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19 ELR 20855 | Environmental Law Reporter | copyright © 1989 | All rights reserved Wickland Oil Terminals v. Asarco, Inc.No. C-83-5906-SC (N.D. Cal. February 23, 1988)The court holds that a landowner that did not own or operate a hazardous waste facility during the time when waste was deposited at the site is not entitled to the Comprehensive Environmental Response, Compensation, and Liability Act's (CERCLA's) innocent landowner defense. CERCLA § 101(35) requires that a purchaser make all appropriate inquiry into previous uses of a property for the defense to apply, and includes as factors in the assessment of "all appropriate inquiry" special knowledge by the owner, commonly known information, and the obviousness or likely presence of contamination. In this case, the landowner was aware of the metal slag when it purchased the site and knew that the slag was leaching into local waters and that the previous owner had had discussions regarding its discharges with state agencies. There is evidence that the landowner knew of the risk of future contamination and liability. There was additional information readily available to the landowner, which it could have obtained by conducting tests at the site and examining state files. The owner's consulting firm and attorneys were familiar with the site's environmental problems. Even if the landowner could demonstrate that it was unaware of the site's environmental problems, it has not demonstrated that it conducted an appropriate inquiry. Moreover, the owner's emphasis on what it knew about the site's environmental problems is misplaced. The question under CERCLA § 101(35) is whether the purchaser knew or had reason to know that hazardous substances were disposed of at the facility, and the owner knew about the slag and its hazardous constituents. The court also rejects the landowner's argument that it cannot possibly be allocated any response costs under any theory of apportionment. [Earlier decisions in this litigation are published at 14 ELR 20494, 16 ELR 20754, and 17 ELR 20688.] Counsel for Plaintiff Counsel for Defendants Charles F. Preuss Ellyn Levinson, Deputy Attorney General Conti, J.: Order Granting Partial Summary Judgment for Defendants and Denying Summary Judgment for Plaintiffs Plaintiff Wickland Oil Terminals ("Wickland") brings this action under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA"), 42 U.S.C. §§ 9601-9657, and state law seeking damages, declaratory relief, and indemnity against defendants Asarco, Inc. ("Asarco") and State Lands Commission of California ("State Lands") with respect to the disposal of allegedly hazardous wastes located on property owned and leased by plaintiff. Specifically, plaintiff, in its federal claims, seeks: (1) a declaration that Asarco and State Lands are "wholly liable" to plaintiff for all of the necessary costs of response to the hazard posed by the slag; and (2) a declaration that Asarco and State Lands, between themselves, are "wholly liable" for all past and future necessary costs of response expended by any party, governmental or private. Defendants Asarco and State Lands have filed cross-claims against each other and counterclaims seeking a declaration that Wickland is itself a liable party under CERCLA § 107(A). This matter is now before the court on plaintiff's motion for partial summary judgment and summary judgment on the counterclaims and defendants' motions for summary judgment and partial summary judgment on their counterclaims against plaintiff. From approximately 1886 through 1970, Asarco conducted smelting operations for the extraction of lead, zinc and other metals on two contiguous parcels of land in Contra Costa County. Asarco owned one parcel in fee simple and occupied the other parcel under license from Contra Costa County. In 1951, the State of California became the owner of the licensed parcel and placed it under the custodianship of State Lands, which issued a lease to Asarco. Collectively, these two parcels are known as the "Selby site." On October 25, 1977, Wickland purchased from Asarco the parcel owned in fee. State Lands issued a lease to Wickland for the state-owned parcel on July 17, 1981. Accordingly, Wickland now occupies the Selby site. Asarco's smelting operations produced smelting slag, a rock-like material, which was deposited at the site. Up to 1,000,000 metric tons were allegedly deposited above the surface of the site, and an unascertained amount was deposited below the surface. The slag currently remains on the site in the form of two stockpiles, in addition to that located below the surface. In early 1980, Wickland was preparing the site for commercial redevelopment. As part of the redevelopment plan, Wickland desired to relocate the slag, either offsite or elsewhere on the site. Consequently, it proposed to the U.S. Army Corps of Engineers ("Corps") that the slag be used as fill material for levees on the nearby Sacramento River Delta, which had been damaged by heavy rains. On April 21, 1980, the California Department of Fish and Game ("DOFG") informed the Corps by letter that deposit of slag in the levees would violate the California Fish and Game Code due to the presence of heavy metals in the slag. On July 6, 1980, the California Department of Health Services ("DOHS") advised the Corps by letter that the slag contained hazardous waste and posed a serious threat to the public health and environment if not properly managed. A copy of this letter was received by Wickland on or about July 29, 1980. Wickland alleges that receipt of the letter marked the first instance where the slag was characterized as hazardous waste by any state or federal regulatory agency. On July 21, 1980, DOHS informed Wickland directly that the slag was hazardous waste and directed Wickland "not [to] excavate, remove or recover the slag waste without written approval from this Department." On August 13, 1980, DOHS issued a press release confirming its position that the slag at the Selby site contained hazardous waste. On October 3, 1980, DOHS advised Wickland by letter that a study conducted by the Hazardous Materials Management Section of DOHS indicated that the Selby site contained hazardous waste warranting further investigation. On October 7, 