. This Note analyzes how courts have treated this issue and evaluates the different interpretations that have evolved. It concludes that the “active” interpretation has become, for good reason, the majority position in the federal courts.
In 1992, two well-reasoned, influential, yet conflicting decisions were handed down on the issue of whether “disposal” includes passive events. The U.S. Circuit Court of Appeals for the Fourth Circuit became the first federal circuit to rule on the question when it determined, in Nurad, Inc. v. William E. Hooper & Sons Co., that passive and unknown leaking from an underground storage tank constituted a “disposal” and imposed liability against the owner of the property at the time of the leak. Several months later, the Northern District of Illinois, in United States v. Petersen Sand & Gravel, Inc., reached the opposite conclusion on similar facts, deciding that a disposal requires active human behavior. At the time of the Petersen decision, cases were fairly evenly split on the issue, with some commentators asserting that the Nurad decision, given its appellate status, represented the majority view.
This Note argues that since Petersen the weight of authority has shifted, quite properly, to the “active” definition. Cases and significant commentary from the last six years have strongly favored the Petersen position, and a circuit split has emerged with the Second and Third Circuits recently adopting the active definition. Moreover, a close examination of recent cases favoring the passive definition clearly reveals the flaws that have caused it to lose favor. This Note begins by explaining the issue of liability for “disposal” under CERCLA and the arguments advanced by courts on both sides up through the Petersen case. It then examines commentary and cases since 1992, finding that the active definition has become the majority position. The issue remains controversial, however, and resolution of this conflict, either through a Supreme Court decision or by congressional amendment, seems unlikely. Thus, this Note concludes that the issue of passive disposal will continue to be fought in the lower courts, where the active interpretation should prevail most of the time.
