Water, Lead, and Environmental Justice: Easing the Flint Water Crisis with a Public Water Contamination Liability Fund

William & Mary Environmental Law and Policy Review William & Mary Environmental Law and Policy Review

Volume

42 (2017-2018)

Issue 1

Article 9

November 2017

Water, Lead, and Environmental Justice: Easing the Flint Water Water, Lead, and Environmental Justice: Easing the Flint Water

Crisis with a Public Water Contamination Liability Fund Crisis with a Public Water Contamination Liability Fund

Jonathon Lubrano

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Part of the Environmental Law Commons, Environmental Policy Commons, and the Water Resource

Management Commons

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Jonathon Lubrano,

Water, Lead, and Environmental Justice: Easing the Flint Water Crisis with a

Public Water Contamination Liability Fund

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Repository.

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WATER, LEAD, AND ENVIRONMENTAL JUSTICE:

ASING THE FLINT WATER CRISIS WITH A PUBLIC

WATER CONTAMINATION LIABILITY FUND

ONATHON LUBRANO

INTRODUCTION

On April 25, 2014, the city of Flint, Michigan switched water

sources from the Detroit Water and Sewage Department to the Flint

River.

By the next month, residents were already complaining about

color and smell.

It wasn’t until August 2014, four months after the

switch, that high levels of dangerous bacteria were detected, requiring

residents to boil their water before using it.

By the beginning of 2015,

tests were registering high levels of lead and carcinogens.

However, it

wasn’t until September 2015 that larger studies confirmed the problem

and detected higher rates of excessive lead levels in children.

The mayor

declared a state of emergency that December, followed by President

Barack Obama the next month.

The Flint water crisis has become a particularly salient issue

in American consciousness and environmental law.

The problem of

JD Candidate, William & Mary Law School, 2018; BS Policy Analysis & Management,

Cornell University, 2015. Graduate Research Fellow of the Virginia Coastal Policy Center.

The author would like to thank his family and friends for their unwavering support and

encouragement. He would also like to thank the staff of the William & Mary Envi-

ronmental Law and Policy Review—whose tireless efforts made this Note possible.

Merrit Kennedy, Lead-Laced Water In Flint: A Step-By-Step Look At The Makings Of

A Crisis, NPR (Apr. 20, 2016, 6:39 PM), http://www.npr.org/sections/thetwo-way/2016/04

/20/465545378/lead-laced-water-in-flint-a-step-by-step-look-at-the-makings-of-a-crisis

[https://perma.cc/9DW5-LRUS].

Id.

Kennedy, supra note 1.

Id.

E.g., Helen Marie Berg, When a Disaster Is Not a “Disaster” and Why that Title Matters

for Flint, S

TAN. ENVTL. L.J. (Mar. 28, 2016), http://journals.law.stanford.edu/stanford-en

vironmental-law-journal-elj/blog/when-disaster-not-disaster-and-why-title-matters-flint

[https://perma.cc/32CF-N2XE]; David Bailey, Lawsuit Filed over Student Exposure to Lead

in Flint, Michigan, Schools, REUTERS (Oct. 18, 2016, 3:50 PM), http://www.reuters.com

/article/us-michigan-water-idUSKCN12I2J8 [https://web.archive.org/web/*/http://www

331

332 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

contaminated drinking water affects communities across the country;

according to the National Resource Defense Council, $ 18 million people

used water systems with lead violations in 2015.

The goals of this Note are to 1) identify the multiple contours

of the problem of contaminated water in Flint and other communities,

2) analyze the law surrounding these problems, 3) explore potential in-

dividualized policy solutions to each problem, and 4) recommend a

solution that optimally addresses each of these problems.

In pursuit of these goals, Parts I, II, and III identify and examine

three substantial issues present within the Flint water crisis, and the

relevant law involved in each. Part I examines sovereign immunity as a

barrier to recovery for those harmed by contaminated water. Part II

explores the externalities of awarding damages in citizen-plaintiff suits,

and Part III identifies the relevant environmental justice concerns raised

by Flint and similarly contaminated cities.

Part IV examines hypothetical policy solutions to each discussed

issue to combat their likely consequences. Ultimately, overly individual-

ized solutions risk exacerbating other issues.

To optimally address each dimension of Flint’s water problem

invoked in Parts I, II, and III, Part V analyzes and argues for, a proposed

solution to create a Water Contamination Liability Fund, which would

cover the costs of correcting the water contamination and compensating

injured citizens. The Fund would be financed by a nominal tax on water

usage in municipal systems. It is likely that this program could circum-

vent barriers to recovery such as sovereign immunity—discussed in Part

I—by implementing administrative hearings and avoiding formal law-

suits altogether.

.reuters.com/article/us-michigan-water-idUSKCN12I2J8]; David Bailey, Flint Water

Class Action Belongs in State Court—6th Circuit, REUTERS LEGAL (Nov. 18, 2016); Jeremy

Dillon, Oversight Panel Democrats Want Flint Investigation Reopened, ROLL CALL (Jan. 19,

2017, 4:30 PM), http://www.rollcall.com/news/policy/over sight-panel-democrats-want-flint

-investigation-reopened [https://perma.cc/ZC2J-PJDY]; Ben Klayman, Michigan Attorney

General Sues France’s Veolia in Flint Water Crisis, REUTERS (June 22, 2016, 10:28 AM),

http://www.reuters.com/article/us-michigan-water-idUSKCN0Z81PD [https://web.archive

.org/web/*/http://www.reuters.com/article/us-michigan-water-idUSKCN0Z81PD].

Erik Olson & Kristi Pullen Fedinick, What’s in Your Water? Flint and Beyond, NRDC

(June 28, 2016), https://www.nrdc.org/resources/whats-your-water-flint-and-beyond [https://

perma.cc/2L92-SQPY]. For example, “[a]ccording to the most recent data available, 5,363

active community water systems across the United States” faced issues relating to the

Lead and Copper Rule in 2015. Id.

Id.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 333

Furthermore, this policy would spread the cost of water contami-

nation suits across the entire state, thereby reducing the budgetary

burden on a locality in crisis, and thus the proportion of damages funded

by a plaintiff community’s own residents by way of taxation. Finally, by

implementing this program at the state or federal level, it could improve

environmental justice by spreading the cost of water contamination more

broadly across many neighborhoods of different classes, reducing the cost

to already burdened communities with scant resources.

ACKGROUND: THE SITUATION IN FLINT

To save money during the construction of a new pipeline from Lake

Huron, Flint switched from Detroit’s water system to the Flint River.

Emergency manager Darnell Earley, appointed by Gov. Rick Snyder to

continue addressing Flint’s budgetary emergency in October 2013,

made

the formal decision to switch.

The Flint River was contaminated with

mercury, PCBs,

and other corrosives from years of industrial runoff

that leech lead from the water pipes into Flint’s water.

Residents noted

distinct problems with their water including color and smell,

and soon

after, Flint switched back to the Detroit water supply.

However, by that

point, the protective coating on the municipal water pipes had been worn

away, and lead was continuing to leech into the water.

Many experienced law firms were wary to take on these cases due

to the limitations of sovereign immunity,

a legal privilege held by the

Tribune News Services, Class action suit filed by residents over Flint water crisis,

HICAGO TRIBUNE (Mar 7, 2016, 2:28 PM), http://www.chicagotribune.com/news/local

/breaking/ct-flint-water-crisis-class-action-lawsuit-20160307-story.html [https://perma.cc

/J432-E2HM].

