Cost Recovery Options for Emerging Contaminants- Shifting Treatment Costs from Ratepayers to Polluters

Remediation efforts to provide high-quality drinking water come at a significant financial burden to water utilities and public entities. Whether addressing a regulated drinking water constituent or an emerging contaminant of concern it becomes increasingly challenging to deliver affordable water. While every case must be evaluated on its facts, legal precedence has been set for recovering the costs of cleaning up contaminated drinking water and shifting treatment costs from ratepayers to polluters. Under the theory of “products liability” manufacturers of chemicals responsible for contamination are held accountable for the associated treatment costs— including but not limited to replacement or treatment of affected well, capital costs, well connection and distribution system costs, operation and maintenance costs for the lifetime of affected wells, and protection against future uncertainty through the inclusion of contamination contingency clauses in settlement documents. By including a legal review of cost recovery options as part of their systematic approach to evaluate remediation efforts water utilities may be able to lessen their financial burden associated with providing high-quality drinking water. This presentation will detail the legal review process that can be undertaken by a utility interested in pursing cost recovery options for regulated or emerging contaminants. The factors to consider when evaluating manufacturer liability will be reviewed. General resource commitments and timelines for undertaking this process will also be particularized. To see the legal review process in context a case study from the State of New Hampshire will be deconstructed; twenty-two major oil companies were sued for adding MTBE to New Hampshire’s gasoline knowing that it would contaminate the State’s drinking water supplies resulting in over $372 million in settlements and jury verdict which helped fund the creation of an MTBE Remediation Bureau in the State’s Department of Environmental Services.