[*PG69]PUTTING THE REMEDIAL CART BEFORE THE STATUTORY HORSE:THE NINTH CIRCUIT REOPENS DEBATE ON CERCLA’S DEFINITION OF DISPOSAL

Ranen Schechner*

Abstract:  In Carson Harbor Village, Ltd. v. Unocal Corp., a panel of the Ninth Circuit Court of Appeals ruled that the passive migration of contaminants satisfied the Comprehensive Environmental Response, Compensation, and Liability Act’s definition of “disposal.” In so doing, the Ninth Circuit went against the weight of prevailing jurisprudence, which had clearly settled on the belief that passive migration should not be considered a statutory “disposal.” After undertaking an independent analysis of the passive migration question, this Note examines the effectiveness of the Ninth Circuit in rebutting the majority position’s strongest arguments. The Note concludes that while the Ninth Circuit offers a strong opinion, its reading of the CERCLA leads to too many statutory inconsistencies to be tenable.

Introduction

The Resource Conservation and Recovery Act of 1976 (RCRA) was Congress’s first attempt to address the growing environmental hazardous waste problem in a comprehensive manner.1 Touted as a “cradle-to-grave regulatory regime governing the movement of hazardous waste in our society,”2 RCRA is primarily prospective in nature.3 In 1980, Congress addressed the other side of the regulatory coin by passing the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA)4 which, being retrospective in nature, was designed to promote the cleanup of waste sites that were already contaminated and, therefore, largely outside of RCRA’s pur[*PG70]view.5 Towards this end, CERCLA implemented a system of strict liability and joint and several liability for potentially responsible parties (PRPs).6 Included among these PRPs are persons who owned or operated property “at the time of disposal” of hazardous waste.7

The exact meaning of the term “disposal” has been sharply disputed among the courts.8 One possible interpretation limits CERCLA liability of past land owners to persons who actively placed waste on or in the environment, while a broader interpretation of “disposal” finds that this statutory threshold is met if a landowner owned previously contaminated land while that contamination passively migrated through the ground.9 While the circuits are currently split on this issue,10 trends in the evolution of the jurisprudence are clearly identifiable,11 as are landmark cases which have served as milestones in the ever-changing case law.12 Most recently, the active definition has become the dominant interpretation, with three consecutive circuit court decisions endorsing that interpretation.13 However, a recent appellate decision by the Ninth Circuit endorsing the passive interpretation reopens a debate that had appeared settled.14

This Note will examine the ongoing controversy between the two interpretive camps, paying particular attention to the Ninth Circuit’s [*PG71]recent decision to adopt the passive interpretation.15 Part I will examine the structure of CERCLA’s system of liability and introduce the interpretational ambiguity which is at the center of the problem. Part II will examine the history and development of the passive definition. Part III will examine the emergence and development of the active definition, focusing on the landmark decisions that articulate the majority view. Part IV will explicate the Ninth Circuit’s recent endorsement of the passive definition in Carson Harbor Village, Ltd. v. Unocal Corp.16 Lastly, part V will analyze the Ninth Circuit’s success in rebutting the widely accepted rationale of the active interpretation.

I.  Statutory Structure of CERCLA’s Liability Scheme

The question of whether Congress intended for the passive migration of contaminants to count as a statutory “disposal” hinges, in large part, on a detailed understanding of CERCLA’s liability provisions. Because any resolution to the passive disposal question depends on interpreting and harmonizing a broad and complicated set of explicit congressional actions, implicit policy considerations, and judicial canons of statutory construction, a firm grasp of the statutory provisions implicated by the passive disposal question is an essential foundation for further analysis. Additionally, understanding the intricacies of CERCLA’s liability provisions also helps one appreciate the ultimate scope and extent to which the affected parties are impacted by a judicial decision endorsing either interpretation.

A.  Potentially Responsible Parties

CERCLA was passed “to bring order to the array of partly redundant, partly inadequate federal hazardous substances cleanup . . . laws.”17 A large part of this new “order” involves a compensatory liability system for those who have incurred “response costs” in remediating an environmental hazard.18 In order to recover these response costs, a plaintiff seeking contribution from a liable party must prove [*PG72]four elements: (1) the defendant falls within one of the classes of PRPs; (2) the hazardous substances were disposed of at a “facility”; (3) there has been a “release” or “threatened release” of hazardous substance from the facility into the environment; and (4) the release or threatened release has required or will require the expenditure of “response costs.”19

Statutory analysis of the passive disposal question focuses primarily on the first and third elements described above.20 With respect to the first element, which defines who CERCLA may hold responsible, the statute effectively imposes liability on three classes of persons: (1) the current owner or operator of the facility; (2) any person who owned the facility “at the time of disposal” of any hazardous substance; and (3) any person who arranged, agreed to arrange, or accepted hazardous material for purposes of transport or treatment of those substances.21 These classes of PRPs are intentionally broad in order to effectuate CERCLA’s remedial purpose.22

Judicial analysis surrounding the third element for CERCLA liability centers around the statute’s definitions of “release” and “disposal.”23 CERCLA defines “release” as “any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leach[*PG73]ing, dumping, or disposing into the environment.”24 “Disposal” is defined by incorporating the definition of “disposal” used in RCRA:25

The term “disposal” means the discharge, deposit, injection, dumping, spilling, leaking, or placing of any solid waste or hazardous waste into or on any land or water so that such solid waste or hazardous waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters, including ground waters.26

Thus, if a PRP owns a facility where a “release” or “threatened release” has caused the incurrence of response cost, that PRP may be liable under CERCLA.27

B.  Liability and Defenses Thereto

If the above requirements are met, responsible parties are held strictly liable.28 Section 101(32) states that “liability” under CERCLA “shall be construed to be the standard of liability” under section 311 of the Clean Water Act (CWA).29 The courts have interpreted section 311 of the CWA to impose strict liability,30 and there is ample evidence that this was Congress’s intent.31 Additionally, courts have construed CERCLA’s liability framework to impose joint and several liability on all persons covered by the statute.32

While liability may be strict, it is not absolute.33 Specifically, Congress included three affirmative defenses under section 107(b).34 Liability does not attach if a release or threatened release was caused solely by either (1) an act of God; (2) an act of war; or (3) an act or [*PG74]omission of a third party not an employee or agent of defendant, or of a person having a contractual relationship with the defendant.35

Six years after CERCLA’s passage, Congress expanded and clarified the extent of the third party defense available under section 107(b)(3).36 The 1986 Superfund Amendment and Reauthorization Act (SARA),37 which supplemented and reauthorized the original 1980 CERCLA legislation, defined the previously undefined term “contractual relationship” contained in section 107(b)(3).38 Under the new innocent landowner provision, a defendant looking to establish that he or she did not have a contractual relationship with a third party must prove that the “property on which the facility concerned is located was acquired by the defendant after the disposal or placement of the hazardous substance on, in, or at the facility.”39 Thus, only a defendant acquiring a site after the “disposal” of the hazardous substances could invoke the innocent landowner defense.40

