Pope Res., LP v. Wash. State Dep't of Natural Res. ( 2018 )

This oplhion was filed for record
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psmE oxso; si*re97 Wn. App. 417,
983 P.2d 1155 (1999) and Taliesen Corp. v. Razore Land Co., 135 Wn. App. 106,
144 P.3d 1185 (2006). See Pope Res., LP v. Dep't ofNat. Res., 197 Wn. App. 409,
Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
422,389 P.3d 699(2016)("Because the language ofthe 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.
We reverse the Court of Appeals and hold that DNR is not an "owner or
operator" ofthe 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 ofthe Port Gamble Bay facility.
BACKGROLfND
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
Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
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.
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
ofAppeals affirmed the tax court's valuation ofthe transferred properties at between
$46.7 and $59.7 million. Pope & Talbot, Inc., 162 F.3d at 1238, 1242. Pope
Resources in tum 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.
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
Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
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 fmances ofthe facility at Port Gamble, manage the
employees of the faeility, manage the daily business operations of the
faeility, or have authority to operate or maintain environmental eontrols at
the faeility. DNR did not eontrol Pope and Talbot's deeisions regarding
eomplianee with environmental laws or regulations, or Pope and Talbot's
decisions regarding the presenee of pollutants. DNR did not authorize the
release of any hazardous substances on this site.
CP at 269.1
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
'See also CP at 120 ("During the Term of this Lease, Lessee shall have exclusive
control and possession ofthe Property(subject to easements or other land uses that may be
granted under Subsection 5.5, and any interference by third parties as identified in
Subsection 10.2), and State shall have no liabilities, obligations, control, or responsibilities
whatsoever with respect thereto, or with respect to any plans or specifications submitted to
State pursuant to this Lease, or improvements or repairs made to the Property or any
activity conducted thereon. State's approval or disapproval of any such plans and
specifications or improvements shall not render State liable therefore.").
Pope Resources, LP, etal. Dep'tofNat. Res., 94084-3
3-10. The Kitsap County Superior Court granted summary judgment in favor of
DNRin2016. 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 Wn.
App. at 412. DNR appealed, and we granted review. Pope Res., LP v. Dep't ofNat.
Res., 188 Wn.2d 1002, 393 P.3d 357(2017).
ANALYSIS
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(l)(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.
Pope Resources, LP, etal. Dep't ofNat. Res., 94084-3
I. The Court ofAppeals Conflated the Terms "Owner"and "Operator"under
MTCA
The Court of Appeals erroneously concluded "that DNR is liable under
MTCA as an 'owner or operator' ofthe Site." Pope Res., 197 Wn. App, at 418. At
the center of its error lies the conflation ofthese 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. The result is a
patchwork drawn from distinct legal doctrines that fails to adequately describe
DNR's role at Port Gamble Bay.
The plain language ofMTCA 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.
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
Pope Resources, LP, et al. Dep 't ofNat. Res., 94084-3
"[pjolluters should pay to clean up their own mess. Initiative 97 would make them
do that. Polluters areforced 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
substantially the same language used in CERCLA with one exception. See 42 U.S.C.
§ 9607(a)(1)(persons liable include "the owner and operator of... a facility"). The
parallel construction from the definition of "owner or operator" recurs throughout
MTCA,which defines "facilities" by applying this dyad:
"Facility" means (a)[operational fixtures and assets such as] any building,
structure, installation, equipment, pipe or pipeline (including any pipe into a
sewer or publicly owned treatment works), well, pit, pond, lagoon,
impoundment, ditch, landfill, storage container, motor vehicle, rolling stock,
vessel, or aircraft, or(b)[real property locations and assets such as] any site
or area where a hazardous substance, other than a consumer product in
consumer use, has been deposited, stored, disposed of, or placed, or
otherwise come to be located.
RCW 70.105D.020(8). Other than adding vessels under MTCA,this is substantially
the same definition for "facility" under CERCLA,42 U.S.C. § 9601(9).
The parent statute to MTCA, CERCLA, has consistently been interpreted to
avoid fusing the separate legal doctrines that underlie the terms, "owner" and
"operator." See Craig N. Johnston & Melissa Powers, Principles of
Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
Environmental Law 162-63 (2016)("The prima facie elements of ownership
liability are generally very straightforward: Does the defendant own the facility ....
The question of who may qualify as an 'operator' under CERCLA is somewhat
trickier."). Because MTCA was heavily patterned after CERCLA, Washington
courts have recognized "federal cases interpreting similar 'owner or operator'
language in the federal act are persuasive authority in determining operator liability."
Taliesen, 135 Wn. App. at 127(citing Unigard, 97 Wn. App. at 428).
The Court of Appeals erroneously concluded that DNR has "owner or
operator" liability by conflating these distinct statutory terms and entangling
independent legal doctrines regarding real property ownership, statutory delegation,
and business facilities operations. The court neglected to make concrete findings of
any real property ownership interest or any facility-level operational control based
on facts in the record. Its reasoning thereby creates the risk that persons with no
ownership interest and who lack facility-level operational control may nonetheless
be named potentially responsible parties under MTCA.^ When MTCA is properly
construed, it is clear that DNR,regardless of whether it is a person under MTCA,is
neither an "owner" nor an "operator" subject to liability for the Port Gamble Bay
facility.
