Toxics Regulation and Product Liability: Decreasing Exposure in the Workplace, Increasing Exposure in the Courts

Timothy Atkeson

Editors' Summary: Recent OSHA and EPA regulations will promote investigation and disclosure of the health hazards posed by toxic substances. The regulations will also provide potential plaintiffs with the information they need to win product liability suits. Mr. Atkeson analyzes recent rules and statutory provisions that may affect product liability exposure. He concludes that although the new laws will encourage suits, the laws ultimately will reduce toxic exposures and promote equitable assessment of victim compensation costs.

Mr. Atkeson is a member of Steptoe & Johnson, Chartered, Washington, D.C. He serves on the Board of the Environmental Law Institute and teaches environmental regulation of chemicals at the Georgetown University Law School.

[13 ELR 10418]

On November 25, 1983 the Occupational Safety and Health Administration (OSHA) issued its long-deferred final Hazard Communication Standard.¹ The standard joins a series of recent OSHA and Environmental Protection Agency (EPA) regulations under the Toxic Substances Control Act (TSCA)² relating to reporting, recordkeeping, testing, and risk assessment of toxics. Ultimately, these regulations should lessen employee and public exposure to dangerous chemicals and decrease the number of injuries. In the short run, though, they will substantially increase the product liability exposure of manufacturers and importers by providing potential plaintiffs with data on exposure, causation, injury, and possible negligence of management.

Product Liability for Toxics

Product liability law, particularly with respect to toxic chemicals, has been steadily evolving towards making the manufacturer or seller of toxic chemicals an insurer against hazardous effects.³ Under § 402A of the RESTATEMENT (SECOND) OF TORTS, "One who sells any product in a defective condition unreasonably dangerous to the user … is subject to liability for physical harm thereby caused to the ultimate user … [even though] the seller has exercised all possible care in the preparation and sale of his product." This rule of strict liability has been held to apply to toxic chemicals where lack of an adequate warning as to dangers which the seller either knew of or should have known of is held to make the chemical "unreasonably dangerous."⁴

A representative recent product liability opinion, applying theories of both § 402A strict liability and negligence for asbestosis and mesothelioma suffered by an asbestos insulation installer, is Borel v. Fibreboard Paper Products Corporation.⁵ The Borel court found that the key element in either strict liability or negligence was a failure to give adequate warning of a danger of which the seller either knew or should have known. Indeed, the court stated that

in cases such as the instant case, the manufacturer is held to the knowledge and skill of an expert. This is relevant in determining (1) whether the manufacturer knew or should have known the danger, and (2) whether the manufacturer was negligent in failing to communicate this superior knowledge to the user or consumer of its product … The manufacturer's status as expert means that at a minimum he must keep abreast of scientific knowledge, discoveries and advances and is presumed to know what is imparted thereby. But even more importantly, a manufacturer has a duty to test and inspect his product. The extent of research and experiment must be commensurate with the dangers involved.⁶

In Borel what the manufacturers knew or should have known of the dangers associated with insulation products containing asbestos was a central issue. A similar case today could be based almost entirely on duties, data, and disclosures mandated by the new OSHA and TSCA rules.

The OSHA and EPA regulations do not themselves change the substantive law on product liability relating to toxic chemicals. What they do, however, is more important: they produce great amounts of easily available information to document (1) what a manufacturer or importer of a toxic chemical should have known about its hazards; (2) what precautionary measures the manufacturer or importer reasonably should have taken; (3) what warnings and protective training should have been available; (4) what the size and identity of likely plaintiff groups are; (5) what potential there is for substantial claims for injury from chronic hazards; and (6) what [13 ELR 10419] grounds exist for assessment of punitive damages. While careful compliance with these new regulations may help protect a manufacturer or importer, juries are likely to be very impressed by any adverse evidence the new regulations produce.

