Ashley II Charleston LLC v. PCS Nitrogen-the most important CERCLA case of 2010?

In the first reported case to interpret the scope of the "appropriate care" requirements of the CERCLA Bona Fide Prospective Purchaser (BFPP) defense, a  federal district court in South Carolina ruled that an entity owned by the brownfield developer Cherokee failed to qualify for the BFPP when it failed to address impacts from RECs that had been identified in a phase 1 report. Ashley II Charleston LLC v. PCS Nitrogen, 2010 U.S.Dist. LEXIS 104772 (D.S.C. 9/20/10)

The phase 1 identified sumps and conrete pads as RECs. When the developer demolished all of the above-ground structures on that parcel, it failed to clean out and fill in the sumps,  leaving them exposed to the elements which may have exacerbated these environmentl conditions.

The court was also troubled by the fact that the developer indemnified the prior owners of the site. The court said this called into question whether the developer had complied with the "no affiliation" requirement of the BFPP defense.

Also of interest was the court's observation that the phase 1 did not strictly comply with the AAI requirements in effect at the time of the acquisition but that the deviation was not significant. Therefore, the court found the developer had complied with the AAI aspect of the BFPP defense.

The facts are dense and complicated. Here are the Key findings of Court:

1. plaintiff failure to perform sampling recommended in phase 1 and failure to address RECs was failure to comply with "appropriate care" requirements. ("Doing nothing in the face of know or suspected environmental hazard" was insufficient to establish appropriate care).

2. Plaintif failure to maintain cover on site. Only added crushed rock when parcel was about to be leased, thereby allowing contamination runoff to spread contaminants.

3. Plaintiff Indemnity provided in purchase agreements coupled with urging EPA not to proceed against former landowners raised "no affiliation" question. ("Ashley efforts to discourage EPA from recovering response costs covered by the indemnification reveals just the sort of affiliation Congress intended to discourage")--DOES THIS MEAN PURCHASERS CANNOT INDEMNIFY SELLERS TO ASSERT BFPP???

4. Defendants could not assert third party/ILO defense because of earth moving/grading activities

5. Distinguished between apportionment and allocation. Harm was indivisible and incapable of apportionment but court allocated liability for purposes of contribution action.