The following articles are excerpts from the newsletter:

Fear of Cancer Claims after Potter V. Firestone,
Thomas Parker Redick, Christina Galdos Bernstein, and Ryan Blackstone-Gardner

The Next Wave of Toxic Torts: State Attorney General Suits to Protect Children from Lead,
Thomas Parker Redick

Significant Recent Cases,
Heather Clauson, Edward A. Kazmarek, and Lawrence J. Bracken II

 

FEAR OF CANCER CLAIMS AFTER POTTER v. FIRESTONE

Thomas Parker Redick
Christina Galdos Bernstein
Ryan Blackstone-Gardner

I. Introduction

Fear of future illness is an emerging area of case law that is greatly in need of clarification from the courts. "Fear of Cancer" is a term generally used to describe present anxiety over developing cancer or other serious illnesses in the future. The prospect of awarding damages today to monitor medical conditions that might develop in the future raises significant issues of policy and fairness. Future claimants may prefer that the companies involved hold their funds to pay compensation to a few injured parties later, rather than squander them paying prevention money to many claimants today.

Claims for fear of future illness based on exposure to toxic chemicals are increasingly being asserted in toxic tort cases around the United States. An award based on the fear of cancer typically includes general damages for emotional distress and a claim for medical monitoring. The Supreme Court of California and the United States Supreme Court have both expressed concerns about opening the floodgates of litigation. In Potter v. Firestone Tire & Rubber Co., 6 Cal. 4^th 965, 863 P.2d 795 (1993) the Supreme Court of California limited recovery for future risks based on negligent emotional distress lacking any physical injury. In Metro North Commuter R.R. v. Buckley, 521 U.S. 424, (1997), the United States Supreme Court found "physical contact" with insulation asbestos-containing dust insufficient physical impact to allow a claim for negligent infliction of emotional distress damages.

The current state of the law after Potter represents a varying landscape of policy-based limitations on the scientific evidence required to demonstrate a "reasonable fear" of cancer or other future diseases. This article will outline the legal reasoning behind the current case law in California and suggests that clarification of the legal standard for proof of "reasonable fear" may be lacking under existing law. This article will focus on California law relating to fear of future illness, with a nod toward other states running on parallel paths. It will offer ideas for providing greater certainty about fear of cancer claims.

II. A Brief History of Fear of Cancer and Medical Monitoring

Medical monitoring for fear of future cancer has emerged in the aftermath of the massive cleanup effort that has occurred over the past twenty years at hazardous waste disposal sites around the United States. Cancer fears have been compensable in various jurisdictions for incidents involving intentional acts long before the biological mechanisms of cancer were understood. See, e.g., Alley v. Charlotte Pipe and Foundry Co., 159 N.C. 327, 328, 74 S.E. 885, 886 (1912). Since the 1970s, there have been commentators suggesting that 70% to 90% of cancers could have some link to environmental and dietary factors. With this backdrop and the explosion of asbestos cases, see, e.g., Devlin v. Johns-Manville Corp., 202 N.J. Super. 556, 495 A.2d 495 (1985), it did not take long for the fear of cancer cases to emerge as another popular remedy in mass torts.

The seminal case opening the door to medical monitoring for fear of cancer based upon subclinical or genetic damage from hazardous chemicals was Ayers v. Jackson Township, 525 A. 2d 287 (N.J. 1987). In Ayers, more than 300 plaintiffs alleging exposure to toxic substances in drinking water (which supposedly led to a "genetic switch" ready to turn cancerous in the future) were allowed to recover medical monitoring costs. Their claim was based on a largely unquantified "excess risk" substantiated by expert opinion that there existed a "reasonable likelihood" of future illness.

As the permissible scope of recovery for fear of future illness expanded, together with research allowing expert opinions to support a "reasonable fear" of future illness, courts began expressing concern about opening the "floodgates" of litigation.

III. The Decision in Potter v. Firestone

The Supreme Court of California rendered a decision in 1993 in Potter v. Firestone Tire & Rubber Co., (1993) 6 Cal. 4^th 965, 863 P.2d 795 (1993), that drew the line for recovery of future risks. The Supreme Court set up three levels for fear of cancer claims: (1) those involving physical injury, which are "parasitic" upon a genuine physical injury, (2) those claims without physical injury, where the defendant concealed the risk from plaintiffs or otherwise committed acts constituting "conscious disregard" of the risk posed by exposure, and (3) those without physical injury, but where defendant was only negligent. Since the decision in Potter will be one of the most widely cited decisions in fear of cancer law for years to come, it merits a careful review and summary here.

