Exhibit H

Attachment B H-1

No. COA 16-414 TWENTY-SIXTH DISTRICT

NORTH CAROLINA COURT OF APPEALS ********************************

WASCO LLC, ) )

Petitioner-Appellant, ) )

v. ) From Wake County )

NORTH CAROLINA DEPARTMENT ) OF ENVIRONMENT AND NATURAL ) RESOURCES, DIVISION OF WASTE ) MANAGEMENT, ) )

Respondent-Appellee. )

*********************** APPELLEE’S BRIEF

***********************

Attachment B H-2

INDEX

TABLE OF CASES AND AUTHORITIES ............................. iii ISSUES PRESENTED ............................................................... 1 STATEMENT OF THE CASE .................................................. 2 STATEMENT OF THE FACTS ................................................ 7 STANDARD OF REVIEW ...................................................... 14 ARGUMENT............................................................................ 15

I. THE TRIAL COURT APPLIED THE CORRECT LEGAL STANDARDS FOR INTERPRETING THE SCOPE OF POST-CLOSURE OPERATOR LIABILITY UNDER THE STATE HAZARDOUS WASTE PROGRAM ............................................................... 16 A. The State Definitions Of “Operator” Apply ........ 16

B. The Bestfoods Operatorship Test Provides

Persuasive Guidance ............................................ 18

II. THE TRIAL COURT PROPERLY LIMITED ITS INQUIRY TO WHETHER WASCO WAS AN OPERATOR OF A LANDFILL FOR PURPOSES OF “POST-CLOSURE” LIABILITY, WHICH NECESSARILY ARISES AFTER CLOSURE ................................... 20

III. THE UNDISPUTED FACTS SHOW THAT WASCO IS A POST-CLOSURE OPERATOR OF THE LANDFILL AT ISSUE, MAKING WASCO RESPONSIBLE FOR FACILITY-WIDE INVESTIGATION, MAINTENANCE, MONITORING, AND REMEDIATION ................. 23

Attachment B H-3

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A. WASCO Is An Operator Under The Totality Of The Circumstances ......................................... 23

1. WASCO expressly assumed post-closure

operator liability under penalty of law ........... 26

2. WASCO provided financial assurances for the Facility ................................................. 29

3. WASCO performed post-closure

operations, through its environmental consultant ........................................................ 31

B. WASCO’s Unpreserved “Protective Filer”

Defense Lacks Merit ............................................ 32

IV. AS WASCO ADMITS, THERE ARE NO GENIUNE ISSUES OF MATERIAL FACT ........... 35

V. WASCO HAS ABANDONED ITS PROPOSED ISSUE CONCERNING THE TIMING OF THE ALJ’S RULING ON SUMMARY JUDGMENT PRIOR TO THE DISCOVERY DEADLINE ...................................... 37

CONCLUSION ........................................................................ 38 CERTIFICATE AS TO WORD COUNT ................................ 40 CERTIFICATE OF SERVICE ................................................. 41

Attachment B H-4

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TABLE OF CASES AND AUTHORITIES Cases Amanini v. N.C. Dep’t of Human Res., 114 N.C. App. 668, 443 S.E.2d 114 (1994) .................... 32, 33 City of Wichita v. Trs. of the Apco Oil Corp. Liquidating

Tr., 306 F. Supp. 2d 1040 (D. Kan. 2003) ............................ 26 Hilliard v. N.C. Dep’t of Corr.,

173 N.C. App. 594, 620 S.E.2d 14 (2005) ..................... 14, 15 In re Quaker State Oil Ref. Corp., No. RCRA-III-116, 1986 EPA ALJ LEXIS 22 (Feb. 6, 1986) .................................................................. 33, 34 Link v. Link,

278 N.C. 181, 179 S.E.2d 697 (1971) .................................. 36 Litgo N.J., Inc. v. Comm’r N.J. Dep’t of Envtl. Prot., 725 F.3d 369, 380-82 (3d Cir. 2013) ................ 22, 25, 29, 31 Morrell v. Flaherty,

338 N.C. 230, 449 S.E.2d 175 (1994), cert. denied, 515 U.S. 1122, 132 L. Ed. 2d 282 (1995) ........ 14 Richardson v. Bank of Am., N.A.,

182 N.C. App. 531, 643 S.E.2d 410 (2007) ......................... 19 Shore v. Brown,

324 N.C. 427, 378 S.E.2d 778 (1989) .................................. 15 Skinner v. Preferred Credit,

172 N.C. App. 407, 616 S.E.2d 676 (2005), aff’d, 361 N.C. 114, 638 S.E.2d 203 (2006) ......................... 18

Stewart v. Stewart,

61 N.C. App. 112, 300 S.E.2d 263 (1983) ........................... 36

Attachment B H-5

-iv-

Tanglewood East Homeowners v. Charles-Thomas, Inc., 849 F.2d 1568 (5th Cir. 1988) ............................................ 20

United States v. Bestfoods,

524 U.S. 51, 141 L. Ed. 2d 43 (1998) ........................... passim United States v. Envtl. Waste Control, Inc.,

710 F. Supp. 1172 (1989) .............................................. 24, 27 United States v. JG-24, Inc.,

331 F. Supp. 2d 14 (D.P.R. 2004), aff’d, 478 F.3d 28 (1st Cir. 2007) ................................... 24, 27 United States v. NCR Corp.,

840 F. Supp. 2d 1093 (E.D. Wis. 2011), rev’d on other grounds on reconsideration, 840 F. Supp. 2d 1093 (E.D. Wis. 2012) ................................ 22 United States v. Township of Brighton,

153 F.3d 307 (6th Cir. 1998) ............................. 26, 27, 29, 31 Viar v. N.C. DOT,

359 N.C. 400, 610 S.E.2d 360 (2005) .................................. 38 Whitacre P’ship v. BioSignia, Inc.,

358 N.C. 1, 591 S.E.2d 870 (2004) ...................................... 20 Statutes N.C.G.S. ch. 130A, art. 9 (2015) .......................................... 5, 17 N.C.G.S. § 130A-290(a)(21) (2015) .................................. 17, 20 N.C.G.S. § 130A-294(a)(2) (2015) ............................................ 5 N.C.G.S. § 130A-294(b) (2015) ................................................. 5 N.C.G.S. § 130A-295.04 (2015) .............................................. 10 N.C.G.S. § 150B-52 (2015) ...................................................... 14

Attachment B H-6

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42 U.S.C. §§ 6901-6992k (1976) ............................................... 4 42 U.S.C. § 6926 (2012) ............................................................. 5 42 U.S.C. § 9601(20)(A)(ii) (2012) ......................................... 19 Rules 15A NCAC 13A .0102 ............................................................. 17 15A NCAC 13A .0102(b)......................................................... 17 15A NCAC 13A .0109 ............................................................. 16 15A NCAC 13A .0109(h)........................................................... 6 15A NCAC 13A .0110 ............................................................... 8 15A NCAC 13A .0110(j) ............................................... 6, 21, 33 15A NCAC 13A .0113 ............................................................... 8 15A NCAC 13A .0113(a) .................................................. passim 15A NCAC 13A .0113(j) ........................................................... 8 15A NCAC Subchapter 13A ...................................................... 5 N.C. R. App. P. 10 (2016) ............................................ 33, 36, 38 N.C. R. App. P. 28(b)(6) (2016) ............................................... 38 N.C.G.S. § 1A-1, Rule 9(b) (2015) .......................................... 36 N.C.G.S. § 1A-1, Rule 56 (2015) ............................................. 15 N.C.G.S. § 1A-1, Rule 56(f) (2015) ..................................... 4, 37 Regulations 40 C.F.R. § 260.10 .................................................................... 17 40 C.F.R. § 264.117 .................................................................... 6