Detroit News Staff, How Flint’s water contamination crisis developed, THE DETROIT

NEWS (Feb. 2, 2016, 11:32 PM), http://www.detroitnews.com/story/news/michigan/flint

-water-crisis/2016/02/02/flints-water-contamination-crisis-developed/79736038 [https://

perma.cc/JU7B-MTQE].

Rita Ann Cicero, In Flint, Lawsuits Over Drinking Water Contamination Start Trick-

ling In, 33 WESTLAW J. TOXIC TORTS 4 (2016).

Id.

Tribune News Services, supra note 10.

Cicero, supra note 12.

Id.

Amber Phillips, Criminal charges were just filed in Flint. But suing over the water crisis

remains very difficult., W

ASH. POST (Apr. 20, 2016), https://www.washington post.com

/news/the-fix/wp/2016/01/26/why-it-will-be-very-difficult-for-flint-residents-to-sue-the

-state-of-michigan-for-money/ [https://perma.cc/9T2J-4DMH].

334 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

federal and state governments that insulates each from many lawsuits.

However, this has not stopped a few Michigan lawyers from pursuing

creative legal theories to circumnavigate sovereign immunity, such as

construing the harm as a constitutional violation.

For example, one of

the first class lawsuits filed on November 13, 2015 was Melissa Mays, et

al., v. Governor Rick Snyder et al. in which the plaintiffs claimed the actions

of the Flint and State governments deprived residents of their rights with-

out due process.

This lawsuit sought compensatory damages, punitive

damages, as well as medical, educational, occupational, and nutritional

support for Flint citizens.

However, it was dismissed on the grounds

that claims regarding unsafe drinking water must proceed under the

procedures in the Safe Drinking Water Act (“SDWA”).

Unfortunately,

if the plaintiffs in Mays did file a claim under the SDWA, they would

only be able to receive injunctive relief and legal fees.

Under the SDWA

there is no path to obtain the compensatory and punitive damages they

originally sought.

Other suits have arisen in federal court under the SDWA.

The

claim filed by Concerned Pastors for Social Action under the SDWA sought

equitable relief for Flint.

Specifically, the lawsuit sought replacement

of all lead water pipes at no cost to the Flint taxpayer.

Ultimately, the

parties settled in March, 2017.

The state of Michigan agreed to pay $87

million to replace Flint’s lead contaminated pipes with copper lines.

The

plaintiffs also secured bottled water distribution in the interim, including

a hotline for those who could not physically reach destination sites.

Medical costs and other damages caused by the contaminated water were

See Sovereign Immunity, Black’s Law Dictionary (10th ed. 2014).

Mays v. Snyder, No. 15-14002, 2017 WL 445637, at *1 (E.D. Mich. Feb. 2, 2017).

Id.

Jennifer Chambers, Flint water lawsuit dismissed by judge, THE DETROIT NEWS (Feb. 3,

2017, 3:44 PM), http://www.detroitnews.com/story/news/michigan/flint-water-crisis/2017/02

/03/judge-dismisses-class-action-flint-water-lawsuit/97436892/ [https://perma.cc/G6SF-RHT3].

Mays, 2017 WL 445637, at *3.

42 U.S.C.A. § 300j-8(d).

See id. § 300j-8(e).

Concerned Pastors for Soc. Action v. Khouri, 194 F. Supp. 3d 589, 596 (E.D. Mich. 2016).

Id. at 596–97.

Id. at 595–96.

See Settlement Agreement, Concerned Pastors for Soc. Action v. Khouri, 194 F. Supp.

3d 589, 596 (E.D. Mich. 2016), http://www.michigan.gov/documents/flintwater/Settlement

_Agreement_dated_032717_580103_7.pdf [https://perma.cc/VD52-XAGV] [hereinafter

Settlement Agreement].

Id. at 20.

Id. at 54, 57.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 335

left notably unaddressed

because SDWA does not allow for their recov-

ery.

The compensatory damages for the Crisis are not negligible. For

example, United Way anticipates the medical costs for exposed children

alone will reach $100 million.

At present, the restrictions of the SDWA,

and government torts generally, have created a legal environment in

which these costs remain unaddressed.

If the citizens of Flint are limited to claims under the SDWA, they

will be unable to obtain compensatory relief for any of the health effects

of their lead-ridden water.

This Note strives to bridge this remedy gap

and address other elements of the problem in Flint to ease similar prob-

lems in the future. To fully analyze the scale of the problem, this Paper

explores the Flint water crisis in greater depth within the areas of 1) sov-

ereign immunity as a barrier to recovery, 2) the negative externalities of

citizen-class lawsuits, and 3) lack of environmental justice.

I. S

OVEREIGN IMMUNITY AS A BARRIER TO RECOVERY

It should come as no surprise that numerous lawsuits have arisen

seeking damages from the government agencies responsible for Flint’s

contaminated water system.

However, those who have been harmed face

barriers to their recovery.

One such substantial barrier is the doctrine

of sovereign immunity, which bars civil claims against the government.

The concept of sovereign immunity in the United States is origi-

nally sourced from England.

It is based on the premise that “[t]he King

could do no wrong.”

Under the modern doctrine of sovereign immunity

in the United States, the federal government cannot be sued unless it

consents to be sued.

The United States maintains sovereign immunity

“to shield the public from the costs and consequences of improvident

See id. at 59–62.

42 U.S.C.A. § 300j-8(d–e).

United Way estimates cost of helping children $100M (Jan. 19, 2016, 9:36 AM), WNEM,

http://www.wnem.com/story/30995770/united-way-estimates-cost-of-helping-children

-100m [https://web.archive.org/web/*/http://www.wnem.com/story/30995770/united-way

-estimates-cost-of-helping-children-100m].

See 42 U.S.C.A. § 300j-8(d–e).

See Cicero, supra note 12.

Phillips, supra note 18.

Id.

See, e.g., William Blackstone, Commentaries on the law of England, 238 (1765).

Id.

See United States v. Sherwood, 312 U.S. 584, 586 (1941).

336 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

actions of their governments,”

such as lawsuits.

In United States v.

Shaw, Justice Reed wrote, “[t]he reasons for this immunity are imbedded

in our legal philosophy. They partake somewhat of dignity and decorum,

somewhat of practical administration, somewhat of the political desir-

ability of an impregnable legal citadel where government as distinct from

its functionaries may operate undisturbed by the demands of litigants.”

The 11th Amendment protects states from lawsuits filed by citizens

of another state.

All states, besides Washington,

expressly limit gov-

ernment tort liability from their own citizens as well.

In the context of

the Flint Water Crisis, Michigan is not liable for acts it performs in its

governmental capacity unless it expressly waives immunity.

Michigan’s

immunity extends to its political subdivision and municipalities.

This

is often called “governmental immunity” when applied to these political

subdivisions of the state of Michigan,

although there is little distinction

between the two, conceptually.

Notably, sovereign immunity has an exception built into its frame-

work; the government can consent to be sued.

This can be accomplished

quite easily by statute.

For example, Congress passed the Federal Tort

Claims Act (“FTCA”) in 1946,

which generally grants jurisdiction to the

District Court to hear tort claims against the United States.

