As Texaco, Inc. found out recently, no good deed goes unpunished.
In 1955, a leaking pipe at a gasoline refinery operated by Texaco since the 1920s in Sunburst, Montana, population 2,500, created a plume of contaminated groundwater under the refinery and under some parts of the town. Texaco stepped up to the plate and pumped out most of the free product over a two-year period and monitored groundwater quality until 1973, when no gasoline had been detected for several years.
A second cleanup began in 1989, under the direction and supervision of the Montana Department of Environmental Quality (DEQ). All that remains of the plume today are trace gasoline residues in soils 10 or more feet below ground level and in groundwater at an average depth of 16 feet, all of which are being digested by naturally occurring bacteria. DEQ concluded those residuals pose no health risks to area residents. Texaco has agreed to monitor the biodegradation process for the next 30 years.
That was not good enough for the local school district and some residents of the town. In a move with potential repercussions across the country, they filed suit in Montana state court, claiming Texaco is liable to them because it failed to reduce the contamination levels to zero. The jury socked Texaco with a $41 million verdict, including $15 million in property restoration costs and $25 million in punitive damages, all based on the presence of trace residues of gasoline contamination.
The plaintiffs’ attorney, Tom Lewis of Great Falls, Montana, told the Great Falls Tribune Texaco got a fair trial by an intelligent jury and that “there was no error” in the judge’s rulings or otherwise.
Water Already Contaminated
The groundwater affected by the gasoline leakage was already naturally “contaminated” with suspended solids and excessive saline, so it had never been used as drinking water, for irrigation, or for any other purpose. The site wasn’t contaminated enough to qualify in 1991 for a federal Superfund cleanup by the United States Environmental Protection Agency, according to Texaco’s lead attorney, Laurence F. Janssen of Steptoe & Johnson’s Los Angeles office. But Texaco had already agreed, in 1989, to further investigate and clean up the refinery site as directed by DEQ.
In that investigation, Texaco sampled the air in local homes and schools twice. “We sampled the air in every classroom in town,” Janssen said. At the agency’s request, Texaco also tested subsurface soils and water and conducted an assessment of the risks posed by the plume to potentially exposed residents.
On the basis of those studies, DEQ concluded the site posed no health risks because there was no risk of human exposure to the buried contamination. A biological survey found no risk to plants and animals. The remedy selected by DEQ, called monitored natural attenuation, relies on microbial digestion to decontaminate the gasoline in soils and waters over time, with monitoring for as long as necessary to ensure the degradation is taking place.
Hoping for Reversal
Texaco’s attorneys are hopeful the Montana Supreme Court will reverse the jury verdict on appeal, due to a number of judicial rulings the firm’s attorneys claim were erroneous. Before trial even started, for example, Judge Thomas McKittrick ruled Texaco was guilty of trespass and strict liability in tort for the subsurface gasoline contamination, even though the plaintiffs had not mustered any evidence that the contamination interfered with their use and enjoyment of their properties, a necessary element of the tort of trespass.
Most significantly, however, Texaco was barred from introducing any evidence of DEQ’s involvement at the site. The jury never learned that DEQ had supervised and directed Texaco’s work and verified the accuracy of the soil and water testing by taking split samples. Nor did the jury learn Texaco had already spent millions of dollars in voluntary cleanups of the properties. Lastly, the jury never learned that DEQ had held a public hearing in 2003 in Sunburst to entertain objections to the remedy selected by DEQ, which plaintiffs’ counsel had attended without comment then or during the following 60-day period for written objections.
In addition, Texaco was not allowed to introduce evidence of the scientific acceptance of bacterial biodegradation as a valid method of treatment. It also was prohibited from introducing evidence of DEQ’s finding that the residual contaminants posed no health risk to the townspeople, school children, teachers, or construction workers. And while an expert for the plaintiffs, a chemist, testified the contamination had caused illnesses ranging from arthritis to mononucleosis and that the contaminants were carcinogens and neurotoxins, the judge ruled Texaco could not cross-examine him on whether his opinions were supported in the medical literature, on the grounds that these topics were beyond the expert’s competence, Janssen said.
Awards Called Excessive
Texaco attorneys likewise believe the actual and punitive damages awards were excessive and improper. Among the remedies proposed by the plaintiffs was excavation, which would involve moving 23 homes, digging up 30 feet of soil, backfilling with clean soils, rebuilding basements, and replacing the houses and landscaping. Plaintiffs estimated this cost at $18 million, while they peg the values of the properties involved at $1.8 million.
Under Montana law, punitive damages are to be awarded when the defendant engages in conduct that was “intentional” and “malicious,” and the jury found Texaco was guilty of malice and fraud. But Texaco’s attorneys argue the case was prejudiced against Texaco because the firm was not allowed to demonstrate the voluntary and public nature of the cleanup measures it had taken and its full disclosure of testing data.
Toxic Judicial Precedent
If replicated elsewhere, the Sunburst suit would create “a mammoth problem,” Janssen said.
In the 1980s, during the infancy of environmental cleanups, most laws failed to specify “how clean is clean”; they didn’t specify allowable levels of contaminants that could remain behind after the cleanup. Later, regulators did establish such allowable residual levels for common contaminants in amounts determined to pose no risks to health or the environment. Those regulations took into account the fact that some contaminants, such as lead and copper, exist in soils almost everywhere, at least at background levels, without human health risks.
The regulations also recognized that the contaminants in gasoline–benzene, ethylbenzene, xylene, and toluene–are present in the crude oil pumped from the ground. The oil refined at the Sunburst refinery came from oil fields located four miles to the south of Sunburst.
There are untold millions of sites throughout the United States at which companies have fully complied with regulatory cleanup requirements that establish allowable levels of residues that may be left in place. Unless the Sunburst case is reversed on appeal, innumerable similar “double-whammy” lawsuits could be brought, requiring removal of contamination down to zero. Verdicts similar to the Sunburst one would dwarf the already-sizeable asbestos and medical malpractice damages awards that have created litigation crises in these areas.
Attorney Maureen Martin ([email protected]) is senior fellow for legal affairs at The Heartland Institute.
Maureen Martin, a former legal fellow at The Heartland Institute, passed away on February 5, 2013.
