Iowa Court of Appeals Bars Claims Against Asbestos Defendants for Products Made or Sold by Third Parties

The Iowa Court of Appeals affirmed a district court’s decision that Iowa’s Section 686B.7(5), enacted in 2017, barred claims against a premises owner and installer of asbestos products. The statute provides: “A defendant in an asbestos action or silica action shall not be liable for exposures from a product or component part made or sold by a third party.

In Beverage v. Alcoa, Inc., decedent worked many years inside an asbestos-containing aluminum plant. Decedent’s family brought asbestos-related claims against premises owner Alcoa Inc. and insulation contractor Iowa-Illinois Taylor Insulation, Inc. Both defendants filed motions for summary judgment arguing that Section 686B.7(5) provided them immunity.

The District Court focused on whether the asbestos-containing insulation used at the premise and any component parts were “made or sold by a third party.” The court noted that the premises defendant never manufactured, produced, or sold an asbestos-containing product or component part, it was merely a consumer of asbestos insulation provided by a third party (the insulation contractor). And while the insulation contractor sold products containing asbestos, the insulation contractor purchased these asbestos products from other sources. Because any asbestos-containing products the insulation contractor installed at the premise or sold to the premise were products or component parts made or sold by third parties, Section 686(B).7(5) granted the defendants immunity, and the court dismissed the claims against them.

On appeal, Plaintiffs argued that the district court misinterpreted Section 686(B).7(5).

First, Plaintiffs argued that the word “defendant” in Section 686(B).7(5) does not mean “any entity sued in an asbestos suit,” but rather “one that makes or sells an asbestos product.” The court disagreed, holding that the words of Section 686(B).7(5) show the legislature’s clear intention to limit asbestos litigation by immunizing a substantial range of defendants, not all of whom manufacture anything.

Plaintiffs next argued that Section 686(B).7(5) established a “bare metal defense,” a common defense raised by manufacturers of equipment that used asbestos, and that because the bare metal defense applies to product manufacturers, the district court should have interpreted Section 686(B).7(5) to only protect product manufacturers. The court disagreed, holding that the immunity available under Section 686(B).7(5) is not the same as that available under “bare metal” defenses, and that if the legislature intended merely to codify the common law defenses, it would have so stated.

Plaintiffs also argued that Section 686(B).7(5) should only apply to product manufacturers because, under the district court’s interpretation, Section 686(B).7(5) would eliminate the liability of premises owners and product suppliers, and interpretation that is “absurd in the extreme.” The court disagreed, pointing out that Section 686(B).7(5) did not create a general grant of immunity for either group. The court further held that it saw nothing absurd with asbestos litigation refocusing on culpable targets, such as asbestos manufacturers.

Full disclosure: GRSM’s Beverly Bond served as national counsel for Alcoa in this matter.

While this decision is welcome news for many asbestos defendants in Iowa, the debate over the bare metal defense’s viability remains alive and well at the state court level in other jurisdictions as we advance into 2021.

The Big Chill

Last month, the Environmental Protection Agency (EPA) issued final rules under the Clean Water Act Section 316(b).  The new rules impact existing[1] facilities that: (1) use cooling water intake structures designed to withdraw at least two million gallons of water per day from U.S. waters; (2) have or are required to have a National Pollutant Discharge Elimination System (NPDES) permit; and (3) use at least 25 percent of the water they withdraw exclusively for cooling purposes. Additionally, they showcase the EPA’s efforts to prevent aquatic life from being drawn or trapped by plant and factory equipment. According to EPA, the rules will likely apply to more than 1,000 facilities in sectors including electric generation plants, pulp and paper mills, chemical manufacturing plants, iron and steel manufacturing facilities, petroleum refineries, food processing plants, and aluminum manufacturing facilities. According to Nancy Stoner, EPA’s acting assistance administrator for water, “EPA is making it clear that if you have cooling water intakes you have to look at the impact on aquatic life in local waterways and take steps to minimize that impact.”

The requirements offer facilities a choice of seven technologies to prevent both fish entrainment (aquatic organisms being drawn into the facility) and impingement (aquatic organisms becoming trapped against an intake structure), which have all been in use for decades and are currently in place at more than 40 percent of the affected plants. Republicans and the power-generating sector believe the new rules will increase costs, raise electricity prices, and kill jobs. Sen. Jim Inhofe (R-Okla.) immediately criticized the rules and stated he would seek congressional action to overturn them. “The EPA has released another rule that threatens the affordability and reliability of America’s electricity,” Inhofe said.

The regulation disproportionately impacts power generation plants—of the approximately 1,065 facilities impacted, 544 of them are power generating plants. America’s nuclear infrastructure, consisting of 104 facilities and generating 20 percent of U.S. electricity, is particularly affected with its copious use of cooling water. The average commercial reactor in the U.S. is aged 33 years with the two oldest in service since 1969 and the last newly built reactor entering service in 1996. Although the rule allows facility owners or operators flexibility in fulfilling its “best technology available requirements,” there is an added requirement for biological studies and federal consultations as part of the permitting process—an aspect that will undoubtedly be costly, potentially unfeasible, and enough to give any energy provider an unwelcomed chill.

