In a novel case, the Court of Appeals (Second District Montgomery County) held that Ohio EPA had no duty to disclose knowledge of contamination to a buyer of a contaminated property, even though the Agency had records in its files documenting additional contamination. See, Ohio v. Republic Envrtl. Sys. (Ohio), Inc., 2015 WL 5783650 (Ohio Ct. App. Sept. 30, 2015).
Buyer purchased a property that was in the middle of a hazardous waste cleanup (RCRA). Seller makes no representations regarding the condition of the property (agreement contains an "as is" clause). Buyer also agrees to assume Seller’s cleanup obligations.
Prior to purchase, Ohio EPA approves a cleanup plan ("RCRA Closure Plan"). The Buyer purchased the property in reliance on the closure cost estimates in the plan. After Buyer purchases the property, it is later discovered that additional contamination is present on the property which will result in a significant increase in cleanup costs. Buyer asserts Ohio EPA knew the contamination was present based upon documents it had in its files.
Court Holds Ohio EPA Has No Duty to Disclose
Buyer argued that Ohio EPA had a duty to disclose all known contamination because the Agency had records in its files showing additional contamination. Buyer asserted that the Ohio Administrative Code provisions related to approval of cleanup plans (RCRA Closure Plans) placed an affirmative duty on the Agency to inform the Buyer of everything it knew regarding the property.
Court disagrees, holding that the Agency simply oversee the cleanup process. Owners or operators are responsible for identifying all contamination and cleaning up the property to meet standards.
The Court noted that the Buyer did not perform any independent due diligence prior to purchasing the property. The Court said, Buyer should not have relied only upon the Agency’s approved cleanup plan cost estimate.
Key lessons from this case:
- The burden is on the Buyer to perform sufficient due diligence prior to purchase;
- Don’t rely upon Agency approved cleanup cost estimates, Buyer should perform their own independent analysis of cleanup requirements; and
- Cleanup of environmental sites always involve the risk that additional contamination will be discovered during the cleanup process.