A redevelopment agency may sue a landowner to force cleanup of contaminated property within a redevelopment project area, the Fourth District Court of Appeal has ruled. The court further held that the redevelopment agency need not have expended resources on the cleanup before filing a lawsuit.

The Polanco Redevelopment Act [Health and Safety Code §§ 33459 et seq.] “expressly provides redevelopment agencies with the power to take ‘any actions’ necessary to remove hazardous substances from ‘property within a project area, whether the agency owns that property or not,’” Justice James McIntyre wrote for the court. “Nothing within the act requires a redevelopment agency to sustain ‘injury’ through the actual payment of costs in order to compel a responsible party to remediate contaminated property within its territory.”

The property in question is the Campbell Shipyard and an adjacent parking lot, which the San Diego Unified Port District proposed to develop for a convention center hotel. San Diego Gas & Electric Co (SDG&E), previously operated a manufactured gas plant near the property. In 1995, the San Diego Regional Water Quality Control Board issued a cleanup and abatement order for the parking lot because of contaminated soil and groundwater. The San Diego Redevelopment Agency contended that SDG&E’s gas plant caused the contamination and, therefore, SDG&E was the “responsible party” for cleanup under the Polanco Act. But, apparently, no cleanup was forthcoming.

In 2001, the Redevelopment Agency and the Port District signed a joint powers agreement (JPA) primarily for the purpose of cleaning up the site and identifying responsible parties. The agency then sent SDG&E a 60-day notice identifying the utility as a responsible party and asking how it would clean up the site. The utility did not respond, so in November 2002 the agency filed a lawsuit seeking to compel SDG&E to remove the hazardous substances.

San Diego County Superior Court Judge Sheridan Reed ruled for SDG&E, finding that the Polanco Act did not authorize the agency’s lawsuit and that because the JPA immunized the agency from direct costs, the agency had no standing to file a lawsuit.

The agency appealed, and a unanimous three-judge panel of the Fourth District, Division One, overturned the lower court.

The appellate panel answered two questions: Does the Polanco Act allow redevelopment agencies to bring lawsuits to compel parties to remedy environmental contamination within a project area? If so, does the redevelopment agency have to show financial injury or damage to win the case? The answers were yes to the first question, and no to the second.

A reading of the statute and of the legislative history supports the conclusion that the agency may file the lawsuit to compel action by SDG&E, the court ruled. SDG&E argued that a plain reading of the law and the legislative history supported the opposite conclusion, but the court ruled that the utility relied on its own interpretation and “provided no authority to support its assertion.”

State law promotes redevelopment of blighted areas by remedying “injurious conditions through the employment of all appropriate means,” Justice McIntyre wrote, citing Health and Safety Code § 33037, subdivision (a). “The existence of hazardous waste on a property is considered to be a blight-causing condition that permits a redevelopment agency to use its authority under the act,” he wrote. Moreover, the Polanco Act gives the agency specific authority to take “any actions” to remove hazardous substances within a project area.

“Thus, the plain language of the act allows a redevelopment agency to compel a responsible party through a civil action to remedy or remove hazardous substances,” McIntyre wrote.

The court then dealt with the issue of whether the Redevelopment Agency had to show it had sustained injury — namely, spent money — because of the contamination before filing the lawsuit. SDG&E said yes, but the court said no and again pointed to the language of the statute.

The court also rejected the argument that the agency-port district JPA — which assigned all costs to the port district — prevented the agency from suing SDG&E. The Polanco Act gives the agency the right to seek a court order, and a separate contract “does not affect this right,” the appellate panel ruled.

The Case:
Redevelopment Agency of the City of San Diego v. San Diego Gas & Electric Company, No. D041882, 03 C.D.O.S. 7955, 2003 DJDAR 9876. Filed August 28, 2003.
The Lawyers:
For the Redevelopment Agency: Linda Beresford, Foley & Lardner, (619) 234-6655.
For SDG&E: C. Larry Davis, Sempra Energy, (619) 696-2000.