The new rule, effective sixty days after its publication in the Federal Register, will be implemented through the NPDES permit program. Environmental groups were hoping for more stringent requirements and will undoubtedly challenge the final rule.

[1] Previous Phase I rules, found at 40 C.F.R Subpart I, apply to new facilities. 66 Fed. Reg. 65256 (Dec. 18, 2001).

The EPA, DPA and Your First-Grader’s GPA?

Last week, the Environmental Working Group, a nonprofit health advocacy organization, petitioned the U.S. Environmental Protection Agency about a pesticide commonly used on apples.

The group urged federal regulators to impose harsh and unnecessary restrictions regarding the pesticide known as diphenylamine, or DPA. It cited the European Union, which prohibited levels above 0.1 parts per million two years ago, and arsenic, an accepted but then banned substance, as two strong reasons to conduct new scientific research.

The chemical is used frequently on apples in the United States to prevent browning of the skin during long-term cold storage. Tests conducted by the U.S. Department of Agriculture demonstrated measurable levels of DPA on 80 percent of their sample size, according to the EWG — with levels on those testing positive, four times greater than the allowable limits on European imports.

It may be a little premature to accept their cautionary rhetoric. It’s a mistake to “equate the presence of a chemical with the presence of risk,” says Joseph Schwarcz, director of the Office for Science & Society at McGill University in Montreal. Although Americans eat about 10 pounds of apples per year, a look at the database the EWG used to support its letter does not trip serious alarms. The database, a product of the USDA, shows just one of 744 apple samples it tested demonstrating a level higher than the government limit — most were far below the permissible limit.

The EU’s stance may be a product of how the United States and Europe view food differently, with America viewing food as a commodity and Europe much more concerned about where food originates.

Still, the EWG’s shopper’s guide urges consumers to buy organic fruits and vegetables; though, even organics are not pesticide-free.

The bottom line? No one should stop eating fruits and vegetables; although, first-grade teachers may be well advised to prepare for an avalanche of avocados, if the EWG gets its way.

Fracking Verdict May Spur More Lawsuits

“Rise early, work hard, strike oil.” The late oil baron J. Paul Getty’s formula for success may be a new rally cry for the plaintiffs’ bar. On Tuesday, April 24, a Texas jury awarded $2.95 million to a family in one of the first trials alleging that hydraulic fracturing (commonly known as “fracking”) caused severe health problems.

Plaintiffs testified that an environmental doctor told them they had neurotoxins in their blood that matched chemicals used in natural gas activities. The family experienced chronic migraines, rashes, dizziness, nausea and chronic nosebleeds — including an incident when their daughter awoke in the middle of the night covered in blood, according to plaintiffs’ attorneys in Parr v. Aruba Petroleum, Inc. The size of the verdict (and that it results from air pollution, as opposed to the more common assertion of groundwater pollution) may spur similar cases and exert upward pressure on settlement demands throughout the country.

Fracking, a process performed by drilling thousands of feet and releasing a fracking fluid into the rock layer, allows natural gas to escape and be transported up into a well storage. Fracking sites are huge operations with construction and drilling equipment, retention ponds and storage tanks for chemicals, water and hydrocarbons. The drilling sites operate 24 hours a day because they support well bores that must be continually fracked to promote the flow of oil and gas from tight formations. Fracking has made natural gas extraordinarily cheap in America. In Asia, it sells for more than triple the price; in Europe, double.

Despite fracking’s perspicuous opportunity for arbitrage, environmentalists only recognize fracking’s potential impact on local air and water pollution due to leaks of benzene, methane and other hydrocarbons. Further, much to the chagrin of fracking’s opponents, many state regulations allow fracking operations to be located in proximity to homes and schools. In several jurisdictions, environmentalists have pressured lawmakers to tighten fracking regulations, noting in Illinois, a large loophole where energy companies may bypass regulations by instituting modified technologies, such as nonwater-based fracking.

The Parr lawsuit, pitting Barnett Shale landowners against natural gas producer Aruba Petroleum, Inc., is one of the first cases in the nation to reach a jury on claims that air emissions from nearby drilling operations caused health problems. The plaintiffs sought $9 million in damages and alleged that 22 wells operated within two miles of their land. The case, a deviation from the common order because it made it to trial and because of the fact-specific nature of nuisance claims (including serious causation questions), has some anticipating a reversal on appeal.

Yet the jury’s verdict — finding Aruba intentionally created a private nuisance and is liable for the plaintiffs’ physical and mental pain and suffering as well as a diminution of their property value — may hearten plaintiffs’ attorneys with similar litigation and add fuel to settlement negotiations in other fracking and air emissions cases. The plaintiffs’ bar will intently watch the appeal process in Parr, and so too should energy companies.  While many thought the anti-fracking movement would be “the next big thing” and generate a multitude of litigation across the country, few cases have reached the courts. The redolence of fracking money from this verdict may change that, with a gas explosion from the plaintiff’s bar in the near future.