OSHA Regulations

The OSHA Hazard Communication Rule

The most comprehensive and important of the recent OSHA and EPA regulations affecting the product liability exposure of chemical manufacturers and importers is the new OSHA Hazard Communication Rule.⁷ It requires some 10,000 firms manufacturing and importing toxic chemicals to (1) determine the hazards involved in employee exposure to hazardous chemicals (including potential exposures in possible accidents), (2) place warning labels on containers of such chemicals and provide lists of such hazards in the workplace, (3) prepare material safety data sheets (MSDS) identifying the chemical and health risks involved, and (4) establish education programs to alert employees to the dangers involved and measures to reduce risk of exposure.⁸ The chemicals will pass downstream to over 300,000 distributors and manufacturers handling such chemicals who will also have a duty to educate their employees to the dangers involved and measures to reduce risk.⁹ Even if the employees of the original chemical manufacturer are confined to workmen's compensation remedies,¹⁰ the millions of employees of the over 300,000 establishments processing and distributing such chemicals still represent a very large group of potential toxic tort claimants against the original manufacturer. While we may never see a single disaster on the scale of the thousands of workers exposed to asbestos, already substantial claimant groups are litigating a variety of maladies attributed to benzene, formaldehyde, dioxins, solvents, and other chemicals.

The new OSHA rule defines "hazardous" broadly. The concept of hazard is tied to exposure "under normal conditions of use or in a foreseeable emergency."¹¹ A "foreseeable emergency" is "any potential occurrence such as, but not limited to, equipment failure, rupture of containers, or failure of control equipment, which could result in an uncontrolled release of a hazardous chemical in the workplace."¹² The employer has a duty to evaluate each chemical for its potential to cause adverse health effects, as well as its potential to pose physical hazards, for example, its flammability. The following specific rules on identification of health hazards apply:

The employer must report any adverse health effect "for which there is statistically significant evidence based on at least one study [human or animal] conducted in accordance with established scientific principles that acute or chronic health effects may occur in exposed employees."¹³ (The employer is required to report such findings whether he agrees with them or not but may add data to the contrary.)

All chemical substances specifically regulated by OSHA under 29 C.F.R. § 1910 (approximately 430 chemicals) are to be included.¹⁴

All chemicals listed by the American Conference of Governmental Industrial Hygienists in their latest edition of "Threshold Limit Values for Chemical Substances and Physical Agents in the Work Environment" areto be included (over 600 substances).¹⁵

Unless an employer has toxicity data on a mixture itself, mixtures are to be treated as hazardous chemicals if [13 ELR 10420] any substance constituting one percent of the mixture is itself a hazardous chemical or if a component that is less than one percent of the mixture could be released in concentrations that would exceed an established permissible exposure limit under normal conditions of use.¹⁶

All chemicals found to be a carcinogen or potential carcinogen by the International Agency for Research on Cancer or by the National Toxicology Program in the latest edition of ANNUAL REPORT ON CARCINOGENS or regulated by OSHA as a carcinogen¹⁷ are to be labelled and treated as carcinogens or potential carcinogens even if they constitute no more than 0.1 percent of a mxture.¹⁸

Appendix A, which is mandatory, lists a variety of other health effects that may be caused by chemicals, all instances of which are to be regarded as hazardous.¹⁹

Appendix B, which also is mandatory, establishes criteria for determining hazards. This provides that "available results of toxicological testing in animal populations shall be used to predict health effects that may be experienced by exposed workers."²⁰ In addition, "the results of any studies which are designed and conducted according to established scientific principles and which report statistically significant conclusions regarding the health of a chemical, shall be sufficient basis for a hazard determination and reported on any material safety data sheet."²¹

Appendix C, which is advisory rather than mandatory, contains an extensive list of information sources on chemical toxicity extending to what appears to be all the government's various computerized lists of the subject as well as leading texts on toxicity. The inclusion of Medline, Toxline, Cancerlit, and the Registry of Toxic Effects of Chemical Substances suggests the need for extensive literature reviews on possible chronic health hazards.²²

In addition to the hazard determination, warning, MSDS, and training responsibilities established by the regulation, the detailed procedures required by the OSHA hazard communication rule will increase the duties that manufacturers owe to potential plaintiffs.

