Celanese Corporation v. Coastal Water Authority et al

Filing 213

FINDINGS OF FACT AND CONCLUSIONS OF LAW.(Signed by Magistrate Judge Stephen Wm Smith) Parties notified. (jmarchand)

C e l a n e s e Corporation v. Coastal Water Authority et al

D o c . 213

U N I T E D STATES DISTRICT COURT S O U T H E R N DISTRICT OF TEXAS H O U S T O N DIVISION C ELANESE CORPORATION, § § P l a i n t i ff , § § vs. § § C OASTAL WATER AUTHORITY, § K ELLOGG, BROWN & ROOT, INC., AND § M ARTIN K. EBY CONSTRUCTION CO., INC., § § D e fen d a n ts. §

C IVIL ACTION NO. H-06-2265

F I N D IN G S OF FACT AND CONCLUSIONS OF LAW P la in tif f Celanese Corporation sued defendants 1 Kellogg, Brown & Root, Inc. and M a rtin K. Eby Construction Co., Inc. to recover environmental clean-up costs under the T e x a s Solid Waste Disposal Act, TEX. HEALTH & SAFETY CODE § 361.344 (SWDA) and the C o m p re h e n siv e Environmental Response, Compensation and Liability Act of 1980, 42 U .S .C . § 9607 (CERCLA). A jury trial was conducted March 9-20, 2009. The jury returned a verdict on the S W D A claim, and its findings of fact are advisory only with respect to the CERCLA claim. T h e court now makes the following findings of fact and conclusions of law. Any finding of f a ct that should be a conclusion of law is deemed a conclusion of law, and vice versa.

1

All claims against a third defendant, Coastal Water Authority, were dismissed by orders dated February 9, 2007 (Dkt. 45) and July 2, 2008 (Dkt. 108).

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F in d i n g s of Fact 1. P la in tif f Celanese Corporation is a corporation organized and existing under the laws o f the State of Delaware, with its principal place of business in Dallas, Texas. 2. D e f e n d a n t Kellogg, Brown & Root, LLC (Brown & Root) is the successor to Brown & Root, Inc. and is a company organized and existing under the laws of the State of D e la w a re , with its principal place of business in Houston, Texas. 3. D e f e n d a n t Martin K. Eby Construction Co., Inc. (Eby) is the successor to Chisholm T ra il Construction Co., Inc. and is a corporation organized and existing under the laws o f the State of Kansas, with its principal place of business in Wichita, Kansas. S p ill Site 4. T h e site of the methanol spill generating this lawsuit is located approximately ½-mile s o u th e a st of the intersection of State Highway 146 and Shoreacres Boulevard, near B a yp o rt Industrial Complex in eastern Harris County, Texas. The property is bounded b y the Taylor Bayou small boat channel to the west and by a marine terminal owned b y LBC-Houston, LP to the east (hereafter Site). 5. T h e methanol leaked from a 10" pipeline installed by Celanese in 1971. This threem ile long pipeline originally ran between the Celanese Clear Lake plant and a barge ter m in a l on Galveston Bay, but was partially rerouted in 1974 to a Bayport ship te rm in a l. From at least 1974 to the present, the methanol pipeline passed through c o rrid o rs and easements belonging to Friendswood Development Corp. and managed b y Exxon Pipeline Company. 2

6.

From 1971 to the time of trial, Celanese has been the sole owner and operator of the m e th a n o l pipeline.