Attachment B H-7

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40 C.F.R. § 265.197(b) ................................................... 6, 21, 33 40 C.F.R. § 270.1(c) ................................................. 6, 16, 21, 38 40 C.F.R. § 270.2 ...................................................................... 17 40 C.F.R. § 270.13 ...................................................................... 8 40 C.F.R. § 270.70(a)(2) ............................................................ 8 45 Fed. Reg. 33153 (May 19, 1980) ............................. 27, 28, 29 45 Fed. Reg. 72024 (Oct. 30, 1980) ............................. 22, 27, 28 49 Fed. Reg. 48694 (Dec. 14, 1984) .......................................... 5 50 Fed. Reg. 38946 (Sept. 25, 1985) ........................................ 33 Secondary Sources RCRA Online database https://yosemite.epa.gov/osw/rcra.nsf/ how+to+use?OpenForm (“RO”)

RO 12174 (Jan. 27, 1984) ................................................... 19 RO 12590 (Mar. 24, 1986) .................................................. 33 RO 12703 (Aug. 1, 1986) .................................................... 37 RO 12952 (Jun. 24, 1987) ................................................... 19 RO 13071 (Oct. 28, 1987) ................................................... 19

Attachment B H-8

No. COA 16-414 TWENTY-SIXTH DISTRICT

NORTH CAROLINA COURT OF APPEALS ********************************

WASCO LLC, ) )

Petitioner-Appellant, ) )

v. ) From Wake County )

NORTH CAROLINA DEPARTMENT ) OF ENVIRONMENT AND NATURAL ) RESOURCES, DIVISION OF WASTE ) MANAGEMENT, ) )

Respondent-Appellee. )

*********************** APPELLEE’S BRIEF

***********************

ISSUES PRESENTED

I. DID THE TRIAL COURT APPLY THE CORRECT LEGAL STANDARDS FOR INTERPRETING THE SCOPE OF POST-CLOSURE OPERATOR LIABILITY UNDER THE STATE HAZARDOUS WASTE PROGRAM?

II. DID THE TRIAL COURT PROPERLY LIMIT ITS INQUIRY TO WHETHER WASCO WAS AN OPERATOR OF A LANDFILL FOR PURPOSES OF “POST-CLOSURE” LIABILITY, WHICH NECESSARILY ARISES AFTER CLOSURE?

III. DO THE UNDISPUTED FACTS SHOW THAT WASCO IS A POST-

CLOSURE OPERATOR OF THE LANDFILL AT ISSUE, MAKING WASCO RESPONSIBLE FOR FACILITY-WIDE INVESTIGATION, MAINTENANCE, MONITORING, AND REMEDIATION?

IV. ARE THERE ANY GENUINE ISSUES OF MATERIAL FACT?

Attachment B H-9

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V. HAS WASCO ABANDONED ITS PROPOSED ISSUE CONCERNING THE TIMING OF THE ALJ’S RULING ON SUMMARY JUDGMENT PRIOR TO THE DISCOVERY DEADLINE?

STATEMENT OF THE CASE

Overview

WASCO LLC (“WASCO”) has obstructed the timely and complete cleanup

of contaminated property in Swannanoa, North Carolina by assuming liability

through its words and conduct over many years and then refusing to perform its

statutory and regulatory obligations to ameliorate the harm onsite. Such liability is

based on its direct dealings with the Division of Waste Management, Hazardous

Waste Section of what is now the North Carolina Department of Environmental

Quality (“the Section”). WASCO has been the only entity with ultimate decision-

making responsibility for post-closure compliance matters since 2004.

Decades ago, an underground storage tank containing used dry cleaning

solvent (perchloroethylene) leaked. The tank was removed and the pit backfilled

as a landfill with contaminated soil left in place. In 1995, the owner of both the

contaminated land and the knitwear business responsible for the contamination

(“Winston Mills”) sold the property. At the same time, an affiliate known as

Culligan contacted the Section and agreed to step into the shoes of the property

owner. Culligan pledged to take responsibility for the contamination and followed

through on that promise.

Attachment B H-10

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WASCO, then known as United States Filter Corporation, acquired Culligan

in 1998. After Culligan’s divestiture from WASCO in 2004, WASCO contacted

the Section and agreed to fill the same shoes worn by Culligan and acquired from

the polluter. After performing post-closure operations for many years, WASCO

now claims it is inequitable for the Section to require it to continue to do so,

because Winston Mills, and not WASCO, was the polluter, and because the

Section should hold Winston Mills (or its successors, if any) liable, instead.

WASCO misunderstands the nature of post-closure liability under the State

Hazardous Waste Program, which is prospective and not retrospective. In stepping

into the shoes of Winston Mills, Culligan became an operator. In stepping into the

shoes of Culligan, WASCO became an operator. An assuming party is bound by

its conduct. Allowing WASCO to walk away from responsibilities it assumed

expressly and knowingly would allow other operators to do the same, wreaking

havoc on the State Hazardous Waste Program and the State’s ability to achieve

cleanup of contamination in the interests of human health and the environment.

Procedural History

In a letter dated 16 August 2013, concerning the requirements of the State

Hazardous Waste Program, the Section alleged that WASCO was an “operator” of

a landfill and needed to obtain a post-closure permit. (Doc. Ex. 87) WASCO

Attachment B H-11

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disputed this assertion in a 27 September 2013 Petition for a Contested Case

Hearing. (Doc. Ex. 1-11)

On 25 September 2014, after an exchange of written discovery, two formal

mediations, and an informal settlement conference, but prior to the discovery

deadline, the Section moved for summary judgment. (Doc. Ex. 12-13) WASCO

filed a motion under N.C.G.S. § 1A-1, Rule 56(f), requesting an extension of time

to respond until after it had taken the Section’s deposition. (Doc. Ex. 1259-62)

The administrative law judge (“ALJ”) denied WASCO’s Rule 56(f) motion. (R pp

17-18)

Following WASCO’s timely response, the ALJ granted summary judgment

to the Section on 2 January 2015 and renewed the denial of WASCO’s Rule 56(f)

motion. (R pp 9-16) WASCO filed a timely Petition for Judicial Review. (R pp 2-

8) Following briefing (R pp 22-83, 88-103) and arguments by the parties (R p

105), the Honorable G. Brian Collins, Jr., entered a final order and judgment

denying WASCO’s petition for judicial review and affirming both the ALJ’s

interlocutory order on the Rule 56(f) motion and the ALJ’s 2 January 2015 final

decision (R pp 105-23). WASCO timely appealed to this Court. (R pp 124-25)

Legal Framework

Subtitle C of the Resource Conservation and Recovery Act (“RCRA”), 42

U.S.C. §§ 6901 to 6992k (1976), governs the management of hazardous waste

Attachment B H-12

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through its generation, transportation, treatment, storage, and disposal, including

the clean-up of hazardous waste contamination. The United States Environmental

Protection Agency (“EPA”) is charged with administering this comprehensive

cradle-to-grave management approach, but EPA may authorize a state to operate a

state hazardous waste program, provided that a state program is at least as stringent

as the Federal program. 42 U.S.C. § 6926; (Doc. Ex. 1216). EPA has authorized

North Carolina to operate its own state hazardous waste program. 49 Fed. Reg.

48694 (Dec. 14, 1984).

The State Hazardous Waste Program consists of two coordinate parts—the

Solid Waste Management Act (“the Act”), N.C.G.S. Chapter 130A, Article 9, and

the Hazardous Waste Management Rules (“the Rules”), 15A NCAC Subchapter

13A. The Act specifically authorizes the Section to “cooperate . . . with . . . the

federal government . . . in the formulation and carrying out of a solid waste

management program,” including a program for the management of hazardous

waste. N.C.G.S. § 130A-294(a)(2), (b). The Act mandates the adoption of rules to

implement that program, and requires the Section to enforce the rules promulgated

thereunder. N.C.G.S. § 130A-294(b). Consistent with its statutory authority, the

Section has promulgated specific rules related to various subsets of the State

Hazardous Waste Program, including the rule at issue here. These rules largely

adopt and incorporate the federal RCRA regulations by reference.

