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U.S. v. CDMG Realty Co.

September 27, 1996

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

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.

HMAT ASSOCIATES, INC.,

APPELLANT



On Appeal From the United States District Court For the District of New Jersey

(Newark N.J. D.C. Civil No. 89-cv-04246); (NEWARK N.J. D.C. Civil No. 89-cv-04281)

Before: BECKER, McKEE, and McKAY, *fn* Circuit Judges.

BECKER, Circuit Judge.

Argued: March 18, 1996

Filed September 27, l996)

OPINION OF THE COURT

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. Section(s) 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. Section(s) 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 Section(s) 107(a)(1), 42 U.S.C. Section(s) 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). *fn1

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. Section(s) 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. Section(s) 9607(a); see United States v. Alcan Aluminum Corp., 964 F.2d 252, 258-59 (3d Cir.), reh'g and reh'g ...


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