Tesoro Refining & Marketing Company, LLC v. Los Angeles Regional Water Quality Control Board

In this appeal, plaintiffs and appellants Tesoro Refining &

Marketing Company LLC and Tesoro Socal Pipeline Company

LLC (Tesoro) appeal the denial of a writ of mandate seeking to

set aside a cleanup and abatement order (CAO) issued by

defendant and respondent Los Angeles Regional Water Quality

Control Board (Regional Board).1

Tesoro alleges that the trial judge erred in two ways. First,

Tesoro claims that the administrative record does not contain

substantial evidence to support the finding that Tesoro’s

pipelines were the source of the pollutants. Second, Tesoro,

claiming that any such discharge must have occurred before

1970, challenges the imposition of liability as an impermissible

retroactive application of the Porter-Cologne Water Quality

Control Act of 1969 (Porter-Cologne Act). (Wat. Code,

§§ 13000―16104.)

2

The Regional Board responds that there is substantial

evidence to support the trial court’s decision. Further, the

Regional Board objects to Tesoro’s introduction of a new claim of

retroactive application in this proceeding. As a threshold matter,

the factual question of when Tesoro’s pipelines leaked pollutants

was never answered because Tesoro never argued to the Regional



1 Tesoro acquired these pipelines effective June 1, 2013.

Tesoro and the previous owners, BP Pipelines (North America),

Inc., Atlantic Richfield Company (ARCO) and ARCO Terminal

Services Corporation (ATSC), shall be referred to collectively as

“Tesoro.”

2 All further undesignated statutory references are to the

Water Code.

3

Board that this action involved an impermissible retroactive

application of the Porter-Cologne Act. In fact, throughout the

administrative process, Tesoro denied that its pipelines were the

source of the pollution. Where, as here, the administrative

agency has not determined a factual predicate for a defense such

as this one, administrative exhaustion should preclude the

argument. Finally, the Regional Board asserts that even if

exhausted, Tesoro’s retroactivity argument erroneously limits the

definition of “discharge.” The term “discharge” must be read to

include not only the initial occurrence, but also the passive

migration of the contamination into the soil and, ultimately, into

the groundwater.

We find that the law and substantial evidence support the

trial court’s denial of Tesoro’s writ of mandate. Substantial

evidence in the administrative record supports the court’s

independent judgment that Tesoro’s pipelines were the source of

the contamination addressed in the CAO. We also find that it

would have been futile for Tesoro to argue its narrow definition of

“discharge” before the Regional Board, thereby excusing its

failure to exhaust. We also hold that, even if substantial

evidence in the record supported Tesoro’s factual contention that

the initial discharge from its pipelines necessarily occurred before

1970, it would still be an actionable discharge under the PorterCologne

Act.

BACKGROUND FACTS

To understand the issues presented here, it is necessary to

examine the statutory basis for the challenged order and the facts

surrounding the investigation of and enforcement actions taken

with the order.

4

A. The Porter-Cologne Act

Enacted in 1969, the Porter-Cologne Act reflects the

public’s “primary interest in the conservation, control, and

utilization of the water resources of the state,” and intends to

advance that interest by ensuring the protection of the “quality of

all the waters of the state” for the public’s use and enjoyment.

(§ 13000.)

The Porter-Cologne Act recognizes that the protection of

water quality can best be accomplished by statewide regulation

with regional administration. Thus, under the Porter-Cologne

Act, the State Water Resources Control Board (State Board) and

nine regional boards are the principal state agencies for enforcing

state water pollution law.3 (See WaterKeepers Northern

California v. State Water Resources Control Bd. (2002) 102

Cal.App.4th 1448, 1452.) “Waters of the state,” as defined in the

Porter-Cologne Act, include “any surface water or groundwater

. . . within the boundaries of the state.” (§ 13050, subd. (e).)

Section 13304, subdivision (a) establishes the Regional

Board’s authority to issue a CAO to any person “who has caused

or permitted, causes or permits, or threatens to cause or permit

any waste to be discharged or deposited where it is, or probably

will be, discharged into the waters of the state and creates, or

threatens to create, a condition of pollution or nuisance.” Upon

order of a regional board, the discharger shall “clean up the waste

or abate the effects of the waste, or, in the case of threatened



3 The State Board is solely responsible for setting statewide

policy concerning water quality control and is the only entity

authorized to promulgate regulations to implement the Act.

(State Water Resources Control Bd. Cases (2006) 136 Cal.App.4th

674, 696.)

5

pollution or nuisance, take other necessary remedial action.”

(§ 13304, subd. (a).) A regional board can order suspected

dischargers to investigate to determine the source of the

pollution. (§ 13267.) A person who objects to the CAO can file a

petition with the State Board to review that action. (§ 13320,

subd. (a).)

B. Tesoro’s Pipelines and the Regional Board’s

Investigation

In November 2009, the Regional Board received notice from

the California Department of Public Health (DPH) regarding an

inquiry from the Wrigley Heights neighborhood in Long Beach,

California. Residents of the Wrigley Heights neighborhood had

expressed concern regarding potential vapor intrusion into

buildings. DPH requested that the Regional Board conduct

further investigation of petroleum hydrocarbon-impacted soils

and groundwater contamination at the Oil Operators Inc. (OOI)

site located nearby.

OOI is a cooperative association of several companies which

operate oil wells in the Long Beach/Signal Hill area. OOI owns a

20-acre parcel of land in the City of Long Beach, which is

bounded by the 405 and 710 Freeways, the Los Angeles River and

Wardlow Road and Golden Avenue. At this site, OOI operated

onsite water treatment facilities to treat production brines and

other fluids recovered during crude oil production. OOI ended all

operations in 1998, and the property has been undergoing decommissioning

since that time.4



4 The OOI site has been the subject of remediation under the

oversight of the City of Long Beach Department of Health and

Human Services in accordance with a consent decree issued in

the Los Angeles Superior Court in 2002. Full scale remedial

6

In February 2010, the Regional Board issued a requirement

for a technical report pursuant to section 13267 to OOI. The

Regional Board ordered OOI to complete onsite and offsite

assessments of dissolved groundwater contamination and to

determine whether any inhabitants have been potentially

exposed to health threats from migrating volatile organic

compounds (VOC’s) contaminant plumes from the OOI site.