The employer must describe its hazard communication system in writing and make the description available to employees.²³

Chemical manufacturers and importers must "describe in writing the procedures they use to determine the hazards of the chemicals they evaluate. These written procedures are to be made available, upon request, to employees, their designated representatives, the Assistant Secretary [of Labor], and the Director [of the National Institute for Occupational Safety and Health]."²⁴

To alert employees to the presence of hazards, an employer must make available a list of the hazardous chemicals known to be present, either in the workplace as a whole or in individual work areas.²⁵

Chemical manufacturers and importers must insure that distributors and manufacturing purchasers of hazardous chemicals are provided with appropriate MSDS with each initial shipment of a chemical and with the first shipment after a MSDS is updated.²⁶

"The chemical manufacturers, importers and employers should remain aware of the development of new and significant information regarding the potential health hazard of a chemical in their workplace." If the chemical manufacturer, importer, or employer becomes newly aware of any significant information regarding the hazards of a chemical, or of ways to protect against its hazards, this new information must be added to the material safety data sheet within three months.²⁷

Since there is already wide voluntary use of material safety data sheets in the chemical industry, and most hazards, except for chronic health hazards, are reasonably well identified, the most significant new hazard identification problem posed by the OSHA rule will be the identification of chronic effects. OSHA acknowledges in Appendix A to the rule "the fact that most chemicals have not been adequately tested to determine their health hazard potential, and data do not exist to substantiate [chronic] effects."²⁸ OSHA has not explicitly required testing in its hazard communication rule, but as noted in the Borel opinion,²⁹ there is a common law duty on a manufacturer of chemicals to test the toxicity and effects of products depending on the evidence of hazard and likely exposure of employees or the public to the chemical involved.

It is well settled that to avoid liability in negligence, a manufacturer must undertake to use reasonable care in its manufacturing process. Reasonable care necessitates the making of such inspections and tests during the course of manufacture and after the article is completed as the manufacturer should recognize as reasonably necessary to discover defects and latent hazards.³⁰

Manufacturers will need to adopt some system to keep abreast of rapidly expanding information available on chemicals. Such a system should take account of information being generated under TSCA. In particular, manufacturers should keep track of the information EPA collects under the reporting requirements of §§ 4, 5, and 8,³¹ discussed briefly below.³²

[13 ELR 10421]

OSHA Rule on Access to Employee Exposure and Medical Records

In 1980 OSHA issued the "access rule"³³ giving employees and their designated representatives rights of access to relevant exposure and medical records. Material safety data sheets are included among the "employee exposure records" covered by the rule. Also included among "employee medical records" are any records of employee medical complaints. The rule requires the preservation and maintenance of employee medical records and employee exposure records for 30 years.³⁴

Appendix B to the access rule indicates that the "toxic substances" for which medical and exposure records must be kept include chemical substances and biological agents "for which there is evidence of harmful health effects."³⁵ Arguably the chemicals deemed "toxic substances" for purposes of the access rule will also be candidates for purposes of the hazard communication standard. The access rule relies on the latest edition of the National Institute for Occupational Safety and Health (NIOSH) "Registry of Toxic Effects of Chemical Substances" (RTECS)³⁶ as one of the chief sources of evidence that a chemical is harmful. If a chemical substance is listed in the latest RTECS, the access rule applies to both exposure and medical records and to analyses of these records relevant to employee exposure to that chemical substance. Appendix B indicates that the NIOSH RTECS includes over 40,000 chemicals. Appendix B comments: "It must be reemphasized that the entry of a substance in the registry does not automatically mean that it must be avoided. A listing does mean, however, that the substance has the documented potential of being harmful if misused, and care must be exercised to prevent tragic consequences."³⁷

EPA Regulations under TSCA

TSCA § 8(c): Significant Adverse Reaction Records

EPA has made its final regulation implementing § 8(c) of TSCA³⁸ effective as of November 21, 1983.³⁹ The regulation requires that records of adverse health environmental reactions to chemicals be retained for a minimum of five yearsexcept for records of adverse reactions to the health of employees, which must be retained for a period of 30 years. The records required to be kept under § 8(c) include records of consumer allegations of personal injury or harm to health, reports of occupational disease or injury, and reports of complaints about environmental damage submitted to the manufacturer, processor, or distributor of a chemical. Clearly, these records will facilitate proof of the recipient's knowledge and duty to test, to warn, and to protect employees and customers from reported chemical hazardous. Such records will be important evidence in toxic tort litigation.

