On rehearing en banc, the Ninth Circuit upheld summary judgment for the defendants who claimed that cleanup efforts by plaintiff Carson Harbor were not necessary. Although genuine issues of material fact remained as to whether plaintiff's response costs were necessary, defendants Carson Harbor Village Mobile Home Park, Richard G. Braley, and Walker Smith, Jr. (collectively Partnership Defendants) were not potentially responsible parties (PRPs) as defined by the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA).[1] The Ninth Circuit upheld summary judgment for defendants on state claims, while reversing summary judgment for defendants with respect to plaintiff's claim for indemnity.
Carson Harbor Village (Carson Harbor) purchased a mobile home park from the Partnership Defendants. Prior to and during part of Partnership Defendants' ownership of the property, Unocal Corporation (Unocal) held a leasehold in the property to extract, store, and refine petroleum products. While refinancing the property in 1993, Carson Harbor discovered on the property hazardous substances of a petroleum nature. Studies indicated that the material had existed on the property for several decades. Subsequently, contamination was found in surrounding soils and on-property wetlands. Carson Harbor notified the appropriate agencies, initiated and completed a cleanup, and then sued the Partnership Defendants, the Cities of Carson and Compton and unincorporated areas within Los Angeles County (Government Defendants), and Unocal for relief under CERCLA, the Resource Conservation and Recovery Act (RCRA),[2] the Clean Water Act,[3] and state common law claims. The district court rejected every claim brought by Carson Harbor. Carson Harbor appealed the CERCLA claim, the state-law claims against Government Defendants, and the indemnity claim against the Partnership Defendants.
The Ninth Circuit first addressed whether, under CERCLA, the costs incurred by Carson Harbor were "necessary" and therefore recoverable in a CERCLA action. The court found that the district court erred in focusing on whether Carson Harbor had an ulterior motive to remediate the property instead of whether the contamination posed a threat to human health or the environment. The Ninth Circuit deemed the latter question key to determining whether a cleanup is necessary. Because various testimony indicated that the contamination posed a potential threat, a genuine issue of material fact existed, and summary judgment for defendants was improper.
The court then turned to whether the Partnership Defendants were PRPs within the meaning of section 107(a) of CERCLA.[4] Partnership Defendants would be PRPs if a disposal occurred on the property during the time they owned the property. In determining what qualifies as a disposal under CERCLA, the Ninth Circuit examined at length possible definitions using circuit court interpretations, plain meaning analysis, and the Act's legislative history.
The Ninth Circuit began by noting the continuum of definitions amongst the circuits. At one end of the continuum, the Sixth Circuit requires active disposal on the part of an actor.[5] At the other end, the Fourth Circuit found that passive migration of contaminants from an underground storage tank (UST) without any other explicit action also qualified as disposal.[6] The Ninth Circuit rejected any definition that rested on a passive/active distinction.
The court noted that unlike situations involving underground storage tanks (USTs), no release occurred in the case at bar. Nor was the gradual contamination of the property akin to a disposal. The Ninth Circuit thus determined that the passive migration that occurred during the Partnership Defendants' ownership of the property was not a disposal within the meaning of CERCLA. However, after adopting this construction, the court sounded a note of caution. While the passive soil migration that occurred during the Partnership Defendants' ownership was not a disposal, other forms of passive migration, even those occurring without the benefit of human intervention, might still be classified as disposals under CERCLA.
The Ninth Circuit found support for its holding and its determination that other kinds of passive migration might constitute a disposal under CERCLA. For example, the court noted that one purpose of CERCLA is to encourage prompt and effective cleanup of abandoned storage tanks. In so finding, the court did not limit suits against owners of USTs that release pollutants into surrounding soil. However, by limiting liability for passive migration, the Ninth Circuit avoided absurd results, such as holding subsequent landowners equally as culpable as landowners who cause an initial spill. Also, allowing unchecked liability for passive soil migration would moot the innocent landowner defense. Legislative history also supported the Ninth Circuit's determinations that active roles were usually required to constitute a disposal, but that passive migration in the context of USTs also could amount to a disposal.
The Ninth Circuit then held that a nuisance cause of action cannot be premised on statutory authority affirmed the district court's grant of summary judgment to the Government Defendants. Finally, because a genuine issue of material fact existed as to whether the plaintiff's cleanup costs were necessary under CERCLA, the court reversed the grant of summary judgment for the Partnership Defendants on the indemnity claim.
Judge Fletcher concurred in part and dissented in part. While agreeing that the plaintiff's cleanup costs were necessary, Fletcher concluded that the majority erred in its characterization of what constitutes a disposal under CERCLA. Disposal, according to Fletcher, is defined foremost by its contemporary, common meaning. As the water passing through the wetlands carried the hazardous waste to the surrounding lands, the waste was deposited on those lands. Because, under CERCLA, a disposal includes a deposit,[7] this process, which occurred during the Partnership Defendant's ownership of the property, was one of disposal.
According to the dissent, holding the Partnership Defendants liable as PRPs would help accomplish two of CERCLA's purposes: ensuring the prompt and effective cleanup of waste disposal sites and assuring that those responsible for the contamination bear the costs of remediation. The majority's decision, argued Fletcher, instead will encourage landowners who discover contamination on their property to sell their property and thus evade any liability. This, Fletcher stated, does not promote prompt and effective cleanup of contamination. Furthermore, in the case at bar, Unocal continued to operate its petroleum plant on the property while the Partnership Defendants were owners. Fletcher stated that the absurdity of the majority's holding is manifest in the result of the case: The Partnership Defendants, who had reason to know of the disposal, were not held responsible for cleanup costs, while the plaintiff, who had no reason to suspect contamination, was left to pay for part of the cleanup. Finally, Fletcher noted that CERCLA is not a fault-based scheme of liability; liability is strict and is based on property ownership at the time the disposal occurs. According to Fletcher, because passive soil migration is a form of disposal, summary judgment to the Partnership Defendants should be reversed.