Specifically, OOI was to begin sampling groundwater monitoring

wells on its site and submit quarterly reports and submit a work

plan to delineate fully the lateral and vertical extent of

groundwater contamination.

In March 2010, OOI submitted to the Regional Board a

proposed work plan and a recitation of current subsurface

conditions at the OOI site. In relevant part, the report discloses

the existence of benzene in the northern most portion of the

property at 45 feet. In addition, the report disclosed the presence

of 1,2-dichloroethane (1,2-DCA), an additive that had been used

with leaded gasoline, in groundwater. Benzene was also present

in the groundwater. Concentrations of both 1,2-DCA and

benzene exceeded the state’s maximum contaminant levels along

the eastern portion of the OOI property.

In May 2010, the Regional Board issued another

Requirement for a Technical Report pursuant to section 13267 to

OOI. In this report, the Regional Board directed OOI to

determine if any offsite inhabitants had been potentially exposed

to health threats from migrating VOC’s contaminant plumes



activities, including bioremediation of the soils under the site,

has been ongoing.

7

beneath the residential properties on the eastern boundary of the

OOI site, which was the Wrigley Heights neighborhood.

A plan for additional site assessment by OOI was approved

in mid-2011 and a series of reports from that work plan were

submitted to the Regional Board. A multi-depth, site-wide soil

gas survey was conducted beneath the OOI property and the

Wrigley Heights neighborhood. Soil gas samples were tested for

VOC’s (benzene) and methane. High concentrations of benzene

in soil gas were found to be coincident with higher concentrations

of benzene in the underlying groundwater. The higher level of

benzene in soil gas also appeared correlated with buried

petroleum (gasoline) pipelines on the eastern boundary of the

OOI site. In addition, the groundwater flow direction onsite was

established to be to the north-northwest. The observed

groundwater flow direction along with the pattern and

distribution of contaminants within the groundwater indicated

an offsite source to the east of the OOI property.

The presence of benzene and 1,2-DCA, the location of that

contamination on the eastern boundary of the OOI site and the

general groundwater flow direction led the Regional Board to

suspect that there had been a gasoline discharge. And, the

location and distribution of the groundwater contamination

suggested that the source of that discharge was located along

Golden Avenue. Based on the groundwater data and their

engineering and scientific expertise, staff at the Regional Board

narrowed the origination of the discharge to certain pipelines

that carried gasoline beneath Golden Avenue.

In January 2012, the Regional Board issued a requirement

for technical report on pipeline inventory to two companies—

Tesoro and Plains All American Pipeline, L.P. (Plains). Those

8

two companies owned underground pipelines that might have

transported gasoline near Golden Avenue. The Regional Board

ordered these two companies to provide inventories of their

respective pipelines within one mile of the intersection of Baker

Street and Golden Avenue in Long Beach and to describe the

products that those pipelines conveyed.

The information provided by these two companies provided

critical facts to the investigators.5

Plains identified seven line segments within the one-mile

radius of the investigation area. Plains reported that “all line

segments have historically only been in crude oil service.” A

crude oil leak was not consistent with the type of contamination

found at the subject site. Further, the one segment of Plains’s

crude oil pipelines in the immediate vicinity of the investigation

location (Line 52E) was purged and placed out of service for at

least the last 12 years.6

In Tesoro’s response, it identified six pipelines within a

one-mile radius of the intersection of Baker Street and Golden

Avenue. The Tesoro pipelines crossing nearest to the location of

the detected contamination were Lines 32, 34 and 252.



5 Although Tesoro asserts that there were over 10 pipelines

in the vicinity of 712 Baker Street, the Regional Board

investigated the use, history of operation and release and repair

history for these lines. Records from the state fire marshal’s

office and the City of Long Beach, Department of Public Works

showed only Tesoro’s pipelines carried gasoline.

6 Tesoro verified that Plains’s Line 252 was a crude oil

transport pipeline.

9

Line 252 was initially identified by Tesoro as a wastewater

line. Tesoro later changed its description of Line 252 as carrying

gasoline until 1953 and then used for wastewater transport

thereafter and inactive since 1995. This line is a six-inch

pipeline.

Line 32 was an idled 12-inch “crude and refined dark

products line.” Work was underway to reactivate this line.

During an inspection of the line in 2011, some “anomalies (dents)

were identified in the vicinity of Baker Street and Golden

Avenue,” and those areas of Line 32 were “subsequently bolstered

with approved pipeline repair methods.” Tesoro denied any

release from Line 32 at any time.

Line 34 was an active eight-inch diameter diesel and

gasoline refined products line. A piece of that line had been

relocated/replaced under the Metropolitan Transit Authority rail

line in 2010 as a precautionary measure. According to Tesoro,

there was no “release of product” and the abandoned section was

filled with mud. According to Tesoro, there was no evidence of a

release from Line 34. Tesoro denied any release from Line 34 at

any time.7

Based on these responses, the only pipelines under Golden

Avenue that had ever transported refined gasoline belonged to

Tesoro.

In response to this information, the Regional Board issued

another requirement for technical report to Tesoro. In that order,

Tesoro was described as “suspected of being responsible for” a

discharge of waste beneath Golden Avenue resulting in “gasoline



7 Cal Fire records showed the only record of release on this

line was a diesel spill in the City of Bellflower in 1990.

10

type hydrocarbon contamination” in the soil and soil vapor. And,

the order directed Tesoro to prepare and submit a work plan to

determine the extent of that contamination.

