Port of Seattle v. The Boeing Co.

• Decision Date: 23 November 2022
• Docket Number: C22-0993JLR
• Parties: PORT OF SEATTLE, Plaintiff, v. THE BOEING COMPANY, Defendant.
• Court: U.S. District Court — Western District of Washington

PORT OF SEATTLE, Plaintiff,
v.
THE BOEING COMPANY, Defendant.

No. C22-0993JLR

United States District Court, W.D. Washington, Seattle

November 23, 2022

ORDER

JAMES L. ROBART UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Before the court is Defendant The Boeing Company's (“Boeing”) motion to stay this case until April 2023.^[1](Mot. (Dkt. # 10); Reply (Dkt. # 15).^[2]) Plaintiff Port of

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Seattle (the “Port”) opposes the motion. (Resp. (Dkt. # 13).) Boeing also filed supplemental briefing in response to the court's November 2, 2022 and November 10, 2022 orders. (See 11/2/22 Order (Dkt. # 19); Def. Supp. (Dkt. # 20); 11/10/22 Order (Dkt. # 22); 11/14/22 Schneider Decl. (Dkt. # 23).) The court has considered the parties' submissions, the balance of the record, and the applicable law. Being fully advised,^[3]the court GRANTS Boeing's motion to stay.

II. BACKGROUND

This action arises from the parties' involvement in the cleanup of the Lower Duwamish Waterway (“LDW”), which has been contaminated by decades of industrial releases associated with the use of the waterway, and adjacent upland areas, as Seattle's major industrial corridor since the early 1900s. (See generally Compl. (Dkt. # 1)); see also EPA, Record of Decision-Lower Duwamish Waterway Superfund Site 1 (Nov. 2014), https://semspub.epa.gov/work/10/715975.pdf (“Record of Decision”).^[4] From the 1960s to the present, the Port has “owned properties adjacent to the LDW” and has “leased those properties to tenants for a variety of operations including (primarily) cargo

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storage and shipping.” (See Compl. ¶ 63.) The Port also inherited limited property rights in some of the LDW's submerged lands from the former Commercial Waterway District No. 1 of King County upon its dissolution in 1963. (See id. ¶¶ 64-68.) Boeing has owned and/or operated a number of facilities adjacent to the LDW since the early 1900s. (See id. ¶¶ 48-60.)

A. Lower Duwamish Waterway Group

In 2000, Boeing, the Port, the City of Seattle, and King County formed the Lower Duwamish Waterway Group (“LDWG”) and entered into an administrative order on consent with the Environmental Protection Agency (“EPA”) and the Washington Department of Ecology (“Ecology”). (Id. ¶ 17; see also 11/14/22 Schneider Decl. ¶ 2, Ex. A (“Order on Consent”).) That order required the LDWG parties to conduct a remedial investigation and feasibility study^[5]to “investigate the nature and extent of” contamination in the LDW and “develop remedial alternatives” for the LDW. (Compl. ¶ 17; see also Order on Consent.) The LDWG parties agreed to share costs of the remedial investigation and feasibility study equally-with each party paying 25%-as an interim arrangement, with the understanding that those costs would later be re-allocated. (Compl. ¶ 18.)

The remedial investigation and feasibility study were ultimately completed in 2012. Record of Decision, supra, at 4. However, the 2000 administrative order on

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consent has since been amended five times to “provide for additional studies, sampling, and analysis to prepare the way for EPA's selected remedy.” (Compl. ¶ 20; see also Id. ¶¶ 20-21 (alleging that the LDWG parties have continued to equally share costs associated with the amendments to the order on consent); 11/14/22 Schneider Decl. ¶ 2, Exs. B-F (amendments to the administrative order on consent).) As a result, the LDWG parties are still engaging in activities related to “the investigation and planning necessary to perform the LDW cleanup.” (Compl. ¶ 21.) According to the Port, “[s]ince 2000, the LDWG parties have collectively incurred approximately $60 million in LDWG-Shared Costs to implement the [a]dministrative [o]rder on [c]onsent (as amended), and the Port has incurred approximately $15 million as its share of those costs.” (Id. ¶ 69; see also Id. ¶ 70 (alleging that the Port has also incurred “approximately $8 million of other recoverable costs . . . that were necessary for implementing the [a]dministrative [o]rder on [c]onsent but that were not covered under LDWG's interim cost-sharing agreement”).)

B. Lower Duwamish Waterway Allocation and Settlement Process

In 2013, the LDWG parties “and dozens of other potentially responsible parties at the Duwamish site [‘PRPs']^[6] initiated a voluntary alternative dispute resolution [‘ADR'] process known as the Duwamish Allocation.” King Cnty. v. Travelers Indem. Co., No. C14-1957BJR, 2018 WL 1994119, at *1 (W.D. Wash. Apr. 27, 2018). The non-binding ADR proceedings-which commenced in April 2014 and are still ongoing-seek to allocate liability for contaminating the LDW among 45 PRPs. See King Cnty. v. Travelers Indem. Co.,

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No. C14-1957MJP, 2015 WL 4878011, at *1 (W.D. Wash. Aug. 14, 2015).

