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14 ELR 10133 | Environmental Law Reporter | copyright © 1984 | All rights reserved A Comparison of the 301(e) Report and Some Pending Legislative ProposalsAlfred R. Light [14 ELR 10133]Congressional proposals addressing hazardous waste exposure injuries have proliferated. These proposals are promoting wide discussion at conferences and studies by numerous trade associations, while having stimulated the creation of a Reagan Administration major interagency task force. The hazardous waste proposals are only part of the broader congressional debate concerning toxic exposure compensation, which includes the issues of asbestos, Agent Orange, and radiation injuries. At the center of the hazardous waste compensation proposals is the Report of the "301(e) Study Group"1 under the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund).2 As an associate working with George C. Freeman, Jr., a member of the Study Group, I was able to observe many of the Group's meetings.In part, the congressional proposals implement the recommendations of the Study Group, sometimes coincidentally and sometimes deliberately; sometimes they diverge in part, often deliberately I would think. I would like to compare the current proposals with the 301(e) Report recommendations. I do not propose to do a thorough comparison now, but instead to make some of the more interesting observations.3 S. 917: Senator Stafford's Resurrection of S. 1480 Of the currently pending proposals, the most direct descendant of the 1980 Superfund debate is Senator Robert Stafford's S. 917, which he introduced on March 24 and which we discussed last night. As Senator Stafford noted in his statement introducing the bill, it contains largely the same third party liability provisions that had been included in the 96th Congress' S. 1480 as reported from the Senate Environment and Public Works Committee but were deleted from the Superfund Act as part of the 1980 compromise. The new bill is the product of an earlier era,except in a few selected provisions where S. 917 is even more plaintiff-oriented than was S. 1480. Like S. 1480, S. 917 expands the response cost recovery section of the Superfund Act — § 107 — to permit private persons to recover damages for personal [14 ELR 10134] injuries and direct and indirect economic losses. The expansions beyond S. 1480 are: (1) a liberalization of the Act's statute of limitations from three to six years to begin running only upon discovery of an injury and its cause, and (2) a rewriting of the bill's savings clause regarding other federal and state law rights. In light of Senator Stafford's Opening Address and other comments he has made, the new savings clause is probably intended to imply the existence of "federal common law" rights beyond those set forth in the statutory cause of action.4 Two problems exist with the S. 917 approach. First, the bill incorporates by reference all the ambiguities and peculiarities of the present Superfund liability regime. Private plaintiffs would benefit from the Justice Department's efforts to expand the scope of § 107 liability to its outer limits, that is, to absolute, joint and several vicarious retroactive liability for anyone remotely connected or associated with the generation, transportation, storage or disposal of any hazardous substance as defined in any environmental statute. Also, original exclusive jurisdiction is granted to the federal district courts, as in Superfund, thus moving all toxic tort cases, whether diversity jurisdiction exists or not, into the already overburdened federal courts. The second problem with S. 917 is generally all of the flaws that led Congress to reject the third party liability provisions in S. 1480 in the first place. In this regard, I refer you to the separate statements of Senator Simpson and Senators Domenici, Bentsen and Baker in the Senate Environment and Public Works Committee Report on S. 1480.5 S. 945: Senator Mitchell's "Pale Twin" of S. 917 Another relatively direct descendant of S. 1480 is Senator George Mitchell's S. 945, also introduced on March 24. S. 945 is another version of the Superfund liability expansion approach. Mitchell's S. 945 expands the Superfund § 107 liability regime to cover medical expenses for personal injury, but it does not grant recovery for economic losses resulting from those injuries or recovery for private property damage as would S. 917. S. 945 does not contain the many exemptions and qualifications, concerning the type of release that may lead to compensable damages, that were contained in S. 1480 and are now set forth in S. 917. Mitchell's bill therefore appears shorter and simpler insofar as its creation of third party liability is concerned. Most of the complexities, however, arise from the bill's integration of the present Superfund Act's § 107 liability regime. For