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State ex rel. Regan v. Wasco, LLC

Court of Appeals of North Carolina

January 7, 2020

STATE OF NORTH CAROLINA, ex. rel., MICHAEL S. REGAN, SECRETARY, NORTH CAROLINA DEPARTMENT OF ENVIRONMENTAL QUALITY, DIVISION OF WASTE MANAGEMENT, Plaintiff,
v.
WASCO, LLC, Defendant.

          Heard in the Court of Appeals 30 October 2019.

          Appeal by Defendant from orders denying Defendant's motion to dismiss, entering summary judgment for Plaintiff, and permanently enjoining Defendant entered 27 November 2018 by Judge R. Gregory Horne in Buncombe County, No. 18-CVS-1731Superior Court.

          Attorney General Joshua H. Stein, by Assistant Attorney General Michael Bulleri, for the State.

          Troutman Sanders LLP, by Christopher G. Browning, Jr., Sean M. Sullivan, and Lisa Zak, for the Defendant.

          BROOK, JUDGE.

         WASCO, LLC, ("Defendant") appeals from trial court orders denying Defendant's motion to dismiss, entering summary judgment for the North Carolina Department of Environmental Quality, Division of Waste Management ("Plaintiff"), and permanently enjoining Defendant. Because this Court has previously held that Defendant is liable for submitting a Part B post-closure permit as the operator of a facility under the Resource Conservation and Recovery Act ("RCRA") in WASCO LLC v. N.C. Dep't of Env't & Nat. Res., 253 N.C.App. 222, 799 S.E.2d 405 (2017) ("WASCO I"), we affirm.

         I. Factual Background

         The pertinent factual background is fully laid out in WASCO I, and we repeat only the facts necessary to decide the instant appeal.

         The facility at issue is a former textile manufacturing facility located in Swannanoa, North Carolina ("the Facility"). WASCO I, 253 N.C.App. at 225, 799 S.E.2d at 408. Prior to Defendant's purchase of the Facility, underground tanks were used to store virgin and waste perchloroethylene ("PCE"), a dry-cleaning solvent. Id. PCE leaked from the tanks and contaminated the soil. Id. The tanks were removed, and the resulting pits were filled with the contaminated soil. Id.

         In 1990, the then-operator of the facility, Asheville Dyeing & Finishing ("AD&F"), a division of Winston Mills, Inc., entered into an Administrative Order on Consent with Plaintiff that set forth a plan to close the Facility. Id. The Facility was certified closed in 1993. Id. In 1995, Winston Mills and its parent corporation, McGregor Corporation, sold the site to Anvil Knitwear, Inc. and provided Anvil Knitwear indemnification rights for "environmental requirements." Id. Culligan International Company ("Culligan") co-guaranteed Winston Mills's performance of indemnification for environmental liabilities. Id.

         In 1998, Defendant's predecessor in interest, United States Filter Corporation, acquired stock of Culligan Water Technologies, Inc., which owned Culligan. Id. Defendant then provided Plaintiff with a trust fund to the benefit of Plaintiff as financial assurance on behalf of Culligan, as well as an irrevocable standby letter of credit for the account of AD&F. Id. In 2004, Defendant sold Culligan and agreed to indemnify the buyer as to identified environmental issues at the Facility. Id. at 225-26, 799 S.E.2d at 408. From that point forward, Part A permit applications signed by Defendant's director of environmental affairs identified Defendant as the operator of the facility. Id. at 226, 799 S.E.2d at 408.

         In 2007, Defendant received a letter from Plaintiff indicating that the Facility required corrective action to develop a groundwater assessment plan to address the migration of hazardous waste in the groundwater. Id. Defendant, its hired consultant, and Plaintiff continued to develop a groundwater assessment plan. Id. The following year, in 2008, Anvil Knitwear sold the property to Dyna-Diggr, LLC.[1]Id. At that point, both Defendant and Anvil disclaimed responsibility for post-closure actions at the Facility. Id.

         Litigation resulting from the disagreement regarding responsibility for post-closure actions resulted in the decision reached by this Court in WASCO I.

         II. Procedural Background

         In WASCO I, this Court held that Defendant was liable for securing a post-closure permit as an operator of the Facility. WASCO I, 253 N.C.App. at 237, 799 S.E.2d at 415. After this Court's unanimous decision in WASCO I, Defendant filed a Petition for Discretionary Review under N.C. Gen. Stat § 7A-31 in the North Carolina Supreme Court. WASCO LLC v. N.C. Dep't of Env't & Nat. Res., Div. of Waste Mgmt., 370 N.C. 276, 805 S.E.2d 684, 685 (2017). The Supreme Court denied review. Id.

         Despite the decision of this Court, Defendant did not seek a post-closure permit as required by 40 C.F.R. § 270.10(b) and 40 C.F.R. § 270.1, incorporated by reference in 15A NCAC 13A.0113. Instead, Defendant filed a Petition for Rule Making before the Environmental Management Commission ("EMC"), seeking to change the definition of the term "operator" in the North Carolina Administrative Code. EMC denied Defendant's petition on 8 March 2018. Defendant then filed a Petition for Declaratory Ruling before the EMC on 8 December 2017, requesting a ruling that Plaintiff "lacks the authority to require WASCO to obtain a post-closure permit or a post-closure order for the Facility pursuant to 15A NCAC [13A].0113(a) (adopting 40 C.F.R. § 270.1(c))." Defendant amended this petition on 27 February 2018 seeking the same ruling. On 3 March 2018, Defendant filed a new Petition for Declaratory Ruling before the EMC, seeking the same ruling. Defendant withdrew the first amended Petition for Declaratory Ruling, and the new Petition was scheduled for hearing at the time Plaintiff commenced this action.