A. Factual Background

Firestone Tire & Rubber Company ("Firestone") was a typical generator of hazardous waste that struggled with the regulatory compliance requirements for disposal. Firestone made a fateful decision to ignore regulatory standards in order to save the company money on disposal costs. From 1963 to 1980, Firestone operated a tire manufacturing plant near Salinas, California. In 1967, Firestone contracted with Salinas Disposal Service and Rural Disposal ("SDS"), two companies operating the Crazy Horse landfill. Firestone agreed to deposit its industrial waste in dumpsters provided by SDS located at the plant site and SDS agreed to haul the waste to the Crazy Horse site.

At the outset of their contractual relationship, SDS informed Firestone that it did not allow dumping of toxic substances at the landfills because of the danger that the groundwater would be contaminated. Firestone gave assurances it would not send toxics to the landfills.

In May 1977, Firestone’s plant engineer in charge of environmental matters sent a memo to department heads about the proper disposal of liquid wastes, pointing out the disposal requirements under California law. When compliance with proper procedures proved too costly, noncompliance became widespread. Despite its promise to SDS not to send toxics to the landfill, Firestone sent large quantities of liquid toxic waste to the landfill.

The regulatory state of the art for the cancer and other health risks posed by these substances had progressed sufficiently by 1977 to allow a finding that the actions taken by Firestone were done with conscious disregard for the health effects that might result from human exposure. While defendants argued that these health risks were not known until the mid-1970s, the court did not find that argument to be relevant, given the continuing misconduct after the health risks and regulatory standards became known. Firestone knew its conduct was illegal due to the risk of well contamination. Firestone was a large international corporation with scientific experts in its employ that violated regulations without making reasonable inquiry into the reasons for the restrictions. Firestone was held to be on "inquiry notice" of the risk that improper disposal would lead to health risks.

The court found that noncompliance with the 1977 memo constituted "extreme and outrageous conduct" allowing a finding of conscious disregard. In 1984, plaintiffs, who were owners of property near the landfill, discovered toxic chemicals in their home water wells and sued Firestone, alleging fear of future illness and various minor ailments.

B. The Supreme Court Holdings in Potter

Potter had four significant holdings with respect to negligent infliction of emotional distress claims arising out of exposure to carcinogens and/or other toxic substances. First, in the absence of a present physical injury, damages for fear of cancer may be recovered only if the plaintiff pleads and proves that: (1) As a result of the defendant’s negligent breach of a duty owed to the plaintiff, the plaintiff is exposed to a toxic substance which threatens cancer; and (2) plaintiff’s fear stems from a knowledge, corroborated by reliable medical or scientific opinion, that it is more likely than not that the plaintiff will develop cancer in the future due to toxic exposure. This is the holding that significantly limits future claims.

Second, as an exception to the general rule ("malice exception"), a plaintiff without a present physical injury may recover damages for negligently inflicted emotional distress without meeting the "more likely than not" threshold of developing future cancer, if the plaintiff pleads and proves that:

1. As a result of the defendant’s negligent breach of a duty owed to the plaintiff, he or she is exposed to a toxic substance that threatens cancer;
2. The defendant, in breaching its duty to the plaintiff, acted with oppression, fraud or malice as defined in Civil Code § 3294; and
3. The plaintiff’s fear of cancer stems from a knowledge, corroborated by reliable medical or scientific opinion, that the toxic exposure caused by the defendant’s breach of duty has significantly increased the plaintiff’s risk of cancer and has resulted in an actual risk of cancer that is "significant" (a term not well defined by the court).

Third, the court held that medical monitoring costs are a compensable item of damages in a negligence action where the proof demonstrates, through reliable medical expert testimony, that the need for future monitoring is a reasonably certain consequence of the plaintiff’s toxic exposure and that the recommended monitoring is reasonable. It is unclear whether a plaintiff may recover these damages independent of a successful result under the more likely than not or malice exception standards.

Finally, in the absence of proof that Firestone’s extreme and outrageous conduct was directed at plaintiffs, or undertaken with knowledge of their presence and consumption of the groundwater and with knowledge of a substantial certainty that they would suffer severe emotional injury upon discovery of the facts, Christensen v. Superior Court, 54 Cal. 3d 868, 820 P.2d 181 (1991), precluded any liability for intentional infliction of emotional distress.

IV. The Decisions Applying Potter v. Firestone’s Malice Exception

While Potter expended great effort in announcing and clarifying the standard under which fear of cancer claimants could recover, the court left plenty of work for lower courts to define the scope of the malice exception. The California punitive damages cases cited in Potter would require a finding of "conscious disregard" (malice, fraud or an "oppressive" state of mind) in the products liability context where the defendant ignored a serious risk of harm to persons foreseeably exposed to toxic substances. Because there cannot be conscious disregard of an event that is inherently uncertain, recovery of medical monitoring under the malice exception would presumably be limited to those exposures which meet certain methodological criteria for defining significant risk (of cancer or other disease), based on what was known when disposal, or at the latest, exposure, occurred. The crucial component then would be defendant’s knowledge of serious potential harm at the time of exposure.