CWA Water Pipeline Project 7. In 1979, Coastal Water Authority (CWA), a state agency that supplies industries with w a te r, built a 30" underground water pipeline to serve Bayport industrial plants. The C W A waterline crossed underground pipelines owned by many different companies, in c lu d in g Celanese, in many places. 8. T h e Site where the leak occurred is near one of the intersections of the CWA water p ip e lin e and the methanol pipeline. 9. C W A hired Brown & Root to provide engineering services on the water pipeline p ro je c t, to assist with the preparation of a bid package for prospective contractors, and to inspect the work of the successful bidder for CWA. 10. B ro w n & Root recommended acceptance of Eby's bid as construction contractor for in s ta lla tio n of the CWA water pipeline. 11. B ro w n & Root was contractually required to observe Eby's construction of the CWA lin e on a daily basis, and in particular was required to inspect each section of the C W A line as it was laid. Brown & Root had contractual authority to direct Eby to s to p work on the project in appropriate circumstances. 12. E b y's normal procedure was to notify pipeline owners when Eby planned an e x c av a tio n in the vicinity of their pipelines. Likewise, it was Celanese's normal

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p ra c tic e to have a representative present when they knew anyone would be digging n e a r its pipelines. D a m a g e to the Methanol Line 13. O n April 27, 1979, Celanese received a telephone call from Eby representatives a d v isin g that the CWA water line would cross under Celanese pipelines adjacent to H w y. 146. 14. I n July 1979, Eby began excavating the Site where the CWA waterline, running east a n d west, was to cross under the Celanese methanol line, which ran north and south. 15. A t that time, the project was a few weeks behind schedule due to unusually heavy ra in f a ll . Eby added a second pipe laying crew, and the work was eventually

c o m p l e te d on schedule. 16. E b y's excavation at the Site exposed only a portion of the Celanese methanol pipeline, w h ic h was approximately twelve (12) feet below ground surface. 17. D u rin g that excavation, an unknown Eby employee operating a backhoe struck and d a m a g e d the methanol pipeline.2 18. T h e dent in the methanol pipeline was approximately 10-15 feet south of the CWA w a te r line, and approximately 8 feet above it. 19. T h e dented portion of the pipeline was neither exposed nor in plain view prior to b a c k f illin g .

2

This finding adopts the jury's advisory answer to Question No. 1. 4

L a c k of Knowledge 20. T h e 1979 strike on the Celanese methanol pipeline was not contemporaneously re p o rte d or recorded by Eby, Brown & Root, Celanese, or anyone else. 21. A c c o rd in g to Celanese expert witness Ross Benson, who has operated heavy e q u ip m en t for nearly 40 years, a backhoe operator with his level of experience knows w h e n he hits a pipeline, as opposed to a rock or some other object. 22. T h e re is no evidence that the Eby employee who damaged the methanol pipeline in 1 9 7 9 had Benson's level of experience operating heavy equipment. 23. E b y operator Weldon Booker was moderately experienced on heavy equipment by 1 9 7 9 , but he could not always tell the difference between hitting metal or rock, and w o u ld have to probe with a shovel to discover what had been hit. 24. B o o k e r was not operating the backhoe when the Celanese methanol line was struck. H e had previously been relieved from backhoe duty because he accidentally turned o v e r a backhoe while working near the Taylor Bayou small boat channel. 25. E v e n when Booker was the main operator of the backhoe, other members of the crew (e x c e p t for laborers) would occasionally operate the machine. 26. 27. T h e Eby employee who struck the pipeline did not know what he had hit. N e ith e r Eby nor any of its employees knew that the Celanese methanol line had been d a m a g e d by its work on the CWA line.3

3

The court adopts the jury's advisory answer to Question No. 2. 5

28.

E b y's decision to backfill the excavation was made without knowledge that the C e la n e se methanol line had been damaged.4

29.

N e ith e r Brown & Root nor any of its employees knew that Eby had damaged the C e la n e se methanol line.5

30.

