Environmental Stigma Damages: Speculative Damages in Environmental Tort Cases
Johnson, E. Jean, UCLA Journal of Environmental Law & Policy
Courts across the United States are recognizing a new cause of action that allows property owners to recover the diminution in property values resulting from environmental Stigma that accompanies the contamination of their properties.(1) The recoveries are predicated upon the public's negative perceptions about, and unsubstantiated fears of, contaminated property.(2) Unfortunately, by allowing plaintiffs to recover for damages based upon conjecture and speculation, these courts have defied fundamental principles of common law.
Stigma, in the environmental context, may be broadly defined as the negative perceptions associated with property that is contaminated, that was once contaminated or that lies in proximity to contaminated or previously contaminated property. Stigma represents a loss in value apart from the cost of curing the contamination itself,(3) and it can be based upon actual or perceived risks or fear, such as "possible public liability," "fear of additional health hazards" and "simple fear of the unknown."(4) Additionally, stigma is based upon perceptions about risks and liabilities associated with owning, or holding property interests in, contaminated property. The perceptions on which society bases the stigma need not be reasonable or substantiated.
Proponents of stigma damages contend that once property is contaminated, it becomes stigmatized by public perceptions about the contamination's effects on health and the environment. Stigma advocates also contend that even if the property is subsequently remediated, it will still continue to have a stigma because of the past contamination;(5) once seriously contaminated, they contend, property can almost never reclaim a marketable uncontaminated status.(6)
It is this author's position that stigma damages should not be recognized as a basis of recovery because stigma damages are based solely upon public perceptions--perceptions which can change at any given moment. However, where courts are inclined to award stigma damages despite their speculative nature, stigma damages should never be awarded prior to a plaintiff realizing an actual harm from the stigma.
This Article discusses and explores the ramifications of awarding stigma damages to property owners whose property has been contaminated or is juxtaposed to contaminated property. This discussion is divided into five Parts. Part I provides an overview of various environmental laws and introduces risks associated with having ownership or a property interest in contaminated property. Part II provides an introduction to stigma damages and discusses the evolution of traditional common law theories of recovery for real property damage into causes of action for environmental stigma. Part III discusses and analyzes case law relating to stigma damages to contaminated properties. Finally, Part IV discusses policy considerations for determining whether stigma damages are justified. This Article concludes that stigma damages should not be recognized as a basis of recovery because they are inherently speculative in nature.
RISKS ASSOCIATED WITH CONTAMINATED PROPERTY
In discussing environmental stigma damages, it is important to have a general understanding of the nature of the liability scheme associated with environmental laws that regulate sources of pollution. The purpose of this overview is to depict the potential liability associated with contamination. Leaking underground storage tank systems, chemical spills and hazardous waste dumping result in widespread contamination to properties throughout the United States. Consequently, a vast amount of litigation has arisen over environmental liability.
Historically, no one fully understood the potential environmental and health risks associated with leaking underground storage tanks, chemical spills or hazardous waste dumping. As a result, virtually no laws regulated such acts. …