The developer of a proposed low-level radioactive waste dump near Needles has won the right to sue the State of California for damages.
The Fourth District Court of Appeal ruled against U.S. Ecology Inc.'s request that the court order the state to permit construction of the facility — a decision that suggests the project remains dead. But the court did find that there was a basis for U.S. Ecology to seek compensation for damages because it spent millions of dollars based on promises made by the state. The court sent the case back to San Diego County Superior Court for further proceedings.
The history of the Ward Valley site as a potential radioactive waste receptacle reaches back to the early 1980s, when Congress ordered the states to find regional solutions for disposing of the material. In California, the Department of Health Services (DHS) prepared a low-level radioactive waste (LLRW) management plan and, under direction from the Legislature, began pursuing creation of a dump.
In 1985, DHS selected U.S. Ecology as the license-designee to develop a radioactive waste dump. After extensive study, U.S. Ecology in 1988 settled on 1.7-square-miles of federally owned land in the Ward Valley about 15 miles west of Needles. U.S. Ecology continued to collect detailed environmental information about the site while the State Lands Commission moved to acquire the land. In 1989, U.S. Ecology submitted a 7,000-page project application to DHS. Two years later, DHS and the federal Bureau of Land Management issued a joint environmental impact report/environmental impact statement that said the dump would pose no significant adverse impacts. The state then issued a draft license to U.S. Ecology.
However, the State Lands Commission withdrew its application to acquire the site at the urging of Gray Davis, who at the time was state controller and a member of the commission. The Wilson administration then pursued the land through different means but could not complete a deal before the Clinton administration arrived in Washington. Clinton Interior Secretary Bruce Babbitt blocked the land transfer.
After assuming the governor's office in 1999, Davis appointed an advisory group to propose solutions for disposing of low-level radioactive waste and to find alternatives to the Ward Valley dump. Since then, Davis has made clear his opposition to the Ward Valley project and DHS has reassigned program personnel.
U.S. Ecology sued, claiming it completed its duties as both license-designee and licensee. The company said it incurred more than $162 million in development costs. In its lawsuit, U.S. Ecology alleged breach of contract, breach of implied contract and promissory estoppel. The company also asked the court to mandate that the state allow development of the dump.
San Diego County Superior Court Judge S. Charles Wickersham sustained the state's demurrer. On appeal, a unanimous three-judge panel of the Fourth District, Division One, upheld all of the ruling except the portion regarding promissory estoppel.
Citing Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority, (2000) 23 Cal.4th 305, the court explained, "‘Promissory estoppel was developed to do rough justice when a party lacking contractual protection relied on another's promise to its detriment.'"
The court found that U.S. Ecology's allegations "fit within the classic model of a promissory estoppel claim." The company argued that DHS promised in a memorandum of understanding to use its best efforts to acquire property from the federal government, that DHS should have expected its promise to induce action by U.S. Ecology, that the company spent millions of dollars on the project, and that DHS abandoned the project without justification.
The state argued that DHS lacked statutory authority to make such promises, that enforcement of any promises would be contrary to public policy, and that DHS in fact fully met its commitments. The court rejected all three state arguments.
The court found, based on the unique nature of the relationship between DHS and the license-designee, that the Legislature did intend for DHS to make binding promises to U.S. Ecology. "The express statutory objective of the ‘expeditious establishment and operation by the private sector of a LLWR disposal facility' would be undermined if the agency charged with the responsibility for meeting this goal did not have the power to promise to use its best efforts to comply with its own obligations, particularly the obligation to acquire suitable property for the site," Justice Judith Haller wrote for the court.
The court ruled that the alleged violation of public policy was an open question, and that U.S. Ecology made an adequate argument that DHS broke the memorandum of understanding. The company "will still be required to prove its claims, and we offer no opinion as to the likelihood that [it] will do so," the court added.
In another important part of the case, the court held that a writ of mandate sought by U.S. Ecology was inappropriate because the state is not required by law to purchase the site or use the dump. "Mandamus cannot be used to compel the exercise of discretion in a particular manner or to order a specific result when the underlying decision is purely discretionary," Haller wrote.
U.S. Ecology v. State of California, No. D036933, 01 C.D.O.S. 7886, 2001 DJDAR 9703. Filed September 5, 2001.
For U.S. Ecology: Karl Lytz, Latham & Watkins, (415) 391-0600.
For the state: Paul Reynaga, deputy attorney general, (916) 327-7854.
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