Pounds of Cure: General Electric Agrees to PCB Abatement, Cleanup and Research

Because there is typically a long period between environmental release of a toxic substance and appearance of chronic adverse health and environmental effects, many industrial and commercial chemicals that initially appeared innocuous have turned out to be dangerous. It is thus not uncommon for companies to have engaged in widespread production of dangerous substances — and for government regulatory agencies to have sanctioned their wide use and disposal — in good faith ignorance of their potential for harm. Then, when the threat becomes apparent, initiation of effective measures to halt and clean up contamination is likely to prove difficult because of the financial and employment stakes of preserving the status quo, and the uncertain legality and fairness of effectively penalizing a course of conduct that was officially permitted initially.¹

PCB's in the Hudson River

The history of the New York State Environmental Conservation Department's recent enforcement action against General Electric Company for its discharges of polychlorinated biphenyls (PCB's) into the upper Hudson River illustrates this situation perfectly. The outcome of that action — a negotiated settlement of troublesome remedial issues — may be a model for dealing as effectively, yet as fairly as possible, with the like problems that will undoubtedly arise in the context of the use of other toxic chemicals.

PCB's are a family of chlorinated hydrocarbons,² which because of their chemical and thermal stability [6 ELR 10226] came into wide industrial use soon after their initial production around 1930.³ It was not, however, until the mid-1960's that the environmental and health hazards of these chemicals began to be appreciated. By the early 1970's it was widely realized that PCB's cause a variety of harms to aquatic species, that they are extremely persistent in the environment, and that they bioaccumulate and cause skin lesions in humans.⁴ Only in the last few months has evidence come to light that PCB's also are associated with human cancers.⁵

Both federal and state authorities and General Electric, which had long been using PCB's in its capacitor plants on the Hudson River at Edwards Falls and Fort Edward, were slow to respond to the growing body of evidence of PCB hazards. Initial concern at the federal level led in 1971 to formation of an interdepartmental task force concerning PCB contamination of paper packaging material and fish, but the task force soon issued an optimistic report, based perhaps on a 1972 decision by Monsanto Corporation, the sole domestic producer of the chemicals, to restrict production and sales exclusively to closed uses like electrical transformers and capacitors.

Slow Official Response to Threats

The initial response of the Environmental Protection Agency to PCB problems occurred in 1973, when it listed⁶ them as "toxic pollutants" under § 307(a)(1) of the 1972 Federal Water Pollution Control Act Amendments (FWPCA).⁷ Three months later it proposed effluent limitations for PCB's under § 307(a)(2), but following a hearing on formal rulemaking in early 1974, EPA decided to gather further data and repropose PCB limits later. It was not until July 13, 1976, that the agency again proposed⁸ toxic effluent limits for PCB's, in compliance with its settlement agreement in Natural Resources Defense Council v. Train.⁹

EPA was also slow to insist on strict PCB limits in the permit that it granted to General Electric under the FWPCA's National Pollution Discharge Elimination System (NPDES). General Electric initially applied in 1971 for a Refuse Act permit. In 1973, it submitted a revised NPDES permit application. In both, it stated that it was discharging an average total of 30 pounds per day of "chlorinated hydrocarbons" from its two plants.¹⁰ Late that year, the New York State Department made the required "certification" of the permit under § 401 of the FWPCA,¹¹ in the course of which it added a general limitation banning discharges of toxic wastes or deleterious substances in quantities sufficient "to prevent fish survival or impair the waters for any other best usage as determined for the specific waters which are assigned to this class."¹² At this time, however, the state raised no objection to General Electric's proposed PCB discharges. In March 1974 EPA issued General Electric a draft permit authorizing a discharge average of 30 pounds per day of "chlorinated hydrocarbons." It issued the final NPDES permit in December with the same discharge figures, but requiring "chlorinated hydrocarbon" discharges to be reduced to 100 grams or less than 1/4 pound per day by May 1977. The final permit also contained a standard clause reciting that nothing in it was to be deemed to relieve the permittee from any liability under any other federal or state law or regulations.¹³

