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Cleaning Up Contamination From Stormwater Run-Off

Daily Journal
07/16/10

On June 7, a federal court ruled, for the first time, that a state Department of Transportation (DOT) is liable for the cost of cleaning up and restoring areas contaminated by highway stormwater runoff. This ruling will have long-term consequences for highway design and operation and for storm water management systems generally.

In U.S. v. Wash. St. Dept. of Transportation, 2010 WL 2302502 (W.D. Wash.), the U.S. District Court for the Western District of Washington found the Washington Department of Transportation (WSDOT) liable for the costs of cleaning up contamination from stormwater runoff at the Commencement Bay, Washington Superfund Site. The stormwater runoff came from two state highways and an interstate highway. Judge Robert Ryan ruled that WSDOT was a liable party under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), commonly known as Superfund, because WSDOT "arranged for the disposal" of stormwater by designing drainage systems for the three highways.

Under CERCLA, a party who owns or operates a facility at which hazardous substances have been released or come to be located, who arranges for the disposal or treatment of hazardous substances released at a facility, or who transports hazardous waste for disposal can be jointly and severally liable for cleanup costs and the cost of restoring the environment after cleanup. Here, the U.S. claims that WSDOT acted to arrange for the release of contaminants into the affected water body by designing and building a stormwater drainage system that received hazardous substances and released them into the environment. Joint and several liability means each liable party can be responsible for 100 percent of the cleanup and restoration costs, which are often measured in the tens or hundreds of millions of dollars. At issue in this case was WSDOT's potential liability for $6.8 million in cleanup costs already incurred at the Superfund site and future clean-up costs which, not including restoration, are expected to exceed $52 million.

WSDOT claimed it has a Clean Water Act permit authorizing the stormwater releases, does not own the highway property, has no control over contaminants that are carried away from rainwater, and any contaminants released into highway storm drains were present because of the actions of third parties, i.e. drivers using the road. The U.S. countered that WSDOT arranged for the disposal of hazardous substances from the highways by designing, constructing, and operating drainage systems whose sole function was to collect highway runoff and dispose of it into nearby water bodies. The U.S. argued that WSDOT knew highway stormwater runoff contains hazardous substances and had the ability to "redirect, contain, and treat its contaminated runoff." The hazardous substances at issue included petroleum hydrocarbons, phthalates, and heavy metals such as cadmium lead, zinc, and nickel. The court agreed with the U.S., finding that WSDOT designed the drainage systems, knew stormwater runoff contains hazardous substances, and had control over the disposal of the runoff. The court also rejected WSDOT's argument that WSDOT was not liable because it was exercising its sovereign powers non-negligently.

As to the existence of a Clean Water Act permit, the court acknowledged that federally permitted releases are exempt from CERCLA liability but noted there would be a further decision as to whether this defense is, in fact, available to WSDOT. The U.S. is arguing the permits do not cover the releases and, even if they do, WSDOT is not in compliance with the permits.

Regarding WSDOT's argument that the contaminants in the stormwater were caused by individuals using the highway and other sources, the U.S. argued WSDOT had not proven the releases were caused "solely" by a third party and, even if they were, WSDOT failed to exercise "due care" because it did not use the best methods and practices for treatment of stormwater. The court deferred a decision on this issue to later proceedings.

This decision opens state DOTs to potential liability at Superfund sites across the nation. There are just over 1,200 such sites currently on the National Priorities List for the U.S. At the sites where cleanup has already been completed, the average cost was $43 million. Cleaning up the remaining Superfund sites is expected to cost an additional $30 billion. But cleanup sought by the U.S. Environmental Protection Agency (EPA) is often only the beginning. Superfund also has a natural resource damages provision requiring parties who are responsible for the cleanup to restore the environment. This part of Superfund is administered by agencies such as the Interior Department's Fish and Wildlife Service and the Commerce Department's National Oceanic and Atmospheric Administration. These agencies, collectively called Trustees, are responsible for fish, wildlife, and other values. Trustees have defined a natural resource damage as the presence of pollutants in the environment. Thus, if an EPA required cleanup leaves any contamination in the environment, Trustees can demand a second cleanup. Trustees can also demand payments for so-called "non-use damages," what the General Accountability Office describes as the psychological value of just knowing that the resource exists. These second cleanup and psychological damage claims can be huge. In one case, a straightforward $30 million EPA driven groundwater cleanup was transformed into a $5 billion natural resource damages claim. Although that clam was ultimately defeated, it was only after a prodigious effort by the potentially responsible parties, which cost $1 million per month in legal and consulting fees for an extended period.

Notwithstanding that the District Court in U.S. v. Wash. St. Dept. of Transportation will conduct further proceedings on what defenses might be available to WSDOT, the court's ruling decides for the first time that the mere act of building a highway with a stormwater management program can make a state DOT liable for Superfund cleanup costs as an "arranger." This decision, should it survive any appeal, will loom large for others involved in the design and management of stormwater collection and discharge systems - including property developers, industrial and commercial concerns, schools and other public service agencies.

The decision also raises important public policy issues. The concept behind Superfund is that the "polluter" should pay to clean up and then restore the environment. In the case of public agencies such as state DOTs, it means state and federal tax money now slated for highway construction could become a deep pocket source of revenue to satisfy cleanup and restoration costs at Superfund sites given Superfund's joint and several liability standard.

George J. Mannina Jr. is a partner at Nossaman's Washington D.C. office. He has extensive experience in environmental litigation including oceans and fisheries law, the Endangered Species Act, Superfund's natural resource damages program, and the Clean Water Act. He can be reached at (202) 887-1491 or gmannina@nossaman.com.

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