^ The dissent heightens this risk by erroneously suggesting that the burden is on
DNR to prove it is not an "owner" or "operator." See dissent at 4.
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Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
II. DNR Is Not Liable under MTCA as an "Owner"at Port Gamble Bay
The Court of Appeals incorrectly held that DNR has an "ownership interest"
in the Port Gamble Bay facility. Pope Res., 197 Wn. App. at 420. In so doing, the
court interposed ownership attributes into the State's delegation of aquatic lands
managementto DNR. See id. at 419(wrongly assuming that delegated responsibility
to manage aquatic lands resembles a property right and, consequently, an
"ownership interest" in the Pope/OPG facility). Despite a record bereft ofany deeds,
grants, patents, or other instruments conveying "any ownership interest" to DNR,
the Court ofAppeals deemed DNR an owner by mistaking its delegated management
authority for a real property right, and then concluding that "DNR's authority
includes those rights associated with an ownership interest." Id. at 420. This was
error.
It is imdisputed that the State of Washington owns the aquatic lands at Port
Gamble Bay. Indeed, Pope/OPG conceded as much and also acknowledged before
the trial court that "the State of Washington cannot be liable under MTCA." CP at
308; see also Pope Res., 197 Wn. App. at 418 (noting parties' stipulation that the
State owns lands at Port Gamble Bay). Pope/OPG nonetheless sued DNR,arguing
that"DNR has every incident of ownership other than fee." Resp'ts' Suppl. Br. at
10. Not so; the legislature reserved for the State the full bundle ofrights comprising
Pope Resources, LP, et al. Dep'tofNat. Res., 94084-3
an ownership interest when it declared that "the state owns these aquatic lands in fee
and has delegated to the department the responsibility to manage these lands for the
benefit ofthe public." RCW 79.105.010; see also RCW 79.105.020(the purpose of
the aquatic lands statutes "is to articulate a management philosophy to guide the
exercise of the state's ownership interest and the exercise of the department's
management authority"). DNR's interest is solely as the State's management agent.
The limitation on DNR's role has constitutional roots because the State of
Washington, not DNR,owns the beds and shores ofall navigable waters in this state.
Const, art. XVII, § 1. Upon entering the Union, the State of Washington obtained
title to the beds ofits navigable waters under the equal footing doctrine, U.S. Const.
art. IV, § 3, cl. 1. Under this doctrine,"the people of each of the Thirteen Colonies
at the time of independence 'became themselves sovereign; and in that character
hold the absolute right to all their navigable waters and the soils under them for their
own common use, subject only to the rights since surrendered by the Constitution to
the general government.'" Idaho v. Coeur d'Alene Tribe, 521 U.S. 261,283,117 S.
Ct. 2028, 138 L. Ed. 2d 438 (1997)(quoting Martin v. Lessee ofWaddell, 41 U.S.
(16 Pet.) 367, 410, 10 L. Ed. 997 (1842)). The Court later concluded that states
entering the Union after 1789 did so on an '"equal footing'" with the original states.
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Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
thereby granting similar ownership over these "sovereign lands." Id.(citing Pollard
V. Hagan, 44 U.S.(3 How.)212, 228-229, 11 L. Ed. 565 (1845).
While the State owns aquatic lands in fee, it has delegated to DNR the
responsibility to manage such lands "for the benefit of the public." RCW
79.105.010. The public benefits "are varied and include:(1)[e]ncouraging direct
public use and access; (2) [f]ostering water-dependent uses; (3) [e]nsuring
environmental protection; [and] (4) [ujtilizing renewable resources." RCW
79.105.030. Generating revenue in a manner consistent with these other purposes is
also a public benefit. Id. Log storage is an expressly authorized purpose for state-
owned aquatic lands, subject to DNR's management. RCW 79.105.250. "State-
owned aquatic lands" "means all tidelands, shorelands, harbor areas, the beds of
navigable waters, and waterways owned by the state and administered by the
department or managed under RCW 79.105.420 by a port district. 'State-owned
aquatic lands' does not include aquatic lands owned in fee by, or withdrawn for the
use of, state agencies other than the department." RCW 79.105.060(20).
The State's ownership of aquatic lands reflects its obligations under the public
trust doctrine. Rooted in Const, art. XVII, § 1, "[t]he public trust doctrine protects
'public ownership interests in certain uses of navigable waters and underlying lands,
including navigation, commerce, fisheries, recreation, and environmental quality.'"