Attachment B H-13

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Broadly, in accordance with RCRA, the State Hazardous Waste Program

regulates the generation, treatment, storage, and disposal of hazardous waste;

closure of hazardous waste management units; and cleanup of “post-closure”

contamination. Post-closure requires (a) maintenance of landfill units;

(b) groundwater monitoring and reporting; (c) corrective action associated with

any sources of contamination at a facility; and (d) up-front financial assurance for

the entire projected cleanup costs as a contingency, subject to amendment if the

costs change. See generally 15A NCAC 13A .0109(h) (adopting 40 C.F.R.

§ 264.117).

These requirements, including to obtain a post-closure permit or

Administrative Order on Consent (“AOC”) in lieu of a permit, apply to “owners”

and “operators” of hazardous waste management units closed as landfills with

waste in place. 15A NCAC 13A .0113(a) (adopting 40 C.F.R. § 270.1(c)). When a

tank system is removed but “not all contaminated soils can be practicably removed

or decontaminated,” then “such a tank system is then considered to be a landfill.”

15A NCAC 13A .0110(j) (adopting 40 C.F.R. § 265.197(b)).

Attachment B H-14

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STATEMENT OF THE FACTS

The record reflects the following undisputed facts:

This case concerns real property located at 850 Warren Wilson Road,

Swannanoa, North Carolina 28778, which is associated with EPA Identification

Number NCD 070 619 663 (“the Facility”). (Doc. Ex. 259-321)

Prior to backfilling the former tank pit, Winston Mills unsuccessfully sought

to achieve “clean closure” by complete decontamination. Closure of the unit as a

landfill was certified on 11 December 1992 and accepted by a predecessor agency

on 10 March 1993, after which time post-closure care began. (See, e.g., Doc. Ex.

331-56). Culligan performed post-closure operations related to the Facility,

including installation and operation of two groundwater cleanup systems.1 (Doc.

Ex. 597).

WASCO became involved with the Facility in an indirect capacity following

its 1998 acquisition of Culligan. (Doc. Ex. 88-127). Between 1999 and 2004,

WASCO’s role included supplying financial assurance to the Section on behalf of

Culligan for post-closure care associated with the Facility, including a Trust

Agreement and Irrevocable Standby Letter of Credit in 2003. (Doc. Ex. 441-88)

EPA Region 4 and the Section conducted a RCRA Facility Assessment

(“Assessment”) at the Facility in 2004 to evaluate whether corrective action might

1 Culligan received interests valued at $9 million in exchange for stepping into the shoes of Winston Mills. (Doc. Ex. 391-427)

Attachment B H-15

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be needed beyond the site of the landfill. The Assessment identified various units

of concern and recommended further investigation of five specific locations. (Doc.

Ex. 372-89).

The Culligan Group was divested from WASCO in 2004.2 (Doc. Ex. 430-31,

435-40, 761) Following the 2004 divestiture, Culligan represented in a letter to the

Section that WASCO was “assuming responsibility” for the Facility. (Doc. Ex.

129-30) The letter indicated that copies were transmitted to John Coyne, the

Director of Environmental Affairs for WASCO. (Id.)

The Section followed-up with Mr. Coyne by email, referencing Culligan’s

representation that WASCO “is now responsible for RCRA issues” at the Facility,

and asking for WASCO to complete a new Part A permit3 application as the

Facility’s operator. (Doc. Ex. 132-33)

Mr. Coyne responded that he was “very familiar with this project” and he

would “attend to the Part A application in the very near future.” (Id.) Mr. Coyne

stated that WASCO “intend[ed] on keeping the same consultants . . . and doing

2 WASCO’s affiliate was able to sell the Culligan Group for $610 million based partly on an indemnity agreement between WASCO and Culligan’s buyer related to the Facility. (Doc. Ex. 428-40, 761) 3 A post-closure permit consists of two parts. The “Part A” contains basic facility information. 15A NCAC 13A .0113(j) (adopting 40 C.F.R. § 270.13). Initial notice of hazardous waste activity and submission of a Part A mean a facility is “treated as having been issued a permit,” making it subject to “interim status” requirements, including post-closure care associated with the regulated unit (here, the former waste-PCE tank). 15A NCAC 13A .0113 (adopting 40 C.F.R. § 270.70(a)(2)); 15A NCAC 13A .0110.

Attachment B H-16

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everything else we can to maintain continuity and keep the project headed in the

right direction.” (Id.)

An updated Part A permit application was submitted to the Section in

December 2004 naming WASCO as the operator. (Doc. Ex. 261-74) Mr. Coyne

signed the Part A permit application for WASCO “under penalty of law” as to the

truth of its contents. (Id.) Mr. Coyne signed another updated Part A “under penalty

of law” in 2006, which was submitted to the Section and continued to identify

WASCO as the operator. (Doc. Ex. 276-79)

Rodney Huerter—who assumed the role of WASCO’s Director of

Environmental Affairs from Mr. Coyne—signed a third Part A permit application

“under penalty of law” in 2008, which was submitted to the Section and which

again identified WASCO as the Facility’s operator. (Doc. Ex. 281-91)

After the divestiture of Culligan, WASCO continued to provide financial

assurance for the Facility under a 2003 Trust Agreement, Standby Trust Fund, and

Irrevocable Standby Letter of Credit, which it amended in the Section’s favor for

inflation 10 times between the divestiture of Culligan and the initiation of the 2013

contested case. (Doc. Ex. 489-591) WASCO has communicated directly with the

Section throughout this time period concerning financial requirements for the

Facility. (Id.; Doc. Ex. 1240-41) Internal WASCO communications concerning

financial assurance reference “the statutory / regulatory requirements relating to

Attachment B H-17

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one of our environmental legacy sites in Swannanoa, NC.” (Doc. Ex. 526, 536,

546)

The language of the Trust Agreement identifies WASCO as the “Grantor,”

and the agreement’s purpose to “establish a trust fund . . . for the benefit of

DENR.” 4 Specifically, the Trust Agreement recites that:

. . . “DENR” . . . has established certain regulations applicable to the Grantor, requiring that an owner or operator of a hazardous waste management facility shall provide assurance that funds will be available when needed for closure and/or post-closure care of facility . . . . The Trustee shall make payments from the fund as the Secretary of [DENR] . . . shall direct, in writing, to provide for the payment of the cost of closure and/or post-closure care of facilities covered by this agreement . . . . “this Trust shall be irrevocable and shall continue until terminated at the written agreement of the Grantor, the Trustee, and the Secretary . . .”

(Doc. Ex. 470-84) The Irrevocable Standby Letter of Credit, as amended, is

subject to automatic renewal in one-year increments unless cancelled by the bank.

(Doc. Ex. 486) The most recent amendment to the Irrevocable Standby Letter of

Credit submitted prior to the filing of the contested case is in the amount of

$443,769.88. (Doc. Ex. 586)

4 The purpose of the financial assurance requirement is to “ensure that sufficient funds are available for . . . post-closure maintenance and monitoring, [and] any corrective action that the Department may require . . . even if the applicant or permit holder becomes insolvent or ceases to reside, be incorporated, do business, or maintain assets in the State.” N.C.G.S. § 130A-295.04.

Attachment B H-18

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After the divestiture of Culligan, WASCO entered into a Master Consulting

Services Agreement with Mineral Springs Environmental, P.C. (“Mineral

Springs”) for Mineral Springs to perform work at the Facility. (Doc. Ex. 878-82)

A total of 51 invoices from Mineral Springs to WASCO shows that Mineral

Springs or its subcontractors performed a variety of post-closure activities at the

Facility or related to the Facility, between November 2004 and August 2013,

which fell into the following categories:

operation and maintenance of a groundwater contamination cleanup system, including use of a subcontractor for supplies such as air filters, oil filters, oil, and separators;

groundwater sampling and analysis, including use of laboratory subcontractors;

preparation of quarterly and semi-annual reports analyzing sampling results;

project management;

assessment of two potential sources of contamination at the Facility in addition to the former tank site—specifically, an old dump site and a French drain—including use of an excavation subcontractor and a bush hog subcontractor; and

payment of utility bills for one meter labeled as “pump” and

one meter labeled as “environmental cleanup.”

