Crawford v. National Lead Co.

No. C-1-85-0149 (S.D. Ohio February 13, 1989)

The court holds that the government contractor defense does not immunize the Department of Energy and its contract-operator of a nuclear weapons plant from tort liability, because they violated applicable environmental laws. The court first holds that operating the plant is an abnormally dangerous activity, given its handling of radioactive materials in an inappropriate place. The court then holds that if emotional distress and lowered property values due to the plant's radioactive emissions are proven, the elements for applying a theory of strict liability are present. In Ohio emotional distress and lowered property values are sufficient harm to support a claim of strict liability, and the seepage of radioactive materials onto plaintiffs' property is the kind of harm that makes operation of the plant abnormally dangerous. The court holds that if emotional distress and lowered property values are proven, the Energy Department and its contractor are also liable for maintaining a private, absolute nuisance. In doing so, the court follows the same reasoning as for its holding that strict liability applies. Moreover, although the plant cannot be a public nuisance, it may nevertheless be a private nuisance because it is authorized by competent legal authority. The court next holds that the government contractor defense does not bar these state tort law claims. The government contractor defense immunizes a contractor who acted pursuant to instructions from the federal government. To apply, the defense requires uniquely federal interests and a significant conflict between federal policy and the operation of state law. Although the operation of a nuclear weapons plant is a uniquely federal interest, if doing so violatesapplicable environmental law and these violations give rise to state law tort claims, there is no conflict between federal policy and the operation of state law. The court holds that the plant violated the Refuse Act of 1899 (§ 13 of the Rivers and Harbors Act) when it discharged uranium into the Great Miami River. The Refuse Act's streets and sewers exception does not include industrial waste. Moreover, the court holds that the plant violated federal regulations for maximum permissible releases of radioactive material into the environment. Finally, the court holds that recent amendments to the Price-Anderson Act do not bar punitive damages. The amendments became effective on August 20, 1988, and have no application to this case.

Counsel for Plaintiffs
Stanley M. Chesley, Louise Roselle
1513 Central Trust Tower, Fourth & Vine Sts., Cincinnati OH 45202
(513) 621-0267

Counsel for Defendant
Jake J. Chavez, Russell M. Young
U.S. Department of Energy
Forrestal Bldg., 1000 Independence Ave SW, Washington DC 20585
(202) 586-8713

Donetta D. Wiethe, Ass't U.S. Attorney
220 U.S. Post Office & Courthouse, Fifth & Walnut Sts., Cincinnati OH 45202
(513) 684-3711

[19 ELR 21174]

Spiegel, J.:

Opinion

This matter is before the Court after a hearing on plaintiffs' motion for partial summary judgment (doc. 108), defendants' response in opposition thereto (doc. 130), and plaintiffs' reply memorandum (doc. 131). The Court also heard argument on defendants' motion for summary judgment (doc. 115), plaintiffs' response (doc. 125), defendants' reply (doc. 143), and plaintiffs' surreply (doc. 145). Both motions are decided by this Order.

This case involves the operation of a federally-owned uranium metals production plant located near Fernald, Ohio. The Feed Materials Production Center (FMPC) provides the uranium in various forms to nuclear facilities throughout the country for use in the production of nuclear weapons and energy. Defendants herein are NLO, Inc. (NLO), the contractor that operated the FMPC for the government from 1951 through 1985, and NL Industries, Inc. (NLI), NLO's parent corporation. Plaintiffs are the neighbors of the FMPC.¹ They alleged that defendants failed to prevent the emission of uranium and other harmful materials from the FMPC and that such failure caused emotional distress and diminished property values. Plaintiffs proceed under six theories of liability — negligence, strict liability, nuisance, willful or wanton misconduct, breach of contract, and violation of the Price-Anderson Act (42 U.S.C. § 2210) — and seek damages and injunctive relief.

The FMPC is a 1,050 acre facility owned by the United States Department of Energy (DOE). In 1951, NLO contracted with the Atomic Energy Commission (AEC), the predecessor agency of the DOE, to operate the plant. NLI was required to ratify the contract as guarantor of NLO's performance. This contractual arrangement between NLI, NLO and AEC/DOE empowered defendants to operate and maintain the FMPC, and required them to procure all necessary permits and to comply with all applicable regulations, laws and requirements relating to health and safety. The extent and nature of defendants' work under the contract was subject to the supervision of the government's Contracting Officer. [19 ELR 21176] Ohio. Walczesky v. Horvitz Co., 26 Ohio St. 2d 146, 269 N.E.2d 844 (1971) (holding the user of explosives strictly liable for damages proximately caused to adjoining property; petition for relief included claim of "deprivation" of property value). Contamination by uranium, diminishing the value of one's property, constitutes compensable property damage. See Sterling v. Velsicol Chemical Corp., 855F.2d 1188, 1212 [18 ELR 20978] (6th Cir. 1988) (allowing damages, inter alia, for diminution in property values due to contamination from hazardous chemicals). Again, we conclude that plaintiffs have alleged a cognizable injury compensable under the doctrine of strict liability.