B ro w n & Root's decision to allow Eby to backfill the excavation was made without k n o w le d g e that the Celanese methanol line had been damaged.6

C a u s a t io n of Methanol Release 31. T h e release of methanol at the Site would not have occurred but for the 1979 damage to the Celanese methanol line.7 32. C e lan e se 's acts or omissions in monitoring and maintaining the integrity of its m e th a n o l line did not contribute to the release in question.8

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The court adopts the jury's advisory answer to Question No. 4. The court adopts the jury's advisory answer to Question No. 3. The court adopts the jury's advisory answer to Question No. 5. The court adopts the jury's advisory answer to Question No. 6. The court adopts, in part, the jury's advisory finding to Question No. 9. The court declines to adopt the jury's advisory answer to Question No. 8, i.e., that Celanese failed to use due care in monitoring and maintaining the integrity of the line. The defendants failed to sustain their burden of proof on that issue. 6

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C e la n e s e Response 33. C e la n e se discovered the methanol leak on October 1, 2002, when a patch of dead g ra ss was observed at the Site. Defendants have not shown by preponderance of the ev id en ce that Celanese acted unreasonably in failing to detect the release sooner.9 34. C e la n e se hired Benson Pipeline Maintenance to excavate down to the methanol line a n d find the source of the leak. 35. A CWA representative, Lee Casey, was present at the Site while Benson was e x c av a tin g in the vicinity of the CWA waterline. 36. B ro w n & Root was notified by CWA in October 2002 of the leak, the excavation, and C e la n e se 's intention to take steps to eliminate the release. 37. C e la n e se notified Eby of the leak and its efforts to eliminate the release in 2006, after it learned through discovery in this case that Eby was the contractor for installation o f the CWA waterline in 1979. Neither Brown & Root nor CWA informed Celanese th a t Eby was the contractor prior to initiation of this lawsuit. 38. C e la n e se replaced the damaged portion of the pipeline, pressure-tested the repaired p ip e lin e , and backfilled the excavation. 39. A s of mid-November 2008, Celanese had removed and disposed of over 232,028 g a llo n s of methanol from the subsurface at the Site. The exact amount of methanol th a t leaked from the pipe before repair is unknown.

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Respectfully, the court declines to adopt the jury's advisory answer to Question No. 10. 7

40.

C e la n e se notified the National Response Center and Texas Commission on E n v iro n m e n ta l Quality (TCEQ) of its discovery of the methanol release.

41.

C e la n e se , in accordance with TCEQ regulations known as the Texas Risk Reduction P r o g ra m (TRRP), summarized its site evaluation in an Affected Property Assessment R ep o rt (APAR).

42.

T C E Q approved the APAR and directed Celanese to prepare a Response Action Plan (R A P ) . Celanese's RAP proposed (a) establishment of a Plume Management Zone; a n d (b) monitored natural attenuation (MNA).

43.

T C E Q approved the RAP on June 3, 2008. Once Celanese can demonstrate the e f f e c tiv e n e ss of the MNA remedy, it will submit a Response Action Completion R e p o rt .

44.

C e la n e se has not yet received approval from TCEQ of a Response Action Completion R e p o rt or a Certificate of Completion from the TCEQ for the methanol contamination a t the Site.

45.

C e la n e se has not yet received a No Further Action letter from the TCEQ for the m e th a n o l contamination at the Site.

46.

It will take longer than 4 years from January 1, 2009 to receive approval of a R e sp o n s e Action Completion Report or No Further Action letter from the TCEQ for th e methanol contamination at the Site.

47.

B ro w n & Root has not participated in the response to or clean-up of the methanol r e le a se . 8

48.

E b y has not participated in the response to or clean-up of the methanol release. C o n c lu s io n s of Law

1.

C la im s under the SWDA § 361.344 and CERCLA § 107 are governed by the same p rin c ip le s . R.R. Street & Co. v. Pilgrim Enter., 166 S.W.3d 232, 242-43 (Tex. 2005).