1980, DOHS identified the Selby site as a hazardous waste dump and in January 1983 DOHS placed the site on the California List of Hazardous Waste Sites. As a result, DOHS has requested cleanup actions to be taken at the Selby site but neither DOHS nor the federal government has initiated an enforcement action at the site. Wickland has already spent in excess of $ 400,000 as part of a program to test the site and surrounding waters and to devise a remediation and containment program for the slag acceptable to the state agencies. The current remediation plan awaiting final agency approval entails first phase costs of $ 5-6 million. Summary judgment is proper only when there is no genuine issue of material fact or when, viewing the evidence in the light most favorable to the non-moving party, the movant is clearly entitled to prevail as a matter of law. Fed. R. Civ. P. 56(c); Jung v. FHC Corp., 755 F.2d 708, 710 (9th Cir. 1985). Once a summary judgment motion is made and properly supported, the adverse party may not rest on the mere allegations of his pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e); Celotex Corp. v. Myrtle Nell Catrett, 477 U.S. , 91 L. Ed. 2d 265 (1986). In addition, to withstand a motion for summary judgment, the non-moving party must show that there are "genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be in favor of either party." Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505, 2511 (1986). If the factual context makes the non-moving party's claim implausible, that party must come forward with more persuasive evidence than would otherwise be necessary to show that there is [19 ELR 20856] a genuine issue for trial. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 106 S. Ct. 1348, 1356 (1986). No longer can it be argued that any disagreement about a material issue of fact precludes the use of summary judgment. California Architectural Building Products, Inc. v. Franciscan Ceramics, Inc., 818 F.2d 1466, 1468 (9th Cir. 1987). All parties agree that the Selby site qualifies as a hazardous waste facility under CERCLA as defined in 42 U.S.C. § 9601(9) 1983. Section 107(a) of CERCLA establishes four categories of persons who are liable for costs incurred as a result of a release or threatened release of hazardous substances.1 Wickland admits that as "the current owner and operator" of a facility it is "technically liable" under section 107(a)(1). Nevertheless, Wickland claims that it is exonerated from liability under CERCLA because it meets the definition of "innocent purchaser" as set forth in CERCLA § 101(35). Therefore, Wickland claims that Asarco and State Lands, as the owners and operators of the Selby site during disposal of the waste, are wholly liable to it under CERCLA § 107(a)(2) for the response costs associated with the Selby site. The court will begin with Wickland's claim that it is an "innocent purchaser" since this contention is a necessary basis for Wickland's summary judgment motion and central to the counterclaims of defendants Asarco and State Lands. Subsection 107(b)(3) of CERCLA provides a defense where an otherwise liable party can show the release of a hazardous substance is attributable solely to a third party and there is no contractual relationship between itself and the third party. Since Wickland, as vendee/lessee of the site, has a contractual relationship with the named third parties, Wickland must show by a preponderance of the evidence that at the time of acquisition of the property it "did not know and had no reason to know that any hazardous substance which is the subject of the release or threatened release was disposed of on, in, or at the facility." CERCLA § 101(35)(A)(i). To establish this innocent purchaser defense, Wickland must also demonstrate that it has undertaken, at the time of the acquisition: all appropriate inquiry into the previous ownership and uses of the property consistent with good commercial or customary practice in an effort to minimize liability. As part of its inquiry into whether a party is an innocent purchaser, the court is instructed to take into account: any specialized knowledge or experience in the part of the defendant, the relationship of the purchase price to the value of the property if uncontaminated, commonly known or reasonably ascertainable information, the obviousness of the presence or likely presence of contamination of the property and the ability to detect contamination by appropriate inspection. The undisputed facts show that the following information was known to Wickland at the time it acquired the Selby site. Wickland was aware of the presence of up to one million metric tons of metal slag and Roy Wickland had physically observed the large slag piles during his inspections of the Selby site. Roy Wickland and his environmental consultant Frank Boerger were aware that the slag contained lead and other heavy metals. Wickland was also aware that the slag was leaching into the bay and after a meeting with Fred E. Dierker, the Executive Director of the Regional Water Quality Control Board ("RWQCB"), Roy Wickland noted that "acid caused the lead deposits in the slag to break down and, consequently, water was carrying the lead into the Bay . . . [o]ver the years, Asarco had a significant number of discharges in the Bay and, as a result, has had many discussions with the [RWQCB]." Defendant's Second Amended Statement of Material Facts Not in Dispute, Plaintiff's Response, P47. Wickland states that it understood from its consultations with RWQCB and others that the slag posed no present environmental risk and was inert. Yet, Wickland did perceive that there was a definite risk of future problems resulting from the slag. After his April 1977 meeting with RWQCB, Roy Wickland noted that: "as expected, Dierker could not assure me that there would not be any future water quality problems with this particular site." Id. In October 1977 Frank Boerger received a letter from RWQCB which stated: "Our current information indicates that leachate from the site will not produce toxic effects in the receiving waters, but this information is sketchy at best." Id. at P63. In this letter Wickland was also advised to obtain legal advice about potential liability for "water quality and/or health problems" that could arise