United States v. 150 Acres of Land

• Court: Court of Appeals for the Sixth Circuit
• Decided: January 20, 2000
• Docket: 98-3160
• Status: Published

Opinion

RECOMMENDED FOR FULL-TEXT PUBLICATION Pursuant to Sixth Circuit Rule 206 ELECTRONIC CITATION: 2000 FED App. 0033P (6th Cir.) File Name: 00a0033p.06

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _________________

;  UNITED STATES OF AMERICA,  Plaintiff-Appellee,   No. 98-3160 v.  > 150 ACRES OF LAND, More or    Less, Located in Medina

Defendant-Appellant.  County, Ohio,  1

Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 95-01009—Solomon Oliver, Jr., District Judge. Argued: April 29, 1999 Decided and Filed: January 20, 2000 Before: JONES, BOGGS, and COLE, Circuit Judges. _________________ COUNSEL ARGUED: David S. Hoffmann, McMAHON, DeGULIS & HOFFMAN, Cleveland, Ohio, for Appellant. Jared A. Goldstein, U.S. DEPARTMENT OF JUSTICE, LAND & NATURAL RESOURCES DIVISION, Washington, D.C., for

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Appellee. ON BRIEF: David S. Hoffmann, McMAHON, property into appropriate units based on reasonable divisions DeGULIS & HOFFMAN, Cleveland, Ohio, for Appellant. and the bounds of contamination present on the property. In Jared A. Goldstein, James D. Freeman, U.S. DEPARTMENT the present case, I would hold that the facility is limited to OF JUSTICE, LAND & NATURAL RESOURCES Parcel 1, based on the divisibility of the property into natural DIVISION, Washington, D.C., for Appellee. units and the admission that no contamination was found outside of Parcel 1, and thus I would hold that the lien is BOGGS, J., delivered the opinion of the court. JONES, J. proper only as it pertains to Parcel 1. (p. 23), delivered a separate concurring opinion. COLE, J. (pp. 24-27), delivered a separate opinion concurring in part For the foregoing reasons, I respectfully DISSENT from and dissenting in part. Part II. C. of the majority opinion. _________________ OPINION _________________ BOGGS, Circuit Judge. The federal Environmental Protection Agency (“EPA”) sued the Glidden Co. in personam and certain land owned by various members of the Bohaty family in rem under the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., in connection with costs incurred in removing toxic wastes found on the land. Glidden settled with the EPA for a small fraction of the clean- up costs, and the Bohatys and the government cross-moved for summary judgment. The district court granted summary judgment for the government, thereby perfecting a lien on the property under 42 U.S.C. § 9607(l)(1). The Bohatys now appeal the judgment of the district court ordering the sale of the land and directing that the proceeds be used to satisfy the lien on the property. We reverse the judgment of the district court in part, affirm in part, and remand the case for further proceedings. I The land in question is approximately 150 contiguous acres of real estate in three parcels, located on Pearl Road in Medina County, Ohio. It has been owned “for at least three generations” by the Bohaty family, which has operated a farm-equipment repair business at the extreme western edge. 26 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 3

389, 395-96 (E.D. Va. 1994) (stating that what “matters for According to the district court’s opinion, at the present time, the purpose of defining the scope of the facility is where the Ethel Bohaty owns a 37/45 interest, and John Bohaty, Jr., hazardous substances were . . . disposed of . . . or have Barbara Bohaty, Belinda Bohaty, and Susan Bohaty each own otherwise come to be located” and “the uncontradicted record a 2/45 interest in the land. Each interest was entirely inherited confirms that hazardous substances exist . . . in all quadrants except for that part of Ethel Bohaty’s interest that is 12/45 of of the property”) (footnotes and internal quotations omitted). the land, which she purchased from relatives whose interests In essence, the scope of contamination determined the scope descended at the same time as her husband’s. Ethel’s father- of the facility. in-law, John Bohaty, died on April 12, 1982, leaving one-half interest in the property to her husband Vencel (John), the Conversely, where the Fourth Circuit found that interests now owned by John, Jr., Barbara, Belinda, and Susan contamination was not widespread, the court limited the to them, and the remainder to three other relatives. On “facility” to include only the area where hazardous substances January 27, 1984, Vencel died, leaving his entire interest to were located. See, e.g., Nurad, Inc. v. William E. Hooper & Ethel. On February 15, 1985, the three other relatives or their Sons Co., 966 F.2d 837, 843 (4th Cir. 1992) (stating that “the heirs sold their interests to Ethel. only ‘area’ where hazardous substances [had] ‘come to be located’ was in and around the storage tanks, so the relevant On March 30, 1987, the local fire department noticed ‘facility’ [was] properly confined to that area”). numerous fifty-five gallon drums on the property and notified the Ohio Environmental Protection Agency (“OEPA”). This case presents land that is geographically distinct and OEPA visited the property and noted approximately 300 while used in part as a dumping site, is admittedly not abandoned drums containing paint waste, laboratory contaminated in its entirety. It is clear that no contamination chemicals, and red sludge. OEPA’s toxicity tests were was discovered outside of Parcel 1. Following this court’s negative. Ethel Bohaty stated that she asked the inspectors to approach in Brighton and applying § 9601(9)(B), the facility inform her if the drums posed a problem, and that she did not under these facts should be limited to Parcel 1; the area of the hear from them. entire contamination that is reasonably and naturally separable from Parcels 2 and 3. On August 17, 1989, OEPA again inspected the property in connection with the City of Medina’s appropriation of four Where the contamination is confined to a single parcel and acres for road construction. The inspection was not related to there is no indication that dumping has occurred on connected the 1987 inspection. Ethel Bohaty expressed her desire to get parcels, this court should look to the metes and bounds of the rid of any toxic substances that might be found. The contamination as a measure, at least in part, when defining the inspectors found 200–300 drums, some of which were cause scope of the “facility” under 42 U.S.C. § 9601(9). Cf. for concern, and five underground storage tanks; they Brighton, 153 F.3d at 313 (relying on scope of suggested a follow-up inspection in the fall, when the contamination); Axel Johnson, Inc., 191 F.3d at 418-19 vegetation would be less dense. The inspectors concluded, (examining scope of contamination and divisibility of land); from historical aerial photographs, that organized drum Nurad, Inc., 966 F.2d at 843 (relying on scope of placement had occurred from the mid-1950s through the early contamination). If we are to apply the statutory language 1970s. Ethel Bohaty stated that the inspectors did not tell her defining the “facility” under § 9601(9) and follow the that the drums contained hazardous materials or that she teachings of Brighton with respect to limiting the “facility” at should remove them or take other precautions, and that OEPA all, this case presents a clear opportunity to divide the 4 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 25