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Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
Citizensfor Responsible Wildlife Mgmt. v. State, 124 Wn. App. 566, 571, 103 P.3d
203(2004)(internal quotation marks omitted)(quoting Weden v. San Juan County,
135 Wn.2d 678,698,958 P,2d 273(1998)). "In other words,the public trust doctrine
grants the state dominion and sovereignty over these lands to hold in trust for the
public." Id. (citing Caminiti v. Boyle, 107 Wn.2d 662, 669, 732 P.2d 989(1987)). Const, art. XVII, § 1 was "a formal declaration by the people of rights
which our new State possessed by virtue of its sovereignty, and which declaration
had the effect of vesting title to such lands in the state." Caminiti, 107 Wn.2d at
666-67(footnote omitted).
The public trust duty "devolves upon the State, not any particular agency
thereof." Rettkowski v. Dep't ofEcology, 122 Wn.2d 219,232,858 P.2d 232(1993).
Through the aquatic lands statutes, the State has granted sovereign powers to DNR
for protection of the State's interest in the trust. See, e.g., Caminiti, 107 Wn.2d at
672("The statute also specifically authorizes an agency ofthe State,the Department
of Natural Resources, to regulate the docks through its powers of revocation to
protect waterward access and ingress rights of other landowners and the public
health and safety.").
In 1953, the legislature specifically delegated to DNR the authority to lease
state bedlands. CP at 263. Through the exercise of this delegated power, DNR
12
Pope Resources, LP, etal. Dep'tofNat. Res., 94084-3
executed its first lease for the Port Gamble Bay area with Pope & Talbot in 1974.
CP at 267. DNR does not generate profits from leases of state-owned aquatic lands.
Rather,
[a]fter deduction for management costs as provided in RCW 79.64.040 and
payments to towns under RCW 79.115.150(2), all moneys received by the
state from the sale or lease of state-owned aquatic lands and from the sale of
valuable material from state-owned aquatic lands shall be deposited in the
aquatic lands enhancement account which is hereby created in the state
treasury. After appropriation, these funds shall be used solely for aquatic
lands enhancement projects; for the purchase, improvement, or protection of
aquatic lands for public purposes; for providing and improving access to the
lands; and for volunteer cooperative fish and game projects.
RCW 79.105.150(1).
DNR executes its leasing authority with a view toward the State's duty to
protect the public trust. The "1992 Memorandum of Agreement Concerning
Contaminated Sediment Source Control, Cleanup, and Disposal"(MOA)between
DNR and the Department ofEcology recommended indemnity language,concerning
hazardous, toxic, or harmful substances, for DNR to include in its leases when
exercising its delegated management powers over state-owned aquatic lands. CP at
306. The lease agreements between DNR and Pope & Talbot state:
Lessee shall be fully and completely liable to State, and shall waive any
claims against State for contribution or otherwise, and shall indemnify,
defend, and save harmless State and its agencies, employees, officers,
directors, and agents with respect to any and all liability, damages(including
damages to land, aquatic life, and other natural resources), expenses, causes
of action, suits, claims, costs (including testing, auditing, surveying, and
investigation costs),fees(including attomeys' fees and costs), penalties(civil
and criminal), and response, cleanup, or remediation costs assessed against
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Pope Resources, LP, et al. Dep 't ofNat. Res., 94084-3
or imposed upon Lessee, State, or the Property, as a result ofLessee's control
of the Property, or Lessee's use, disposal, transportation, generation and/or
sale of Hazardous Substances or that ofLessee's employees, agents, assigns,
sublessees, contractors,subcontractors,licensees, permittees, or invitees, and
for any breach of this [agreement].
CP at 120.
This lease provision is wholly consistent with serving the public interest under
the public trust doctrine test we have developed.^ See Caminiti, 107 Wn.2d at 670.
In Caminiti, we considered whether a statute that allowed DNR to authorize no-cost
residential docks abutting state tidelands and shorelands violated the public trust. Id.
at 666. We applied the following inquiry: "(1) whether the State, by the questioned
legislation, has given up its right of control over the jus publicum[, an overriding
public authority interest over navigable waters and lands beneath them,] and (2)if
so, whether by so doing the State (a) has promoted the interests of the public in the
jus publicum, or (b) has not substantially impaired it." Id. at 670. We concluded
that the public trust was not violated because the statute at issue in Caminiti
^ Pope/OPG argue that the lease indemnifieation language conflicts with the public
interest and is evidence that DNR is no different from a private landowner seeking to limit
its liability exposure. They go so far as to criticize DNR's public interest argument as
disingenuous. Resp'ts' Answer to Pet. for Review at 10. However, it is well understood
that "DNR could have (and presumably did) use indemnity agreements and insurance to
protect itself from liability resulting from lessees' activities and can continue to protect
itself going forward by using similar measures." Amicus Curiae Br. Submitted by Jolene
Unsoeld, Janice Niemi & David Brieklin, No. 47861-7-II, at 12-13. This is sound
management practice and not inconsistent with the State's objectives under the public trust
doctrine.
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Pope Resources, LP, et al. Dep'tofNat. Res., 94084-3
adequately protected public harbors and incorporated protections ofthe trust through
the Shoreline Management Act of 1971,RCW 90.58.140(1), the Planning Enabling
Act ofthe State of Washington,ch. 36.70 RCW,the hydraulics act, RCW 77.55.021,
and local regulation. Id. at 672-73. In addition, the statute promoted public use of
the trust consistent with the referenced legal requirements, while not conveying trust
ownership to private parties. Id. at 673-74.