Tesoro responded by claiming that it was not responsible

for any gasoline-type hydrocarbon contamination of the soil and

groundwater at the site. Tesoro flatly denied any leaks from any

of its pipelines at any time. Tesoro noted that Line 32 had not

been used for the conveyance of gasoline. And, Tesoro pointed

out that Line 34 had passed testing on eight different occasions

and that there was “no evidence of a release from Line 34.”8

Tesoro also argued that the Regional Board’s data failed to

support a finding of gasoline contamination.9

The Regional Board requested additional information and

analysis be conducted through site sampling in response to



8 Tesoro later amended its answers and reported a 1973 leak

from Line 32 near Golden Avenue about one-half mile from Baker

Street. The leak was caused by external corrosion. Tesoro also

reported a two-barrel leak of “unknown material” from Line 34 in

1990. Again, that leak was caused by external corrosion. The

location of that release was unknown.

9 In response to the Regional Board’s order for a soil and soil

vapor investigation of the area surrounding its pipelines, Tesoro

proposed placing probes at a single location adjacent to Line 32.

The Regional Board found that work plan to be deficient and,

upon further discussion, Tesoro proposed three sampling

locations. The Regional Board asked Tesoro to expand the extent

of its proposed investigation to delineate the full extent of

hydrocarbon impacts in soil, soil vapor and groundwater on both

sides of BP Line 32 and 34. As of November 2012, no such

revised work plan was submitted by Tesoro to the Regional

Board.

11

Tesoro’s arguments. Six water samples and one product sample

were tested. These tests revealed the presence of 2,2,4-

trimethylpentane (iso-octane, arrowed) and other

trimethylpentanes, which are blended into gasoline to increase

octane levels. These tests also revealed the presence of

n-alkanes, which is suggestive of leaded gasoline. The tests ruled

out any heavier petroleum products in the sample. Once again,

the only gasoline pipelines in the area were owned by Tesoro.

Unable to assert that the contamination was not from

refined products, Tesoro changed its focus and now claimed that

OOI’s wastewater lines, not Tesoro’s gasoline pipelines, were the

source of the problem. Citing a 1953 United States Geological

Survey (USGS) report, Tesoro asserted that OOI’s wastewater

treatment facility was the source of the contamination.10

Specifically, Tesoro suggested that OOI accepted waste from

wells and refineries and then discharged that waste via the sewer

line or the Los Angeles River discharge line. This refinery waste,

Tesoro argued, was the source of the gasoline contamination.

The Regional Board investigated that theory. Business

records from OOI failed to corroborate the USGS’s description of

its waste treatment operations. OOI had no records of refinery

waste water going to the site. The Regional Board, however,

accepted the possibility that OOI had accepted refinery wastes.

However, even if OOI accepted refinery wastes at some point in

the past, the soil, soil gas and groundwater data all pointed to the



10 United States Geological Survey, 1953, Department of the

Interior. “Native and Contaminated Ground Waters in the Long

Beach-Santa Ana Area, California,” U.S. Geological Survey

Water-Supply Paper 1136, Washington, D.C., at pp. 71―75.

12

pipeline corridor as the source of the contamination. If OOI were

the discharger, the data would have looked different. For

example, if OOI had discharged refinery wastes into the

Los Angeles River (as Tesoro contended), then the groundwater

proximate to the western side of the OOI property would be

contaminated. Tests of this groundwater, however, were

negative. Using this and other facts, OOI’s reception of

wastewater from refineries was ruled out as a source of the

contamination.

The Regional Board issued a further report establishing the

basis upon which it concluded that Tesoro’s pipelines were “a

discharger and responsible party,” and directed Tesoro to adopt a

“proactive approach and work together with all the stakeholders

to address this environmental concern.”

Tesoro declined to adopt a “proactive approach,” instead

asserting a new argument to disprove that it was a discharger.

For the first time, Tesoro claimed that Line 34 did not carry

gasoline; it had been dedicated to diesel service since 1946. This

factual claim contradicted the sworn statement originally

provided by Tesoro.

Tesoro’s claim that Line 34 only carried diesel also failed to

comport with other contemporaneous records regarding the

pipeline and its uses. Cal Fire noted that its records showed that

Line 34, from the Los Angeles Refinery to Vinvale, was used for

refined product service. A 1975 City of Long Beach pipeline map

also showed that Line 34 was in gasoline service.11 And, a



11 Although Tesoro claimed that the “Gaso” designation on

this 1975 City of Long Beach pipeline map generically applied to

any refined fuel product and as such could properly designate a

diesel pipeline, that argument was unsupported by competent

13

Western Oil and Gas Association, Long Beach-Wilmington

Harbor area, oil handling facility map, updated on January 1973,

showed Tesoro as having four-, six-, eight- and twelve-inch

diameter “refined products lines.” 12 The four- and six-inch lines

identify segments of Line 252, the 12-inch diameter line is Line

32 and the eight-inch diameter line is Line 34.

C. Cleanup and Abatement Order and Appeal to State

Board

In April 2013, the Regional Board issued a “tentative

cleanup and abatement order” (TCAO) to Tesoro. The TCAO

found that Tesoro was responsible for a discharge of waste at the

site and, that as a result of that discharge, elevated

concentrations of benzene and other petroleum hydrocarbons

were found in the soil and groundwater at the site.

In response, Tesoro submitted extensive comments, adding

to the hundreds of pages that it had already submitted to the

Regional Board. Although several arguments were made, at no

time did Tesoro admit to having caused a discharge from its

pipelines at any time—either before or after 1970. “We have no

record of gasoline pipeline leaks from any of the three pipelines



evidence. A City of Long Beach employee noted that “Gaso” on its

1975 maps referred only to gasoline—not diesel.

12 Although Tesoro claimed that a Golden Eagle pipeline

running along the Golden Avenue corridor on the City of Long

Beach map carried gasoline, the Western Oil and Gas Association

map does not show any Golden Eagle pipelines running along the

Golden Avenue corridor. There are Golden Eagle pipelines on the

1973 map, but they do not run along the Golden Avenue corridor

and they are identified as “oil” pipelines, not refined product

pipelines.