did not contact her further regarding the August 1989 records, were transferred on the same land deed, and were inspection. maintained in similar undeveloped states. These factors are not determinative of the bounds of the facility. The words of On September 16, 1991, OEPA requested assistance from the statute direct our inquiry to the determination of the the federal EPA. In October 1991, the EPA asked to inspect bounds of the “site or area where a hazardous substance has the property. On October 8, 1991, EPA inspectors conducted been deposited, stored, disposed of, or placed, or otherwise a preliminary inspection that identified approximately 400 come to be located.” 42 U.S.C. § 9601(9)(B). The case law drums. Later that afternoon, the inspectors took soil samples conforms to this directive. from various parts of the property. Laboratory analysis revealed that each of the samples exhibited flashpoints of less In Brighton, this court determined that the entire property than 130 degrees Fahrenheit, therefore posing an ignitability was the “facility” in part because “it appear[ed] that the entire hazard, as well as substantially acidic pH values. The EPA property was operated together as a dump.” 153 F.3d at 313. considered these results sufficient to justify a removal action Judge Moore, concurring in the result in Brighton, concluded under 40 C.F.R. § 300.415(b)(2). that the entire property was the facility because § 9601(9)(B) defined a “landfill” in its entirety as constituting a “facility” The government presented evidence that Vencel Bohaty, and this court did not need to decide the bounds of the Ethel’s husband (now deceased) knew of the dumping and contamination under § 9601(9)(B) to designate the entire may have profited from it.1 The living Bohatys presented property as the facility. Id. at 323 (Moore, J. concurring in unrebutted evidence that they did not know of the presence of result). Thus, in Brighton this court reasoned that land which drums on the property, other than those used in the farm- was used overall as a dumping site – thus, the land was equipment repair business. Except for the extreme western widely contaminated – and was not geographically distinct edge of the property, the land was heavily vegetated, could not be divided into reasonable or natural separate especially the area containing the drums. In fact, EPA facilities. See id. at 313 (Judge Boggs’s reasoning on defining inspectors often could not see the drums until they stumbled the scope of facility), 323 (Judge Moore’s concurrence relying on them. on statutory language to define “facility”). On December 16, 1991, the EPA sent John and Ethel Similarly, courts faced with widely contaminated land have Bohaty a notice of potential liability asking them to agree to refused to divide the land into separate facilities even when pay for the response activities. The notice requested a divisible into separate units. See, e.g., Axel Johnson, Inc. v. response within five days. The Bohatys did not respond to the Carroll Carolina Oil Co., 191 F.3d 409, 418-19 (4th Cir. notice. 1999) (holding that widespread contamination scattered throughout the property prevented limiting the facility to the On January 15, 1992, the EPA began a removal operation particular functional units simply because the property could on the property. Altogether, approximately 1000 drums were be divided into those units); Akzo Coatings, Inc. v. Aigner removed, of which approximately 550 contained waste and Corp., 960 F. Supp. 1354, 1358 (N.D. Ind. 1996) (rejecting the argument that because the “Site can be divided into five distinct geographic areas, each area is a distinct facility” and 1 The EPA regional judicial officer found that the Bohatys had raised holding that hazardous waste had “otherwise come to be credibility issues concerning several affidavits and depositions proffered located in several locations at the Site”); Northwestern by the government in support of this claim “that defeat their usefulness to Mutual Life Ins. Co. v. Atlantic Research Corp., 847 F. Supp. the EPA.” 24 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 5

