BCEIA 2018 Environment Industry Guide Now Available

The eighth edition of the British Columbia Environment Industry Guide is your doorway to an industry sector that is growing faster than the economy as a whole – a sector full of opportunity for a new generation of highly skilled and educated workers.

Our industry provides the services and support needed to protect our natural and social environments in a period of rapid expansion.

Download the pdf version here or request a copy be mailed to you by contacting Kate MacDonald at info@bceia.com.

Ontario Legal Report: Thompson Fuels Ordered To Pay Costs

Article by Paula LombardiSiskinds LLP

The case of Gendron v. Thompson Fuels, related to a home furnace oil tank that developed a leak in December 2008. The leak caused damage to the Gendron’s home and the surrounding environment, including nearby Sturgeon Lake. The City of Kawartha Lakes cleaned up the Lake.

On July 17, 2017 the court released its decision on this matter, (2017 ONSC 4009) granting judgement in favour of Gendron against Thompson Fuels. The court appropriated 60% liability to Gendron and 40% to Thompson Fuels. The parties agreed that, based on the court’s findings, Gendron’s total damages were $2,161,570, and Thompson Fuels’ portion of those costs equalled $901,747 ($864,628 plus $37,119 interest). In that decision the court found that the two remaining defendants, the Technical Standards and Safety Authority (“TSSA”) and Les Reservoirs D’Acier De Granby Inc. (“Granby”) were not liable.

Closeup of an oil slick in water with fall colors in the grass on the shore

The parties were unable to agree on costs and requested that submissions on costs be deferred until the decision on the post-trial motions was released. On March 29, 2018 the Court ordered Thompson Fuels to pay Gendron’s costs on a partial indemnity basis in the amount of $473,000.00 (2018 ONSC 2079). In arriving at this amount, the Court considered the Gendron’s contributory negligence, the costs of various post-trial motions brought by the parties, the reasonableness of Gendron’s bill of costs, and the fact that neither party had beat its offer to settle.

The Court then awarded $150,000 in costs to TSSA as against Gendron and Thompson Fuels, who had cross-claimed against TSSA. The Court further ordered Gendron and Thompson Fuels to contribute $140,000 and $10,000, respectively. The Court also ordered Gendron and Thompson Fuels to pay equal shares of TSSA’s costs of $7,500.00 for the post-trial motions. In deciding to award only partial indemnity costs, the Court found that given TSSA’s limited involvement at trial, it did not require two lawyers to attend at trial. The Court also noted that even though Gendron’s action in negligence against TSSA had failed, the trial Court had found that the TSSA had not been “a model of efficiency or clarity” in its dealings with Gendron.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

This article was first published on the Siskinds Law Firm web site.

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About the author

Paula Lombardi is a partner of Siskinds LLP,  and practices in the areas of environmental, municipal, regulatory and administrative law.  Prior to joining Siskinds, Paula worked as an associate at a Bay Street law firm where her practice focused on occupational health and safety, environmental and regulatory matters.

Paula recently spent two years as in-house counsel for a major privately owned US corporation, whose owner is on the Forbes 500 list, and was responsible for all Canadian legal and business issues relating to the import and export of goods, transportation of hazardous materials, remediation of contaminated sites, construction of large infrastructure projects, regulatory compliance, NAFTA matters, and preparation of environmental assessments in the US and Canada.

Paula has a great deal of experience in: providing due diligence advice; dealing with contamination issues; handling of organic chemicals and hazardous wastes; obtaining environmental approvals; obtaining planning and development approvals; providing advice to municipalities; defending environmental prosecutions; and assisting companies with environmental and regulatory compliance. Paula has appeared before numerous administrative tribunals.

Despite Efforts to Roll-Back Other Program Requirements, U.S. EPA Administrator Scott Pruitt Continues to Prioritize Superfund Cleanups

by Van P. Hilderbrand, Jr. and Marian C. Hwang

 

 

U.S. Environmental Protection Agency (“EPA”) Administrator Scott Pruitt has made it clear that one of his top priorities during his tenure is to expedite cleanups at contaminated sites across the country. To achieve this goal while facing potential budget cuts, he has made several significant decisions over the last year to overhaul and restructure the Superfund cleanup program from within.

