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District Court Addresses Definition of Disposal and Compliance with NCP in Ruling on CERCLA Summary Judgment Motions

On December 2, 2021, addressing issues related to the definition of “disposal” and compliance with the National Contingency Plan (“NCP”) in a claim brought under Section 107 of CERCLA, the United States District Court for the Northern District of California denied both Plaintiff Stanford University’s (“Stanford”) motion for summary judgment and Defendant Agilent Technologies, Inc.’s (“Agilent”) cross motion for summary judgment. See Bd. of Trs. of the Leland Stanford Junior Univ. v. Agilent Techs., Inc., Slip Op. (N.D. Cal. Dec. 2, 2021). The Court denied Stanford’s motion because there was a genuine dispute about whether HP spread PCB contaminated soil over uncontaminated areas of Stanford’s property and Stanford failed to show that it incurred costs consistent with the NCP. Id.  The court denied HP’s cross motion because, although incurred in connection with redevelopment of the property, Stanford’s clean-up costs were “necessary” within the meaning of 42 U.S.C. § 9607(a)(4)(B) and, separately, because a genuine dispute existed as to whether Stanford consented to the disposal of hazardous material on its property. Id.

Stanford owned property located in Palo Alto, California (“Property). In 1970, through a series of assignments and subleases, Hewlett-Packard Company (“HP”) commenced operating its business on the Property. In 1999, HP assigned its lease of the Property to its affiliate, Agilent Technologies, Inc., and Agilent indemnified HP from liability pursuant to the terms of the assignment agreement. Agilent discontinued business operations on the Property in 2013, and in 2015, Stanford began construction of a housing project on the Property. During the early phases of the project, Stanford’s environmental consultants identified extensive PCB and TCE contamination in the soil and soil vapors.  On February 23, 2018, Stanford brough a cost recovery action under Section 107 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Section 9607 (“CERCLA”).

In its motion for Summary Judgment, as earthmoving activities that spread hazardous material over uncontaminated portions are considered “disposals” under CERCLA, Stanford alleged that HP “disposed” of PCBs when, in 1987, it dug a trench and removed dirt on the property to lay a storm drain. Id. at 5. The parties contested whether HP, in removing the dirt, simply stockpiled it alongside the trench before backfilling the area, or instead redistributed any of the hazardous soil to other parts of the property. Id. at 5. Stanford argued that “even if HP only removed the soil, stacked it next to the trench, and then refilled the trench with that same soil, it still disposed of PCB on the property.” Id. at 5-6.  

The Court disagreed. Denying Stanford’s motion for summary judgment on this point, the Court first analyzed the statutory definition of “disposal” to determine whether HP spread PCB over uncontaminated areas of Stanford's property. Id. at 4-7. Under CERCLA, “disposal” means “discharge, deposit, injection, dumping, spilling, leaking, or placing of any . . . hazardous waste into or on any land . . . so that such . . . waste or any constituent thereof may enter the environment or be emitted into the air or discharged into any waters.” Id. at 4-5 (citing § 6903(3)).  According to the Court, the terms “discharge, deposit, injection, dumping, spilling, leaking, or placing,” which are used to define “disposal” under the statute, connote moving matter from one place to another. Id (citing 42 U.S.C. § 6903(3)). Thus, the court held that that temporarily lifting soil and backfilling the same hole with the same soil was not a “disposal.” Id. at 7.

The Court also denied Stanford’s motion on the basis that it failed to show the absence of a genuine issue of material fact regarding whether HP disposed of TCE on the property. Id. at 7. Although there was circumstantial evidence supporting Stanford’s argument that “HP used TCE in the 1970s and TCE was detected in the soil near the chemical storage area on the property…HP presented admissible evidence that a prior occupant was responsible for the TCE contamination, having used the same chemical storage area.” Id. Thus a genuine dispute existed as to whether HP disposed of TCE on the Property.

Finally, Stanford failed to show that it incurred costs “consistent with the national contingency plan” Id. at7-8. Compliance with the plan is a prerequisite to recovering actual cleanup costs. Stanford claimed that although compliance with the plan was a prerequisite to recover actual cleanup cost, it is not a prerequisite to recovering assessment and evaluation costs as the NCP “does not speak to assessment and evaluation costs.”  Criticizing Palmisano v. Olin Corp., authority cited by Stanford to support its argument, the court interpreted the statute’s text and determined that it “[did] not differentiate between initial assessment and evaluation costs and other kinds of costs.” Id. at 8.  Section 9607(a)(4)(B) holds that private parties may recover “necessary costs of response . . . consistent with the national contingency plan.” Id. The court also noted that “nothing in CERCLA … exempts monitoring and investigation costs from the requirements of the [NCP].” Id (citing Village of Milford v. K-H Holding Corp., 390 F.3d 926 (6th Cir. 2004)).The Court also cited subsections (c)(5) and (c)(6) and noted that those subsections “relate, at least in part, to assessment and evaluation costs.” Therefore, although Stanford may have incurred cost consistent with the NCP, it had not brought forward any evidence showing compliance and was not entitled to summary judgment.

The Court then turned to HP’s cross motion. HP first argued that Stanford’s costs were not “necessary” within the meaning of the statute because Stanford incurred them as part of an “upgrade” in the use of the property. Id. at 11. In rejecting HP’s argument, the court reasoned that the “touchstone for determining . . . necessity…is whether there is an actual threat to human health or the environment,” and a party also having “a business [motive] for the cleanup does not negate necessity.” Id. at 12. Necessity does not turn on ulterior business reasons, nor on the plaintiff's subjective motivations, what matters is the objective threat contamination poses to health or the environment. Id.  Indeed, “Stanford’s desired use of the property was well within the range of normal things that owners do with their property…” Id. at 14. Thus, the Court held that the cleanup costs associated with desired use are “necessary” within the meaning of the statute, and HP was not entitled to summary judgment. Id.

HP also argued that Stanford consented to the disposal of hazardous materials by approving HP's excavation activities and by failing to take immediate action after learning about contamination. Id. at 15. The court held that “approving activities on a property is not the same as consenting to contamination resulting from those activities” and rejected HP’s argument. Id.