Source: http://www.lexology.com, June 17, 2013
By: Gerard M. Giordano, Cole Schotz Meisel Forman & Leonard PA
In EPEC Polymers, Inc. v. NL Industries Inc., Civ. Action No. 12-3842 (D.N.J. May 24, 2013), defendant NL Industries Inc. owned property on one side of the Raritan River, where it produced and discharged waste to the river. Plaintiff EPEC Polymers, Inc. owned property on the opposite side of the river. The U.S. Army Corps of Engineer had dredged the river and the dredging spoils had been placed on EPEC’s property. These dredged spoils contained, in part, NL’s waste. EPEC spent over $2 million investigating the contamination on its property.
EPEC sued NL under several statutory and common law theories of recovery seeking to recoup its cleanup costs from NL. One of EPEC’s claim was that under CERCLA’s owner/operator liability section, NL was liable. That provision imposes liability on any person who owned or operated the facility at the time of the disposal of a hazardous substance.
NL argued that it cannot be held liable as an owner/operator because it did not own the site at which the cleanup is being conducted. Specifically, NL stated that its property “is not the facility at which hazardous waste came to be located or where EPEC allegedly has incurred ‘response costs’ for which it now seeks recovery under CERCLA.” Therefore, NL reasoned that it could not be held liable as an owner or operator of the facility under CERCLA’s owner/operator liability provision.
The Court rejected this argument and broadly interpreted the definition of facility holding that NL’s property is the “facility” for the purposes of owner/operator liability. Thus, NL can be held liable as an owner/operator under CERCLA even though it did not own or operate the property at which the contamination is being remedied. The Court also held that NL can be liable as an arranger under CERCLA’s liability provisions for having arranged for the dumping of its hazardous waste into the river.
Source: Ottawa Business Journal (Blog), April 15, 2013
By: Jeysa Martinez, Brazeau Seller LLP
Innocent and blameless property owners may be exposed to significant environmental liability risk.
When assessing environmental liability one might think that, if a land owner did not create nor contribute to an environmental spill or contamination, fault and fairness would be taken into consideration before a cleanup order is issued against an otherwise innocent party. In May of 2012, in the case of The Corporation of the City of Kawartha Lakes v. Director, Ministry of the Environment, the Ontario Divisional Court concluded that an innocent party can be held liable for the pollution on their property, even though that pollution was caused by someone else. In this case, the Court upheld the decision made by the Environmental Review Tribunal in 2009. The Court focused on the purpose of the Environmental Protection Act and, although the Court did not go so far as to exclude the fairness factors from being considered (as they were in the Appletex case, a previous decision which set out the “fairness factors”), the Court did confirm that the Ministry of the Environment’s Compliance Policy allows the Ministry to exercise their authority and issue cleanup orders against innocent owners. The Divisional Court further noted that the Environmental Protection Act specifically contemplates that innocent owners can be held responsible for environmental cleanup costs regardless of fault and, accordingly, the Director is not required to consider the fairness factors before issuing a cleanup order to one or more parties.
We have stepped away from the days where the size of the deal dictated the nature and extent of a buyer’s due diligence efforts. As we have learned from the case above, innocent landowner’s may be served with environmental cleanup orders. As a result, now more than ever, a prospective purchaser must always assess the potential risk for environmental liability and cleanup costs and should at all times conduct an Environmental Risk Analysis as part of the due diligence process in order to avoid liability for environmental spills or contamination caused by previous owners.…
Acknowledgement to Great American
A hotel constructed in the early 1980s had a dry cleaning operation in the basement of the building as a service for their guests. Prior to sale of the property in the late 2000s, an environmental investigation was performed on behalf of the buyer. This investigation found staining around the base of the dry cleaning machine, triggering intrusive investigations. The soil and groundwater investigation found contamination at levels requiring clean-up beneath the property. Additionally, indoor air sampling found actionable levels of dry cleaning chemicals extending up several floors in the building. As a result of the discovery of contamination, the property sale fell through and the hotel owner is being held responsible for the clean-up costs.…
Acknowledgement to XL Environmental
An XL insured entered into a transaction to sell an office building to a developer. The property was previously used as a newspaper/printing operation. As the potential buyer of the property, the developer had environmental studies done on the property. During the studies, trichloroethylene (TCE) was discovered in the soil and groundwater at the site.
XL’s environmental claims counsel and a technical consultant collaborated with our insured and their consultant to further investigate the property and prepare a remediation work plan. Remediation costs were estimated at $2,500,000. Remediation activities were monitored by the XL’s environmental claims counsel and a technical consultant, which ultimately led to a successful completion of the remediation below cost estimates.
The insured’s Pollution and Remediation Legal Liability Policy paid $1,500,000 for the costs and expenses associated with the remediation of the property. The sale between our insured and developer was successfully completed.…
Real estate owners, developers, and investors face many issues during property transactions. The expectation is that these properties will provide a profitable income. However, a pollution condition can wipe out any development or investment monies in a nanosecond. That’s why the real estate community relies on XL’s Pollution and Remediation Legal Liability (PARLL) policy.
XL can provide unique and flexible coverages and risk transfer products for mergers and acquisitions, property transactions, Brownfields, BRACS/Closed Military Bases and other forms of real estate.…