_______________________________________________ approximately 450 were empty. The removal was completed on May 7, 1992. The estimated cost under control of the on- CONCURRING IN PART, DISSENTING IN PART scene coordinator was $652,720. The district court ultimately _______________________________________________ determined that the costs and damages incurred by the government were $854,426.87. The Bohatys assert that a large underground storage tank was removed, although the R. GUY COLE, JR., Circuit Judge, Concurring in Part and on-scene coordinator’s report does not indicate such activity. Dissenting in Part. I concur in the majority’s decision in Parts II. A, B, D and E. Because I believe that Parcel 1, the parcel The removal activities were confined to Parcel 1 of the at issue, is geographically separable by a reasonable and property. The EPA inspected Parcels 2 and 3 visually and natural division from the multiple non-contaminated parts, I with a magnetometer for surface and subsurface drums, and find that Parcel 1 is the appropriate facility under 42 U.S.C. found nothing to remove. § 9601(9)(B). Therefore, I respectfully DISSENT from Part II. C of the majority’s opinion. On May 5, 1995, just before the three-year statute of limitations expired, see 42 U.S.C. § 9613(g)(2)(A), the As Judge Boggs noted in United States v. Township of government brought an in personam action against the Brighton,1 “a facility should be defined at least in part by the Glidden Company and an in rem action against the Bohatys’ bounds of the contamination.” 153 F.3d 307, 313 (6th Cir. three parcels of land to recover the cost of the removal 1998). In Brighton, Judge Boggs reasoned that an area that activity. The government executed a consent agreement with cannot be reasonably or naturally divided into multiple parts Glidden resolving the claims against Glidden for $60,000, or functional units should be defined as a single facility, even leaving the Bohatys as the only defendants in this action. See if it contains parts that are non-contaminated. See id. at 313. 61 Fed. Reg. 29763. The government and the Bohatys both Conversely, where property is reasonably and naturally moved for summary judgment. On September 30, 1997, the divisible into contaminated and non-contaminated parts, a district court granted the government’s motion, denied the court can limit the facility to the contaminated portions of the Bohatys’ motion, and entered judgment “for the Plaintiff and property. In this case, the evidence shows that the three against the Defendants.” The Bohatys appealed to this court, parcels have distinct legal descriptions and can be reasonably but voluntarily dismissed their appeal without prejudice, divided into multiple parts, separating the contaminated from apparently on the ground that the order entered by the district the non-contaminated parts. court was not a final judgment. The government, unopposed by the Bohatys, then moved the district court to modify its The majority emphasizes the fact that the parcels were order and judgment entry. On January 26, 1998, the district never considered separate for any purpose other than land court granted the motion and entered both an order modifying its previous judgment and order and a concurrent order of sale. Enforcement of the orders is stayed pending this appeal. 1 The Brighton court produced a divided opinion where Judge Boggs wrote for the court, Judge Moore concurred only in the result and Judge In related proceedings, on February 13, 1996, the EPA Dowd concurred in part and dissented in part. 153 F.3d 307 (6th Cir. issued a de minimis order on consent addressing the potential 1998). In sum, the reasoning of the Brighton court differs according to liability of nine parties with regard to the Bohaty property. 61 the opinion of each of Judge, while the result is the product of the court. Accordingly, references to the Brighton opinion refer to the reasoning of Fed. Reg. 5550. Ashland Chemical Company, Dow Chemical the individual Judges where appropriate and not to the reasoning of the Company, General Motors Corporation, Quaker Oats court. 6 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 23

Company, State Chemical Manufacturing Company, Inc., ________________________ Synthetic Products Company, Uniroyal Chemical Company, Inc., and Upjohn Company were each assessed $1,050 in CONCURRENCE satisfaction of past and future claims connected with the ________________________ Bohaty site. Ibid. NATHANIEL R. JONES, Circuit Judge, concurring. While II I agree with the majority that the district court’s construction of “disposal” for the purposes of 42 U.S.C. § 9601(35)(A) is A. The Structure of the CERCLA Defenses overly expansive, the majority’s interpretation is too narrow. The majority limits “disposal” to “spills occurring by human The basic liability structure under CERCLA is set forth at intervention.” Ante at ___. This language seemingly restricts 42 U.S.C. § 9607(a): “disposal” to occasions where property owners release toxic substances themselves, or actively participate in exacerbating Notwithstanding any other provision or rule of law, existing spills. The result is to potentially provide unjustified and subject only to the defenses set forth in subsection cover for spectator polluters, who are aware of past and (b) of this section— ongoing toxic releases, yet do nothing to remedy them. (1) the owner and operator of a . . . facility, [and] Accordingly, I construe “disposal” under § 9601(35)(A) to (2) any person who at the time of disposal of any encompass spills produced by human agency, including those hazardous substance owned or operated any facility at precipitated by willful neglect. This construction conveys the which such hazardous substances were disposed of, “active” component of “disposal,” yet still provides room for . . . shall be liable for— actions that are not affirmatively interventionist, but (A) all costs of removal or remedial action incurred by sufficiently assertive to fall outside the bounds of the the United States Government or a State or an Indian CERCLA defense regime. I concur in the court’s judgment tribe not inconsistent with the national contingency plan; and in all other aspects of Judge Boggs’ opinion. .... Ibid. The CERCLA defenses are: (b) Defenses There shall be no liability under subsection (a) of this section for a person otherwise liable who can establish by a preponderance of the evidence that the release or threat of release of a hazardous substance and the damages resulting therefrom were caused solely by— .... (3) an act or omission of a third party other than an employee or agent of the defendant, or than one whose act or omission occurs in connection with a contractual relationship, existing directly or indirectly, with the defendant . . . , if the defendant establishes by a preponderance of the evidence that (a) he exercised due 22 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 7