Cases following Potter have not defined the malice exception. In carving out the malice exception, not only does the court leave open the definition of what a significant increase means (1%, 2%, 20%?), but Potter also lowers the burden for establishing malice, oppression and fraud as defined by Section 3294, from a clear and convincing evidence standard to a preponderance of the evidence standard. This reasoning flies in the face of the policy concerns of limiting the potential class of plaintiffs, establishing predictable thresholds to allow for consistency of recovery, and preserving scarce financial resources for actual cancer victims. Subsequent cases have failed to define the "significant risk" standard with specificity. The best effort to date concludes that a mere 0.5% increase was not significant. See Herbert v. Regents of the University of California, 26 Cal. App. 4th 782 (1994), 1994 Cal. App. LEXIS 700.

The future course of the malice exception may be guided by the policy concerns expressed in Potter. In deciding claims upon the "more likely than not" standard for fear of cancer, the court discussed at length the public policy concerns underlying its decision. Recognizing the "indisputable fact that all of us are exposed to carcinogens every day," the court first noted that all of us are potential fear of cancer claimants. Therefore, the more likely than not limitation helps to address the tremendous societal cost of otherwise allowing emotional distress compensation to a potentially unrestricted class.

A second policy concern affecting the 51% threshold is the unduly detrimental impact that unrestricted fear liability would have in the health care field. In particular, the Supreme Court recognized amicus curiae California Medical Association’s point that access to prescription drugs is likely to be impeded by recovery of fear of cancer damages in negligence cases unless the heightened threshold is imposed.

The third policy concern considered is that allowing recovery to all victims who have a fear of cancer may work to the detriment of those who sustain actual physical injury and those who ultimately develop cancer as a result of toxic exposure. If the same amount of recovery ($800,000 allowed to four plaintiffs in Potter) were allowed in large class actions the potential liability for this type of injury alone would be staggering. Potter, 6 Cal. 4^th at 993, 820 P.2d at 813.

A fourth reason given by the Supreme Court focused on predictability and consistency of results. Here, the Court noted that the more likely than not limitation establishes a sufficiently definite and predictable threshold for recovery to permit consistent application from case to case. Such a definite threshold may also contribute to early resolution or settlement of claims. Id. at 993, 820 P.2d at 814.

Finally, the Court recognized that although the "more likely than not" limitation may foreclose compensation to individuals with genuine and objectively reasonable fears, it is sometimes necessary to "limit the class of potential plaintiff’s if emotional injury absent physical harm is to continue to be a recoverable item of damages in a negligence action." Thing v. La Causa, Cal. 3d 644, 771 P.2d 814 (1989).

In the final analysis, the Potter court’s concern for future claimants is driven by a simplistic view of future protection (the "bank balance" view of future protection). The court recognizes that if too much is paid to monitor health today it may leave insufficient money in the future to compensate actual cancer victims. The court failed to factor in the effect of potential liability on investment in innovative beneficial technologies.

Given the policy concerns raised by the Court in discussing the "more likely than not" standard, the Supreme Court could not have intended to carve a malice exception which could effectively erode the limitations on unlimited and unpredictable litigation imposed by the standard. Considering the court’s desire for consistency of results, the court should not allow an exception when the toxic exposure caused by the defendant’s breach of duty has significantly increased the plaintiff’s risk of cancer. At the very least, a doubling of the background epidemiological risk should be required to screen unreasonable fears.

Typically, a person’s likelihood of developing cancer or other future illnesses as a result of toxic exposure is difficult to predict. Many forms of cancer involve long latency periods and development of the disease depends on interrelation of many factors. As a result, defendants will bring pretrial motions assessing the viability of plaintiff’s theory of medical causation based upon Daubert’s gatekeeper doctrine (or the Frye "general acceptance" test in some state courts). In California, the admissibility of expert medical or scientific testimony, on such key issues as exposure and causation, will be governed by the Kelly-Frye standard. The hallmark of the Kelly-Frye rule is that the proponent must establish, usually by expert testimony, that the technique utilized by the expert is sufficiently established to have gained general acceptance in the particular field to which it belongs. The proponent also must establish that the witness furnishing the testimony is properly qualified as an expert to give such an opinion. The third and final requirement is for the proponent to show that correct scientific procedures were used in the particular case.

