A recent appellate court decision, arising from the transfer of property in Ohio, will help protect unknowing buyers from attempts by the EPA to impose cleanup liability on land purchasers.
Over two years after the reinspection, Ohio officials asked the EPA to become involved. An EPA inspector found approximately 400 drums of waste, and soil tests caused the EPA to institute removal action. In all, the EPA removed about 1,000 drums, of which 550 contained waste. The rest were empty. The EPA then sought to collect over $850,000 from the current land owner for the removal costs and damages. EPA even perfected a lien on the property, posing the possibility of a forced sale of the land to pay the costs.
The landowner defended on the basis that she did not own the property when the disposal occurred and had no knowledge that any hazardous materials were present. She maintained that after two inspections, the Ohio Environmental Protection Agency never told her of any hazard problem, and the situation was not obvious (the area was overgrown with tall grass and other vegetation). The lower court held for the EPA and said the current owner was responsible. The Court of Appeals, however, reversed and ruled that under the circumstances the current owner may not be liable. The appellate court asked the lower court to examine the evidence as to who knew what and when.
In the Ohio action, the EPA maintained that the current owners were responsible because they were "disposing" of hazardous waste onto the land after they acquired it. The EPA's theory was that the drums continued to leak after the property changed hands, and this was "disposal" under the statute. The Court of Appeals rejected the EPA's "passive movement of substances" argument and said that it did not constitute disposal. Other federal appellate courts have ruled the same way, rejecting the EPA's theory on leaks being the same as disposal.
The case demonstrates that EPA does not always win in court, but it also shows that property transfers may pose significant environmental liability problems. As some in the ceramic industry have already learned, careful investigation of past use and existing problems needs to be undertaken before any industrial or storage site is acquired. Purchasers may insist that sellers agree to bear the costs of any cleanups for problems discovered later.