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San Diego Unified Port District v. General Dynamics Corp.

United States District Court, S.D. California

June 20, 2017

SAN DIEGO UNIFIED PORT DISTRICT, Plaintiff,
v.
GENERAL DYNAMICS CORPORATION, LOCKHEED MARTIN CORPORATION, Defendants. SAN DIEGO UNIFIED PORT DISTRICT, Plaintiff,
v.
LOCKHEED MARTIN CORPORATION, LOCKHEED MARTIN ENGINEERING & SCIENCES COMPANY, Defendants.

          ORDER GRANTING MOTION TO CONFIRM SETTLEMENT AND BAR AND DISMISS CLAIMS [ECF NO. 105]

          HON. CYNTHIA BASHANT, UNITED STATES DISTRICT JUDGE

         These consolidated actions arise out of environmental contamination emanating from two properties located alongside the San Diego Bay. The San Diego Unified Port District seeks relief against General Dynamics Corporation and Lockheed Martin Corporation for allegedly contaminating sediment in the San Diego Bay while conducting industrial and research activities at the properties. Presently before the Court is the parties' motion to confirm their combined settlement of these actions. (ECF No. 105.) The parties seek an order that approves their settlement, dismisses these actions, and provides contribution protection under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) and California Code of Civil Procedure sections 877 and 877.6. (Id.) The Court held a hearing on the motion. (ECF No. 111.) For the following reasons, the Court GRANTS the parties' motion.

         I. BACKGROUND

         A. The Harbor Island East Basin Sediment Area

         These actions concern contamination of the Northwest Portion of the Harbor Island East Basin of the San Diego Bay.[1] (Settlement Agreement § 1.27, Ex. A, ECF No. 106-1.)

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         Since 1962, the Port District has held and managed the properties in this area in trust on behalf of the people of the State of California. In doing so, the Port District has leased to tenants two adjacent properties that border the East Basin-the Tow Basin Site and the Marine Terminal and Railway Facility Site. (See id.) As described below, state agencies have determined that the use of these sites led to contamination of the sediment in the East Basin, which the parties now seek to remedy in resolving these consolidated cases.

         1. Tow Basin Site

         The Tow Basin Site is a 61, 630 square foot property located at 3380 North Harbor Drive, San Diego, CA 92101, that has historically been the site of various industrial facilities. (Settlement Agreement Ex. A; San Diego Regional Water Quality Control Board Draft Cleanup and Abatement Order No. R9-2017-0021 (“CAO”) ¶ 2(a), Settlement Agreement Ex. B.) Previously, the Tow Basin Site included a 13, 000 square foot building that contained an “open-top concrete water tank, ” which was used to test ship hull designs. (CAO ¶ 2(a).) Further, the property bordered several outfalls that emptied into the East Basin. (Settlement Agreement Ex. A.)

         Over time, the Port District leased the Tow Basin Site to General Dynamics, Lockheed Martin, and the now-defunct Rohr Marine Inc. (Mot. 6:18-19; see also COA ¶ 3.) Initially, from 1954 to 1970, a General Dynamics subsidiary operated the Tow Basin Site. (Id. ¶ 3.a.) It used the facility “to test and develop hull designs for deep submersible vehicles and seaplanes.” (Id.)

         Next, in 1970, Lockheed Martin purchased the building at the Tow Basin Site. (CAO ¶ 3.b.) The company and its entities operated the site from 1970 to 1983, and they similarly used the site's building and open-top concrete water tank to “test various designs of boats, submersible vehicles, and seaplanes.” (Id.)

         Then, in 1983, Rohr Marine purchased the structure at the Tow Basin Site from Lockheed Martin and leased the underlying land from the Port District. (COA ¶ 3.c.) Rohr Marine conducted industrial operations at the site until 1986. (Id.) In 1986, the Port District took ownership of the site's building and regained possession of the land after Rohr Marine “relinquished the facility due to bankruptcy.” (Id.) The Port District then again leased the site to Lockheed Martin from 1986 until 1991, at which time the facility reverted back to the Port District. (Id. ¶ 3.b.)

         2. Marine Terminal and Railway Facility Site

         The Marine Terminal and Railway Facility Site is located at 1160 Harbor Island Drive, San Diego, CA 92101. (Settlement Agreement Ex. A.) The site consists of (i) a laboratory building and (ii) a pier and railway that extends into the East Basin of the San Diego Bay. (CAO ¶ 2(b).)

         From 1966 to 2015, the Port District leased the Marine Terminal and Railway Facility Site to various Lockheed Martin entities. (CAO ¶ 3(b).) The facility was used for “a variety of maintenance and industrial activities.” (Id. ¶ 2(b).) These activities included the operation of a “deep submergence vehicle” and “deep submergence rescue vehicle maintenance operations.” (Id. ¶ 3(b).) General Dynamics was not involved in the operation of this site. (See id.)

