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The 9th U.S. Circuit Court of Appeals ruled 8-3 Wednesday that landowners who once owned contaminated property but did nothing to contribute to its contamination aren’t liable for cleanup costs. In the closely watched environmental law case, the court reversed an earlier three-judge panel decision holding so-called intervening landowners liable for cleanup costs even though they had nothing to do with a patch of tar and slag that continued to spread contamination into a property throughout their ownership. In reaching its decision, the en banc court established a new “plain meaning construction” rule for assessing liability under the Comprehensive Environmental Response, Compensation and Liability Act. The 9th Circuit rested its decision on language — in this case, the definitions of “disposal” provided by CERCLA, including “discharge, deposit, injection, dumping, spilling, leaking or placing.” It held that none of those terms apply in Carson Harbor Village v. Unocal, 01 C.D.O.S. 9080. “Of the terms defining ‘disposal,’ the one that might remotely describe the passive soil migration here is ‘leaking.’ But under the plain and common meaning of the word, we conclude that there was no leaking,” wrote Judge M. Margaret McKeown. The case was brought by owners of the 70-acre parcel in Carson, Calif., against Unocal Corp. and the former operator of a mobile home park located on the property. The important issue focused on the liability of the second owner. Since World War II, Unocal operated oil production facilities, including wells, pipelines and storage tanks, on the property. In 1977, a company named Carson Harbor Village Mobile Home Park began operating there until 1983. Later, the plaintiffs, Carson Harbor Village, took over. In 1993, the new owners discovered a small area of petroleum-derived tar and slag in a 17-acre wetlands area of the property. More than 1,000 tons of material were removed before the property was given a clean bill of health. The owners sued the previous operator of the mobile home park on the theory that a “disposal” of contaminants had occurred when it owned the property, since the contaminants had continued to seep into the soil. The majority rejected the theory. Senior Judge Betty Fletcher, joined by Judges Harry Pregerson and Richard Paez, dissented. “The majority perhaps is motivated by a sense that the structure of the statute is unfair by including essentially innocent persons in the process — requiring them to assert their defenses — but that is the structure of the statute,” Fletcher wrote. The decision brings the 9th Circuit’s law in line with several other circuits, although McKeown referred to various decisions as a “nuanced range of views.” Only the conservative 4th Circuit has ruled otherwise. San Francisco’s Howard, Rice, Nemerovski, Canady, Falk & Rabkin partner Richard Jacobs, who represents Unocal, said the liability issue was the most important among several the court decided Wednesday. “It would have meant any intervening landowner would have had joint and several liability,” Jacobs said. Lawyers for the landowners, Morris, Polich & Purdy partners Walter Lipsman and Richard Nakamura Jr., praised the decision but said the new framework will have to be tested before its meaning is clear. “It leaves a lot of questions unanswered,” said Los Angeles-based Nakamura. Lipsman said his clients had not been aware of the contamination. Frank Gooch III, of Santa Monica, Calif.’s Gilchrist & Rutter, who argued the case for the current landowners, said if his clients have to pay for part of the cleanup, former landowners should do the same. “We think that we’ve got grounds for a Supreme Court appeal, and we’re certainly considering that,” Gooch said.

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