While the

FTCA is codified in statute, the United States consents to suit for claims

seeking money damages for any “negligent or wrongful act or omission

of any employee of the Government while acting within the scope of his

office or employment.”

This liability extends to any act considered a tort

according to the law of the place it occurred.

However, there are many

Tooke v. City of Mexia, 197 S.W.3d 325, 332 (Tex. 2006).

See United States v. Shaw, 309 U.S. 495, 501 (1940).

Id.

U.S. CONST. amend. XI.

Wash. Rev. Code Ann. § 4.92.090 (West).

Lawrence Rosenthal, A Theory of Governmental Damages Liability: Torts, Consti-

tutional Torts, and Takings, 9 U. PA. J. CONST. L. 797, 804 (2007).

Shuey v. State of Mich., 106 F. Supp. 32 (E.D. Mich. 1952).

Id. at 34.

See Hannay v. Dep’t of Transp., 497 Mich. 45, 58–59, 860 N.W.2d 67, 76 (Mich. 2014).

United States v. Sherwood, 312 U.S. 584, 586 (1941).

E.g., 28 U.S.C.A. § 2674.

Frank Hanley Santoro, A Practical Guide to the Federal Tort Claims Act, 63 CONN. B.J.

224 (1989).

28 U.S.C.A. § 1346(a), (b)(1) (West).

Id. § 1346(b)(1).

Id. § 1346.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 337

notable exceptions that make the FTCA a much less substantial waiver

of sovereign immunity than it appears.

The “intentional tort exception”

maintains sovereign immunity for assault or battery, false imprisonment

or false arrest, malicious prosecution or abuse of process, libel or slander,

misrepresentation or deceit, and interference with contract rights.

The

act also does not curtail sovereign immunity for “discretionary func-

tions”

which, in turn, provides rather broad protection for government

actors carrying out policy.

The Supreme Court developed a two-part test

to determine what qualifies as a discretionary function in Berkovitz by

Berkovitz v. United States.

Generally, if 1) the government employee’s

conduct involves a judgment or choice and 2) that choice was made in the

fulfillment of public policy, then the discretionary exception applies.

Finally, the FTCA also contains exceptions relating to the postal service,

tax collection, quarantines, operations of the Treasury, and the activities

of the military during war.

In regard to Flint, the State of Michigan codified some modest

curtailments of sovereign immunity. These curtailments included actions

within the context of providing medical care,

as well as liability under

the MISS DIG Underground Facility Damage Prevention and Safety

Act

involving the maintenance and protection of underground facili-

ties.

However, Michigan maintains a provision that generally insulates

agents of the government 1) acting within the scope of their authority, 2)

in the discharge of a government function, and 3) that did commit an

action (though not amounting to gross negligence) that is the proximate

cause of alleged injury or damage.

Most relevant to the Flint Water

Crisis, emergency managers are generally immune from tort liability.

David W. Fuller, Intentional Torts and Other Exceptions to the Federal Tort Claims Act,

8 U. ST. THOMAS L.J. 375, 376 (2011) (naming the exceptions as the central issue in

lawsuits brought under the FTCA); see, e.g., 28 U.S.C. § 2680.

Id. at 379.

Id. citing 28 U.S.C. § 2680(h) (2006).

28 U.S.C.A. § 2680 (West 2006).

See Statutory Exceptions to Sovereign Immunity—Actions Under The Federal Tort

Claims Act—The Discretionary Function Exception, 14 Fed. Prac. & Proc Juris. § 3658.1

(4th ed. 2017).

Berkovitz by Berkovitz v. United States, 486 U.S. 531, 536–37 (1988).

See id.

Fuller, supra note 57, at 380.

Mich. Comp. Laws Ann. § 691.1407(4) (West 2014).

Id. § 691.1407(7).

See Mich. Comp. Laws Ann. § 460.271 (West 2017).

See Mich. Comp. Laws Ann. § 691.1407(2) (West 2014).

Id. § 691.1407(1).

338 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

As such, there are few viable pathways for citizens harmed by the Crisis

to recover damages in tort for the actions of the emergency manager,

who ultimately made the decision to switch water supplies.

Unless it is waived in statute, or creative Mays-like

lawsuits set

precedent helpful to citizen-plaintiffs, sovereign immunity will continue

to serve as a barrier to recovery.

II. T

HE EXTERNALITIES OF AWARDED DAMAGES

Even if it was possible to overcome the hurdle of sovereign immu-

nity, seeking damages from a government is unhelpful to a large class of

citizens; the funding a government would use to pay damages or fulfill

injunctive relief is ultimately derived from that community’s own taxes.

In other words, citizens bear the cost of their own awards after trial. This

ironic phenomenon runs counter to predominate theories and justifica-

tions in support of tort liability.

There are two competing theories of tort liability: instrumentalist

and noninstrumentalist, or “corrective justice.”

Instrumentalism is more

utilitarian in nature.

It states that one should either fulfill one’s duties

of precaution, short of wasteful activity, or pay the cost of failing to do

so.

Conversely, corrective justice is more deontological.

It states that

one has a duty to correct one’s mistakes, irrelevant of consequence, and

restore victims to the time before the harm.

Instrumentalism is perhaps best expressed in United States v.

Carol Towing Co. Judge Billings Learned Hand described duty in tort

claims as a “function of three variables: (1) The probability [of injury,]

(2) the gravity of the resulting injury . . . [, and] (3) the burden of ade-

quate precautions.”

The instrumentalist theory, which assumes the risk

of payout, encourages caution; an individual or profit-motivated company

should be motivated to apply Hand’s formula to avoid costly lawsuits.

See Phillips, supra note 18.

Kennedy, supra note 1.

See Mays, 2017 WL 445637, at *1.

Richard A. Posner, Instrumental and Noninstrumental Theories of Tort Law, 88 IND.

L. J. 469 (2013).

See id.

Id.

See id.

Id.

United States v. Carroll Towing Co., 159 F.2d 169, 173 (2d Cir. 1947).

See generally Daryl J. Levinson, Making Government Pay: Markets, Politics, and the

Allocation of Constitutional Costs, 67 U. CHI. L. REV. 345 (2000).

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 339

But governments are not similarly motivated; the monies in the govern-

ment’s possession are public funds, and as such, “government cares not

about dollars, only about votes.”

Thus, unless the payout from the

lawsuit becomes large and salient enough to galvanize voters, it is ques-

tionable whether a costly lawsuit actually motivates a government to

behave cautiously.

If a court orders damages for a tort claim in which the govern-

ment is the defendant, corrective justice is not achieved either. This is

because these costs are not solely shifted to, or borne by, culpable parties.

Additionally, localities heavily compete to provide residents with services

at reasonable costs.

If a lawsuit puts greater pressure on the budget of

a community, it may motivate residents and businesses to leave the

locality as service costs go up or tax revenues go down, further undermin-

ing the local tax base and economy.

With these consequences in mind,

the goals of corrective justice are not met because the harmed are not ac-

tually made whole. If the government faces substantial damages, it is the

citizens who pay via taxes, lost services, or possibly a damaged economy.

Therefore, neither major theory of tort of liability justifies govern-

ment liability because the government lacks its own resources apart from

public funds. This is particularly relevant for small localities like Flint,

where all citizens were potentially harmed by their government. This

evokes a situation in which citizens, as plaintiffs, would effectively fund

their own legal damages. This concern was highlighted by the plaintiffs

in Concerned Pastors for Social Action et al., who specifically requested

injunctive relief to replace corroded pipes at no cost to the system’s

customers.