First, as we discussed in our earlier post, A New Budget, a New EPA Administrator, and New Uncertainty for Superfund Cleanups, Administrator Pruitt issued a memorandum on May 9, 2017 centralizing decision-making on major Superfund remedies to EPA headquarters. Specifically, final decisions on remedies exceeding $50 million are to be made by Administrator Pruitt or the Deputy Administrator, not by Regional Administrators. According to the memorandum, this change is designed to improve the remedy selection process by promoting increased oversight and accountability and by “enhancing consistency in remedy selection across states and the regions.”

Next, Administrator Pruitt specially convened an EPA Superfund Task Force on May 22, 2017. In our post, EPA’s Task Force Recommendations to Revamp and Expedite Superfund Cleanups and Process – A Welcome Change, we discussed the Task Force Report, issued on July 22, 2017, which identified 5 goals, 13 strategies, and 42 recommendations to (1) expedite Superfund cleanups; (2) re-invigorate responsible party cleanup and reuse; (3) encourage private investment; (4) promote redevelopment and community revitalization; and (5) engage partners and stakeholders. We have seen many of these recommendations realized, including the development and issuance of a priority list of Superfund sites targeted for immediate attention by Administrator Pruitt.

Recent EPA Realignment in Approval Process Sees the Administrator’s Role Expanding

Composite image map showing TRI facilities in blue and Superfund NPL sites in red

In a recent shift to expand the influence of the Administrator’s Office, Administrator Pruitt issued a second memorandum on April 26, 2018 clarifying that EPA’s Office of Land & Emergency Management and regional offices should “coordinate and consult with the Administrator’s Office early on when developing” other significant actions (in addition to remedies) related to costly Superfund cleanups. Such actions would include Amendments to Records of Decision (“ROD”) or Explanations of Significant Differences (“ESD”) that are projected to either increase the estimated cost of a remedy to greater than $50 million or are projected to increase the estimated cost of a remedy that is already greater than $50 million by any amount.

The memorandum also specifically notes that consultations should occur when developing Non-Time-Critical Removal Actions (“NTCRA”) estimated to exceed $50 million. As in the earlier 2017 memorandum, Administrator Pruitt says the additional coordination and cooperation will result in “more accountability and consistency throughout the EPA’s regions.” What this means for potentially responsible parties (“PRPs”) at large Superfund sites is that Administrator Pruitt will play an increasingly important role in the decision-making process.

Neither memorandum addressed any change in the role of the National Remedy Review Board (“NRRB”) and the interplay between the NRRB and the increasing oversight and decision-making role of Administrator Pruitt. The NRRB is an internal EPA peer review group that reviews and comments on remedial actions and NTCRAs costing more than $25 million. Questions remain whether the NRRB only reviews actions costing between $25 and $50 million, as not to impede Administrator Pruitt’s review, or do both NRRB and Administrator Pruitt review actions costing in excess of $50 million?

Uncertainty in the Superfund Program

This step comes amid increased turmoil and uncertainty in the Administrator’s Office and the Superfund program. Administrator Pruitt’s top advisor on the Superfund program and chairman of the Superfund Task Force, Albert “Kell” Kelly, resigned unexpectedly in early May, leaving questions regarding who will run the approximately $1 billion program. Further, Administrator Pruitt himself is facing numerous investigations into his own actions and ethical violations; causing many to wonder just how much longer he will be in his current job and whether he will see any of these policy changes implemented.

It is easy to see, therefore, why every decision from the Administrator’s Office comes under significant scrutiny. Many opponents believe these moves are simply ways to reduce costs and time in the cleanup process, and they question whether “expedited” cleanups actually mean less rigorous cleanups. In his first year or so, there are examples where Administrator Pruitt has approved strengthened measures and cleanup requirements at some sites, despite pushback from industry and companies involved in the cleanup, but there are also examples of site decisions that cast doubt on his ability to be independent and impartial. In any case, as long as Administrator Pruitt is in his current role, it is clear that the Superfund program will see continued change and that he will use the authority of that role to expedite cleanups.

Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.

This story is was first published on the Miles Stockbridge website.

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About the authors

member of Miles & Stockbridge Products Liability & Mass Torts Practice Group, Van P. Hilderbrand, Jr. focuses his practice on environmental litigation, regulatory compliance issues, and advising on the environmental aspects of business and real estate transactions. His work also includes consulting on renewable energy project development and project finance transactions, conducting due diligence and assisting with permitting issues. He represents clients in a wide range of industries, including energy, manufacturing, consumer products, pharmaceuticals, chemicals, transportation, technology and real estate.

Marian Hwang has been an environmental attorney with the Miles & Stockbridge since 1987 and chairs its Environmental Practice. The breadth of her experiences representing multinational and national clients enables her to develop practical solutions to complex issues, whether involving complicated real estate/corporate acquisitions or divestitures or commercial financing matters to complex multi-defendant toxic tort claims, litigation, and multi-facility compliance matters. Marian works extensively with and appears before Federal and State regulators, and courts, has been certified as a LEED Green Associate by the U.S. Green Building Council, and has served as outside national environmental counsel to the firm’s major clients.

 

EQM awarded $45 million remediation contract by USACE

Environmental Quality Management Inc. (EQM, Cincinnati, Ohio) has been awarded a $45 million cost-plus-fixed-fee contract by the U.S. Army Corps of Engineers, New England District for environmental remediation services at the Callahan Mine site in Maine. The first Task Order will be issued in June for over $6 million.

The former Callahan Mine site was an open-pit mine developed in Goose Pond, a shallow tidal estuary of approximately 75 acres in the town of Brooksville, Maine.  From 1968 through 1972, approximately five million tons of waste rock and 800,000 tons of ore-bearing rock were mined from the open pit.  The waste rock was disposed of on site in three large piles and was also utilized to create a dam for the tailings impoundment.   In summary, the major work elements are remediation of the tailings impoundment; remediation of waste rock pile #3; slope stabilization of the tailings impoundment; consolidation and capping of the tailings impoundment; sediment excavation and disposal in a confined aquatic disposal cell; remediation of residual contamination at waste rock pile #2 and the ore processing area; and site restoration, mitigation, and monitoring.

Tax rebate to fund $8.6M cleanup of former Kitchener Frame site

by Catherine Thompson, Waterloo Region Record

As reported by Catherine Thompson in the Waterloo Region Record, It’ll cost about $8.6 million to rid the soil and groundwater of contaminants at the former Kitchener, Ontario Frame site.

The huge industrial site at Homer Watson Boulevard and Bleams Road has been undergoing cleanup for the past three years. The soil and groundwater were contaminated with petroleum hydrocarbons, volatile organic compounds, metals, polychlorinated biphenyls (PCBs) and polycyclic aromatic hydrocarbons (PAHs), contaminants that are often found at former industrial sites.

The former Kitchener Frame Site (Photo Credit: Philip Walker/Record staff)

The city and the developers — Gary Ball and Marty Pathak — are keen to see the site redeveloped, said Rob Morgan, the City of Kitchener’s co-ordinator of development of former industrial sites. The site of the auto parts plant variously known as Budd Canada, ThyssenKrupp Budd Canada and Kitchener Frame, has been vacant since 2009.

Redevelopment of the sprawling 32-hectare site will give a big boost to the city’s supply of industrial land, Morgan said. About 16 hectares are slated industrial, 10 hectares are retail and 1.5 hectares are office. Another four hectares will be used for things like roads and storm water management.

“It’s much-needed land,” Morgan said. “Kitchener doesn’t have a lot of vacant industrial land left to offer.” There’s a couple of parcels, on Shirley Avenue and Strasburg Road, but not much else, he said.

The developers have applied to the city and region for grants under a program to encourage remediation of contaminated land.

