Texas Court of Appeals, Eleven...

Texas Court of Appeals, Eleventh District, Affirms Dismissal of Claims Against the City of Midland in a Cost Recovery Action Under the Texas Solid Waste Disposal Act

By Kirk M. Tracy

In an action concerning groundwater contaminated by trichloroethylene (“TCE”) and perchloroethylene (“PCE”), allegedly conveyed and released by a municipal sewer system, the Court of Appeals of Texas, Eleventh District, recently ruled on an interlocutory appeal from the grant of a plea to the jurisdiction in favor of the City of Midland (the “City”), affirming a trial court’s ruling that the City had not waived its governmental immunity under the Texas Solid Waste Disposal Act (“SWDA”).[1] The Court of Appeal found that the pleadings and the preliminary evidence presented demonstrated the City had not committed a statutory violation and therefore did not waive its immunity.[2] The Court of Appeals affirmed the trial court’s order, finding that the statutory definition of “solid waste facility” and “solid waste” were fatal to the Appellant’s claims because the allegations and only demonstrable facts concerned the City’s collection and treatment of domestic sewage, which are excluded from the definition of those terms, and no evidence that the City had any knowledge of alleged discharges by other parties. At the time of writing, each party may still consider filing a petition for review with the Texas Supreme Court.

Factual History: Weatherford’s Status as a Responsible Party, Response to Contamination, and Petition for Cost Recovery

Appellants, Weatherford International, LLC and Weatherford U.S., L.P. (collectively, “Weatherford”), brought a cost recovery action against the City under the SWDA, seeking past and future response costs incurred to remediate contamination of well water located on property once owned by Weatherford. Weatherford filed the underlying lawsuit in April 2019, seeking contribution from the City under the SWDA.[3] In response, the City answered and filed a plea to the jurisdiction. In its filings, the City asserted that (1) it had governmental immunity from suit; (2) Weatherford failed to allege any waiver of the City’s immunity; (3) Weatherford failed to assert that the City is a transporter of hazardous waste; and (4) Weatherford lacked standing to assert the claims it had raised in its petition.[4]

As alleged in Weatherford’s petition, “[a]pproximately twenty-five years ago, Weatherford purchased a 20.7-acre tract (the Site) from Energy Industries, Inc. As part of a joint-venture agreement, Weatherford performed an environmental assessment of the Site in November of 1998. The results of that assessment revealed that a water well located on the Site contained certain contaminants. Weatherford subsequently notified the Texas Natural Resource Conservation Commission (TNRCC)—the nominal predecessor to the Texas Commission on Environmental Quality (TCEQ)[5]—of their November 1998 water testing results.”[6]

Weatherford sold the Site in 2001 but continued to investigate the source and cause of contamination—it installed numerous groundwater monitoring wells between 2001 and 2009, which detected the presence of TCE and PCE (also known as “perc”).[7] The highest concentrations of TCE originated form an offsite location to the northeast. In August 2002, Weatherford submitted an Affected Property Assessment Report (“APAR”) to TCEQ, which revealed the existence of TCE and PCE at the Site.[8] In late 2004, TCEQ conferred with Weatherford and contested Weatherford’s representations in the APAR and required continued delineation of the groundwater plume offsite on water wells located within a half-mile radius of the Site. TCEQ ultimately rejected the APAR.[9] In December 2007, the Site was sold again; but in July 2008 TCEQ concluded that Weatherford was the party responsible for the subject contamination and required additional monitoring wells installed.[10]

A September 2013 groundwater assessment report by Weatherford’s consultant concluded that the contamination originated from an upgradient source not connected to or associated with the Site.[11] Nonetheless, TCEQ rejected Weatherford’s denial of liability and efforts to apply for an “Innocent Owner/Operator (IOP) Certificate.” TCEQ requested that Weatherford submit another APAR.[12] Weatherford continued its investigations at the Site and identified what it believed were the entities responsible for the contamination from historical manufacture of electronic components at a nearby property. TCEQ acknowledged that an offsite contributor was likely, but maintained its contention that Weatherford had used TCE during its operations and thus was also a source and cause of the contamination.[13] Weatherford continued its investigation at the Site and submitted an interim Response Action Plan (“RAP”) to TCEQ in 2016, which TCEQ approved after certain comments were addressed.[14]

Weatherford continued its response activities at the Site and its final RAP proposed methods for remediating the contamination but also concluded that chlorinated solvents leaking from the sanitary sewer line owned by the City into adjacent soil was the source of the groundwater contamination, not Weatherford’s activities. Weatherford complied with the RAP, incurring millions of dollars to investigate and respond to the contamination at the Site.[15] Weatherford subsequently filed a lawsuit against the City and other potentially responsible parties.