on the site. Id.. In addition to this information which Wickland possessed at the time of purchase, there was still more information readily available to Wickland. Wickland was allowed to perform test borings at the property and conduct other tests as it saw fit, but apparently did not avail itself of this opportunity. Wickland also did not examine the RWQCB files on the Selby site and was thus unaware of a tentative 1970 resolution which proposed setting discharge requirements for metals leaching from the site. Both Harding-Lawson Associates, a consulting firm hired by Wickland, and Landeis, Ripley and Diamond, Wickland's legal counsel, were familiar with the environmental problems posed by the slag and the need for a detailed study to determine the scope of the problems. In particular, the Landeis firm had represented the Dillingham Corporation which rescinded an earlier agreement to buy the site based in part on the environmental problems posed by the slag. Edgar Washburn of this firm who advised Wickland on the Selby site testified that the environmental problems with the slag were well-known. Nevertheless, Wickland states that it did not acquire this information. Wickland claims that defendants Asarco and State Lands withheld material information concerning environmental problems at the site and that it was misled into believing that the slag posed no environmental problem. The statutory language of CERCLA, however, requires the purchaser to establish that it undertook an appropriate inquiry. In this case, much of the information that Wickland claims was withheld by defendants was in the possession of firms that Wickland had hired to advise it on the site or was available from other sources. Yet Wickland somehow failed to obtain this information. Therefore, even if Wickland could establish that it was unaware of the presence of hazardous waste on the site, it had not demonstrated that it conducted an appropriate inquiry. This is particularly so since Congress intended that "those engaged in commercial transactions should . . . be held to a higher standard of inquiry than those who are engaged in private residential transactions." H.R. Rep. No. 962, 99th Cong., 2d Sess. 187 (1986). Moreover, Wickland's emphasis on what it knew about the environmental problems posed by the slag at the time of purchase is misplaced. The question for the purposes of Wickland's "innocent purchaser" defense is whether it knew or had reason to know that hazardous substances were "disposed of on, in, or at the facility." CERCLA § 101(35)(A)(i). The undisputed facts show that Wickland was aware of the obvious presence of the large slag piles on the site and knew that the slag contained lead and other heavy metals which are classified as hazardous substances. The court finds that Wickland is not entitled to the "innocent purchaser" defense under CERCLA sections 101(35)(A)(i) and 107(b). Therefore, Wickland is strictly liable under CERCLA § 107(a) regardless of whether [19 ELR 20857] it is at fault. State of New York v. Shore Realty Corp., 759 F.2d 1032, 1043-45 [15 ELR 20358] (2d Cir. 1985). Accordingly, the court grants defendants' motion for partial summary judgment on their counterclaims and finds that the plaintiff is a party responsible under CERCLA for response costs at the Selby site. Because Wickland is a party responsible, the court denies Wickland's motion for partial summary judgment declaring that defendants Asarco and State Lands are wholly responsible for response costs at the Selby site.2 The court also denies defendants' motions for summary judgment against Wickland because it finds that genuine issues of material fact remain with regard to the contractual and legal defenses raised by defendants and the apportionment of liability between the parties. In accordance with the foregoing, it is hereby ordered that: (1) defendants' motion for partial summary judgment regarding plaintiff's liability under CERCLA is granted; (2) plaintiff's motion for partial summary judgment on the complaint and summary judgment on the counterclaims is denied; (3) defendants' motion for summary judgment is denied. 1. This section provides, in relevant part: (a) Covered persons; scope . . . Notwithstanding any other provision or rule of law, and subject only to the defenses set forth in subsection (b) of this section — (1) the owner and operator of a vessel or a facility, (2) any person who at the time of disposal of any hazardous substance owned or operated any facility at which such hazardous substances were disposed of, (3) any person who by contract, agreement or otherwise arranged for disposal or treatment . . . or transport . . . of hazardous substances owned . . . by such person, by any other party or entity, at any facility or incineration vessel owned or operated by another party or entity and containing such hazardous substances, and (4) any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release, or threatened release which causes the incurrence of response costs, of a hazardous substance, shall be liable for — (A) all costs of removal or remedial action incurred by the United States Government or a State . . . not inconsistent with the national contingency plan; (B) any other necessary costs of response incurred by any other person consistent with the national contingency plan; (C) damages for injury to, destruction of, or loss of natural resources, including the reasonable costs of assessing such injury, destruction, or loss resulting from such a release; and (D) the costs of any health assessment or health effects study carried out under section 9604(i) of this title. 2. Wickland also contends that even if it does not have an innocent purchaser defense it is entitled to partial summary judgment since it cannot possibly be allocated any response costs under any theory of apportionment. In allocating response costs among liable parties, the court is to consider "such equitable factors as [it] determines are appropriate." CERCLA § 113(f). The allocation of costs necessarily involves the consideration of a number of questions with respect to which there are genuine issues of material fact. Therefore this issue is not ripe for summary judgment. 19 ELR 20855 | Environmental Law Reporter | copyright © 1989 | All rights reserved |