California has enacted two regulatory schemes to manage and protect its waters.1 State legislators gave the Department of Health Services (DHS) the task of ensuring that the water delivered to the public is safe to consume.2 They also require the State Water Resources Control Board (SWRCB) to manage and maintain the beneficial uses of the state’s waters.3 The DHS accomplishes its task by setting numerical standards such as maximum contaminant levels (MCLs), which involve a balancing of public health concerns with technological feasibility and cost. The SWRCB, by contrast, applies a qualitative standard focused on achieving the "maximum benefit to the people of the State." The MCLs are health-based standards. The SWRCB qualitative standards are based upon a policy of nondegradation.
The intersection of these two regulatory schemes has led to court actions and administrative proceedings, often with divergent results and conflicting rationales. The coexistence of health-based MCL standards and nondegradation policies, which are remediation-based standards, inherently creates tension and conflict over which standard will be applied in a litigation or administrative context. When different standards of responsibility or liability are applied by courts as well as various public agencies with jurisdiction over water issues, the results are problematic and costly.
Some courts have adopted MCLs as the basis for determining liability, while others have adopted the nondegradation standard without specifically stating so. The MCL/nondegradation dichotomy is further exacerbated when administrative and legal actions proceed on parallel tracks--a common occurrence in matters involving water.
The ability of defendants to rely upon compliance with health-based environmental laws and regulations to forestall or insulate themselves from liability has been, until recently, a reasonable risk management strategy. Though compliance was never an inviolate safe harbor, its effectiveness was well established through a long line of decisions. That is no longer so.
Over the last few years, courts have begun to chip away the ability of defendants to rely upon regulatory standards to define the scope of liability--and a series of decisions in 2006 and 2007 have all but eviscerated that defense. Though never a sure bet, the ability to rely upon compliance with regulatory standards as a touchstone for meeting one’s obligations has increasingly been eroded by legal and administrative decisions involving the presence of anthropogenic constituents in water. While this trend is relatively recent, the underlying legislation, statutes, and implementing regulations relied upon in these decisions have been on the books for decades.
Plaintiffs’ attorneys, especially in the area of groundwater litigation, have found new and innovative ways of leveraging conflicting legislative policies and regulations into substantial damage awards. Reliance upon health-based regulatory standards as a shield against potential liability no longer appears to be prudent.
Courts have been grappling with applying legal definitions to scientific concepts of human health and environmental safety in both property damage and toxic tort cases for decades. If human health and environmental conditions are safe, then in theory, there should be no injury, and without injury there can be no liability. With regard to drinking water, governmental regulatory agencies--using their vast array of experienced toxicologists, scientists, and policy makers--have marshaled the best available science to determine, on a chemical-by-chemical basis, what is safe. For drinking water, "safe" is defined by the MCL.
MCLs are designed, in part, to establish uniform standards that are protective of human health and to prevent ad hoc standards from being established through litigation or administrative actions.4 These standards, along with those established at the federal level, are, in theory, the benchmarks against which acceptable levels of a constituent in drinking water are judged. MCLs, again in theory, should bar layperson juries, courts, or other agencies from substituting their judgment and personal bias for the reasoned and scientifically based judgment of the agencies charged with protecting public health and welfare.5 These agencies are better equipped to make a safety determination than juries or courts, neither of which have the technical and scientific background to do so. Qualitative, nonobjective standards, when applied in legal proceedings, create situations that can result in ad hoc determinations of liability or responsibility.
When parallel administrative and legal proceedings occur, the application of a qualitative standard by the administrative agency and the application of a quantitative standard by a court increases the potential for conflicting decisions. The uncertainty created in situations in which administrative and legal proceedings address the same contamination in the same aquifer and reach different determinations fosters further tension as the parties must determine which decision controls. This in turn results in additional delays and increased costs for plaintiffs and defendants.
Establishing the Standards
The DHS establishes primary drinking water standards that specify the maximum contaminant level at which a particular constituent may be present in drinking water and still be safely consumed by the public.6 The DHS also often establishes secondary drinking water standards, which specify the MCL that, in its judgment, is necessary to protect public welfare. Public water suppliers may deliver water to their customers that contains these contaminants, so long as they are below the MCL.