The origins of the Kelly-Frye rule date back to 1923 in Frye v. United States, 293 F.2d 1013 (D.C. Cir. 1923), where the D.C. Circuit Court of Appeals refused to allow expert testimony concerning an "experimental" polygraph that measured systolic blood pressure. In 1976, the Supreme Court of California defended the Frye rule in People v. Kelly, 17 Cal. 3d 24 549 P.2d 1240 (1976), and reaffirmed the need for judicial caution in the acceptance of evidence developed by new scientific techniques. Kelly set forth certain "general principles of admissibility" of expert testimony based on new scientific techniques, including the following "traditional" two-step process: "(1) [T]he reliability of the method must be established, usually by expert testimony, and (2) the witness furnishing such testimony must be properly qualified as an expert to give an opinion on the subject. See Cal. Evid. Code, §§ 720, 801. Additionally, the proponent of the evidence must demonstrate that correct scientific procedures were used in the particular case." (italics in original). This is known as the Kelly-Frye standard of admissibility.

The Kelly-Frye standard can lead to application of a "general causation" screening mechanism for cases that allege cancer (or fear of cancer) in circumstances where "doubling risk" is not established by reference to epidemiology. Proof of "general causation" should be required prior to trial, with expert testimony to demonstrate that the substance at issue could cause cancer and other diseases at the levels of exposure alleged. See, e.g., Daubert v. Merrell Dow Pharmaceutical, 43 F.3d 1311 (9^th Cir. 1995); In Re Hanford Nuclear Reservation Litig., 1998 WL 775340 (E.D. Wash.). As a result of these decisions, there are some potential guideposts for determining "significant risk" that would support a claim for a reasonable fear under the malice exception in Potter.

A. Parasitic Recovery for Immune System Impairment And/Or Cellular Damage as Physical Injury

In addition to the holdings establishing a "malice exception" to the policy limitation on negligent infliction of emotional distress, Potter also discussed, but provided no guidance on, "parasitic" recovery where emotional distress is awarded in conjunction with a physical injury. In ordinary negligence actions for physical injury, recovery for emotional distress caused by that injury is available as an item of parasitic damages. Because the plaintiffs in Potter had complained they might have suffered damage to their immune systems, the Supreme Court solicited views on whether such immune system damage constituted physical injuries. After entertaining these views the Court concluded they lacked an appropriate factual record for resolving whether impairment to the immune response system or cellular damage constituted a physical injury for which parasitic damages for emotional distress ought to be available. Potter, 6 Cal. 4th at 981-84.

1. Cases Equating Subcellular/Subclinical Harm with "Physical Injury"

The Potter court cited various jurisdictions deeming subcellular harm (within the cell, such as genetic damage) or subclinical injuries (where there are no objective clinical manifestations) a sufficient physical injury for recovery of damages. See Weirlein v. United States, 746 F. Supp. 887, 901 (D. Minn. 1990) (finding "chromosomal breakage" would qualify as a present physical injury), vacated in part, 793 F. Supp. 898 (D. Minn. 1992) (the earlier decision was vacated because a settlement agreement was reached between the parties); Barth v. Firestone Tire & Rubber Co., 661 F. Supp. 193 (N.D. Cal. 1987) (injury to immune system would be actionable physical injury under California state law); Anderson v. W.R. Grace, 628 F. Supp. 1219, 1226 (D. Mass. 1986) (subcellular harm); Bradford v. Susquehanna Corp., 586 F. Supp.14 (D. Colo. 1984) (chromosomal damage from radiation deprived plaintiffs of certain degree of immunity).

As a matter of scientific proof, chromosomal breakage that is readily repaired via DNA repair should not be considered a physical injury. The physical injury requirement in California after Potter was clarified in Macy’s California, Inc. v. Superior Court, 41 Cal. App. 4th 744 (1995), 1995 Cal. App. LEXIS 1267. This case involved a "needle stick" and plaintiff’s subsequent fear of contracting AIDS. The court recognized that parasitic recovery for fear of AIDS and fear of cancer requires serious physical injuries. The routine needle stick in Macy’s California caused harm only if the plaintiff proves detrimental change to the body through introduction of a foreign hazardous substance. Id. at 756. The needle stick itself heals so quickly that it does not constitute a serious physical injury that would permit recovery. The trend toward requiring physical changes that have a physical impact, as opposed to transient or readily repaired effects, is echoed in other California decisions. See Duarte v. Zachariah, 22 Cal. App. 4^th 1652 (1994), 1994 Cal. App. LEXIS.

In light of subsequent decisions, the federal district court’s 1987 decision in Barth does not provide much guidance to California courts in determining the level of physical injury required to permit recovery for emotional distress associated with fear of cancer. It appears likely that needle sticks and repairable or transient genetic damage (e.g., chromosomal breaks, cell death from DNA crosslinks, etc.) will not meet the physical injury requirement even in courts willing to accept subclinical or subcellular findings as a physical injury.

