Wasco LLC v. N.C. Dep't of Env't & Natural Res.

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA16-414
Filed: 18 April 2017
Wake County, No. 15 CVS 1438
WASCO LLC, Petitioner,
v.
N.C. DEPARTMENT OF ENVIRONMENT AND NATURAL RESOURCES,
DIVISION OF WASTE MANAGEMENT, Respondent.
Appeal by petitioner from order and judgment entered 23 October 2015 by
Judge G. Bryan Collins, Jr., in Wake County Superior Court. Heard in the Court of
Appeals 6 October 2016.
King & Spalding LLP, by Cory Hohnbaum and Adam G. Sowatzka, pro hac
vice, for petitioner-appellant.
Attorney General Joshua H. Stein, by Special Deputy Attorney General Daniel
Hirschman, for respondent-appellee.
McCULLOUGH, Judge.
Petitioner WASCO LLC (WASCO) appeals from the final order and judgment
in which the trial court affirmed the administrative law judge’s (ALJ) denial of
WASCO’s motion for continuance and affirmed the ALJ’s grant of summary judgment
in favor of respondent North Carolina Department of Environment and Natural
Resources (the “Department”), Division of Waste Management (the “Division”). For
the following reasons, we affirm.
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
I. Background
This appeal is the result of a petition for a contested case hearing filed by
WASCO in the Office of Administrative Hearings on 27 September 2013. In the
petition, WASCO sought a declaration that it was not an “operator” of a former textile
manufacturing facility located at 850 Warren Wilson Road in Swannanoa, North
Carolina (the “Site”), and, therefore, not responsible for remedial cleanup efforts
required by federal and state laws governing the management of hazardous wastes.
Those laws include portions of the Resource Conservation and Recovery Act, as
amended (RCRA), 42 U.S.C. §§ 6901-6992, federal regulations, and North Carolina’s
Hazardous Waste Program (the “State Hazardous Waste Program”).
As the United States Supreme Court clearly explained,
RCRA is a comprehensive environmental statute that
empowers [the Environmental Protection Agency (EPA)] to
regulate hazardous wastes from cradle to grave, in
accordance with the rigorous safeguards and waste
management procedures of Subtitle C, 42 USC §§ 6921-
6934. (Nonhazardous wastes are regulated much more
loosely under Subtitle D, 42 USC §§ 6941-6949.) Under the
relevant provisions of Subtitle C, EPA has promulgated
standards governing hazardous waste generators and
transporters, see 42 USC §§ 6922 and 6923, and owners and
operators of hazardous waste treatment, storage, and
disposal facilities (TSDF’s), see § 6924. Pursuant to § 6922,
EPA has directed hazardous waste generators to comply
with handling, recordkeeping, storage, and monitoring
requirements, see 40 CFR pt 262 (1993). TSDF’s, however,
are subject to much more stringent regulation than either
generators or transporters, including a 4 to 5-year
permitting process, see 42 USC § 6925; 40 CFR pt 270
-2-
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
(1993); US Environmental Protection Agency Office of
Solid Waste and Emergency Response, The Nation’s
Hazardous Waste Management Program at a Crossroads,
The RCRA Implementation Study 49-50 (July 1990),
burdensome financial assurance requirements, stringent
design and location standards, and, perhaps most onerous
of all, responsibility to take corrective action for releases of
hazardous substances and to ensure safe closure of each
facility, see 42 USC § 6924; 40 CFR pt 264 (1993).
City of Chicago v. Envtl. Def. Fund, 511 U.S. 328, 331-32, 128 L. Ed. 2d 302, 307-308
(1994).
In lieu of the federal program, RCRA allows states to develop, administer, and
enforce their own hazardous waste programs, subject to authorization by EPA. See
42 U.S.C. § 6926 (2016). State programs must meet the minimum requirements of
RCRA. Id. (requiring state programs to be “equivalent” to the federal hazardous
waste program). EPA granted North Carolina final authorization to operate the State
Hazardous Waste Program in 1984. See 49 Fed. Reg. 48694-01 (Dec. 14, 1984).
