National Clothesline

An allied trades firm may not be held for contamination clean-up costs incurred by a cleaner that used its equipment and services, according to a Texas Supreme Court decision handed down June 10.

The long-running court battle between Pilgrim Enterprises of Houston and R. R. Street & Co. Inc. will continue, however, as the case was remanded by the Supreme Court to the trial court for further proceedings on other issues involved in the suit.

The contamination came to light in 1994 when the Robertson family, which had owned Pilgrim Laundry and Cleaners for nearly 50 years, underwent an environmental assessment as part of the sale of the business that included a chain of drycleaning plants in Houston and San Antonio.

Pilgrim spent $7 million on remediation, then sued Street and several other suppliers of equipment and chemicals, contending that they were responsible parties under state law.

The other companies settled, but Street took the battle to court. In 1998, a jury in a Houston district court decided in Street’s favor, but the district court judge ruled that Street was still liable as an “arranger” for hazardous waste disposal and ordered the company to pay $1.5 million of Pilgrim’s cleanup costs.

After hearing an appeal of the district court ruling, the state court of appeals in 2001 issued a mixed decision. The court said the case should go back to the lower court and that a jury should make factual determination concerning Street’s liability and the judge should apportion the costs. But it left in tact the portion of the ruling that made Street’s liable as an “arranger” for disposal of solid waste.

In last month’s ruling, the Supreme Court said the lower courts erred in holding Street liable as an arranger.

“The supplier was not an arranger subject to potential liability under (the Texas Solid Waste Disposal Act) based upon its giving advice regarding waste disposal,” the court said. A Street representative had told Pilgrim operators that they could dispose of separator water “the same way everybody else was doing it, pouring it down the drain,” the court noted. That advice, indeed, did reflect a common industry practice at the time.

But, the court added, “Street did not actually control the specific method and manner in which Pilgrim disposed of the separator water.”

The court said that if providing technical services and advice were to create an “arranger” liability, companies would be discouraged from this type of information.

That portion of the decision was welcomed by industry allied trades firms. The Textile Care Allied Trades Association called it “a huge victory for all manufacturers and distributors in the textile care industry, especially those that manufacture or distribute hazardous substances and waste.”

“It would be hard to underestimate the importance of this court decision. Whether it is a drycleaning chemical or effluent from a laundry machine, the precedent set by this ruling touches nearly every distributor and manufacturer in our industry,” said TCATA president Bill Odorizzi.

TCATA and the Halogenated Solvents Industry Alliance had filed a friend of the court brief with the Texas Supreme Court making those points.

Another area of the case that industry associations had taken a position on also received favorable consideration from the Texas court. That issue involved whether equipment used to recycle perc amounts to “processing of hazardous waste.” Pilgrim contended that because Street provided the equipment, the company had “arranged to process” the waste.

The International Fabricare Institute and the Southwest Drycleaners Association addressed that issue in a friend of the court brief filed in 2003, saying that if recycling perc constituted processing hazardous waste, all cleaners using perc would become treatment storage or disposal facilities and face such additional regulations that would leave them unable to operate.

In rejecting Pilgrim’s argument, the court noted that EPA has specifically exempted closed loop recycling processes and even referenced solvents returned for use as cleaning agents in drycleaning operations.

Another aspect of the case concerned whether Street was a contributor to the contamination because its representative had poured waste samples of water containing perc into sinks and toilets at Pilgrim properties. On visits to Pilgrim facilities, the Street representative conducted titration tests to determine the detergent concentration. After testing, the contents of the test vials were disposed into the waste drains.

Street argued that the mixtures did not constitute “solid waste” under the domestic sewage exclusion. Pilgrim contended that the perc in the test samples leaked through the sewers and contributed to the contamination.

The Supreme Court said there was conflicting testimony as to whether the sewage pipes leaked at Pilgrim’s facilities. “We… hold that a fact issue exists as to whether the supplier is potentially liable as an arranger based upon its own disposal of test-vial waste fluid,” the court said.

“Because there were fact issues that needed to be resolved as to both liability and damages, the Court of Appeals erred in failing to remand the SWDA claim for a new trial,” the Supreme Court concluded. “Accordingly, we reverse the Court of Appeals’ judgment in part and remand to the trial court for further proceedings.”