(Article from Insurance Law Alert, July/August 2024)
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Holding
A New York appellate court ruled that a trial court erred in dismissing a PFA-related contamination suit based on standing, finding that the petitioner’s allegations of pollution and injury were not conclusively refuted. Seneca Lake Guardian v. New York State Dept. of Envtl. Conservation, 2024 N.Y. App. Div. LEXIS 3899 (3d Dep’t July 18, 2024).
Background
County Line applied for a permit from the Department of Environmental Conservation (“DEC”) to operate a waste and recyclables processing facility. In its application, County Line noted that operation of the proposed facility would produce leachate and disclosed its need to transport the leachate to an offsite treatment facility. It identified Ithaca Area Wastewater Treatment Facility as the offsite facility that would receive the leachate for treatment and disposal. After the DEC issued a permit, Seneca Lake Guardian (“SLG”), a nonprofit environmental conservation organization, sought to annul the permit. The DEC and County Line each moved to dismiss, asserting that SLG lacked standing.
A New York trial court granted both motions, finding that SLG's allegations of harm were “too speculative to confer standing” and no different than harm incurred by the public at large. The appellate court reversed.
Decision
An organization can establish organizational standing “by asserting a claim on behalf of its members, provided that at least one of its members would have standing to sue, that it is representative of the organizational purposes it asserts and that the case would not require the participation of individual members.” Additionally, the organization must demonstrate that at least one of its members may suffer an injury in fact—“actual harm” separate and apart from the public at large—and that such injury falls within the “zone of interests” of the government regulations at issue.
Accepting SLG’s allegations as true for the purposes of the motion to dismiss, the appellate court concluded that SLG met this standard. The parties did not dispute that the alleged injury fell within the zone of interest of the New York state regulations pertaining to waste management. Further, the respondents did not challenge that SLG’s claims were representative or that its organizational purpose was to preserve and protect the health of the local Finger Lakes environment. The only issue in dispute was whether SLG adequately pleaded that at least one of its members would suffer an injury-in-fact different from that suffered by the public at large.
Finding that SLG did plead such harm, the appellate court noted that SLG alleged that its members would be harmed by the leachate produced by County Line, which would be treated by the Ithaca treatment facility and then dumped into Cayuga Lake. According to SLG, the type of solid waste that County Line would handle would create leachate that contains PFA substances, which have been linked to adverse health outcomes. SLG additionally alleged that because the
PFAs cannot be fully filtered out of leachate, PFAs would enter the lake and cause its members harm. SLG specifically identified a member whose potable drinking water is only filtered through the ground in “beach wells” on Cayuga Lake and would be unsafe to drink if County Line were to transport its waste in the method outlined in its DEC application. The appellate court emphasized that neither County Line nor DEC provided evidence rebutting these allegations. As such, the court concluded that SLG’s allegations were sufficient to establish non-speculative injury-in-fact to an individual member distinct from harm to the public at large and therefore had standing to challenge the permit.
Comments
As litigation stemming from PFA-related contamination or exposure to PFA-containing materials continues to proliferate, so too will policyholders’ claims for defense and indemnity of such claims. Coverage litigation in this context will turn primarily on applicable policy language, including pollution exclusions, as well as particular jurisdictional law. At least two courts have dismissed policyholder suits, finding that pollution exclusions barred coverage for such claims, while a few other courts have ruled that, based on the particular allegations in the complaint as compared to policy language, the insurers were obligated to defend the suits.