14

that [Tesoro] operates under Golden Avenue.” Nor did it identify

any other gasoline pipeline that could have been responsible for

the contamination at the site. Rather, Tesoro argued that “[t]he

nature of the contaminants and their location points more

logically to the operations of the Oil Operators, Inc. site.”

According to Tesoro, “nearby community residents noticed, and

reported to authorities, several vacuum trucks discharging waste

[at the OOI site] as late as 2000.”

After considering and responding to these comments, the

Regional Board issued the final CAO on September 18, 2014. The

Regional Board ruled out “other possible sources of wastes at the

site, including the operations of the Oil Operators, Inc. (OOI)

site.” And, the CAO noted that “[j]ust because [Tesoro] has no

record of gasoline pipeline leaks from any of the three pipelines

that [Tesoro] operated under Golden Avenue does not mean that

a release did not occur. A release can occur even if there is no

record of it.” Further, the Regional Board accepted the

information provided by Tesoro and other available records

showing that Lines 32, 34 and 252 collectively transported crude

oil, dark refined products, other refined products, including

gasoline and diesel fuel, and oily water.

Tesoro filed a petition for review with the State Board.

Tesoro argued (again in contradiction with its initial admissions)

that its lines were not gasoline lines after 1953 and there was no

evidence that they leaked at any time. For the first time, Tesoro

argued that given the historical use of its pipelines for gasoline,

the CAO constituted an impermissible retroactive application of

the Porter-Cologne Act. Tesoro argued that the Regional Board

was required to make a finding that the discharge at issue here

occurred before 1970, even though Tesoro had not asserted that

15

position before the Regional Board and the factual basis for

Tesoro’s retroactivity argument was contradicted by the

company’s own admissions and other competent evidence in the

record.

The State Board took no action on Tesoro’s petition for

review, and the petition was deemed denied by operation of law

on January 1, 2016. (See Cal. Code Regs., tit. 23, § 2050.5.)

D. Tesoro’s Writ of Mandate and Trial Court Ruling

Tesoro filed a petition for writ of mandate challenging the

Regional Board’s issuance of the CAO.

In its petition for writ of administrative mandate, Tesoro

argued that the evidence in the record showed that the CAO

mandated the remediation of discharges that took place, if at all,

long before the Porter-Cologne Act became effective. Tesoro

criticized the Regional Board’s failure to make an express finding

that the discharge occurred after 1970 as required to avoid an

impermissible retroactive application of the Act.13 Further,

Tesoro argued that a factual finding of a pre-1970 discharge was

necessary because “discharge” could not be properly defined to

encompass pollution that “continues to occur and expand,” as it

passes from its original location, through the soil and into the

groundwater. Citing Lake Madrone Water Dist. v. State Water

Resources Control Bd. (1989) 209 Cal.App.3d 163, 174 (Lake

Madrone), Tesoro argued that such a definition was contrary to

the plain meaning of the word. Tesoro also argued that even



13 In response to the Regional Board’s argument that Tesoro

had not made this argument before the Regional Board and was,

therefore, precluded from raising this issue judicially, Tesoro

argued that this jurisdictional question had not been waived, and

that further exhaustion would have been futile.

16

under the State Board’s definition, the record showed no

“discharge” had occurred because recent monitoring data showed

that the contaminant concentrations are trending downward.

The trial court issued its decision on the petition on

December 12, 2017. The court ruled, based on its independent

judgment, that the Regional Board’s findings were supported by

the weight of the evidence.

The trial court, giving the State Board’s interpretation of

“discharge” in section 13304 considerable deference, defined that

term to encompass not only the initial event but also to include

the continuing migration of contaminants “so long as they

continue to threaten state waters.” This definition, the court

found, was based not only on the State Board’s expertise in

hydrology and in knowing what is necessary to maintain water

quality “by ensuring that the activities are encompassed that

have an ongoing effect on the quality of the waters of the state,”

but was consistent with the Act’s intent. Thus, the trial court

found that the Regional Board had not retroactively applied the

Porter-Cologne Act to a pre-1970 discharge.14



14 The trial court rejected the Regional Board’s claim that

Tesoro failed to exhaust its administrative remedies by failing to

assert before the Regional Board that it was retroactively

applying the Porter-Cologne Act. Citing Buckley v. California

Coastal Com. (1998) 68 Cal.App.4th 178 (Buckley), the trial court

held that “ ‘[t]he rule of exhaustion of administrative remedies

does not apply where the subject matter lies outside of the

administrative agency’s jurisdiction.’ ” In this case, Tesoro’s

contention to the State Board that the discharge occurred prior to

1970 was sufficient to avoid the bar of administrative exhaustion.

17

The trial court also evaluated the administrative record

and concluded, based on its independent judgment, that the

Regional Board had fully and fairly investigated all parties, and

that the Regional Board properly ruled out other parties as a

possible source of the waste. Benzene was in the gasoline

transported by Tesoro in its Golden Avenue pipelines, and the

maximum benzene concentrations in groundwater were generally

consistent with this pipeline corridor. The investigation also

discovered 1,2-DCA and iso-octane indicators of gasoline

discharge. The highest 1,2-DCA groundwater detections were

found in wells close to and downgrade from Tesoro’s Lines 32, 34

and 252. The distribution of these gasoline-related chemicals

along the eastern edge of the OOI property provided sufficient

circumstantial evidence that Tesoro and its pipelines along

Golden Avenue were the source of the pollution.

Accordingly, the trial court denied Tesoro’s petition and

entered judgment in favor of the Regional Board on January 10,

2018.

A timely appeal followed.

DISCUSSION

A. Standard of Review

Section 13330, subdivision (e) requires the trial court to

exercise its independent judgment in reviewing the CAO issued

by the Regional Board. The parties both agree that the trial

court properly used the correct “independent judgment” standard

of review in this case. Thus, on appeal, we review the lower

court’s factual determinations under the substantial evidence

standard. (Coastal Environmental Rights Foundation v.

California Regional Water Quality Control Bd. (2017) 12

18

Cal.App.5th 178, 190.) Questions of law and the lower court’s

legal determinations are reviewed de novo. (Ibid.)

