I would like to address four points: the genesis of the Environmental Law Institute Study, what the ELI Study says, the important differences between the ELI Study and the 301(e) Report, and some of the policy considerations behind our approach to the problem of compensation of victims of exposure to toxic substances.

First, the genesis of the ELI report, that is, how we became involved with this issue. Our Toxic Substances Program was commissioned in 1979 to examine the adequacy of state law to deal with victims of toxic substances injuries. A report was completed for the Congressional Research Service of the Library of Congress and was entitled Six Case Studies.¹ It studied the case law of six different [14 ELR 10109] states, Texas, Michigan, Missouri, New Jersey, California, and Alabama, and their treatment of this category of victim. This report provided the background to the debate over the Superfund law in the 1979-1980 session of the Congress.

The report concluded that victims faced a great deal of difficulty in recovering, whether from an administrative compensation scheme or in a lawsuit. The report identified problems with the system and pointed toward the need for administrative or legislative action in the area. As an example of the practical effect of a victim's difficulty in recovery, the average time it takes to recover for an occupational injury is two months, yet the average time for an occupational disease is one year. The level of income replaced for an occupational injury is 60 percent, yet for occupational disease it is 40 percent. The primary source of compensation for occupational disease is Social Security, which was designed only as a general safety net.

Following publication of our Six Case Studies, the Virginia Environmental Endowment asked the Institute to follow up the report with a model state statute addressing the identified problems. Our methodology was to develop a series of background papers, approach various interest groups, and find a neutral forum, in this case the University of Virginia Law School, for fruitful discussion to explore the issues. We reached out to people in the insurance industry, the chemical industry, environmental groups, and in the Virginia legislature, to involve them in a network of commentary as Jeffrey Trauberman, the ELI researcher, prepared the model statute.

After four drafts and extensive comments from each round of circulation, we issued a final report in the Fall of 1982. We printed 500 copies, all of which were distributed within a month. The model statute has been reprinted at 7 Harvard Environmental Law Review 177 (1983).

Four aspects of the ELI Study particularly deserve highlighting. First, the statute sets up an administrative compensation system. Second, it changes the rules of evidence. Third, it proposes changes concerning rebuttable presumptions in proving causation in a way that we believe is more equitable for all parties concerned. And finally, the model statute proposes a broad-based financing scheme.

An administrative compensation fund is created for the members of the general public. Claims against the fund are based on no-fault liability. The fund is designed to compensate chronic and progressive health effects primarily, because the uncertain etiology of these injuries causes them to be least successfully remedied by the existing legal, regulatory, and marketplace systems. A victim does have the choice of resorting to a private lawsuit in court.

If the situation involves an employer/employee relationship, the claim must be remedied under the workers' compensation laws. The ELI Study, however, recommends changes to the workers' compensation system so that these claims may be handled more equitably than is currently the case. These changes parallel the proposal for the general fund, such as liberalizing the rules of evidence and modifying the requirements for proof of causation.

Expansive evidentiary rules are another important aspect of the Study. The mix between science and law is very troublesome in this area. The Study recommends admitting epidemiological data, results of animal or human laboratory toxicological studies, test data on microorganisms and tissue samples, information on the correlations between the structures of chemical substances or mixtures and their potential to cause or contribute to a covered disease in an individual, and studies of the effect of exposure to two or more substances, as evidence in a very liberal manner.

The ELI Study has pinpointed the need for more information. We have tried to create a statutory system providing incentives for disclosing information about chemical hazards. This is one of the frontier elements in the Study.

Another major proposal in the Study is the modification of principles of proof of causation. In this area of uncertainty in the application of scientific principles in the law, most legal writers consider the concept of rebuttable presumptions. The rebuttable presumptions created in the ELI Study apply only in claims against the fund and claims under the modified workers' compensation system.The rebuttable presumption is not available for private lawsuits nor for subrogated claims brought by the fund.

There are three major elements of the rebuttable presumption in the ELI Study. First, it is only available for covered diseases. Covered diseases are those associated with chronic and progressive health effects, such as cancer. Second, there must be a showing of exposure to the chemical, including a showing of sufficient duration of exposure. Third, the claimant must show causation. This is where the epidemiological data and all other studies admissible under the liberalized rules of evidence come into play. This showing gives rise to the rebuttable presumption that the exposure to the chemical caused the injury.