The Court ofAppeals later applied the Caminiti test to a state agency decision
regarding whether DNR's procedures for auctioning geoduck harvest rights violated
the public trust doctrine. Wash. State Geoduck Harvest Ass'n v. Dep't ofNat. Res.,
124 Wn. App. 441, 101 P.3d 891 (2004). The court concluded that the public trust
was not violated because no title to state land was conveyed and DNR reserved the
right to suspend commercial harvests if needed. Id. at 452. In addition, DNR
established procedures that, in combination with federal law and industry standards,
provided a relevant regulatory jframework to ensure continued State control over its
geoduck resources. Id.
DNR's actions in this case reflect a similar effort to safeguard the public trust.
As in Caminiti and Washington State Geoduck Harvest Ass'n, the State, through its
management agent DNR, conveyed occupancy to Pope & Talbot in term leases,
rather than a fee title conveyance,for a facility the State inherited at statehood. DNR
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Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
introduced requirements in the leases to prevent accumulation of wood waste and
hazardous materials, and required indemnification by the lessee pursuant to the
MOA with the Department ofEcology, CP at 103-06,111-21,306-07. Any revenue
it collected was dedicated to the enhancement ofaquatic lands. RCW 79.105.150(1).
And as the State's designated manager, DNR,through the leases, clearly delineated
the operational control and MTCA liability for the leased facility to Pope & Talbot,
consistent with the Department ofEcology MOA. CP at 119-20.
This allocation ofresponsibility is consistent with MTCA's goal to ensure that
polluters pay. At Port Gamble Bay,DNR also required compensation from Pope &
Talbot for lost income from reduced geoduck production associated with a 1975
sewer outfall lease. CP at 126-32. Port Gamble Bay restoration is in progress, in
part through Pope/OPG's consent decree with the Department of Ecology pursuant
to MTCA. There may be a temporary loss ofsome trust resources, as in the geoduck
lease areas that may need decades of recovery time prior to any resumption of
leasing. See Wash. State Geoduck Harvest Ass'n, 124 Wn. App. at 445. However,
the regulatory and legal framework in this case resembles the protective legal
landscapes in Caminiti and Washington State Geoduck Harvest Ass'n.
The Court of Appeals erred by misidentifying DNR's delegated authority as
indicating a conveyed property right under property law doctrines. However, the
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Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
delegation to DKR. merely authorizes leasing of state-owned submerged lands
consistent with public uses. The record lacks evidence that the State ever conveyed
to DNR "any ownership interest" in Port Gamble Bay. When the legislature wishes
to define an agency as a landowner, it knows how to do so. See Oberg v. Dep't of
Nat. Res., 114 Wn.2d 278, 282, 787 P.2d 918 (1990) (noting the legislature's
"express inclusion ofDNR within the landowner categoiy"(citing ch. 76.04 RCW)).
Further, when the legislature wishes to convey land, it knows how to authorize it.
See RCW 79.105.400 ("The department may exchange state-owned tidelands and
shorelands with private and other public landowners ifthe exchange is in the public
interest and will actively contribute to the public benefits established in
RCW 79.105.030."); see also RCW 79.125.200(2) ("Notwithstanding any other
provision of law, from and after August 9, 1971, all state-owned tidelands and
shorelands enumerated in subsection (1) of this section shall not be sold except to
public entities as may be authorized by law and they shall not be given away."). The
Court of Appeals erred when it concluded that the legislature conferred "any
ownership interest" to DNR. Pope Res., 197 Wn. App at 420."^
Our conclusion that DNR is not subject to MTCA liability as an "owner" should
not be misunderstood as disclaiming any state agency liability under MTCA. See Br. of
Amicus Curiae Cities of Seattle, Tacoma & Bellingham,& Wash. Ass'n of Mun. Att'ys at
9-10 (asking court to "confirm that DNR is not exempt from liability under the statute").
Our decision does not alter MTCA liability for state agencies. Instead, we conclude, based
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III. DNR Is Not Liable under MTCA as an "Operator"at Port Gamble Bay
The Court of Appeals also erred in holding DNR is an "operator" for MTCA
purposes at the Port Gamble Bay facility. It wrongly conflated the distinct statutory
terms "owner" and "operator" and their underlying doctrines in property and
business/agency law, implying that delegated authorities that resemble property
interests can thereby resemble operational control that triggers MTCA liability. The
court wrongly seized on DNR's management role over aquatic lands and, without
reference to legal authority, equated this role with having operational control over
the Pope/OPG facility.^ Pope Res., 197 Wn. App. at 420-21. These concepts are
distinct.
"DNR is a creature ofstatute and derives its power from the legislature." Pope
Res., 197 Wn. App. at 426(Melnick, J., dissenting).^ The legislature delegated only
on these circumstances, that DNR is not the "owner" of state-owned submerged lands but
is solely the State's managing agent.