C.  Interpretive Problems and Ramifications Posed by Defining “Disposal”

CERCLA was born of considerable controversy and an eleventh-hour compromise, and is plagued by drafting inconsistencies as a result.41 While some elements of CERCLA’s liability framework are straightforward, other provisions have spawned considerable litigation.42 The scope of section 107(a)(2), which holds persons who owned or operated land at the time of “disposal” liable for cleanup [*PG75]costs, is one area of sharp disagreement among the courts.43 Some courts have concluded that “disposal” includes the passive leaking or migration of chemicals through land.44 Conversely, other courts have found that a “disposal” occurs only as a result of affirmative human action.45

[*PG76] These differing interpretations have important consequences for landowners.46 Under the passive interpretation, intermediate landowners of a contaminated parcel may be held jointly and severally liable if the court finds that chemicals on their land leaked, leached, or otherwise migrated during their intervening ownership.47 It is of no legal consequence that the intermediate landowners were guilty only of inaction during their tenure as title holders, or that they may not even have had reason to suspect that their property was contaminated—if the parties owned the contaminated property and did not clean it up, they are jointly and severally liable for the cleanup costs.48 By comparison, the active interpretation narrows liability only to those current and past landowners who intentionally buried waste or allowed waste to be buried on the land.49 Intervening title holders who did not take action with respect to the waste are exempted from liability.50

II.  Formation of the Passive Disposal Interpretation

Courts which have adopted the passive definition of “disposal” in the context of CERCLA have usually cited three main justifying factors: (1) early decisions interpreting this language in the context of RCRA strongly endorsed the passive definition;51 (2) the inclusion of passive language in the statutory definition of “disposal” is dispositive evidence that Congress did not intend to require human action in order for an event to constitute a “disposal;”52 and (3) the remedial purposes of the statute are frustrated without a broad interpretation.53 While all three of these reasons have found their way into the opin[*PG77]ions of various district courts endorsing the passive definition, they were given their most comprehensive examination, and most complete endorsement, by the Fourth Circuit in Nurad, Inc. v. William E. Hooper & Sons Co.54

A.  Early RCRA Decisions Endorse the Passive Interpretation

The first courts faced with the challenge of interpreting the ambiguous language of section 107(a) did so in the context of RCRA section 6903(3),55 where the language first appeared. These early interpretations gave “disposal” an expansive meaning, setting a precedential foundation for later courts to adopt that same definition in the context of CERCLA.56

1.  United States v. Price

In United States v. Price, EPA brought suit under the imminent hazard provision of RCRA against the previous and current owners of a now abandoned landfill.57 Under section 7003, the Administrator may bring suit against such persons engaged in the “handling, storage, treatment, transportation or disposal of any solid waste or hazardous waste [that] may present an imminent and substantial endangerment to health or the environment.”58 The current owners of the site objected to the imposition of liability, arguing that they should not be considered a “person” engaged in “disposal” under section 7003 because they had bought the site three years after the dumping had ceased and had in no way “contributed to” the introduction of hazardous waste.59

While the court noted the troubling aspects of holding the defendants liable for a condition they did not create, it found the defendants’ argument was “predicated on the . . . erroneous premise . . . that ‘disposal’ requires some active behavior.”60 In the court’s opinion, the defendants had “contributed to the disposal (i.e. leaking) of wastes merely by virtue of their studied indifference to the hazardous [*PG78]condition that now exists.”61 The court held that because the defendants were aware that the land had previously been a landfill, they had a duty to investigate the condition of the property before purchase.62 Because they had chosen not to investigate the state of the land, and because they had not taken any steps to abate the hazardous condition since they had become aware of it, the court ruled for the EPA.63

2.  United States v. Waste Industries

In United States v. Waste Industries, EPA brought suit seeking contribution under section 7003 of RCRA for remediation of a leaking landfill owned and operated by the defendant.64 In overturning the district court’s ruling that section 7003 was not actionable because “the provision was not intended to apply to past conduct that terminated before enforcement was sought,” the court of appeals found that section 7003 does “not regulate conduct but regulates and mitigates endangerment.”65 To rule otherwise, the court reasoned, would render the remedial purpose of the Act “meaningless.”66

The court further noted that the “diverse definitional components of ‘disposal’ demonstrates that Congress intended ‘disposal’ to have a range of meanings.”67 The court paid particular attention to inclusion of the word “leaking” within the definition, pointing out that “leaking” usually occurs at poorly constructed landfills or when storage tanks rust out.68 Thus, the court reasoned, “leaking” is an event which is included in the meaning of “disposal.”69

B.  CERCLA Decisions Imposing Liability for Passive Migration

1.  Stanley Works v. Snydergeneral Corporation

Courts faced with the question of whether “disposal” encompassed the passive migration of waste within the context of CERCLA relied heavily on previous decisions which had interpreted the lan[*PG79]guage in the context of RCRA.70 For example, in Stanley Works v. Snydergeneral Corp., the district court was faced with resolving “the extent to which the ongoing leaking, leaching and migration of hazardous substances constitutes a release or disposal giving rise to liability under CERCLA . . . .”71 In ruling that parties were responsible under CERCLA for passive migration of contaminants, the district court specifically rebutted defendant’s contention that the court should not rely on RCRA decisions for guidance in interpreting the term “disposal” under CERCLA.72 Calling it a distinction without merit, the court emphasized that the definition of “disposal” was identical in both statutes.73

The court found support for its reading of the statute in the policy choices CERCLA was believed to represent.74 In the court’s opinion, the active interpretation would impart a causation requirement into the liability scheme.75 The court viewed a fault-based liability regime as conflicting with CERCLA’s strict liability framework and the Congressional purpose represented by that liability structure.76

2.  New York v. Shore Realty Corp.

New York v. Shore Realty is another case which provides a broad interpretation of the language of CERCLA section 107(a)(2).77 The defendant, Shore Realty Corp. (Shore), knowingly purchased property with underground storage tanks (USTs) full of hazardous chemicals.78 Shore was aware that the equipment at the site was in a state of disrepair and that the site had a history of spills.79 While the previous owner had attempted some cleanup, it was well known that hazardous substances were still leaking into the ground when Shore obtained [*PG80]ownership.80 Upon taking title, Shore did nothing about the deteriorating condition of the storage tanks on its newly acquired land.81

Approximately one year after Shore obtained title to the property, the State of New York brought suit to compel Shore to clean up the contamination.82 Despite being a “current owner” of the facility under section 107(a)(1), Shore claimed that it should not be held liable because it had never actively contributed to the “disposal” of the waste on the site.83 According to Shore, 42 U.S.C.  9607(a) was ambiguous, and both sections 107(a)(1) and (a)(2) should be read as requiring a showing of causation.84

