Pa. Dep't of Envtl. Prot. v. Trainer Custom Chem., LLC
Opinion
We are asked in this interlocutory appeal to decide whether the owner of a piece of land is liable for the costs of an environmental cleanup that took place there before the owner acquired it. Our answer is yes.
Trainer Custom Chemical, LLC ("Trainer") acquired a property known as the Stoney Creek Site (the "Site") for $20,000, after Pennsylvania's Department of Environmental Protection ("PADEP") had already incurred over $818,000 in environmental cleanup costs at the Site. The cleanup costs continued to mount following Trainer's acquisition of the property, both because of pre-existing pollution and because buildings on the Site were demolished by one or both of Trainer's principals, Jeremy Hunter and James Halkias, which caused further contamination.
PADEP sued Trainer, Hunter, and Halkias for violations of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"),
We conclude that a current owner of real property is liable under both CERCLA and HSCA for all response costs in an environmental cleanup, including costs incurred before the owner acquired the property. Accordingly, we will affirm in part, vacate in part, and remand for further proceedings consistent with this opinion.
I. BACKGROUND
A. Facts
1. The Site Before Trainer Acquired It
The Site is located in Trainer Borough, Delaware County, Pennsylvania. In 2007, it was owned by Stoney Creek Technologies ("SCT"), which primarily used it for making corrosion inhibitors, fuel additives, and oil additives. Buildings and equipment used in creating SCT's products were located on the Site, including a laboratory and a water treatment facility. SCT also kept various hazardous substances at the Site, including about three million gallons of flammable or combustible chemicals that posed a threat of release, and over seventeen million pounds of other chemical inventory, which included flammable, combustible, and corrosive chemicals.
PADEP investigated the environmental risk at the Site and determined in 2007 that "there is a release or threat of release of hazardous substances or contaminants, which presents a substantial danger to human health or the environment[.]" (App. at 34.) Accordingly, PADEP and the United States Environmental Protection Agency ("EPA") initiated removal actions. 2
SCT was in financial trouble and could not afford the expenses involved in the cleanup. One such expense was for the electricity to power pollution control and security equipment, including a vaporized nitrogen system. The nitrogen system was necessary to minimize the threat of fire posed by the flammable and combustible chemicals on the Site. Due to lack of payment, the power company was going to shut off the electricity to the Site, so PADEP assumed responsibility for paying the electrical bills.
2. Trainer's Acquisition of the Site
The same financial straits that had apparently led SCT to fall behind in paying for electricity also led it to become delinquent in paying real estate taxes. Consequently, the Tax Claim Bureau of Delaware County forced a sale of the Site. In what was evidently a coordinated effort, Hunter and Halkias purchased the property and put its title in Trainer's name. Hunter signed the purchase agreement, the recitals of which plainly stated that the Site had ongoing "environmental issues ... [and] environmental remediation." (App. at 53.) Despite that warning, on October 4, 2012, Halkias tendered a cashier's check for $20,000 and a handwritten note indicating that the deed to the property should be made out to Trainer Custom Chemical LLC. The next day, Halkias and Hunter officially formed Trainer Custom Chemical LLC by filing a Certificate of Organization with the Pennsylvania Department of State. On October 9, 2012, the deed to the Site was executed and put in Trainer's name.
3. The Site After Trainer Acquired It
The EPA and PADEP completed their removal actions at the Site on December 12, 2012. 3 But that was not the end of the problems there. After Trainer acquired the Site, either Hunter or Halkias or both - they point the finger of blame at each other - demolished many of the Site's structures. Regardless of who was responsible, it is undisputed that metals and other salvageable materials reclaimed from the Site were sold for at least $875,000 to JK Myers Contracting, a business that Halkias had registered with the Pennsylvania Corporations Bureau in April 2012.
In June 2014, PADEP received two reports assessing environmental concerns at the Site. One noted that "[t]he [ ]EPA has acknowledged that hazards still exist at the Site[.]" (App. at 61.) The report further said that, during a recent visit to the Site, PADEP "observed active demolition activities being conducted on several structures throughout the Site[,]" and "[s]everal storage tanks were observed to be cut open and unknown contents were noted to be spilling onto the ground." (App. at 62.) The other report indicated that buildings on the Site had asbestos-containing materials that needed to be removed before demolition.