The former Kitchener Frame site would be the biggest property ever to apply for the program, Morgan said.

Under the program, a developer cleans up a site and redevelops it. The new development generates far more taxes than the vacant land had. The city and region hand over the additional tax revenue to the developer for a set number of years, to repay the cost of the environmental cleanup.

The site now has an assessed value of $8 million, and generates about $108,000 in property taxes a year, split roughly 40-60 between the city and the Region of Waterloo. Once it’s cleaned up and redeveloped, it’s expected to have an assessed value of around $112 million, and generate $2.2 million in municipal property taxes.

“It’s a great program,” Morgan said. In exchange for foregoing the increased taxes for a certain number of years, the city gets vacant land cleaned up and converted to a productive use that generates more taxes and jobs.

“These lands are sitting dormant, contaminated, sometimes for many years. As a resident I’d rather see it cleaned up and earning money for the tax base.”

The Kitchener Frame site will be split into 11 different parcels from 1.3 to 10 hectares. Kitchener doesn’t expect to see the first new development on the site until about 2020, and development could continue for the next 10 or 15 years beyond that.

Morgan thinks it’s likely the property will be developed well before then, though. “They’ve got a lot of interest in that property. It’s a great location, because of its proximity to the 401; you’ve got a lot of variety in the lots; Kitchener has a strong manufacturing base, and we’ve got a lot of skilled workers.”

City staff are recommending that Kitchener council approve the application, which must also be approved by regional council, likely in June.

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About the Author

Catherine Thompson covers Kitchener City Hall for the Waterloo Region Record.

MOECC Releases Notice of Updated Excess Soil Management Proposal

By David Nguyen – Staff Writer

The Ontario Ministry of Environment and Climate Change (MOECC) recently posted notice on the Environmental Bill of Rights Environmental Registry of the regulatory changes to the management of excess soil (Excess Soil Management Regulatory Proposal, ERO# 013-2774). Excess soil is soil that has been dug up, such as during excavation activities, and cannot be reused at its original site and must be moved off site.  There is much controversy in the Province of Ontario and other provinces concerning the management of excess soil as there are claims and growing evidence that some companies mix clean soil with contaminated soil, some companies dispose of contaminated soil as clean soil, and other questionable practices.

The MOECC proposal clarifies where soils can be reused based on the soil characterization and aims to reduce greenhouse gasses from the transportation of soil by encouraging local reuse. The proposal also clarifies that the project leader is responsible for the management and relocation of the excess soil generated during a project to ensure proper characterization and relocation. Minor amendments to O.Reg. 153/04 and to O. Reg. 347 are also proposed.

The current proposal incorporates responses and comments from the previous proposal as well as from engagement with stakeholders and Indigenous communities. Changes from the previous proposal include:

  • A revised approach to waste designation
  • Reduced regulatory complexity and some details moved to guidance
  • A two to three years transition time for key regulations
  • Several O. Reg. 153/04 amendments to come into effect sooner
  • More flexibility for reuse through new reuse standards and a Beneficial Reuse Assessment Tool to develop site specific standards

This proposal is part of the MOECC’s response to the commitments outlined in Ontario’s Excess Soil Management Policy Framework. Other actions of the framework include developing priority education, outreach and training initiatives to support implementation.

The specific regulations and proposals provided for comments are summarized below:

