Demonstrating how far some courts will stretch the concept of “owner” liability under CERCLA, a federal judge in Illinois recently held a lessor of equipment used at a contaminated site liable as a facility “owner” under CERCLA. The case, United States v. Saporito, 2010 WL 489703 (N.D. Ill. Feb. 9, 2010), involved contamination at a metal plating facility, and the defendant leased equipment used in the plating process to the facility. Although the court attempted to limit its decision to the facts, the opinion fails to provide a meaningful explanation as to why its theory of liability would not also apply to the lessor of a truck, a forklift, or potentially any other piece of leased equipment found at a CERCLA site. The court went on to place 100 percent of the cleanup costs on the defendant equipment lessor, refusing to apportion liability under the Supreme Court’s decision, Burlington Northern & Santa Fe Railway Co., v. United States, 129 S. Ct. 1870 (2009).
The Saporito decision involved the government’s efforts to recover the costs of a cleanup EPA conducted at a former metal plating facility in Chicago, Illinois. The facility, operated by a company called Crescent Plating, dipped metal parts in a series of chemical baths charged with an electric current, and used hazardous substances such as sodium cyanide, hexavalent chromium, and trichloroethane. Plating solution that dripped and spilled on the concrete floor during the transfer of metal parts between the chemical baths was routed through concrete trenches to a pit lined with polypropylene. The highly acidic plating chemicals corroded the concrete in the trenches and the floor and seeped into the soil beneath the facility.
Concerns regarding the facility surfaced in 1997, when neighbors reported a “black liquid with a chemical smell” seeping through their basement wall. Over the next several years, state investigators observed leaks from the facility’s plating lines, cracks in the concrete floor, and evidence of broken pipes, and concluded that hazardous substances detected in soil samples below a neighboring building likely migrated from the facility. EPA investigated the site in 2003, discovered evidence of improperly stored plating waste and spillage, leakage, and deterioration at the facility, and determined that the conditions presented an “imminent and substantial endangerment.” EPA eventually conducted a $1.5 million cleanup of hazardous liquids and sludge at the site.
In an effort to recoup its cleanup costs, EPA filed CERCLA claims against what may have been the only two solvent parties with connections to Crescent Plating: (1) James Saporito, who owned equipment leased to Crescent Plating for a short period of time, held various titles as a Crescent Plating employee, and allegedly held a financial stake in Crescent Plating; and (2) Paul Carr, who worked in various roles with Crescent Plating, including as president of the company. The owner of Crescent Plating and the underlying property died sometime around 2000, and the property was sold in a tax sale in 2003. EPA allegedly settled with the current owner of the property for approximately $200,000, and Mr. Carr agreed to enter into a consent decree with the United States to resolve his liability at the site. As a result, the district court’s decision is limited to claims regarding Saporito’s liability.
Equipment Owner Analogous to Landowner for CERCLA Purposes
EPA moved for summary judgment against Saporito, maintaining that he was an “owner” of the site based on his ownership of equipment leased to Crescent Plating under a purchase-leaseback agreement. This equipment included 14 “rectifiers,” which converted the electrical current necessary for the plating process, as well as a filter press, boilers, computers, and a semi truck and trailer. Although EPA and Saporito disputed whether Saporito’s equipment (particularly the rectifiers) constituted the “heartbeat” of Crescent Plating’s business, they agreed that that the equipment was “at least a necessary part of the plating process.” The parties did not dispute that the plating lines constituted a “facility” under CERCLA, due to the fact that CERCLA’s definition of “facility” includes “equipment.”
Saporito maintained that “owner” liability under CERCLA does not encompass a lessor of equipment that an independent third party (the lessee) uses to cause pollution, even when the equipment is necessary for the operations that result in contamination. In rejecting this argument, the court relied on a 1994 decision from a federal district court in Pennsylvania, Elf Atochem North American, Inc. v. United States, 868 F. Supp. 707 (E.D. Pa. 1994), where the United States conceded that its lease of equipment to a pesticide manufacturer that used the equipment in its operations led to “owner” liability under CERCLA. The court opined that an equipment owner could even be “more culpable” than a landowner, because “a landowner might not inquire into how her land is being used, but an equipment owner is likely to know exactly what her equipment can do.”
Saporito argued that acceptance of EPA’s theory of liability would create a risk that private and public owners of the power lines and water pipes would likewise face CERCLA liability, because these components were necessary to the plating process at the facility. The court agreed that holding these parties “liable would be absurd,” but disagreed with the defendant’s analogy. Although these parties owned equipment that was “necessary for the electroplating process,” unlike Saporito, they did not own “ actual components of the plating line.”
The district court rejected Saporito’s contention that EPA had provided no evidence connecting his equipment to a release or threatened release of hazardous substances, or a connection to EPA’s cleanup costs. According to the district court, CERCLA “requires no such connection,” but instead imposes liability regardless of whether the plaintiff presents evidence connecting a specific piece of equipment to “specific releases of hazardous chemicals or specific cleanup costs.”
Court Declines to Apportion Liability Based on Failure to Meet Burlington Northern’s Evidentiary Standard
Saporito also argued that, in any event, he should not be held jointly and severally liable, because the circumstances justified apportioning him a de minimis share of liability. The court also rejected this argument, holding that Saporito had failed to demonstrate that apportionment was appropriate under the standard that the Supreme Court established in Burlington Northern.
Saporito argued that, because his equipment was incapable of producing waste by itself, he should be apportioned no liability based solely on his ownership of the equipment. The court again disagreed, holding that, because the equipment was “a necessary part of the plating process,” it must be “responsible for some amount of the waste that the process produced.”
Saporito also maintained that, because one piece of his equipment—a filter press—could only hold a small fraction of the hundreds of thousands of gallons of waste that EPA removed from the site, any “waste contribution from the filter press was negligible.” The court rejected this argument as well, concluding that Saporito had failed to provide evidence showing what his proper percentage of liability should be.
The court’s holding—that an equipment lessor with no other connection to a site could be jointly and severally liable as an owner—has the potential to significantly broaden the scope of “owner” liability under CERCLA. The Saporito decision provides no guidance on how Saporito’s equipment differed in a legally meaningful way from any other lessor of equipment. It appears that Saporito’s roles as an employee of and an investor in Crescent Plating—although not themselves bases for liability—may have tipped the balance in the judge’s mind in favor of accepting a rather novel theory of CERCLA liability. If so, these bad facts may have, as is often the case, led to bad law for other lessors of equipment at CERCLA sites.
Meline MacCurdy practices environmental law at Marten Law, 1191 Second Avenue, Suite 2200, Seattle, WA 98101. She represents clients both in environmental litigation and environmental permitting and review. She has particular experience with brownfield redevelopment. She has defended cases under the Clean Water Act and the state and federal Superfund laws, and is assisting clients in fisheries matters and in issues involving climate change and energy. She can be reached at email@example.com or 206-292-2600.
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