After the claimant makes this showing, the fund itself may defend. One available defense is modeled along the lines of a restricted "assumption of the risk" theory, i.e., that a claimant contributed by knowingly and voluntarily encountering the hazard. An example might be a voluntary lifestyle risk, such as smoking. The administrator of the fund can show that the claimant had the ability to appreciate the risk that he was undertaking and that it was fair to expect the claimant to act upon that information, in which case the presumption shifts back to the claimant's side. This defense is also available in private lawsuits.

The ELI Study recommends establishment of a compensation scheme financed by a tax on oil and chemical feedstocks for the initial baseline of the fund. The Study also sets up a system for phasing in a hazard fee to replace eventually the feedstock tax as the source of money for the fund. This would be accomplished by assigning degrees of hazard to various enterprises and by identifying substances, such as asbestos, that are well recognized causes of harm. The fund should internalize the external costs of injuries.

The ELI Study differs from the 301(e) Report in numerous ways. In some aspects it is more liberal; in other aspects it is less so.Its format marks the first difference. The ELI Study is drafted as a model statute, whereas the 301(e) Report takes the form of policy recommendations. Second, the ELI Study focuses on hazardous substances generally, including occupational hazards and product liability hazards; the 301(e) Study is limited to hazardous waste.

The ELI Study is more restrictive than the policy recommendations of the 301(e) Report in that, under the ELI model act, once a victim recovers from the fund, he must repay the fund award before a private suit can be brought against the responsible party. Under the 301(e) Report recommendations, once the victim recovers from the [14 ELR 10110] fund, he can sue without first reimbursing the fund; but if the claimant/plaintiff does not recover an extra 25 percent over and above the fund payment, then he may be assessed court costs.

Differences also exist with regard to the financing of the funds. The ELI model statute phases in a tax based on the risk of injury from the activity, whereas the 301(e) Report simply increases the tax established by CERCLA on the chemical feedstocks.

The rebuttable presumption in the 301(e) Report is only available based on a government document, the Toxic Substance Document. The ELI Study does not require any such special effort. The presumptions can be triggered by governmental studies as well as by private scientific studies.

A significant difference between the ELI and 301(e) proposals is that ELI focuses on designated diseases. These are chronic diseases, such as cancer. The 301(e) Study covers all health effects. Property damage is not recoverable under the 301(e) Study compensation scheme, but the ELI model statute includes one title addressing property damages. Such damages can be recovered if all other avenues (such as private suits or negotiated settlements) fail. This provision of the fund as a residual source of damages is also available for other uncompensated pecuniary losses such as acute health effects.

From this brief outline of the major aspects of the ELI Study and the comparison with the 301(e) Report, it is evident that our ELI effort is supported by very important policy considerations. The ELI Study is based on our that the issue of toxic waste is but a component of a much larger societal problem. A brief perusal of the "Federal Filings Alert" would make it clear that there are a myriad of toxic substances-related cases, of which hazardous waste exposure cases comprise only a limited portion. The legal, regulatory, and marketplace systems have failed to provide remedies not simply for hazardous waste cases, but also for the larger problem of toxic substance-related injuries. We suggest that to focus only on hazardous waste is to obscure the issue.

The most obvious example of this undercurrent is illustrated by the fact that the model statute does not exclude occupational or product liability claims. The Study also proposes a hazard fee for financing the fund so that the marketplace may operate more effectively to internalize the external costs of injuries. Another example of this measured response approach is the concentration on those chronic and progressive health effects for which the current legal and regulatory systems have failed most significantly to provide remedies.

In conclusion, the ELI Study is a relatively limited and modest undertaking. Yet, it not only contains recommendations that we feel deserve very serious considerationfor implementation at this time, but also identifies frontier issues that deserve further exploration.

1. Environmental Law Institute under the supervision of the Congressional Research Service for the Committee on Environment and Public Works, 96th Cong., 2d Sess., Six Case Studies of Compensation for Toxic Substances Pollution (Comm. Print 1980).

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