B. Procedural History
PADEP sued Trainer, Halkias, and Hunter under CERCLA and HSCA to recover the costs incurred in cleaning up the Site. The complaint was in six counts: separate ones against each of the three defendants under CERCLA § 107(a),
Eventually, PADEP moved for summary judgment, arguing that the defendants should be jointly and severally liable for all of the environmental response costs. In total, those costs were $932,580.12, through November 2015. The most significant charges were payments for electricity amounting to $818,730.50 through June 2009, before Trainer acquired the Site. PADEP also bore other response costs after Trainer took ownership.
The District Court granted summary judgment in part and denied it in part. The Court noted that PADEP's claims against Halkias and Hunter were based on a theory of piercing Trainer's corporate veil, so the initial question it sought to answer, and the question before us in this interlocutory appeal, is whether Trainer was liable for violations of CERCLA and HSCA. With respect to CERCLA liability, "the Court [held] [Trainer] liable for any response costs incurred after [Trainer] took ownership of the Site, but not for costs incurred beforehand." (App. at 99-100.) As to CERCLA damages, it denied summary judgment because there was a genuine dispute of material fact concerning the amount of damages for which Trainer was liable. The Court reached the same conclusions with respect to HSCA liability and damages.
PADEP disagreed with the District Court's decision to grant summary judgment only in part. It sought an order certifying for interlocutory appeal the issue of whether federal and Pennsylvania law "make an owner liable for response actions and response costs attributable to an identified release of hazardous substances which continues at the time of that person's ownership, regardless of when such actions or response costs were taken or incurred." (App. at 114-15.) The District Court granted certification, and PADEP then petitioned us for permission to appeal, which we gave pursuant to
II. STATUTORY BACKGROUND
A. CERCLA
"Congress enacted CERCLA 'to promote the timely cleanup of hazardous waste sites and to ensure that the costs of such cleanup efforts were borne by those responsible for the contamination.' "
Litgo N.J. Inc. v. Comm'r N.J. Dep't of Envtl. Prot.
,
Our focus here is on the first category of PRPs: "the owner ... of ... a facility[.]"
In § 107 cost recovery actions, summary judgment on the issue of liability may be appropriate "even when genuine issues of material fact remain as to ... damages."
United States v. Alcan Aluminum Corp.
,
B. HSCA
HSCA is Pennsylvania's state law counterpart to CERCLA.
Cf.
In re Joshua Hill, Inc.
,
Agere Sys., Inc. v. Adv. Envtl. Tech. Corp.
,
III. DISCUSSION 7
At the outset, we note that all parties and the District Court agree that Trainer is the owner of the Site and, pursuant to CERCLA § 107(a)(1), is at least liable for environmental response costs incurred after it took ownership. Taking that concession as our starting point, our task is to decide whether the meaning of "all costs" in § 107(a) includes response costs incurred before Trainer acquired the Site. We conclude that, given the structure and text of CERCLA, a current owner under § 107(a)(1) is indeed liable for all response costs, whether incurred before or after acquiring the property.
"Statutory interpretation, as we always say, begins with the text."
Rotkiske v. Klemm
,
Section 107(a) provides that "the owner ... of ... a facility ... shall be liable for ... all costs of removal or remedial action incurred by ... a State ... not inconsistent with the national contingency plan[.]"
The structure of CERCLA, as amended, reinforces that reading of the statute. "The Supreme Court has stated consistently that the text of a statute must be considered in the larger context or structure of the statute in which it is found."
United States v. Tupone
,
Moreover, the provision in CERCLA for contribution actions, § 113(f), also supports reading "all costs" to include costs incurred before a current owner acquired a property.
Finally, the Small Business Liability Relief and Brownfields Revitalization Act of 2002, Pub. L. No. 107-118,
Therefore, based on CERCLA's text and structure, the meaning of "all costs" in § 107(a) includes costs incurred both before and after a current owner acquired the property. 12 As mentioned at the outset, that means that Trainer is liable for the removal costs at the Site regardless of when those costs were incurred. And because we conclude that Trainer is liable under CERCLA, we also conclude that it is liable under HSCA. See supra Section II.B. 13
Nothing in our decision today regarding liability for "all costs" is meant to affect established precedent concerning CERCLA damages. How exactly damages are assessed against or apportioned among PRPs in any particular case is a matter to be decided according to existing statutory and decisional law.