(Doc. Ex. 1048-1168) Mr. Coyne or Mr. Huerter personally approved payment to

Mineral Springs for work in the above categories, totaling at least $225,927.03,

Attachment B H-19

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and approved payment directly to the utility company for additional bills, totaling

$235,984.43. (Id.; Doc. Ex. 1170-87)

The Section communicated directly with WASCO, or with both WASCO

and Mineral Springs, in numerous matters related to environmental compliance,

including but not limited to requests for preparation of a work plan for the

investigation of the former dump site and French drain identified in the 2004

Assessment, and communications regarding groundwater monitoring reports. (Doc.

Ex. 67-79, 129-92, 1243-45) In particular, Mineral Springs submitted 33 reports

associated with the invoiced post-closure activities to the Section on WASCO’s

behalf between February 2005 and May 2013, including 16 groundwater

monitoring reports that expressly identified WASCO as the “responsible party for

the site.” (Doc. Ex. 532-863)

Communications between Mr. Huerter and Mineral Springs included

(a) Mineral Springs’s requests for Mr. Huerter’s guidance or authorization on

matters related to the Facility, including changes to a Part A form, communications

with the property owner, whether groundwater sampling should continue, and

whether to advise the Section about the sale of the property (Doc. Ex. 940, 942,

950, 981); (b) Mineral Springs’s practice of updating Mr. Huerter, copying him on

communications with the Section, or forwarding such communications to him

(Doc. Ex. 153, 163, 169, 175, 931, 950, 952, 1042); and (c) Mr. Huerter’s requests

Attachment B H-20

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for copies of utility bills to compare with Mineral Springs’s invoices, and annual

cost projections (Doc. Ex. 909, 947, 1039).

Mineral Springs and/or its sub-contractors performed assessment work

related to the French drain and dump. (Doc. Ex. 756-70) Before drafting the

Assessment Report, Mineral Springs notified Mr. Huerter of preliminary findings

concerning the volume and nature of drums discovered. (Doc. Ex. 945) Mineral

Springs identified liquid in one drum that tested at a pH of 14, which is considered

hazardous based on corrosivity. (Id.) Mineral Springs expressed concern for health

and safety, recommended that Mr. Huerter notify the Section, and expressed its

belief that an immediate response and a more thorough evaluation could be

necessary. (Id.) No such concerns are reflected in the final report. (Doc. Ex. 756-

70) Instead, Mr. Huerter instructed Mineral Springs not to remove “any of the

drums, containers, or anything else,” and asked to conduct an “advanced review”

of the dump Assessment Report before its submission to the Section. (Doc. Ex.

944, 954) Mr. Huerter commented on Mineral Springs’s first draft, including by

providing two “reviewed and revised blackline document[s].” (Doc. Ex. 973-74,

1007-21, 1023-37)

Three representatives of the Section—a financial analyst, the Head of the

Facility Management Branch, and the project manager for the Facility—testified

through affidavits regarding their understanding of WASCO’s status as an

Attachment B H-21

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operator. (Doc. Ex. 1239-50) Their understanding was based on their

communications with WASCO or its representatives; review of “historic records

associated with the Facility”; and knowledge of the State Hazardous Waste

Program, which led to the 16 August 2013 letter. (Id.)

STANDARD OF REVIEW

Procedurally, in reviewing a superior court decision upholding an ALJ’s

order affirming summary judgment under the North Carolina Administrative

Procedure Act, this Court applies the same standard of review that it does in other

civil cases. N.C.G.S. § 150B-52. Summary judgment is a question of law

reviewed de novo. Hilliard v. N.C. Dep’t of Corr., 173 N.C. App. 594, 596, 620

S.E.2d 14, 17 (2005).

Even under de novo review, “an agency’s interpretation of its own

regulations will be enforced unless clearly erroneous or inconsistent with the

regulation’s plain language.” Id. at 598, 620 S.E.2d at 17. Deference is especially

warranted with “complex and highly technical regulatory program[s], in which the

identification and classification of relevant criteria necessarily require significant

expertise and entail the exercise of judgment grounded in policy concerns.”

Morrell v. Flaherty, 338 N.C. 230, 238, 449 S.E.2d 175, 180 (1994), cert. denied,

515 U.S. 1122, 132 L. Ed. 2d 282 (1995) (quotation marks omitted).

Attachment B H-22

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Substantively, “[t]he court may grant summary judgment where there is no

genuine issue of material fact and the moving party is entitled to judgment as a

matter of law.” Hilliard, 173 N.C. App. at 597, 620 S.E.2d at 17; N.C.G.S. § 1A-1,

Rule 56. This Court should affirm the grant of summary judgment if it “can be

sustained on any grounds.” Shore v. Brown, 324 N.C. 427, 428, 378 S.E.2d 778,

779 (1989). “If the correct result has been reached, the judgment will not be

disturbed even though the trial court may not have assigned the correct reason for

the judgment entered.” Id.

ARGUMENT

WASCO is responsible for the operation of the landfill at issue. Since 2004,

WASCO has had ultimate decision-making responsibility for post-closure

compliance matters—including financial assurance, groundwater sampling and

reporting, and operation of groundwater contamination clean-up systems. As part

of the next phase of post-closure care, WASCO must now obtain a post-closure

permit and fulfill a set of associated regulatory obligations related to the

investigation and remediation of contamination facility-wide, beyond the site of the

landfill. This Court should affirm the ALJ’s grant of summary judgment to the

Section, finding WASCO liable as a post-closure operator as a matter of law.

Attachment B H-23

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I. THE TRIAL COURT APPLIED THE CORRECT LEGAL STANDARDS FOR INTERPRETING THE SCOPE OF POST-CLOSURE OPERATOR LIABILITY UNDER THE STATE HAZARDOUS WASTE PROGRAM.

In the instant matter of first impression, the trial court properly examined

three different definitions of “operator” through the lens of the post-closure

program, and concluded under all of them that WASCO is an operator of the

landfill at issue.5 (R p 116 n.3) In doing so, it properly turned to federal law as the

only source of persuasive guidance offered by either party. (R p 115 para. 42)

A. The State Definitions of “Operator” Apply.

Under the challenged rule (which WASCO does not cite at all in its brief),

“operators of . . . landfills” closed with waste in place must obtain “Part B” post-

closure permits.6 See 15A NCAC 13A .0113(a) (adopting 40 C.F.R. § 270.1(c)).

WASCO neither challenges the rule as a valid exercise of the Section’s rulemaking

authority nor disputes the fact that the former storage tank was closed as a

“landfill.” Instead, WASCO claims only that it does not operate that landfill.

5 WASCO’s claim that the trial court based its decision “exclusively” on the Comprehensive Environmental Response, Compensation, and Liability Act is simply untrue. (Compare Pet Br pp 19-20 with R pp 105-23) 6 A facility must submit a comprehensive “Part B” upon request, and the combined permit mandates the facility’s compliance with various requirements contained in 15A NCAC 13A .0109, including corrective action for all releases as well as post-closure care of the regulated unit.

Attachment B H-24

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Three definitions of “operator” have application. First, the Solid Waste

Management Act defines operator as:

any person, including the owner, who is principally engaged in, and is in charge of, the actual operation, supervision, and maintenance of a solid waste management facility and includes the person in charge of a shift or periods of operation during any part of the day.

N.C.G.S. § 130A-290(a)(21) (emphasis added). This broad definition has general

application throughout Article 9 of Chapter 130A, which includes portions of the

State Hazardous Waste Program, as well as numerous other separate state

regulatory programs related to waste management.

Second, the Rules adopted by the State Hazardous Waste Program under the

authority of the Solid Waste Management Act, generally define an “operator” as

“the person responsible for the overall operation of a facility.” 15A NCAC 13A

.0102(b) (adopting 40 C.F.R. § 260.10).