Weatherford’s petition alleges, with respect to the City, that “[The City] owned and operated the sewer systems running adjacent to the Site and the affected water wells. [The City] also permitted [other defendants] to dispose of hazardous waste, including the Contaminants of Concern, through its sewer system. During Ramboll’s investigation, it identified the sewer system as a likely source of contamination of the Site and affected water wells.” Accordingly, Weatherford asserted a contribution claim against the City under the SWDA to recover response costs it incurred.[16]

The City’s Plea to the Jurisdiction

In response to Weatherford’s petition, the City filed a plea to the jurisdiction in which it contended Weatherford’s factual allegations “did not give rise to any liability on behalf of the City under the SWDA and that governmental immunity barred the claims.”[17] In support of its plea, the City submitted a declaration by one of its directors attesting to the City’s historical permitting and management of its wastewater collection system and the absence of any record of the other defendants every obtaining industrial discharge permits or licenses, demonstrating that the City had no knowledge of any of the alleged disposal practices.[18] The trial court granted the City’s plea and dismissed all claims against the City in October 2020.[19] Weatherford filed an appeal.

Weatherford’s Appeal Denied

The sole issues before the Court of Appeals was Weatherford’s contention that, “because the SWDA waives the City’s governmental immunity, the trial court erred when it granted the City’s plea and dismissed Weatherford’s cost-recovery claims for lack of subject-matter jurisdiction.” The Court of Appeals disagreed and affirmed the trial court’s order.[20]

The Court first held that if the State retains “sovereign immunity,” then its political subdivisions, such as the City in the present case, would also retain “governmental immunity.”[21] The Court distinguished between “immunity to suit,” which strips a court of subject matter jurisdiction unless the State has expressly consented to suit, and “immunity from liability,” which is an affirmative defense, not a matter of subject matter jurisdiction—but an immunity that must still be waived by the state.[22] “A governmental entity, such as the City, retains its immunity unless the legislature clearly and unambiguously waives it.”[23]

Analyzing the pleadings and the supporting evidence necessary to the consideration of the plea to the jurisdiction, the Court held that Weatherford’s cost-recovery action is barred because Weatherford failed to raise a genuine issue of material fact as to whether the SWDA’s waiver of immunity applies to any alleged act by the City.[24] In particular, the City challenged whether it is a “person responsible for solid waste under the SWDA.”[25]

Similar to CERCLA, there are four categories of “persons responsible for solid waste” under the SWDA, including present owners or operators of a solid waste facility, owners or operators at the time of processing, storage, or disposal, those who arranged for such activities, and those who transported solid waste to a facility or site selected by the person.[26] The Court analyzed these categories, focusing on the first (owner and operator) and third (arranger), and analyzed the terms “solid waste facility” and “solid waste” to conclude that the SWDA “waives immunity if a governmental subdivision, such as the City, is responsible for solid waste.”[27] This determination hinged, at least in part, on the definition of “solid waste factiliy,” which “includes a publicly or privately owned solid waste facility . . . .”[28]  and the definition of “solid waste,” which specifically excludes “solid or dissolved material in domestic sewage.”[29] That exclusion is key in this matter.

As the Court ruled, “a statutory violation is necessary to establish an immunity waiver under the SWDA,” which intertwines jurisdiction and the merits of the case.[30] Even construing the statute liberally, the Court found that the City is not “responsible for solid waste” and thus did not waive its governmental immunity. The Court found that the “record before us shows that Weatherford’s allegations against the City, as raised in Weatherford’s pleadings, are premised on the City’s operation of a domestic sewer system—not the City’s disposal of solid waste.”[31] Weatherford’s pleadings specifically refer to the City’s sewer systems to attempt to establish liability, but City provided evidence in its plea that its wastewater treatment plant system collects “domestic sewage” for conveyance and subsequent treatment. Therefore, the Court held, “the SWDA’s cost-recovery provision does not apply to the allegations and subject matter—i.e., a domestic wastewater collection system,” that form the basis of Weatherford’s claims against the City.[32] The City’s successful rebuttal of factual allegations that it had permitted other specific defendants to dispose of waste into the domestic wastewater system also supported the trial court’s finding that there was no genuine issue of material fact. The Court of Appeals held that Weatherford failed to establish a waiver of the City’s immunity under the SWDA.[33]

The Court of Appeals affirmed the order of the trial court.