2. Cases Rejecting Subcellular/Subclinical Harm as "Physical Injury"

Most of the cases coming out against a subclinical finding are occurring in the reported appellate cases arising out of asbestos litigation. The reluctance to find physical injury in the case of subclinical changes caused by asbestos fibers has resulted in a line of cases denying physical injury for asbestos exposure. In re Hawaii Federal Asbestos Case, 734 F. Supp. 1563, 156-70 (D. Haw. 1990) (physical injury not established by the mere presence of asbestos fibers in lungs); Owens-Illinois v. Armstrong, 87 Md. App. 699, 734, 591 A.2d 544, 560 (1991) (pleural plaques do not cause functional impairment); Giffear v. Johns-Manville Corp., 429 Pa. Super. 327, 632 A.2d 880 (1993) (citing Restatement Second, Torts § 7 "Insofar as physical changes have a detrimental effect on a person, that person suffers harm"); Schweitzer v. Consolidated Rail Corp., 758 F.2d 936, 942 (3d Cir. 1985) (subclinical asbestos injury not actual loss under FELA).

The United States Supreme Court has weighed in with its own opinion limiting fear of cancer where a physical injury is not present. In Metro North Commuter R.R. v. Buckley, 521 U.S. 424 (1997), the United States Supreme Court held that "physical contact" with insulation asbestos-containing dust did not permit claim for "parasitic" emotional distress damages. The Supreme Court decision echoes the same concerns discussed in Potter. If we allow recovery for thousands of people’s fear, will we use up money that might better be allocated to those who actually contract cancer in the future? Justice Breyer’s majority opinion echoed the policy concerns expressed in Potter. He noted that there are over 20 million workers that have been exposed to asbestos, three million workers have been exposed to benzene and 43% of U.S. children live with environmental tobacco smoke in the home. By allowing compensation for fear today, tomorrow’s actual injuries might not be fully compensated. Id. at 2120.

On balance, the federal regulatory agency approach to cancer causation appears to be moving away from recognition of subclinical damage, particularly DNA damage subject to repair. The EPA is undertaking a comprehensive review of the "linear dose" model that would allow cancer risk to be recognized at very low doses (where only "one molecule" reached the cell). In May 1999, the EPA Report Risk Assessment Forum Technical Panel: Questions Concerning the Draft EPA Cancer Risk Assessment Guidelines from the Children's Health Protection Advisory Committee acknowledged that usually identification of potential carcinogens comes from analyzing animal studies done on post-sexually mature animals exposed to very high doses. The Cancer Risk Assessment Guidelines Review Subcommittee of the Science Advisory Board met in late July 1999 to discuss children’s issues under the guidelines. According to the National Service Center for Environmental Publications (NSCEP, 1-800-490-9198), the 1999 finalized guideline is still expected.

In defining the boundaries of cancer risks, regulatory pronouncements should provide a complete defense (even if they are not conclusive for the future injuries that may develop). Companies that monitor the entire life cycle of their product for adverse impacts to the environment or human health should not be subject to claims for fear of future injury, if the state of the art (as defined by judicially noticed regulations) provides clear guidance regarding the content of a warning. This will allow scarce resources to be devoted to innovation and compensation of future claimants with injuries that can be linked to the exposure.

V. Conclusion

The number of fear of cancer claims may continue to steadily expand in the future. Societal trends that indicate a possible expansion include: (1) the steady lowering of exposure levels detectable by science, (2) the increasing number of diagnostic tests for exposure (e.g., molecular "biomarkers" showing subcellular damage), (3) as scientific research expands, more and more substances may be linked with cancer, (4) regulatory levels deemed safe are reduced along with these various findings, and (5) an increasing number of diagnostic tests will be available for medical monitoring plans.

By placing regulatory and scientific limits on Potter’s exceptions for "malice" and physical injury, manufacturers of beneficial products can continue to innovate in good faith free from the threat of unlimited and unpredictable liability. The tools for finding a reasonable limit on these claims are available, if courts have the will to apply them. In the process of setting reasonable limits, companies innovating in good faith as well as future claimants depending on compensation for developing cancer should benefit.

 

THE NEXT WAVE OF TOXIC TORTS: State Attorney General Suits To Protect Children From Lead

Thomas Parker Redick

In a move the Wall Street Journal predicts "could become a wave of similar actions filed by states, counties and cities nationwide" (WSJ 10/13/199 at A3), the State of Rhode Island filed an action in state court in the capital, Providence, for an order directing remediation of properties "contaminated" by lead paint.

The suit alleges a conspiracy among eight companies manufacturing lead paint (including industry giants Atlantic Richfield, DuPont, Sherwin-Williams, NL Industries, Cytec Industries and Glidden) as well as an industry trade association (the Lead Industries Association). The alleged conspiracy to promote lead paint sales while concealing risks appears to have ended by the 1960s, when the industry ceased selling paint for domestic purposes.