The State Hazardous Waste Program is administered by the Division’s
Hazardous Waste Section (the “Section”). See 15A N.C. Admin. Code 13A.0101(a)
(2016). The State Hazardous Waste Program consists of portions of the North
Carolina Solid Waste Management Act (the “State Solid Waste Management Act”),
Article 9 of Chapter 130A of the General Statutes, and related state rules and
regulations. Specifically, Part 2 of the State Solid Waste Management Act concerns
“Solid and Hazardous Waste Management” and requires that rules establishing a
complete and integrated regulatory scheme in the area of hazardous waste
-3-
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
management be adopted and enforced. See N.C. Gen. Stat. § 130A-294(c) (2015).
North Carolina’s Hazardous Waste Management Rules (the “State Hazardous Waste
Rules”) are found in Title 15A, Subchapter 13A of the N.C. Administrative Code. The
State Hazardous Waste Rules largely incorporate the federal regulations under
RCRA by reference.
Pertinent to the present case, the State Hazardous Waste Rules adopt closure
and post-closure standards for owners and operators of hazardous waste TSDF’s from
subpart G of the federal regulations. See 15A N.C. Admin. Code 13A.0109(h)
(incorporating by reference 40 C.F.R. §§ 264.110 through 264.120). The State
Hazardous Waste Rules also implement a hazardous waste permit program, which
incorporates much of the federal hazardous waste permit program, with added “Part
B” information requirements. See 15A N.C. Admin. Code 13A.0113 (incorporating by
reference portions of 40 C.F.R. Ch. 1, Subch. I, Pt. 270,).
40 C.F.R. § 270.1(c) is one of those sections of the federal hazardous waste
permit program incorporated by reference in 15A N.C. Admin. Code 13A.0113(a).
That section provides, in pertinent part, that
[o]wners and operators of surface impoundments, landfills,
land treatment units, and waste pile units that received
waste after July 26, 1982, or that certified closure
(according to § 265.115 of this chapter) after
January 26, 1983, must have post-closure permits, unless
they demonstrate closure by removal or decontamination
as provided under § 270.1(c)(5) and (6), or obtain an
enforceable document in lieu of a post-closure permit, as
-4-
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
provided under paragraph (c)(7) of this section. If a post-
closure permit is required, the permit must address
applicable 40 CFR part 264 groundwater monitoring,
unsaturated zone monitoring, corrective action, and post-
closure care requirements of this chapter.
40 C.F.R. § 270.1(c) (2017). It is WASCO’s responsibility to obtain a post-closure
permit for the Site that is at issue in the present case.
As mentioned above, the Site is a former textile manufacturing facility located
at 850 Warren Wilson Road in Swannanoa, North Carolina. Years before WASCO
became involved with the Site, Asheville Dyeing & Finishing (AD&F), a division of
Winston Mills, Inc., operated a knitwear business on the Site. During the operation
of the knitwear business, underground tanks were used to store virgin and waste
perchloroethylene (PCE), a dry cleaning solvent. At some point prior to 1985, PCE
leaked from the tanks and contaminated the soil. The storage tanks were excavated
by Winston Mills in 1985 and the resulting pits were backfilled with the contaminated
soil left in place.
In 1990, Winston Mills and the Section entered into an Administrative Order
on Consent that set forth a detailed plan to close the Site. Winston Mills completed
the closure plan to close the Site as a landfill in 1992 and the Section accepted
certifications of closure in a 1993 letter to Winston Mills.
Winston Mills and its parent corporation, McGregor Corporation, sold the site
to Anvil Knitwear, Inc., in 1995. In connection with the sale, Winston Mills provided
Anvil Knitwear indemnification rights for “environmental requirements.” Culligan
-5-
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
International Company (Culligan) co-guaranteed Winston Mills’ performance of
indemnification for environmental liabilities.