B. Substantial Evidence Shows Other Possible Sources

of Gasoline Contamination Were Ruled Out.

Tesoro’s first contention on appeal is that the trial court’s

finding of Tesoro’s pipelines as the source of the gasoline

contamination in this instance is not supported by substantial

evidence in the record. Specifically, Tesoro asserts that the

Regional Board’s investigation failed to “rule out” other possible

sources of gasoline contamination.

The trial court, based on its independent judgment, reached

the conclusion that Tesoro was responsible for the waste

discharge and that the Regional Board had fairly investigated

whether OOI or other pipeline operators might be responsible for

the waste at the site and had properly ruled them out.

The circumstantial evidence in support of this conclusion is

overwhelming. The tests conducted on soil, soil gases and

groundwater at the site point clearly in the direction of gasoline

as the source of the pollution. These tests detected 1,2-DCA, isooctanes

and n-alkanes, common additives used in the production

of gasoline. In addition, these tests failed to show the presence of

any heavier-end hydrocarbons, indicative of crude oil. The

groundwater data also showed that the benzene concentrations

were highest along the immediate vicinity of Golden Avenue, and

lower at locations farther away. Thus the plume was roughly

centered at and aligned with Golden Avenue, between Baker

Street and where Golden Avenue veers southeast. Soil vapor

data indicates a track of benzene near Tesoro’s Pipelines 32, 34

and 252, and the pattern of the benzene demonstrates a pattern

of an older near-surface release for which the center of the mass

19

has migrated downward—thus rebutting Tesoro’s theory that the

waste was released from a deeper source. Tesoro admitted that

Line 34 operated in this Golden Avenue corridor, and carried

refined gasoline and reformulated gasoline in its pipelines during

the relevant period. Tesoro's initial admission of how it used

Line 34 was corroborated by other records, including a City of

Long Beach pipeline map and a Western Petroleum Association

map showing that this pipeline transported gasoline in the

1970’s.

And, despite considering and studying the issue, the

Regional Board found no other source of gasoline contamination.

OOI had no records of ever handling waste from gasoline

refineries, despite a contrary statement contained in a

description of OOI’s operations in a 1953 report of the USGS.

Further, that version of historic events—that OOI processed

refined waste products and dumped them in the Los Angeles

River—would not have created the contaminated soil and

groundwater patterns found on the Golden Avenue corridor.

Further, Tesoro’s claim that the release was from a source other

than its pipelines failed to find support in the pattern of benzene

contamination in the soil and soil vapor. Finally, the

uncontroverted information in the record is that Plains’s Line 52

transported only crude oil. The Regional Board’s testing of the

soil and groundwater in the Golden Avenue corridor ruled out

crude oil as the source of the contamination.

This circumstantial evidence constitutes more than

sufficient evidence upon which the trial court could reasonably

infer that there was a gasoline discharge along the Golden

Avenue corridor and that the discharge came from Tesoro’s

pipelines.

20

C. Tesoro’s Failure to Exhaust the Allegation that the

Discharge at Issue Here Occurred Before 1970 that

Lies at the Heart of the Retroactivity Argument Is

Excused.

The factual predicate upon which Tesoro’s entire

retroactivity argument rests—i.e., that the discharge from its

pipeline occurred only before 1970—was never determined by the

Regional Board. Tesoro never admitted that its pipelines leaked

gasoline but that these leaks occurred before 1970. Nor, as a

corollary to that admission, did Tesoro assert that the CAO

constituted a retroactive application of the Porter-Cologne Act in

any of its numerous and voluminous submissions. Even after the

tentative CAO was issued, and the Regional Board invited Tesoro

to “ensure that all evidence and comments that you wish staff

and/or the Executive Officer to consider,” Tesoro did not argue

that section 13304 was being impermissibly applied to a pre-1970

discharge. The Regional Board was never presented with that

argument and, as a result, the CAO includes no findings on that

issue.

Tesoro’s failure to raise this argument is understandable.

To have claimed a pre-1970 initial discharge would have required

a repudiation of Tesoro’s numerous denials of any discharges

from its pipelines. Tesoro’s failure to assert this argument,

however, has resulted in a paucity of evidence in the

administrative record to support its claim that the discharge at

issue here occurred before 1970. In fact, the record contains

substantial evidence that might have supported the Regional

Board reaching a very different conclusion. Tesoro’s pipelines

carried gasoline along the Golden Avenue corridor well into the

1970’s. And, although the samples suggested leaded components

21

to the gasoline as the source of the pollution at the site, leaded

gasoline was in use well after 1970. The weathered nature of the

benzene suggests a historic discharge, but does nothing to

suggest how many years ago the discharge occurred. The record

also establishes that Tesoro made repairs and experienced

discharges from certain of these pipelines after 1970. This

evidence, had the issue been raised, could have supported a

finding that the initial discharges occurred after 1970 and that

the CAO at issue here is not a retroactive application of the

Porter-Cologne Act.

As there were no arguments asserted and no findings made

regarding the timing of the initial leak from Tesoro’s pipelines,

the question of retroactivity is somewhat hypothetical. The

Regional Board objects to Tesoro being allowed to make a

retroactivity argument to the trial court because that defense and

its factual predicate were not administratively exhausted. The

trial court excused Tesoro’s failure to exhaust because “ ‘[t]he rule

of exhaustion of administrative remedies does not apply where

the subject matter lies outside the administrative agency’s

jurisdiction.’ ” We agree that the exhaustion doctrine does not

preclude a judicial determination of Tesoro's retroactivity

argument, but reach that conclusion on different grounds.

A party aggrieved by a decision of an administrative agency

must exhaust all available administrative remedies before

seeking judicial review of that decision. (Coachella Valley

Mosquito & Vector Control Dist. v. California Public Employment

Relations Bd. (2005) 35 Cal.4th 1072, 1080.) The doctrine of

exhaustion of administrative remedies precludes judicial review

of issues, both legal and factual, that could have been raised but

were not raised, at the administrative level. (Coalition for

22

Student Action v. City of Fullerton (1984) 153 Cal.App.3d 1194,

1197.) The exhaustion requirement is not a matter of judicial

discretion; it is a jurisdictional prerequisite to resort to the

courts. (Abelleira v. District Court of Appeal (1941) 17 Cal.2d

280, 293.)