The settlement agreement secures funding for injunctive

relief from the State of Michigan, rather than the local government.

This, at least, reduces the proportional local tax burden to the citizens of

Flint by pulling the funding from across the entire State.

Instrumentalism does not justify holding a government liable in

class water contamination suits because the government can only lose

funds derived from the public at large. Thus, there is little loss aversion

Id. at 420.

Rosenthal, supra note 47, at 820.

See Vicki Been, “Exit” As A Constraint on Land Use Exactions: Rethinking the Un-

constitutional Conditions Doctrine, 91 COLUM. L. REV. 473, 511–14 (1991).

Rosenthal, supra note 47, at 848.

See Been, supra note 82, at 511–14.

Concerned Pastors for Soc. Action, 194 F. Supp. 3d at 596.

Settlement Agreement, supra note 29, at 596.

340 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

motivating caution. Neither does corrective justice justify government

liability in class water contamination suits, because the plaintiff citizens

are not truly compensated for their harm when they receive damages they

funded with their own taxes. This issue would grow in severity as more

plaintiffs join a suit. Hypothetically, a single plaintiff harmed by the gov-

ernment is proportionally paying very little of his or her damage award,

but a class of every citizen in a tortfeasant locality must fund every cent

of damages awarded. Any policy designed to remedy the problems of

Flint should carefully consider funding sources to avoid a situation where

plaintiffs pay for their own damages after a lawsuit.

III. E

NVIRONMENTAL JUSTICE

Flint is a clear example of the need for greater environmental jus-

tice in the United States. The EPA defines environmental justice as the

“fair treatment and meaningful involvement of all people regardless of

race, color, national origin, or income, with respect to the development,

implementation, and enforcement of environmental laws, regulations, and

policies.”

Here in the United States, poor and minority communities are

disproportionately impacted by environmental harms and degradation.

The lead issues in Flint are emblematic of the need for greater

environmental justice nationally.

For example, the Center for Disease

Control notes that poor and minority Americans have a higher risk for

lead exposure.

Flint boasts a population that is fifty-seven percent

African American.

Forty-two percent of Flint’s citizens live below the

poverty line.

The Michigan Civil Rights Commission (“Commission”),

under the Michigan Department of Civil Rights, blames the systematic

racism of the housing market, even following the passage of the Fair Hous-

ing Act of 1968, for these racially and economically slanted demographic

EPA, ENVIRONMENTAL JUSTICE, https://www.epa.gov/environmentaljustice [https://

perma.cc/LV8K-UKHM] (last visited Oct. 23, 2017).

See Rachel D. Godsil, Remedying Environmental Racism, 90 MICH. L. REV. 394, 397 (1991);

Mariaea Ramirez Fisher, On the Road from Environmental Racism to Environmental

Justice, 5 VILL. ENVTL. L.J. 449, 452 (1994); Gerald Torres, Introduction: Understanding

Environmental Racism, 63 U.

COLO. L. REV. 839, 842 (1992).

E.g., David A. Dana & Deborah Tuerkheimer, After Flint: Environmental Justice As

Equal Protection, 111 NW. U.L. REV. ONLINE 93 (2017).

CDC, AT RISK POPULATIONS, https://www.cdc.gov/nceh/lead/tips/populations.htm [https://

perma.cc/H2MW-QLYY] (last visited Oct. 23, 2017).

Dana & Tuerkheimer, supra note 89, at 93.

Id.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 341

statistics.

When racial minorities began purchasing homes in the area,

it drove down the values of properties, which caused a “flight” from the

community.

Financially stable and predominantly white families va-

cated Flint after the Fair Housing Act was passed.

The Commission

looked beyond “economic flight” to blame racism directly, and on a sys-

temic scale, for the current landscape of Flint.

If white citizens who left

the city were only concerned about their property values or economics

generally, many would not have thrown away money by leaving their

homes unsold.

As the Commission explains, “[t]he result is a poor, less

educated and disproportionately black population left behind with a

shrinking tax base and a greater share of the city’s costs.”

Their report

concludes confidently that racial and economic forces created an environ-

ment in which a crisis was “all but inevitable” in Flint.

The Commission strove to avoid blaming any party or actor for

the situation in Flint.

100

However, factually, it is well established that

Gov. Rick Snyder appointed emergency manager Michael Brown in 2011

to control finances in the wake of Flint’s financial crisis.

101

Further, it

was subsequent emergency manager Darnell Earley who ultimately

made the decision to switch the city’s water supply to the Flint River, in

order to save money.

102

As demonstrated by Flint, the importance of accountability in

government action can directly conflict with the doctrine of sovereign

immunity, especially in the face of poverty and lack of resources. A lack

of environmental justice played, and will continue to play, a role in the

See Michigan Civil Rights Commission, The Flint Water Crisis: Systemic Racism

Through the Lens of Flint, 38 (Feb. 17, 2017), https://www.michigan.gov/documents/mdcr

/VFlintCrisisRep-F-Edited3-13-17_554317_7.pdf [https://perma.cc/85NC-W9ZN].

Id. at 69.

Id. at 68–69.

Id. at 69.

Id.

Michigan Civil Rights Commission, supra note 93, at 68–69.

Id. at 114.

100

Id. at 9.

101

Detroit News Staff, supra note 11.

102

Leonard N. Fleming, Darnell Earley: The man in power during Flint switch, THE

DETROIT NEWS (Mar. 14, 2016 7:31 PM), http://www.detroitnews.com/story/news/michi

gan/flint-water-crisis/2016/03/14/darnell-earley-flint-water-crisis/81788654/ [https://perma

.cc/X5F9-U3DG]; See also Letter from Darnell Earley, Emergency Manager, City of Flint,

to Sue McCormick, Detroit Water and Sewer Department (Mar. 7, 2014), http://mediad

.publicbroadcasting.net/p/michigan/files/201512/earlely_letter.pdf?_ga=1.224901786

.1036207224.1446746452 [https://perma.cc/JVU2-KP8R].

342 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

development of this crisis.

103

Any policy solution that seeks to meaning-

fully compensate victims, such as those in Flint, must account for these

institutional pressures.

IV. A

PROPOSAL AND EXAMINATION OF POSSIBLE POLICY SOLUTIONS

Each of the three aforementioned dimensions of the Flint water

crisis can be addressed individually through policy. The following three

sections propose and analyze individualized solutions to each of them.

A. Reducing Sovereign Immunity at State Level for Water

Contamination

Sovereign immunity serves as a bar to recovery for Flint’s harmed

citizens.

104

As a possible policy solution, states could expressly consent

to suit and compensatory damages for water contamination liability,

when the negligent actions of governments or water authorities cause

harm. To avoid the pitfall of overburdening an already harmed commu-

nity, sovereign immunity could be pulled back at the state level, rather

than the locality, to better distribute the cost of awarded damages over

a wider area and reduce the proportional burden on the harmed plaintiffs

in their community. Although relaxed sovereign immunity standards at

the federal level would provide access to an even broader area to distribute

damages, the federal government is far removed, and often constitution-

ally distinct, from the negligent actions of a locality. Thus, the state serves

as the best place to implement this policy to distribute cost without re-

moving a legal nexus of liability. Under this policy, when citizens of Flint

are harmed by water contamination, all of Michigan pays for it.