In August 1975, General Electric's permit became a State PDES permit as the New York State Environmental Conservation Department took over administration of the program. Nevertheless, in December 1975, EPA invoked its retained authority to decrease allowable PCB discharges from 30 pounds per day to roughly 6, and to order General Electric to achieve zero PCB discharge by June 30, 1977.¹⁴

It was not until September 1975 that the Department objected to General Electric's PCB discharges, when it accused the company of violating state water quality standards by its discharges.¹⁵ The Department alleged that General Electric's PCB discharges were harming fish and had damaged the commercial and sport fishing industries on the Hudson. As a result, it claimed, General Electric's discharges violated applicable water quality standards that prohibit impairment of fish survival and fishing on the upper Hudson.¹⁶

[6 ELR 10227]

General Electric's Liability

After hearing extensive evidence concerning the toxicity of PCB's to aquatic species, the pattern of their presence in the upper Hudson, and the destruction of recreational fishing on the river, the Hearing Officer, Professor Abraham D. Sofaer of Columbia Law School, sustained the Department's major charges in an interim opinion.¹⁷ Significantly, the opinion recognizes that despite the Department's and EPA's laxity in permitting continuation of General Electric's substantial discharges, the company is liable for them, notwithstanding its affirmative defense that its NPDES/SPDES permit insulated it from state law liability.¹⁸ Characterizing the corporation's defense as having "more than superficial appeal,"¹⁹ Professor Sofaer nonetheless chose to give effect to the boilerplate recitals in the permits preserving liability under applicable state laws and regulations. By such language, he said, Congress intended to place the responsibility of avoiding violations of applicable laws primarily on dischargers rather than on government agencies, which may fail to insure compliance through shortage of resources or political pressures. Moreover, according to Professor Sofaer, Congress intended by the FWPCA § 401 certification procedure to permit the states to impose water quality or other limitations more stringent than the standards in NPDES permits. As noted earlier, the Department had used this mechanism to add to the permit the exact standard that it was now charging General Electric with violating.

Following issuance of the Interim Opinion, the parties commenced negotiations concerning remedies for General Electric's violations. It was at this stage that the equities of the situation — General Electric's innocent use of PCB'sduring the decades when their risks were not known, and its own and the government agencies' failure to respond promptly once these were known — and the legal uncertainties that these matters spawned, played their most dynamic role.

The Department's initial demands were quite severe. It sought from the company complete and immediate abatement of its PCB discharges, full cleanup of its contamination of the river, and payment of substantial civil penalties. General Electric questioned by the feasibility of reclamation and the Department's power to compel it. It also resisted imposition of penalties and total immediate abatement.

Commenced in April 1976, the negotiation process proceeded for several months, with the Hearing Officer playing a limited role as mediator, and all intervenors²⁰ being consulted on each tentative agreement. In September 1976, the Department and General Electric agreed to a compromise settlement to which none of the intervenors objected.²¹

The Settlement Agreement

The Department agreed to drop its claims for civil penalties and for immediate total abatement. In return, General Electric agreed to spend about $3 million on treatment facilities to achieve a discharge level of less than 1 gram per day within 5 months, and to phase PCB use out entirely by July 1, 1977. The Department further agreed to drop its demand that General Electric completely clean up the PCB's that it has discharged into the Hudson.²² In exchange, General Electric agreed to contribute an additional $3 million to a cleanup program for PCB's or, should that not prove feasible, other substances to be chosen by the Department, and also to spend $1 million on research on the feasibility of PCB cleanup and on the environmental compatability of proposed PCB substitutes and other substances. Finally, the Department committed itself to match General Electric's $3 million contribution to a PCB cleanup program.

In his memorandum recommending approval of the proposed settlement, Professor Sofaer emphasized the balance of equitable considerations in the case. General Electric's course of conduct was, he observed, essentially non-willful. For most of the 45 years that PCB's have been in use, no one was aware of their environmental and health hazards. Moreover, until September 1975 both state and federal authorities had specifically authorized General Electric's discharges.