Finally, for the specific purposes of permitting, including post-closure

activities, the Rules define operator as the “operator of any facility or activity

subject to regulation under RCRA.” 15A NCAC 13A .0113(a) (adopting 40 C.F.R.

§ 270.2).

While not identical, these three definitions of “operator” are consistent and

all are applicable here: the Solid Waste Management Act definition applying most

broadly; the definition in 15A NCAC 13A .0102 applying more narrowly to the

Attachment B H-25

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State Hazardous Waste Program; and the definition in 15A NCAC 13A .0113(a)

applying most specifically to post-closure activities such as the ones at issue in this

case.

WASCO is clearly an operator under all three of these definitions for the

reasons discussed below. Our appellate courts have not applied these operator

definitions to the facts of a particular case, making it proper to “look to other

jurisdictions to review persuasive authority that coincides with North Carolina’s

law.” Skinner v. Preferred Credit, 172 N.C. App. 407, 413, 616 S.E.2d 676, 680

(2005), aff’d, 361 N.C. 114, 638 S.E.2d 203 (2006).

B. The Bestfoods Operatorship Test Provides Persuasive Guidance.

The definitions of “operator” under the State Hazardous Waste Program are

consistent with federal definitions of “operator.” As noted above, North Carolina’s

Rules adopt and incorporate the federal RCRA regulations in this context.

Additionally, a similar definition of “operator” applies to another pollution-related

federal law, the Comprehensive Environmental Response, Compensation, and

Liability Act (“CERCLA”). Thus, an examination of federal case law interpreting

the meaning of operator is useful and appropriate.

In United States v. Bestfoods, 524 U.S. 51, 141 L. Ed. 2d 43 (1998), the

Supreme Court articulated a logical framework for interpreting the term “operator”

Attachment B H-26

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as applied to liability for environmental contamination.7 The Bestfoods Court

unanimously concluded:

[A]n operator is simply someone who directs the workings of, manages, or conducts the affairs of a facility. To sharpen the definition for purposes of . . . concern with environmental contamination, an operator must manage, direct, or conduct operations specifically related to pollution, that is, operations having to do with the leakage or disposal of hazardous waste, or decisions about compliance with environmental regulations.

Id. at 66-67, 141 L. Ed. 2d at 59 (emphasis added).

The State Hazardous Waste Program overlaps with CERCLA in some ways,

including with respect to the regulation of “owners” and “operators.” Similar to

the definitions contained in the State Hazardous Waste Program and cited above,

CERCLA defines operator as “any person owning or operating [a] facility.” 42

U.S.C. § 9601(20)(A)(ii). As a consequence, and due to the relative lack of RCRA

case law,8 both EPA and federal courts have recognized the appropriateness of

looking to CERCLA case law as guidance in RCRA operator cases. See, e.g.,

RO 13071 (Oct. 28, 1987) (noting a consistent interpretation of “operator” by the

7 This Court has previously recognized the persuasiveness of Bestfoods in the broader context of corporate law. Richardson v. Bank of Am., N.A., 182 N.C. App. 531, 546-47, 643 S.E.2d 410, 420-21 (2007). 8 In RCRA guidance documents, EPA has looked to a person’s “considerable autonomy to make [major] decisions without [the owner’s] involvement,” and responsibility “for the operation, management or oversight of hazardous waste activities at the facility.” RO 12174 (Jan. 27, 1984); RO 12952 (Jun. 24, 1987) (using “RO” as shorthand for the RCRA Online database, maintained by EPA at https://yosemite.epa.gov/osw/rcra.nsf/how+to+use?OpenForm).

Attachment B H-27

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courts under both RCRA and CERCLA); Tanglewood East Homeowners v.

Charles-Thomas, Inc., 849 F.2d 1568, 1574 (5th Cir. 1988) (agreeing that “the

relevant statutory definitions in [RCRA] are the same as the definitions in

CERCLA”).

Relying primarily on the text of N.C.G.S. § 130A-290(a)(21), WASCO

rejects the Bestfoods test. (Pet Br pp 19-23) In so doing, WASCO cites nothing to

connect the term “operator” back to the challenged rule—except Bestfoods and

other federal law. (Compare Pet Br p 20 (arguing that Bestfoods may be applicable

to RCRA cases in circumstances “not present here”) with Pet Br p 29 (“Bestfoods

was a CERCLA case, but the discussion of direct and indirect liability applies

here.”); see also Whitacre P’ship v. BioSignia, Inc., 358 N.C. 1, 12, 591 S.E.2d

870, 878 (2004) (denouncing the act of blowing hot and cold in a single breath).

Thus, as WASCO implicitly admits, a fact-specific analysis based on Bestfoods

and its progeny is helpful to an understanding of the present case.

II. THE TRIAL COURT PROPERLY LIMITED ITS INQUIRY TO WHETHER WASCO WAS AN OPERATOR OF A LANDFILL FOR PURPOSES OF “POST-CLOSURE” LIABILITY, WHICH NECESSARILY ARISES AFTER CLOSURE.

Post-closure operator liability is not an “invent[ed]” concept as suggested by

WASCO (Pet Br p 25), but rather a category established under RCRA and adopted

by the State for the long-term remediation of residual contamination. In fact,

Attachment B H-28

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WASCO acknowledges that RCRA imposes “a duty to provide ‘post-closure care’

on operators of facilities after they cease to operate.” (Id.)

Under the State Hazardous Waste Rules, “[o]wners and operators

of . . . landfills” must obtain post-closure permits or AOCs, “unless they

demonstrate closure by removal or decontamination.” 15A NCAC 13A .0113(a)

(adopting 40 C.F.R. § 270.1(c)). If a tank or tank system is closed with waste in

place, such unit “is then considered to be a landfill” for purposes of post-closure

and associated corrective action requirements. 15A NCAC 13A .0110(j) (adopting

40 C.F.R. § 265.197(b)). Nowhere do the Rules limit post-closure operator liability

to operators of plants or active businesses. By contrast, 15A NCAC 13A .0113(a)

explicitly applies to “operators of . . . landfills.”

Here, it is undisputed that the site of the former storage tank was closed with

waste in place in 1992—which converted the pit into a “landfill” for regulatory

purposes—and that the resulting “landfill” is subject to regulation under the post-

closure program. (Doc. Ex. 331-56) The site of the former storage tank did not

become a landfill subject to post-closure regulation until after it was closed with

waste in place. 15A NCAC 13A .0110(j) (adopting 40 C.F.R. § 265.197(b)).

Thus, the only activities relevant to determining who is an operator of that landfill

occurred during post-closure care.

Attachment B H-29

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The fact that WASCO’s involvement has been limited to post-closure

operations rather than active business operations is not a barrier to liability. The

Third Circuit expressly rejected the claim that entities “should not be held liable as

current operators because they have only managed remedial activities on the site.”

Litgo N.J., Inc. v. Comm’r N.J. Dep’t of Envtl. Prot., 725 F.3d 369, 380-82 (3d

Cir. 2013).9 Instead, the suggestion that a previously uninvolved entity cannot take

actions related to a facility that would result in post-closure operator liability is

inconsistent with EPA guidance and sound economic policy. When an entity

informs an agency that it is “assum[ing] and perform[ing] the [regulatory]

duties . . . on behalf of all of the parties,” then “the Agency will look to that

designated party” for compliance. 45 Fed. Reg. 72024, 72026-27 (Oct. 30, 1980)

(emphasis added); see also United States v. NCR Corp., 840 F. Supp. 2d 1093,

1097 (E.D. Wis. 2011) (finding that an otherwise non-liable party can “take on

direct liability” under CERCLA), rev’d on other grounds on reconsideration, 840

F. Supp. 2d 1093 (E.D. Wis. 2012). For the State Hazardous Waste Program to

function effectively, the Section has a need for regulatory certainty.

9 While WASCO uses a quotation from Litgo to imply that operators who participate in remediation “without slowing or interfering with that process” may be less culpable, the next sentence emphasizes the contrary for an operator like WASCO who has delayed remediation. 725 F.3d at 383.