example, it would apparently be necessary, under the Superfund Act as amended by S. 945, that a release or threatened release cause the incurrence of response (i.e., cleanup) costs in order to trigger liability for recovery of medical costs. In addition, the Act as amended may not create a private right of action for medical costs but may only permit claims against the fund which may subsequently be reimbursed to the government by those liable under § 107. On the other hand, Senator Mitchell seemed to present a different view in his statement introducing the bill, that is, that a federal cause of action was indeed created. Senator Mitchell or his staff may not have thought through completely the problematical effects of the bill's parsimonious changes to the complex, ambiguous Superfund Act. S. 946: Senator Mitchell's Implementation of the 301(e) Report Senator Mitchell has also drafted a bill implementing the recommendations of the 301(e) Report. The Senator stated that he was introducing the additional bill because he believed that the Report's recommendations should become a part of Congress' deliberations. Senator Mitchell's draft is an intriguing interpretation of the Study Group's "consensus" recommendations. I do not envy the draftsman, who surely must have grappled with the puzzling inconsistencies and ambiguities in those recommendations in an effort to reduce the Group's negotiated compromises into statutory language. The divergence between the Report's consensus and this bill's allegedly implementing provisions should be illuminating to those in industry who would ultimately have to bear the financial burden of claims under either the Study Group's recommendations or the S. 946 provisions. The gaps and ambiguities that the Study Group left in its proposal, either by design or by inadvertence, have been filled with anti-industry provisions. I would like to highlight a few of these and some of the provisions that diverge from the Study Group Report. First, § 10 in S. 946 would add a new "Section 116" of the Superfund Act instructing the states that certain "improvements should be made in [state court] actions." S. 946 also provides in Section 9: Regardless of any State or Federal statutory or common law to the contrary, no person who asserts a claim or receives an award under this section shall be barred from pursuing such claim or cause of action against any party or parties alleged to be responsible, under any provision of State law or under Section 116. Senator Mitchell is attempting either to create a federal cause of section under Section 116 in federal court or to order the states to create a law incorporating the provisions of that proposed section in state court. In either or both events, S. 946 is totally contrary to the expressed recommendations and legal perspectives of the Superfund Study Group. The content of the "state law" that Senator Mitchell would have Congress ordain is also an amusingly biased variation from the 301(e) Report. The movel "channeling" of liability which the Study Group recommended that the states consider as an apportionment of liability alternative is completely missing from S. 946. "Channeling" means that one and only one firm at a time should be held strictly liable for any hazardous waste exposure. In essence, the person in control of a hazardous waste when an accident occurs is strictly liable for its consequences up to a certain level of liability. The entire industry bears excess liability above that level, up to an overall ceiling of liability.Reminiscent of the Price-Anderson scheme, the system would preempt state tort law in favor of one uniform liability system. The system involves a high level of financial protection for waste handlers and may yield substantial savings by eliminating costly cross-actions among the handlers. The overall reform objective is to improve the ratio of dollars paid to injured persons to the dollars paid for the system's operating costs. But this approach is not mentioned in S. 946. Other provisions in S. 946 differ from the Study Group recommendations. While the 301(e) Report did recommend to the states a relatively stringent standard of strict liability, it did not suggest that the states adopt the ambiguous and confusing standard of liability that Congress enacted in the [14 ELR 10135] Superfund Act's § 107. S. 946, however, recommends just that. Again, if the Justice Department's view of the absolute nature of that liability prevails, especially with regard to those only remotely associated with a substance that has been released, S. 946's expansion of the Superfund liability regime would go far beyond the expansion suggested by the majority of the Superfund Study Group. The Group recommended that defendants as well as plaintiffs be allowed to join parties plaintiff and parties defendant in a joint trial of causation and liability