Pope Res., LP v. Wash. State Dep't of Natural Res.

• Decision Date: 24 May 2018
• Docket Number: NO. 94084-3,94084-3
• Citation: 418 P.3d 90,190 Wash.2d 744
• Parties: POPE RESOURCES, LP, a Delaware limited partnership; OPG Properties, LLC, a Washington limited liability company, Respondents, v. The WASHINGTON STATE DEPARTMENT OF NATURAL RESOURCES, a Washington State agency, Petitioner.
• Court: Washington Supreme Court

190 Wash.2d 744

418 P.3d 90

POPE RESOURCES, LP, a Delaware limited partnership; OPG Properties, LLC, a Washington limited liability company, Respondents,

v.The WASHINGTON STATE DEPARTMENT OF NATURAL RESOURCES, a Washington State agency, Petitioner.

NO. 94084-3

Supreme Court of Washington.

Oral Argument Date: September 26, 2017

Filed May 24, 2018

Edward David Callow, Washington Office of Attorney General, 1125 Washington Street Se, Ms 40100, Olympia, WA, 98504-0100, for Petitioner.

Nick Steven Verwolf, Attorney at Law, 14005 Ne 32nd Pl, Bellevue, WA, 98007-3205, David Joseph Ubaldi, Robert Edward Miller, Davis Wright Tremaine LLP, 777 108th Ave Ne Ste 2300, Bellevue, WA, 98004-5149, for Respondent.

Andrew Arthur Fitz, Ofc of the Aty General/Ecology Division, Po Box 40117, Ecology Division A.g. Office, Attorney at Law, 2425 Bristol Court Sw Second Fl., P O Box 40117, Olympia, WA, 98504-0117, as Amicus Curiae on behalf of Department of Ecology State of Washington.

Kenneth Lederman, Foster Pepper PLLC, 1111 3rd Ave Ste 3000, Seattle, WA, 98101-3292, as Amicus Curiae on behalf of Washington Environmental Council.

Laura Beth Wishik Seattle City Attorneys Office 701 5th Ave Ste 2050 Columbia Ctr Seattle, WA, 98104-7095

Adam Rosenberg, Williams Kastner & Gibbs PLLC, 601 Union St Ste 4100, Seattle, WA, 98101-1368, as Amicus Curiae on behalf of Washington Association of Municipal Attorneys.

Amy Beth Kraham, City of Bellingham, 210 Lottie St, Bellingham, WA, 98225-4089, as Amicus Curiae on behalf of City of Bellingham.

Christopher D. Bacha, Tacoma City Attorney's Office, 747 Market St, Tacoma, WA, 98402-3701, as Amicus Curiae on behalf of City of Tacoma.

David Alan Bricklin, Bricklin & Newman, LLP, 1424 4th Ave Ste 500, Seattle, WA, 98101-2258, as Amicus Curiae on behalf of David Bricklin.

Michael L Dunning, Perkins Coie LLP, 1201 3rd Ave Ste 4900, Seattle, WA, 98101-3099, as Amicus Curiae on behalf of Sierra Pacific Industries.

Earle David Lees III, Attorney at Law, 80 N Tribal Center Rd, Skokomish Nation, WA, 98584-9748, as Amicus Curiae on behalf of Skokomish Indian Tribe.

Jason T Morgan, Attorney at Law, Sara Anne Leverette, Stoel Rives LLP, 600 University St Ste 3600 Seattle, WA, 98101-4109, as Amicus Curiae on behalf of Georgia-Pacific, LLC.

STEPHENS, J.

¶ 1 In concluding that the Department of Natural Resources (DNR) is a potentially liable party under Washington's Model Toxics Control Act (MTCA), ch. 70.105 RCW, the Court of Appeals below rejected the prior interpretation of that statute in Unigard Insurance Co. v. Leven , 97 Wash. App. 417, 983 P.2d 1155 (1999) and Taliesen Corp. v. Razore Land Co. , 135 Wash. App. 106, 144 P.3d 1185 (2006). See Pope Res., LP v. Dep't of Nat. Res. , 197 Wash. App. 409, 422, 389 P.3d 699 (2016) ("Because the language of the provision in MTCA differs from the language in CERCLA [Comprehensive Environmental Response, Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601 - 9675 ], Taliesen 's and Unigard 's holdings relying on an interpretation of CERCLA liability are not persuasive."). We granted review to resolve this split in the Court of Appeals and to provide guidance for interpreting MTCA.

¶ 2 We reverse the Court of Appeals and hold that DNR is not an "owner or operator" of the Port Gamble Bay facility within the meaning of MTCA. As did the courts in Unigard and Taliesen , we recognize MTCA's affinity with CERCLA, under which the control retained by DNR is insufficient to support its liability for environmental contamination of the Port Gamble Bay facility.

BACKGROUND

¶ 3 Between 1853 and 1995, the Port Gamble Bay facility in Kitsap County operated as a sawmill and forest products manufacturing facility by Pope & Talbot and its corporate predecessors. In 1890, some 37 years after Puget Mill Co., predecessor to Pope & Talbot, began operating the sawmill, the legislature authorized the disposal of certain occupied state-owned aquatic lands, including the tidal lands within Port Gamble Bay. Clerk's Papers (CP) at 249-55. In 1893 and 1913, Puget Mill Co. purchased tidelands around the mill facility and on the east and west sides of Port Gamble Bay from the State of Washington. CP at 266. DNR issued the first lease for Pope & Talbot's use of the Port Gamble Bay submerged lands in 1974. CP at 103.