The exhaustion doctrine is principally grounded on

concerns favoring administrative autonomy and the idea that

courts should not interfere with an agency determination until

the agency has reached a final decision. (McAllister v. County of

Monterey (2007) 147 Cal.App.4th 253, 275.) Of equal importance

is the notion that courts should not intervene in an

administrative dispute until the expertise of the administrative

agency can be employed to develop a complete record. (Ibid.)

There are, however, exceptions to the exhaustion doctrine. (Ibid.)

One such exception exists where a party claims that the

subject matter lies outside of the administrative agency’s

jurisdiction. (McAllister v. County of Monterey, supra, 147

Cal.App.4th at p. 275; see also Buckley, supra, 68 Cal.App.4th

178.) Tesoro argued to the trial court that it was not required to

exhaust its claim that the discharge at issue in this proceeding

had occurred before 1970 and, therefore, was barred because that

argument essentially claimed that the Regional Board did not

have subject matter jurisdiction. The trial court agreed.

That ruling was erroneous as a matter of law. In Buckley,

the question was whether the Coastal Commission could enforce

a permitting scheme over the portion of a lot that was legally

exempt from the permit requirement. (See Buckley, supra, 68

Cal.App.4th at 189.) The plaintiffs were not required to exhaust

a claim over which the Coastal Commission had no authority in

the first instance. (Id. at pp. 189―190.) There was no factual

23

dispute between the Coastal Commission and the plaintiffs—the

only question was one of law, i.e., the Commission’s legal

authority to take any action regarding the front part of Buckley’s

lot.

Unlike in Buckley, Tesoro’s claim that the Regional Board

acted outside of its jurisdiction depends upon a resolution of a

contested factual issue. Tesoro’s argument regarding the proper

statutory interpretation of the term “discharge,” rests on the

contention that the initial discharge causing the contamination of

the soil and groundwater on the Golden Avenue corridor occurred

before 1970—a factual allegation that was subject to dispute and

that was never determined by the Regional Board. It was never

adjudicated by the Regional Board because the claim of

retroactivity and its factual predicate were never raised by

Tesoro. In fact, Tesoro consistently denied ever having

discharged any gasoline from its pipelines—at any time.

Where, as in this case, the jurisdictional question rests on

disputed facts, administrative exhaustion precludes the litigation

of those facts for the first time in court. (See United States v.

Superior Court of Los Angeles County (1941) 19 Cal.2d 189, 196.)

This requirement serves the intended purpose of the exhaustion

of administrative remedies—“to reduce the burden on courts

while benefiting from the expertise of an agency particularly

familiar and experienced in the area.” (Styne v. Stevens (2001) 26

Cal.4th 42, 55 & fn. 6, 58.) The Regional Board has far more

expertise in chemistry, soil and soil gases, hydrology and other

scientific areas than the court. These experts are uniquely

qualified to determine the origin and timing of the discharge of

gasoline from Tesoro’s pipelines, or to admit an inability to

marshal sufficient facts and, thereafter, to construe the definition

24

of “discharge” to encompass a historic contamination that

continues to pollute soils and groundwater. (Morton v. Superior

Court (1970) 9 Cal.App.3d 977, 982 [“It lies within the power of

the administrative agency . . . to determine, in the first instance

and before judicial relief may be obtained, whether a given

controversy falls within its granted jurisdiction.”].)

One of Tesoro’s other claimed reasons for not asserting its

retroactivity argument in the administrative proceeding,

however, provides a legal excuse for that failure. Tesoro claims

that it would have been futile to adjudicate the date on which the

initial discharge occurred to argue that the law was being applied

retroactively. We agree.

Futility is a narrow exception to the general rule requiring

exhaustion of administrative remedies. (Sea & Sage Audubon

Society, Inc. v. Planning Com. (1983) 34 Cal.3d 412, 418.) It

applies only where the petitioner can “ ‘ “positively state” ’ ” that

the agency had “ ‘ “declared what its ruling will be in a particular

case.” ’ ” (Id. at p. 418, italics in original; Coachella Valley

Mosquito & Vector Control Dist. v. California Public Employment

Relations Bd., supra, 35 Cal.4th at p. 1081.)

In this case, the Regional Board listened, extensively

researched and carefully considered the myriad of arguments

made by Tesoro during this investigation. And, while it never

was called upon to declare what its ruling would have been if

Tesoro had admitted a pre-1970 discharge from its pipelines, the

Regional Board would have been bound by over 40 years of State

Board precedents in defining discharge. In In re Atchison,

Topeka and Santa Fe Railway Company (Order No. WQ 74-13,

Aug. 15, 1974) 1974 Cal. Env. Lexis 2 at p. *9 (Cal.St.Wat.Res.

Bd.) (Atchison, Topeka) and in two other cases thereafter, the

25

State Board held that a continuous and ongoing movement of

contamination from a source through the soil and into the

groundwater is a discharge to waters of the state and subject to

regulation. (See In re Zoecon Corp. (Order No. WQ 86-2, Feb. 20,

1986) 1986 Cal. Env. Lexis 4 at p. *3 (Cal.St.Wat.Res.Bd.)

(Zoecon Corp.); Atchison, Topeka, supra, 1974 Cal. Env. Lexis 2 at

p. *9; see also In re Spitzer (Order No. WQ 89-8, May 16, 1989)

1989 Cal. Env. Lexis 11 at p. *17 (Cal.St.Wat.Res.Bd.) (Spitzer)

[“[D]ischarge continues as long as pollutants are being emitted at

the site.”].) In fact, it cited to this precedent as the basis for the

order.

