Modification: United Artists Theater Circuit v. Regional Water Quality Control Board

UNITED ARTISTS THEATRE CIRCUIT, INC.,

Plaintiff and Appellant

v.

CALIFORNIA REGIONAL WATER QUALITY CONTROL BOARD, SAN FRANCISCO REGION,

Defendant and Appellant;

MOONLITE ASSOCIATES LLC,

Real Party in Interest.

No. A152988

(Alameda County

Super. Ct. No. RG16811955)

California Courts of Appeal

First Appellate District

Division Five

Filed December 18, 2019

Hon. Jennifer Madden, Judge.

Hogan Lovells US, Scott H. Reisch, Katherine B. Wellington, for Plaintiff and Appellant.

Xavier Becerra, Attorney General, Gavin G. McCabe, Mark W. Poole and Marc N. Melnick, Deputy Attorneys General, for Defendant and Appellant.

BY THE COURT:

It is ordered that the opinion filed November 27, 2019 be modified as follows:

1. On page 2, replace the first sentence on the first complete paragraph with the following:

As to the knowledge component of "permitted," we adopt a standard that focuses on the landlord's awareness of a risk of discharge: a prior owner may be named in a section 13304 cleanup order upon a showing the owner knew or should have known that a lessee's activity created a reasonable possibility of a discharge into waters of the state of wastes that could create or threaten to create a condition of pollution or nuisance.

2. On page 2, replace footnote 2 with the following:

Section 13050, subdivision (d), broadly defines "waste" to include "sewage and any and all other waste substances, liquid, solid, gaseous, or radioactive, associated with human habitation, or of human or animal origin, or from any producing, manufacturing, or processing operation. . . ."

3. On page 2, replace the first sentence and citation in the "Statutory Background" section with the following:

In 1967, the Legislature created the State Water Resources Control Board (State Board) within the Resources Agency; the State Board now resides within the California Environmental Protection Agency. (§ 175; Stats. 1967, ch. 284, § 2.4, p. 1442, eff. Dec. 1, 1967; Governor's Reorganization Plan No. 1 of 1991, § 192, eff. July 17, 1991, 4 Stats.1991; see also Gov't Code, § 12080 et seq.)

4. On page 11, at the end of the first sentence of the first complete paragraph, replace the words "of hazardous waste" with the "into waters of the state of wastes that could create or threaten to create a condition of pollution or nuisance" so the sentence reads:

Rather than the standard adopted by the trial court or that proposed by the Regional Board, we conclude a prior owner may be named in a cleanup order as someone who has "permitted" a discharge if it knew or should have known that a lessee's activity presented a reasonable possibility of discharge into waters of the state of wastes that could create or threaten to create a condition of pollution or nuisance.

5. On page 18, delete the word "hazardous" from the sentence "In 1980, the Legislature enacted Assembly Bill 2700 (AB 2700), which amended provisions of the Health and Safety Code and the Water Code to expand the authority of the State Director of Health Services and of regional water quality control boards to address hazardous waste control and cleanup."

6. On page 20, delete the word "hazardous" from the sentence "However, a true strict liability statute would impose liability on an owner whose lessee discharged hazardous waste into the state's water supply whether or not the owner knew of the tenant's activities."

7. On page 20, footnote 17, delete the word "hazardous" from the sentence "In the present case, UATC does not claim it took any steps to prevent discharges of hazardous wastes from the dry-cleaning operation, so we have no occasion to consider whether any such showing could provide a basis to avoid being named in a cleanup order."

8. On page 22, replace footnote 18 with the following:

The Regional Board refers to statements in a Department of Justice memorandum and a Department of Fish and Game bill analysis that support their contention that section 13304, as amended by AB 2700, imposes strict liability. It unclear whether it is appropriate for this court to consider those analyses, absent any indication they were available to the full Legislature. (See Quintano v. Mercury Casualty Co. (1995) 11 Cal.4th 1049, 1062; Hutnick, supra, 47 Cal.3d at p. 465, fn. 7; but see Elsner v. Uveges (2004) 34 Cal.4th 915, 934, fn. 19 [approving consideration of enrolled bill reports].) In any event, even if it is appropriate to consider them, they do not address the meaning of the word "permitted" in section 13304.