IV. CONCLUSION
For the foregoing reasons, we will affirm in part, vacate in part, and remand for further proceedings. We will affirm the District Court's order that Trainer is liable under CERCLA and HSCA for PADEP's response costs incurred after it acquired the Site, but we will vacate the District Court's order with respect to Trainer's liability for PADEP's response costs incurred before acquisition of the Site. Given that disposition, we do not need to address the remaining aspects of the District Court's decision. The matter is remanded for further proceedings consistent with this opinion.
CERCLA § 1 et seq. is codified at
Generally, "removal actions are short term responses to a release or threat of release while remedial actions involve long term remedies."
Black Horse Lane Assoc., L.P. v. Dow Chem. Corp.
,
There is some ambiguity in the record on the date of completion. PADEP's reply brief notes December 10, 2012 as the date of completion, but an EPA website referenced in the briefing indicates the date to be May 2, 2013. The discrepancy is immaterial to this case.
While CERCLA does not use the word "current" as a modifier for "owner," we have held that § 107(a)(1) includes "current owners" as potentially responsible parties.
See, e.g.
,
Litgo
,
There is some disagreement in the case law over whether divisibility is properly addressed at the liability phase or damages phase of a cost recovery action. We have said that it is best to resolve a divisibility inquiry "at the initial liability phase" because "it involves precisely relative degrees of
liability
[,]"
Alcan-Butler
,
Our decision today does not imply that relevant distinctions may not emerge in other cases, but no relevant difference has been suggested to us here.
The District Court had jurisdiction under
"We review the grant or denial of a motion for summary judgment de novo,"
An initial cost recovery action under § 107 "must be commenced ... for a removal action, within 3 years after completion of the removal action, ... and ... for a remedial action, within 6 years after initiation of physical on-site construction of the remedial action[.]"
"To establish the innocent owner defense, the defendant must show that 'the real property on which the facility is located was acquired by the defendant after the disposal or placement of the hazardous substance on, in, or at the facility' and that '[a]t the time the defendant acquired the facility the defendant did not know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the facility.' "
CDMG Realty Co.
,
A bona fide prospective purchaser is one who, among other things, has "made all appropriate inquiries into the previous ownership and uses of the facility" and "exercises appropriate care with respect to hazardous substances found at the facility[.]"
The District Court noted in its order certifying the interlocutory appeal that the bona fide prospective purchaser defense "might support [PADEP]'s position." (App. at 157 (emphasis omitted).)
The District Court concluded otherwise based on
California Department of Toxic Substances Control v. Hearthside Residential Corp.
,
Specifically, as under CERCLA, there is no ambiguity under HSCA that Trainer is liable for all response costs, including those incurred prior to its ownership. First, Trainer is a "responsible person" because it "own[ed] or operate[d] the site" (1) "when a hazardous substance [wa]s placed or [came] to be located in or on the site," § 6020.701(a)(1)(i), or (2) "during the time of the release or threatened release," id. § 60020.701(a)(1)(iii). There were hazardous substances located on the site at the time Trainer took ownership and there has been a release or threatened release since that time. Second, a responsible person is "strictly liable for response costs and damages which result from the release or threatened release of hazardous substances," id. § 6020.702(a), which includes "[r]easonable and necessary or appropriate costs of remedial response incurred by the United States [or] the Commonwealth." id. § 6020.702(a)(2). Here, PADEP has incurred "[r]easonable and necessary or appropriate costs of remedial response," id. § 6020.702(a)(2), resulting from the release or threatened release. Third, exceptions to responsible party status do not apply because at least one of the defendants knew or had reason to know "a hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the site." id. § 6020.701(b)(vi)(A).
Reference
- Full Case Name
- PENNSYLVANIA DEPARTMENT OF ENVIRONMENTAL PROTECTION, Appellant v. TRAINER CUSTOM CHEMICAL, LLC; James Halkias; Jeremy Hunter
- Cited By
- 5 cases
- Status
- Published