Judge William B. Shubb of the Eastern District of California ruled last month that a state government agency can be held liable as a Potentially Responsible Party (PRP) even if the agency’s involvement at a particular site is limited to cleanup activities. In California Department of Toxic Substances Control v. Jim Dobbas, Inc., No. 2:14-595 WBS EFB, 2014 WL 4627248 (E.D. Cal. Sept. 16, 2014) (Dobbas), the court held that a government agency’s “involvement in remediation efforts subsequent to the emission of hazardous substances at a facility” can be grounds for “operator” liability under the Comprehensive Environmental Response, Compensation, and Liability Act if the agency “managed, directed, or conducted operations there.” In making this ruling, the court rejected older cases holding that the government cannot be liable for CERCLA claims based solely on the government’s own regulatory activities, and reiterated the Eastern District’s (and Ninth Circuit’s) rejection of sovereign immunity as a bar to CERCLA liability.
This ruling has significant implications for private parties whose CERCLA liability arises from sites where government agencies have taken a direct or leading role in response actions. Where it can be shown that the government is an “operator” as defined by CERCLA, private parties may be able to obtain contribution or cost recovery from the government for any harm caused by the government’s inadequate or detrimental remediation efforts.
The site at issue in the case was a wood preservative facility in Elmira, California, that treated wood products from 1972 through 1982. It was owned by a succession of companies and individuals. Cleanup and investigation activities at the site began in 1978 as a result of the overflow of the containment areas due to a storm. Spills of even larger volume took place in 1979 through 1982 when the site was owned by the Wickes Corporation. It continued to be owned by Wickes’s successor, Collins & Aikman Products Company, until 1997. Studies of the site indicate that hazardous substances remain on the site and have continuously impacted the environment from the 1980s through today.
Throughout the period from 1978 to today, the State of California directed investigation and response actions at the site. In 2011-2012, the State carried out its own response action at the site. The California Department of Toxic Substances Control, according to Defendant Dobbas’s counterclaims, mismanaged the cleanup operations at the site. Because DTSC selected and implemented response actions at the site that “were, and continue to be negligent, grossly negligent and/or constitute[d] intentional misconduct,” Dobbas charged, DTSC should be held accountable under Sections 107 and 113 of CERCLA.
The State of California moved to dismiss Dobbas’s counterclaims arguing that the State was not an “owner” or “operator” at the site and thus could not be held liable. The State clearly did not own the site and thus could not be held liable as such. The question for the court, however, was whether the State could be held liable as an “operator” under CERCLA and thus whether Dobbas could move forward with its counterclaims.
Given the detailed allegations contained in Dobbas’s counterclaims, the court held that under the broad definition given to “operator” by the Supreme Court in United States v. Bestfoods, 524 U.S. 51, 66 (1998), the State might have liability if it “‘manage[d], direct[ed], or conduct[ed] operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations.’” Consequently, the State’s motion to dismiss both the CERCLA and California Hazardous Substance Account Act claims was denied. Dobbas and presumably other PRPs at the site will now be allowed to pursue discovery against the State in an effort to prove that the State was and is an operator at the site.