A prior court decision in Maryland rejected the idea of an industry-wide conspiracy, but plaintiffs are not bound by that decision. The Rhode Island suit alleges that lead paint posed "knowable" risks to children as early as 1900. Children allegedly sustained high doses from eating paint chips ("sweet as candy" according to the Wall Street Journal), dust in homes, and dirt in the environment. The suit targets remediation of environmental risks, not individual harm. Private homeowner actions have been filed in Baltimore, Maryland, Cleveland, Ohio, and New York, New York.

With many other environmental sources of lead (from leaded gasoline residues), lead pipes and solder, and leaded foil on wine bottles, there are alternate causes of environmental residues and detectable levels in exposed persons. Product identification will also pose a barrier to actions seeking to tie lead residues on particular manufacturers 40 to 80 years after the paint was applied. Market share approaches will reach their logical boundaries, as will defenses based on the "state of the art" (a defense that a defendant conspiring to conceal risks will have difficulty establishing). These cases merit continued attention as they present renewed efforts to seek recovery from the lead industry for alleged contamination.

 

SIGNIFICANT RECENT CASES

Heather Clauson, Edward A. Kazmarek, Lawrence J. Bracken II

Remedial Action Not Subject to Bar on Pre-Enforcement Review

Fort Ord Toxics Project, Inc. v. California Envtl. Protection Agency, No. 98-16160, 1999 WL 680343 (9^th Cir. Sept. 2, 1999). The Ninth Circuit recently held that remedial actions conducted under § 120 of the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA") are not subject to the § 113(h) bar on pre-enforcement review of CERCLA cleanups. In Fort Ord, citizen groups sued California and several federal agencies requesting an injunction against the government’s CERCLA cleanup of the military installation at Fort Ord for failing to comply with the California Environmental Quality Act. The district court had dismissed the suit holding that § 133(h) of CERCLA precludes pre-enforcement review of remedial actions under CERCLA. The plaintiffs argued, however, that § 113(h) does not apply to cleanups conducted under the authority of § 120, but only applies to cleanups conducted under the authority of § 104 and § 106. Because the cleanup at Fort Ord was clearly conducted under § 120, the plaintiffs contended that the bar on pre-enforcement review should not apply. The court noted that because § 120 creates a grant of authority for remedial actions separate from §§ 104 and 106 and because the text § 113(h) does not explicitly include § 120 then §113(h) cannot preclude challenges to a CERCLA remedial action conducted under § 120.

This decision was limited, however, to remedial actions and does not apply to removal actions conducted under § 120 of CERCLA. Nonetheless, this decision could impact a number of federal hazardous waste facilities by allowing citizens to challenge remedial activities conducted at these facilities. The decision does not appear to be limited to government defense facilities, but appears to apply to any federal facility conducting a remedial action under § 120, which could include government-owned, contract-operated facilities.

Public Interest Weighs in Favor of NPDES Permit Violation

Sierra Club v. Georgia Power, 180 F.3d 1309 (11^th Cir. 1999). The U.S. Court of Appeals for the Eleventh Circuit affirmed a district court’s decision allowing Georgia Power to violate its National Pollution Discharge Elimination Permit ("NPDES") permit by placing more importance on the public’s interest in receiving a steady supply of electricity than on the environmental harm created by the permit violations. The Sierra Club sought a preliminary injunction against Georgia Power to prevent further exceedances of the numerical temperature limits for wastewater from Georgia Power’s coal-fired electricity generation facility. Georgia Power contended that it could not achieve the heat limit required by its NPDES permit without creating a harm to the general public by reducing the amount of electricity generated. Despite the fact that the thermal loading into the lake created by the permit violations caused fish kills, the district court concluded that the potential harm to the public from a reduction in electricity outweighed the potential injury to the environment in the lake and to lakeside residents and denied the plaintiff’s motion for a preliminary injunction.

The Eleventh Circuit affirmed the district court’s decision by noting that a steady supply of electricity during the summer months is critical and that fish kills resulting from the thermal loading in the lake were only temporary and limited in scope. The court observed that, during the summer months, air conditioning to the elderly, hospitals and day care centers was critical and that Georgia Power had already planned a forty million dollar cooling tower to prevent future violations of its permit. It is interesting that even though the permit violations created a clear harm to the environment in the form of fish kills, the court placed more importance on the public’s interest in a steady supply of electricity. This decision may just be an anomaly and limited to the facts of this case, but it creates interesting precedent for subsequent cases that may arise related to fish kills caused by a number of dams in this country - particularly in the Pacific Northwest.