Attachment B H-30

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III. THE UNDISPUTED FACTS SHOW THAT WASCO IS A POST-CLOSURE OPERATOR OF THE LANDFILL AT ISSUE, MAKING WASCO RESPONSIBLE FOR FACILITY-WIDE INVESTIGATION, MAINTENANCE, MONITORING, AND REMEDIATION.

The trial court’s decision that WASCO is a post-closure operator was based

on WASCO’s direct actions vis-à-vis the Facility and the Section and not a theory

of indirect or guarantor liability. (Pet Br pp 27-29) The record of the Section’s

course of dealing with WASCO is replete with evidence that WASCO “manage[d],

direct[ed], or conduct[ed] operations specifically related to pollution” at the

Facility, including making “decisions about compliance with environmental

regulations” related to post-closure. Bestfoods, 524 U.S. at 66-67, 141 L. Ed. 2d at

59. WASCO has been the decision-maker in post-closure regulatory matters

concerning the Facility since 2004. Likewise, via Mineral Springs and Mineral

Springs’s subcontractors, WASCO has been the only entity operating remediation

systems onsite, performing groundwater sampling and reporting, conducting

assessment activities, submitting reports to the Section, and paying for all of these

tasks and their associated utility bills.

A. WASCO Is An Operator Under The Totality Of The Circumstances.

When applying the State definitions of operator, it makes sense, as federal

courts have done in similar cases, for this Court to examine the totality of the

circumstances. WASCO’s activities fall into three categories relevant to operator

Attachment B H-31

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liability—(1) assumption of liability; (2) provision of financial assurance; and

(3) performance of post-closure operations.

The District Court for the District of Puerto Rico applied Bestfoods to

RCRA, finding an individual liable as a RCRA operator where (1) he acted as the

facility’s representative in discussions with the state regarding an air quality Notice

of Violation; (2) a facility employee deferred to him when questioned by EPA

inspectors and another employee would not allow an inspection of the facility

without his permission; (3) he authorized an inspection and spoke with EPA

inspectors about environmental regulations and a RCRA Information Request; and

(4) he signed and certified “under penalty of law” a “Notification of Regulated

Waste Activity” form on behalf of the facility. United States v. JG-24, Inc., 331 F.

Supp. 2d 14, 75 (D.P.R. 2004), aff’d, 478 F.3d 28 (1st Cir. 2007); see also United

States v. Envtl. Waste Control, Inc., 710 F. Supp. 1172, 1202-04 (1989) (rejecting

a claim pre-Bestfoods that a person’s signature on an EPA compliance document

that “affirmatively identifie[d]” him as an operator in three places “was simply [a]

mistake,” based on the person’s role in the day-to-day operations and financial

obligations of a RCRA landfill and because he agreed to indemnify a waste broker

from Superfund or cleanup-order liability).

Examining the “broad, passive language” in Bestfoods that an operator “is

one who is involved in operations ‘having to do with the leakage or disposal of

Attachment B H-32

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hazardous waste,’” the Third Circuit held that a corporation and its sole

shareholder were “operators” for purposes of CERCLA even though their only

activities at the facility “[had] been those necessary to remove and remediate the

soil and groundwater contamination.” Litgo, 725 F.3d at 380-82. The Third

Circuit noted that the shareholder-appellant had entered into an agreement with the

prior owner to remediate the property in accordance with New Jersey’s hazardous

waste management program, and to accept financial responsibility for remediation

beyond the first $100,000.00. The court emphasized that, “not only did the

[operators] have the actual authority to make decisions about compliance with

environmental regulations, they hired environmental consultants to conduct tests

and remediation operations on the Litgo Property, and they oversaw that work.”

Id. at 381, 382 n.6.

In another decision applying Bestfoods, the Sixth Circuit held that a

township which contracted with a landowner to use a waste dump was an

“operator” under CERCLA because, rather than “operating at arm’s length with a

contractor,” it (1) “made repeated and substantial ad hoc appropriations”;

(2) “made arrangements (including with the local Junior Fire Department) for

bulldozing and other maintenance when [the owner] himself proved unequal to the

task”; and (3) “took responsibility for ameliorating the unacceptable condition of

the dump, before and after scrutiny from the state government,” over a number of

Attachment B H-33

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years. United States v. Township of Brighton, 153 F.3d 307, 315-16 (6th Cir.

1998).

The District of Kansas found that the president of a corporation, while “two

layers removed from the day-to-day supervision of operations,” was directly liable

under Bestfoods as a CERCLA operator where he participated in weekly meetings

that addressed environmental compliance issues, and where “no decisions were

made at those meetings without [his] approval.” City of Wichita v. Trs. of the

Apco Oil Corp. Liquidating Tr., 306 F. Supp. 2d 1040, 1055-56 (D. Kan. 2003).

The court emphasized “the frequency of those meetings, and the fact that [the

president] was actively involved in deciding matters of environmental

compliance.” Id. at 1056.

Consistent with the operators in the above line of precedent, WASCO

identified and committed itself to the Section as a post-closure operator of the

Facility through written communication and forms submitted under penalty of

perjury; pledged irrevocable money for post-closure care; and hired, paid for, and

supervised the post-closure operations of an environmental consultant.

1. WASCO expressly assumed post-closure operator liability under penalty of law.

WASCO stepped into Culligan’s shoes in 2004 by pledging to the Section

that it would be directly responsible for the Facility. The fact that an entity “took

responsibility for ameliorating the unacceptable condition” of the Facility, as

Attachment B H-34

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opposed to the property owner, is relevant to the applicable definitions of

“operator.” Township of Brighton, 153 F.3d at 315-16; 45 Fed. Reg. 33153, 33170

(May 19, 1980); 45 Fed. Reg. at 72026-27. Also relevant is an entity’s action in

signing and submitting regulatory forms for compliance purposes. See JG-24, Inc.,

331 F. Supp. 2d at 75; Envtl. Waste Control, Inc., 710 F. Supp. at 1202-04.

When Culligan represented to the Section in 2004 that WASCO would be

taking over post-closure operations for the Facility, WASCO did not dispute that

assertion. (Doc. Ex. 129-30) Nor did WASCO dispute the Section’s follow-up

request for WASCO to formalize the transition by completing a new Part A permit

application that would make it “responsible for RCRA issues” at the Facility as the

Facility’s operator. (Doc. Ex. 132-33)

Instead, WASCO’s Director of Environmental Affairs responded that (1) he

was “very familiar with this project,” (2) he would “attend to the Part A application

in the very near future,” and (3) WASCO “intend[ed] on keeping the same

consultants . . . and doing everything else we can to maintain continuity and keep

the project headed in the right direction.” (Doc. Ex. 132) Indeed, WASCO’s

indirect involvement with the Facility between 1998 and 2004 (during its

ownership of Culligan) confirms that it acted with an eyes-wide-open

understanding of post-closure liability. (Doc. Ex. 89-127, 442-88) WASCO

executed a Part A permit application in 2004, naming itself an operator “under

Attachment B H-35

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penalty of law” as to the truth of the application’s contents, and executed amended

Part A forms in 2006 and 2008. (Doc. Ex. 261-74, 276-79, 281-91)

These undisputed facts manifestly contradict WASCO’s post hoc claims that

it was pressured to sign documents it did not understand and did so under protest.

(Pet Br p 32) As a sophisticated entity with a designated Director of

Environmental Affairs, WASCO chose in the exercise of its own business

judgment to accept operator liability and all the attendant risks that come with

cleanup of a contaminated site where the nature and breadth of contamination have

never been fully delineated. WASCO’s contemporaneous conduct shows that its

actions were the product of reasoned deliberation.