government’s actions. The Bohatys have not presented care with respect to the hazardous substance concerned, evidence that filing the lawsuit influenced the RJO’s decision; taking into consideration the characteristics of such in addition, the lawsuit itself may be construed as part of the hazardous substance, in light of all relevant facts and process afforded to the Bohatys. The district court is correct. circumstances, and (b) he took precautions against The Bohatys received sufficient due process. foreseeable acts or omissions of any such third party and the consequences that could foreseeably result from such III acts or omissions. The Bohatys have raised a genuine issue of material fact as 42 U.S.C. § 9607(b). The CERCLA definitions state: to each element of the CERCLA “innocent landowner” defense, and are therefore entitled to have that defense survive (35)(A) The term “contractual relationship”, for the summary judgment. They have not, however, raised a purpose of section 9607(b)(3) of this title, includes, but genuine issue of material fact as to whether any lien that may is not limited to, land contracts, deeds or other be proper covers Parcels 2 and 3, the district court’s finding instruments transferring title or possession, unless the on the amount of costs that are recoverable if liability is real property on which the facility concerned is located established, or the due process claim. was acquired by the defendant after the disposal or placement of the hazardous substance on, in, or at the For the foregoing reasons, the judgment of the district court facility, and one or more of the circumstances described with respect to the innocent landowner defense is in clause (i), (ii), or (iii) is also established by the REVERSED and the case is REMANDED to the district defendant by a preponderance of the evidence: court for further proceedings consistent with this opinion. (i) At the time the defendant acquired the facility the The judgment of the district court is AFFIRMED in all other defendant did not know and had no reason to know that respects. any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the facility. .... (iii) The defendant acquired the facility by inheritance or bequest. In addition to establishing the foregoing, the defendant must establish that he has satisfied the requirements of section 9607(b)(3)(a) and (b) of this title. (B) To establish that the defendant had no reason to know, as provided in clause (i) of subparagraph (A) of this paragraph, the defendant must have undertaken, at the time of acquisition, all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability. For purposes of the preceding sentence the court shall take into account any specialized knowledge or experience on the part of the defendant, the 8 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 21

relationship of the purchase price to the value of the Furthermore, there is no evidence in the record that removing property if uncontaminated, commonly known or the empty drums raised the costs significantly. There is also reasonably ascertainable information about the property, no evidence in the record on appeal that an underground tank the obviousness of the presence or likely presence of was removed. Nor is there evidence that the empty drums contamination at the property, and the ability to detect would have been accepted by an ordinary landfill, or that such such contamination by appropriate inspection. disposition would have been less costly than the actual .... disposition. Accordingly, the decision of the district court as (D) Nothing in this paragraph shall affect the liability to the amount of the cleanup costs is affirmed. under this chapter of a defendant who, by any act or omission, caused or contributed to the release or E. Due Process threatened release of a hazardous substance which is the subject of the action relating to the facility. Relying on Reardon v. United States, 947 F.2d 1509 (1st Cir. 1991), the Bohatys argue that the lien on their property 42 U.S.C. § 9601. violates their Fifth Amendment due process rights. The district court agreed that the lien deprived the Bohatys of a Based on these provisions, the framework for considering significant property interest, but held that the Bohatys were the Bohatys’ liability is this: The present owners of a afforded sufficient due process. The district court was “facility” are liable for the costs incurred in removing toxic correct. substances from the facility, unless To determine what process is due, we consider (1) the (1) they can establish by a preponderance of the evidence private interest that will be affected by the official action; (2) that the “release” of the substances and the damages the risk of an erroneous deprivation of such interest through resulting from the release were caused solely by an act or the procedures used and the probable value, if any, of omission of a third party who was neither additional or substitute safeguards; and (3) the government's (a) the present owners’ employee nor interest, including the function involved and the fiscal and (b) someone who was in a contractual relationship administrative burdens that the additional or substitute with the owners; procedural requirement would entail. See Mathews v. and Eldridge, 424 U.S. 319, 335 (1976). (2) the owners (a) exercised due care with respect to the substances, The district court found that the risk of erroneous in light of all relevant facts and circumstances, and deprivation was minimal because the Bohatys were given (b) took precautions against the foreseeable actions both notice of the government’s intent to perfect the lien and and omissions of third parties. a hearing before the EPA Regional Judicial Officer (“RJO”). The Bohatys argue that due process was not satisfied because The statutory definitions state, non-exclusively, that the the RJO is an EPA employee and because the lawsuit now following contractual relationships satisfy (1)(b) above and before this court was filed before the RJO issued her decision. thus create liability for owners: land contracts, deeds, or other The RJO was sufficiently institutionally isolated to satisfy due instruments transferring title or possession, unless process, see 5 U.S.C. § 554(d); Withrow v. Larkin, 421 U.S. 35, 56 (1975), and the need to file this lawsuit before the statute of limitations expired constituted an exigent circumstance sufficient to excuse the timing of the 20 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 9