TSCA § 8(d): Health and Safety Study Reports

Under § 8(d) of TSCA⁴⁰ EPA issues rules requiring manufacturers, processors, and distributors of chemicals to submit lists of unpublished health and safety studies of which they are aware relating to chemical substances or mixtures. EPA may subsequently require production of such studies. Such lists and underlying studies would easily be subject to discovery in toxic tort litigation and will also serve to document a chemical manufacturer's, processor's, or distributor's awareness of chemical hazards revealed in such studies.

TSCA § 8(e): Notices of Substantial Chemical Risks

Section 8(e) of TSCA⁴¹ requires manufacturers, processors, and distributors of chemical substances or mixtures who obtain information "which reasonably supports the conclusion that such substance or mixture presents a substantial risk of injury to health or the environment" to immediately inform EPA.⁴² EPA from time to time publishes summaries of these § 8(e) reports and under the OSHA hazard communication rule, manufacturers have a duty to be aware of significant new findings bearing on their products. Also, the response of a defendant chemical manufacturer, processor, or distributor to the TSCA § 8(e) reporting duty could demonstrate the actual awareness of a risk. Non-response could show the failure to meet a statutory obligation.

TSCA § 4: Reports of Testing

EPA has arranged for testing of a limited number of chemicals under § 4 of TSCA.⁴³ This list will likely grow. The Interagency Testing Committee's periodic suggestions for additions to a 50-chemical priority testing list will encourage EPA to require more testing; the data obtained from which will be relevant to product liability claims.

TSCA § 5: Pre-manufacture and Significant New Use Regulation Notices

Section 5 of TSCA⁴⁴ require that before a new chemical is manufactured, EPA must be given 90-day advance pre-manufacture notice (PMN) together with information on the chemical identity, proposed uses, known environmental and health data, and likely exposures. Pursuant to § 14(b) of TSCA,⁴⁵ health and safety data in these notices are not to be barred from disclosure by assertions of confidentiality. Similar types of data are required where EPA determines that a chemical is being put to a significant [13 ELR 10422] new use in a significant new use regulation. Although the extent of toxicity testing included in PMNs to date has been limited, EPA will likely increase its requirements in this respect.

Conclusion

It is ironic that such a regulatory structure for toxic chemicals should first be implemented during an administration known to be concerned about the burden of regulation on business and at a time when members of Congress frequently are asserting the need for new legislation to remove obstacles to toxic tort litigation.⁴⁶ While the OSHA and TSCA regulations referred to are directed for the most part at occupational exposures, the new information gathered will document industry awareness of hazards and the adequacy or inadequacy of warnings relevant in any toxic tort litigation. Together with EPA regulations implementing the hazardous substance provisions of the Clean Air Act, Federal Water Pollution Control Act, and Resource Conservation and Recovery Act, the OSHA and TSCA regulations afford unprecedented administrative control of toxic chemical hazards.

While the new OSHA and TSCA regulations may for a time fuel more product liability litigation, any liability documented by the newly available information will be aimed at specific conduct of identified parties who will usually be capable of correcting the hazardous condition. This direct relation of liability for chemical hazards to fault or foreseeability is likely to be the most economically efficient and fair method of assessing damages and of achieving higher standards of care including substitution of less harmful materials. From this perspective the new OSHA and TSCA rules should have a powerful cumulative effect on standards of care in the industry. By contrast, pending legislative proposals to facilitate toxic tort litigation by presumptions as to causation, by multiplying the defendants who may be held liable, and by creating new federal causes of action seem likely to create unpredictable group liability in the chemical industry with little relation to the actual conduct of individual defendants.⁴⁷ Congress shoul wait and see what effect the new OSHA and TSCA regulations will have before determining that more drastic measures are needed.

