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Taken to the Cleaners
On the hook for someone else's toxic mess.
AS A U.S. AIR FORCE PILOT IN VIETNAM, Paul Tullius faced the danger of being shot down every time he went on a mission. But his decision 15 years agolong after he had retired from the serviceto buy a warehouse in Chico, Calif., has proved as risky as any he made in the air.
Tullius, who is 58, bought the 5,000-square-foot building to store a handful of old race cars he collects, which include a 1960 Lancia and a 1950s Simca (in pieces). The concrete structure looks unobtrusive enough. Painted white with blue trim, it sits on a quiet street lined by palm trees in a mostly residential neighborhood of the Sacramento Valley agricultural town, a few blocks from the state university. For a while, Tullius and his wife, Victoria, fantasized about living in the warehouse. Their plan was to convert the wooden rafters into a retirement loft and to park an RV underneath for vacation road trips. Instead, they sold most of the cars and rented the warehouse to a homeless shelter, which used it for office space, and then to a mattress company.
But in a past life in the 1960s and '70s, the warehouse was home to Payless Cleanersand to the nasty chemicals used in dry cleaning. Six months after the Tulliuses bought the building, an engineering company contacted them out of the blue about needing to take soil samples for the California Department of Toxic Substances Control. Tullius called the state agency to ask how concerned he should be about this inspection. "I'd be losing sleep," he remembers the bureaucrat on the other end of the line saying.
The state had fingered Payless in its investigation of what's known in Chico as the "Southwest Plume," an area of below-the-ground contamination encompassing about a half square mile. Along with five other dry cleaners, Payless may have been to blame for polluting the town's aquifer with the toxic solvent perchloroethylene, or PCE. The chemical is the biggest contaminant of groundwater in California and has been linked to kidney and liver cancer as well as nervous system disorders.
Never mind that Payless closed up shop in 1972, or that Tullius says he knew nothing about the property's history when he bought it in 1988. Soon, bills from the state for toxics testing began to arrive at his house. The first bill was for $1.2 million. The most recent bill Tullius received, which included that unpaid amount, interest, and the cost of further tests, arrived last spring and totaled $1,466,715.59. In the envelope was a handy form for credit card payment.
Meanwhile, in October 2002 the state filed suit to recover the costs of decontaminating the Chico aquifer. The defendants are the Tulliuses, the six long-retired (and quite elderly) dry cleaners, the City of Chico, which owns the sewer lines from which the chemical likely leaked, and the local water company that allowed the PCE to move through the city's wells and pipes. Toxic Substances Control says that its protocol is to sue everyone it can find. "It's not up to us regulators to decide" who to hold liable, says Ron Baker, a spokesperson for the department. "We are not the court."
Welcome to the world of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, a federal law known as CERCLA. Faced with the daunting prospect of mopping up the toxic slop of an earlier era, Congress wrote a law meant to ensure that the pollutersnot the taxpayerswould pay for massive environmental cleanups. To hold the Tulliuses responsible for the damage done by Payless, the state need not prove that the couple caused the contamination. The theory of liability behind CERCLA is that since polluters don't usually write their names on the poisons they leave behind, the government needs to be able to cast a wide net in linking all "responsible parties" to a site. Current landowners stand to profit from the property's increased value after a cleanup, so they can be held jointly liable for it, along with former landowners and the original generators and transporters of the waste. "In this cost-recovery phase, we name everybody," says Baker. "When you buy the property, you buy the liability."
But what's good for the taxpayers is rotten for the hapless guy stuck holding the toxic bag. The Travelers Insurance policy that Tullius took out when he bought the warehouse doesn't cover liability associated with toxic contamination, a fine-print exclusion that many policies have made since CERCLA was passed. It's unlikely that Tullius could recoup his loss if he sold the property after the cleanup. He could try to go after his co-defendants. He could sue the people who sold him the warehouse, who were required by California law to tell him about the building's toxic history. But each of those options would mean slogging through more years of costly litigation.
So Tullius is pinning his hopes on the "innocent landowner defense," which he plans to argue himself in the Sacramento federal district court where the case will likely go to trial in 2006. (CERCLA also lets you off the hook in the event of an "act of God" or an "act of war," but Chico hasn't had either in recent memory.) Innocence is a tricky concept under CERCLA, though. Tullius won't win by arguing that he knew nothing about his warehouse's poisonous past; he'll also have to show that he couldn't have known. In other words, he needs to prove that he did things like inspecting the property and researching its previous owners to make sure the seller didn't hand over a warehouse that was contaminated.
Even if he is held liable, Tullius may still be able to avoid a big bill. Judges in CERCLA cases may consider who caused the damage when they assign who pays what. With luck, Tullius will have to pay only a small percentage of the cleanup costs, while the city and the water company, who have insurance and much deeper pockets, pick up the rest.
But for now, that's not much consolation to Tullius. In October 2002 he had a heart attack and then quintuple bypass surgery, which he links to the stress of the long dispute. "It's just an overwhelming thing. It affects you in many ways," he said, looking around the cluttered warehouse. "Flying airplanes in the Air Force, you were confronted with more rules and regulations than you could ever imagine. But the guiding principle was: You did what made sense. You did what was logical, and that pretty much kept you out of trouble. There is no logic to this. There is no sense to it."