The SWRCB establishes cleanup or remediation standards based upon a nondegradation policy7 that states that "[w]henever the existing quality of water is better than the quality established in policies…such existing high quality will be maintained."8 There is a more ambiguous aspect of the SWRCB nondegradation policy, however. High quality waters must be maintained until "the [s]tate finds that change in water quality will be consistent with maximum benefit to the people of the [s]tate, will not unreasonably affect present and anticipated beneficial use of such water and will not result in water quality less than that prescribed in policies."9
Thus, cost considerations alone are not enough to justify allowing degradation; the discharges must match background water quality.10 If the discharger can treat water pollutants to below detectable levels, the SWRCB regulation trumps lesser federal water quality standards and requires the discharger to use "the best practical treatment."11
In California, the SWRCB addressed the conflict between lesser drinking water standards and the high quality water nondegradation policy12 by adopting the position that the drinking water standard is considered the "least stringent" of water quality objectives.13 Therefore, if nondegradation is possible, even at great expense to the discharger, the SWRCB mandates the highest level of pollutant treatment to match existing high water quality.14
The remediation levels established by the agencies charged with enforcing these nondegradation policies are significant factors in determining when and if remediation is necessary and in proving if an injury has in fact occurred. Indeed, state and federal court decisions in 2006 and 2007, along with administrative decisions, have undermined the MCL as the standard for civil liability and remediation requirements and created situations in which remediation of a contaminant to a non-detect level in an aquifer has been required even though the contaminant level is below the MCL--the level at which drinking water could be safely provided to the public.
Private party litigation and agency enforcement actions often go hand in hand. In cases involving a chemical that was released into the environment and made its way into the "waters of the state," claims for nuisance, trespass, negligence, and product liability, as well as other health-based claims, are typically brought against defendants in court by private parties, quasi-governmental agencies such as water companies, and municipalities seeking a wide range of damages. As is often the case when drinking water supplies are involved, the defendants frequently are subject to agency orders requiring them to not only remove the offending chemical but also provide an alternate source of drinking water until the cleanup has been completed. These dual-tracked actions raise an interesting issue: The agency charged with "protecting groundwater quality" can require the defendants to remediate the drinking water source to a non-detect level--and, at the same time, under the standards set by the agency charged with "protecting human health," the defendants could provide alternate water supplies that contained the offending constituent at concentration levels greater than non-detect but less than the MCL. Taken to its logical extreme, the alternate water supply could conceivably be drawn from the very aquifer at issue in both actions if the levels were less than the MCL.
Water providers, regulatory agencies, industry, and consumers--that is, the stakeholders--are confronted with this conflict when the concentration level of an anthropogenic constituent is present in groundwater at levels below the MCL or the secondary MCL, if one has been established. In those cases, stakeholders are faced with the issue of whether the presence of an anthropogenic constituent, at concentrations below the MCL or secondary MCL, provides a legal basis to support a claim for damages, and whether that presence under nondegradation policies requires remediation when the health-based MCLs established by state and federal agencies charged with protecting public health and welfare have not been exceeded. The conundrum is which standard--the health-based MCLs or remediation-based nondegradation--should be applied in evaluating whether a compensable injury has in fact occurred and whether remediation is warranted. The courts have been less than uniform in their decisions, and regulatory agencies have adopted differing positions on when and how to enforce the nondegradation policies.
Plaintiffs, municipalities, and water companies often contend that the presence of an anthropogenic constituent "constitutes a public nuisance" that "threatens their water." A finding of nuisance requires an unreasonable and substantial interference with the plaintiff’s use and enjoyment of property.
Municipalities and other water purveyors will often shut down their water wells not because the MCLs have been exceeded but because of self-imposed policies--such as not serving water with any amount of a contaminant, no matter how harmless. These self-imposed prohibitions begin the accrual, from a plaintiff’s point of view, of damages. The risk faced by defendants in these situations is that despite the black letter law that no claim can be maintained absent injury and that an injury must be more than a mere possibility,15 defendants are put in the position of watching potential damages mount while they defend themselves and run the risk that a judge or jury will apply the nondegradation standard when determining liability and damages.
Courts either incorporate regulatory standards into their analysis of common law injury or in their analysis of standing. At either stage of a proceeding the issues are essentially the same: Does meeting or not meeting the standard determine if the plaintiffs have a claim, and which standard will be applied?
