The Eastern District of California just gave cities across the country another reason to upgrade their crumbling, outdated sewer systems.

In Mission Linen Supply v. City of Visalia, No. 1:15-CV-0672 AWI EPG (E.D. Cal. Feb. 5, 2019), the Eastern District of California addressed the proper apportionment of future response costs for perchloroethylene (PCE) contamination from former dry cleaning operations. The plaintiff, Mission Linen Supply, was a former owner of a dry cleaner in Visalia, California. Mission Linen Supply was actively remediating the PCE contamination, and brought a CERCLA contribution action against the city for contributing to the spread of contamination off-site.

The city owned and operated three sanitary sewer lines and two storm sewer lines running next to or through the former dry cleaner property. The sewer lines were installed at various times, beginning as early as in the 1920s. The sewer was installed “below general industry standards,” because the pipes did not slope downward and were buried too shallow, meaning that they would not have adequate supporting strength. The city also did not properly maintain the sewers in accordance with general industry practices. The pipes had many defects, “including holes/broken pipes, exposed soil, cracks, sags, offset/separated joints, missing portions of pipe, root intrusion, debris, and deposits of material that indicate blockages and surcharge conditions.” In fact, there was no sign that the city had ever cleaned the sewers, or conducted any regular maintenance, repair or inspections.

The city was also aware that the sewers contained levels of PCE exceeding drinking water limitations, yet the city did nothing to address those levels.

In a surprising ruling, the court found the city liable for fifty percent of all off-site necessary future response costs. Based on the testimony and evidence provided, the court held that PCE was released into the environment as a result of the sewer installation and maintenance defects, and therefore the city is responsible for a portion of the cleanup costs. The court apportioned each party’s liability based on the geographic features of the PCE plume and held each party responsible for half of the off-site necessary response costs.

Although the city’s failures to properly install and maintain its sewers, in this case, were extreme, the case should nonetheless serve as a warning to municipalities to take seriously the responsibility to maintain their infrastructures. Otherwise, they might just find themselves holding the bill for a costly environmental cleanup. 

Significantly, cities and towns in states like Indiana that don’t enforce the absolute pollution exclusion in CGL policies are likely to have an alternative source of funding available via historical insurance policies.