¶ 4 In 1985, "Pope & Talbot's Board of Directors and shareholders approved a ‘Plan of Distribution’ ... to transfer 71,363 acres of its timberlands, timber, land development, and resort businesses in the State of Washington ... to Pope Resources, a newly formed Delaware limited partnership." Pope & Talbot, Inc. v. Comm'r , 162 F.3d 1236, 1237 (9th Cir. 1999). "The Partnership paid no consideration for the Washington Properties," id. , although Pope Resources and Olympic Property Group (Pope/OPG) claim they assumed a $22.5 million mortgage in consideration. Appellants' Opening Br. at 5. However, the Ninth Circuit Court of Appeals affirmed the tax court's valuation of the transferred properties at between $46.7 and $59.7 million. Pope & Talbot, Inc. , 162 F.3d at 1238, 1242. Pope Resources in turn leased the mill area to Pope & Talbot. CP at 77. Pope & Talbot ceased mill operations in 1995. CP at 231. The record indicates that Pope/OPG now seek to develop their Port Gamble holdings for a large, high-density community with a marina. CP at 153-55.

¶ 5 Contamination of the Port Gamble site stems in part from the operation of sawmill buildings to saw logs for lumber, operation of chip barge loading facilities and a log-transfer facility, particulate sawmill emissions from wood and wood waste burning, in-water log rafting and storage, and creosote treated pilings placed throughout the bay to facilitate storage and transport of logs and wood products. "Logs were generally stored, rafted, and sorted in-water throughout the Bay." CP at 78. It is uncontested that

DNR did not control the finances of the facility at Port Gamble, manage the employees of the facility, manage the daily business operations of the facility, or have authority to operate or maintain environmental controls at the facility. DNR did not control Pope and Talbot's decisions regarding compliance with environmental laws or regulations, or Pope and Talbot's decisions regarding the presence of pollutants. DNR did not authorize the release of any hazardous substances on this site.

CP at 269.¹

¶ 6 After entering into a consent decree with the Washington Department of Ecology in 2013 "to provide for remedial action at a portion(s) of the facility ... where there has been a release or threatened release of hazardous substances," CP at 73, Pope/OPG filed a complaint in 2014 seeking a declaration that DNR is liable for natural resources damages and remedial costs, and for contribution of costs. CP at 3-10. The Kitsap County Superior Court granted summary judgment in favor of DNR in 2016. CP at 368-70. The Court of Appeals reversed, holding that DNR is an "owner or operator" with potential liability under MTCA. Pope Res. , 197 Wash. App. at 412, 389 P.3d 699. DNR appealed, and we granted review. Pope Res., LP v. Dep't of Nat. Res. , 188 Wash.2d 1002, 393 P.3d 357 (2017).

ANALYSIS

¶ 7 MTCA imposes liability for environmental contamination on the "owner or operator" of a subject facility, or any person who owned or operated the facility at the time of the hazardous substance release or disposal.

RCW 70.105D.040(1)(a), (b). MTCA "owner or operator" liability extends to the following "person[s]," as defined in RCW 70.105D.020(24) : an "individual, firm, corporation, association, partnership, consortium, joint venture, commercial entity, state government agency, unit of local government, federal government agency, or Indian tribe." Each liable person "is strictly liable, jointly and severally, for all remedial action costs and for all natural resource damages resulting from the releases or threatened releases of hazardous substances." RCW 70.105D.040(2). Liable persons have a right to seek contribution from other potentially liable persons. RCW 70.105D.080.

I. The Court of Appeals Conflated the Terms "Owner" and "Operator" under MTCA

¶ 8 The Court of Appeals erroneously concluded "that DNR is liable under MTCA as an ‘owner or operator’ of the Site." Pope Res. , 197 Wash. App. at 418, 389 P.3d 699. At the center of its error lies the conflation of these terms, leading the Court of Appeals to misconstrue DNR's delegated management authority as an "ownership interest" in the Port Gamble Bay facility. Then, relying on this faux ownership interest, the Court of Appeals mischaracterized DNR's leasing authority as indicating operational control over the Pope/OPG facility. Id. at 420-21, 389 P.3d 699. The result is a patchwork drawn from distinct legal doctrines that fails to adequately describe DNR's role at Port Gamble Bay.

¶ 9 The plain language of MTCA states that an "owner" is "[a]ny person with any ownership interest in the facility." RCW 70.105D.020(22)(a). An "operator" is any person "who exercises any control over the facility." Id. Although the terms "owner" and "operator" are joined in the phrase "owner or operator" in MTCA, this does not reduce their independent meaning, given the absence of express legislative intent to alter the distinct real property and business operation legal doctrines corresponding with these terms.¶ 10 Contrary to the Court of Appeals' view, MTCA follows CERCLA in defining who is liable for environmental contamination. The primary intent of MTCA is that "[p]olluters should pay to clean up their own mess. Initiative 97 would make them do that. Polluters are forced to clean up their wastes ." State of Washington Voter's Pamphlet, General Election 6 (Nov. 8, 1988). MTCA assigns liability to the following persons "with respect to a facility: (a) [t]he owner or operator of the facility; [and] (b) [a]ny person who owned or operated the facility at the time of disposal or release of hazardous substances." RCW 70.105D.040(1). This is...