Harvey Stokes More Superfund Liability Risk

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By Steven M. Sellers

The severity of superstorms like Katrina, Sandy, and now Harvey has significantly raised the liability stakes for companies over the release of toxic substances from hazardous waste and chemical storage sites.

Environmental lawyers have warned for years that manufacturers can protect the environment and avoid potentially enormous litigation costs by taking steps to minimize cyclone-related chemical spills.

Those warnings make it unlikely hazardous substance releases in the Houston area, similar to prior defenses to cleanup liability related to the storms in Louisiana and New Jersey, can be excused as an unforeseen and unpreventable “Act of God,” lawyers experienced in the area tell Bloomberg BNA.

How much risk companies are expected to face from new toxic tort and hazardous waste litigation tied to Harvey is uncertain, the lawyers said.

But it no doubt will depend not only on how much contamination occurred and where the contaminants ended up, but also on the kinds and extent of storm-related protective measures put in place at contaminated and chemical sites in Houston before the hurricane hit.

“There have been two ‘Once in 500 year storms’ in the past 10 years,” said Patrick Parenteau, a professor of environmental law at Vermont Law School in Burlington, Vt. “Katrina taught us that the petrochemical infrastructure on the Gulf Coast was particularly vulnerable to storms like Harvey.”

“So are all kinds of hazardous waste facilities and Superfund sites,” Parenteau said in an email. “I would not be surprised to see lawsuits against the owners and operators of these facilities and sites,” he said.

The litigation likely will include toxic tort suits, as well as actions under the Comprehensive Environmental Response, Compensation, and Liability Act.

Thirteen Waste Sites Damaged, Flooded

Thirteen superfund sites in the Houston area “show damage or excessive flooding associated with Harvey,” the EPA said Sept. 2 in a statement.

Protective measures in advance of the storm minimized hazardous waste releases related to at least one contaminated property–the U.S. Oil Recovery Superfund Site in Pasadena, Texas, about 15 miles southeast of Houston.

“In anticipation of the storm, crews were able to pump down several vessels” at one of two parcels at the 18-acre site, “preventing additional overflow due to the large rainfall amount,” attorney Gary Justis, of the Justis Law Firm in Overland Park, Kan., said Sept. 1.

But how those safeguards ultimately will impact the cost of area hazardous waste cleanups isn’t yet known.

Justis is counsel for a group of potentially responsible parties in ongoing superfund litigation over contamination near Vince Bayou. The case is pending in the U.S. District Court for the Southern District of Texas.

“A full remedial assessment has yet to take place at either site,” Justis said in an email.

‘Act of God’ Defense

Responsible parties are jointly liable for superfund cleanups, but the law also gives an escape hatch for a party that can establish that the release of a hazardous substance was caused solely by an “Act of God.”

Such an act is defined in the law as “an unanticipated grave natural disaster or other natural phenomenon of an exceptional, inevitable, and irresistible character, the effects of which could not have been prevented or avoided by the exercise of due care or foresight.”

But even in light of Harvey’s unusual severity—it dumped more than 4 feet of rain in portions of Texas—manufacturers and other companies facing toxic substances liability shouldn’t count on the defense, attorney William Ruskin, of the William Ruskin Law Office in Rye Brook, N.Y., said.

“Case law on the defense makes clear that to assert it, the Act of God has to have been the sole cause of the release, such that if there is any issue of foreseeability, the defense is unavailable,” Ruskin, an experienced superfund litigator, said.

Michael Gerrard, director of the Sabine Center for Climate Change Law at Columbia Law School in New York City, agreed the defense is unlikely to succeed even in light of the especially extreme conditions created by Harvey.

“There is not a single reported decision under CERCLA, the Oil Pollution Act, or any other federal environmental statutes where the Act of God defense was successful, not even after Katrina or Sandy,” Gerrard said in an email.

The foreseeability factor is important in any assessment of the defense, said Peter Hsiao, an environmental lawyer with Morrison & Foerster in Los Angeles.

“Hurricanes are not unexpected in the area and time of this event,” Hsiao said in an email, adding that companies are “on notice” that very severe storms—Harvey, Sandy, Katrina—are likely and require enhanced protective measures.

Expert Evidence

A successful assertion of the Act of God defense “will heavily depend upon expert testimony showing that the resulting problems could not have been anticipated or prevented by the exercise of due care or foresight,” Hsiao said.

He added that the proof likely would have to include “a showing that the facility implemented enhanced protective measures before the storm, which is probably true for most major industrial facilities in the affected area.”

But many superfund litigants likely will face another hurdle for storm-aggravated releases at sites where EPA or Texas officials implemented remedial actions before the hurricane. It may be difficult, because of these governmental actions, to convince a court that Harvey was the sole cause of the contamination.

Regardless of its application to the Act of God defense, Hsiao said, a company’s pre-storm protective measures ultimately could reduce a company’s liability.

“For a toxic tort case, there is no statutory Act of God defense, but the same types of arguments will be used to show that the facility exercised due care and reasonable foresight in taking protective measures,” Hsiao said. “These issues will also be presented in insurance claims and litigation regarding coverage disputes.”

EPA Interpretations

The 51.88 inches of rain unleashed by Harvey in parts of Texas—the most on record from a single tropical system in the continental U.S., according to the National Weather Service—still might be a factor in superfund enforcement related to the storm, the lawyers said.

“Especially with the spirit of weakened environmental enforcement that President Trump has brought to the federal government, we may be unlikely to see vigorous action taken against companies that experienced spills during Harvey,” Gerrard said.

Hsiao agreed the EPA “will be an important party in how it interprets the Act of God defense in responding to the hurricane and the subsequent cleanup of hazardous substances.”

The EPA declined to comment Sept. 5.

Corporate Scapegoating?

Questions of negligence in hazardous waste cases also should take into account more than how corporations prepared for major hurricanes, Ruskin said.

“What I’m seeing nationally is that whenever infrastructure or developmental issues are in play, corporate America is being scapegoated by plaintiffs,” he said. “I think you have to consider that it may not be the corporations’ fault.”

In some cases, zoning and development decisions have resulted in residential communities and schools being situated near chemical plants, “so if there is an accident at a facility it’s more likely there will be a human impact,” Ruskin said.

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