         On 18 April 2018, Plaintiff filed a Complaint and Motion for Preliminary and Permanent Injunctive Relief. Plaintiff sought a mandatory injunction requiring Defendant to, among other things, "[s]ubmit, within 90 days of issuance of an Order, a complete application for a RCRA Part B post-closure permit in accordance with 40 CFR 270.10 addressing all of the applicable requirements of Chapter 40 of the Code of Federal Regulations and the State Hazardous Waste Program[.]"

         Defendant filed a Motion to Dismiss on 9 July 2018, alleging that Plaintiff had "fail[ed] to join the current owner and operator of the Facility, Dyna-Diggr, LLC ('Dyna-Diggr') and Brisco, Inc. (an additional current operator of the Facility), as well as the former owners and operators of the Facility, as necessary parties."[2] Plaintiff then filed a Motion for Summary Judgment, alleging "that there are no disputed issues of material fact and that Plaintiff is entitled to judgment as a matter of law" because Defendant failed to comply with this Court's decision in WASCO I requiring Defendant to submit a Part B post-closure permit application under RCRA.

         A hearing on the motions was held before Judge R. Gregory Horne on 31 October 2018. The trial court determined that Plaintiff had not failed to join any necessary parties and denied Defendant's motion to dismiss. The trial court made the following oral findings of fact and conclusions of law to support the denial of Defendant's motion to dismiss and the grant of Plaintiff's motion for summary judgment:

THE COURT: All right, thank you. . . . the Court of Appeals and the Supreme Court often . . . talk about changing horses midstream in litigation. And oftentimes . . . they're talking about a situation in which there was not an issue raised in the trial courts, so as a result, the trial court didn't have an opportunity to consider or rule upon the issue. But prior to [] getting to the appellate courts and prior to hearing, [] the parties change horses or change legal theories, change legal strategies and bring up issues that were not brought up in trial court. Of course, appellate cases indicate that that is not allowed to be done.
Now, I must again say that . . . I'm far from an expert in the area of the EPA . . . . This is an area that clearly is a specialty, even folks who are specialized in it, I think, would have frequent updates and interpretations throughout.
However, initially, when I looked at it it appeared to me that the defendant WASCO, the plaintiff in the original case before the Court of Appeals, was changing horses midstream in that, although somewhat differently, . . . it was heard first with an administrative law judge, went through the trial court, and then went to the Court of Appeals and then not receiving relief, changed horses and repackaged and attempted to relitigate. I hear from WASCO that, in fact, they are looking at some new regulations that have come out that weren't present at the time.
What this Court does understand is that this Court is bound by the decision of the North Carolina Appellate Courts, and the decision as I read it is clear. I had underlined and underscored a number of cases, the State has quoted some, but indicated it's WASCO's responsibility to obtain a postclosure permit for the site that is at issue in the present case. And there's a quote-additionally, Part A permit - it's on page six. (As read) Application signed by WASCO's director of environmental affairs identified WASCO as the operator, and WASCO continued to pay consultants and take action at the site.
The [C]ourts in their conclusion indicate, (as read) We hold WASCO as an operator of a landfill for purposes of the postclosure permitting requirement at the site.
So it is the Court's belief and, indeed, that . . . upon petition for discretionary review, the North Carolina Supreme Court denying that, Court believes it is the law of the case at this time.
So that brings us to the present action in 18 CVS 1731 in which the department is seeking a motion for summary judgment. Court having considered the submissions, having respectfully considered the arguments of counsel, the Court would find and conclude that there remains no genuine issue of material fact, and that Plaintiff, then, the department and the division are entitled to judgment as a matter of law. Court therefore grants the summary judgment motion and requires WASCO to submit to [sic] this Part B postclosure permit application within 90 days of signing and filing of this order.

         Following the hearing, the trial court entered an order denying Defendant's motion to dismiss on 12 December 2018 and an order entering summary judgment for Plaintiff. The order denying Defendant's motion to dismiss included the following findings and conclusions:

1. On April 18, 2017, the Court of Appeals issued a unanimous decision holding that Defendant "WASCO was the party responsible for and directly involved in the post-closure activities subject to regulation" at the former Asheville Dyeing & Finishing Plant located at 850 Warren Wilson Road, Swannanoa ("the Facility") in Buncombe County. WASCO LLC v. N.C. Dep't of Env't and Natural Res., No. COA 16 414 ( N.C. Ct. App. Apr. 18, 2017). The Court of Appeals framed the issue as follows: "It is WASCO's responsibility to obtain a post-closure permit for the Site that is at issue in the present case." Id. at page 5. The Court of Appeals opinion affirmed the final order and judgment of the trial court and held that "WASCO is an operator of a landfill for purposes of the post-closure permitting requirement at the Site". Id. at page 22.
2. WASCO was the only party to this Court of Appeals' decision other than the Department of ...

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