WASCO became involved in 1998 when its predecessor in interest, United
States Filter Corporation, acquired stock of Culligan Water Technologies, Inc., which
owned Culligan. Thereafter, WASCO provided financial assurances to the Section on
behalf of Culligan in the form of a trust fund to the benefit of the Department and an
irrevocable standby letter of credit for the account of AD&F.
WASCO divested itself of Culligan in 2004. As part of the sale of Culligan,
WASCO agreed to indemnify the buyer as to identified environmental issues at the
Site. At that time, a letter from Culligan to the Section represented that WASCO
was assuming Culligan’s remediation responsibilities at the Site and directing
further communications to WASCO’s director of environmental affairs. Subsequent
communications between WASCO and the Section show that WASCO did intend to
take on those responsibilities and that the Section identified WASCO as the
responsible party. Additionally, Part A permit applications signed by WASCO’s
director of environmental affairs identified WASCO as the operator and WASO
continued to pay consultants and take action at the Site.
In 2007, WASCO received a letter from the Section that the Site was included
on a list of facilities needing corrective action. A follow-up letter from the Section
soon thereafter indicated that additional action was needed to develop a groundwater
-6-
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
assessment plan to address the migration of hazardous waste in the groundwater.
This expanded the size of the area with which WASCO was dealing to off-site
locations. WASCO, its consultant, and the Section continued to work together to
address a groundwater plan.
In 2008, Anvil Knitwear sold the property to Dyna-Diggr, LLC. Thereafter,
responsibility for compliance with the State Hazardous Waste Program became an
issue, with both WASCO and Anvil disclaiming responsibility. WASCO asserted it
participated in post-closure actions on a voluntary basis.
In an 16 August 2013 letter, the Section detailed its positions that Dyna-Diggr
is liable as an owner and that WASCO is independently liable as an operator. The
Section sought cooperation between all parties and suggested it “would be willing to
enter into a modified Joint Administrative Order on Consent in Lieu of a Post-Closure
Permit pursuant to which the two parties agree to undertake part of the post-closure
responsibilities[.]” However, in the alternative, the Section reminded the parties that
it “always has the option of issuing a Compliance Order with Administrative Penalty
to both parties for violation of 40 CFR 270.1(c) and associated post-closure
regulations.” This action resulted in WASCO filing the 27 September 2013 petition.
Following the filing of the petition, on 25 September 2014, the Section filed a
motion for summary judgment on all claims raised in WASCO’s petition. After the
ALJ denied WASCO’s motion for a continuance regarding the summary judgment
-7-
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
motion by order filed 28 October 2014, the ALJ filed his final decision granting the
Section’s motion for summary judgment on 2 January 2015.
On 2 February 2015, WASCO filed a petition for judicial review (the “PJR”) of
both orders. After both parties filed briefs regarding the PJR, the matter came on for
hearing in Wake County Superior Court on 12 October 2015 before the Honorable G.
Bryan Collins, Jr.
On 23 October 2015, the court filed its “Final Order and Judgment on Rule
56(f) Motion and Petition for Judicial Review.” The court concluded, “[a]s a matter of
law, WASCO is an operator of a landfill for purposes of the State Hazardous Waste
Program’s post-closure permitting requirement.” Therefore, the court affirmed the
2 January 2015 final decision of the ALJ granting summary judgment in favor of the
respondent and denied WASCO’s PJR. In the decretal portion of the court’s order,
the court reiterated that “WASCO is an ‘operator’ for purposes of 40 C.F.R. § 270.1(c)
(adopted by reference in 15A [N.C. Admin. Code] 13A.0113(a)) and must comply with
all attendant responsibilities and regulatory requirements.”
Wasco filed notice of appeal to this Court on 20 November 2015.