^ In the process, the Court of Appeals defined a '"general manager' as a person who
administers or supervises the affairs of an organization, 'who has overall control' of an
organization." Pope Res., 197 Wn. App. at 421 (quoting BLACK'S LAW DICTIONARY 1104
(10th ed. 2014)). Although the court identified DNR as possessing authority to manage
state-owned aquatic lands, it never made a factual finding that DNR exercised operational
control over the Port Gamble Bay facility.
^ See Pope Res., 197 Wn. App. at 426 (Melnick, J., dissenting)("'An agency may
exercise only those powers conferred by statute and cannot authorize action in absence of
statutory authority.'"{cyxoImgNorthlake Marine Works,Inc. v. Dep't ofNat. Res., 134 Wn.
App. 272, 282, 138 P.3d 626 (2006))); id. ("'DNR has been granted authority to manage
state aquatic lands.'" {quotiag Northlake Marine Works, Inc., 134 Wn. App. at 287)).
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Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
the authority to manage state-owned aquatic lands, without a "general manager"
delegation to DNR, let alone the appropriation of "any control" over private
Pope/OPG assets. Therefore, if we focus only on control and set aside the Court of
Appeals erroneous designation ofDNR as an "owner," under the court's test it would
not require much to incur "operator" liability under MTCA. Any entity with
delegated management responsibility for some aspect of state lands could qualify,
as could any entity with some power to control activities at the site. Indeed, as DNR
notes in responding to an amicus brief by Ecology that reflects the Court ofAppeals'
view:
One of the side effects of Ecology's argument is that it, too, could have
liability as an "owner or operator" under MTCA. As Ecology argues, a
person can "exercise[] control" by choosing to limit or not limit the uses to
which a facility can be put. Br. of Ecology at 6. At Port Gamble, it was
Ecology and its predecessor,the Pollution Control Commission,that had the
authority to limit, or choose not to limit, the pollution from the mill.
DNR's Answer to Amicus Br. of Dep't of Ecology at 5 (alteration in original). It
should give pause that the agency charged with naming potentially liable parties
could actually be one under the Court of Appeals' minimalist test for operator
liability. See Pope Res., 197 Wn. App. at 423.^
^ Amicus Curiae cities of Seattle, Tacoma, and Bellingham remind us that Ecology
is entitled to deference when interpreting an ambiguous statute goveming its delegated
authority. Br. of Amicus Curiae Cities of Seattle, Tacoma,& Bellingham & Wash. Ass'n
of Mun. Att'ys at 8. However, "[t]he plain language of RCW 70.105D.020(22) is
unambiguous." Pope Res., 197 Wn. App. at 420; see also id. at 426 ("Although the
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Pope Resources, LP, etal. Dep'tofNat. Res., 94084-3
We reject the Court of Appeals' approach in favor ofthat taken by the courts
in Unigard and Taliesen, which properly interpret MTCA to align with CERCLA.
In the context of shareholder liability and the assignment of insurance benefits and
indemnification against liability, the Court ofAppeals in Unigard found CERCLA's
test for determining "operator" liability persuasive. 97 Wn. App. at 428. In the
context of subcontractor liability, the Court of Appeals in Taliesen concluded that a
contract drill operator under the supervision of an engineering firm was not liable
for a ruptured tank, even though he had mechanical control over the drill, because
the contractor had no authority regarding where to drill—^this authority resided with
the engineering firm. Taliesen, 135 Wn. App. at 128. The court found the
interpretation of organizational operations under CERCLA persuasive:
"In a mechanical sense, to 'operate' ordinarily means '[t]o control the
functioning of; run: operate a sewing machine.' And in the organizational
sense more obviously intended by CERCLA,the word ordinarily means '[t]o
conduct the affairs of; manage: operate a business.' So, under CERCLA,an
operator is simply someone who directs the workings of, manages, or
conducts the affairs of a facility. To sharpen the definition for purposes of
CERCLA's concem with environmental contamination, an operator must
manage, direct, or conduct operations specifically related to pollution, that
majority does not distinguish between the terms 'owner' and 'operator,' the plain language
of the statute at issue clearly differentiates between the two.")(Melnick, J., dissenting).
Ecology's interpretation risks distorting the plain-language definitions of MTCA in
situations similar to this ease by injecting delegation and real property doctrines into
corporate and proprietary rights regarding operational control. See Amiens Br. ofDep't of
Ecology at 5-6. This departure from plain meaning could render operational elements of
the statute superfluous and lead to unintended, if not absurd, consequences,thus obviating
the rationale for deference.
20
Pope Resources, LP, etal. Dep'tofNat. Res., 94084-3
is, operations having to do with the leakage or disposal of hazardous waste,
or decisions about compliance with environmental regulations."
See id. (quoting United States v. Bestfoods, 524 U.S. 51,66-67, 118 S. Ct. 1876, 141
L. Ed. 2d 43 (1998)); see also Unigard, 97 Wn. App. at 429 (finding CERCLA
interpretation "applicable" in that case).
