Courts Split Over Liability of Former Operators Under RCRA

A judge in the Northern District of Georgia recently allowed a RCRA[1] complaint to proceed against a former property management company. Scarlett & Associates, Inc. v. Briarcliff Center Partners LLC.[2]The decision is directly at odds with another decision issued earlier this year, La Plata County Board v. Brown Group Retail, Inc.,[3] in which the District of Colorado rejected a similar claim on the basis that the RCRA statute did not apply to past operators.[4]

While the Scarlett court based its decision on the existence of disputed material facts, its extensive citation of authority running contrary to that relied upon in La Plata highlights a split in the federal courts on this issue, with the Second Circuit having rejected claims against former operators and district courts within the Sixth (N.D. Ohio), Seventh (N.D. Illinois; E.D. Wisconsin), and Ninth Circuits (E.D. Cal.) all issuing contrary opinions, setting up the possibility of a circuit split on this issue.

Factual Background

The contamination that generated the dispute in Scarlett came from a dry cleaner housed within the Briarcliff Station Shopping Center in DeKalb County, Georgia. In 1995, the lessee of the shopping mall hired Faison and Associates, LLC (“Faison”) as a property manager for the shopping center. Faison served as the property manager from September 1995 through September 1997.

Site investigations revealed the presence of tetrachloroethene or “PCE” at the site. In 1996, the Georgia Environmental Protection Division (“GPED”) placed the shopping center on the Georgia Hazardous Waste Site Inventory, and directed the plaintiff, Scarlett and Associates, Inc. and other entities to perform a site investigation and clean up the contamination. Scarlett sought cost recovery against Faison and others as owners and operators under RCRA, CERCLA,[5] Georgia’s Hazardous Site Response Act (“HSRA”),[6] and various other state common law claims.

Under Scarlett, a Former Property Manager Faces Potential Liability under RCRA

Scarlett maintained that Faison: (1) was operating a hazardous waste treatment, storage, or disposal facility in violation of RCRA, and (2) that Faison was an operator who had contributed to the solid or hazardous wastes at the site “which may present an imminent and substantial endangerment to health or the environment.”[7] The court dismissed the second claim, based on a failure to produce evidence showing that Faison had “contributed” to the handling, storage, treatment, transportation, or disposal of the PCE at the dry cleaning operation. The court refused to grant summary judgment on Scarlett’s § 6972(a)(1)(A) claim.

Under 42 U.S.C. § 6972(a)(1)(A), a citizen may sue any person (including a government agency) who is “alleged to be in violation” of a RCRA permit or other requirement. Courts have interpreted § 6972(a)(1)(A) to require that, at the time litigation is commenced, the defendant be engaged in a “continuous or ongoing violation” of a RCRA permit or other requirement.[8] Faison had not been connected to the shopping center since 1997, when it ceased management of the property. Nevertheless, Scarlett asserted that Faison was “operating” a facility at the time that Scarlett commenced the lawsuit, based on the continued presence of the PCE contamination at the site.[9]

As an initial matter, the court concluded that Faison may be liable as an operator under CERCLA, even though its “operation” consisted of the relatively generic tasks of: (1) correspondence ensuring tenants’ compliance with the EPA’s hazardous waste management requirements, and (2) responsibility for ensuring tenants’ compliance with applicable statues and regulations.[10] Having already determined that such conduct might suffice to make Faison an operator under CERCLA,[11] the court concluded that there was a genuine issue with respect to this same issue under RCRA.[12]

The court then turned to the question of whether Faison was operating a hazardous waste treatment, storage, and disposal facility “in violation” of a RCRA permit or requirement under § 6972(a)(1)(A).[13] The court acknowledged that Faison’s involvement at the shopping center ended on or about 1997. Regardless, the court concluded that a former operator was potentially liable for a continuous or ongoing violation if it failed to remedy past contamination or comply with regulations in connection with past contamination – particularly when the contamination had been shown to be migrating.[14] In support of this conclusion, the court noted that “many courts have concluded that the failure of a past owner or operator to remedy past contamination … can constitute a continuous violation under § 6972(a)(1)(A).”[15]

Scarlett presented evidence that the PCE plume had been continuously migrating and expanding since it was first discovered in the early to mid 1990s. The court also pointed to evidence that there were active ongoing releases of hazardous substances from the operation of the dry cleaning facility during the time period that Faison managed the Shopping Center. Finally, the court concluded that there was no dispute that the PCE contamination had not been cleaned up or that the environmental damage had been sufficiently remedied. Therefore, the court held that the genuine dispute of fact as to whether Faison is liable as an operator in violation of RCRA precluded the entry of summary judgment in favor of either Scarlett or Faison on the RCRA claim, “notwithstanding the fact that Faison ceased its involvement at the Shopping Center on or about September 1, 1997.”[16]

Under La Plata, Past Owners and Operators Cannot Be Held Liable Under RCRA

The decision in Scarlett stands in direct opposition to the Colorado District Court’s decision this past February in La Plata County Board v. Brown Group Retail, Inc.[17] In La Plata, the district court explicitly rejected an argument that a former operator could be liable for the continued presence of unremediated hazardous waste at a site when the operator was no longer associated with the site operations.[18] Because a former owner or operator had “no control over the pollution source,” the court held that the former owner no longer had the ability to “bring itself into complete compliance.”[19] In reaching its decision, the court relied heavily the Second Circuit’s decision in Connecticut Coastal Fishermen’s Ass’n v. Remington Arms Co.,[20] as well as case law involving identical language in a Clean Water Act citizen suit provision.[21]

The court held that because the defendant did not own the property when the plaintiffs brought suit and the defendant’s alleged RCRA violations had ceased in 1983, dismissal of the § 6972(a)(1)(A) claim was appropriate because the plaintiffs were asserting a “wholly past” violation.[22]

“Mixed Result” Creates Potential Circuit Conflict

The court in La Plata acknowledged that the question of “whether a prior violation that remains unremedied may form a basis for a citizen suit under Section 6972(a)(1)(A)” had met with “mixed results in the federal courts.”[23] The Scarlett opinion did not address La Plata’s reasoning regarding § 6972(a)(1)(A) directly; however, it did note La Plata’s holding in its discussion of whether the continuous migration of contamination represented a continuing violation for purposes of RCRA’s statute of limitations.[24] The Scarlett court was apparently unmoved by the distinction between former and present owners and operators that played a prominent role in the La Plata decision’s reasoning.

La Plata expressly relied on a decision from the Second Circuit[25] which rejected RCRA claims against former operators, while acknowledging (but rejecting the reasoning of) contrary authority from other district courts supporting the reasoning adopted in Scarlett.[26] For its part, the court in Scarlett relied on these cases, as well as a number of other district court opinions based on similar reasoning.[27]

For more information on the decision, contact Russell Prugh, Steve Jones or any member of our Waste Cleanup practice group.