issues. S. 946 obscured this recommendation, making it ambiguous as to who may cause joinder of such parties. S. 946 also complicates the clear Study Group recommendation that no subrogation of claims by the Fund in the administrative compensation plan be permitted in connection with a defendant's activities occurring prior to enactment. The availability of subrogation in S. 946 is geared not to a defendant's activities but to release and exposure. A generator could be liable for a claim arising out of his waste generation years earlier if the release or exposure creating injury occurred "wholly or partially" after the Act was passed. This language completely undercuts the Study Group's intent to make subrogation of Fund claims prospective only. In another area, the Superfund Study Group proposed (1) an extension of the "Superfund" tax itself on crude oil and petrochemicals and (2) a waste generator tax. S. 946, however, only expands the front-end tax and ignores the back-end tax section of the Study Group's proposal. Other features of the Mitchell bill are unrelated to any recommendations, or even discussions, of the Study Group. In this category would be the bill's attempt to have EPA rush to develop the so-called "Hazardous Substance Presumption" documents for dioxin, PCBs, various pesticides, cadmium, chromium and lead within 180 days. Another example is permitting half of the Superfund to be used for noncleanup purposes rather than the twenty percent permitted in the present Act. In fact, it was my view that the Group had agreed upon a compensation fund, similar to but separate from the cleanup fund. I could enumerate other divergences, but I think these observations should indicate that Senator Mitchell's bill does not reflect completely the "consensus" reached in the Superfund Study Group and that the divergence moves in a one-way direction. H.R. 2330 and H.R. 2482: The LaFalce Administrative Compensation Plan Congressman John J. LaFalce's toxic injury compensation bills, H.R. 2330 and H.R. 2482, are virtually identical to the bill he introduced (H.R. 7300) when the Superfund 301(e) Report was released during the lame duck session on the 97th Congress.6 There are only two changes from that earlier legislation, one intentional and one probably unintentional. First, Rep. LaFalce has moved the federal administration of his "victim compensation" plan from the Environmental Protection Agency (EPA) to the Department of Health & Human Services (HHS). The second change was apparently a drafting mistake that arose from an attempt to eliminate a requirement for the defendant to prove a negative. The earlier bill had stated that in order to avoid liability the defendant would have to prove that a "release was not the result of a failure of the defendant to exercise due care" (emphasis added). The new bill, however, requires that, in order to avoid liability, a defendant "fail to establish … that … [a] release was not the result of a failure of the defendant to exercise due care" (emphasis added). Congressman LaFalce's proposals are the same as those he drafted in 1981. As such, his drafting has no direct relationship to the Superfund Study Group's recommendations, despite the public understanding to the contrary. There is some coincidental similarity between the Study Group's recommendations and LaFalce's bill, in particular the creation of an administrative compensation remedy to supplement remedies in the courts. LaFalce's approach, however, goes far beyond (and diverges from) the Superfund Study Group's recommendations in many respects. Most importantly, it creates a federal cause of action for pollutioncaused injuries and illnesses which the Study Group rejected. The proposal federal cause of action includes a broad presumption of causation for a plaintiff who shows that his exposure was "at such a level and for such duration as would be reasonably likely to cause or significantly contribute to the class or type of injury, illness, or damage allegedly suffered…." Similar to provisions in S. 1480 and in Senator Stafford's S. 917, an extremely broad variety of evidence is declared to be relevant to a causation determination. The LaFalce presumptions are considerably broader than the presumption that the Study Group recommended, although I think the approach is confusing and unwise no matter how narrowly such a statutory presumption is drafted. The LaFalce proposal is unlike the Senate Superfund amendments in several respects. LaFalce's bill creates a liability section outside the Superfund Act, unlike Senator Stafford's and Senator Mitchell's approaches. The identified responsible parties under LaFalce's bill, however, are virtually identical to those in the Superfund Act: they are the owner and operators of a waste site, transporters, and those who arrange for disposal or transportation. Jurisdiction under the LaFalce