The court was unpersuaded, however, and held that CERCLA’s strict liability regime was at odds with Shore’s proposed causation requirement.85 A ruling requiring a showing of causation would have the effect of rendering the affirmative defenses provided in 9607(b) superfluous.86 Additionally, accepting Shore’s argument would have opened a loophole in CERCLA’s liability scheme, allowing a current owner of a site to avoid liability merely by having purchased the site after chemical dumping had ceased.87 The court ultimately held that the leaking tanks, pipelines, and drums, along with the continuous leaching and seepage from the earlier spills, all constituted a “release.”88 Thus, Shore was found liable for contribution towards the cost of remediation.89

C.  Nurad, Inc. v. William E. Hooper & Sons Co.

These complimentary threads of analysis were finally gathered together by the Court of Appeals for the Fourth Circuit, which was the first appellate court to address directly the passive disposal issue in the context of CERCLA.90 In Nurad, Inc. v. William E. Hooper & Sons Co., Nurad, the current owner of a hazardous waste site, brought suit against the previous owners in order to recover costs incurred during [*PG81]removal of abandoned USTs.91 The tanks had been installed by the Hooper company, which had owned and operated the property from 1905 to 1963.92 The tanks stored mineral spirits, which the company had used to coat fabrics in an adjacent textile finishing plant.93 In 1963, the Hooper company sold the property to Property Investors, Inc., who in turn sold it to Kenneth Mumaw.94 Mumaw eventually subdivided the property and sold the portion in dispute to Nurad in 1976.95

In 1987, the Maryland Department of the Environment informed Nurad that the USTs had not been properly abandoned, and required their removal within 180 days.96 Nurad sought assistance for the cleanup from previous owners of the property, but they refused.97 In 1990, after having completed removal, Nurad filed suit seeking $226,000 in compensation from all previous owners.98 Included in the suit was a claim of liability against the intervening owners, Property Investors, Inc. and Mumaw, even though there was no evidence that they had actually used the USTs during their ownership.99 On a summary judgment motion, the district court ruled that certain previous owners were not liable because they were not owners “at the time of disposal.”100 According to the district court, “disposal” required an element of affirmative participation on the part of the defendant, and only the Hooper company defendants had actively utilized the site for hazardous waste management.101

In overturning the district court’s decision, the Fourth Circuit Court of Appeals first looked to the language of the provision.102 Finding that some of the words of the “disposal” definition have passive connotations, the court noted that human participation was not required for hazardous waste to leak or spill.103 It reasoned that the district court’s decision to impose a requirement of active human par[*PG82]ticipation “arbitrarily deprived these words of their passive element.”104 Furthermore, the district court’s decision represented a break with circuit precedent since the court had already rejected a “‘strained reading’ of disposal which would limit its meaning to ‘active human conduct’” when it decided Waste Industries.105

The Fourth Circuit was also concerned that a requirement of active participation would open a statutory loophole through which an owner could avoid liability “simply by standing idle while an environmental hazard festers on his property.”106 This outcome would significantly harm CERCLA’s statutory policy of promoting private cleanup of environmental hazards, as well as create:

the anomalous situation where a current owner, such as Nurad, who never used the storage tanks could bear a substantial share of the cleanup costs, while a former owner who was similarly situated would face no liability at all. A CERCLA regime which rewards indifference to environmental hazards and discourages voluntary efforts at waste cleanup cannot be what Congress had in mind.107

Finally, the court found that the active definition of “disposal” was contradictory to CERCLA’s strict liability emphasis.108 Because the “trigger to liability under  9607(a)(2) is ownership or operation of a facility at the time of disposal, [and] not culpability or responsibility for the contamination,” the court declined to “engraft onto the statute additional prerequisites to the reimbursement of response costs which Congress did not place there.”109

Applying these principles to the case, the court determined that there had been a statutory “disposal” of hazardous waste during the period of Hooper’s and Mumaw’s ownership.110 Because there was clear evidence that the mineral spirits were “leaking” from the tanks, and because neither defendant had “pointed to anything to overcome the presumption that the leaking . . . was not a sudden event, but the result of a gradual and progressive course of environmental contamination that included these defendants’ period of ownership,” the [*PG83]court held that Nurad was entitled to reimbursement from these intermediate owners. 111

III.  Formation of the Active Disposal Majority

To many contemporary observers, Nurad seemed to mark the crowning of the passive interpretation as the majority position.112 Most district court decisions supported the passive definition, and in Nurad, the first appellate court to examine the issue had persuasively argued the point in reaching the passive interpretation.113 Nurad, however, would not be the most influential decision concerning the definition of “disposal” to be issued that year.114 Ironically, it would be a decision by a district court which, in explicitly rejecting Nurad, would take the first step in a sweeping jurisprudential shift towards the active definition.115

A.  United States v. Petersen Sand & Gravel, Inc.

In Petersen Sand, the government sought to recover response costs expended in investigating the defendant’s property.116 Raymond Petersen, who owned the land individually before Petersen Sand & Gravel’s incorporation in 1970, allegedly allowed the site to be used for hazardous waste disposal during the 1960s.117 In 1982, the site was condemned by the Lake County Forest Preserve District for use as a recreational lake.118 While preparing the site for flooding, a bulldozer struck a buried barrel.119 The Forest Preserve contacted EPA, who informed the Forest Preserve that they would be liable for cleanup under CERCLA.120 Cleanup was completed by the Forest Preserve in December of 1983.121

In 1984, EPA placed the site on the National Priorities List, which tracks priority releases for long-term remedial evaluation and re[*PG84]sponse.122 A subsequent investigation by EPA concluded that while the site did contain hazardous substances in concentrations above those occurring naturally, the levels present did not warrant further remedial action.123 In 1991, the United States sued Petersen Sand & Gravel, to recover the $800,000 expended in conducting the investigation.124

The United States sought recovery from the defendant under three theories of liability, one of which was that the company was liable for the passive leaking or leaching of contaminants that occurred after Petersen Sand & Gravel’s incorporation in 1970.125 In addressing the question of passive disposal, the court noted that the language of the statute readily admitted both an active and a passive interpretation.126 To some people, most of the events constituting “disposal” required a human actor, while others maintained that such interpretations deprived the terms “spilling” or “leaking” of their passive definition.127 The court also noted, however, that there was more to the definition of “disposal” than the oft-discussed series of “occurrences.”128 Rather, the rest of the definition of “disposal” requires that an event must be one such that waste “may enter the environment or be emitted into the air or discharged into any waters.”129 In the court’s opinion, passive migration was “itself an entering into the environment; not a predicate to entering the environment.”130 As proof that Congress appreciated this distinction, the court observed that CERCLA’s definition of “release” is also a series of events, such as “spilling” or “leaking,” but it is followed simply by the phrase “into the environment.”131

The court gained further illumination from the contextual relationship between “release” and “disposal.”132 Under CERCLA, a “release” or a “threatened release” is the precondition to authority to act.133 A “release” is defined as any “spilling, leaking, pumping, pour[*PG85]ing, emitting, emptying, discharging, injecting, escaping, leaching, dumping or disposing into the environment.”134 The court found it undisputed that this definition encompasses the sort of passive migration at issue.135 Thus, while

a “release” includes a “disposal,” . . . a “disposal” does not include a “release.” In some way, therefore, “release” must be more inclusive than “disposal.” Congress could have made operator liability depend on a “release”; instead, Congress designed the entire CERCLA response scheme to activate whenever a “release” occurred, but limited the liability for operators to those who were operators during a “disposal.” Some distinction must have been intended . . . between active and passive events.136

