United States v. Argent Corp.

No. 83-0523 BB (D.N.M. May 4, 1984)

The court rules that the lessor of a site where hazardous substances were released is a potentially liable party under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court first rules that the plain language of § 107(a) of CERCLA makes the owner of land on which there is a hazardous substance release potentially liable notwithstanding the fact that the owner has no involvement in the operation of the activity causing the release. The language of CERCLA, its legislative history, and applicable precedent all point to this conclusion. The court also rules that the landowner cannot avail himself of CERCLA § 107(b)'s third-party defense. The lease between the landowner and the hazardous substance disposer is a contractual link that clearly negates the third-party defense of § 107(b).

Counsel are listed at 14 ELR 20497.

[14 ELR 20616]

Baldock, J.:

Order

THIS MATTER comes before the court on defendant Hugh W. Bishop's Motion for Summary Judgment. The court, having considered the parties' accompanying memoranda and attachments thereto, having adhered to the standard set forth in Rule 56 of the Federal Rules of Civil Procedure, and otherwise being advised fully in the premises, finds that defendant Hugh W. Bishop's Motion is not well taken and should be denied.

Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601-9657, specifies four categories of defendants who may be held liable for response costs under the Act: owners, operators, transporters and those who arrange for the transport or disposal of hazardous substances (usually generators). Section 107(a)(2) specifically imposes liability upon "any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of" and at which there has been a release of hazardous substances. Section 101(29) defines "disposal" in accordance with Section 1004 of the Solid Waste Disposal Act, 42 U.S.C. § 6903, as "the discharge, deposit, injection, dumping, spilling, leaking, or placing" of any hazardous waste into or on any land so that such hazardous waste may enter the environment. Section 101(9) defines "facility" as "(A) any building . . . or (B) any site or area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located . . ." Section 101(22) defines "release" as "any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, or disposing into the environment . . ."

Applying the plain language of the Act to the uncontested facts before the court, it is clear that a disposal of a hazardous substance occurred at a facility located at 134 Rio Rancho Industrial Drive, Rio Rancho, New Mexico, from which there was a release of hazardous substances. As to this, there is no genuine issue of material fact. The defendant contends, however, there is a genuine issue as to whether defendant Bishop falls within a category of defendants who may be held liable for response costs under § 107.

At all times material to this lawsuit, Argent Corp. leased a warehouse on the Rio Rancho property in which it operated a business utilizing hazardous chemicals to recover silver from used film. Defendant Bishop had no connection with defendant Argent Corp.'s business. At all times material to this lawsuit, defendant Bishop owned the Rio Rancho property and leased the warehouse to defendant Argent Corp. The United States contends that defendant Bishop, as the owner and lessor of the Rio Rancho property upon which defendant lessee Argent Corp. operated its silver recovery business, is an owner liable for response costs under CERCLA. In bringing this summary judgment motion, defendant Bishop argues that his mere ownership of the Rio Rancho land and building, without any attendant connection to the Argent Corp. business operated thereon, does not make him an "owner" within the contemplation of CERCLA.

This court finds no case law adopting Bishop's argument, but does find precedent holding a landowner lessor liable as an owner under CERCLA. See United States v. South Carolina Recycling and Disposal, Inc., et al., Civ. No. 80-1274-6 [14 ELR 20272] (D.S.C. Feb. 23, 1984). See also United States v. Northeastern Pharmaceutical and Chemical Co., Inc., 579 F. Supp. 823, 845 n.26 [14 ELR 20212] (W.D. Mo. 1984) (landowner could have been a defendant had the other defendants chosen to join him). The court further notes that CERCLA's legislative history shows a deliberate omission from the Act of language in the proposed House version which would have required participation in management or in operation as a prerequisite to owner liability. Having carefully studied the plain language of the Act, the legislative history of the Act, and legal precedent construing the Act, the court finds as a matter of law that defendant Bishop, as the undisputed owner of the Rio Rancho land and building, is an owner susceptible to liability under CERCLA.

Having determined that defendant Bishop is an owner subject to liability under § 107 of CERCLA, the court next considers whether any of the extremely limited affirmative defenses available under § 107(b) may afford defendant Bishop relief. Bishop does not argue an act of God or an act of war as a defense, but does argue the "third party defense" set forth in § 107(b)(3). Bishop contends that the release which is the subject of this lawsuit was caused solely by an act or omission of third party Argent Corp. Section 107(b) provides, however, that a defendant may not assert the third party defense if the act or omission of that third party occurred in connection with a contractual relationship, existing directly or indirectly, with the defendant. It is undisputed that defendant Bishop and defendant Argent Corp. were parties to a lease agreement with regard to the Rio Rancho site. Because of this contractual link, defendant Bishop cannot show, as required by § 107(b), that the release was caused solely by a third party which did not share a contractual relationship with him. The court finds, therefore, as a matter of law that no § 107(b) defense is available to defendant Bishop. United States of America v. South Carolina Recycling and Disposal, Inc., et al., Civ. No. 80-1274-6 [14 ELR 20272] (D.S.C. Feb. 23, 1984).

Because the court finds that defendant Bishop is an owner susceptible to liability under CERCLA, and because the court further finds that none of the defenses enumerated in § 107(b) of CERCLA are available to defendant Bishop,

IT IS ORDERED that defendant Bishop's Motion for Summary Judgment be, and the same hereby is, denied.