However, this policy is unfavorable because 1) there is no consis-

tent rule for determining a state’s vicarious liability for the actions of a

locality and 2) curtailing sovereign immunity comes with substantial

costs and barriers.

1. Legal Ambiguity of State Liability

For this policy to function and not burden the community itself with

the entirety of liability and damages, a state must bear some responsibility

for the negligence of localities within its borders. However, there is no

103

Michigan Civil Rights Commission, supra note 93, at 114.

104

Supra Part I.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 343

concrete rule for determining when a state is liable for the actions of a

locality.

105

It is not entirely novel to hold a state liable in this manner; for

example, the Fourth and Ninth Circuits have held states are liable for

failures of their respective localities to implement the Food Stamp Act of

1964.

106

However, in Milliken v. Bradley, the Supreme Court did not con-

sider the State of Michigan vicariously liable for the de jure segregation

of Detroit schools.

107

As such, it is entirely possible that even if sovereign

immunity is relaxed at the state level, liability will rest entirely with the

locality government and burden citizens with their own damages.

Another key factor in a discussion of state liability for locality

action is whether that state follows what is known as “Dillon’s Rule.”

Dillon’s Rule, named after the late Eighth Circuit Court of Appeals Judge

and former Iowa Supreme Court Chief Justice John F. Dillon,

108

outlines

that “[a] municipal corporation can only exercise those powers: (1) granted

to it by express words; (2) necessary or fairly implied in the express pow-

ers; and (3) that are indispensable to its ability to carry out its pur-

poses.”

109

Dillon’s Rule may establish a greater liability link between the

actions of localities and the state government, but there is no coherent

standard to solidify this possibility.

110

In contrast, “Home Rule” asserts that localities themselves have “an

inherent right to self-determination.”

111

Relevantly, this second stance has

been labeled “The Cooley Doctrine” after Michigan Supreme Court Chief

Justice Thomas M. Cooley and his concurring opinion in the 1871 case

People v. Hurlbut, in which he stated that “local government is [a] matter

of absolute right; and the state cannot take it away. It would be the boldest

mockery to speak of a city as possessing municipal liberty where the

state . . . at discretion sent in its own agents to administer it . . . .”

112

This

historic language is representative of Michigan’s long-standing struggle to

105

The State’s Vicarious Liability for the Actions of the City, 124 HARV. L. REV. 1036–37

(2011) [hereinafter State’s Vicarious Liability].

106

Id. at 1039–40.

107

Milliken v. Bradley, 418 U.S. 717, 749–50 (1974).

108

JOHN F. DILLON, TREATISE ON THE LAW OF MUNICIPAL CORPORATIONS I (1872).

109

22A Summ. Pa. Jur. 2d Municipal and Local Law § 13:4 (2d ed. 2017). Dillon’s Rule

is derived from Judge Dillon’s Treatise on the Law of Municipal Corporations and his

jurisprudence. Id.

110

State’s Vicarious Liability, supra note 105, at 1039 (stating that there is no coherent

rule for determining the liability link between states and localities).

111

CITIZENS RESEARCH COUNCIL OF MICHIGAN, MICHIGAN CONSTITUTIONAL ISSUES 3,

Report No. 313-09 (Oct. 1994), http://www.crcmich.org/PUBLICAT/1990s/1994/rpt31309

.pdf [https://perma.cc/NKF5-37T9].

112

People ex rel. Le Roy v. Hurlbut, 24 Mich. 44, 108 (Mich. 1871) (Cooley, J., concurring).

344 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

assign responsibility between local and state actors, as well as its tradi-

tional strength as a Home Rule state, thus further complicating the

situation. The debate between Dillon’s Rule and Home Rule policies, and

their modern implications, resurfaced in 2011 when Governor Rick Snyder

sought to impose a program of state-assigned emergency managers on

financially struggling cities in Michigan.

113

The effect of Dillon’s Rule,

and the ambiguous state of the law in this area, means the policy may

not ultimately function as intended.

It is therefore very possible courts will not be able to hold states

liable for negligence on the local level. If this is the case, curtailing

sovereign immunity for water contamination liability at the state level

would achieve nothing for the citizens seeking compensatory damages.

2. Barriers and Costs of Curtailing Sovereign Immunity

Consenting to suit for water contamination at the state level may

prove unwise or ineffective. First, sovereign immunity at the federal level

can be enforced constitutionally through the Appropriations Clause.

114

Article I decrees that “[n]o Money shall be drawn from the Treasury but

in Consequence of Appropriations made by Law.”

115

This gives Congress

substantial discretion to determine if and when it pays damages to harmed

plaintiffs.

116

For example, in District of Columbia. v. Eslin, Plaintiffs were

awarded damages after they filed suit under a law created by Con-

gress.

117

The District of Columbia appealed the ruling.

118

However, before

the appellate hearing, Congress passed another law, which directed the

Secretary of the Treasury not to pay the damages.

119

The Appellate Court

dismissed the case for lack of jurisdiction stating it was the “one solu-

tion” after Congress passed the new law.

120

This indicates that even if the

federal government consents to suits, Congress may nullify any damages

through legislation, even after a court has awarded them.

121

113

Jamess, Michigan Has a History of ‘Home Rule’—Despite the Unconstitutional Take-

overs Using Dillon’s Rule, DAILY KOS (Apr. 30, 2011, 3:00 PM), https://www.dailykos

.com/stories/2011/4/30/971713/- [https://perma.cc/3LF5-4D83].

114

See Rosenthal, supra note 47, at 802–03.

115

U.S. CONST. art. I § 9, cl. 7.

116

Rosenthal, supra note 47, at 802–03.

117

District of Columbia v. Eslin, 183 U.S. 62, 62–64 (1901).

118

Id. at 64.

119

Id.

120

Id. at 64–65.

121

See generally id. at 64.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 345

Michigan’s constitution also contains an Appropriations Clause,

122

suggesting the state could potentially perform the same maneuver.

123

Ultimately, appropriations clauses in state and federal constitutions

mean that any curtailment of sovereign immunity by statute would pro-

vide neither a permanent nor a dependable solution.

Furthermore, relaxing sovereign immunity comes with certain

consequences and pitfalls.

124

First, immunity may disincentivize govern-

ment action for fear of incurring a lawsuit.

125

For example, if a lawsuit

can arise for any action taken, a legislature may pursue only the most

cautious of steps rather than the most effective ones.

126

Secondly, some

fear that lawsuits provide a pathway for courts to weigh in on policy

actions of the other two branches; in determining reasonableness and

negligence courts would have greater say in the allocation of resources

and the direction of policy, which were previously immunized.

127

Third,

sovereign immunity protects majoritarian government by insulating the

democratically elected government from litigious minority factions.

128

In the context of the Flint water crisis, these issues could also

worsen the problems of environmental justice, by deterring government

action;

129

the communities most at risk to experience problems requiring

rapid government intervention

130

would be left helpless. Even if sover-

eign immunity was pulled back solely in the area of water contamination,

one could imagine a toxic spill that required rapid cleanup might be ap-

proached slowly and cautiously by a lawsuit-adverse executive branch.

131

Ultimately, addressing the problem of sovereign immunity by

itself comes with substantial hurdles as well as externalities which

undermine the other dimensions of the Flint problem.

122

Mich. Const. 1963, art. 9, § 17.