The court also found support for the active interpretation in the 1986 amendments to CERCLA.137 Specifically, the court examined the innocent purchaser defense under section 107(b)(3), which relieves an otherwise responsible party from liability when the damages are caused by a third party who is not an agent or employee of the otherwise responsible party, and who is not in a contractual relationship with that party.138 The amendments expanded the scope of the defense by excluding land sales from the definition of “contractual relationship.”139 The court found that this definitional clarification contributed to the analysis in three ways:

First, in order for the defense to apply in all but the rarest circumstances, “disposal” must be limited to its active meaning. Otherwise, this defense would be available only to innocent owners who are fortunate enough to have purchased a facility where all the hazardous waste is sealed in concrete—any seeping or leaking on a site occurring after the purchase would eliminate the defense. Put simply, the amendment on its face has a plain purpose: to exclude from liability owners who bought after the hazardous waste was placed on the land and knew nothing about the hazardous waste at the time of purchase. Giving “disposal” passive content would [*PG86]eviscerate that plain purpose. Second, by juxtaposing the two terms, the amendment makes the relative scope of “release” and “disposal” unequivocally clear. The reference to a period “after” a disposal but during (“is the subject of”) a “release” or “threatened release” establishes that “disposal” refers to a discrete human act with a discrete ending. Finally, the amendment likens a “disposal” to a placement, which also requires an affirmative human act.140

The court ended its analysis by explicitly refuting Nurad’s contentions that the active interpretation was incompatible with CERCLA’s remedial purpose.141 The court stated three reasons why the Fourth Circuit’s fears were overstated.142 First, because CERCLA imposes criminal liability for failure to report a “release” in a timely manner, it is unlikely that an owner could avoid liability by standing idle while an environmental hazard festered, then transferring the property before any response costs were incurred.143 Second, CERCLA creates an incentive for purchasers to investigate the possibility of environmental contamination before a land purchase, which makes the transfer of contaminated facilities more difficult.144 Finally, the court maintained that the state common law disclosure requirements, which already protect purchasers against intentional failure to disclose hidden defects, would help prevent malevolent owners from carrying out environmentally irresponsible schemes.145

B.  United States v. CDMG Realty Co.

The Petersen Sand opinion proved to be extremely influential. Cases decided in the aftermath of Petersen Sand cited the case to support the active disposal interpretation.146 In 1995, much of the Illinois district court’s reasoning was adopted by the Third Circuit Court of [*PG87]Appeals in United States v. CDMG Realty Co.,147 which is widely regarded as the most comprehensive and authoritative endorsement of the active interpretation.148 The CDMG Realty decision is critical because, in establishing the dominant analytical framework for the active interpretation of “disposal,” it is the foil against which Carson Harbor must argue.149

In CDMG Realty, the plaintiff HMAT Associates, the current owner of a former municipal landfill, sought contribution from the defendant, Dowell Associates, under the theory that contamination dumped on the land prior to defendant’s purchase of the property spread passively during defendant’s ownership.150 It was not alleged that Dowell Associates had ever placed hazardous waste on the site.151 In disposing of the passive disposal interpretation, the court undertook a five-part analysis, including consideration of the language of the statute, the structure of the innocent owner defense, and the purposes of the statute.152

1.  Language of the Statute

The court’s analysis of the statutory language of the “disposal” definition hinged on the canon of noscitur a sociis.153 A common cannon of statutory interpretation, noscitur a sociis states that one may infer the meaning of ambiguous terms by examining the meaning of its surrounding words.154 Because the words surrounding “leaking” and “spilling”—”discharge,” “deposit,” “injection,” “dumping,” and “placing”—all envision a human actor, the court reasoned that Congress could have intended these words to have an active meaning as well.155

[*PG88] The court did not rely on the canon of noscitur a sociis exclusively.156 Because the common definition of “leak” is “to enter or escape through a hole, crevice, or other opening,” the court reasoned that if something is to leak passively, it must leak from some opening.157 As an example, the court noted that the definition might encompass the escape of waste through a hole in a drum.158 HMAT, however, had offered no evidence of leaking drums, or that waste had escaped from any opening during Dowell’s ownership.159 A similarly precise definitional analysis of “spilling” convinced the court that the passive definition of “spill” implies “a rapid torrent, not gradual passive migration over the course of several years.”160 Thus, whatever the answer to the broader question of whether “disposal” always requires human activity, the court decided that the activity alleged here did not meet the statutory burden.161

The court continued its rhetorical analysis by comparing the definition of “disposal” with the definition of “release.”162 In a similar fashion to the district court in Petersen Sand, the Third Circuit found the definition of “release” to be broader than the definition of “disposal.”163 More importantly, the court noted that the definition of “release” included the term “leaching,” which was not mentioned in the “disposal” definition.164 The court referred to Webster’s dictionary, which defines “leaching” as “the process or an instance of separating the soluble components from some material by percolation.”165 Taking notice of the fact that the term is commonly used in an environmental context to describe the sort of slow, rain- and groundwater-induced migration at issue here, the court reasoned that Congress was aware of the concept of passive migration in landfills and knew how to [*PG89]refer explicitly to it.166 Thus, the fact that Congress made prior owners liable only if they owned the land at the time of “disposal,” and not the time of “release,” was strong evidence that the passive activity of “leaching” was not intended by Congress to be a “disposal.”167

The court concluded its rhetorical analysis by noting, as did Petersen Sand, that if the spreading of contaminants is constant, then characterizing liable parties as “any person who at the time of disposal . . . owned or operated a facility” was a very complicated way of making liable everyone who owned or operated a facility after the introduction of hazardous waste.168 Furthermore, such a distinction would eliminate the need for a separate responsible party category of current owner or operator.169 Thus, while the court acknowledged that CERCLA was not written with great clarity, it was loathe to “impute to Congress an intent to set up a simple liability scheme through a convoluted methodology.”170

2.  Structure of the Innocent Owner Defense

As in Petersen Sand, the court in CDMG Realty found that the consequences of the passive interpretation would essentially nullify the innocent owner defense.171 Because CERCLA conditions the innocent owner defense on the defendants having purchased the property “after the disposal” of hazardous waste at the property, “disposal” cannot constitute the allegedly continuous spreading of contaminants.172 Otherwise, the court reasoned, the defense would almost never apply, since there would generally be no point “after disposal.”173

Importantly, however, the Third Circuit found additional support for the active interpretation in the fact that it appears that only current owners can invoke the innocent purchaser defense.174 The provision establishing the innocent owner defense states: “[n]othing in this paragraph or in section 9607(b)(3) of this title shall diminish the liability of any previous owner or operator who would otherwise be li[*PG90]able under this chapter.”175 If, as this provision seems to suggest, only current owners can invoke the defense, and if we hold prior owners liable because waste spread during their ownership, then prior owners would be in a significantly worse position than current owners, liable even if they had no reason to know that the waste was present.176 This, the court concluded, could not have been Congress’s intent.177