         B. State Agency Proceedings

         In the 1990s, the California Environmental Protection Agency's Department of Toxic Substances Control began investigating soil and groundwater contamination at the Tow Basin Site. On January 9, 1998, the Department issued an Imminent or Substantial Endangerment Remedial Action Order (“RAO”) for the property. (RAO, ECF No. 105-8.) The RAO identified polychlorinated biphenyls (“PCBs”), total petroleum hydrocarbons (“TPH”), mercury, and volatile organic compounds (“VOCs”) as contaminants found at the Tow Basin Site. (Id. § 2.4.) It also identified the Port District, General Dynamics, and Lockheed Martin as the parties responsible for remediating the contamination. (Id. § 2.1.)

         Shortly after the issuance of the RAO, the parties submit that they entered into an agreement to cooperate in the investigation and cleanup of hazardous substances at the Tow Basin Site. (Mot. 3:26-4:2.) After completing cleanup efforts for the soil and groundwater at the site in the 2000s, only the investigation into contaminated sediment at the site remained. (Id. 4:2-5.) The California Department of Toxic Substances Control transferred oversight for the sediment cleanup to the California Regional Water Quality Control Board for the San Diego Region (“Regional Water Board”). (Id.; see also CAO.)

         In 2009, the Regional Water Board began investigating marine sediment impacts at the Tow Basin Site and instituted administrative proceedings. (See CAO ¶ 2; Gigounas Decl. ¶ 7, ECF No. 105-5.) Then, in 2011, the Regional Water Board instituted a separate proceeding relating to sediment contamination at the adjacent Marine Terminal and Railway Facility Site. (Regional Water Board Investigative Order No. R9-2011-0026, ECF No. 105-4.)

         Following additional investigations and several mediation sessions with the parties, on October 21, 2016, the Regional Water Board issued an Administrative Draft Cleanup and Abatement Order (“CAO”) that covered both the Tow Basin and Marine Terminal and Railway Facility Sites. (Gigounas Decl. ¶ 8.) The current version of the CAO provides that there have been “unauthorized discharges of wastes” at the sites into sediment in the East Basin. (CAO ¶ 2, Settlement Agreement Ex. B.) Due to these releases of “[PCBs], metals, and other pollutant wastes, ” contaminants have now accumulated in the East Basin's sediment. (Id.) Further, the Regional Water Board determined that the “concentrations of pollutants in the sediments of the East Basin of San Diego Bay are at levels that may have an impact on human health and the benthic community, and may have an impact on aquatic-dependent wildlife, thus creating a condition of pollution and nuisance in waters of the State.” (Id. ¶ 8.) Thus, the CAO directs that all necessary corrective actions be taken to clean up and abate the contaminants in the sediment to acceptable cleanup levels. (Id. ¶¶ 12, A.)

         C. The Port District's Lawsuits

         1. Tow Basin Action

         While the state agency investigations were ongoing, the Port District commenced the lead case, San Diego Unified Port District v. General Dynamics Corp., No. 07-cv-01955-BAS-WVG (S.D. Cal. removed Oct. 9, 2007) (“Tow Basin Action”). The Port District filed the Tow Basin Action in 2005 in state court against Lockheed Martin and General Dynamics. (Compl., Notice of Removal Ex. A, ECF No. 1.) The action seeks to (i) recover costs the Port District allegedly incurred to investigate and remediate the Tow Basin Site and (ii) compel Defendants to perform further investigation and cleanup at the site. (Id. ¶¶ 13-48.)

         In 2006, the parties submitted the Tow Basin Action to mediation and entered into an Interim Cost Sharing Agreement where they agreed to again share investigation costs for the site. (Gigounas Decl. ¶ 11.) In 2007, Lockheed Martin and General Dynamics removed the action to federal court. (ECF No. 1.) The parties later submitted a phased discovery plan, which the Court approved. (ECF No. 10.) This plan provided the parties would initially (1) investigate the contamination at the site, (2) determine whether sediment remediation would be required, and (3) assess the anticipated costs of any remediation. (Id.) Since approval of the phased discovery plan, the Tow Basin Action has not proceeded past the initial phase or been actively litigated. The parties have provided periodic case management statements to the Court as they attempted to mediate a resolution of the action and develop a plan to clean up the site that was acceptable to the Regional Water Board and all parties. (See generally ECF Nos. 14-93.)

         2. Marine Terminal Action

         The Marine Terminal and Railway Facility Site is the subject of the member case, San Diego Unified Port District v. Lockheed Martin Corp., No. 16-cv-02026-BAS-KSC (S.D. Cal. filed Aug. 11, 2016) (“Marine Terminal Action” or “MTA”). The Port District commenced the Marine Terminal Action on August 11, 2016, against Lockheed Martin and one of its subsidiaries under state law and CERCLA. (MTA, ECF No. 1.) The action similarly seeks to (i) recover costs the Port District has allegedly incurred to investigate contamination at the Marine Terminal and Railway Facility Site and (ii) compel Lockheed Martin to remediate the property. (See Id. ΒΆΒΆ 27-91.) Lockheed Martin has moved to dismiss several of the Port District's causes of action. (MTA, ECF No. 19.) However, on February 2, 2017, the Court stayed ...


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