In obtaining WASCO’s confirmation, in writing, that it was assuming

operator liability, the Section was entitled to substitute WASCO for Culligan as the

operator of record and direct all regulatory communications to WASCO or its

designated consultant from that point forward. (Doc. Ex. 1239-50); 45 Fed. Reg. at

72026-27. Generally, “RCRA is written in the present tense and its regulatory

scheme is prospective.” 45 Fed. Reg. at 33170. Allowing entities to assume and

castoff operatorship at-will would drastically impair the Section’s duty to ensure

the Facility’s compliance with post-closure obligations. Regulators need to be able

to gain compliance “as quickly as possible,” including by understanding the

identity of the Facility’s operator at all times for purposes of regulatory

Attachment B H-36

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communication. (Doc. Ex. 1243-45); 45 Fed. Reg. at 33169. Thus, upholding

WASCO’s operator liability under these facts is essential to preserving the

integrity of the State Hazardous Waste Program and enabling the Section to fulfill

its mandate of protecting human health and the environment.

While the forms and written communication alone are strong evidence of

WASCO’s liability, the ALJ and trial court properly proceeded to analyze other

indicia of operatorship.

2. WASCO provided financial assurance for the Facility.

WASCO provided financial assurance to the Section on its own behalf

following the 2004 sale of Culligan, and has continued to do so through the filing

of the instant contested case. (Doc. Ex. 489-530, 1239-41) As financial assurance

pertains to the Facility’s environmental compliance, its provision is a relevant

factor. Litgo, 725 F.3d at 380-82; Township of Brighton, 153 F.3d at 315-16.

Here, the financial assurance consisted of a Trust Agreement, Irrevocable

Standby Letter of Credit, and Standby Trust Fund. (Doc. Ex. 470-86) These

documents (1) referenced “regulations applicable to [WASCO], requiring that an

owner or operator of a hazardous waste management facility shall provide

assurance that funds will be available when needed for . . . post-closure care of

facility,” and (2) were “for the benefit of” the Section. (Doc. Ex. 471) The most

Attachment B H-37

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recent letter of credit was in the amount of $443,769.88 and remains subject to

automatic renewal. (Doc. Ex. 486, 586)

WASCO’s role with regard to financial assurance has been active, not

passive. It did not simply supply financial instruments during its ownership and

then forget about them. Instead, WASCO amended the instruments in the

Section’s favor 10 times for inflation between the divestiture of Culligan and the

instant contested case. (Doc. Ex. 489-591) In internal communications concerning

financial assurance, WASCO repeatedly referenced “the statutory / regulatory

requirements relating to one of our environmental legacy sites in Swannanoa, NC.”

(Doc. Ex. 526, 536, 546) WASCO also engaged in numerous communications

directly with the Section throughout this time period concerning financial

requirements for the Facility. (Doc. Ex. 489-91, 1240-41)

Together with its submission of forms and written representations to the

Section, WASCO’s irrevocable commitment of $443,769.88 for use by the

Section, in its sole discretion, “when needed” to ensure the Facility’s compliance

with the post-closure program, speaks volumes with regard to operator liability.10

10 Even if WASCO were released from prospective operator liability, the text of these financial instruments demonstrates that the Section would have the continuing right to direct payment of the $443,769.88 for post-closure expenditures, to the extent no other solvent owner or operator is found. (Doc. Ex. 471-84, 486, 586)

Attachment B H-38

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3. WASCO performed post-closure operations, through its environmental consultant.

WASCO hired and paid for the work of Mineral Springs concerning the

Facility, between 2004 and the filing of the contested case, and also paid utility

bills associated with post-closure operations. An entity’s relationship with an

environmental consultant is relevant to operator liability. Litgo, 725 F.3d at 381,

382 n.6. As is the act of making “repeated and substantial ad hoc appropriations”

for post-closure care. Township of Brighton, 153 F.3d at 315-16.

Contrary to the representation in WASCO’s brief, the Section never

“demand[ed]” WASCO “pay a consultant” to perform post-closure activities. (Pet

Br p 36) Instead, WASCO volunteered to the Section in 2004 that it intended to

continue using the same consultant hired by Culligan. (Doc. Ex. 132) The Section

was not involved in WASCO’s negotiation of a Master Consulting Services

Agreement with Mineral Springs. (Doc. Ex. 878-82) WASCO made these

decisions on its own.

Mineral Springs’s activities included operation and maintenance of air

sparge/soil vapor extraction systems, groundwater sampling, preparation of reports

and their submission to the Section, project management, assessment activities, and

payment of utility bills. In particular, Mineral Springs submitted 33 reports

associated with the invoiced post-closure activities to the Section on WASCO’s

behalf between February 2005 and May 2013, including 16 groundwater

Attachment B H-39

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monitoring reports that expressly identified WASCO as the “responsible party for

the site.” (Doc. Ex. 593-863) Additionally, WASCO agreed to, paid for, and

supervised a limited investigation of both a French drain and a former dump site.

(Doc. Ex. 698-706, 755-70, 916-19, 944-45, 954-55, 963-75, 987-1003, 1006-37,

1062-65)

WASCO also communicated with Mineral Springs concerning post-closure

operations, edited draft documents, exercised review over invoices, and paid

invoices totaling $225,927.03. (Doc. Ex. 592-863, 876-882, 1047-1168, 1169-

1187) Mineral Springs copied WASCO on communications with the Section or

forwarded such communications to WASCO. (Doc. Ex. 90-92, 100-01, 112-13,

868-69, 887-88, 889-90, 979-80) Moreover, WASCO made direct payments of

$235,984.43 in utility bills. (Doc. Ex. 1169-87) The record reflects the scope and

breadth of WASCO’s involvement and refutes its claim that any oversight was

minor.

B. WASCO’s Unpreserved “Protective Filer” Defense Lacks Merit.

Acting as an appellate tribunal, the trial court properly treated WASCO’s

“protective filer” defense as unpreserved because WASCO failed to present it to

the ALJ. See Amanini v. N.C. Dep’t of Human Res., 114 N.C. App. 668, 681, 443

S.E.2d 114, 121-22 (1994) (refusing to consider an argument raised for the first

time to the State Personnel Commission where the matter had previously been

Attachment B H-40

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heard by an ALJ). Likewise, this Court should decline to consider it under N.C. R.

App. P. 10 (stating that issues not properly raised and ruled on at the trial level will

not be reviewed on appeal).

In any event, the protective filer doctrine is inapplicable. Under this

doctrine, facilities that “submitted their Part A application, but have never

conducted a regulated activity requiring a permit” are not considered to be subject

to regulation. 50 Fed. Reg. 38946, 38948 (Sept. 25, 1985). In other words, the

doctrine only applies to facilities where “hazardous wastes were never actually

stored, treated, or disposed” onsite. RO 12590 (Mar. 24, 1986). Here, closure of

the former perchloroethylene tank as a landfill converted the Facility into a

hazardous waste disposal site and amounted to a regulated activity triggering post-

closure requirements. 15A NCAC 13A .0110(j) (adopting 40 C.F.R.

§ 265.197(b)).

Whatever WASCO’s motives for assuming post-closure liability, it clearly

did much more than submit forms. Instead, as discussed above, it provided

financial assurance, made decisions about regulatory compliance, paid for and

supervised the work of an environmental consultant, and paid utility bills for the

operation of groundwater pollution cleanup systems. The Quaker State case, in

which an owner/operator mistakenly identified waste managed onsite as hazardous

but never actually engaged in a regulated activity, is distinguishable given

Attachment B H-41

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WASCO’s active management of the remediation of the landfill. (Pet Br pp 33-34);

In re Quaker State Oil Ref. Corp., No. RCRA-III-116, 1986 EPA ALJ LEXIS 22

(Feb. 6, 1986).

WASCO can point to nothing in the record where it expressed doubts as to

its operator status to the Section prior to submitting the forms and agreeing to be

bound, or where it sought to do so on a contingent basis. No such record exists.

On the contrary, the undisputed facts discussed above demonstrate WASCO’s

exercise of a reasoned business judgment in 2004. Its attempts to extricate itself

from operator liability did not begin until years later, when the Section sought to

begin the next phase of post-closure cleanup consistent with the applicable rules

and regulations requiring the investigation and remediation of property-wide

contamination.