  • A new proposed On-Site and Excess Soil Management Regulation
    • Excess soil would be designated as waste when it leaves the project area unless it is reused in accordance with the rules set out in this regulation.
    • If designated waste, the regulation would clarify when an ECA is not required.
    • Hauling of excess soil would generally not need an ECA, but is still subject to certain rules, such as maintaining records.
    • Project leaders may use temporary soil storage sites without an ECA as long as certain conditions are met.
    • Unless exempted, a project leader is responsible for preparing an Excess Soil Management Plan (ESMP), which involves determining contaminant concentrations on the soil, finding appropriate receiving sites, develop a tracking system and record keeping requirements.
    • Key information from the ESMP would be registered on a public registry. A qualified person (QP) would need to prepare or supervise the ESMP.
    • The regulation would be phased in over two to three years.
  • Amendments to O. Reg. 153/04
    • Align the requirements for soil being taken to Record of Site Condition (RSC) or phase two properties with the new rules for excess soil proposed in the On-Site and Excess Soil Management Regulation.
    • Resolve delineation challenges experienced at properties going through the Risk Assessment process.
    • Remove Record of Site Condition triggers for low risk projects.
    • Provide flexibility for meeting contamination standards where exceedances are cause by substances used for ice and snow safety, discharges of treated drinking water, and presence of fill that matches local background levels.
  • Amendments to O. Reg. 347
    • Clarify that excess soil is no longer part of the definition of “inert fill.”
    • Clarify operational requirements to support exemptions from ECA requirements for excess soil related activities.
  • Proposal of Rules for On-site and Excess Soil Management
    • A proposed document to be adopted by reference in the On-Site and Excess Soil Management Regulation
    • Specifies ESMP contents, including an assessment of past uses, sampling and analysis plan, excess soil characterization, requirements for excess soil tracking systems, a destination assessment and identification, and declarations required of the project leader and qualified person, and applicable soil quality standards and related rules.
  • The proposed “Beneficial Reuse Assessment Tool” (BRAT)
    • An alternative rules that aim to promote greater reuse of excess soil and the protection of human health and the environment
    • Allows a QP to generate site specific standards using a spreadsheet model

Comments can be made on the proposal up to June 15, 2018 on the Environmental Registry of Ontario proposal site or by mail.

Pulp Mill in British Columbia fined $900K for releasing deleterious effluent

The Mackenzie Pulp Mill Corporation recently pleaded guilty, in the Provincial Court of British Columbia, to depositing a deleterious substance into water frequented by fish, in violation of the pollution-prevention provisions of the Fisheries Act.  The company was ordered to pay a penalty of $900,000, which will be directed to the federal Environmental Damages Fund.  This funding is to be used for the conservation of fish or fish habitat in the Omineca region of British Columbia. The company was also ordered to complete an independent audit of its operations to prevent future incidents of this kind.

The offence relates to incidents in July 2014 and September 2016, when effluent discharging from the Mackenzie Pulp Mill was found to be deleterious to fish. Environment and Climate Change Canada enforcement officers investigated the incidents, and their investigation revealed that the mill’s treatment system had not properly treated the effluent before discharging it, due in part to improper management of the wastewater entering the treatment system. The effluent was deposited into Williston Lake, which is frequented by fish.

As a result of this conviction, the company’s name will be added to the Environmental Offenders Registry.  The Environmental Offenders Registry contains information on convictions of corporations registered for offences committed under certain federal environmental laws.

Environmental Fine of $100,000 for Gas Bar Owner in Big River, Saskatchewan

Big River First Nation was recently sentenced to pay a fine of $100,000 in the Provincial Court of Saskatchewan for failing to comply with an environmental protection compliance order concerning the Miami Gas Bar, a company owned and operated by the Big River First Nation. An environmental protection compliance order is an order under the Canadian Environmental Protection Act, 1999, which directs various measures be taken to stop or prevent a violation of the Act or its regulations.

The conviction stems a 2014 inspection by Officers from Environment Canada and Climate Change (ECCC) to verify compliance with the Storage Tank Systems for Petroleum Products and Allied Petroleum Products Regulations under the Canadian Environmental Protection Act, 1999.  As a result of the investigation, the ECCC Officers issued an environmental protection compliance order. Charges were subsequently laid when the compliance order was not followed.  In court, Big River First Nation pleaded guilty to failing to comply with measures identified in the order.

The Storage Tank Systems for Petroleum Products and Allied Petroleum Products Regulations aim to reduce the risk of spills and leaks of petroleum products from storage tank systems, which can contaminate soil and groundwater. The Regulations apply to storage tank systems operated by a federal department, board, agency, or Crown corporation; storage tank systems providing services to federal works or undertakings that are a port authority, airport, or railway; and storage tank systems located on federal or Aboriginal lands.