123

Michigan lacks definitive precedent to determine if this is possible. However, District

of Columbia v. Eslin indicates Michigan holds powers to pass laws effectively revoking

tort damages when the State is a defendant to a tort claim. District of Columbia, 183 U.S.

at 64–65.

124

Harold J. Krent, Reconceptualizing Sovereign Immunity, 45 VAND. L. REV. 1529,

1530–31 (1992).

125

Id. at 1537.

126

Id. at 1541.

127

Id. at 1536–67.

128

See id. at 1530.

129

See Krent, supra note 124, at 1537.

130

See generally Michigan Civil Rights Commission, supra note 93, at 12.

131

See generally Krent, supra note 124, at 1537.

346 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

B. Don’t Make Plaintiffs Pay for Their Own Damages: Freezing

Plaintiff Taxes as a Remedy in Water Contamination Lawsuits

To directly prevent a situation in which a class of Plaintiffs

effectively provides for a substantial portion of their own damages when

filing suit against a government for water contamination,

132

a policy

could be designed that directly prevents a locality from increasing taxes

on plaintiffs in a water contamination suit for a set period of time. This

could be implemented by establishing, in statute, a “tax freeze” as an

available remedy in water contamination suits in which localities are

liable for the harm. Theoretically, this policy would force the locality to

pay damages through means other than taxing the plaintiffs, and take

the situation a step closer to the ideals of corrective justice.

Unfortunately, under this hypothetical policy, the locality would

be left with less palatable options for raising the funds to pay damages

when they cannot raise taxes on plaintiffs. One can imagine the locality

would either have to put the entire tax burden of the lawsuit on the only

citizens who escaped the harm in the first place (i.e., persons who did not

join in the suit), reduce services for the whole community, or appeal to

outside funding. It is unrealistic to expect the few citizens that did not

join the lawsuit to pay the tax burden and reducing services would still

harm the class plaintiffs as well. Ultimately, this is also an undesirable

option because, even by shielding the plaintiffs from a tax increase, they

will likely still experience economic harm though as the cost is placed on

their community.

C. Policies to Address Environmental Injustice

Environmental justice is generally described as a systematic prob-

lem;

133

therefore, it can be addressed by a variety of initiatives and policies.

This variety is beneficial because it provides more potential pathways

forward, which would hopefully avoid exacerbating other dimensions of

the Flint water crisis.

There are a variety of existing recommendations to improve envi-

ronmental justice including 1) recognizing, when conducting cost-benefit

analysis, that benefits do not defuse easily throughout an impoverished

132

Supra Part II.

133

E.g., Michigan Civil Rights Commission, supra note 93, at 10.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 347

area,

134

2) encouraging the government and large well-funded environ-

mental organizations to engage with grass roots organizations in disad-

vantaged communities,

135

3) establishing a claim for disparate impact on

the federal level in regards to hazardous waste facility siting,

136

and

4) upgrading energy facilities, promoting green energy, and funding dis-

tributed generation in disadvantaged communities to reduce emissions

in these areas.

137

The Commission in Michigan provides a litany of policy recom-

mendations for improving environmental justice and preventing the next

Flint-like crisis; they include recommendations to 1) develop mechanisms

to identify when the civil rights of a community are being ignored,

2) relocate agency meetings to the threatened communities they involve,

3) aggregate and transmit community concerns to other relevant govern-

ment agencies, even when the aggregating agency is not adopting those

concerns as an official policy stance, 4) invite psychologists to govern-

ment agencies to provide training on avoiding implicit bias, and 5) train

all levels of government on the role of structural racism in the develop-

ment of disparate outcomes.

138

Most relevant to the Flint water crisis

itself, the Commission also recommended revising the emergency man-

ager laws to 1) direct manager focus to the root of fiscal problems, rather

than the financial symptoms, 2) empower elected local representatives

to perform emergency manager functions, and 3) make emergency man-

agers accountable to the elected officials, among other provisions.

139

Depending on how this relationship between the State government, the

local government, and the emergency manager is altered, it could poten-

tially clarify the liability link between the actions of a locality and the

actions of state.

Many of these solutions do not directly involve the barriers to

recovery discussed in this Note. Therefore, Michigan and other states can

implement them with little effect on the issues of sovereign immunity

and the externalities of locality-paid damages.

134

See generally Shannon M. Roesler, Addressing Environmental Injustices: A Capability

Approach to Rulemaking, 114

W. VA. L. REV. 49, 50, 53 (2011).

135

See generally Fisher, supra 88, at 451–52.

136

Godsil, supra note 88, at 421–22.

137

James M. Van Nostrand, Energy and Environmental Justice: How States Can Inte-

grate Environmental Justice into Energy-Related Proceedings, 61 CATH. U. L. REV. 701,

722 (2012).

138

Michigan Civil Rights Commission, supra note 93, at 117–19.

139

Id. at 122–24.

348 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

V. T

HREE BIRDS WITH ONE STONE: ESTABLISHING THE WATER

CONTAMINATION LIABILITY FUND—FOLLOWING THE EXAMPLE

OF THE

UNDERGROUND STORAGE TANK INSURANCE PROGRAMS

In 1988 the EPA established regulations under 40 C.F.R. § 280(H),

which defined the financial responsibilities of the owners of underground

storage tanks for petroleum and other hazardous substances.

140

The EPA’s

goal was to ensure there were funds available to finance the clean-up of

any spill, and compensate anyone harmed by a spill.

141

As part of this

program, EPA gave tank owners a variety of options to comply with this

regulation, such as participating in a state-administered assurance pro-

gram that offers coverage from $500,000 to $1 million depending on the

size of the tank.

142

Many states, including Michigan,

143

created public funds to meet

the needs of storage tank owners.

144

In Michigan the program was funded

by charging owners a $100 registration fee and a one cent per gallon tax

on motor fuel.

145

The concept for these state-based funds mirrors a simi-

lar program at the federal level for federally regulated storage tanks

implemented in 1986 called the Leaking Underground Storage Tank

(“LUST”) Trust Fund.

146

The LUST Trust Fund money was used to “over-

see cleanups of petroleum released by responsible parties; [e]nforce

cleanups by recalcitrant parties; [p]ay for cleanups at sites where the

owner or operator is unknown, unwilling, or unable to respond, or which

140

40 C.F.R. § 280.93. See also 1988 Underground Storage Tanks; Technical Require-

ments; Final Rule and Underground Storage Tanks Containing Petroleum—Financial

Responsibility Requirements and State Program Approval Objective; Final Rule, EPA,

https://www.epa.gov/ust/1988-underground-storage-tanks-technical-requirements-final

-rule-and-underground-storage-tanks (last visited Oct. 23, 2017) [https://perma.cc/8CX2

-9FSH] [hereinafter 1988 Underground].

141

EPA Study On The Effectiveness Of UST Insurance As A Financial Responsibility (FR)

Mechanism at 1 (Dec. 2011), https://www.epa.gov/sites/production/files/2014-03/docu

ments/epa-insurance-paper.pdf [https://perma.cc/7MJ2-4A9Y] (last visited Oct. 23, 2017).

142

See 40 C.F.R. § 280.93; 40 C.F.R. § 280.101.