Prior Settlement with State Bars RCRA Claim

Harmon Indus., Inc. v. Browner, No. 98-3775, 1999 WL 718443 (8^th Cir. Sept. 16, 1999). The Eight Circuit recently held that EPA cannot file a Resource Conservation and Recovery Act ("RCRA") claim against a company that has previously settled with its authorized state for the same violations. In this case, Harmon Industries voluntarily reported its RCRA violations to the Missouri Department of Natural Resources ("MDNR") and complied with MDNR’s requests to implement a cleanup plan. EPA then initiated an administrative enforcement action against Harmon seeking over two millions dollars in civil penalties. While EPA’s action was pending, a Missouri state court judge approved a consent decree between MDNR and Harmon, whereby MDNR recognized full accord and satisfaction and released Harmon from any monetary claims for penalties. Harmon then litigated EPA’s claim and subsequently was imposed a civil fine of $586,716. Harmon filed a complaint in federal district court challenging the penalty. The district court held that EPA’s overfiling and decision to impose penalties not only violated RCRA, but also was barred by principles of res judicata.

The U.S. Court of Appeals for the Eight Circuit affirmed the lower court’s decision. The court reasoned that RCRA specifically authorizes the states to administer the program "in lieu of" EPA’s regulatory program. In addition, RCRA provides that the state program is to be given the "same force and effect" as the federal program. As a result, EPA only has enforcement authority in an authorized state for cases where the state has failed to initiate an enforcement action or if the state authorization is rescinded because the state’s action under RCRA is inadequate. The Eighth Circuit also separately held that because MDNR advanced the same legal right under RCRA as EPA did in its administrative action the identity of parties requirement for res judicata was satisfied, thus barring EPA’s action under the principles of res judicata as well.

The holding of this case could have a significant impact not only on enforcement actions but also on RCRA permitting, regulatory compliance and cleanup as well. The ruling is currently limited to the Eight Circuit, but could expand to other circuits if EPA tries to overfile in another jurisdiction. It would appear, however, that the holding may be applicable to other federal environmental statutes if the courts are willing to apply the res judicata theory in similar situations under other environmental laws.

CWA Zero-Discharge Standard Applies Where Permits Unavailable

Driscoll v. Adams, 181 F.3d 1285 (July 23, 1999). In a decision involving stormwater runoff, the Eleventh Circuit held that the Clean Water Act’s zero-discharge standard applies even where the required stormwater discharge permits were not available. In Driscoll, the plaintiffs claimed that the defendant’s land clearing, grading, and development activities, which caused pollution storm water discharges that caused approximately 64 tons of sediments to be deposited in the plaintiffs’ downstream ponds, were in violation of the CWA. The defendant claimed that it was impossible to violate the act since the general stormwater permit was not available due to a legal challenge to the permit in Georgia and no individual stormwater permit had ever been issued in Georgia. The district court dismissed the plaintiffs’ suit concluding that obtaining a NPDES permit was an impossible condition and there were no standards that applied to discharges of sand, silt and mud.

In reversing the district court, the Eleventh Circuit held that the exception to the unpermitted discharge prohibition established in Hughey v. JMS Dev. Corp., 78 F.3d 1523 (11^th Cir. 1996), applied to a property developer only in circumstances where the developer made a good faith effort to comply with state and local pollution control standards and where pollutant discharges were minimal. The court also found that, even though there were no approved federal standards for releases of sand, silt and mud, the defendant should have obtained an individual point source discharge permit because the defendant created a point source when he collected the storm water by pipes and other means. This case will undoubtedly create some uneasiness for land developers in Georgia who are still unable to obtain a storm water permit from EPD and who may not fulfill all the requirements necessary to take advantage of the exception to the unpermitted discharge prohibition provided by the Hughey case.

Denial of Wetland Permit Ruled a Regulatory Taking

Florida Rock Indus. v. United States, No. 266-82-L, 1999 WL 692836 (Fed. Cl. Aug. 31, 1999). The Court of Federal Claims recently held that Florida Rock Industries was entitled to compensation for denial of a wetlands permit back in 1980 based upon a determination that the Army Corps of Engineers ("Corps") had engaged in a partial regulatory taking of Florida Rock’s property under the Fifth Amendment. Florida Rock purchased a 1,560-acre parcel of wetlands in 1972 specifically for the subsurface limestone to sell to the construction industry after conversion into aggregates. In 1978, after the Corps had asserted jurisdiction under the Clean Water Act, Florida Rock applied for a dredge and fill permit for a 98-acre portion of its land, and the Corps denied the permit. As a result, Florida Rock was unable to mine its land and subsequently filed suit against the Corps claiming the permit denial was a compensable taking under the Fifth Amendment.

