Date: 01-07-2006

Case Style: Pacific Sound Resources, et al. v. Burlington Northern Railway, et al.

Case Number: 54491-8-I

Judge: Schindler

Court: Supreme Court of Washington on appeal from the Superior Court of King County

Plaintiff's Attorney:

David Devalois Dicks and Jennifer Tanya Barnett, Cascadia Law Group, Seattle, Washington; Gillis Edward Reavis of Foster Pepper & Shefelman PLLC, Seattle, Washington;

Amicus Curiae on behalf of Washington Department of Ecology, Kristie Elizabeth Carevich, Attorney General's Office, Ecology Division, Olympia, Washington and Steven J. Thiele, Stoel Rives LLP, Seattle, Washington

Defendant's Attorney:

Thomas Dean Adams, Deborah Lynn Carstens, Jerret E. Sale of Bullivant Houser Bailey PC, Seattle, Washington

John Barg and Marc Zeppetello of Barg, Coffin, Lewis, Trapp, San Francisco, California

James Carl Hanken, Seattle, Washington

Amicus Curiae on behalf of United States, Christa L. Thompson, Attorney General's Office, Natural Resources Division, Olympia, Washington

Description:

A contribution claim under Washington's Model Toxics Control Act (MTCA) for recovery of cleanup costs against other potentially liable persons must be brought within three years 'from the date remedial action confirms cleanup standards are met.'1 While the Legislature broadly defines 'remedial action,' it did not define what action 'confirms' when cleanup standards are met. Pacific Sound Resources (PSR) and The Port of Seattle (the Port) sued Burlington Northern Santa Fe Railway Company and J.H. Baxter and Company (collectively 'BNSF') and others2 under the MTCA to recover environmental cleanup costs incurred at the PSR Superfund Site (Site). PSR and the Port also alleged claims under common law tort theories of negligence, nuisance, and trespass. On summary judgment, the trial court dismissed the lawsuit as barred by the statute of limitations. In dismissing the claims under the MTCA, the trial court relied on assertions in the final Remedial Investigation and Feasibility Study (RI/FS) approved by the Environmental Protection Agency (EPA) to conclude PSR and the Port's contributions claims were barred by the statute of limitations.

We conclude that the language in RCW 70.105D.080 that 'remedial action confirms cleanup standards are met' requires some official decision by the lead agency. EPA's approval of the RI/FS is not an official decision that triggers the statute of limitations. The RI/FS is a predecision document that identifies the nature and extent of the problems at the site and evaluates and recommends alternative cleanup actions. After completion of the RI/FS, the lead agency issues a formal decision selecting the cleanup action. Because we conclude that the earliest the statute of limitations began to run for the MTCA contribution claims was when EPA officially selected the cleanup remedy for the Site and established site cleanup levels in the Record of Decision (ROD), we need not definitively decide what remedial action 'confirms' when cleanup standards are met under the MTCA. In order to fulfill the stated purpose of the statute to encourage and promote hazardous waste site cleanup by private parties, the Legislature or the Washington Department of Ecology (DOE), through administrative rule making, needs to clearly define what remedial action confirms that cleanup standards are met under RCW 70.105D.080.

We conclude the common law tort theories are barred by the three-year statute of limitations because there were actual and substantial damages known well over three years before PSR and the Port filed their lawsuit. But we reverse the trial court's decision to dismiss the contribution claims under RCW 70.105D.080 and remand for trial.

FACTS

The PSR Site was a wood-treatment facility that began operation in the early 1900s. PSR, formerly the Wyckoff West Seattle Wood Treating facility, owned and operated the Site from 1959 to 1994. The Site is contaminated with creosote, pentachlorophenol, chemonite and other hazardous substances. The Site is located on the south shore of Elliott Bay in the Puget Sound, and includes twenty-five acres of upland property and fifty acres of adjacent aquatic lands. In August 1984, EPA issued an administrative order directing PSR to investigate contamination at the facility. In March 1985, PSR's president and three of its employees pled guilty to criminal violations of federal environmental laws. In September 1987, PSR and EPA entered an Administrative Order on Consent (consent order) under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) and the Resource Conservation and Recovery Act (RCRA). The consent order required PSR to complete the investigation of hazardous substances at the facility, study necessary corrective alternatives, perform interim corrective action, and submit a closure plan.

In January 1990, EPA issued another administrative order to PSR under CERCLA and RCRA. The order required PSR to prepare a Remedial Investigation and Feasibility Study (RI/FS). As a part of the RI/FS, PSR conducted extensive investigations, including soil and groundwater sampling. In March 1990, PSR notified EPA that it did not have sufficient funds to complete the RI/FS. EPA estimated the cost to clean up the Site would be between $40 to $50 million.