143

Michigan Underground Storage Tank Authority, DEP’T OF ENVTL. QUALITY, http://

www.michigan.gov/deq/0,4561,7-135-3311_4109_9977_73545---,00.html [https://perma

.cc/5TQ4-82CW] (last visited Oct. 23, 2017).

144

Haitao Yin et al., Risk-Based Pricing and Risk-Reducing Effort: Does the Private

Insurance Market Reduce Environmental Accidents?, 54 J.L. & ECON. 325, 331 (2011).

145

Id.

146

Leaking Underground Storage Tank (LUST) Trust Fund, EPA, https://www.epa.gov

/ust/leaking-underground-storage-tank-lust-trust-fund [https://perma.cc/YX8U-FX9N]

(last visited Oct. 23, 2017).

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 349

require emergency action; and [c]onduct inspections and other release

prevention activities.”

147

It was funded by a one cent per gallon tax on

motor fuel.

148

The program is well used, funding over 9,000 cleanups in

the 2015 fiscal year.

149

This framework could be applied to the situation in Flint by

creating a “Water Contamination Liability Fund” (“Fund”) at the state

level to finance the cleanup and liability of water contamination caused

by government action. The Fund would spread the risk of water contami-

nation across a larger group, so those harmed by toxic drinking water are

better proportionally and economically compensated for harms.

In conjunction with the tax, the state should route any claims

through an administrative hearing to avoid the burden of formal litiga-

tion on the locality and state. Administrative hearings cost less to both

sides, require fewer government resources, and utilize adjudicators who

specialize in the field and maintain familiarity with the relevant is-

sues.

150

When citizens are harmed by lead poisoning, for example, these

administrative adjudicates can award them compensation. The Fund

could be sourced from a nominal tax on water usage, similar to the LUST

tax on gasoline.

A. The Water Contamination Liability Fund Can Address the

Varied Dimensions of the Flint Water Crisis

As discussed in Parts I through III, the water crisis in Flint con-

tains multiple dimensions including 1) sovereign immunity as barrier to

recovery, 2) the externalities of winning damages in a suit against a

citizen’s own government, and 3) the violation of environmental justice.

The Water Contamination Fund Policy can be designed to effectively

address all three.

151

The Fund could circumnavigate sovereign immunity by providing

procedures for an administrative hearing to assess a claimant’s damages

from water contamination, instead of having plaintiffs rely on the tort

147

1988 Underground, supra note 140.

148

Id.

149

Leaking Underground Storage Tank Trust Fund Corrective Action Program, CATALOG

OF FEDERAL DOMESTIC ASSISTANCE, https://www.cfda.gov/index?s=program&mode=form

&tab=step1&id=2a8cd17a0ba4277511f7ed10c04f08a6 [https://perma.cc/RAM5-G5NS]

(last visited Oct. 23, 2017).

150

Christopher B. McNeil, The Marginal Utility of Consolidated Agency Hearings in Ohio:

A Due Process Analysis from an Economic Perspective, 32 OHIO N.U. L. REV. 127, 131 (2006).

151

See supra Parts I–III.

350 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

liability system. By using an administrative hearing, this policy would

avoid the dangers of relaxing sovereign immunity, such as the burden of

litigation on local governments.

152

The Fund could also reduce the ironic cost of citizen-plaintiff suits

brought against a locality;

153

the harmed would pay a proportionally

lower cost for any damages (rather than footing the entire bill as a city)

because the Fund would redistribute risk by collecting the tax across the

state. Furthermore, withdrawing resources from the Fund would be less

disruptive to the activities of a locality than an unexpected lawsuit,

particularly because a Fund, unlike an expansive lawsuit, is already

budgeted. Finally, administrative hearings regarding the Fund would

better serve the corrective justice of tort liability, as they could provide

compensatory damages to make the harmed whole utilizing expertise,

and without perverse effect.

The breadth of this policy can also address environmental justice

concerns. By collecting funds from water use across the state, poorer

localities, that might otherwise face hardship in meeting their responsi-

bilities due to lack of resources, will still be able to compensate their

community’s victims while they continue existing services.

154

Those

harmed by water contamination will have the ability to recover from the

Fund regardless of race or economic class. The use of administrative

hearings will also reduce cost and procedural complexity for claimants,

155

which could improve accessibility to compensation. Since 1977, roughly

ten to twenty percent of Disability Insurance and Supplement Security

Income claimants have proceeded completely without an attorney in

administrative hearings,

156

although some argue this is unwise.

157

government can also establish provisions to provide representation at the

hearings, assuming the cost is manageable for the state.

It is important to recognize that collecting this tax from a com-

modity such as water could harm poorer populations; because water is

152

See supra Section IV.A.

153

See supra Section IV.B.

154

Adam Babich, Environmental Justice in Louisiana, 51 LA. B.J. 90, 91 (2003) (discuss-

ing how part of environmental injustice is that costs are distributed unfairly on the poor

and minority communities).

155

McNeil, supra note 150, at 127.

156

Social Security Advisory Board, Aspects of Disability Decision Making: Data and

Materials, 60 (Feb. 2012) http://ssab.gov/Portals/0/OUR_WORK/REPORTS/Chartbook_As

pects%20of%20Disability%20Decision%20Making_2012.pdf?ver=2012-06-12-152148-000

[https://perma.cc/H3Z6-769E].

157

See generally Lisa Brodoff, Lifting Burdens: Proof, Social Justice, and Public Assistance

Administrative Hearings, 32 N.Y.U. REV. L. & SOC. CHANGE 131 (2008).

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 351

a necessity, price has little effect on consumption, and thus the poor will

have minimal ability to avoid the tax.

158

Therefore, the needs of the Fund

would have to find an equilibrium regarding efforts to keep the tax burden

low on low-income communities, possibly accomplished by providing hard-

ship exceptions or scaling the tax based on city income.

B. Analyzing the Water Contamination Fund Policy: Addressing

Potential Pitfalls and Determining Efficacy

The Fund avoids a few pitfalls of the other policy options. A public

fund enables victims to recover for their harm without relaxing sovereign

immunity and slowing down the state and local governments with litiga-

tion. Unlike the tax freeze policy, a public fund provides a real payout to

plaintiffs, without a substantial increase in the local tax burden; the cost

is spread across the entire state.

1. The Issue of Moral Hazard

One likely negative externality of this policy is moral hazard.

Moral hazard is the phenomena by which increasing protection against

a risk incentivizes riskier behavior in that area.

159

For example, studies

showed that rates of dangerous driving and car accidents rose after drivers

acquired airbag-equipped cars.

160

Although airbags reduced the number

of fatal accidents, the phenomena of moral hazard curbs the positive

effect on safety.

161

The explanation for this phenomenon was that when

drivers felt protected by the airbags, they were less fearful of the conse-

quences of accidents, and intuitively drove more recklessly.

162

In the context of a public water contamination liability, the Fund

separates the tortfeasor from the consequences of the payout and the

danger of risking harm. The Fund may incentivize a government or water

authority to take greater risks within their legally authorized discretion,

158

See S. T. Wong, A Model on Municipal Water Demand: A Case Study of Northeastern

Illinois, 48 LAND ECONOMICS, 34, 40–41 (1972) (describing analytics that show how price

has little effect on consumption of water).

159

See generally David Rowell & Luke B. Connelly, A History of the Term “Moral Hazard,”

79 J. RISK INS. 1051 (2012).

160

Steven P. Peterson & George E. Hoffer, The Impact of Airbag Adoption on Relative

Personal Injury and Absolute Collision Insurance Claims, 20 J. CONSUMER RES. 657,

661–62 (1994).