In the fifth judicial consideration of the issue, the court used the Penn Central test and weighed the following factors: the economic impact, the reasonable investment-backed expectations, and character of the government action. The court noted that Florida Rock suffered deprivation of all its traditional common law right to its subsurface estates, as well as all economically viable use of the surface of its property. Because the court concluded that the land’s value had dropped by 73.1% after the permit denial, it awarded Florida Rock compensation of $752,444, plus interest and attorneys fees for the taking of the 98-acre tract. Finally, the court noted that Florida Rock could have obtained permits to develop the other tracts of the 1,462-acre parcel and that requiring a separate suit for each of the subsequent permits would be unfair; thus, the court invited the parties to resolve the issue through settlement. Although it is likely the government will appeal, this case represents one of the few cases in a large number of takings cases brought under the Clean Water Act where a taking has been found.

Sewer Discharges Not Required to Comply with Numeric Limitations

Defenders of Wildlife v. Browner, No. 98-71080, 1999 WL 717721 (9^th Cir. Sept. 15, 1999). In reviewing EPA’s decision to issue an NPDES permit to five municipalities for their separate storm sewer discharges, the Ninth Circuit held that the Clean Water Act does not require municipal storm sewer discharges to comply with numeric limitations to ensure compliance with state water-quality standards. Defenders of Wildlife and the Sierra Club challenged EPA’s decision to issue NPDES permits to the municipalities contending that the permits must comply with the numeric limitations of 33 U.S.C. § 1311 to ensure strict compliance with state water quality standards. EPA had determined that with best management practices and controls provided under the storm water management program that the permits ensured compliance with the state water quality standards.

The court noted that unlike the provision regulating industrial storm water discharges, which explicitly requires compliance with the numeric limitations of § 1311, the provision in the CWA regulating municipal storm water discharges did not include the same requirement. Instead, the provision regulating municipal storm water discharges replaces the requirements of § 1311 with the requirement that the dischargers must "reduce the discharge of pollutants to the maximum extent practicable, including management practices, control techniques and system, design and engineering methods..." 33. U.S.C. § 1342(p)(3)(B)(iii). Thus, the court held that the CWA does not require municipal storm sewer discharges to comply strictly with § 1311. Note that the petitioners did not raise the factual question of whether the management practices that the EPA chose would be effective in meeting state water quality standards. This decision will undoubtedly affect a number of municipalities nationwide.

Achieving compliance with state water quality standards through best management practices instead of numeric limits may prove to be a more cost-effective and reasonable approach for municipalities with separate storm sewer systems.

No Joint and Several Liability for Background Quantities in § 113(f) Contribution Action

Acushnet Co. v. Mohasco Corp., No. 97-2138, 1999 U.S. App. LEXIS 22498 (1^st Cir. Sept. 15, 1999). In an action for contribution under § 113(f) of CERCLA, the First Circuit held that defendants can avoid joint and several liability for response costs if they demonstrate that their contributions to contamination at a site constitute no more than background amounts of such substances in the environment and cannot react with other wastes to produce higher amounts. Waste generators at the Sullivan’s Ledge site filed suit seeking contribution from several other potentially responsible parties ("PRPs") at the site. The district court dismissed the plaintiff’s claims, holding that the defendants deposited so little waste at the site that it could not reasonably be said that they caused the plaintiffs to incur response costs. The First Circuit affirmed, but clarified that CERCLA does not incorporate a causation standard requiring a PRP’s waste to meet a minimum quantitative threshold.

The court did, however, make it clear that causation is relevant when the harm caused is divisible and the court must consider what is an equitable allocation. A defendant should not be held liable for contribution under CERCLA if the defendant’s release did not cause the incurrence of response costs. In a footnote, the court noted that a defendant can avoid liability for contribution by establishing that its waste did not cause the alleged contamination because it was below background levels for a particular contaminant or by establishing that the substances attributed to the defendant are not the same contaminants being remediated at the site.

This decision will affect a number of PRPs at Superfund sites because a PRP will no longer assume that they are automatically liable because they sent something to the site. This decision will also place a higher burden on larger PRPs seeking to obtain significant payments from de minimus parties.

Update: Constitutionality of "Right to Farm" Laws

During the late 1970s and early 1980s, many states passed "right to farm" laws. These laws, brought about in part by the pressures of urban sprawl, were designed to protect farms by offering them a defense when newly-arrived suburbanites object to the normal incidents of farming operations, such as the smell of manure.

A recent case, however, raises some questions about the legal basis for such statutes. Bormann v. Kossuth County, 584 N.W.2d 309, 29 Envt’l L. Rep. 20,235 (Iowa 1998). In this case, the Court held that the statute permitting nuisance conditions to exist on the property of another, in essence, granted an easement in the affected property to the benefit of the farming operation. Easements, however, are property interests subject to the just compensation provisions of state and federal constitutions. The statute, therefore, had the legal effect of a legislative grant of an easement in the property of another. Accordingly, both the state statute that authorized such conditions, and the action of the county Board of Supervisors in enabling the agricultural designation, constituted takings of property without just compensation and were therefore unconstitutional.