On the other hand, according to Professor Sofaer, General Electric, EPA and the Department should all have been on notice of PCB threats some time before September 1975. As noted above, evidence of these first came to light in the late 1960's; EPA was aware of high PCB concentrations in fish as early as 1971; and high concentrations in the Hudson River were discovered in 1972.

In short, Professor Sofaer concluded that General Electric did not fit the stereotype of the callous intentional polluter, and that both the company and the authorities should have responded somewhat more promptly to the growing PCB threat. Under the circumstances, he strongly questioned the fairness of the Department's strict demands and the likelihood of their surviving judicial review. And, given the legal uncertainties and the time that might be consumed by extended litigation, all parties involved were willing to accept the immediately effective and certain settlement agreement.

Impressive Practical Precedents

Independent of these considerations, the settlement is remarkably innovative. Most significant is the precedent established by General Electric's commitment to spend $7 million on pollution cleanup and suppression.²³ [6 ELR 10228] In pure money terms, this appears to be the largest cash settlement ever achieved in a pollution case.²⁴ More important is the principle that a polluter accepts financial responsibility for the consequences of his conduct, which is implied in General Electric's commitment of $3 million to cleanup its PCB contamination of the Hudson.

The corporation's acceptance of financial responsibility for its pollution may affect the behavior and liability of other polluting enterprises, at least in cases where a single actor's contribution to the pollution burden is sufficiently clear to make obvious its responsibility — as was true of General Electric in this case. Unfortunately, in many cases the sources of a particular pollution problem are too numerous to permit allocation of individual liability.²⁵ Whether and to what extent doctrines allocating liability among joint tortfeasors would permit impossion of responsibility under such circumstances is at best a difficult question.

Another valuable and unique aspect of the settlement is General Electric's promise to spend $1 million on an immediate research program into, inter alia, the practicability of PCB cleanup. This is a very important and highly uncertain matter. In December 1975, at a press conference announcing a fresh EPA attack on PCB's, Administrator Train seriously doubted the possibility of removing the 700 million pounds of PCB's thought to be dispersed in the environment at present.²⁶ General Electric's research into the question should be free of distortion by potential conflict of interest, for it has agreed to contribute the $3 million toward environmental cleanup whether or not PCB's turn out to be reclaimable.

Also important is General Electric's commitment to study the proposed substitutes for PCB's for environmental and health hazards before putting them into use in mid-1977. This pre-screening approach exemplifies the most prudent and sensible approach to latent risk problems: anticipation rather than repair.

The Department also broke new legal ground by committing itself to pay an amount at least equal to General Electric's to clean up PCB's and thereby acknowledging some sense of joint responsibility for the contamination problem. What remains to be seen is whether the Department's federal counterpart — EPA — will acknowledge comparable joint financial responsibility in appropriate cases.

In sum, the compromise reached by General Electric and the Department over remedies for violations of state water quality laws may be the most practical and effective way to deal with the awkward yet damaging consequences of the long-standing practice of allowing unfettered commerce in chemical substances of unknown character. Rather than years of uncertain litigation over possibly impractical demands, the parties achieved prompt action to explore the potential for, and implement, PCB cleanup, to abate PCB discharges and to phase out PCB use, and to assure that the substitutes are environmentally innocuous.

1. In most respects, of course, the soundest approach to latent risks is to anticipate them. That is the policy of the premarket screening and testing provisions of current federal toxic substances control legislation. See Comment, In Anticipation: Comparing the 1976 Toxic Substances Control Bills, 6 ELR 10138 (July 1976). Both bills would ban PCB's within two years.

2. For details of their chemical composition and properties, see In re General Electric Co., 6 ELR 30007, 30008 (N.Y. Dep't of Envir. Conservation Feb. 9, 1976) (hereinafter Interim Opinion).

3. The Environmental Protection Agency estimates that some 1.2 million pounds of PCB's have been used in the United States since 1929. Preamble to proposed PCB toxic effluent standards, 41 Fed. Reg. 30468, 30469 (July 23, 1976).