SW D A 2. T h e elements of a cost recovery action under SWDA are that (1) the defendant is a p e rs o n responsible for solid waste; (2) the TCEQ approved the plaintiff's removal or re m e d ia tio n action; (3) the action was necessary to address a release or threatened re le a se of solid waste; (4) the costs were necessary and reasonable; and (5) plaintiff m ad e reasonable attempts to notify the defendant of both the release and plaintiff's in te n t to take steps to eliminate the release. R.R. Street, 166 S.W.3d at 240. 3. C e la n e s e made reasonable attempts to notify Eby and Brown & Root of the release a n d of its intent to take steps to eliminate the release. 4. A person may be a person responsible under the SWDA if the person "otherwise a rr a n g e d " for the disposal of a hazardous substance. TEX. HEALTH & SAFETY CODE § 361.271. 5. In order to hold a defendant liable as an arranger under the SWDA, there must be a n e x u s between the defendant's conduct and the disposal of the hazardous substance. R .R . Street, 166 S.W.3d at 242.; Geraghty and Miller, Inc. v. Conoco, Inc., 234 F.3d 9 1 7 , 929 (5th Cir. 2000).

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6.

A rra n g er status is based on a person's authority, involvement, or obligation in regard to the disposal at issue. In evaluating arranger status, the court looks at the totality of c irc u m s ta n c es in each case. The court's inquiry focuses on the defendant's actual c o n tro l over the decision regarding the disposal. R.R. Street, 166 S.W.3d at 242-43.

7.

B a se d on the jury's findings of fact, the court concludes that Eby is not a person re s p o n s ib le for solid waste under the SWDA.

8.

B a se d on the jury's findings of fact, the court concludes that Brown & Root is not a p e rs o n responsible for solid waste under the SWDA.

CERCLA 9. T h e elements of a cost recovery action under CERCLA are that (1) the site is a f a cility; (2) there was a release or threatened release of a hazardous substance from th e facility; (3) the plaintiff incurred necessary costs of response; and (4) the d e f e n d a n ts are responsible persons under 42 U.S.C. § 9607(a). Amoco Oil Co. v. B o r d e n , Inc., 889 F.2d 664, 668 (5th Cir. 1989). 10. 11. T h e methanol pipeline is a facility within the meaning of CERCLA § 101(9). T h e methanol release was a release of a hazardous substance within the meaning of CERCLA § 101(14). 12. 13. B row n & Root and Eby are "persons" within the meaning of CERCLA § 101(21). A person may be a person responsible under CERCLA if the person "otherwise arran g ed " for the disposal of a hazardous substance. 42 U.S.C. § 9607(a)(3). 14. T h e methanal release is a disposal within the meaning of CERCLA § 101(29). 10

15.

In order to hold a defendant liable as an arranger, there must be a nexus between the d e f e n d a n t's conduct and the disposal of the hazardous substance. Geraghty and M ille r, Inc. v. Conoco, Inc., 234 F.3d 917, 929 (5th Cir. 2000).

16.

In evaluating arranger status, the court considers a person's authority, involvement, o r obligation in regard to the disposal at issue. The court looks at the totality of c irc u m s ta n c es in each case. The court's inquiry focuses on the defendant's actual c o n tro l over the decision regarding the disposal.

17.

K n o w le d g e that a process inherently results in a disposal can give rise to arranger lia b ility. Vine Street LLC v. Keeling, 362 F. Supp. 2d 754, 760 (E.D. Tex. 2005) U.S. v. Burlington Northern & Santa Fe Railway Co., 520 F.3d 918, 951 (9th Cir. 2 0 0 8 ). Conversely, lack of knowledge may defeat a claim of arranger liability in a p a rtic u la r case. See South Florida Water Manag. Dist. v. Montalvo, 84 F.3d 402, 4070 9 (11th Cir. 1996).

18.

H a v in g found that Eby did not know that the Celanese methanol pipeline had been d a m a g e d , the court concludes that Eby is not liable to Celanese as an arranger for d is p o s a l of a hazardous substance under CERCLA.

19.

H a v in g found that Brown & Root did not know that the Celanese methanol pipeline h a d been damaged by Eby, the court concludes that Brown & Root is not liable to C ela n e s e as an arranger for disposal of a hazardous substance under or CERCLA.

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T h e court will issue a separate take-nothing final judgment on Celanese's claims.1 0

S ig n e d at Houston, Texas on April 13, 2009.

10

Having concluded that neither defendant is liable, the court declines to make further findings or conclusions regarding damages or allocation. 12