(e) The following removal actions are, as a general (i) the present owners acquired their interest in the real rule, appropriate in the types of situations shown; property on which the facility is located after the however, this list is not exhaustive and is not intended to “disposal” or “placement” of the substances, and prevent the lead agency from taking any other actions (ii) the present owners deemed necessary under CERCLA, CWA section 311, or (A) did not know, and had no reason to know, after other appropriate federal or state enforcement or response “all appropriate inquiry,” of the substances, or authorities, and the list does not create a duty on the lead (B) acquired their interests by inheritance or bequest. agency to take action at any particular time: .... Thus, present owners who acquired their interests by (7) Removal of drums, barrels, tanks, or other bulk inheritance or bequest can avoid liability without having containers that contain or may contain hazardous undertaken “all appropriate inquiry” with respect to the substances or pollutants or contaminants—where it will “disposal” or “placement” by third parties of hazardous reduce the likelihood of spillage; leakage; exposure to substances on the land before they acquired it. However, they humans, animals, or food chain; or fire or explosion; must have exercised due care with respect to the substances, in light of all relevant facts and circumstances, and taken 40 C.F.R. § 300.415 (emphasis added). precautions against the foreseeable actions and omissions of third parties, while they have owned the land. Present owners The question for decision, then, is whether removing the who acquired their interests by land contracts, deeds, or other empty drums is “not inconsistent with” the provisions of 40 instruments transferring title or possession, and not by C.F.R. § 300.415 set forth above. Absent evidence that there inheritance or bequest, must also have undertaken “all were sufficient residual materials on the drums to constitute appropriate inquiry” when they acquired the property to avoid a threat to the public health or welfare, removing the empty liability. drums cannot be said to advance or promote the goals of the NCP. However, even3 if strict logical inconsistency is not The 12/45 interest that Ethel Bohaty bought from the three what the NCP means, Congress did not say that costs must other relatives was transferred by quit-claim deed, and was advance or promote the NCP to be recoverable. The general not an inheritance or bequest. On first consideration, it tenor of the NCP is permissive—the lead agency may take appears that for this interest to avoid liability, Ethel must any appropriate action, including those on a list that is show that she undertook “all appropriate inquiry” when she expressly not exhaustive and that includes removal of drums bought it. But see infra at 14-15. The remaining 33/45 that “may contain” hazardous substances. Arguably, drums interest can avoid liability if the Bohatys establish by a that are known to be empty are not drums that “may contain” preponderance of the evidence that (1) the “disposal” or hazardous substances. However, the generally permissive “placement” occurred before 1982, (2) the “release” of the nature of the NCP, together with the apparent reasonableness substances and the damages resulting from the release were of removing the empty drums, should be decisive. caused solely by an act or omission of a third party (i.e., that they did not “cause or contribute to” the release, and (3) they exercised due care with respect to the substances, in light of 3 If the NCP does mean strict logical inconsistency, then the EPA all relevant facts and circumstances, and took precautions could charge landowners for building an expensive sculpture on the land against the foreseeable actions and omissions of third parties (assuming the sculpture were not itself a threat to health or welfare). since they have owned the land. Presumably, this is absurd and compels a different interpretation of “inconsistent.” 10 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 19

