United States v. Washington State Department of Transportation – Rains, Drains, and CERCLA Claims

Judge Robert J. Bryan of the United States District Court for the Western District of Washington recently issued two opinions in United States v. Washington State Department of Transportation that could have significant implications on the scope and extent of liability under the Comprehensive, Environmental Response, Compensation, and Liability Act (“CERCLA”), 42 U.S.C. §9601 et seq., particularly at urban river sites and harbors. Both decisions examine the liability of the Washington State Department of Transportation (“WSDOT”) at the Commencement Bay/Nearshore Tidelands Superfund Site.

In one opinion, decided on June 7, 2010, Judge Bryan examined WSDOT’s liability as an arranger under §107(a)(3) because it had designed, constructed and operated drainage systems intended to collect highway runoff which drained into nearby water bodies. In the second opinion, decided one month later on July 7, 2010, WSDOT’s potential liability was examined as an owner and operator under §§107(a)(1) and (2) of CERCLA because of its ownership of property near the Thea Foss and Wheeler Osgood Waterways, which are located within the Commencement Bay Site.

Arranger Liability Broadened

The Court, mindful of Burlington Northern’s holding that an entity may qualify as an arranger when it takes intentional steps to dispose of a hazardous substance, broadly interpreted arranger liability under §107(a)(3) of CERCLA to conclude that WSDOT arranged for the disposal of hazardous substances because:

  1. WSDOT designed the drainage system at issue with the specific purpose of discharging highway runoff into the environment;
  2. WSDOT had knowledge that the runoff contained hazardous substances;
  3. there was an actual release of hazardous substances into the environment;
  4. WSDOT had control over how the runoff was disposed of because not only did it design the drainage system but it also had the ability to redirect, contain or treat its contaminated runoff.

Whereas most courts examining the issue of arranger liability post-Burlington Northern have narrowed the scope of liability, Judge Bryan took the opposite approach. However, he also concluded that issues of fact precluded him from determining whether WSDOT could properly assert the “federally permitted release” exemption under §107(j) of CERCLA, or whether it could establish the third party defense to liability under §107(b).

Facility Definition Narrowed

In the other opinion, the Court focused on the meaning of “facility” under §107(a)(1) (imposing liability on an owner and operator of a facility) and §107(a)(2), (imposing liability on a person, who at the time of disposal of hazardous substances, owned or operated a facility at which such hazardous substances were disposed). The United States argued that the entire Commencement Bay Site was a facility and that WSDOT was an owner of property within the borders of the Site. WSDOT claimed that the waterways were the facility, which it did not own.

Relying upon U.S. v. Township of Brighton, 153 F.3d 307, 313 (6th Cir. 1998), the Court determined that the bounds of a facility should be defined by the bounds of the contamination. It concluded that the United States’ definition was too broad because it would impose liability on persons not related to the contamination. The Court’s analysis focused upon the following:

  1. facility is defined in §101(a) of CERCLA as an “area where a hazardous substance has been deposited, stored, disposed of, or placed, or otherwise come to be located;”
  2. the Commencement Bay Site included properties owned by different parties, with no common purpose among the different owners;
  3. in order to be a liable party under CERCLA Section 107(a)(1), WSDOT must be “the owner or operator of the facility in which the United States incurred a response cost.” (Slip Opin. At 5).

WSDOT was not the owner or operator of the waterways and although it owned the Tacoma Spur Property, no response costs were incurred on that property, so WSDOT was not found to be a liable party under Section 107(a)(1).

Significantly, Judge Bryan also noted that if the party was only connected factually to a portion of the property, that distinction should be drawn in its divisibility analysis. Slip Opin. at 4.

As to liability under Section 107(a)(2), the Court found that there was a genuine issue of material fact as to whether the hazardous substance, coal tar, was disposed of through the drainage systems on the Tacoma Spur Property.

These rulings are likely to have widespread ramifications in the many river and harbor sites which are pending throughout the United States. And whereas Judge Bryan extended arranger liability under CERCLA to public entities that designed and managed stormwater systems, he narrowly defined a “facility” under CERCLA, and thus, limited the scope of owner/operator liability in such cases. These issues will most definitely be the subject of future litigation.

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