In sum, the above cases and analysis demonstrate the logic of applying a

totality-of-the-circumstances approach when examining the State definitions of

operator and their focus on the question of who is “principally engaged in,” “in

charge of,” or “responsible for the overall operation” of the landfill—and, thus, the

Facility—at issue. Under such an approach, the answer is WASCO.

Attachment B H-42

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IV. AS WASCO ADMITS, THERE ARE NO GENUINE ISSUES OF MATERIAL FACT.

By arguing in its third issue that “the undisputed facts show that WASCO is

not an operator” (Pet Br pp 27-38) and asking the judgment to “be reversed” rather

than remanded (Pet Br p 19), WASCO admits that the instant matter was ripe for

disposition. Its claim that a “plethora of contested material facts” exists is further

rebutted by its failure to identify a single factual issue in dispute. (Pet Br p 39)

Rather than challenging any of the statements of fact characterized as undisputed

by the trial court, WASCO’s true dispute is with the court’s legal conclusions.

First, while WASCO suggests the existence of a factual dispute concerning

financial assurance (Pet Br p 39), WASCO does not actually challenge the wording

of the Trust Agreement, Irrevocable Standby Letter of Credit, or amendments

thereto, which the trial court relied on. (Pet Br p 30 (“These instruments are not in

dispute.”)) Instead, WASCO disputes the court’s use of those instruments as a

basis for its operator liability and the court’s conclusion that WASCO provided

those documents in its own capacity rather than as a guarantor. These are disputes

of law.

Second, WASCO disputes the trial court’s legal conclusion that it “took

responsibility [for] ameliorating unacceptable conditions at the site.” (Pet Br p 39)

WASCO does not dispute the fact that it “agree[d] to perform certain ameliorative

services,” but argues that it did so under “duress” rather than volitionally. (Pet Br

Attachment B H-43

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pp 39-40) Duress, which is a question of law and not fact, is an unpreserved

theory that was never pled with particularity in OAH or decided by the ALJ or trial

court.11 N.C.G.S. § 1A-1, Rule 9(b); N.C. R. App. P. 10; see also Stewart v.

Stewart, 61 N.C. App. 112, 116, 300 S.E.2d 263, 265 (1983) (explaining “[s]ound

policy considerations” that caution against “amorphous allegations and forecasts of

evidence of duress, frivolous in nature, [which] could consume valuable court

time, delay resolution of disputes, and tend to force settlements less than equitable

to the party accused of duress”).

Third, WASCO disputes the trial court’s legal conclusion that it “actively

participated and exerted control over” environmental matters at the Facility,

arguing that it “did not exercise any substantial discretion or control over” the

work of Mineral Springs. (Pet Br p 40) As WASCO does not challenge any of the

facts the trial court relied on concerning its dealings with Mineral Springs, its true

dispute is one of law. Based on the undisputed facts, the trial court reached a

proper conclusion concerning WASCO’s role with regard to the Facility.

11 The suggestion that duress could apply here is completely without basis in light of the undisputed facts discussed above. Duress occurs “where one, by the unlawful act of another, is induced to make a contract or perform or forego some act under circumstances which deprive him of the exercise of free will.” Link v. Link, 278 N.C. 181, 194, 179 S.E.2d 697, 704-05 (1971). The threat of legal proceedings only amounts to duress if coupled by “the corrupt intent to coerce a transaction grossly unfair to the victim and not related to the subject of such proceedings,” as opposed to the good-faith attempt to enforce a right reasonably believed to exist. Id. Otherwise, the settlement of disputes would be “impossible.” Id.

Attachment B H-44

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Finally, WASCO argues that it is “entitled to an evidentiary hearing to prove

that Dyna-Diggr [the current property owner]” is “the person with overall

responsibility of the facility.” (Pet Br p 40) As discussed throughout this brief,

operator status is a question of law, not fact. Moreover, the only question at issue

in the present appeal is whether WASCO is an operator of a landfill for purposes

of the post-closure regulations adopted in the State Hazardous Waste Program.

Dyna-Diggr’s liability is not before this Court.12 For all of these reasons, WASCO

has failed to raise a genuine issue of material fact, and the Section was entitled to

judgement as a matter of law.

V. WASCO HAS ABANDONED ITS PROPOSED ISSUE CONCERNING THE TIMING OF THE ALJ’S RULING ON SUMMARY JUDGMENT PRIOR TO THE DISCOVERY DEADLINE.

While identified in its list of proposed issues, WASCO has raised no

argument in its brief to this Court concerning the ALJ’s denial of its motion under

N.C.G.S. § 1A-1, Rule 56(f). (R p 133) WASCO raised this issue in passing to the

trial court, which noted that WASCO “failed to identify any legal grounds to

support its bald claim” in this respect. (R p 122) The trial court concluded,

nevertheless, that WASCO had not been prejudiced by the timing of the Section’s

12 As WASCO admits, “there can be more than one RCRA ‘operator’ in some cases.” (Pet Br p 40) In fact, joint and several liability applies. E.g., RO 12703 (Aug. 1, 1986) (“EPA considers both the owner (or owners) and operator of a facility to be responsible for regulatory compliance. For this reason, EPA may initiate an enforcement action against either the owner, the operator, or both.”).

Attachment B H-45

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motion and affirmed the ALJ’s denial. (Id.) Thus, assuming arguendo that

WASCO preserved this issue before the trial court, N.C. R. App. P. 10, it has

nevertheless been abandoned, N.C. R. App. P. 28(b)(6); Viar v. N.C. DOT, 359

N.C. 400, 402, 610 S.E.2d 360, 361 (2005) (“It is not the role of the appellate

courts, however, to create an appeal for an appellant.”).

* * * *

The entire case revolves around one agency assertion—that WASCO is an

operator of a landfill for purposes of 15A NCAC 13A .0113(a) (adopting 40 C.F.R.

§ 270.1(c)). Consistent with State statutory and regulatory definitions and the

nature of the post-closure program, the Section has taken the reasonable position

that the focus must be on pollution-related operations. Whether labeled as the

person responsible for the overall operation of the landfill or the person principally

engaged in and in charge of post-closure operations, WASCO’s words and actions

establish its liability as a matter of law.

CONCLUSION

For all of the above reasons, this Court should affirm the trial court’s order

affirming the ALJ’s final decision granting summary judgment in favor of the

Section.

Attachment B H-46

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Respectfully submitted, this the 12th day of July, 2016.

ROY COOPER Attorney General Electronically Submitted

Elizabeth A. Fisher Assistant Solicitor General State Bar No. 38161 efisher@ncdoj.gov N.C. R. App. P. 33(b) Certification: I certify that the attorney listed below has authorized me to list his name on this document as if he had personally signed it.

Daniel Hirschman Special Deputy Attorney General Environmental Division State Bar No. 27252 dhirschman@ncdoj.gov

N.C. Department of Justice Post Office Box 629 Raleigh, NC 27602 Telephone: (919) 716-6900 Facsimile: (919) 716-6763 Counsel for the State of North Carolina

Attachment B H-47

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CERTIFICATION AS TO WORD COUNT In accordance with Rule 28 of the North Carolina Rules of Appellate

Procedure, the undersigned hereby certifies that this is the principal brief of the

State-Appellee, which contains no more than 8,750 words (including footnotes and

citations but excluding covers, index, table of authorities, certificate of service, and

certificate of compliance), as verified by the undersigned’s word processing

program.

This the 12th day of July, 2016.

Electronically Submitted Elizabeth A. Fisher Assistant Solicitor General

Attachment B H-48

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CERTIFICATE OF SERVICE

This is to certify that a copy of the foregoing APPELLEE’S BRIEF, which

was filed electronically with the appellate courts’ official website, was served on

this the 12th day of July, 2016, upon counsel for Appellant electronically via

email, to counsel’s correct and current email address as follows:

David Guidry KING & SPALDING LLP 100 N. Tryon Street, Suite 3900 Charlotte, NC 28202 dguidry@kslaw.com ROY COOPER Attorney General Electronically Submitted

Elizabeth A. Fisher Assistant Solicitor General

Attachment B H-49