3.  Purposes of the Statute

The CDMG Realty court concluded its analysis by examining CERCLA’s purposes.178 The court explained that CERCLA has two principal goals: to facilitate the cleanup of potentially dangerous hazardous waste sites, and to force polluters to pay the costs associated with their pollution.179 The court found nothing in the passive interpretation inconsistent with these purposes.180 Believing that “those who owned previously contaminated property where waste spread without their aid cannot reasonably be characterized as ‘polluters,’” the court reasoned that excluding them from liability would not let those who cause the pollution off the hook.181 That said, the court was confidant that many of those owners would end up paying for the pollution anyway.182 If landowners disclose the fact that the land contains waste, then the selling price of the land would reflect that potential future liability.183 If landowners have knowledge of contamination and do not disclose it to the transferee, they are liable for response costs even after the transfer.184 Thus, under an active interpretation of disposal, the only people who escape liability are the small segment of intermediate property owners who bought and sold the land without any knowledge that the land was contaminated.185

The Third Circuit was also convinced that nothing in its decision would undermine CERCLA’s goals for facilitating cleanup of hazardous waste cites.186 The court cited Petersen Sand for the proposition [*PG91]that existing statutory safeguards already ensured that owners cannot easily transfer ownership to avoid liability.187 These safeguards include the imposition of criminal liability for failure to disclose a “release,”188 the fact that an owner who knowingly transfers contaminated land without full disclosure remains liable even after transfer,189 and the fact that the innocent owner defense encourages potential buyers to investigate the possible contamination before purchase.190

C.  Aftermath of CDMG Realty

The persuasiveness of the CDMG Realty opinion is clearly evident in the next two appellate decisions to examine the passive interpretation of disposal.191 In ABB Industrial Systems, Inc., v. Prime Technology, Inc., the Second Circuit was faced with the now familiar pattern of a present landowner seeking contribution from a prior intervening landowner because waste had passively migrated during the intervenor’s ownership.192 In dismissing the plaintiff’s passive migration theory, the court relied exclusively on the CDMG Realty reasoning, and chose to summarize the Third Circuit’s most persuasive reasoning rather than “reinven[t] the wheel.”193

The Second Circuit found four of CDMG Realty’s arguments persuasive: (1) that none of the terms used in the “disposal” definition commonly refer to the gradual spreading of hazardous chemicals already in the ground; (2) that Congress used the term “leaching” in the definition of “release,” but not in the definition of “disposal,” demonstrating that Congress knew that passive migration occurred but chose not to impose liability on prior owners; (3) that the innocent landowner defense, which is applicable when an owner acquired a cite “after disposal,” would almost never apply because there would never be a period of time “after disposal”; and (4) that the active interpretation was not contrary to CERCLA’s policy objectives.194 Thus, the court affirmed the district court’s grant of summary judgment to [*PG92]the defendant intermediate landowners who had been sued for contribution.195

CDMG Realty’s reasoning was also adopted by the Sixth Circuit, which had an opportunity to rule on the passive migration question in United States v. 150 Acres of Land.196 Unlike ABB Industrial Systems, which evidenced the influence of CDMG Realty by adopting the Third Circuit’s reasoning almost verbatim, 150 Acres of Land evidenced the influence of the recent interpretive shift towards the active position by barely discussing its reasoning at all.197 The court summarily disposed of the entire passive migration question in one paragraph.198 In doing so, the court cited the “more recent view” of CDMG Realty and ABB Industrial Systems that “disposal be limited to spills occurring by human intervention.”199

IV.  Carson Harbor Village, Ltd. v. Unocal Corp.

Carson Harbor Village, Ltd. v. Unocal Corp., filed on September 14, 2000, is the most recent appellate pronouncement on the question of passive migration.200 By a two-to-one vote, a panel of the Ninth Circuit Court of Appeals adopted the passive definition of disposal.201 In doing so, the court noted, but ultimately rejected, the analysis of CDMG Realty and its progeny, solidifying a circuit split that had recently appeared resolved.202

[*PG93]A.  Factual and Procedural Background

In Carson Harbor, the plaintiff Carson Harbor Village Ltd. owned and operated a mobile home park on seventy acres of land.203 One of the defendants, Carson Harbor Village Mobile Home Park (Partnership Defendants), had owned the property from 1977 to 1983 and had operated a mobile home park on the land.204 From 1945 to 1983, Unocal corporation held a leasehold interest in the property, which it used for petroleum production.205

Seventeen of the seventy acres of the property were undeveloped open flow wetlands.206 In 1993, as part of an attempt to refinance the property, the plaintiff’s lender undertook an environmental assessment of the property, which revealed slag and tar-like material buried within the wetlands.207 Further investigation determined that the material was a petroleum by-product that had been on the property for several decades prior to its development as a mobile home park.208 Elevated lead levels were found in and around the area of contamination.209

In 1995, the plaintiff undertook remediation of the contaminated soil, which ultimately required the removal of 1,042 tons of material from the wetlands.210 Within a year after the completion of remediation, the plaintiff filed suit seeking contribution from the Partnership Defendants, among others.211 On a motion for summary judgment, the district court ruled that the Partnership Defendants were not PRPs under section 107(a)(2) because there was no evidence of “disposal” between 1977 and 1983.212 In reaching this conclusion, the district court rejected the plaintiff’s claim that the passive spread of contamination from the buried tar and slag material into the surrounding soil constituted “disposal.”213 While the court recog[*PG94]nized that “CERCLA was intended to reach broadly, it also clearly expresses limits to the contemplated statutory liability.”214 If passive migration satisfied the statutory requirement of a “disposal,” it would subject previous owners who had no knowledge of or control over the leaching material to liability.215 To the court, this result was in conflict with the statute’s intent, which was to affix the ultimate cost of cleanup to the parties who were responsible for the contamination.216

B.  The Ninth Circuit Endorses the Passive Interpretation

In overturning the district court decision not to allow the passive migration of contaminants to count as a “disposal,” the panel of the Ninth Circuit Court of Appeals first examined the language of the statute.217 While previous courts had focused on the passive meaning of “spill” and “leak” within section 107(a), the Ninth Circuit felt that the passive definition of “discharge” was especially broad.218 Because at least three of the terms listed in the definition had “well-recognized passive meanings,” the court felt it was “bound to give effect to that definition.”219 Citing Nurad, the court held that “the district court arbitrarily deprived these words of their passive element by imposing a requirement of active participation as a prerequisite to liability.”220

The court continued by further comparing its current position with that of the Fourth Circuit.221 In Nurad, the court had looked to its own circuit precedent for support in imbuing “disposal” with a passive interpretation, since the circuit had already rejected the active interpretation of the term in the context of RCRA.222 Likewise, the Ninth Circuit had also previously rejected the passive interpretation of “disposal” in the context of RCRA.223

