Legal Question in Environmental Law in California

We purchased a property in California in the 1970's from a major oil company. It had been a gas station. Of course in those days, no one did Phase 1' or 2's or testing, etc. We built a restaurant ... a tire store on the site which are now getting old and past their useful ... order for us to do any new project in the future, I'm sure that we would be required to do testing where the gas station was. So here are my questions...

Should we wait until that time in the future when we are ready to build something new, or should we test now? I don't know if there is a fund in place now to take care of these costs...

Is the Oil Company still responsible?

Do the Oil Companies fight you or do they acknowledge&... take care of all costs.

Thanks for the help...

Asked on 9/17/09, 8:06 pm

3 Answers from Attorneys

The continued presence of petroleum hydrocarbon contamination in soil and groundwater constitutes a nuisance actionable under California law. Whether the oil company seller remains liable, however, will depend in large part upon the terms of the purchase and sale agreement. It is not uncommon for a seller to include in the agreement a release of all environmental claims and, in some instances, a provision requiring the buyer to indemnify the seller for environmental claims.

Whether an oil company will acknowledge responsibility and undertake appropriate investigation and remediation, on the one hand, or dig in its heels and fight an environmental claim depends upon the unique circumstances of each case. Without knowing more facts, it is difficult to assess how an oil company may respond to an environmental claim.

If you would like to discuss this matter in more detail, please feel free to contact me.

Mike Stiles

Stiles Law Group

(626) 243-5599

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Answered on 9/18/09, 12:29 am
Cathy Cowin Law Offices of Cathy Cowin

(1) Wait or test now? Hmmm... You mention that the current building are nearing the end of their useful life. I'm not sure from your post what time frame that implies. It costs money to test but that information will be helpful in understanding limitations regarding the property. For example, are you going to sell the property or build something new yourself? What is the property worth? This question is in part a business strategy question rather than a legal question and in part does not provide enough information to formulate a strategy recommendation. I would want to review requirements for cleanup funding, etc to be assured that waiting doesn't have any downside but you've already waited such a substantial period of time that it doesn't seem likely that waiting longer will substantially affect any position.

(2) Is there a fund in place? Yes but there are qualifications to get funding and you still may have some liability. It usually goes backward to all property owners, including that darn oil company.

(3) Is the oil company still responsible? My first blush response is probably no unless there is a cleanup fund demand of some type. If you fully knew what was on the property at the time of the sale, the buyer has a responsibility to test if necessary. If they didn't make full disclosures, the answer might change. If there is something in the original sales contracts that would address this issue specifically, the answer might change. With full disclosure and significant passage of time; however, I would not count on this as a probable source of funds except in the case of #2 above.

(4) If the oil company is responsible, would they fight? Now, that is a question that requires a crystal ball. It depends on the company's corporate culture/personality, the particular folks you deal with, etc. Definitely my experience is that big companies have deep pockets to fight if they think it will cost less to defend than write a check to you. The real question becomes how far/hard you should push to pursue this and this strategy requires re-evaluation throughout any case. A demand letter costs very little. The further you get into a lawsuit, the more pressing that question becomes. Sometimes, it gets hard to pull the plug. You just keep asking the question as reasonable during the process.

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Answered on 9/18/09, 1:11 pm
James R. Arnold The Arnold Law Practice

Hi -- The governor just signed a bill that adds some more money to the California UST Cleanup Fund. The Fund is being updated and reformed so it can (a) make reimbursement grants more efficiently, and (b) get sites investigated and "closed" if there is little risk from contamination. You need to consider what you know and what you might do. You can get some assistance from an experienced environmental consultant. You can also get confidential assistance from an experienced environmental attorney. The Fund does not run forever, so you should take some careful steps now to get ready to do something else with your property.

Jim Arnold

The Arnold Law Practice

225 Bush Street, 16th Floor

San Francisco, CA 94104

Telephone: 925-284-8887

Fax: 925-284-1387

[email protected]

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Answered on 11/07/09, 11:51 pm

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