II. Discussion
The issue on appeal is whether the trial court erred in entering summary
judgment in favor of the Section on the basis that, “[a]s a matter of law, WASCO is
an operator of a landfill for purposes of the State Hazardous Waste Program’s post-
-8-
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
closure permitting requirement.” WASCO contends that it is not, and has never been,
an operator of any facility at the Site.
Under the Administrative Procedure Act, when a party to a review proceeding
in a superior court appeals to the appellate division from the final judgment of the
superior court, “[t]he scope of review to be applied by [this Court] . . . is the same as
it is for other civil cases.” N.C. Gen. Stat. § 150B-52 (2015). “Our standard of review
of an appeal from summary judgment is de novo; such judgment is appropriate only
when the record shows that ‘there is no genuine issue as to any material fact and that
any party is entitled to a judgment as a matter of law.’ ” In re Will of Jones, 362 N.C.
569, 573, 669 S.E.2d 572, 576 (2008) (quoting Forbis v. Neal, 361 N.C. 519, 524, 649
S.E.2d 382, 385 (2007)).
Citing In re Appeal of N.C. Sav. & Loan League, 302 N.C. 458, 276 S.E.2d 404
(1981), WASCO asserts that in our de novo review, the Section’s interpretation of the
law is entitled to no deference. However, this Court has stated that “an agency’s
interpretation of its own regulations will be enforced unless clearly erroneous or
inconsistent with the regulation’s plain language.” Hillian v. N.C. Dep’t of Corr., 173
N.C. App. 594, 598, 620 S.E.2d 14, 17 (2005). In fact, in N.C. Sav. & Loan League,
the Court explained as follows,
[w]hen the issue on appeal is whether a state agency erred
in interpreting a statutory term, an appellate court may
freely substitute its judgment for that of the agency and
employ de novo review. Although the interpretation of a
-9-
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
statute by an agency created to administer that statute is
traditionally accorded some deference by appellate courts,
those interpretations are not binding. The weight of such
[an interpretation] in a particular case will depend upon
the thoroughness evident in its consideration, the validity
of its reasoning, its consistency with earlier and later
pronouncements, and all those factors which give it power
to persuade, if lacking power to control.
302 N.C. at 465-66, 276 S.E.2d at 410 (internal citations and quotation marks
omitted). Thus, the Section’s interpretation is afforded some deference.
“Operator” is defined in various places throughout the State Solid Waste
Management Act and the State Hazardous Waste Rules. First, the general
definitions in Part 1 of the State Solid Waste Management Act define “operator” to
mean “any person, including the owner, who is principally engaged in, and is in
charge of, the actual operation, supervision, and maintenance of a solid waste
management facility and includes the person in charge of a shift or periods of
operation during any part of the day.” N.C. Gen. Stat. § 130A-290(a)(21) (2015). This
definition applies broadly to the entire State Solid Waste Management Act, including
those portions relevant to hazardous waste management. The definition’s application
to hazardous waste management is evident from the definition provision in the State
Hazardous Waste Rules, which provides that both the definition of “operator” in N.C.
Gen. Stat. § 130A-290 applies to the State Hazardous Waste Rules, see 15A N.C.
Admin. Code 13A.0102(a) (providing “[t]he definitions contained in [N.C. Gen. Stat.
§] 130A-290 apply to this Subchapter[]”), and that the definition of “operator” in 40
- 10 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
C.F.R. § 260.10, “[o]perator means the person responsible for the overall operation of
a facility[,]” is incorporated by reference, see 15A N.C. Admin. Code 13A.0102(b). Yet,
most specific to the post-closure permit requirement at issue in this case, the State
Hazardous Waste Rules concerning the hazardous waste permit program incorporate
by reference Subpart A of the federal regulations providing general information about
the hazardous waste permit program, see 15A N.C. Admin. Code 13A.0113(a),
including the definitions in 40 C.F.R. § 270.2, which provides that “[o]wner or
operator means the owner or operator of any facility or activity subject to regulation
under RCRA.” 40 C.F.R. § 270.2 (2017).
