More than 20 years ago, in the Tanglewood East decision, the 5th Circuit Court of Appeals held that a developers could potentially be liable under CERCLA for conducting site development activities that moved contamination on the site, exacerbated conditions, and required additional cleanup. There have not been many reported cases on this issue since then, so the decision earlier this week in Saline River Properties v. Johnson Controls seemed noteworthy.
The factual discussion was pretty sparse, but it seems undisputed that Johnson Controls had previously owned that property, the property was contaminated, and Johnson Controls was remediating it under a state administrative order. Saline became the operator of the property and at some point “destroy[ed] the building slab.” Johnson Controls alleged that this resulted in migration of contamination that would not otherwise have occurred.
For the court, these allegations were sufficient for Johnson Controls’ claim to survive Saline’s summary judgment motion. The court distinguished cases holding that “passive migration” does not constitute disposal:
"Here, more is alleged than just passive migration. [Johnson Controls] alleges that Saline took the affirmative action of breaking up the concrete slab, which caused hazardous substances beneath the barrier to migrate into additional soils and groundwater. The Court concludes that [Johnson Controls] has created a genuine issue of material fact as to whether Saline caused a release or disposal at the facility."
I don’t regard the decision as a surprise, but it is a useful lesson (if costly to Saline) for developers. Perform your due diligence before purchasing contaminated property and to make certain that your redevelopment plans are appropriate given site conditions.