Absent a review by the Texas Supreme Court, this ruling sets the bar for bringing a cost recovery action against a municipality under the SWDA, including jurisdictional issues that may require marshalling evidence at the preliminary phases of litigation, without the benefit of traditional discovery timelines. Parties considering whether to voluntarily respond to contamination, or seeking contribution from municipalities or other political subdivisions of the State for costs incurred in responding to contamination, should consider all possible state and federal remedies before choosing a course of action.

[1] The SWDA, embodied in chapter 361 of the Texas Health and Safety Code, is the Texas counterpart to two federal environmental statutes: the Resource Conservation and Recovery Act (“RCRA”), 42 U.S.C. §§ 6901-6992, and the Comprehensive Environmental Response, Compensation, and Liability Act (“CERCLA”). 42 U.S.C. §§ 9601-9675; see R.R. St. & Co. v. Pilgrim Enters., 166 S.W.3d 232, 238-39 (Tex. 2005). “While RCRA ‘is designed primarily to regulate on-going treatment, storage, and disposal of solid and hazardous wastes,’ [citation], CERCLA was enacted to facilitate the prompt clean-up of hazardous substances that have already been released into the environment and to ensure that those responsible for the hazardous substances bear the cost of their actions. [citations].” R.R. St. & Co., 166 S.W.3d at 238-39.

“The purpose of SWDA, originally enacted in 1969 and codified twenty years later, is ‘to safeguard the health, welfare, and physical property of the people and to protect the environment by controlling the management of solid waste, including accounting for hazardous waste that is generated.’” Id. (citing Tex. Health & Safety Code § 361.002(a). “SWDA’s cost-recovery provisions are structured similarly to those in CERCLA, which the federal courts have given a liberal interpretation consistent with Congress’s ‘overwhelmingly remedial statutory scheme.’” Id. (citations omitted).

“In accordance with that purpose, SWDA, like CERCLA, provides mechanisms for the clean-up of solid waste and for both governmental entities and private parties to recover clean-up costs from those responsible for the waste.” Id. (citing Tex. Health & Safety Code §§ 361.272, .197, .344; 42 U.S.C. §§ 9607, 9613(f)).

[2] Id. at 908; see Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(8) (appeal from interlocutory order).

[3] “To establish a viable cost-recovery claim under the SWDA, a plaintiff must prove:

(1) the defendant is a “person responsible for solid waste” as defined in [S]ection 361.271;

(2) the [TCEQ] approved the plaintiff’s removal or remedial action;

(3) the action was necessary to address a release or threatened release of solid waste;

(4) the costs of the action were reasonable and necessary; and

(5) the plaintiff made reasonable attempts to notify the defendant of both the release and the plaintiff’s intent to take steps to eliminate the release.

 

Weatherford, 652 S.W.3d at 913 (citing R.R. St. & Co., 166 S.W.3d at 240).

[4] Id.

[5] In 2004, the TNRCC became the TCEQ. Act of May 28, 2001, 77th Leg., R.S., ch. 965, § 18.01(a)(1), (b), 2001 Tex. Gen. Laws 1933, 1985.

[6] Weatherford, 652 S.W.3d at 908-09.

[7] Id. at 909.

[8] Id.

[9] Id.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Id. at 910.

[15] Id.

[16] Id.

[17] Id. at 908-10.

[18] Id. at 910-11.

[19] Id.

[20] Id. at 911.

[21] Id. at 912 (citing Harris Cnty. v. Sykes, 136 S.W.3d 635, 638 (Tex. 2004)).

[22] Id. (“Because immunity from suit defeats a trial court’s subject matter jurisdiction, it is properly raised in a plea to the jurisdiction.”).

[23] Id. (citations omitted).

[24] Id. at 913.

[25] Id.

[26] Tex. Health & Safety Code § 361.271(a)(1)-(4).

[27] Id. at 914 (citing R.R. St. & Co., 166 S.W.3d. at 240).

[28] Id. (quoting Tex. Health & Safety Code § 361.003(36)).

[29] Id. (quoting Tex. Health & Safety Code § 361.003(35)(A)(i)).

[30] Id. In considering a plea to the jurisdiction, a court “must move beyond the pleadings and consider evidence when necessary to resolve the jurisdictional issues, even if the evidence implicates both subject-matter jurisdiction and the merits.” Id. at 912.

of a claim

[31] Id. at 915.

[32] Id.

[33] Id.