1. 48 Fed. Reg. 53340 (1983) (to be codified at 29 C.F.R. § 1910.1200). The original version of this rule was issued on January 16, 1981 (46 Fed. Reg. 4412), in the last days of the Carter Administration, and was withdrawn several weeks later on February 13, 1981 (46 Fed. Reg. 12214). A new version was proposed over a year later, on March 19, 1982 (47 Fed. Reg. 12092).

2. 15 U.S.C. §§ 2601-2629, ELR STAT. 41335.

3. Atkeson & Neidich, A Status Report on Proposals for a Federal Product Liability Act, 38 BUS. LAW. 623 (1983). The New Jersey Supreme Court in Beshada v. Johns-Manville Products Corp., 90 N.J. 191, 447 A.2d 539, 13 ELR 20533 (1982), ruled, for example, that it would be in the public interest to impose liability even in cases where the manufacturer of an asbestos product could not have known of the hazard, since "the manufacturers and distributors of the defective products can best allocate the costs of injuries resulting from it" because "if a product was in fact defective, the distributor … should compensate its victims for the misfortune it inflicted on them," and because by "imposing on manufacturers the costs of failure to discover hazards, we create an incentive for them to invest more actively in safety research." Id. at 207, 447 A.2d at 548.

4. RESTATEMENT (SECOND) OF TORTS § 402A comment j.

5. 493 F.2d 1076 (5th Cir. 1973), cert. denied, 419 U.S. 869 (1974).

6. 493 F.2d at 1089-90 (emphasis added).

7. 48 Fed. Reg. 53340 (1983) (to be codified at 29 C.F.R. § 1910.1200).

8. OSHA intended the hazard communication rule to preempt the growing number of state and local "right to know" laws. Id. at 53340 (to be codified at 29 C.F.R. § 1910.1200(a)(2)). What impact this preemption will have is unclear. Since some state and local laws have the purpose of informing the adjacent community rather than merely the employees or a chemical manufacturer, the OSHA rule is unlikely to be totally preemptive.

9. The OSHA hazard communication rule applies to all chemical manufacturers and importers and to all employers in the manufacturing sector, Standard Industrial Classification (SIC) Codes 20-39. These are as follows:

(20) Food and kindred products;

(21) Tobacco manufacturers;

(22) Textile mill products;

(23) Apparel and other textile products;

(24) Lumber and wood products;

(25) Furniture and fixtures;

(26) Paper and allied products;

(27) Printing and publishing;

(28) Chemical and allied products;

(29) Petroleum and coal products;

(30) Rubber and plastic products;

(31) Leather and leather products;

(32) Stone, clay, and glass products;

(33) Primary metal industries;

(34) Fabricated metal products;

(35) Machinery, except electrical;

(36) Electrical equipment and supplies;

(37) Transportation equipment;

(38) Instruments and related products;

(39) Miscellaneous manufacturing products.

Manufacturers and importers of hazardous chemicals have two years to comply with the new OSHA rule. The other distributors and manufacturers who receive the labelled chemicals and their MSDS have an additional six months in which to institute all the warning procedures called for. (At common law the duty of manufacturers and importers to warn is not limited to sales to users in SIC categories 20-39. Chemical manufacturers and importers need to alert all users of their products who may suffer injurious exposures and this is perhaps best done by labels and the MSDS.)

This broadcast disclosure of hazard information is bound to raise concerns about protecting trade secrets. The OSHA rule permits a chemical manufacturer or importer to mask the exact chemical identity or composition of a substance in warnings and MSDS in order to protect trade secrets but allows doctors and nurses treating patients believed to be injured by a chemical to obtain this information in emergencies. In addition, information on an MSDS declared to be "confidential" must be made available to "health professionals" (e.g., physicians, industrial hygienists, toxicologists, or epidemiologists) providing medical or other occupational health services to exposed employees on condition that a confidentiality agreement and written justification are provided. 48 Fed. Reg. 53342, 53344 (1983).