In this case, the court determined WASCO was an “operator” under the two
definitions specifically dealing with hazardous waste management adopted from 40
C.F.R. §§ 260.10 and 270.2. The court, however, noted that the result would be the
same applying the definition of “operator” in N.C. Gen. Stat. § 130A-290(a)(21). In
conclusion number 42, the court explained its analysis of the definitions as follows,
[b]ased on the federally delegated nature of the State
Hazardous Waste Program, the Section’s Memorandum of
Agreement with the EPA, the fact that the obligation at
issue arises under a federal regulation – 40 C.F.R. §
270.1(c) – and not Chapter 130A, and because both parties
have identified no state case law on point and have cited to
federal law, [the court] concludes it is appropriate here to
look to federal case law and administrative EPA documents
for guidance.
The federal case law considered by the court included cases analyzing operator
liability under the Comprehensive Environmental Response, Compensation, and
- 11 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
Liability Act, 42 U.S.C. §§ 9601 to 9675 (CERCLA), which, similar to the State
Hazardous Waste Rules, defines “operator” as “any person owning or operating such
facility[.]” 42 U.S.C. § 9601(20)(A) (2016). Specifically, the court looked to United
States v. Bestfoods, 524 U.S. 51, 141 L. Ed. 2d 43 (1998), in which the Court explained
that,
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 concern with environmental contamination, 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.
Id. at 66-67, 141 L. Ed. 2d at 59. The court in the present case then concluded that
“[c]onsistent with Bestfoods and its progeny, . . . post-closure operatorship is based on
an examination of the totality of the circumstances.”
On appeal, WASCO’s first contention is that the court erred in basing its
decision exclusively on CERCLA without considering the elements of the operator
definition in N.C. Gen. Stat. § 130A-290(a)(21). WASCO contends that the definition
in N.C. Gen. Stat. § 130A-290(a)(21) sharpened the definition of operator for purposes
of the State Solid Waste Management Act and, citing R.J. Reynolds Tobacco Co. v.
N.C. Dep’t of Environment & Natural Resources, 148 N.C. App. 610, 616, 560 S.E.2d
163, 167-68 (looking to the plain meaning of N.C. Gen. Stat. § 130A-290(35) and
determining that tobacco scrap, stems, and dust did fall within the definition of “solid
- 12 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
waste”), disc. review denied, 355 N.C. 493, 564 S.E.2d 44 (2002), contends the
definition in N.C. Gen. Stat. § 130A-290(a)(21) is controlling over other definitions to
the extent the definitions differ. Thus, WASCO contends to be an operator, it must
be “principally engaged in, and is in charge of, the actual operation, supervision, and
maintenance of a solid waste management facility[.]” N.C. Gen. Stat. § 130A-
290(a)(21).
We are not persuaded by WASCO’s arguments that the court is limited to an
analysis of the definition of “operator” in N.C. Gen. Stat. § 130A-290(a)(21).
Moreover, we note that it is clear the court did not look exclusively to CERCLA, but
instead looked to CERCLA only for guidance on how to interpret the definitions of
operator in the State Hazardous Waste Rules adopted from the federal regulations.
Despite differences in the framework of RCRA and CERCLA, the definitions of
“operator” in both acts are similar and CERCLA case law does provide persuasive
guidance. Furthermore, and not contested by WASCO on appeal, the court also
looked to EPA documents providing guidance on RCRA and concluded that those
documents support the conclusion that WASCO was an operator.
We hold the court was correct to look for guidance in federal law while
interpreting the term “operator” in the context of the State Hazardous Waste Rules
and, specifically, the hazardous waste permit program. Those portions of the State
Hazardous Waste Rules deal specifically with the post-closure permit requirement at
- 13 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
issue in the present case. See 40 C.F.R. § 270.1(c) (incorporated by reference in 15A
N.C. Admin. Code 13A.0113(a)). In contrast, the terms of N.C. Gen. Stat. § 130A-
290(a)(21) make clear that the definition of operator therein is for an operator of any
“solid waste management facility.” Although that definition is more detailed than
the definitions in the State Hazardous Waste Rules, that definition was intended to
apply to the management of all solid wastes, not just the control of hazardous wastes
of a facility post-closure.
