Developer of Former Landfill Qualifies Qualifies as Innocent Owner and May Proceed with Cost Recovery for Methane Mitigation

In Frontier Recovery, LLC v Lane County, 2010 U.S.Dist. LEXIS 61857 (D.Ore. 4/14/10), the defendant owned the site from 1974-1978, and operated it as a solid waste landfill. Defendant transferred the site to Lane Plywood, Inc. in 1978 who primarily used it to stockpile logs.  The plaintiff was the successor to Lane Plywood and wanted to develop the site for light industrial and commercial use.

During pre-development activities, the plaintiff discovered methane gas concentrations and other contamination required mitigation. The plaintiff entered into a voluntary cleanup agreement to implement the mitigation measures under the supervision of the Oregon Department of Environmental Quality (DEQ). The plaintiff then filed a lawsuit against the county seeking to recover its costs and the county filed a motion for summary judgment.

            The denied the county’s motion on the plaintiff’s cost recovery claim. The court said the plaintiff had introduced evidence that it developed the site in reliance on statements from the defendant and DEQ that the County had properly operated and closed the landfill and that there were no serious environmental problems at the site. As a result, the court found that a reasonable trier of fact could conclude that plaintiff conduced all reasonable inquiries prior to purchasing the property and thus did not know nor reasonably could have known of the methane gas issues. Interestingly, in so holding, the court did not address successor liability,  examine if the plaintiff's predecessor qualified for the innocent landowner defense and the impact of any failure to qualify for the defense would have on the plaintiff. 

The court also denied the defendant’s motion for summary judgment on the statutory contribution claim. The county had argued that the plaintiff’s statutory contribution claim was barred because the costs were incurred pursuant to a voluntary cleanup agreement. The plaintiff responded that the relevant case law only required some form of DEQ involvement. Moreover, the plaintiff asserted that it entered into the voluntary agreement to avoid an enforcement action that could have resulted in civil penalties. The court agreed with plaintiff, holding that was a question of fact regarding whether plaintiff was required to undertake such action and therefore, summary judgment is not appropriate on this claim.