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    LSchnapf
    Ct State Court Rules DEP Can Enforce Against One Certifying...
    Entry posted June 17, 2010 by LSchnapfElite Contributor, last edited January 19, 2012 
    555 Views, 2 Comments
    Title:
    Ct State Court Rules DEP Can Enforce Against One Certifying Party Under Transfer Act
    Entry:

    The Connecticut Transfer Act (CTA) is one of those state laws that are triggered by a transfer of certain types of commercial property or businesses that generate hazardous waste.  While the law was intended as a buyer protection statute, it provides that a party to the transaction certify to the Ct DEP that it will be responsible for undertaking necessary investigation.

    Often times, there may be more than one "certifying" party.  In Commissioner of Environmental Protection v. Sergy Company, LLC, a state court ruled that the DEP may elect to bring an enforcement action against one of the certifying parties for failure to comply with the CTA and the defendant may not seek apportionment from prior certifying parties even if they caused the contamination. In this case, the seller signed the CTA Form III as the Certifying Party . The DEP subsequently informed the seller that it had to submit a proposed schedule to investigate and remediate the property. The seller failed to file this schedule after the parties disagreed who was responsible for paying for the costs to operate a groundwater PCB treatment system for the property.

    After the groundwater  treatment system was shutdown, DEP sought an order requiring the seller to comply with the CTA and to pay a civil penalty of $25,000 per day. The seller responded that that a previous party had filed a Form III in 1986 and DEP staff had indicated that agency would continue to look to the 1986 Certifying Party to complete the cleanup. The court denied the seller's defense of apportionment, reasoning that the damage suffered by the seller was solely a result of its failure as a certifying party to comply with its own statutory obligations.

    While the CTA provides that a transferor shall be strictly liable, without regard to fault, for all remediation costs and for all direct and indirect damages, this statutory remedy is not available to remote transferees who did not acquire the business or property from the non-compliant transferor. Presumably, the seller will have other common law remedies to recover its costs from the responsible party but this case serves as a reminder to carefully review any prior investigations or cleanups that have been performed at a site as well as to verify the continued compliance with any post-remedial monitoring obligations. 

    

    Comment

     

    • EdG

      Appears to me that once again - a big point is to not look at CERCLA for AAI or any other type defense (recovery) - but to focus on state statutory law.  In this case and pursuant to the CT (state) Transfer Act - it appears that a 'responsible party' is precluded from statutory contribution from other responsible parties.  This is a remedy that is specifically set forth as a statutory 'right' under CERCLA.

      So it appears that the CT Transfer Act trumps CERCLA for sellers of certain type of properties.  Therefore, to be an intentional broken record, it is far more important for parties (consultants, attorneys, buyers, sellers) to focus on state (and local) law - rather than CERCLA.

      And always a good point to state that common law (increasingly the most popular form of recovery) is always available to said parties.  CERCLA, AAI, ASTM 1527-05 does 100% nothing to preclude such claims.  Most often the most costly form of litigation too - bodily injury, dimunition in property value.

    • Tom Speight

      Oh, the Transfer Act is SO much fun...... it's the textbook example of a law that started out as a really good idea, but then everything went to heck. You wouldn't believe some of the stuff people do to try to weasel out of getting dragged into it.

      I'm surprised the DEP would agree seriously to look at a 1986 Form III and CP, since blaming someone from a quarter-century ago for the shutdown of a cleanup system is prima facie BS. 

      A Form III, by the way, is filed "when the environmental conditions at the establishment are unknown, or a release of hazardous waste or a hazardous substance has occurred at the establishment and any pollution from the establishment has not been remediated in accordance with the RSRs [Connecticut Remediation Standard Regulations]. 

      You have to file the paperwork at the time of transfer of title, but don't have to have commenced remediation.