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SPECIAL TO THE NATIONAL LAW JOURNAL Olin Corp. is knee-deep in the developing controversy over how much perchlorate needs to be in drinking water for it to be considered a serious health hazard. Experts agree that perchlorate is an extremely toxic chemical that can cause cancer, birth defects and neurological harm. And the experts know it is in the water supply of at least 20 states, including California, particularly in Santa Clara County, where Olin once operated a factory that manufactured flares. On Jan. 15, Olin informed local government officials that there was a widespread problem with perchlorate seeping into the area’s groundwater. The first lawsuits against Olin were filed soon thereafter. Since then, the company, based in Norwalk, Conn., has been hit with approximately 150 suits, including four class actions, brought by hundreds of residents of Santa Clara Valley, near San Jose, Calif. They claim that Olin dumped perchlorate onto its land at the site of the flare factory, and that tiny amounts of the chemical seeped into the groundwater that supplies valley residents with their drinking water. Olin denies any wrongdoing. The company claims it is unclear how much, if any, of the perchlorate came from its plant or other factories in the area, said Olin’s outside counsel, Randall Creech of San Jose’s Creech, Liebow & Kraus. Regardless of the source, Creech said, it is unclear if the chemical is present in the drinking water in unsafe amounts. Olin potentially faces huge, although unspecified, liability, as do defense contractors such as Lockheed Martin Corp. and Kerr-McGee Corp., lawyers say, because perchlorate is commonly used in the manufacture of rocket fuel, flares and munitions. Until fairly recently, technology did not exist to measure minute amounts of perchlorate in drinking water. But this changed in the late 1990s, allowing scientists to detect four to 10 parts per billion. A preliminary study in 2002 by the Environmental Protection Agency found that perchlorate is dangerous at a concentration of one part per billion. But the study’s findings are disputed by the Bush administration, the Department of Defense and several large defense contractors. They claim that perchlorate is safe in drinking water at levels that are 70 to 200 times higher than what the EPA study says. The preliminary report has now been referred to the National Academy of Sciences for further review. The danger of perchlorate-contaminated water has been known since the 1890s, said plaintiffs’ counsel Richard Alexander of San Jose’s Alexander, Hawes & Audet. “There’s quite a body of scientific literature about it,” he said. During the working life of the Morgan Hill, Calif., plant where the flares were manufactured from 1956 to 1996, there was no available evidence that perchlorate was getting into the water supply. Trouble arose in 2000, when a potential buyer found chemicals in groundwater samples. Over the next several years, Olin worked with state and local governments to establish monitoring wells. During recent tests of 1,000 wells in the area, two wells were found to have 40 to 100 parts per billion (ppb) of perchlorate, three wells were found to have 20 to 39 ppb, 15 wells were found to have 10 to 19 ppb, 369 wells had levels between four to nine ppb, and another 617 wells had no detectible levels of perchlorate, which in this case meant there were less than four parts per billion. While it is possible to test for levels below that level, California law requires a clean-up to be done only if perchlorate levels reach or exceed that level. Alexander claims the test results under-report the danger. “The extent of pollution is unknown because the testing has been arbitrarily cut off at four parts per billion. People have been told . . . there was a nondetect in their wells, because it was below four parts per billion, and it later turned out to be 3.8 parts per billion. Independent testing is needed to determine the true extent of harm.” Creech, Olin’s attorney, said the test results are misleadingly alarmist. “I don’t believe there are any studies that show there are specific health dangers at four or eight or anything else [close to that],” he said. He said he was unaware of the EPA’s interim study but that he would review it. The plaintiffs are suing Olin in California state and federal courts on a variety of state law claims, including trespass, nuisance, negligence and intentional infliction of emotional distress. Olin’s potential liability is huge. The plaintiffs want Olin to pay for monitoring to diagnose medical problems at an early stage; damages, including the loss in value of plaintiffs’ homes; and punitive damages. They are also seeking equitable relief, such as requiring Olin to create a municipal water system that pipes in water from elsewhere and to carry out a study of perchlorate’s effects on the community, Alexander said. As Olin battles in court, it is trying to work with the community. It is providing bottled drinking water to 1,900 households, according to press reports, and is working with the water district to try to provide clean drinking water to the area. Some experts expect the Olin suits to have ramifications beyond Santa Clara Valley. “I think they will be precedent-setting,” said Erik Olson, a senior attorney with the Natural Resources Defense Council in Washington. Because these suits are among the first to try to hold companies accountable for perchlorate contamination, they will “set the liability standards,” according to Olson. The Bush administration supports amendments to a bill to give the Defense Department and defense contractors immunity from private or state suits over pollution. But the language of the amendments makes it unclear to what extent immunity would be granted. Olin might receive immunity because its products include ammunition for the military. However, Olin’s Morgan Hill plant was used only for civilian products, so it may not be covered. Michael Ravnitzky contributed to this story.

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