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.
Filed September 27, l996)
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
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 ...