ELR Citation: ELR 20079
No(s). WN 90-661 (D. Md. Aug 15, 1991)

The court rules on the liability of various defendants in a private Comprehensive Environmental, Response, Compensation, and Liability Act (CERCLA) action to recover costs for releases at seven underground storage tanks (USTs) on plaintiff's property. The court first holds that the site is a "facility" under CERCLA because hazardous substances have come to be located on the property. The court also holds that there has been a release or threatened release at the site and that the release or threatened release caused the plaintiff to incur response costs. The court notes that §107 does not require the plaintiff to show that the defendant's conduct caused the plaintiff to incur response costs, but only that the release or threatened release caused the incurrence of response costs.

The court next addresses whether the defendants that previously owned the site are liable under CERCLA §107(a)(2) as owners or operators. The court holds that a company that owned and operated the site from 1905 to 1963 qualifies as an owner/operator. This company ran a textile manufacturing operation and used USTs to store solvents and chemicals. The court holds that two former corporate officers of this company are not personally liable as owner/operators. The court adopts the test for corporate officer liability under CERCLA that looks to the individual's authority to control a facility's waste disposal activities. The court notes that its conclusion would be the same under this test or the "prevention test," which asks whether the individual could have prevented the hazardous waste discharge. Both individuals worked as salesmen for the company, but worked and lived outside the area where the plant was located. Although they were board members and became vice presidents in 1963 when they returned to work at the plant, neither participated in the finishing plant operations prior to 1969 or had the authority to exercise control over plant operations. Further, these defendants could not have prevented the abandonment of the USTs and the disposal of hazardous substances at the site. The court also holds that the president and principal stockholder of both the company that owned the parcel from 1963 to 1964 and the company that owned the site from 1964-1976 is liable as a CERCLA owner/operator. This defendant was actively involved in the day-to-day operations of companies he owned and controlled. He was aware of the USTs and the need to empty them and had the authority to properly dispose of the hazardous substances in the USTs. Even assuming that this defendant could not influence his tenants' waste disposal activities, absentee landlords can be held liable under CERCLA §107(a)(2). The court holds that an individual that was both a legal and equitable owner of the site prior to its sale to the plaintiff in November 1976 is liable as a prior owner under CERCLA.

The court next addresses whether other defendants associated with the site are liable under CERCLA §107(a)(2) as owners or operators. The court holds that a moving and storage company that leased a building on the site from 1966 to 1979 and its president/sole shareholder are not liable under CERCLA as former operators. Although tenants may be liable under CERCLA, these defendants did not have sufficient control over, or participation in, the disposal of hazardous substances at the site. The defendants' mere access to the USTs, without more, is insufficient to establish operator liability. The court also holds that these defendants are not liable for negligence under Maryland common law. The court holds that a company that occupied a building on the site for nine months while it installed cabinets and other materials is not liable under CERCLA. The court holds that a company that occupied a portion of an off-site building from 1968 to 1978 to assemble and store doors and windows is also not liable under CERCLA.

The court next holds that the company that owned the site from 1905 to 1963, which qualifies as an owner or operator under CERCLA §107(a)(2), is liable under CERCLA because it deposited hazardous substances into the USTs during its ownership of the site. The company's subsequent sale of the USTs and the site does not reverse the company's disposal of hazardous substances. However, the court holds that this company is not liable as an operator for the period beginning in 1966 when it leased two buildings on the site and conducted finishing operations. The company did not actively dispose of hazardous substances at the site during its operation of the two buildings. The court holds that the two individual defendants that qualify as prior owners or operators are not liable under CERCLA because there is no evidence that either actively disposed of hazardous substances during their ownership or operation. The court next rules that equitable defenses cannot be asserted in a private cost recovery action under CERCLA. The defenses provided in CERCLA §107(b) are exclusive. The court grants plaintiff's motion to bifurcate the issues of liability and damages. Bifurcation of the issues of liability and consistency with the national contingency plan (NCP) is appropriate where the record does not permit a determination of NCP consistency when the motion for summary judgment is filed or where the plaintiff seeks only a declaration of the defendant's liability for future costs incurred consistent with the NCP.

Counsel for Plaintiff
William Toole
Piper & Marbury
36 S. Charles St., Ste. 1100, Baltimore, MD 21202
(301) 539-2530

Counsel for Defendant
Pamela White
Ober Kaler Grimes & Shriver
120 E. Baltimore St., Baltimore MD 21202
(301) 685-1120