9. On page 29, at the end of the first sentence of the first complete paragraph, replace the words "hazardous wastes" with "wastes that could create or threaten to create a condition of pollution or nuisance" so the sentence reads:

Contrary to the Regional Board's contention that the term "permitted" in section 13304 imposes only the limited burden of showing an owner was aware of the general activity that resulted in a discharge, Laube supports the position that before an owner can be said to have "permitted" harm resulting from a lessee's conduct, there must be some basis to conclude that the owner was aware or should have been aware of the reasonable possibility that harm would occur---in this case the discharge of wastes that could create or threaten to create a condition of pollution or nuisance.

10. On page 29, footnote 20, delete the word "hazardous" from the sentence "The section 13304 context differs and supports a construction of 'permitted' that permits a Regional Board to name an owner in a cleanup order where, in the language of Laube, the owner had 'the obligation to be diligent' because it knew or should have known that a lessee's activity made the discharge of hazardous wastes 'reasonably possible.' "

11. On page 30, delete the word "hazardous" from the sentence "To the contrary, the public has a strong interest in preventing the discharge of hazardous wastes and would benefit from greater vigilance on the part of property owners."

12. On page 31, in the first paragraph replace the sentence "The public has a strong interest in the cleanup of hazardous wastes and relieving owners of liability shifts the costs to others or, if there are no solvent other responsible parties, to the public." with the following:

The public has a strong interest in waste cleanup and relieving owners of liability shifts the costs to others or, if there are no solvent other responsible parties, to the public.

13. On page 37, delete the word "hazardous" from the sentence "Thus, Stuart can be read to require a showing that a prior owner or lessor knew or should have known about the risk of hazardous waste discharge."

14. On page 39, replace the first sentence of the first complete paragraph with the following:

We construe "permitted" in section 13304 to mean that a prior owner may be named in a cleanup order if it knew or should have known that a lessee's activity created a reasonable possibility of discharge into waters of the state of wastes that could create or threaten to create a condition of pollution or nuisance.

15. On page 39, at the end of the first sentence of the second paragraph in the "Conclusion" section, replace the words "hazardous wastes" with "wastes that could create or threaten to create a condition of pollution or nuisance" so the sentence reads:

The Regional Board's interpretation comes close to writing "permitted" out of the statute by imposing liability under a cleanup order absent any knowledge, actual or constructive, that a lessee's activity created a risk of discharge of wastes that could create or threaten to create a condition of pollution or nuisance.

16. On page 40, delete the word "hazardous" from the sentence "Construing section 13304 to authorize regional boards to name such owners in cleanup orders elevates their interest in mitigating the risk of discharges of hazardous wastes by lessees---and landowners are in a position to prevent such discharges."

17. On page 40, in the last sentence of footnote 28, replace the word "hazardous" with the word "waste" so the sentence reads:

It is more consistent with the Legislature's goal of environmental protection to encourage caution by and impose responsibility on landowners who should know waste discharges are reasonably possible.

18. On page 42, footnote 30, delete the word "hazardous" from the sentence "Arguably, under Ohio v. Kovacs (1985) 469 U.S. 274 and its progeny, the Regional Board's Cleanup Order is a claim because it directs an entity no longer in possession of the subject property to clean-up hazardous waste deposited before the bankruptcy confirmation date."

19. On page 47, in the final paragraph on the page, replace the words "hazardous waste discharges" with the "discharges of wastes that could create or threaten to create a condition of pollution or nuisance" so the sentence reads:

The parties are not similarly situated: while it is reasonable to hold a landowner responsible for what it permits to take place on its property, it is not reasonable to expect the regional boards to track bankruptcy proceedings involving all landowners who have leased to dry cleaners (and every other business that might present a risk of discharges of wastes that could create or threaten to create a condition of pollution or nuisance).

There is no change in the judgment.

Appellant's petition for rehearing is denied.

Dated: ____________________

____________________, P.J.