Decisions of courts outside of California--both state and federal--on these issues are illustrative. For example, in Texas, the state appellate court in Taco Cabana, Inc. v. Exxon Corporation affirmed a verdict in favor of the former landowner by relying upon the State Water Code and implementing administrative regulations that established the appropriate cleanup standards. Because those standards dictated when corrective action was necessary, the court reasoned that they also defined when unreasonable levels of contamination were present. The levels on the plaintiffs’ property did not exceed those standards, so the plaintiffs’ trespass claim was dismissed.16
In Washington, the district court in City of Moses Lake v. United States dismissed the plaintiffs’ claims, finding that to the extent the city was merely concerned about possible health risks or that one of its wells at some point in the future might be contaminated, it did not establish that the defendant had a duty to address the potential liability. The court used the MCL to define the beginning and the end of the defendant’s duties to the plaintiffs.17
In North Carolina, residents of a town filed individual claims arising from alleged Methyl tertiary Butyl Ether (MtBE) contamination of private well drinking water supplies.18 With minor exceptions, the plaintiffs could only demonstrate that MtBE concentrations exceeded the MCL standard on three occasions. The plaintiffs urged the court to adopt a different standard based on taste and odor rather than the health-based MCL. The court declined, finding that the regulatory standards "form a bright line, objective, and easily determinable test." Thus the court deferred to the standard adopted by state authorities responsible for protecting the state’s water resources, stating that they are "in a better position than courts to set and reset standards based upon new scientific information and changing standards of health."
In Massachusetts, the superior court in Gleason v. Town of Bolton emphasized that federal and state MCLs for drinking water supplies establish stringent safety standards. According to the court, when drinking water contaminants are below the MCL, the water supplies are "considered safe for all purposes, including drinking." The court found that the plaintiff did not suffer a compensable injury and the negligence, trespass, nuisance, and strict liability claims were without merit.19
However, more recent decisions are discounting health-based standards and instead focusing on property rights, product liability theories, and the nondegradation standards to support claims based upon the presence of contaminants at any detectable level. Beginning in 2000 and culminating in 2006, the nondegradation standard moved to the forefront and trumped the health-based MCL standards.20 In 2000, an appellate court in Ohio held that even though "contamination levels in the water never exceeded levels considered to be safe [that] merely showed compliance with regulatory standards and did not show [defendants] met the standard of care required under common law."21 In 2006, the U.S. District Court for the Southern District of New York and the Third District Court of Appeal in California followed suit.22 These decisions make it clear that MCLs are not determinative of whether a public water supplier can maintain a claim that it was injured by the mere presence of a chemical in a drinking water source at a level below the MCL. Based upon the rationale of these decisions, and the nondegradation policies of the agencies tasked with setting remediation levels, stakeholders cannot rely upon the MCLs as either determinative of an injury or the level to which remedial measures are required. The MCLs--long the benchmark by which health risks have been gauged--no longer appear to be the standards that stakeholders can look to when evaluating liability, designing remediation facilities, or projecting remediation costs and damages.
The 2006 Southern District of New York case involved a series of rulings allowing water suppliers’ claims of injury and damage to "go to the jury," even when the level of contamination was below the MCL. Judge Shira A. Scheindlin, in In re Methyl Tertiary Butyl Ether Products Liability Litigation, rejected the defendants’ arguments that four suits by water suppliers in New York and California should be dismissed because the levels of MtBE alleged to be present were below the MCL.23 Judge Scheindlin reasoned that, while the MCL may serve as "a convenient guidepost in determining that a particular level of contamination has likely caused an injury, the MCL does not define whether an injury has occurred."24
Judge Scheindlin noted that "nothing in [the decisions cited by the defendants] compels a holding that the applicable MCL establishes a bright-line rule defining the scope of plaintiffs’ protected interests or what legally constitutes an injury."25 Of particular note, the judge found that the "plaintiffs’ protected interests may be interfered with whenever contamination affects the quality of the water from which they supply the public, or in the case of OCWD, the ground water it is statutorily tasked with protecting."26 Thus Judge Scheindlin effectively discarded the MCL and adopted nondegradation as the standard against which harm or injury is judged.27
In reaching her decision, the judge distinguished two cases28 cited by the defendant oil companies. These cases held that contamination levels below the MCL cannot constitute a legally cognizable injury. The judge commented that the plaintiffs in these cases were private well owners, not public water suppliers, and therefore had no statutory duty to protect or remediate groundwater.29
In 2006, the Third District California Court of Appeal in D.J. Nelson Trust v. Superior Court (Exxon-Mobil) reversed a lower court’s rejection of a water utility’s products liability claim. The utility, Fruitridge Water Company, sought damages for contamination of groundwater from MtBE.30 The court refused to restrict a products liability claim to the end user or consumer of the water, finding that the utility had a sufficient possessory interest in the water to maintain its claim and that Exxon-Mobil should have reasonably foreseen that MtBE would leak from its gasoline delivery systems into the plaintiff’s "groundwater" system. The court commented that California law does not limit potential product liability exposure only to consumers that have a direct buy/sell relationship with the manufacturer, finding that "state law does not restrict liability to cases arising after a retail sale or equivalent transaction, which might imply a more limited class of potential, expected uses."
