The Proposed Federal Cause of Action Is No Solution to Victims Compensation Problems

Leslie Cheek

Title II of H.R. 5640 is a dangerous proposal. It would create a cause of action radically different from any existing today under common law. It would burden the already busy federal courts with cases traditionally handled by the states. And the standard of liability it would impose would give potential defendants no incentive for careful conduct, and might even encourage illegal disposal. We may need a solution to the problems of hazardous waste injuries, but Title II is not what we need.

A Radical New Tort

Tort law strikes a balance among deterrence of tortious conduct, individual justice, and compensation of injured persons. Title II of H.R. 5640 would destroy that balance. It would convert a system that has awarded generous damages on proof of cause and fault into a system in which the fault basis for damages would be eliminated, but the damages and the transaction costs would be even higher than under the common law.

Liability under Title II would be absolute, not "strict." Those associated with a disposal site would have only one defense — that the "disposal" involved was an act of God, war, or an unrelated third party. Liability would attach not to the defendant's association with the substance that caused a plaintiff's harm, but to the mere act of "disposal" of any hazardous substance at a particular site. Liability would be joint and several unless defendants would establish the divisibility of the plaintiff's harm, not its cause, an impossible task.

The cause of action would thus relieve a plaintiff of the common law obligations of identifying the defendants who disposed of the hazardous substance that harmed him and the substance itself, while denying defendants any opportunity to show that the substances they disposed of either did not harm or could not have harmed the plaintiff.

This standard of liability is very close to what one would expect in a limited-benefit, non-fault compensation system. Yet the cause of action would permit the recovery of fault-based damages and attorneys fees. In fact, unlike common law actions, which permit recovery for mental anguish and other intangible damages only where there has been actual bodily injury or contact with a harmful substance, the cause of action in H.R. 5640 would permit recovery of damages for "personal injury," a term far broader than "bodily injury." It might, for example, permit plaintiffs to claim damages for "increased risk" of harm by virtue of proximity to a site where "disposal" of hazardous substances has occurred, regardless of whether any physical harm has resulted from that disposal.

On top of all this, Title II would impose its standard of liability retroactively, in two ways. First, the cause of action would lie against persons who, at any time in history, generated, transported, stored, treated, or disposed of hazardous substances at a facility at which there is a "disposal." Thus, a paint manufacturer who properly disposed of sludge at a site 60 years ago could be held liable for harm caused by the release tomorrow of substances disposed of by others at the same site. Second, Title II's statute of limitations would revive, for a three-year period, all claims time-barred over the past 10 years under any state's statute of limitations, imposing a new legal standard on defendants for past acts.

An Unnecessary Federal Cause of Action

The federal courts are an illogical forum for resolution of victim compensation cases. The Study Group established under § 301(e) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) recommended against the creation of a federal cause of action for hazardous injuries, pointing out that the statutory limitations on tort recovery for long-latency diseases could be remedied in the six states where they still exist. Moreover, the growing list of judgments and settlements in "toxic tort" cases is convincing evidence that state tort law has developed remedies that work to win damages for persons harmed — or even potentially harmed — by exposure to hazardous substances.Indeed, many businesses are concerned that tort law is working "too well" from the standpoint of defendants.

Yet Title II would eliminate citizenship and dollar limitations on access to federal courts, inviting innumerable small claims to clog already crowded dockets. Opportunities for awards of attorneys fees and an unusual provision in Title I of H.R. 5640 allowing potential plaintiffs to petitionthe Environmental Protection Agency for defendant-financed "health effects studies" — a sort of pretrial free discovery — will further encourage suits. And an amendment added by the House Energy and Commerce Committee would permit plaintiffs to sue the same defendant repeatedly as new injuries manifest themselves, unless the first action expressly includes damages for undiscovered injuries.

A Backward Step

A federal cause of action for hazardous substance injuries has no place in the reauthorization of a law whose principal objective is — and should remain — the prompt cleanup of hazardous wastes. Indeed, the enactment of such a cause of action would be inimical to CERCLA's cleanup goal and to the compensation of persons injured through exposure to hazardous substances.

A disposer's liability under Title II would be uninsurable. There is no way an insurer could cost out the exposure under the law, and it is doubtful a disposer could afford the premiums insurers would have to require. When Minnesota created a similar state cause to action, the environmental liability insurance market for businesses subject to the law vanished.

[14 ELR 10297]

The enactment of an uninsurable scheme of liability would sens a devastating message to the thousands of small businesses — dry cleaners, automobile service stations, electroplaters, medical laboratories, and the like — that require the use of hazardous substances. Title II would tell them not only that it does not matter what care they exercised in the disposal of the substances they used in assessing their liability for the harm their substances might cause, but also that they will pay for the harm caused by substances disposed of by others at the same site at any time in history.

Rather than encouraging them to properly dispose of wastes at licensed facilities, this message would invite them to avoid joint and several liability by disposing of their wastes illegally, perhaps by mixing them with ordinary refuse or pouring them down municipal sewers, in which case the municipality would be absolutely liable for the ensuing harm.

And rather than encouraging them to participate on a pro rata basis in any cleanup of a site they have used, it would require them to fight the imposition of any cleanup liability, because of the collateral estoppel effect that participation in the cleanup effort would have on their absolute tort liability for the "disposal" involved.

On top of all this, the cause of action in Title II would do nothing for the cases that pose the worst problems under existing law: injured plaintiffs who cannot find solvent defendants, who cannot prove that their injury is chemically caused, and who haven't the time or resources to struggle through the federal court system.

There is no question that CERCLA could be improved. H.R. 5640's commitment to adequate funding of the cleanup process and strong enforcement is admirable. Avoiding injury is the best solution to hazardous waste problems. But the cause of action in Title II is no solution.