The Bohatys concede that they are the owners of the constitutes a “reasonable or natural” division into multiple property, and thus that they are potentially responsible parties parts. under § 9607(a)(1); they dispute that they are potentially responsible parties under § 9607(a)(2), as the government We hold that it does not. There is no evidence in the record argues, because they contend that no “disposal” of hazardous that the parcels were, at any relevant time, considered substance has occurred while they owned the property. The separate for any purpose other than the land records. They Bohatys also concede that a “release” of “hazardous were transferred on the same deed, and except for a small part substances” has occurred on the property, that at least one of of one parcel they were in the same undeveloped state. The the three parcels is a “facility,” and that the government merely formal division in the land records is not a “reasonable incurred removal costs. They dispute the amount of the or natural” division under Brighton. removal costs claimed by the government. D. Which Removal Costs are Proper? The issues on appeal are (1) whether the district court erred when it decided that the Bohatys do not qualify for the The Bohatys argue that the removal action incurred “innocent landowner” defense of §§ 9607(b)(3) and 9601(35) unnecessary costs, for which they should not be liable. In set out above; (2) whether the district court erred when it particular, they claim that (1) the EPA should not have decided that the two unaffected parcels are part of the removed the empty drums at all, because they posed no “facility;” (3) whether the district court erred when it found environmental hazard; (2) the EPA should not have removed that the costs of disposing of the empty barrels and the the underground storage tank, because it posed no underground tank were properly part of the removal costs; and environmental hazard; (3) after the EPA consolidated the (4) whether the Bohatys were deprived of due process by the contents of the 550 waste-containing drums into 300 drums actions of the EPA and the district court. for disposal, it should not have disposed of the 250 additional empty drums, because they posed no environmental hazard; B. The Innocent Landowner Defense and (4) at a minimum, the 700 empty drums should have been disposed of in a standard landfill rather than sent to a The Bohatys argue first that they qualify for the “innocent hazardous-materials site (presumably, at greater cost). landowner” defense of §§ 9607(b)(3) and 9601(35). The district court held that CERCLA places liability on responsible parties for “all costs of removal or remedial action incurred by the United Defendants cannot assert such defenses because they States . . . not inconsistent with the national contingency cannot prove that (1) the release or threat of release of plan.” 42 U.S.C. § 9607(a)(2)(A). The national contingency hazardous substances and the resulting damages were plan (“NCP”) provides that: caused solely by an act or omission of a third party; (2) the third party’s act or omission did not occur in At any release . . . where the lead agency makes the connection with a contractual relationship with the determination . . . that there is a threat to public health or Defendants; (3) they exercised due care with respect to welfare of the United States or the environment, the lead the hazardous substance; and (4) they took precautions agency may take any appropriate removal action to against the third party’s foreseeable acts or omissions and abate, prevent, minimize, stabilize, mitigate, or eliminate the foreseeable consequences resulting therefrom. the release or the threat of release. 40 C.F.R. § 300.415 (b)(1) (emphasis added). 18 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 11

law to interpret CERCLA’s lien provision is a tenuous Opinion, J.A. at 62. Each of the four holdings, if correct, is proposition. dispositive standing alone. The government states that this court has decided the issue, First, the district court held that hazardous substances were relying on Kelley v. DuPont de Nemours & Co., 17 F.3d 836, “released” by the Bohatys. CERCLA defines “release” as 843 (6th Cir. 1994) for the proposition that a remedial follows: “The term ‘release’ means any spilling, leaking, investigation and feasibility study constitutes a “removal pumping, pouring, emitting, emptying, discharging, injecting, action.” Although Kelley does state that the term “removal escaping, leaching, dumping, or disposing into the action” should be construed broadly, the statute-of-limitations environment (including the abandonment or discarding of issue in that case does not illuminate the geographic issue in barrels, containers, and other closed receptacles containing the case before us. Furthermore, the government’s claim that any hazardous substance or pollutant or contaminant).” 42 “the investigation in Kelley . . . examined ten contiguous sites, U.S.C. § 9601(22). Therefore, to prevail in their assertion of only one of which actually contained hazardous waste,” Brief the “innocent landowner” defense, the Bohatys must prove for the United States at 45, is misleading. There is no that all spilling, leaking, pumping, pouring, emitting, indication that the ten “sites” were separate parcels—they emptying, discharging, injecting, escaping, leaching, were merely ten locations in one large landfill that the EPA dumping, or disposing into the environment (including the identified as possible locations of hazardous materials. The abandonment or discarding of barrels, containers, and other Kelley panel simply did not consider the issue of the closed receptacles containing any hazardous substance or geographical extent of a “removal.” pollutant or contaminant) was “caused solely by” the acts or omissions of third parties who were neither employees nor The distinctive feature of the case before this court is the persons in a contractual relationship with the Bohatys. fact that the three parcels have separate identities, notwithstanding that they were historically conveyed together. The district court held that the release of hazardous The hard question is whether this should make any difference. substances was caused, in part, by the Bohatys’ “failure to remove or stabilize the drums on their property.” The district The words of the statute suggest that the bounds of a court evidently was not entirely clear about the elements of facility should be defined at least in part by the bounds of and defenses to CERCLA liability. Having concluded that the the contamination. . . . However, an area that cannot be release was not solely caused by a third party, which would in reasonably or naturally divided into multiple parts or fact be fatal to the “third party” defense, the court then functional units should be defined as a single ‘facility,’ confusingly stated that the Bohatys “can still attempt to assert even if it contains parts that are non-contaminated. the innocent purchaser defense by demonstrating that a third party’s ‘act or omission [causing the release of hazardous United States v. Township of Brighton, 153 F.3d 307, 313 wastes at the Site] occur[red] in connection with a contractual (6th Cir. 1998) (citing Clear Lake Properties v. Rockwell Int’l relationship, existing directly or indirectly with’ them.” J.A.2 Corp., 959 F. Supp. 763, 767-68 (S.D. Tex. 1997)). In at 63 (brackets in original) (citing 42 U.S.C. § 9607(b)(3)). Brighton, we held that where “it appear[ed] that the entire property was operated together as a dump,” the whole parcel was a “facility” even though only one corner was 2 contaminated. Ibid. To apply the teaching of Brighton, we Section 9601(35)(A) exempts certain, apparently contractual, relationships from the § 9607(b)(3) rule that present owners are liable if must decide whether the fact that the Bohaty property is the release was caused by third parties with whom they have contractual composed of three cartographically-denominated parcels ties (or, whom they employ). 12 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 17