The Carson Harbor court also believed that the passive definition “cohere[d] with the structure and purpose of CERCLA’s liability pro[*PG95]visions.”224 While the court recognized that CERCLA was intended to impose cleanup on “responsible parities,” it decided that the overriding “imperative” of the statute was “to create a mechanism for prompt cleanup.”225 The court reasoned that because many directly responsible parties were insolvent or no longer in existence at the time of CERLA’s passage, Congress, so aware, had abandoned traditional causation requirements in favor of a strict liability regime.226 Consequently, the categories of PRPs were defined broadly, “sweeping in parties who may have done nothing affirmatively to contribute to contamination at a site and forcing them to disprove causation as an affirmative defense.”227 An interpretation of “disposal” that included past passive owners as PRPs was deemed by the court to be consistent with that structure.228

C.  Response to CDMG Realty Co.

The court continued its analysis by addressing the “thoughtful opinion” of the Third Circuit and its progeny.229 Implicitly recognizing that the active interpretation had become the majority position in the wake of CDMG Realty, the Ninth Circuit did not reject the active interpretation outright.230 Instead, Judge Fletcher argued that because CERCLA contained many inherent inconsistencies and redundancies, the identification of inconsistency or redundancy in the statute is not necessarily fatal to a given construction. Nor can one automatically assume that a construction that appears to resolve inconsistencies or avoid redundancies is consonant with the intended design of the statute, especially if the “saving” construction merely substitutes one form of inconsistency or redundancy for another.231

With that framework in place, the court turned its attention to the specific arguments set forth in CDMG Realty.232 In addressing the argument that the passive definition rendered “release” and “dis[*PG96]posal” redundant, the court referred to Petersen Sand, which had cautioned that “[i]t is not possible to interpret these two definitions without some degree of inconsistency” because both definitions share terms.233 To the Ninth Circuit, the critical question was “whether Congress intended to avoid the particular redundancy that would result from reading ‘disposal’ in accordance with the passive terms and whether this particular redundancy is one we should care about.”234

In the court’s view, the passive interpretation did not render “time of disposal” awkward or superfluous, as had been charged by CDMG Realty.235 Rather, Judge Fletcher saw the “time of disposal” requirements as drawing an “important distinction in CERCLA’s otherwise capricious liability framework.”236 “Time of disposal” was a “temporal trigger for prior owner liability,” with owners and operators preceding the disposal of hazardous substances exempted from CERCLA’s coverage “regardless of their knowledge that selling the property to a certain buyer may result in contamination.”237

The Ninth Circuit also disputed CDMG Realty’s contention that an active interpretation of “disposal” was required to preserve the innocent landowner defense.238 Judge Fletcher pointed out that the defense applied to property “acquired after the disposal or placement of the hazardous substances.”239 The alleged negation of the innocent owner defense could be avoided by merely “giving effect to Congress’s explicit use of the disjunctive, and to the common meaning of placement.”240 Thus, the defense would apply despite passive migration, as long as the owner acquired the property after the hazardous waste was first placed on it.241

Finally, the Ninth Circuit pointed out that the active theory of disposal created its own inconsistencies.242 Under the active theory, current operators would be PRPs without regard to fault, while prior owners would be immune from suit as long as they did not own the [*PG97]property during an act of disposal.243 Additionally, the court stated that the active interpretation created “irrational distinctions” between prior owners.244 The court explained:

Owners who held property while contamination was passively migrating would be categorically exempt even if they (1) failed to conduct a reasonably diligent review of the environmental condition of their property (and thereby allowed readily discoverable contamination to worsen), or (2) simply allowed known, pre-existing contamination to remain untreated. On the other hand, owners at the time of active disposal would be PRP’s along with current owners even if they weren’t responsible for the disposal.245

Applying these principles to the facts of the case, the court found little reason to impose liability on the Partnership Defendants because there was little to distinguish them from the current owner.246 Both parties had come into ownership after the hazardous waste had been deposited, and neither had directly caused any of the contamination by running a mobile home park on the land.247 The court did, however, find one difference between the intermediate and current owner: during the Partnership Defendant’s tenure, Unocal Corp. had been in possession of the land.248 Thus, equity suggested finding the Partnership Defendant’s liable because they had more reason to be vigilant concerning the possibility of contamination.249 The court therefore remanded the case for further proceeding against the Partnership Defendants.250

V.  Analysis

In adopting the passive definition of “disposal,” Carson Harbor reopened a debate that some commentators,251 and most courts,252 believed had been conclusively decided. Since the passive definition [*PG98]of “disposal” was adopted by the Fourth Circuit Court of Appeals in Nurad, relatively few district courts outside of that circuit have followed the passive interpretation.253 Prior to Carson Harbor, none of the three subsequent appeals courts had followed the passive interpretation.254 Instead, CDMG Realty’s authoritative opinion had solidified the interpretive shift towards the active position that began in Petersen Sand.255 Indeed, one may infer from the surprising lack of analysis contained in 150 Acres of Land that the question of whether passive migration constituted “disposal” was no longer in sufficient doubt to warrant extended discussion.256

Thus, in adopting the minority passive position in Carson Harbor, the Ninth Circuit needed to do more than just provide a reasonable interpretation of the statute. As Judge Fletcher noted himself, CERCLA’s inconsistencies make it relatively easy to have two divergent interpretations, both of which are reasonable.257 In order for the Ninth Circuit’s opinion to have an effect outside of its own circuit, it needed to forcefully rebut the reasoning that made CDMG Realty so authoritative in the first place.

A.  Language

Like most courts that have examined the definition of “disposal,” the Carson Harbor court began its analysis by focusing on the language of the statute.258 While the court repeated the oft-cited fact that the terms “spilling” and “leaking” have well recognized passive meanings, the court did break new ground by recognizing the passive component of the term “discharge.”259 Citing to a common cannon of statu[*PG99]tory construction, the court pronounced that “as a rule, a definition which declares what a term means is binding upon the court.”260

By the court’s own admission, however, these three words are capable of multiple meanings.261 In citing Nurad for the proposition that the district court’s ruling “arbitrarily deprived these words of their passive element,” the court implicitly admitted that the words are capable of multiple meanings. A court’s job is not to give effect to every meaning the words are capable of, but rather to deduce the specific meaning intended by Congress.262 When the definition of the words alone are not dispositive, a reviewing court must examine the overall statutory structure, as well as the purposes of the statute.263 In this regard, the active interpretation has the stronger argument. Because “meaning derives from context” the noscitur a sociis and ejusdem generis canons of statutory construction necessarily serve to cohere the definition with itself.264