These decisions, combined with nondegradation policies, undermine the premise of health-based MCLs. Taken to their logical conclusion, these decisions can be interpreted to support remediation of an anthropogenic constituent in groundwater to a non-detect level--even when the constituent level is below the health-based MCL--while at the same time permitting the end user or consumer to be provided with replacement drinking water containing the same constituent at a concentration level that is equal to or less than the MCL.
As 2007 comes to a close, however, this trend may be changing. On August 24, 2007, the First District California Court of Appeal in the In re Groundwater Cases decision gave strong support to adopting MCLs as the standard for determining liability.31 The case involved water purveyors regulated by the Public Utilities Commission (PUC). The appellate court found that the MCLs developed by the DHS were the standards by which acceptable levels of a constituent in drinking water would be judged. The court was clear in its finding that the qualitative language in the Health and Safety Code, such as "pure" or "wholesome"--which is akin to the "highest quality" and "maximum benefit" language in the SWRCB’s nondegradation policies--was not an enforceable, objective standard but instead was only a goal that was never meant to be a substitute for actual numeric standards. The court of appeal also found that municipal water providers were only liable for violations of mandatory duties,32 and the only standards at issue in matters involving municipal water providers, like the PUC-regulated entities, were numerical standards such as MCLs.
Moreover, the court emphatically rejected the plaintiffs’ claims that an isolated instance of water containing constituents in excess of the MCLs could trigger potential liability. The court found the plaintiffs’ position to be "inconsistent with the purpose for which MCLs were established." The In re Groundwater Cases decision, while focused on the "regulated water provider," makes it clear that in California MCLs are the standards by which liability is to be adjudicated. General policy statements such as those contained in SWRCB nondegradation resolutions and the "pure" and "wholesome" language of California’s Safe Drinking Water Act33 are only goals, not the benchmarks by which legal duty is determined.
The protection of public health by establishing MCLs and ensuring that those criteria are met is actually a matter of minimizing health risks rather than eliminating risk entirely, because practical, technical, and financial constraints make it impossible to do so. The development and adoption of MCLs takes these factors into consideration. Nevertheless, plaintiffs have been demanding, and the courts--with the exception of the court that decided In re Groundwater Cases, which is thus far applicable only to the regulated community--seem to be agreeing that water sources, drinking or otherwise, must be pure. This means the water must have no detectable level of contaminants.
The tension between the MCL and nondegradation standards will continue nationwide. The uncertainty arising from this dichotomy will likely result in extended legal and administrative battles and the expenditure of significant resources, some of which will be unnecessary and wasteful. Having two separate and at times conflicting standards raises critical and often overlooked legal, financial, and public policy issues regarding who can recover damages, whether more than one class of plaintiff can recover for the same harm under different theories, and who decides what is safe. The In re Groundwater Cases court based its decision on a human health-based standard, not vague subjective policy statements. The rational approach adopted in this decision eliminates or at least reduces the risk of ad hoc standards being applied in litigation and administrative actions.
The In re Groundwater Cases approach should be extended and applied to all cases involving groundwater contamination, not just those involving regulated utilities. Doing so will bring much needed certainty to the determination of liability and damages in the groundwater arena