The court decided that the answer to this question depends (B) The time that the person referred to in paragraph upon whether the “disposal” preceded the Bohatys’ (1) is provided (by certified or registered mail) written acquisition of the property and concluded that “disposal” was notice of potential liability. ongoing. For its definition of “disposal,” CERCLA refers to Such lien shall continue until the liability for the costs the Solid Waste Disposal Act, which states that “[t]he term (or a judgment against the person arising out of such ‘disposal’ means the discharge, deposit, injection, dumping, liability) is satisfied or becomes unenforceable through spilling, leaking, or placing of any solid waste or hazardous operation of the statute of limitations provided in section waste into or on any land or water.” 42 U.S.C. § 6903(3). 9613 of this title. The distinction between “disposal” and “release” is 42 U.S.C. § 9607(l)(1). important to our resolution of the case before us. Although early CERCLA decisions interpreted “disposal” to include The government argues that the three parcels were all passive movement of substances (i.e., with no human “subject to or affected by” the removal. EPA investigators activity), two circuits have recently limited “disposal” to observed Parcels 2 and 3 both visually and with a spills occurring by human intervention. See United States v. magnetometer to locate any drums that might have been CDMG Realty Co., 96 F.3d 706 (3rd Cir. 1996); ABB Indus. deposited there. The government presented evidence that the Sys., Inc. v. Prime Tech, Inc., 120 F.3d 351, 358 (2d Cir. pond, upon which the investigators expended considerable 1997) (adopting the reasoning of CDMG Realty). This energy, extends beyond Parcel 1 to Parcel 3. Are these interpretation of the statute is the better view for several reasons. See Michael S. Caplan, “Escaping CERCLA such actions as may be necessary to monitor, assess, and Liability: The Interim Owner Passive Migration Defense evaluate the release or threat of release of hazardous Gains Circuit Recognition,” 28 ENVTL. L. REP. 10121 (1998). substances, the disposal of removed material, or . . . such First, because “disposal” is defined primarily in terms of other actions as may be necessary to prevent, minimize, active words such as injection, deposit, and placing, the or mitigate damage to the public health or welfare or to potentially passive words “spilling” and “leaking” should be the environment, which may otherwise result from a interpreted actively; second, “release” must be broader than release or threat of release? “disposal,” because disposal is included within release, see 42 U.S.C. § 9601(22); and third, it makes sense of the statutory They may be, but that does not appear self-evident. scheme as well as the words themselves to have “disposal” stand for activity that precedes the entry of a substance into The record indicates that interests in the three parcels have the environment and “release” stand for the actual entry of been transferred together by the same instruments, rather than substances into the environment. On this more recent view, by separate instruments for each parcel, at least since 1982. the Bohatys acquired the property after the “disposal.” The The district court looked to asset-forfeiture cases, and found question is whether “release” continued after their acquisition. support for the proposition that a “property” is “defined by the recorded instruments and documents that created the In the absence of any evidence that there was human defendant’s interest in the property.” See United States v. activity involved in whatever movement of hazardous Smith, 966 F.2d 1045 (6th Cir. 1992) (citing United States v. substances occurred on the property since the Bohatys have Santoro, 866 F.2d 1538, 1543 (4th Cir 1989) and United owned it, we hold that the Bohatys have not “disposed” of States v. Reynolds, 856 F.2d 675, 677 (4th Cir 1988)). As the hazardous substances on the property. We also hold that the district court acknowledged, looking to criminal forfeiture 16 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 13