While not having made an express determination of the

issue, the Regional Board viewed the pollution at the site as

possibly resulting from an older, but ongoing discharge. For

example, Line 252 had stopped carrying gasoline in 1953. If this

line had been the original source of the waste, the Regional Board

necessarily, although not expressly, held that migration of waste

from that pipeline through the soil and into the groundwater

below supported the imposition of liability on Tesoro, even if the

pipeline initially ruptured before 1970.

As it would have been futile for Tesoro to assert the factual

bases and to present a legal argument in support of its

retroactivity claim, that omission is excused.

D. The State Board’s Definition of Discharge Is Correct.

Tesoro agrees that, if the State Board’s interpretation of

the term “discharge” as used in section 13304 is correct, then the

findings in the CAO establish that there is an ongoing discharge

of waste at the site. Tesoro’s only argument is that the State

Board’s interpretation of that term is wrong.

26

The State Board has defined the term “discharge” in this

statutory provision consistently for the past 40 years to refer to

the entire time during which the discharged waste remains in the

soil or groundwater and continues to impact or to threaten the

groundwater. (See Zoecon Corp., supra, 1986 Cal. Env. Lexis 4 at

p. *3; Atchison, Topeka, supra, 1974 Cal. ENV. LEXIS 2 at p. *9;

see also Spitzer, supra, 1989 Cal. Env. Lexis at p. *17

[“[D]ischarge continues as long as pollutants are being emitted at

the site.”].)

As stated in those decisions, discharge refers to any

movement of waste from soils to groundwater and from

contaminated to uncontaminated groundwater, and continues to

occur if the waste continues to move through the soils and

groundwater and poses a threat of further degradation to

groundwater. (Atchison, Topeka, supra, 1974 Cal. Env. Lexis 2 at

p. *9.) An actionable discharge, therefore, encompasses not

simply the initial episode of contamination, but rather includes

the time during which the waste uncontrollably flows or migrates

from its source, through the soil, and into and within the

groundwater. (See Zoecon Corp., supra, 1986 Cal. Env. Lexis at

p. *3; Atchison, Topeka, supra, 1974 Cal. Env. Lexis at

pp. *9―*10.)

Where agencies interpret statutes within their

administrative jurisdiction, such rulings constitute “ ‘a body of

experience and informed judgment to which courts . . . may

properly resort for guidance.’ ” (Yamaha Corp. of America v.

State Bd. of Equalization (1998) 19 Cal.4th 1, 12―14.) Judicial

deference is particularly appropriate in cases, such as the one

here, where the agency has “ ‘expertise and technical

knowledge’ ” and “ ‘has consistently maintained the

27

interpretation in question.’ ”

15 (Id. at pp. 12―13.) (See also

DiGiorgio Fruit Corp. v. Department of Employment (1961) 56

Cal.2d 54, 61―62 [“Consistent administrative construction of a

statute over many years . . . is entitled to great weight and will

not be overturned unless clearly erroneous.”]; Communities for a

Better Environment v. State Water Resources Control Bd. (2003)

109 Cal.App.4th 1089, 1107 [“[W]e extend considerable deference

to an administrative agency’s interpretation of its own

regulations or the regulatory scheme which the agency

implements or enforces. The agency’s interpretation is entitled to

great weight unless unauthorized or clearly erroneous.”].)

Going beyond judicial deference to the agency’s longstanding

administrative construction of its statutes, we find that

the Regional Board’s definition of discharge to include ongoing

movement of contaminants through the soil and into the

groundwater is consistent with the plain language of the statute

(See Moyer v. Workmen’s Comp. Appeals Bd. (1973) 10 Cal.3d

222, 230 [In determining the intent of the Legislature, “ ‘[the]

court turns first to the words themselves for the answer.’ ”].) In

Lake Madrone, supra, 209 Cal.App.3d at page 174, the court

determined that “the ordinary import” of the term “discharge” is



15 Tesoro’s contention that this interpretation is

“jurisdictional,” and ought, therefore, to be accorded little weight

is without merit. The statutory interpretation issue here does

not concern the scope of the agency’s jurisdiction. Section 13304

clearly confers jurisdiction on the Regional Board to issue CAO’s

with regard to ongoing discharges of waste into waters of the

state. The question posed by the definition of “discharge” is

simply whether the Regional Board’s findings in this case support

the existence of such an ongoing discharge.

28

“ ‘to relieve of a charge, load or burden; . . . to give outlet to; pour

forth.’ ” That definition is entirely congruent with the definition

used by the State Board in this case. Where, as here, a pipeline

leak puts forth or emits gasoline into the soil, and that

unremediated gasoline waste continues to pour forth or to emit

chemicals forming a toxic plume that actively threatens to pollute

otherwise uncontaminated groundwater, the term “discharge”

necessarily encompasses this entire period.

Tesoro’s argument that the discharge ends at the moment

the waste is released into the soil was not mandated by Lake

Madrone. As correctly noted by the trial judge, the issue

presented in Lake Madrone was when the discharge began, not

necessarily when it ended. Further, using the definition used in

Lake Madrone, discharge is properly interpreted to embody the

entire period during which pollution is introduced into the

environment and thereafter actively migrates so as to threaten to

pollute or to pollute groundwater.

Tesoro’s reliance on Consumer Advocacy Group, Inc. v.

Exxon Mobil Corp. (2002) 104 Cal.App.4th 438 (Consumer

Advocacy) is misplaced. In that case, the court addressed the

meaning of Proposition 65 and its provision that no business

shall knowingly “discharge or release” a chemical known to the

state to cause cancer or reproductive toxicity where it passes or

probably will pass into a source of drinking water. And, the

question presented was whether passive migration of prohibited

chemicals from soil to groundwater would constitute a separate

“discharge or release.” (Id. at p. 450.) Consumer Advocacy did

not consider or address the issue of whether, under Proposition

65 or any other law, the migration of chemicals within the soil

thereafter contaminating groundwater may be considered part of

29

a single, continuous discharge of those chemicals from their

source. In that case, in fact, there was no evidence that the

chemicals had moved out of a confined space when they simply

moved from “one point to another” within soil. (Consumer

Advocacy, at p. 450.) As those facts are clearly distinguishable

from the facts presented here, Consumer Advocacy provides no

support for Tesoro’s argument.