U.S. EPA Hazardous Waste Enforcement in Wisconsin

The United States Environmental Protection Agency (“U.S. EPA”) and Kerry Biofunctional Ingredients, Inc. d/b/a Kerry Bio Sciences (“Kerry”) recently entered a Consent Agreement (“CA”) addressing alleged violations of Subtitle C of the Resource Conservation and Recovery Act (“RCRA”) and its regulations implementing requirements for the management of hazardous waste. See Docket Number : RCRA-02-2017-7108.

Kerry is a subsidiary of Kerry, Inc. whose North American Headquarters is situated in Beloit, Wisconsin.

The CA provides that Kerry operates a facility in Norwich, New York (“Facility”) that has been a generator of hazardous waste.

As a result of the July 2016 inspection and Kerry’s response to the Request for Information, the Facility is alleged to have failed to:

  1. Make hazardous wastes determinations for certain waste-streams found at the Facility
  2. Keep a complete copy of each hazardous waste manifest for at least three years
  3. Meet the conditions necessary to accumulate hazardous waste without having obtained a permit or qualifying for interim status

Such alleged failures are stated to be violations of the RCRA regulations.

The CA assesses a civil penalty of $20,000.

A copy of the CA can be downloaded here.

Kerry Headquarters, Ireland

U.S. Ninth Circuit Rules Military Contractor Liable on CERCLA Clean-up Costs

Written by: By Whitney Jones Roy and Whitney HodgesSheppard Mullin Richter & Hampton LLP

TDY Holdings, LLC brought suit for contribution under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) against the U.S. government relating to environmental contamination at TDY’s manufacturing plant. The district court granted judgment in favor of the government after a 12-day bench trial and allocated 100 percent of past and future CERCLA costs to TDY. On appeal, the Ninth Circuit held that the district court sharply deviated from the two most “on point” decisions regarding allocation of cleanup costs between military contractors and the U.S. government when it determined the cases were not comparable, clarified the applicability of those cases, and remanded the case to reconsider the appropriate allocation of cleanup costs between TDY and the U.S. government.

TDY (formerly known as Ryan Aeronautical Company) owned and operated a manufacturing plant near the San Diego airport

From 1939 through 1999, TDY (formerly known as Ryan Aeronautical Company) owned and operated a manufacturing plant near the San Diego airport. TDY’s primary customer was the U.S. government—99 percent of TDY’s work at the plant between 1942 and 1945, and 90 percent of the work thereafter was done pursuant to contracts with the U.S. military. The United States also owned certain equipment at the site from 1939 to 1979. Id. at 1006. Chromium compounds, chlorinated solvents, and polychlorinated biphenyls (PCBs) were released at the site as a result of their use during manufacturing operations. Id. In some cases, the government’s contracts required the use of chromium compounds and chlorinated solvents. Id. After passage of the Clean Water Act and other environmental laws classifying these chemicals as hazardous substances in the 1970s, TDY began environmental remediation and compliance at the site and billed the government for the “indirect costs” of that work, which the government paid. Id. at 1006–07. TDY incurred over $11 million in response costs at the site. Id. at 1007. Until the plant’s closure in 1999, the government reimbursed 90 to 100 percent of TDY’s cleanup costs at the site. Id. at 1007, 1010.

In 2004, the San Diego Unified Port District brought CERCLA claims against TDY. TDY and the Port District entered into a settlement agreement in March 2007 in which TDY agreed to cleanup releases at the site. TDY then brought suit for contribution under 42 U.S.C. § 9613(f)(1) and declaratory relief against the United States. Id. at 1007. The district court granted TDY’s motion for partial summary judgment declaring that the United States was liable as a past owner of the site under CERCLA. Id. After a 12-day bench trial on equitable allocation of costs, the district court held that the contamination caused by the hazardous substances at issue was attributable to TDY’s storage, maintenance, and repair practices, as well as spills and drips that occurred in the manufacturing process, rather than to the government’s directives to use the chemicals. Id. Accordingly, the district court allocated 100 percent of the past and future response costs for remediation of the three hazardous substances to TDY. Id. at 1008.