proposal exists "in any court of competent jurisdiction in any state" in addition to the federal courts. This contrasts with the exclusive federal district court jurisdiction under the present Superfund Act. In another respect, however, LaFalce's proposal treats the states in an imperial manner. The proposal contains very unusual state law "preemption" provisions intended to force state workers' compensation boards to award claims based on the federal statute's eligibility criteria. For example, one provision states: In any administrative or judicial proceeding under a State's workers' compensation law, the presumption of cause provided by section 102(a)(1) shall constitute the law of such State (section 104(b)). Such an approach presumes that the Congress can rewrite state law where it conflicts with federal policies rather than write a federal law which would then displace state law through traditional preemption. In my view, this approach is constitutionally suspect. The Superfund Study Group, on both policy and legal grounds, rejected this approach. The LaFalce proposal includes an administrative compensation plan in addition to the federal cause of action. First, the plan is completely federal, administered by a federal agency board, funded by federal taxes, and with federal judicial review of agency decisions. Although the locus of the plan's administration is now in HHS the federal agency's duties remain the same. Perhaps the most intriguing aspect of this administrative compensation system is the proposal for its funding. The Toxic Victim Compensation Trust Fund would draw funds from the "unobligated balance" in the Superfund at the time any benefit is awarded to a victim. The Victim Fund is also authorized to obtain loans from the Treasury. The Fund would be reimbursed through subrogation actions. This inter-fund transfer apparently was intended to permit Congressman LaFalce to claim that, unlike the 301(e) Study Group's recommendations, his bill establishes no new tax on industry to fund the toxic victims compensation program. His proposal implies that the subrogation system will work more efficiently than what might seem to be realistic to some. H.R. 2582: The Markey/Florio Bill The lastest "Superfund"-type victim compensation bill is the legislation drafted by Massachusetts Congressman Edward J. Markey and New Jersey Congressman James J. Florio. In a major change from the Study Group Report, the bill creates the federal cause of action which the Superfund Study Group explicitly rejected. The federal cause of action explicitly provides for strict, joint and several liability, and pain and suffering damages. This bill is not, however, the reincarnation of S. 1480 that S. 917 and S. 945 are, nor is it an interpretation of the 301(e) Report similar to S. 946, nor does it mimic the overbroad federal bureaucracy approach of Congressman LaFalce's bills, H.R. 2330 and H.R. 2482. I think it is an attempt to advance beyond the discredited solutions of yesteryear. While the bill still contains critical flaws, it offers a useful step in raising the level of discussion on these issues. The Markey-Florio bill is in two parts, an administrative compensation part permitting the EPA to award compensation for physical injuries and limited economic loss where a person has "suffered a physical injury or illness caused by exposure to a hazardous substance," and a second part establishing a strict liability federal cause of action. Limitations built into the "two tier" approach distinguish this bill from the others. Many of these limitations were included in the Superfund 301(e) Report's proposed plan. For example, the liability system is not imposed retroactively either in reimbursement of the fund or in the federal cause of action. While a kind of joint and several liability is imposed, liability generally is imposed only for exposuresoccurring while one has possession of or control over a hazardous substance or if one owns or operates a site at which a person is exposed. This resembles the "channeling" approach in some respects. Liability is not imposed on an owner or operator who did not know or reasonably should not have known that a substance was located at a facility when he acquired the site or in which no action or inaction of such a person caused or contributed to an exposure. If an exposure results from a federally permitted release, the defendant is not liable absent negligence. Further, the results of an administrative proceeding may not be introduced into evidence in any court action. There is also a collateral source offset for any social insurance program such as Medicare and Medicaid and for private insurance in both tiers. Thus, both tiers are "excess liability" systems only. In addition, any person covered by workers' compensation is excluded completely from recovery under either system. Interestingly, all