161

Id.

162

See id.

352 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

because each would know it will never have to pay for large scale mis-

takes. As part of implementing the Fund, legislatures should conduct a

regulatory and statutory review to ensure water authorities do not have

too much discretion to increase risk.

An examination of Michigan’s Underground Tank Storage Fund

program reveals the detriment of moral hazard. Michigan’s Fund became

insolvent in the 1990s.

163

Michigan transitioned to a system in which

tank owners purchased their own insurance.

164

During this time, technol-

ogy and improved practices were reducing the underground tank storage

leakage rates in many states, but Michigan’s rates improved 20% more

than adjacent states.

165

The primary explanation for this reduction in

spill rates is the reduction of moral hazard; private insurance companies

charge clients based on risk.

166

Underground tank storage owners paid

more each year for insurance for risky practices, and thus saved money

by taking greater precautions.

167

This should not, however, suggest that the Fund would prove in-

efficient at mitigating accidents. The lesson from Michigan’s early public

fund is that the Fund should attempt to incentivize caution. One possible

mechanism for incentivizing caution can be borrowed from the National

Flood Insurance Program’s Community Rating System (“NFIP CRS”).

168

Under NFIP CRS, as communities improve their flood management

beyond the minimum standards, the citizens receive reduced insurance

premiums for flood insurance.

169

This can be adapted to the Fund by

designing a framework in which communities could complete certain

projects and decrease the risk of water contamination, in exchange for a

lower water usage tax rate on their citizens.

Furthermore, requiring localities to purchase private liability in-

surance would not address all dimensions of the Flint problem. Sovereign

immunity remains a barrier to lawsuits because even if the state consents

to suit as part of this program, the state with an appropriations clause

in its constitution can simply nullify the damages.

170

Furthermore, liability

insurance does not provide the benefits of administrative hearings, which

163

Yin et al., supra note 144, at 332.

164

Id. at 341.

165

Id.

166

Id. at 344, 346–47.

167

Id.

168

See generally COMMUNITY RATING SYSTEMS, https://www.fema.gov/community-rating

-system [https://perma.cc/85UG-2DKG] (last visited Oct. 23, 2017).

169

Id.

170

See supra Section IV.A.2.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 353

would reduce costs and improve accessibility.

171

Finally, a risk based pricing

model in a private insurance market would likely hamper environmental

justice concerns because the communities most in need of this program,

like Flint, are also the communities most at risk for water contamina-

tion,

172

and thus would also pay the highest rates for private insurance.

Finally, the private option may be unnecessary because moral

hazard may be curbed by other existing frameworks, particularly crimi-

nal law. One primary function of criminal law, after all, is to prevent

harmful conduct.

173

In the case of Flint, Michigan, numerous state and

local officials are currently facing criminal charges for their actions.

174

This includes Darnell Early, the emergency manager who made the switch

to the contaminated Flint River, who is charged with false pretenses,

conspiracy, misconduct in office, and willful neglect of duty;

175

false pre-

tenses and conspiracy are both 20-year felonies.

176

Incentivizing caution with a framework similar to the NFIP CRS,

and enforcing existing criminal laws, should serve well to curb moral

hazard for the Fund.

2. Political Barriers

The greatest barrier to this program is likely political. There is

often great resistance to tax increases, particularly on services well liked

or utilized by political bases.

177

Unfortunately, this policy will likely not

provide a salient benefit to wealthier tax payers. This policy protects

from an intangible risk of water contamination, which is higher for lower

income communities.

178

This is a particularly noteworthy hurdle because

governments are motivated to provide services that benefit those who

171

McNeil, supra note 150, at 127, 130–31.

172

Michigan Civil Rights Commission, supra note 93, at 121 (stating the conditions of

Flint made a crisis “all but inevitable”).

173

See Paul H. Robinson, A Functional Analysis of Criminal Law, 88 NW. U. L. REV. 857

(1994).

174

Paul Egan & Elisha Anderson, New criminal charges in Flint water crisis, DETROIT

FREE PRESS (Dec. 20, 2016, 9:24 AM), http://www.freep.com/story/news/local/michigan

/flint-water-crisis/2016/12/20/schuette-flint-water-charges/95633422/ [https://perma.cc

/PN2X-39T4].

175

Id.

176

Id.

177

See Eric M. Zolt, Politics and Taxation: An Introduction, 67 TAX L. REV. 453, 455

(2014).

178

E.g., Michigan Civil Rights Commission, supra note 93, at 101.

354 WM. & MARY ENVTL. L. & POL’Y REV. [Vol. 42:331

pay the bulk of taxes.

179

The benefit to the tax payers is security, but this

benefit may not be sufficiently worthwhile to wealthier tax payers to

enable legislation.

This program is further hampered by the fact that localities with

substantial tax bases already have a high level of water security; these

wealthier localities have more funds to monitor and repair water systems

and a larger budget with which to combat any problems when they do

arise.

180

Conversely, the lower income localities who need this security

the most would have less resources to pay the tax than higher income

localities.

181

The irony of this situation, that those who need the policy

the most are those least able to fund it, highlights the need for a state or

federal level program to distribute costs, but also serves as a potential

barrier to legislating this policy. This observation should display how

poverty can perpetuate environmental risks in communities most in need

of environmental justice.

Ultimately, the Fund can effectively protect precariously situated

localities that cannot bear the weight of a large class action suit for water

contamination, optimally monitor water system with their current bud-

get, or leverage sufficient funding to correct problems when they arise. As

such, the Fund will likely face resistance from those in more developed,

high income areas that are less at risk for the problems this policy solves.

Therefore, the tax should remain as small as possible while still main-

taining the solvency of the Fund, to reduce resistance against the program.

ONCLUSION

A Water Contamination Fund would solve many of the problems

facing Flint in the wake of their water crisis. The Fund would compen-

sate the harmed without the need for a civil lawsuit, circumventing the

barrier of sovereign immunity. This program spreads risk across the

entire state to reduce proportion of damages paid for by citizens’ taxes,

and to promote environmental justice by pulling Fund resources from

economically stable areas with potentially lower risks of water contami-

nation. Neither the “tax freeze,”

182

nor the direct reduction of sovereign

179

Zolt, supra note 177, at 455 (citing Jeffrey F. Timmons, The Fiscal Contract: States,

Taxes, and Public Services, 57 WORLD POL. 530 (2005)).

180

Michigan Civil Rights Commission, supra note 93, at 101–02 (citing poverty as a

catalyst for the problems faced by Flint).

181

Id.

182

Supra, Section IV.B.

2017] WATER, LEAD, AND ENVIRONMENTAL JUSTICE 355

immunity

183

would address these problems without missing or exacerbat-

ing another.

Although a mandate requiring localities or water authorities to

purchase private insurance for contamination issues is tempting to avoid

moral hazard, such a program would 1) charge higher-risk communities

more, inhibiting environmental justice, 2) sidestep the procedural ease

and cost saving benefits of administrative hearings and 3) may be ham-

pered whenever damages are awarded by sovereign immunity and the

constitutional powers of the appropriations clause.

Ultimately, the Fund is an effective policy to restore Flint, Michi-

gan and communities like it, when government action hurts citizens.

183

Supra Section IV.A.