The Duwamish Allocation is governed by an ADR Memorandum of Agreement (“MOA”) and is designed to re-allocate 100% of the past costs, as well as future cleanup costs, incurred by “Participating Parties”-i.e., PRPs that sign the MOA and have not withdrawn or been expelled from participation in the Duwamish Allocation process. (See 8/18/22 Schneider Decl. (Dkt. # 12), Ex. A (“MOA”) at 1, 3.^[7]) It is also designed to facilitate the parties settling with each other and then, as a group, negotiating and entering into a consent decree with the EPA, “pursuant to which the EPA will then direct and oversee performance of the clean-up” for the LDW. (See Dively Decl. (Dkt. # 11) ¶¶ 4-5.) As provided for in the MOA, the Participating Parties retained an experienced environmental lawyer to serve as the allocator; exchanged voluminous historical and current records; responded to detailed questionnaires similar to comprehensive interrogatories and requests for production; exchanged expert reports; took fact and expert depositions; held meetings between the allocator and the parties' experts; briefed and had the allocator decide motions for summary judgment on a variety of legal issues; and filed opening, response, and reply briefs on the merits. (See MOA at 8-17.) After the allocator issued preliminary findings, the Participating Parties submitted comments and argument, which the allocator responded to before issuing a final allocation report. (Id. at 16.)

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In 2022, the allocator issued his final report for the Duwamish Allocation, which set out his recommended allocation share for Participating Party. (See 8/18/22 Schneider Decl. ¶ 7.) Following the issuance of the final report, each party had 60 days to accept or reject its share assigned by the allocator. (MOA at 17.) If a Participating Party accepts its share, the MOA sets out a five-month process for parties to negotiate “cash-out” settlement agreements with the parties who will perform the cleanup. (Id. at 19, 27-29.) The “cash-out” parties-i.e., “parties with smaller assigned shares of responsibility”- will pay their shares to the “performing” parties that will conduct the cleanup in exchange for to-be-negotiated releases from further liability and costs. (See 8/18/22 Schneider Decl. ¶ 12; MOA at 19.) The remaining Participating Parties must then negotiate a consent decree with the EPA, under which the performing parties will agree to perform the cleanup using their own funds and, in part, the funds they obtained from the cash-out parties. (See 8/18/22 Schneider Decl. ¶ 12; MOA at 20.) The MOA provides that a Participating Party who rejects its share will cease to be a Participating Party in the Duwamish Allocation. (MOA at 17.)

On July 11, 2022, Boeing accepted the share that the allocator assigned to it. (8/18/22 Schneider Decl. ¶¶ 7, 10.) According to Boeing, the other Participating Parties also accepted their shares. (Id. ¶ 7; see also id. ¶ 10 (“The remaining Participating Parties in the Duwamish Allocation process similarly wish to proceed with negotiating the cash-out settlements and a consent decree with EPA ....”).) The remaining Participating Parties in the Duwamish Allocation have since begun cash-out settlement negotiations, which remain ongoing as of November 9, 2022. (See 8/18/22 Schneider Decl. ¶ 12; Def.

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Supp. at 1-2 (discussing the status of those negotiations).) The Participating Parties who will conduct the cleanup will need to first finalize cash-out settlements with the other Participating Parties, and then all Participating Parties will negotiate a cleanup agreement with the EPA in response to the special notice letters. (See 8/18/22 Schneider Decl. ¶ 12.)

According to Boeing, “[e]ver since it selected the plan for cleaning the waterway in 2014, the EPA has been waiting for the parties to finish the Duwamish Allocation and for some parties to enter cash-out settlements, after which the EPA will begin negotiating a consent decree with the cash-out parties and the remaining parties-including Boeing- who intend to conduct the cleanup.” (Mot. at 6 (first citing Record of Decision, supra; and then citing 8/18/22 Schneider Decl. ¶ 11) (citation omitted).) On July 15, 2022, the EPA told the Participating Parties that it had decided to move forward with consent decree negotiations and would issue special notice letters to the Duwamish Allocation parties in October 2022.^[8](See 8/18/22 Schneider Decl. ¶ 11, Ex. B.) As of November 9, 2022, the EPA had not yet issued special notice letters to the Participating Parties. (11/9/22 Schneider Decl. (Dkt. # 21) ¶ 2.) However, the EPA informed Boeing that it “intends to issue special notice letters at or before the end of this calendar year.” (Id. ¶¶ 3-5, Ex. A; see also Def. Supp. at 2.)

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C. This Litigation

The Port, however, declined to accept its share and is thus no longer a Participating Party in the Duwamish Allocation. (See Resp. at 2; MOA at 17 (providing that a Participating Party may decline its share); MOA at 24 (providing that Participating Party in the Duwamish Allocation process may initiate litigation against another Participating Party only if it first withdraws from the agreement, and thus...