Pope/OPG argue that the "Court of Appeals' conclusion that DNR 'exercised
any control' over the facility in this case hinged, in part, on DNR's role in allowing
and leasing for log storage, which caused pollution." Resp'ts' Answer to Pet. for
Review at 20 n.9 (emphasis added)(citing Pope Res., 197 Wn. App. at 420-421).
But, as Judge Melnick observed in dissent,"'The persuasive authority ofthe federal
cases demonstrates that the key word in our state statute is "control," not "any."'"
Pope Res., 197 Wn. App. at 428-29 (quoting Taliesen, 135 Wn. App. at 128).
Because the term "control" is not defined in the statute, it must be given a judicial
interpretation. The proper judicial interpretation is that set forth in both Taliesen
and Unigard.
These cases correctly read MTCA to follow the CERCLA test, under which
"'an operator is simply someone who directs the workings of, manages, or conducts the
affairs of a facility.'" Taliesen, 135 Wn. App. at 128 (quoting Bestfoods 524 U.S. at
66). Here, DNR did not fulfill this sort of business management role directly over
the facility. Instead, it was Pope & Talbot that executed those operational and
21
Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
"general manager" roles at the Port Gamble Bay facility. The Port Gamble Bay lease
expressly assigned operational control to Pope & Talbot. CP at 120. DNR's role
was to manage the site on behalf ofthe state.^
Given the facts at Pope/OPG's Port Gamble Bay facility, DNR is not an
operator under MTCA. In holding to the contrary, the Court of Appeals rejected the
interpretation of the operative terms in MTCA set forth in Taliesen and Unigard.
Pope Res., 197 Wn. App. at 422. Despite the court's statement that these cases are
"distinguishable," the only distinction offered is a different interpretation of
"control" under MTCA to support operator liability. Id. The court found sufficient
control based on DNR's role as the State's designated manager and lessor of aquatic
lands, but this is too slim a reed on which to hang MTCA liability. It does not amount
to necessary facilities operations control. We follow prior cases applying the
^ The MOA reflects this understanding: "Ecology recognizes that DNR may have
reasonable defenses based on not being an 'owner-operator,' having an 'innocent
landowner' status, etc., at any given cleanup site. These 'reasonable' defenses may apply
to situations where DNR did not: control the finances ofthe facility, manage the employees
of the facility, manage the daily business operations of the facility, or have authority to
daily operate/maintain environmental controls at the facility." CP at 289. As Judge
Melnick noted in his dissent,"This language in the MO[A]evinces Ecology's recognition
that DNR's role as a manager was to act as the public's custodian of the land, and that it
would not be liable under MTCA unless it played an active role in controlling the operation
ofthe facility." Pope Res., 197 Wn. App. at 428. The Department ofEcology insists that
Judge Melnick's conclusion "does not represent Ecology's agreement with, or assent to,
DNR's argument in this case." Amicus Curiae Br. ofDep't ofEcology at 18. Nonetheless,
the MOA statement indicates recognition of DNR's defenses to MTCA liability premised
on not having facility-level control relating to polluting activities.
22
Pope Resources, LP, et al. Dep'tofNat. Res., 94084-3
CERCLA control test to MTCA and hold DNR did not possess the requisite level of
control to support "operator" liability.
CONCLUSION
DNR is neither an "owner" nor an "operator" ofthe Port Gamble Bay facility
for purposes of MTCA. We reverse the Court of Appeals and reinstate the superior
courtjudgment in favor ofDNR.
23
Pope Resources, LP, et al. Dep't ofNat. Res., 94084-3
WE CONCUR:
Waaaa>{' > ^0 .
24
Pope Resources, LP, et al. v. Dep't ofNatural Resources (Gonzalez, J., dissenting)
No.94084-3
Gonzalez, J.(dissenting)—^The Model Toxics Control Act(MTCA), chs.
70.105 and 82.21 RCW,sets strict cleanup standards to ensure the protection of
human health and the environment. The Department of Natural Resources(DNR)
knew its tenant was contaminating the state's waters and did nothing. The
majority holds DNR is neither an owner nor an operator and therefore is not liable
under MTCA. I disagree. The majority's interpretation of MTCA owner or
operator liability undermines both the act's plain language and its strict liability
scheme. MTCA reflects an intentional policy choice that Washington voters made
in 1988 to hold those who have "any ownership interest in the facility or who
exercise[] any control over the facility" strictly liable. RCW 70.105D.020(22)(a)
(emphasis added); see generally State of Washington Voters Pamphlet,
General Election 6(Nov. 8, 1988){Voters Pamphlet)("Cleanups, not lawsuits.
[Initiative]-97 makes cleanups happen now—not later. The initiative prohibits
polluters from filing lawsuits that delay cleanups."). DNR's power to exclude.
Pope Resources, LP, et al. v. Dep't ofNatural Resources, No. 94084-3 (Gonzalez, J., dissenting)
execute leases, and police violations amply constitutes "any control over the
facility," and thus DNR was liable as an "operator" ofthe site under MTCA.^
RCW 70.105D.020(22)(a). As the majority concludes otherwise, I respectfully
dissent.