While both camps can cite to canons of statutory construction to support their position, at some point technical statutory construction and nuanced semantic interpretation give way to common usage and understanding. As Judge Weiner pointed out in dissent, human action and agency are a prerequisite for something to spill or leak.265 Something “spills” only when it is “actively emptied, or because of human action . . . is placed in a position where gravity, or the elements . . . cause the contents to be emptied into the environment.”266 “Whether a substance pours, splashes, or falls, human conduct was necessary ab initio to create the situation permitting the spill to occur . . . .”267 This same reasoning also applies to the verb tense of “leak.” Regardless of who owns the parcel of land during the actual leakage, that event could not have occurred without someone “actively placing the hazardous waste in the container and creating the conditions under which it could, with the passage of time, begin to escape.”268 It is this [*PG100]initial human conduct that creates the conditions for a leak or a spill that the statute is targeting.269

Neither does the Carson Harbor’s invocation of the passive component of the word “discharge” prove insurmountable. While a discharge can arguably occur without human conduct (e.g., a volcano may discharge lava under pressure), the verb also has definitions which imply human agency.270 Reading “discharge” in pari materia with the other verbs found in the definition of disposal, it becomes clear that “Congress intended the definition of discharge to be limited to ‘unload or empty’ or ‘to pour forth contents.’”271 Both of these meanings imply active human conduct.272

B.  Defining “Release” as Distinct from “Disposal”

The statutory distinction between “disposal” and “release” also strongly supports the argument that Congress did not intend for passive migration to incur liability. This distinction, which was first identified in Petersen Sand,273 has been a foundation of every appellate opinion endorsing the active interpretation.274 As such, any court adopting the passive interpretation must adequately address how the passive interpretation does not inextricably conflate these two terms.

[*PG101] Significantly, Carson Harbor does not directly address the conflation of these two terms that results from the passive definition.275 Instead, the court merely notes the inherent inconsistency between the definitions of “release” and “disposal.”276 According to Judge Fletcher, the important question is “whether the particular redundancy that would result from reading ‘disposal’ in accordance with the passive terms in its definition . . . is one we should care about.”277 The court answers its own question in one line, stating that “because there is no indication that the operation of either term in the statute would be compromised . . . we reject the CDMG court’s narrower construction.”278

The Ninth Circuit’s conclusory response is unjustified. The fact that the definition of “release” includes the term “leaching,” while the definition of “disposal” does not, is proof that Congress understood how to describe the occurrence of a passive event.279 The definition of “release” also includes the term “escaping,” which, being exclusively passive, further supports the argument that Congress knew the difference between a passive and an active event, and intended a distinction between “release” and “disposal.”280 None of the words in the definition of “disposal” are so obviously or exclusively passive. Considering that Congress made an affirmative decision to impose liability on the condition of “disposal” rather than “release,” one must assume that Congress intended to give effect to the differences in language between the two definitions.

Not only does the definition of “release” prove that Congress knew how to describe a passive event, but the fact that a “release” includes “disposing” means that the definition of “release” is broader than that of “disposal.”281 This insight was critical to the Sixth Circuit’s decision in 150 Acres of Land, which noted that the CERCLA statutory [*PG102]scheme as a whole gains internal cohesion by having “disposal” stand for human activity that precedes the entry of a substance into the environment while having “release” stand for the actual entry of substances into the environment.282 Thus, while the broader of the two requirements establishes potential CERCLA liability, that liability is limited to those PRP’s who owned or operated the facility when the act of disposal took place.283

Such an interpretation does not, as the Ninth Circuit claimed, frustrate the statute’s strict liability regime.284 While courts endorsing the passive interpretation have generally reasoned that Congress intended to confine causation arguments to the affirmative defenses, such an approach effectively puts the remedial cart before the statutory horse.285 CERCLA’s strict liability is limited only to PRPs, which Congress defined to include a requirement of “disposal.”286 If Congress had intended strict liability for all owners after the introduction of waste regardless of activity, it could easily have made liability contingent on “release” rather than on “disposal.” As it did not do so, a judicial interpretation confining “disposal” to the active conduct of placing the material in or on the environment cannot be seen as contravening clear congressional intent or subverting the statute’s emphasis on holding PRPs strictly liable. To the contrary, the active interpretation respects the fact that Congress used different terms to define different conditions, and sharpens the distinction between a general condition for CERCLA liability and the specific activity necessary to attach that liability to a particular individual.

[*PG103]C.  Time of Disposal

Carson Harbor’s explanation of the requirement that a PRP be an owner or operator “at the time of disposal” is also less than convincing. As the Ninth Circuit read the statute, the passive interpretation did not render congressional reference to a “time of disposal” superfluous because, without that reference, prior owners and operators might be liable under CERCLA if they sold property to buyers whom they knew would contaminate the property.287 Certainly this is true: “time of disposal” was undoubtedly intended to act as a “temporal trigger” for the attachment of liability, with only those people who are part of the chain of title after a “disposal” held liable under the Act. The problem highlighted by CDMG Realty, however, was not that the passive position would render “time of disposal” meaningless, but that it would render it extremely awkward and convoluted.288 Under the passive interpretation, there is no time of “disposal”—by definition “disposal” is a continuous, on-going event.289 Such a reading interprets the congressional instruction to hold liable “any person who at the time of disposal . . . owned or operated any facility” as a directive to hold liable everyone who owned or operated a facility after the introduction of waste.290 Not only is this an awkward reading, it renders the separate PRP category of current owner or operator unnecessary.291 While Carson Harbor is correct in noting that CERCLA was not written with great clarity, we should be wary of any construction which “impute[s] to Congress an intent to set up a simple liability scheme through a convoluted methodology.”292 If Congress had wanted to hold everyone in the chain of title liable from the introduction of waste forward, it would have done so explicitly.

[*PG104]D.  Innocent Owner Defense

The interpretation of “time of disposal” has important ramifications for the innocent owner defense as well. As discussed in CDMG Realty, if there is no definitive “time of disposal,” then an owner looking to prove that he or she acquired property “after the disposal” would generally have an impossible task.293 Carson Harbor’s solution to this problem is to give effect to the statute’s explicit use of the disjunctive, because the innocent owner defense applies “after disposal or placement.294 The critical interpretive question is whether the disjunctive should be viewed either as two separate conditions, or as two different ways of describing the same condition.295

There is ample evidence to support the view that use of the word “placement” was not intended by Congress to create a different class of innocent landowner.296 Because the definition of “disposal” includes “placing,” the use of the word “placement” is redundant.297 If Congress actually meant for a “placement” alone to suffice, then there would have been no need to also condition the defense on “disposal,” because “disposal” occurs by definition when something is placed on the land.298

A better interpretation views the congressional reference to a period of time “after the disposal or placement of the hazardous substance” as proof that Congress viewed “disposal” as a discrete event, with fixed beginning and end points.299 Reading the phrase as a whole, it appears Congress was not creating a separate class of conduct (i.e., placement in and of itself) from which to measure liability, but was “viewing the process of disposal as being akin to the concept of placement, which requires an affirmative act . . . .”300 Thus, rather than support the passive definition, reference to “placement” is fur[*PG105]ther evidence that Congress intended “disposal” to require active human conduct.301