Finally, defendants cite CG&E v. GE as support for their argument that plaintiffs cannot recover because their injuries are not "the kind of harm, the possibility of which makes the activity abnormally dangerous." Restatement (Second) of Torts § 519(2). However, as stated above, CG&E v. GE is inapposite. The CG&E plaintiffs sought recovery of the cost of repair and/or redesign incurred due to defendants' defective product. Such economic loss was not the kind of harm which would have made operation of the nuclear plant at issue abnormally dangerous. Conversely, the seepage of uranium and other dangerous materials onto surrounding property, as alleged in the instant case, is the kind of harm which renders operation of the FMPC abnormally dangerous. Imposition of strict liability under these circumstances is justified.

Accordingly, defendants' motion for summary judgment is denied insofar as it concerned plaintiffs' strict liability claims. Further, we conclude that plaintiffs' motion for summary judgment on their strict liability claim should be denied as there is a genuine issue of material fact regarding the existence of emotional distress or diminished property values. If the evidence of emotional distress and/or diminution in property values was undisputed, we would grant plaintiffs' motion for partial summary judgment. However, because harm is an element of plaintiff's strict liability claim and is not solely relevant to the damages issue, summary judgment as to liability is not appropriate here. Celotex Corp. v. Catrett, 477 U.S. at 422.

Plaintiffs also seek summary judgment on grounds that defendants maintained a private, absolute and permanent nuisance. The Restatement (Second) of Torts § 822 defines the elements of a private nuisance as follows:

One is subject to liability for a private nuisance if, but only if, his conduct is a legal cause of an invasion of another's interest in the private use and enjoyment of land, and the invasion is either

(a) intentional and unreasonable, or

(b) unintentional and otherwise actionable under the rules controlling liability for negligent or reckless conduct, or for abnormally dangerous conditions or activities.

Restatement (Second) of Torts § 822 (1979) (emphasis added). Similarly, Ohio courts impose strict liability for creating an absolute nuisance caused by the escape of inherently dangerous material from one's land onto the land of another which injures the other's legal rights. Taylor v. City of Cincinnati, 143 Ohio St. 426, 55 N.E.2d 724 (1944), citing Rylands v. Fletcher.

We have already determined that defendants are engaging in abnormally dangerous activity at the FMPC. Plaintiffs allege that defendants' acts at the FMPC constitute a nuisance that has caused them emotional distress and diminished the value of their property. Emotional distress and diminished property values are cognizable injuries giving rise to a cause of action for nuisance. See Widmer v. Fretti, 95 Ohio App. 7, 17, 116 N.E.2d 728, 735 (1952) (recognizing that "[t]he personal inconvenience, annoyance or discomfort to the occupant of real estate caused by the maintenance of a nuisance in the immediate vicinity is a separate and distinct element of damage from that of the depreciation of the real estate itself"). However, as with strict liability, harm is an element of plaintiffs' nuisance claim; there can be no liability without significant harm. Restatement (Second) of Torts § 821D comment d; see Taylor, 143 Ohio St. at 440; Rautsaw v. Clark, 22 Ohio App. 3d 20, 488 N.E.2d 243 (1985). Because there are contested issues of fact regarding this element of plaintiffs' claim, plaintiffs' motion for partial summary judgment on this issue must also be denied. Celotex Corp. v. Catrett, 477 U.S. at 322.

Defendants seek summary judgment on the nuisance claims on grounds that work which is "authorized by competent legal authority cannot constitute a nuisance." Ware v. City of Cincinnati, 93 Ohio App. 431, 111 N.E.2d 401 (1952). Although what is authorized by law cannot be a public nuisance, "it may nevertheless be a private nuisance, and the legislative authorization does not affect any claim of a private citizen for damages for any special inconvenience and discomfort caused by the authorized act not experienced by the public at large. . . ." 72 O. Jur. 3d Nuisances § 14 (1987) (emphasis added); see Walczesky, 26 Ohio St. 2d at 149, 269 N.E.2d at 846 (holding, in a case brought under the Rylands doctrine, that authorization to do an act could not be said to include authorization to damage adjoining property when performing said act). Because defendants' actions, if proven, would give rise to a private nuisance,⁶ see generally Restatement (Second) of Torts §§ 821B and 821D; 72 O. Jur. 3d Nuisances § 6, defendants' argument fails. Accordingly, their motion for summary judgment with regard to the nuisance claim is denied.