On appeal, TDY argued that the district court erred (1) when it allocated liability according to “fault”; (2) that the government’s role as owner rather than operator should not have been a dispositive factor in the court’s allocation, and (3) that the government should bear a greater share of response costs because it specifically required use of the chemicals at the site. Id. The court of appeals summarily rejected TDY’s first two arguments, but found that the district court did err in its analysis and application of binding authority on point: United States v. Shell Oil Co., 294 F.3d 1045 (9th Cir. 2002) and Cadillac Fairview/California, Inc. v. Dow Chem. Co., 299 F.3d 1019 (9th Cir. 2002). Id. at 1008–09. Shell Oil and Dow Chemical each produced products to support the U.S. military during World War II and incurred liability for contamination caused by hazardous chemicals that the government required to be used. In both cases, the Ninth Circuit affirmed the district courts’ allocation of 100 percent of cleanup costs to the government because “the contractors’ costs were ‘properly seen as part of the war effort for which the American public as a whole should pay.’” Id. at 1009.

The Ninth Circuit disagreed with the district court’s conclusion that Shell Oil and Cadillac Fairview were not comparable, but agreed that some deviation from their allocations were appropriate. Id. The Ninth Circuit agreed that the government exercised less control over TDY than it did over Shell Oil Co. or Dow Chemical. In support of this determination, the court noted that the government was an operator, rather than an owner, of TDY’s site, that the government-owned equipment was removed from the site 20 years before TDY ceased operations, and that TDY’s own practices at the site caused the contamination. Id. at 1010. Furthermore, the district court properly determined that “industrial operations undertaken for the purpose of national defense, standing alone, did not justify allocating all costs to the government.” Id.

However, the Ninth Circuit held that, in allocating 100 percent of cleanup costs to TDY, the district court failed to consider that the government required TDY to use two of the three chemicals at issue beginning in the 1940s, when the need to take precautions against environmental contamination from these substances was not known. Id. Furthermore, the Ninth Circuit determined that “[t]he court’s acknowledgement of the evolving understanding of environmental contamination caused by these chemicals, and TDY’s prompt adoption of practices to reduce the release of hazardous chemicals into the environment once the hazards became known, further undercuts the decision to allocate 100 percent of the costs to TDY.” Id. The district court also failed to consider the parties’ lengthy course of dealing through 1999, when the government paid between 90 and 100 percent of cleanup costs at the plant. Id. Although “a customer’s willingness to pay disposal costs . . . cannot be equated with a willingness to foot the bill for a company’s unlawful discharge of oil or other pollutants,” the Ninth Circuit nevertheless determined it should have been a relevant factor in the allocation analysis. Id.

This article was originally published on the Sheppard Mullin Real Estate, Land Use & Environment Law Blog

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About the Authors

Whitney Jones Roy is a litigation partner in firm’s Los Angeles office. Ms. Roy was recognized by Law360 as a “Female Powerbroker” and by the Daily Journal as one of the Top 100 Women Lawyers in California in 2014.  Ms. Roy has experience in all aspects of California and federal civil procedure through trial. She also defends her clients on appeal when necessary.  Ms. Roy also specializes in complex environmental litigation and related products liability litigation. Her expertise includes the Clean Air Act, CERCLA, RCRA, design defect, failure to warn, negligence, nuisance, and trespass.

Whitney Hodges is an associate in the Real Estate, Land Use and Natural Resources Practice Group in the firm’s San Diego office. She also serves on the firm’s Diversity and Inclusion Committee, Pro Bono Committee, Recruiting Committee, Energy, Infrastructure and Project Finance Team and Latin Business Team.  Ms. Hodges specializes in the representation of clients involved in real estate development. Her practice focuses on advising and representing major residential, industrial, commercial and mixed-use development projects, as well as Native American Indian tribes and renewable energy developers through all phases of the land use regulatory process and environmental compliance.