The active interpretation also makes sense of the fact that the innocent owner defense is apparently limited to current owners.302 As discussed in CDMG Realty, the passive interpretation creates a category of prior intermediate landowners who are in a significantly worse position than current owners, because while both groups are subject to liability, only the current owners are offered the possibility of establishing the innocent owner defense.303 This disparity would, in effect, create an irrational inequity between similarly situated landowners.304 The active interpretation avoids this potential inequality in so much as the intermediate landowners are no longer held liable.305

Carson Harbor’s rebuttal to this position is simply to assume that the innocent landowner defense is available to prior owners.306 Under this scenario, the active interpretation creates irrational distinctions of its own between current owners who are PRPs without regard to fault, and prior owners who would be immune from suit if they did not own the property during an act of disposal.307 Unfortunately, the court does not provide any reasoning as to why we are warranted in assuming that the innocent owner defense should be extended to prior owners, given the statute’s plain language to the contrary.308

Even granting the Ninth Circuit’s argument that the innocent owner defense is available to prior owners, it not clear that the passive [*PG106]interpretation is any more persuasive.309 The Second Circuit had already ruled that the innocent owner defense was available to prior owners when it examined the question of passive migration in Westwood Pharmaceuticals v. National Fuel Gas Distribution Corp.310 Nevertheless, the court found the other arguments presented in CDMG Realty convincing, and rejected the passive migration theory.311 Thus, even if the innocent landowner defense is applicable to prior landowners, it does not appear to be fatal to the active interpretation.

E.  Remedial Purposes of the Statute

Perhaps the strongest argument against the active disposal position in general, and CDMG Realty in particular, is that the active interpretation may not fully satisfy some of the remedial purposes of the statute.312 As the Ninth Circuit correctly recognized, one of CERCLA’s goals is to create a mechanism for the prompt cleanup of hazardous waste.313 An integral component of this mechanism is statutory encouragement of private cleanup of polluted sites.314 One of the main arguments against the active interpretation has been that it encourages landowners to sell potentially contaminated property without investigating the state of the land or, worse, knowingly sell contaminated property without disclosing defects to the buyer.315

[*PG107] The active interpretation has usually addressed this issue by examining the language of section 101(35)(C), which provides:

Nothing in this paragraph or in section 9607(b)(3) of this title shall diminish the liability of any previous owner or operator of such facility who would otherwise be liable under this chapter. Notwithstanding this paragraph, if the defendant obtained actual knowledge of the release or threatened release of a hazardous substance at such facility when the defendant owned the real property and then subsequently transferred ownership of the property to another person without disclosing such knowledge, such defendant shall be treated as liable under section 9607(a)(1) of this title and no defense under section 9607(b)(3) of this title shall be available to such defendant.316

Both Petersen Sand and CDMG Realty have interpreted the italicized part of section 101(35)(C) as preventing owners from escaping liability by knowingly transferring contaminated property.317 To these two courts, an owner’s knowledge of a “release or threatened release,” coupled with the failure to disclose such knowledge upon subsequent transfer of the property, would result in liability under section 107(a)(1).318 These courts reasoned that since 101(35)(c) provides a mechanism for liability to apply after the fact, no owner would attempt to evade liability by intentionally selling contaminated property without full disclosure.319

Closer analysis of section 101(35)(C) and its apparent restrictions on knowingly selling contaminated land indicate that the section could not apply as the two courts would wish.320 In the second sentence, Congress has limited the scope of the section only to a “defendant” under the act.321 In order to be a defendant, you would need to be classified as a PRP first.322 If, as Petersen Sand and CDMG Realty [*PG108]ruled, passive migration does not qualify as a disposal, then you are not a PRP. Once outside of CERCLA’s definition of a PRP, restrictions on reselling contaminated sites are inapposite.323 Read with this understanding, section 101(35)(C) is not a catch-all provision that imposes liability on past owners who sold their land without disclosing contamination, but is rather a limitation on the innocent owner defense to PRPs who did not have knowledge of contamination when they sold their property to a buyer.324 Because the active interpretation excludes past passive owners from the PRP definition, they must fall outside of any restrictions 101(35)(C) would otherwise introduce.

This loophole in CERCLA’s liability is regrettable, but not fatal. To the extent that this loophole may be a concern, it can largely be addressed by judicial consistency. If the case law is clear that section 101(35)(C) does not impose liability on intermediate landowners, then prospective purchasers would soon learn to investigate diligently the property they are considering purchasing or otherwise, to contract with the intermediate landowner for the contingency that waste may be discovered at some future date. If waste is discovered after an investigation of the land, the selling price will undoubtedly reflect that future liability. Simple due diligence on the part of the buyer effectively removes any incentive an intermediate landowner may have to try to pass off cleanup costs to a subsequent purchaser.

Further evidence that one should not read too much into this apparent gap in CERCLA’s coverage comes from Carson Harbor itself: the statute’s inherent inconsistencies create problems for either interpretation.325 The question comes down to crafting an interpretational approach to the issue that best adheres to congressional intent while, at the same time, recognizing that Congress may not have been fully clear itself what it intended.326 As the court stated in Petersen Sand:

We are enforcing a statute rather than modifying rules of common law . . . . To the point that courts could achieve “more” of the legislative objectives by adding to the lists of [*PG109]those responsible, it is enough to respond that statutes have not only ends but also limits. Born of compromise, laws such as CERCLA and SARA do not pursue their ends to their logical limits. A court’s job is to find and enforce stopping points no less than to implement other legislative choices.327

While courts adopting the passive interpretation have freely invoked the remedial nature of CERCLA to justify a broad interpretation,328 such an approach here leads to too many other statutory inconsistencies to be tenable. CERLCA may be inconsistent, but courts should certainly strive to harmonize as much of the statute as possible. Because the active interpretation successfully integrates more of CERCLA’s complex liability structure with its carefully chosen statutory definitions, it remains the better interpretation of “disposal.”

Conclusion

While the significance of the Carson Harbor decision should not be underestimated, its ultimate impact on the continuing passive disposal debate is hard to predict. Judge Fletcher offers a strong opinion that attempts to rebut as much of CDMG Realty as possible, but in reality breaks little new analytical ground and fails to address some of the active interpretation’s strongest arguments. Instead, the Ninth Circuit relies on CERCLA’s inherent inconsistencies to initially open the majority position to questioning, then finds the remedial purposes of the statute compelling in interpreting “disposal” broadly. As we have seen, however, such an interpretation simply pushes the statutory definitions and structure too far.

While commentators have called on the Supreme Court to grant certiorari to the passive disposal question,329 the Court has thus far refrained from entering the debate.330 Perhaps the Court believes that events of the eight years prior to Carson Harbor, which witnessed three circuits and the majority of district courts reject the passive interpretation, has conclusively answered the questions involved. The Ninth Circuit’s recent decision clearly shows that a true consensus has yet to develop. Carson Harbor, which had provided an excellent opportunity to repudiate fully the passive definition of “disposal,” has instead served as a platform for reopening the entire debate. The Supreme [*PG110]Court should grant certiorari to the next section 107(a)(2) case that comes up for review and answer the question of passive disposal, which has been asked for twenty-one years running.

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