10. Of course, if the worker could use information available under the OSHA rule to prove that the employer "deliberately" caused the injury, a tort action might lie.

11. 48 Fed. Reg. 53340 (1983) (to be codified at 29 C.F.R. § 1910.1200(b)(2)).

12. Id. at 53341 (to be codified at 29 C.F.R. § 1910.1200(c)).

13. Id. In addition, the term "health hazard" is expressly defined to include "chemicals which are carcinogens, toxic or highly toxic agents, reproductive toxins, irritants, corrosives, sensitizers, hepatotoxins, nephrotoxins, neurotoxins, agents which act on the hematopoietic system, and agents which damage the lungs, skin, eyes or mucous membranes." Id.

14. Id. at 53342 (1983) (to be codified at 29 C.F.R. § 1910.1200(d)(3)(i)).

15. Id. (to be codified at 29 C.F.R. § 1910.1200(d)(3)(ii)).

16. Id. (to be codified at 29 C.F.R. § 1910.1200(d)(5)).

17. OSHA hazard communication standard § 1910.1200(d)(4), id., and Appendix A, id. at 53346. Apparently the 1980 carcinogen candidate list proposed by OSHA, 48 Fed. Reg. 53672 (1980), is not included but it is unclear as to whether some of these substances might be included by application of the criteria in the definition of "health hazard."

18. 48 Fed. Reg. 53343 (1980) (to be codified at 29 C.F.R. § 1910.1200(d)(5)(iv)).

19. Id. at 53346.

20. Id. at 53347.

21. Id.

22. Id. at 53347-48.

23. Id. at 53343 (to be condified at 29 C.F.R. § 1910.1200(e)(1)).

24. Id. (to be codified at 29 C.F.R. § 1910.1200(e)(1)(i)).

25. Id. (to be codified at 29 C.F.R. § 1910.1200(g)(6)).

26. Id. (to be codified at 29 C.F.R. § 1910.1200(g)(6)).

27. Id. (to be codified at 29 C.F.R. § 1910.1200(g)(5)).

28. Id. at 53346.

29. See supra text accompanying note 7 (Borel quote on testing).

30. FURMER & FRIEDMAN, PRODUCTS LIABILITY P70.58, at 138-39 (1983).

31. 15 U.S.C. §§ 2603, 2604, 2607, ELR STAT. 41336, 41338, 41343.

32. See infra text accompanying notes 38-45.

33. 29 C.F.R. § 1910.20.

34. Collective bargaining agents are deemed authorized representatives for purposes of access to these materials.

35. 29 C.F.R. § 1920 app. B.

36. NIOSH, REGISTRY OF TOXIC EFFECTS OF CHEMICAL SUBSTANCES (1983).

37. 29 C.F.R. § 1910.20 app. B.

38. 15 U.S.C. § 2607(c), ELR STAT. 41344.

39. 48 Fed. Reg. 38178 (1983).

40. 15 U.S.C. § 2607(d), ELR STAT. 41344.

41. 15 U.S.C. § 2607(e), ELR STAT. 41344.

42. Id. EPA's interpretation of this rule appears at 43 Fed. Reg. 1110 (1978). Section 8(e) requires companies handling chemicals to set up a system to report evidence of "substantial risk" to EPA.

43. 15 U.S.C. § 2603, ELR STAT. 41336.

44. 15 U.S.C. § 2604, ELR STAT. 41338.

45. 15 U.S.C. § 2613(b), ELR STAT. 41346.

46. Representative Florio recently introduced TSCA amendments, H.R. 4303, that would create a federal cause of action with strict liability for injury from toxic substances. See 129 CONG. REC. E5316-17 (daily ed. Nov. 3, 1983); 13 ELR 10425 (summary of legislation introduced).

47. See, e.g., Representative Florio's bill, H.R. 4303, referred to in note 46, supra.