Nevertheless, although the three definitions of “operator” applicable to the
State Hazardous Waste Program differ slightly, the definitions seem to be in accord
that, in general terms, an “operator” is the person responsible for, or in charge of, the
facility subject to regulation. In the present case, that facility is the pit that was
certified closed as a landfill in 1993.
WASCO’s next contention on appeal is that the court erred in holding that
WASCO was an operator even though WASCO did not become involved with the Site
until after the Site was certified closed by the Section. Citing N.C. Gen. Stat. § 130A-
290(a)(2), which defines “closure” to mean “the cessation of operation of a solid waste
management facility and the act of securing the facility so that it will pose no
significant threat to human health or the environment[,]” WASCO asserts that it is
impossible to operate a facility that has ceased operation. Thus, WASCO contends it
cannot be an operator of the Site.
- 14 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
WASCO, however, recognizes that both RCRA and the State Hazardous Waste
Program impose duties on operators to provide post-closure care, but contends that
those duties can only be imposed on those owning and operating the facility before
the time that the facility ceases to operate. WASCO asserts that the Section has
created the concept of “post-closure operator” for purposes of this case without any
basis in the law. Again, we disagree with WASCO’s arguments.
As the Section points out, and as we noted above,
[o]wners and operators of . . . landfills . . . must have post-
closure permits, unless they demonstrate closure by
removal or decontamination as provided under §
270.1(c)(5) and (6), or obtain an enforceable document in
lieu of a post-closure permit, as provided under paragraph
(c)(7) of this section.
See 40 C.F.R. § 270.1(c) (incorporated by reference in 15A N.C. Admin. Code
13A.0113(a)).
In this case, the pit where the underground storage tanks were located on the
Site was not designated a landfill for purposes of the State Hazardous Waste Program
until the time that it was closed with hazardous waste in place, after the time the
facility ceased to operate. See 40 C.F.R. § 265.197(b) (incorporated by reference in
15A N.C. Admin. Code 13A.0110(j)). Thus, there were no “operators” of a landfill
when the facility was in operation, as WASCO limits the term. Yet, the hazardous
waste permit program clearly applies to operators of landfills and those facilities
closed as landfills.
- 15 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
Moreover, although the definition of “closure” cited by WASCO is clear that the
closure of a solid waste management facility is the time it ceases to operate, that
definition also makes clear closure includes the act of securing the facility to prevent
future harm. Thus, it is not just those parties in charge of the actual operation of a
solid waste management facility that are subject to the post-closure permitting
requirement.
Guided by the same federal law relied on by the trial court, including Bestfoods,
its progeny, and EPA documents, we hold “operator,” as it is defined in the State
Hazardous Waste Rules, includes those parties in charge of directing post-closure
activities under the State Hazardous Waste Program and RCRA.
In the present case, the trial court issued detailed findings as to WASCO’s
involvement at the Site that demonstrate it was the operator for purposes of the post-
closure permitting requirement. WASCO does not challenge the factual findings, but
instead asserts arguments that those findings do not lead to the conclusion that it is
an operator as that term is defined in N.C. Gen. Stat. § 130A-290(a)(2). We are not
convinced by WASCO’s arguments.
The court’s pertinent findings, which this Court has reviewed and determined
to be supported by the documentary exhibits, are as follows:
15. WASCO became involved with the Facility in a limited
capacity following its 1998 acquisition of Culligan
Water Technologies, Inc. and its affiliate, Culligan
International Company (“Culligan”).
- 16 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
16. At the time WASCO acquired Culligan, Culligan had
been performing post-closure operations related to the
Facility.