Because PSR could not continue with cleanup efforts, EPA assumed primary responsibility for the Site under CERCLA. EPA designated two operable units at the Site for purposes of investigation: the Upland Unit that included soil and groundwater3 and the Marine Sediments Unit, the adjacent offshore portion of the Site.4 In May 1994, EPA listed the PSR Site on the National Priorities List for cleanup under CERCLA.5

In August 1994, PSR and EPA entered into a Consent Decree. The consent decree required PSR to contribute all its assets to the PSR Environmental Trust and to pay for cleanup actions at the Site. Under the consent decree, PSR contributed more than $10.5 million to remediate the Site. While EPA was negotiating the consent decree with PSR, the Port began efforts to purchase the upland portion of the Site for container terminal operations. To limit its liability for cleanup costs at the Site, the Port negotiated a Prospective Purchaser Agreement (PPA) with EPA. Under the PPA, the Port agreed to deposit $9 million into the PSR Environmental Trust and to pay $7.2 million for environmental response activities at the Site and the adjacent properties. In exchange, EPA agreed that the Port would not be liable for future claims from preexisting contamination. The Port purchased the upland portion of the Site from PSR in October 1994. In the Administrative Order On Consent Re PSR Superfund Site, the Port agreed to assume responsibility to continue cleanup efforts at the Site including (1) project management; (2) assessing current conditions; (3) site stabilization and plant demolition; (4) early removal actions; (5) completing the RI/FS; and (6) surface capping.

In November 1994, EPA and the Washington Department of Ecology (DOE) entered a Memorandum of Understanding (MOU) defining the roles of EPA and DOE in relation to the cleanup of the upland portion of the Site. Under the MOU, EPA was the lead agency responsible for overseeing the investigation and cleanup at the Site. DOE was the support agency in the cleanup process, which included evaluating and commenting on major decisions at the Site.

In 1995, the Port demolished the wood-treating facility and excavated and removed approximately 4,000 cubic yards of contaminated soil and sludge from the Site. In 1996, the Port installed a slurry wall to prevent contaminants from migrating from the upland area into the offshore portion of the Site and to lessen the tidal effects on groundwater. The Port also installed a recovery trench to prevent contaminants from migrating into the Elliot Bay. On June 30, 1998, the Port installed a low-permeability asphalt cap over the upland portion of the Site.

In June 1997, under the supervision of EPA, the Port completed the draft RI/FS for the groundwater in the upland portion of the Site. In preparing the RI/FS, the Port conducted three rounds of groundwater sampling and a 'fate and transport analysis' to assess the groundwater quality at the Site. After receiving comments on the draft RI/FS from the Army Corps of Engineers, the Washington Department of Natural Resources and DOE, EPA directed the Port to prepare a final RI/FS. In November 1998, EPA approved the 'Final Upland Groundwater Remedial Investigation and Feasibility Study Report.' The final RI/FS states that groundwater in the upland portion of the Site '{c}omplies with cleanup standards.'

Approximately a year later, on September 30, 1999, EPA issued a Record of Decision (ROD)6 for the Site. Based on the RI/FS analysis, EPA formally adopted a cleanup plan for the entire Site and selected containment remedies in the ROD. The ROD states that 'PSR groundwater meets cleanup requirements' and that the early remedial action constitutes the final action for the upland unit, but additionally required engineering controls, institutional controls, and monitoring to confirm the remedial actions were effective.

On September 25, 2002, PSR and the Port sued several defendants including Burlington and Baxter (BNSF) for cleanup costs contribution under the MTCA, RCW 70.105D.080.7 PSR and the Port also sued under common law tort theories of negligence, nuisance, and trespass. On summary judgment, the trial court dismissed all of PSR's and the Port's claims against BNSF based on expiration of the three-year statute of limitations. The trial court denied PSR's and the Port's motion for reconsideration or clarification.8

PSR and the Port appeal the summary judgment dismissal of their claims for contribution under the MTCA and common law tort claims, and denial of their motion for reconsideration or clarification.

* * *

Outcome: We conclude that the common law tort theories of trespass, nuisance, and negligence are barred by the statute of limitations and affirm the trial court's decision to dismiss those claims on summary judgment, but we conclude the trial court erred in dismissing the contribution claims under the MTCA and reverse and remand for trial.

Plaintiff's Experts: Unknown

Defendant's Experts: Unknown

Comments: None