MTCA broadly defines an "owner or operator" as "any person with any
ownership interest in the facility or who exercises any control over the facility."
RCW 70.105D.020(22)(a). The statute also explicitly includes state government
agencies in its definition of"person." RCW 70.105D.020(24). The majority
ignores this plain language and redefines "operator" liability with a narrower
standard taken from the judicial interpretation of the federal statute that was the
model for MTCA,the Comprehensive Environmental Response, Compensation
and Liability Act of 1980(CERCLA),42 U.S.C. §§ 9601-9675. Under CERCLA,
'"an operator is simply someone who directs the workings of, manages, or
conducts the affairs of a facility.'" Majority at 21 (internal quotation marks
omitted)(quoting Taliesen Corp. v. RazoreLand Co., 135 Wn. App. 106, 128, 144,
P.3dll85 (2006)).
^ We do not need to resolve whether DNR had an "ownership interest" in the contaminated site
because DNR is liable for remediation costs as an "operator." Nevertheless, because I disagree
with the premises on which the majority relies, I discuss ownership briefly.
Pope Resources, LF, et al. v. Dep't ofNatural Resources, No. 94084-3 (Gonzalez, J., dissenting)
The majority relies on CERCLA jurisprudence simply because the Court of
Appeals in Unigard^ and Talieserf did so. Majority at 20. Under CERCLA,as
interpreted in United States v. Bestfoods, 524 U.S. 51, 66, 118 S. Ct. 1876, 141 L.
Ed. 2d 43 (1998), and applied in Unigard and Taliesen,"an operator must
'manage, direct, or conduct operations specifically related to pollution, that is,
operations having to do with the leakage or disposal of hazardous waste, or
decisions about compliance with environmental regulations.'" Unigard, 97 Wn.
App. at 429 Bestfoods, 524 U.S. at 66-67); see also Taliesen, 135 Wn.
App. at 127-28; 42 U.S.C. 9601(20)(A). But Bestfoods and its CERCLA analysis
should not apply here. We are not bound by the Court of Appeals decisions in
Unigard and Taliesen, and we have compelling state law reasons to depart from
them.
Although MTCA was heavily patterned after CERCLA,the statute's
definitions of"owner or operator" are not the same as MTCA's. Compare 42
U.S.C. § 9601(20)("[t]he term 'owner or operator' means ... in the case of an
onshore facility or an offshore facility, any person owning or operating such
^ Unigard Ins. Co. v. Leven, 97 Wn. App. 417, 429,431,983 P.2d 1155(1999)(the lessor was
liable under MTCA,but Leven as a sbarebolder ofthe company possessing the lease was not an
owner or operator because be did not "participate in, or actually exercise control over, the
operations ofthe facility.").
^135 Wn. App. at 127-28 (the lessor of the property was liable under MTCA,but the project's
drilling subcontractor was not liable as an operator because at the time of drilling, be bad no
control over where to drill or bow deep).
Pope Resources, LP, et al. v. Dep't ofNatural Resources, No. 94084-3 (Gonzalez, J., dissenting)
facility"), with RCW 70.105D.020(22)(a)("any person with any ownership interest
in the facility or who exercises any control over the facility"). Differences in
language between a federal statute and our local equivalent are presumed to be
intentional and reflect a different intent. Bird-Johnson Corp. v. Dana Corp., 119
Wn.2d 423, 427-28, 833 P.2d 375 (1992); see also Seattle City Light v. Dep't of
Transp., 98 Wn. App. 165, 170, 989 P.2d 1164(1999)(MTCA makes strict and
joint and several liability express). The majority does not offer a compelling
reason to depart from these precedents. Its reliance on federal law is misguided.
Under the federal standard, as interpreted by the majority, DNR cannot be
liable because the agency did not make business deeisions for the company leading
to the contamination. Majority at 21 ('"an operator is simply someone who directs
the workings of, manages, or eonducts the affairs of a facility'"(internal quotation
marks omitted)(quoting Taliesen, 135 Wn. App. at 128)). This is incorrect. To
escape liability under MTCA in this case, DNR would have to establish that it is
neither an "owner" nor an "operator." RCW 70.105D.020(22)(a). The majority
focuses on whether a state agency could be liable as an "owner" with an
"ownership interest." Majority at 16-17; see RCW 70.105D.020(22)(a).
Essentially, it determines that a state agency cannot be held liable as an "owner"
because the agency is merely a lessor for the property owned by the state.