4. These effects are summarized in more detail in the Interim Opinion, 6 ELR at 30013-16, and Comment, Federal Toxics Controls: The Patchwork Attack on PCB's, 6 ELR 10056 (Mar. 1976).

Some scientists believe that it is not PCB's themselves that are toxic, but rather an accompanying and highly toxic impurity, polychlorinated dibenzofurans. See Interim Opinion, 6 ELR 30015 n. 30. Whatever the merits of this view, it is immaterial since polychlorinated dibenzofurans almost invariably accompany PCB's. Id.

5. In August 1976, the Mobil Oil Company announced that 6 of 92 workers exposed from 1953 to 1958 to PCB's used at its Paulsboro, New Jersey, plant have died of cancer. Wall Street Journal, August 20, 1976, p. 2, col. 3. Then on September 12, a Japanese scientist told an international conference on chemical carcinogenisis meeting at Cold Springs Harbor, New York, that 5 of the 1000-odd Japanese accidentally poisoned by PCB-contaminated rice cakes in 1968 died of liver cancer within the next 5 years. Washington Post, Sept. 13, 1976, p. A-1, col. 1.

6. 38 Fed. Reg. 24342 (Sept. 7, 1973).

7. 33 U.S.C. § 1317(a)(1), ELR 41115.

8. 41 Fed. Reg. 30468. The proposals would ban PCB discharges by PCB manufacturers and limit transformer and capacitor manufacturers to an average of one microgram/day discharge.

9. 6 ELR 20588 (D.D.C. June 9, 1976).

10. Interim Opinion, 6 ELR 30012.

11. 33 U.S.C. § 1341, ELR 41122-23.

12. Interim Opinion, 6 ELR at 30012.

13. Id. at 30012-13.

14. Reply Trial Memorandum of the Department, File No. 2833, In re General Electric Company, at 7, summarized at ELR 65299 and available in full text through the ELR Document Service.

15. In re General Electric Company, File No. 2833, filed September 8, 1975, ELR 65299.

16. The texts of applicable laws and regulation are set forth in the Interim Opinion, 6 ELR at 30007, 30012.

17. Id., 6 ELR 30007.

18. The argument is summarized at ELR 65299.

19. Interim Opinion, 6 ELR at 30013.

20. In November 1975, the Natural Resources Defense Council and New York State Department of Commerce were permitted to intervene, In re General Electric Company, 6 ELR 30001 (N.Y. Dep't of Envir. Conservation Nov. 19, 1975). In April 1976, the Associated Industries of New York also was permitted to intervene.

21. In re General Electric Company, File No. 2833 (Sept. 7 & 8, 1976) (hereinafter Settlement Agreement). The Settlement Agreement, which was received too late for inclusion in this issue, will be reported in the November 1976 issue of ELR. Meanwhile copies are available from ELR (30 pp. $3.75, ELR Order No. A-1005).

22. This amount is estimated by the Natural Resources Defense Council to total 840,000 pounds between 1966 and 1975 alone. Trial Memorandum, File No. 2833, In re General Electric Company, at 10, available through the ELR Document Service, see ELR 65299.

23. The only part of this commitment that might seem questionable is General Electric's promise to pay roughly $3 million for PCB treatment facilities when it is going to phase the chemicals out by the middle of next year. In fact, however, the treatment facilities should be able to minimize discharge of whatever PCB substitute the company should choose to adopt.

24. A short time before, the Exxon Corporation had agreed to pay a $100,000 civil penalty, the largest ever assessed by EPA under the Federal Water Pollution Control Act, for dumping 500,000 of oil drilling wastes into the Beaufort Sea in Alaska. Wall Street Journal, Sept. 3, 1976, p. 23, col. 2.

25. See, e.g., B. Ackerson et al., The Uncertain Search for Environmental Quality (1974) for an account of the heavy pollution burden borne by the Delaware River estuary from several upstream sources.

26. See Comment, supra note 4, at 10057 n. 7.