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Under California's Polanco Act, owners of a right-of-way to property are not owners or operators for subsurface contamination they did not cause and had no duty to investigate

California's Polanco Act provides a powerful (some would say one sided) tool for Redevelopment Agencies to force the remediation of a site subject to redevelopment, or to cause PRP's to reimburse such agencies for the remedial cost outlays. [As an aside, it should be noted that Governor Brown has proposed doing away with redevelopment agencies as part of his solution to California's budget crisis. See Update: Brown Signs Budget Bills, Forces Redevelopment Agencies' Hand.]

In 1968, in order to make room for the construction of a freeway interchange between Interstate 5 and State Highway 4 in Stockton, California, the State of California entered into a contract with several railroad companies, predecessors-in-interest to the defendants in the case, to relocate existing railroad track from the proposed interchange site to a nearby State-owned parcel. Under the agreement, the Railroads planned and approved grading and drainage improvements to the property made by the State, including the installation of a french drain underneath the new roadbed. The "french drain" (a buried perforated pipe) was installed under the roadbed to facilitate drainage. The railroads sold their interest in the property to the Redevelopment Agency in 1988. In 2004 the Redevelopment Agency sold a portion to a developer, and indemnified the developer as to any contamination. Site assessment found petroleum contamination at the site. The petroleum contamination had likely traveled along the path of the french drain; a nearby petroleum facility was identified as the likely source. The Redevelopment Agency sued under the Polanco Act and nuisance theory; the railroads removed to Federal court under diversity jurisdiction.

Railroad Tracks

The District Court granted summary judgment for the Agency under nuisance theory and one of the Polanco Act claims.

In Redevelopment Agency v. BNSF Railway Co. et al, 2011 U.S. App. LEXIS 13135 (9th Cir.: 6/28/11), the Court of Appeals held that the railroads were not liable for the contamination under a nuisance theory. The railroads did not create or assist in creation of the nuisance based on installation and maintenance of the french drain, which was intended to move water, not contaminants. The railroads also did have a duty to inspect the subsurface for contamination. The railroads were thus not liable under the Polanco Act's reference to Water Code Section 13304(a) since they did not "cause or permit" the discharge of contaminants. They also were not liable under the Polanco Act's reference to the Comprehensive Environmental Response, Compensation, and Liability Act; as holders of a right-of-way or easement, they were not "owners" or "operators" of the property within the meaning of 42 U.S.C. Section 9607(a). The Court thus granted judgment in favor of the railroads.