Majority at 16-17. But MTCA clearly contemplates that state government
Pope Resources, LP, et al. v. Dep 't ofNatural Resources, No. 94084-3 (Gonzalez, J., dissenting)
agencies can be owners for purposes ofthe act, despite the majority's contention
that an "owner" must hold a deed. Id. at 9. But see RCW 70.105D.020(22)(a),
(24)("[a]ny person with any ownership interest in the facility or who exercises any
control over the facility"; "'[pjerson' means an individual, firm, corporation,
association, partnership, consortium,joint venture, commercial entity, state
government agency, unit oflocal government, federal government agency, or
Indian tribe"). Under the majority's interpretation ofthe term "owner," its
explanation ofthe State's constitutional ownership ofthe public trust, and its
ability to delegate managerial duties, a state agency could never be an "owner"
under MTCA. However, legislative enactments suggest otherwise. See, e.g.,
Laws of 2005, ch. 155, § 121 (appropriating funds to DNR for "settlement costs
for aquatic lands cleanup"), ch. 518, § 1205 (appropriating funds to DNR to settle
MTCA litigation brought against DNR by a private party). Washington State has
never required title to be transferred to a government agency for that government
agency to be liable as an owner. Cf. Wasser & Winters Co. v. Jefferson County, 84
Wn.2d 597,600, 528 P.2d 471 (1974)(title is not the only indicia of ownership).
Nonetheless, it is unnecessary to determine if DNR is liable as an owner because
DNR is clearly liable as an operator.
DNR is undoubtedly liable as an "operator" under MTCA. DNR's ability to
exercise the right of exclusion, execute leases, attach conditions to the leases, and
Pope Resources, LP, et al. v. Dep't ofNatural Resources, No. 94084-3(GonzMez, J., dissenting)
police violations constitutes ''any control over the facility." RCW
70.105D.020(22)(a)(emphasis added). Holding DNR strictly liable here will
ensure state agencies enforce their covenants and prevent pollution that they would
otherwise be partly responsible for, as the voters intended. RCW
70.105D.020(24); see also Debra L. Stephens & Bryan P. Hametiaux, The Value of
Government Tort Liability: Washington State's Journeyfrom Immunity to
Accountability, 30 SEATTLE U.L. Rev. 35,59(2006)("any suggestion that tort
liability is not an impetus for change in the context of governmental conduct rests
on the doubtful premise that the government is uniquely unable to reform"). Voters
approved MTCA to "eliminate[]polluters' loopholes." Voters Pamphlet,supra, at
MTCA does not specifically define the term "control," so we look to its
usual and ordinary meaning. Fraternal Order ofEagles, Tenino Aerie No. 564 v.
Grand Aerie ofFraternal Order ofEagles, 148 Wn.2d 224, 239, 59 P.3d 655(2002). "Control" means the "power or authority to guide or manage: directing or
restraining domination." Webster's Third New International Dictionary 496
(1971); see also Black's Law Dictionary 403 (10th ed. 2014)("control" means
"[t]o exercise power or influence over"). DNR's ability to lease aquatic land
amounts to any control ofthe facility. As the majority explains, the legislature
Pope Resources, LP, et al. v. Dep't ofNatural Resources, No. 94084-3 (Gonzalez, J., dissenting)
explicitly delegated to DNR the duty to manage aquatic lands, including the Port
Gamble Bay site. Majority at 10 (citing RCW 79.105.010).
DNR undertook its duty to affirmatively manage the 72 acres of state-owned
aquatic land. It executed three leases for the 72-acre shoreline over approximately
20 years. The first lease, signed in 1974, allowed Pope and Talbot to store, raft,
and boom logs on about 70 acres ofthe land. Provisions in the 1974 lease required
Pope and Talbot to "provide facilities for lowering logs into the water without
tumbling, which loosens the bark." Clerk's Papers at 105. Such handling
minimizes wood waste. When wood waste breaks down, it releases sulfide and
ammonia, which are harmful to bottom-dwelling creatures. Wood waste also
affects sediment by smothering aquatic habitat and bottom-dwelling creatures,
such as clams.
In 1991,DNR removed the protective provisions and identified the bay as an
ideal place for log storage in the renewed lease agreement with Pope and Talbot.
Toxic wood waste inevitably corresponds with log storage, and DNR knew that
Pope and Talbot had been polluting in Port Gamble Bay. See id. at 134 (internal
memorandum recognizing contamination problems created by wood waste from
Pope and Talbot's operations). Yet, DNR's lease with Pope and Talbot expressly
authorized overwater log storage in a specific area ofthe bay that DNR determined
Pope Resources, LP, et al. v. Dep't ofNatural Resources, No. 94084-3 (Gonzalez, J., dissenting)
to be "highly suitable" for that purpose. Id. at 39. DNR continued to collect rent
while failing to mitigate the damage or deter pollution.
DNR exercised control as an operator. MTCA specifies that liability
attaches when there is ''any ownership interest" or "any control over the facility."
RCW 70.105D.020(22)(a)(emphasis added). The majority's interpretation of
MTCA owner or operator liability undermines the act's plain language and strict
liability scheme. Plainly, MTCA defines "owner or operator" liability more
broadly than CERCLA. Through its ability to exclude, execute leases, and police
violations, which constitutes "any control over the facility," DNR was liable as an
"operator" ofthe site under MTCA. Accordingly, I respectfully dissent.
Pope Resources, LP, et al. v. Dep't ofNatural Resources,'Ho. 94084-3 (Gonzalez, J., dissenting)