17. Between 1999 and 2004, Petitioner provided financial
assurance to the Section on behalf of Culligan for post-
closure care associated with the Facility, including a
Trust Agreement and Irrevocable Standby Letter of
Credit in 2003.
18. The Culligan Group, including Culligan, was divested
from WASCO in 2004 in a $610-million transaction
that included WASCO’s agreement to indemnify
Culligan’s buyer “as to certain matters associated at
the Facility as they relate to specific Culligan
obligations.”
19. Following the 2004 divestiture, Culligan represented
in a letter to the Section that WASCO was “assuming
responsibility” for the Facility. The letter indicated
that copies were transmitted to John Coyne, the
Director of Environmental Affairs for WASCO.
20. The Section followed-up with Mr. Coyne by email,
referencing Culligan’s representation that WASCO “is
now responsible for RCRA issues” at the Facility, and
asking for WASCO to complete a new Part A permit
application as the Facility’s operator.
21. Mr. Coyne responded that (a) he was “very familiar
with this project,” (b) he would “attend to the Part A
application in the very near future,” and (c) WASCO
“intend[ed] on keeping the same consultants . . . and
doing everything else we can to maintain continuity
and keep the project headed in the right direction.”
22. An updated Part A permit application was submitted
to the Section in December 2004 naming WASCO as
operator. Mr. Coyne signed the Part A permit
- 17 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
application for WASCO “under penalty of law” as to
the truth of its contents.
23. Mr. Coyne signed another updated Part A “under
penalty of law” in 2006, which was submitted to the
Section and continued to identify WASCO as operator.
24. Rodney Huerter—who had assumed the role of
WASCO’s Director of Environmental Affairs after Mr.
Coyne—signed a third Part A permit application
“under penalty of law” in 2008, which was submitted
to the Section and which again identified WASCO as
the Facility’s operator.
25. After the divestiture of Culligan, WASCO continued
to provide financial assurance for the Facility under
the 2003 Trust Agreement, Standby Trust Fund, and
Irrevocable Standby Letter of Credit, which it
amended in the Section’s favor for inflation 10 times
between the divestiture of Culligan and the initiation
of the 2013 contested case. WASCO has
communicated directly with the Section throughout
this time period concerning financial requirements for
the Facility.
26. The language of the Trust Agreement identifies
WASCO as the “Grantor,” and the agreement’s
purpose to “establish a trust fund . . . for the benefit of
[the Department].” Specifically, the Trust Agreement
recites that:
. . . “DENR” . . . has established certain regulations
applicable to the Grantor, requiring that an owner
or operator of a hazardous waste management
facility shall provide assurance that funds will be
available when needed for closure and/or post-
closure care of facility. . . .
The Trustee shall make payments from the fund as
the Secretary of [the Department] . . . shall direct,
- 18 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
in writing, to provide for the payment of the cost of
closure and/or post-closure care of facilities covered
by this agreement . . . .
“this Trust shall be irrevocable and shall continue
until terminated at the written agreement of the
Grantor, the Trustee, and the Secretary . . .”
27. The Irrevocable Standby Letter of Credit, as amended,
is subject to automatic renewal in one-year
increments unless cancelled by the bank.
28. The most recent amendment to the Irrevocable
Standby Letter of Credit submitted prior to the filing
of the contested case is in the amount of $443,769.88.
29. Internal WASCO communications concerning
financial assurance reference “the
statutory/regulatory requirements relating to one of
our environmental legacy sites in Swannanoa, NC.”
30. After the divestiture of Culligan, WASCO entered into
a Master Consulting Services Agreement with
Mineral Springs Environmental, P.C. (“Mineral
Springs”) for Mineral Springs to perform work at the
Facility.
