Washington Court of Appeals Significantly Expands Scope of Liability for Hazardous Waste Cleanup

Thanks to a decision issued by the Washington Court of Appeals on December 28, 2016, Washington property owners and lessors will greet the new year facing a substantially expanded scope of liability under the Model Toxics Control Act (“MTCA”).  MTCA governs the cleanup of Washington properties contaminated with hazardous wastes.  Under MTCA’s expansive liability scheme, the “owner or operator” of a hazardous waste site is strictly liable for the costs of cleaning up the site, along with entities that contributed directly to the contamination through disposal or transportation of hazardous wastes.   Until the Court of Appeals’ December 28 decision, however, Washington courts interpreted “owner” liability to extend only to the fee title owner of property.  The new Court of Appeals opinion, Pope Resources v. State (No. 47861-7-II, Division II, Dec. 28, 2016), adopts a much broader definition of “owner” that includes any entity with “any ownership interest” in a site.  Under this standard, MTCA liability could extend to, for example, lessees, easement holders, and others who have only limited rights of possession or access, and therefore have generally been excluded from MTCA’s otherwise broad scheme of liability.

Pope Resources addresses liability for cleanup of the former Pope & Talbot lumber mill site in Port Gamble.  The Department of Ecology concluded that the site was contaminated from industrial activities dating back as far as 1853.  Pope and Ecology entered into a consent decree in which Pope agreed to clean up the site.  The Department of Natural Resources (“DNR”), which leased aquatic lands adjacent to the mill site to Pope starting in 1974, however, rejected an assignment of liability, arguing that it was not an “owner” because it merely manages tidelands on the State’s behalf and its statutory authority over tidelands does not make it an “owner” under MTCA.  Pope initiated a contribution action against DNR seeking to recover DNR’s share of the cleanup costs.  The lower court rejected Pope’s claim and Pope appealed.

Although two earlier decisions from Division I of the Court of Appeals held that “owner” includes only the fee owner of property, Division II rejected this view in Pope.  The earlier Division I cases followed federal courts interpreting parallel language in CERCLA, the federal hazardous waste cleanup law, which limit “owner” to its common law sense, which includes only  the fee title owner of property.   The two-judge Pope majority rejected this construction, however, relying on specific differences in language between the federal and state laws, and emphasizing that MTCA defines “owner or operator” to include “any” person who exercises “any control” over a hazardous waste site.  Using this standard, the Pope majority concluded that DNR is an “owner” of the Port Gamble site.

Judge Melnick dissented, concluding that the court should have followed existing Division I precedent limiting the definition of “owner” and that DNR is merely the manager of the State’s aquatic lands, while the State itself (which is excluded from the statutory liability scheme) is the owner of aquatic lands.

Because of the split of authority between Division I and Division II created by Pope and the weighty ramifications of the case, there is a good chance that Division II’s opinion is not the last word.  The Washington Supreme Court may well review the case and legislative action to clear up the “owner” definition is also a possibility.