Having concluded that plaintiffs have stated cognizable state law claims, we turn to defendants' argument that the Government Contractor Defense bars those state law tort claims. The Government Contractor Defense immunizes from liability a contractor who performed an act pursuant to instructions from the federal government, which act would render the contractor liable under state law. In Boyle v. United Technologies Corp., 108 S. Ct. 2510 (1988), the Supreme Court held that state law, which would hold the contractor liable, will be displaced when (1) the subject matter involves "uniquely federal interests"; and (2) "a 'significant conflict' exists between an identifiable 'federal policy or interest and the [operation] of state law' . . . or the application of state law would 'frustrate specific objectives' of federal legislation. . . ." Id. at 2515 (citations omitted). If these two threshold requirements for displacement are met, the scope of such displacement is determined by considering the following three limiting factors:

1. government approved specifications,

2. conformity to specifications, and

3. contractor warning of dangers it knew of which were unknown to the government.

Id. at 2517.⁷

Plaintiffs argue that defendants cannot satisfy the threshold requirements for displacement of state law. Although conceding that operation of the FMPC involves a uniquely federal interest, that of national defense, plaintiffs contend that there is no significant conflict between federal and state laws or interests. Specifically, they claim that defendants' actions giving rise to the state law tort claims also violated applicable environmental laws, and therefore the "significant conflict between federal interest and state law," required for displacement of state law under Boyle, 108 S. Ct. at 2517, does not exist. Defendants agree that if plaintiffs prove that actions undertaken by defendants which are relevant to plaintiffs' claims also violated applicable environmental laws, the government contractor defense would not apply to shield defendants from tort liability for those actions. Defendants' reply brief, doc. 143, p. 7. We agree with the parties' analysis,⁸ and therefore consider the laws pertinent to defendants' operation of the FMPC.

[19 ELR 21177]

The evidence adduced at the hearing demonstrated that uranium contamination was and is present in the soil, air and water surrounding the FMPC. Plaintiffs contend that this pollution violates the Refuse Act of 1899, 33 U.S.C. § 407, Standards for Protection Against Radiation, 10 C.F.R. Part 20 (1988), and the Atomic Energy Commission's ALARA ("as low as reasonably achievable") policy.

The Refuse Act of 1899 provides in part as follows:

It shall not be lawful to throw, discharge, or deposit, or cause, suffer, or procure to be thrown, discharged, or deposited . . . from the shore, wharf, manufacturing establishment, or mill of any kind, any refuse matter of any kind or description whatever other than that flowing from streets and sewers and passing therefrom in a liquid state, into any navigable water of the United States, or into any tributary of any navigable water from which the same shall float or be washed into such navigable water. . . .

33 U.S.C. § 407.

Section 407 imposes a flat bar on the unauthorized deposit of foreign substances in navigable water, regardless of the effect on navigation. United States v. Pennsylvania Indus. Chemical Corp., 411 U.S. 655 [3 ELR 20401] (1973). Defendants concede that "waste water" containing uranium was discharged from the plant into the Great Miami River through a discharge pipeline and a storm sewer system. They contend that these emissions fall under the streets and sewers exception embodied in the Act.

The streets and sewers exception is narrowly construed to mean only domestic sewage. See United States v. Colgate-Palmolive Co., 375 F. Supp. 962, 968 [4 ELR 20707] (D. Kan. 1974), citing United States v. Republic Steel Corp., 362 U.S. 482 (1960). Industrial waste is excluded from the exception. United States v. Genoa Cooperative Creamery Co., 336 F. Supp. 539, 541 [2 ELR 20304] (W.D. Wis. 1972), citing Republic Steel, 362 U.S. at 491 n.6. Thus, defendants violated the Refuse Act when they discharged uranium into the Great Miami River.⁹

The AEC has established by regulation maximum permissible releases of source materials¹⁰ into the environment. 10 C.F.R. § 20.106 and App. B, Table II;¹¹ see Train v. Colorado Pub. Interest Research Group, 426 U.S. 1, [6 ELR 20549] (1975). This regulatory scheme is pervasive, and is intended to exclusively regulate the discharge of radioactive effluents from nuclear plants. See Northern States Power Co. v. Minnesota, 447 F.2d 1143 [1 ELR 20451] (8th Cir. 1971), aff'd, 405 U.S. 1035 (1972). The evidence in the instant case shows that defendants exceeded the dose limits set by the applicable regulations. For example, the DOE recognized that airborne uranium from the FMPC had travelled offsite in heavy concentrations, thereby violating the "as low as reasonably achievable" (ALARA) requirement codified at 10 C.F.R. 2.0.1. The DOE'sown reports verify that it was aware of radon releases from storage silos which exceeded limits set by the Environmental Protection Agency (EPA). See 40 C.F.R. 61. Further, internal reports at the FMPC reflect that above background concentrations of uranium were present in offsite wells, surface water, and ground water. See 10 C.F.R. 20.106 and App. B, Table II. Under these circumstances, we conclude that defendants also violated applicable AEC emission regulations.