C. What Constitutes the “Facility”? Bohatys have raised genuine issues of material fact as to the three other crucial issues: whether they (1) “released” The parties agree that no release nor threat of release hazardous substances on the land, (2) “exercised due care occurred on Parcels 2 and 3. Therefore, the Bohatys argue, with respect to the hazardous substance concerned, taking into even if they are liable, a lien is appropriate only on Parcel 1. consideration the characteristics of such hazardous substance, in light of all relevant facts and circumstances,” and (3) “took (9) The term “facility” means . . . (B) any site or area precautions against foreseeable acts or omissions of [third where a hazardous substance has been deposited, stored, parties] and the consequences that could foreseeably result disposed of, or placed, or otherwise come to be located. from such acts or omissions.” These holdings resolve the .... appeal on the 33/45 interest obtained by inheritance by the (23) The terms “remove” or “removal” means [sic] the present Bohaty owners. We give our reasoning on each of the cleanup or removal of released hazardous substances three in turn. from the environment, such actions as may be necessary taken in the event of the threat of release of hazardous The only evidence presented by the government that the substances into the environment, such actions as may be Bohatys “released” hazardous substances were several necessary to monitor, assess, and evaluate the release or photographs showing what might be hazardous substances on threat of release of hazardous substances, the disposal of the ground near rusted drums and the statements of inspectors removed material, or the taking of such other actions as to that effect. No evidence was presented, for example, that may be necessary to prevent, minimize, or mitigate at one time after the Bohatys acquired the land the piles near damage to the public health or welfare or to the certain drums were one size and, later, that they were larger. environment, which may otherwise result from a release The government appears to be relying on the inference that or threat of release. because there were hazardous substances outside the drums, and because some of the drums were not empty, the leaking 42 U.S.C. § 9601. must have been ongoing. Perhaps, with appropriate factual development, the government will be able to justify that All costs and damages for which a person is liable to inference at trial. The government has not, however, the United States under subsection (a) of this section . . . advanced sufficient evidentiary support at this time to show shall constitute a lien in favor of the United States upon the absence of a genuine issue of material fact. all real property and rights to such property which— (A) belong to such person; and The fact that the drums were present on the property and (B) are subject to or affected by a removal or remedial that the Bohatys knew about them, at least after the first action. OEPA visit in 1987, calls into question whether the Bohatys .... “exercised due care with respect to the hazardous substance[s] The lien imposed by this subsection shall arise at the concerned, taking into consideration the characteristics of later of the following: such hazardous substance[s], in light of all relevant facts and (A) The time costs are first incurred by the United circumstances.” However, the Bohatys presented evidence States with respect to a response action under this that after both the 1987 and the 1989 inspections they asked chapter. OEPA to advise them if anything needed to be done, that the tests performed in 1987 by OEPA were negative, and that OEPA never told them that action was necessary. The 14 United States v. 150 Acres of Land No. 98-3160 No. 98-3160 United States v. 150 Acres of Land 15

Bohatys have raised a genuine issue of material fact as to commercial or customary practice in an effort to minimize whether they exercised the required degree of care. liability.” The definition also emphasizes the particularity of the inquiry by noting that “the court shall take into account The government has shown that the property was accessible any specialized knowledge or experience on the part of the to third parties, which may indicate that the Bohatys did not defendant, the relationship of the purchase price to the value take “precautions against foreseeable acts or omissions of of the property if uncontaminated, commonly known or [third parties] and the consequences that could foreseeably reasonably ascertainable information about the property, the result from such acts or omissions.” However, there is no obviousness of the presence or likely presence of evidence in the record that any third parties ever contamination at the property, and the ability to detect such compromised the integrity of the drums or otherwise caused contamination by appropriate inspection.” the release of their contents. Perhaps the precautions taken by the Bohatys were adequate under the circumstances. Again, These paragraphs and definitions obviously contemplate the government has not shown the absence of a genuine issue primarily a willful acquisition or purchase of the property for of material fact. a particular commercial or personal purpose. They also, though not explicitly, seem to contemplate the acquisition of Therefore, as to the 33/45 inherited interest, the Bohatys all of the interest in a “facility” at one time. This case, have shown a genuine issue of material fact as to each however, is of quite a different sort. Ethel and the other element of the CERCLA innocent landowner defense and are Bohaty defendants had inherited undivided interests entitled to proceed to trial. constituting a large majority of the ownership of the parcel. Three other heirs had inherited very small portions, less than Finally, with respect to the 12/45 interest sold to Ethel by two years before the other fractional interests were other Bohaty heirs, we hold that Ethel has raised a genuine bequeathed to Ethel. A year later, while the estate of Ethel’s issue of material fact as to whether she “undert[ook], at the husband was still in probate, the three other relatives sold time of acquisition, all appropriate inquiry into the previous their fractional interest to Ethel. Under these circumstances, ownership and uses of the property consistent with good where one part-owner by inheritance acquires an interest from commercial or customary practice in an effort to minimize another part-owner by inheritance, apparently merely to liability” with respect to the interest she purchased from her consolidate the inherited ownership interest, the level of relatives. “appropriate inquiry” is a very fact-specific question. We see no evidence in the record of what is “customary practice” in There is no evidence that Ethel conducted a particular connection with such family transactions. There is also no inquiry when she bought the interests. evidence of the specific purchase price and the “value of the property if uncontaminated” or other factors mentioned in the However, the particular inquiry that is necessary under the definition. Under these circumstance we hold simply that, at statutory definition is clearly dependent on the totality of the this time, we cannot state as a matter of law that Ethel’s circumstances. In particular, the requirement is that “the actions were not “appropriate inquiry” under the defendant . . . has no reason to know that any hazardous circumstances at the time of the sale of the other fractional substance . . . was disposed of . . . at the facility.” 42 U.S.C. interests. On remand, the burden will rest on Ethel, assuming § 9601(35)(A)(i). Subsection (35)(B) amplifies this definition all the other requisites of the defense with respect to her stating that “the defendant must have undertaken, at the time inherited interests are met, to also show that she met the of acquisition, all appropriate inquiry into the previous requirement of “appropriate inquiry.” ownership and uses of the property consistent with good