State news: Potential Purchaser Liability

[Tony Chenhansa <tonyc@cpeo.org>]

The original author of this message was Peter Strauss.

-------- Original Message --------
Subject: Brownfields posting
Date: Fri, 09 Apr 1999 12:46:41 -0700
From: peter strauss <pstrauss@igc.apc.org>

Tony, 
Please post
Peter

I have just received news from a law firm that should be of interest to
everyone involved in environmental redemption and is very relevant to
Brownfields development.  It involves a case (K.C. 1986 Ltd. Partnership
v. Reade Manufacturing, WD Mo., No. 93-1062-CV-W-5, 9/16/98), in which
the court held that the "potential" purchaser is liable for cleanup
costs.  

In 1989, Hardee's entered into a  agreement with KC Partnership to lease
some property.  The lease permitted access to the site prior to the
commencement date to conduct an environmental investigation.  The
environmental consultant found soil and groundwater contamination, and
Hardee's terminated its lease agreement.  

In 1993, K.C. sued Hardee's after the Missouri Department of Natural
Resources ordered K.C. to clean up the property.  K.C.'s claim against
Hardee's is that Hardee's consultant, through its testing, increased the
rate of contaminant migration by cross contaminating aquifers.  In other
words, because it drilled a groundwater monitoring well that cut between
two aquifers, one which was contaminated, it increased the rate of
migration between the contaminated aquifer and the less contaminated
aquifer.  

Hardee's filed a motion for summary judgment. The court determined that
Hardee's was a potentially responsible party as defined by CERCLA
because it had control of the work of its environmental consultant. By
installing monitoring wells through soils known to be contaminated to
some degree had the potential to disturb that contamination, and thus
poses an issue of material fact best resolved at trial. Ultimately, the
the case was dismissed because there was no approved remedial action
plan.  (This is puzzling to me, but I assume that damages could not be
established). 

Regardless of the eventual outcome, becoming a potentially responsible
party (PRP) by the mere fact of performing an environmental
investigation may give developers of brownfields sites pause to consider
the risks.  Environmental consultants who perform site investigations
should have insurance, and developers should carefully review the
practices of their consultants.  This case also brings to mind the need
to make sure that the environmental consulting industry has an
up-to-date "best practices manual" that minimizes the possibility of
cross contamination during drilling, and may also invite the development
of innovative technology that can better achieve this.

Peter Strauss