of these limitations were discussed in the Superfund 301(e) Report and most were adopted in the Report. Unfortunately, H.R. 2582 also picks up some of what, in my view, are the less carefully reasoned recommendations, including a statutory presumption of causation in the administrative compensation system. As the Study Group recommended, however, the presumption is not applied in the federal cause of action, although health effect documents prepared for use in connection with such presumptions may be introduced in a court action by any party. The administrative system is funded mostly by oil and petrochemical taxes as is the "Superfund" and to a lesser extent by a waste-end tax as is the Superfund Act's "post-closure" fund. I would oppose H.R. 2582 in its present form because of the tax and statutory presumptions provisions and because I oppose the superimposition of a duplicative federal cause of action onto existing state tort law. H.R. 2582, however, presents some interesting possibilities. Suppose the strict liability cause of action linked to control over a waste were to displace rather than duplicate state tort law, providing the exclusive tort remedy. There would be no costly cross-actions in workers' compensation cases nor contingent liability in situations where exposure occurred after a hazardous substance had left one's control. In addition, liability for hazardous substances exposures would be uniform throughout the United States, with access to the federal courts, eliminating conflict of law, choice of law, and many jurisdictional questions and consequently the current opportunities for forum-shopping. Suppose further that the administrative compensation system were limited to "orphan sites" for which no responsible party could be sued (like California's Hazardous Substance Compensation Account). Anyone claiming against the Fund would be barred from bringing a lawsuit against anyone for the same exposure. A tax either on all the industries responsible for exposures or from general revenues would constitute a fair plan. With these amendments, H.R. 2582 would be much improved. In other words, properly limited and drafted, a two-tier toxic substance compensation approach may be preferable to the present system. Another legislative toxic substances proposal that merits serious attention is the recent state-level proposal of the North Carolina Governor's Waste Management Board. The Board felt that the need for any administrative compensation system had not been demonstrated. The Board recommended, however, a new statutory prospective strict liability system in which generators and those in possession of a substance would be held liable for damages arising out of a statutorily defined hazardous waste occurrence. Generators could avoid liability upon proof that they had transferred the waste to a treatment, storage or disposal facility. A manifest would provide presumptive evidence of that transfer. The North Carolina scheme is a more limited no-fault liability proposal than are any of the congressional proposals. The North Carolina Board carefully assessed the Superfund 301(e) recommendations and then adopted those recommendations in part, while rejecting some of the Report's other proposals. >100"> >101"> 1. INJURIES AND DAMAGES FROM HAZARDOUS WASTES - ANALYSIS AND IMPROVEMENT OF LEGAL REMEDIES, A REPORT TO CONGRESS IN COMPLIANCE WITH SECTION 301(e) OF THE COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION, AND LIABILITY ACT OF 1980 (P.L. 96-510), by the "Superfund 301(e) Study Group," Serial No. 97-12, Pts. 1 and 2, printed for the use of the Sen. Comm. on Environment and Public Works, 97th Cong., 2nd Sess. (Sept. 1982), at 1-20 (hereinafter cited as "The 301(e) Report"). 2. 42 U.S.C. § 9601 et seq., ELR STAT. 41941. 3. The table appended to these remarks is somewhat more comprehensive. 4. S. 917, 98th Cong., 1st Sess. § 5(a)(3) (1983) (adding § 107(i)(5) changing the savings clause from the Act "does not affect or modify" other law to the Act "does not diminish" rights under other law). 5. S. REP NO. 96-848, 96th Cong., 2d Sess. 116-122 (1980). 6. The only difference between H.R. 2330 and H.R. 2482 is that H.R. 2330 starts the running of the statte of limitations upon discovery of a disease, and H.R. 2482 only upon discovery of a disease and its cause. H.R. 7300 was similar to H.R. 2330 in this respect.
2. Through use of present CERCLA claims procedure against the Superfund. 3. Because of present Superfund Act's § 112. 4. Minority advocated binding election of remedies for claimants. 1. Through CERCLA § 114(c)
2. Confusing wording. 3. Under state law. 4. But one member recommended federal preemption of punitive damages where federal regulation is comprehensive. 5. Plus under state law through pendent jurisdiction. 14 ELR 10133 | Environmental Law Reporter | copyright © 1984 | All rights reserved |