Crossposted from Valpo Law Blog.

An underground storage tank exposed. Photo via Wikimedia Commons and Humphrey Bolton.

 

 

Wherever you live, odds are you aren’t very far from an underground storage tank filled with a toxic substance like gasoline. That tank could be leaking right now and you wouldn’t know. The contamination is out of sight and out of mind—until it finally comes to light years or decades later. Then the question is: who foots the bill?

 

The recent Indiana Court of Appeals decision in JDN Properties v. Vanmeter Enterprises makes it harder for former landowners to skip out on liability for contamination that occurred while they owned the property.

 

The decision, issued on September 19 and authored by Judge Michael Barnes, interprets Indiana’s Environmental Legal Action (ELA) statute as imposing a heavy burden of proof on the defendant to prevail on summary judgment once the plaintiff has made out a prima facie case that the defendant knew about the contamination.

 

Here is the background of the case: The defendant is a company that once owned some land in Kosciusko County which was later bought by the plaintiff (the current owner). The land, which houses a light industrial facility, formerly had two underground storage tanks for heating oil. In the 1980s, the defendant’s CEO arranged for some water pipes that ran near the tanks to be moved. According to the contractor who moved them, the pipes needed to be moved because the high level of oil contamination was making the water from the pipes unusable.

 

The issue on appeal boiled down to this: was that circumstantial evidence of the defendant’s CEO’s knowledge of the contamination sufficient to allow the plaintiff’s ELA claim to survive a motion for summary judgment under Indiana Trial Rule 56?

 

As any survivor of the first year of law school can tell you, summary judgment requires that there be “no genuine issue of material fact,” thus allowing the court to rule in the movant’s favor as a matter of law. In this case, deeming the plaintiff’s evidence insufficient to establish a genuine issue of material fact, the trial court granted summary judgment for the former owner on the ELA claim.

 

The Court of Appeals was not so generous, and held that the evidence was sufficient to establish a genuine issue of material fact as to whether the defendant knew about the contamination (and was therefore liable for the cost of cleanup). That issue having been established, the burden shifts to the defendant to adduce evidence to disprove the issue. And the defendant in this case had not met that burden.

 

In coming to this conclusion, Judge Barnes leaned heavily on an Indiana Supreme Court decision on ELA summary judgment, Reed v. Reid. In that case, the Supreme Court rejected the argument that an ELA defendant should prevail on summary judgment unless the plaintiff had proven that contamination came from plaintiff’s facility. Instead, the Reed court ruled, to prevail on summary judgment the defendant needs to definitively prove that it was not the source of the contamination.

 

Judge Barnes did not go so far as to grant the plaintiff’s cross-appeal in favor of its own motion for summary judgment. Instead, the case now returns to the trial court for resolution of those pesky factual questions.

 

Although USTs seldom make it into reported appellate decisions, storage tank problems are all around us. My unscientific review of data from the Indiana Department of Environmental Management shows that Lake County alone has 586 sites with public records from IDEM’s Leaking Underground Storage Tank program (which goes by the charming acronym “LUST”). And that’s a conservative count: many leaking tanks, including the one at issue in this case, haven’t generated any public LUST records at all.

 

Unlike some other environmental justice issues, this one isn’t entirely, or even mostly, an urban problem. Farms and rural factories all across Indiana have USTs in varying states of repair. And brownfield sites all across Indiana are held back from development because nobody wants to pay to clean up those old leaks.

 

Perhaps the Court of Appeals’ decision in this case will make it easier for people who want to fix up these sites to get compensation from the former owners on whose watch the contamination happened.