31. A total of 51 invoices from Mineral Springs to WASCO
shows that Mineral Springs or its subcontractors
performed a variety of post-closure activities at the
Facility or related to the Facility, between November
2004 and August 2013, which fell into the following
categories:
- operation and maintenance of an air sparge/soil
vapor extraction groundwater remediation
system, including use of a subcontractor for
supplies such as air filters, oil filters, oil, and
separators;
- 19 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
- groundwater sampling and analysis, including
use of laboratory subcontractors;
- preparation of quarterly and semi-annual
reports analyzing sampling results;
- project management;
- assessment of two potential sources of
contamination at the Facility in addition to the
former tank site—specifically, an old dump site
and a French drain—including use of an
excavation subcontractor and a bush hog
subcontractor; and
- payment of utility bills based [on] one meter
labeled as “pump” and one meter labeled as
“environmental cleanup.”
32. Mr. Coyne or Mr. Huerter personally approved
payment to Mineral Springs for work in the above
categories, and approved payment directly to the
utility company for additional bills, totaling
$235,984.43.
33. In particular, Mineral Springs submitted 33 reports
associated with the invoiced post-closure activities to
the Section on WASCO’s behalf between February
2005 and May 2013, including 16 groundwater
monitoring reports that expressly identified WASCO
as the “responsible party for the site.”
34. The Section communicated directly with WASCO, or
with both WASCO and Mineral Springs, in numerous
matters related to environmental compliance,
including but not limited to requests for preparation
of a work plan for the investigation of the former dump
site and French drain, and responses to Mineral
Springs’s monitoring reports.
- 20 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
35. After Mineral Springs and/or its sub-contractors
performed the French drain and dump assessment but
before drafting the Assessment Report, Kirk Pollard
of Mineral Springs notified Mr. Huerter of
preliminary findings concerning the volume and
nature of drums discovered. Mr. Pollard identified
liquid in one drum that tested at a pH of 14, which is
considered hazardous based on corrosivity. Mr.
Pollard expressed concern for health and safety,
recommended that Mr. Huerter notify the Section,
and expressed his belief that an immediate response
and a more thorough evaluation could be necessary.
No such concerns are reflected in the final report.
36. Mr. Huerter instructed Mr. Pollard not to remove “any
of the drums, containers, or anything else,” and asked
to conduct an “advanced review” of the dump
Assessment Report before its submission to the
Section. Mr. Huerter commented on Mr. Pollard’s
first draft, including by providing two “reviewed and
revised blackline document[s].”
37. Additional communications between Mr. Huerter and
Mr. Pollard included (a) Mr. Pollard’s requests for Mr.
Huerter’s guidance or authorization on matters
related to the Facility, including changes to a Part A
form, communications with the property owner,
whether groundwater sampling should continue, and
whether to advise the Section about the sale of the
property; (b) Mr. Pollard’s practice of updating Mr.
Huerter, copying him on communications with the
Section, or forwarding such communications to him;
and (c) Mr. Huerter’s requests for copies of utility bills
to compare with Mineral Springs’s invoices, and
annual cost projections.
(Citations and footnote omitted).
It is clear that the pit at the Site that was certified closed as a landfill in 1993
is subject to post-closure regulation under the State Hazardous Waste Program and
- 21 -
WASCO LLC V. N.C. DEP’T OF ENV’T & NAT. RES.
Opinion of the Court
RCRA. Considering the above facts, we hold WASCO was the party responsible for
and directly involved in the post-closure activities subject to regulation. Even under
the definition of operator in N.C. Gen. Stat. § 130A-290(a)(21), when that definition
is viewed through the lens of post-closure regulatory activities at issue in this case,
since 2004, WASCO has been the party principally engaged in, or in charge of the
post-closure operation, supervision, and maintenance of the Site for purposes of the
hazardous waste permit program. WASCO’s arguments to the contrary are
overruled.
III. Conclusion
For the reasons stated above, we hold WASCO is an operator of a landfill for
purposes of the post-closure permitting requirement at the Site. Therefore, we affirm
the final order and judgment of the trial court.
AFFIRMED.
Judges STROUD and ZACHARY concur.
- 22 -