Owner Fined For Failing to Report Transformer Spill

In TWC Storage, LLC v State Water Resources Control Board, 2010 Cal. App. LEXIS 801 (Ct.App-6th Dist. 6/3/10), plaintiff purchased property in 2004 that had been used for semiconductor manufacturing in 1970s and 1980s. In 1987, the site had been placed on the state superfund list for presence of VOCs in groundwater and had been vacant since 1991.

Plaintiff retained general contractor to demolish two-story building that had two pad-mounted transformers. The transformers were also located just 30 feet from a day care center. A subcontractor removed the transformers before they were drained and spilled dilectric fluids containing "Perclene" when the excavator damaged one of the transformers. The damaged transformer had a PCB label affixed to its exterior.The subcontractor then placed the damaged transformer on top of a soils pile to let it drain before removing it to another area to more fully drain. A total of approximately 50 gallons of PCE fluids drained from the transformer.

Subcontractor notified owner who retained an envirronmental consultant two days later to perform a limited cleanup. However, owner did not notify any governmental authority until the local public safety inspector arrived at the site four days later to observe dust control measures for demolition and inquired about the drums that had hazardous waste markings.  PCE was later detected in groundwater near the location of the former transformers at concentrations exceeding 12,000 ppb.

In 2006, the Regional Board assessed the owner $40K for tardy notification under the state Water Code. The fine was later reduced to $25K but the owner then filed a lawsuit challenging the fine. The owner said it could not be liable because it did not cause the spill. However, court said that liability and the duty to take affirmative action flowed not from the landowner's active responsibility, knowledge or intent to cause contamination. Instead, the court said owner liability was based simply on its "very possession and control of the land in question". The court said that section 13350 of the Water Code imposes liability on any person who causes or permits a discharge without regard to intent or negligence. There was substantial evidence, the court said, that the plaintiff had caused or permitted the discharge to occur by engaging contractors to perform the demolition activity that resulted in the discharge.

The court also rejected the notion that the plaintiff should not be liable because the discharge was a result of the negligent acts of an independent contractor. However, the court said the administrative fine was not based on notions of tort liability but on the water code.