Friday, July 29, 2005

Damages for Nothing

Some of the most interesting cases in environmental law arise when contamination does not occur. Two such cases came across my desk recently. In Doyle v. Town of Litchfield, 2005 WL 1342794 (D. Ct. May 31, 2005), Judge Hall held on a summary judgment motion that a property owner may be entitled to recover some CERCLA response costs even though his property had not been contaminated by the defendant's release of hazardous substances. The court cited Artesian Water Co. v. New Castle County, 851 F.2d 643 (3rd Cir. 1988), and Lansford-Coaldale Joint Water Auth. v. Tonolli Corp., 4 F.3d 1209 (3rd Cir. 1993), and concluded that a plaintiff may recover monitoring and evaluation costs under CERCLA, even if no contamination ever occurred.

A similar question was presented in Jaasma v. Shell Oil Co., No. 04-2095 (3rd Cir. June 28, 2005). There the plaintiff owned property that was leased for a service station. When the lessee removed its tanks shortly before the lease expired, some contamination was found in the tank pit and partially excavated. After more than two years of sampling and reporting, the New Jersey Department of Environmental Protection issued a no further action letter, without ordering any further active remediation, which implied that the contamination that remained at the lease expiration (i.e., after the tank removal and excavation) had always been below the level requiring cleanup. The Third Circuit held that despite these facts the lessor was entitled to damages. The lease required lessee to return the property to lessor in its "original state," and, the court held, that there was a question of fact whether lessee was required to obtain a no further action letter in order to satisfy that requirement.

While the Town of Litchfield could not have avoided Doyle's claim, the claim in Jaasma resulted entirely from the language of the lease. While perhaps no one could have anticipated the Third Circuit's ruling, it is something to keep in mind the next time that you are reviewing the environmental provisions of a lease.


Anonymous said...

Jaasma v. Shell Oil Co - Page 5 of the ruling states: "The Remediation Investigation Report also stated that nearly 6,500 tons of soil were removed from the property as part of excavation activities and replaced with clean fill"

Based on this, your statement "...which implied that the contamination that was caused by the lessee had always been below the level requiring cleanup." seems questionable.

Morgan Gilhuly said...

Thanks for the comment. My point is that at all times after the expiration of the lease, the data showed that all contamination was below regulatory levels. The opinion notes that samples taken from the closing of the lease until closure were always below regulatory levels, and on page 6 states: "Jaasma does not dispute that contaminant levels in the soil and groundwater were, with 20/20 hindsight, compliant with environmental standards during the period between October 31, 2001, and February 18, 2004." To the extent my post was unclear, I've corrected it to note that the levels "after the tank removal and excavation" were below regulatory levels.

Anonymous said...

You have partially clarified the situation. Your remaining phrase "without any active remediation"; however, suggests there was no active remediation at any time. Isn't removal of 6,500 tons of soil "active remediation"?

Morgan Gilhuly said...

I have made further edits. Your comments and my edits have clarified this point.