Energy and Environment MonitorA resourceful developer failed in its attempt to have the prior owner of what is now an industrial park clean-up or pay for the clean-up of asbestos which coated boilers, pipes and joints of the facility’s heating system. Sycamore Industrial Park Assoc. v. Ericsson, Inc., 546 F.3d 847 (7th Cir. 2008).
The defendant Ericsson sold the facility consisting of several buildings to Sycamore Industrial Park Associates in 1985. By the time of the sale, Ericsson had installed new natural gas heating units throughout the facility. Before that time, the facility had been heated by a boiler system. Most of the elements of the system were coated with asbestos.
The boiler system was never used after sale. Curiously, Sycamore claimed it did not become aware of the asbestos coating until 2004. Upon discovery, Sycamore sued Ericsson claiming that by discontinuing use of the boiler system, but not removing it, Ericsson had violated CERCLA and RCRA. Sycamore lost at the District Court and appealed to the Seventh Circuit Court of Appeals.
The Circuit Court acknowledged that under CERCLA liability attaches: (1) if the site is a “facility”; (2) the defendant is a responsible party; (3) there has been a “release” or “threatened release” of a hazardous substance; and (4) the plaintiff has incurred costs in response to the release.
The Circuit Court found that the first element had been satisfied, but held that the claim failed because Ericsson was not a responsible party. In order for the prior owner of the facility to be a responsible party, it had to have controlled the site at the time of disposal of the hazardous substance in question. The Court noted that the parties disputed whether the old boiler system was discarded by Ericsson and was therefore a hazardous or solid waste. The Circuit Court reasoned that it need not reach this issue because even if the boiler may have been discarded it had not been disposed of since disposal occurs when the waste is placed in or on any land, water or air so that it may enter the environment. Here, the Court noted that asbestos was located either inside the buildings or in a pipe chase outside the buildings. The Court held that even if it held that there was a “disposal” there was no “release” since a “release” occurs when the substance enters the environment – land, water or ambient air.
The Court refused to adopt a per se rule that the sale of a facility with hazardous substances is not disposal. It noted that if the primary purpose and likely effect of the sale was to remove the asbestos in circumstances that would make release to the outside environment inevitable, the transferor could be liable under CERLA.
The Court also rejected Sycamore’s RCRA claim. The Court noted that liability under the RCRA citizen suit statute attaches to a person who has contributed or is contributing to the past or present handling, storage, treatment, transportation or disposal of any solid or hazardous waste which may present an eminent and substantial endangerment to the environment.
Sycamore first claimed that Ericsson had disposed of the asbestos-containing boiler system. Since the RCRA definition of disposal is the same as is applicable under CERCLA, the Court rejected this claim. In the alternative, Sycamore claimed that Ericsson had handled and stored the asbestos containing boiler system. The Court noted that there was no evidence that Ericsson, handled, stored or even touched any part of the heating system prior to or after the sale to Sycamore. The Court held that mere ownership is not sufficient to satisfy the statutory requirement of “has contributed or is contributing”. The Court held that this language requires affirmative action rather than passive conduct such as leaving a heating system in place.
This article was authored by James R. Snyder, Jackson Kelly PLLC. For more information on the author see here.
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