Because defendants violated pertinent environmental laws by discharging radioactive material into the environment surrounding the FMPC,¹² there is no conflict between state tort law and the federal interests at issue here. Therefore, the government contractor defense does not apply to shield defendants from liability for those emissions, and their motion for summary judgment hereby is denied.¹³

Finally, defendants move for summary judgment on plaintiffs' claims for punitive damages. Defendants claim that recent amendments to the Price-Anderson Act, Pub. L. No. 100-408, 102 Stat. 1067 (1988), prohibit punitive damages in cases such as this. Section 14 of the Act provides that "no court may award punitive damages in any action with respect to a nuclear incident or precautionary evacuation against a person on behalf of whom the United States is obligated to make payments under an agreement of indemnification covering such incident or evaluation." However, section 14 applies to nuclear incidents occurring on or after the date of enactment of the Price-Anderson Amendments Act of 1988. Price-Anderson Amendments Act of 1988 § 20. Because the Act became effective on August 20, 1988, section 20 has no application to the instant case. Accordingly, defendants' motion for summary judgment on the punitive damages claim is denied.

VII

For the foregoing reasons, defendants' motion for summary judgment hereby is denied. Plaintiffs' motion for partial summary judgment also is denied, as the existence of harm is a disputed factual element of plaintiffs' case. However, given our disposition of the parties' cross-motions, the case shall proceed to trial only on the issues of harm and damages. No evidence need be introduced on other issues concerning liability or on the government contractor defense.

SO ORDERED.

1. Plaintiffs were conditionally certified as a class by order of this Court (doc. 41). The class is comprised of two subclasses. Subclass I relates to plaintiff's claims of diminished property value and is limited to owners of real property within a five-mile radius of the FMPC. Subclass II, which concerns plaintiffs' claims of emotional distress, consists of persons who resided or were employed within a five-mile radius of the plant during the relevant time period. A motion for decertification is currently pending (doc. 102).

6. A public nuisance is an unreasonable interference with a right common to the general public. Restatement (Second) of Torts § 821B. It arises out of a violation of public rights or the doing of unlawful acts. 72 O. Jur. 3d Nuisances § 6. A public nuisance may also constitute a private nuisance. Id.

7. Although the Boyle court discussed the government contractor defense within the context of a procurement contract, the defense is viable with regard to performance contracts. See Boyle, 108 S. Ct. at 2514; Yearsley v. W. A. Ross Construction Co., 309 U.S. 18 (1940).

8. The Supreme Court defined the parameters of the "significant conflict" requirement by reference to the discretionary function exemption to the Federal Tort Claims Act (FTCA), 28 U.S.C. § 2680(a). Thus, for the government contractor defense to apply, the court must find that the discretionary function exception to the FTCA would bar any liability on the part of the United States. We agree that the operation of the Fernald plant required an exercise of government discretion in balancing safety concerns against security considerations. However, there is no discretion to violate specific environmental standards, Berkovitz v. United States, 108 S. Ct. 1954 (1988), and if such violations occurred, the defense does not apply.

9. Regardless of whether the Great Miami River is navigable water, see United States v. Appalachian Elec. Power Co., 311 U.S. 377 (1940), it flows into the Ohio River, and as such is a tributary of navigable water under the Act.

10. "The term 'source material' means (1) uranium . . . or (2) ores containing [uranium], in such concentration as the [Atomic Energy] Commission may by regulation determine from time to time." 42 U.S.C. § 2014(2).

11. Although 10 C.F.R. Part 20 explicitly applies to licensees, it applies by Executive Order to government owned, contractor operated facilities. Executive Order 11752, 3 C.F.R. 833 § 4(a)(6) (1971-1975).

12. Given our finding concerning emissions of radioactive material, we do not consider the arguments advanced by both sides regarding non-radioactive discharges.

13. If the Boyle threshold requirements were met, the contractor defense could be defeated on grounds that NLO/NLI did not conform to government approved specifications for operation of the FMPC. However, we will not decide this question, as we are firmly convinced that the defense must be disallowed on the grounds explained above.