Nor does the State Board’s definition of “discharge” conflict

with People ex. rel Younger v. Superior Court of Alameda County

(1976) 16 Cal.3d 30 (Younger). In Younger, the Supreme Court

held that a deposit of oil, for purposes of determining a penalty

amount under section 13350, occurs on the day that the oil was

deposited and not on each day the oil remains in those waters.

(Id. at p. 44.) The statutory term, statutory scheme, and overall

purpose of the statute in that case are entirely different from the

situation presented in this appeal.16 In fact, the relevant statute

in this appeal, section 13304, uses both the terms “deposit” and

“discharge” in authorizing the issuance of a CAO. Were these

terms synonymous, there would have been no need for them both

to be used. At least for section 13304, therefore, “deposit” and



16 Section 13350 was created to deter chronic or continuous

violations, i.e., whether a person causes a single oil spill that

continues for multiple days, or separate spills on multiple days.

(Younger, supra, 16 Cal.3d at pp. 43―44.) This deterrent purpose

was best effectuated by imposing liability for each day on which

oil was actually deposited in the waters of the state. (Id. at

p. 44.) In this case, however, section 13304 does not impose a

monetary penalty and its purpose is not simply to deter

continuous or chronic dischargers. Its purpose is to ensure the

effective remediation of discharges of waste that impact or

threaten to impact state waters.

30

“discharge” must be construed as referring to something

different. (See Moyer v. Workmen's Comp. Appeals Bd., supra, 10

Cal.3d at p. 230 [“a construction making some words surplusage

is to be avoided].”)

Nor does the State Board’s definition of discharge to

include the continuous action of passive migration of

contaminants through the soil and into groundwater fail to

harmonize with the federal Comprehensive Environmental

Response Compensation and Liability Act (CERCLA) case law.

CERCLA imposes liability for response costs and damages

associated with certain “releases” or “threatened releases” of

hazardous substances. (42 U.S.C. § 9607(a).) In Carson Harbor

Village, Ltd. v. Unocal Corp. (9th Cir. 2001) 270 F.3d 863, 887

(Carson Harbor), the court held that passive migration of

contaminants through soil is not “disposal” within the meaning of

42 United States Code section 9607(a). That holding, however,

concerned different language appearing in a different statute.

The term “disposal” is entirely absent from section 13304. And,

as with Consumer Advocacy, the court in Carson Harbor

addressed only whether the migration of contaminants through

the soil—in and of itself—was actionable. In CERCLA, the mere

disposal of hazardous substances does not give rise to liability

unless the disposal results in an actual or threatened release into

the environment. (Pakootas v. Teck Cominco Metals, Ltd. (9th

Cir. 2006) 452 F.3d 1066, 1077.) Moreover, to the extent that

CERCLA is relevant to the statutory construction question

presented here, the term “release” as used in that federal

statutory scheme has been interpreted to include the passive

migration of hazardous substances. (Id. at p. 1075.) In Pakootas,

the Ninth Circuit held that the subsequent leaching of hazardous

31

substances into the environment, after the defendant had

disposed of the substances in the Columbia River, was a release

within the meaning of CERCLA. (Id. at pp. 1068―1069.)

The Regional Board’s application of the State Board’s

definition of “discharge” to encompass a continuous process—

from initial leak to the ongoing process of contaminating soils

and groundwater through the process of migration of toxic

chemicals into a plume from pipeline to groundwater—will best

attain the legislative purpose of the Porter-Cologne Act. (See

Select Base Materials v. Board of Equal. (1959) 51 Cal.2d 640,

645 [“The fundamental rule of statutory interpretation is that the

court should ascertain the intent of the Legislature so as to

effectuate the purpose of the law.”].)

The purpose of section 13304 is to authorize a regional

board to issue a CAO to any person “who has caused or permitted

. . . any waste to be discharged or deposited where it is, or

probably will be, discharged into the waters of the state.”

(§ 13304, subd. (a).) As these words amply demonstrate, the

Legislature sought to address the discharge of waste into the

waters of the state—including the groundwater. As the preamble

to the Act states, “[t]he Legislature finds and declares that the

people of the state have a primary interest in the conservation,

control, and utilization of the water resources of the state, and

that the quality of all the waters of the state shall be protected

for use and enjoyment by the people of the state.” (§ 13000.)

The State Board’s interpretation of the term “discharge,” as

referring to the entire flow of the discharged waste from its origin

to the groundwater advances the legislative purpose of protecting

the quality of the water of the state. By contrast, the truncated

construction of discharge proposed by Tesoro, i.e., to focus only on

32

the initial release of the waste, would frustrate the Legislature’s

express intent. By leaving—as is the case here—a plume of

uncontrolled contamination currently threatening the

groundwater of the state unaddressed, Tesoro’s proposed

definition fails to effectuate the purpose of section 13304.17



17 Tesoro’s argument that the legislative history of section

13304 supports a narrow interpretation of “discharge” is based, in

part, on a portion of a letter written by the State Board to the

California Manufacturers Association. That letter sought to

clarify when a “threatened discharge” from runoff from a mine

could be claimed; it offered nothing by way of explanation as to

when a past discharge ended. It is this latter question that is at

issue in this appeal. As for the statement to the Assembly

Committee on Health (ACH), the State Board’s recognition that a

discharge of waste into a small space, such as a ditch, may end

once the waste is poured or dumped in no way conflicts with

discharge being defined to encompass an entire migration of

discharged waste from its origin, through the soil and into and

within groundwater. Where discharges are transitory or have a

broken flow path between the point of discharge and the point of

pollution, it might be argued that current law would not reach

that situation. In the present case, however, the substantial

evidence in the record showed an uninterrupted flow of waste to

groundwater. The Board’s observations to ACH, therefore, have

no application to this case.

The judgment is affirmed. Respondent shall recover its costs on appeal.