HomeMy WebLinkAbout2023 Monsanto Settlement Memo (final)______________________________________________________________________________
MEMORANDUM
TO: Interested Counties and Municipalities
FROM: Wisconsin Counties Association and League of Wisconsin Municipalities
RE: PCB Contamination and Monsanto Class Action Settlement: Guidance for
Wisconsin’s Counties and Municipalities
DATE: July 14, 2023
EXECUTIVE SUMMARY
Some of Wisconsin’s counties and municipalities have already received settlement checks from
the City of Long Beach et. al v. Monsanto Company, No. 2:16-CV-03493 (United States District
Court, Central District of California – Western Division) class action suit settlement involving
damages arising out of Monsanto’s design and manufacture of PCBs from the 1930s to the late
1970s. The participating counties and municipalities did not need to opt into the suit to participate
in the settlement; rather, if a county or municipality met the requirements for the “class”
participants, they received notice and were added unless the county/municipality sent an objection.
As such, some counties and municipalities may be pleasantly surprised to learn that they may
receive a part of the $550 million dollar settlement.1 However, receiving settlement funds also
brings questions of spending constraints on the settlement funds, when the funds have to be spent,
potential reporting requirements and other restrictions that may accompany the settlement.
This memorandum provides an overview of the Monsanto litigation, the settlement, and the rights
and responsibilities that Wisconsin’s counties and municipalities have upon receiving funds from
the Monsanto settlement.
ANALYSIS
I.Background: Litigation and Settlement
A.PCBs: A Primer
1 See https://pcbclassaction.com/ for a copy of the Settlement Agreement, additional pleadings, and other information
in the Monsanto suit.
Polychlorinated biphenyls, or PCBs, are a group of man-made organic chemicals consisting of
carbon, hydrogen and chlorine atoms, also known as “chlorinated hydrocarbons.”2 PCBs were
manufactured throughout the United States from 1929 until manufacturing was banned in 1979.
PCBs have a range of toxicity and consistency, and due to their non-flammability, chemical
stability, high boiling point and electrical insulating properties, PCBs were used in hundreds of
industrial and commercial applications, processes and products. While no longer domestically
manufactured after 1979, PCBs may still be present in products and materials produced before the
1979 ban. These products range from highly complex products such as transformers and
capacitors, to everyday products such as oil, electrical devices, appliances, cables, oil-based paint,
caulking, floors and many variations of plastic. In addition, PCBs easily migrate out of the source
material or enclosure, or “leak” into the surrounding surfaces, air, water, soil and other materials.
As such, the release of PCBs into our environment occurs so long as these products are still used,
and may still seep into soil and sediment for years after the release from the original source
material. PCBs may also cycle through environments from evaporation of water into the
atmosphere.
Studies have linked PCB contamination to a number of health issues in humans, animals, aquatic
species and aquatic wildlife. When contaminated marine wildlife is eaten by humans, the PCB
contamination passes through the food chain. Increased risk of liver cancer, breast cancer,
melanoma, and non-Hodgkin’s lymphoma have been linked to PCBs. Because PCBs tend to
accumulate in the human body, particularly in the liver, skin, fat, breast milk, plasma and sperm
fluid, PCB health-risks may pass via pregnancy from mother and father to the child. PCB exposure
has been linked to lower IQ, lower birth weight, and lower behavioral assessment scores in
children. In addition to these serious conditions, PCB exposure has been linked to lowered
immune responses, deficits in neurological development, visual recognition, short-term memory
loss, and affect thyroid hormone levels in both humans and animals.
The Monsanto case Plaintiffs raised all of these health issues and harms to establish why Monsanto
was liable under several causes of action through its ongoing design and manufacturing of PCBs.
B. Monsanto Litigation
Prior to being certified as a class action, the original Plaintiffs consisted of counties and
municipalities that operated, owned, and/or managed stormwater and/or dry weather runoff
systems, including municipal separate stormwater systems and/or combined sewer overflows that
are contaminated with PCBs, discharged PCB-contaminated water into a body of water that is
deemed “impaired” pursuant to the Clean Water Act, and have (or will) incur costs to test, monitor,
investigate, sample, manage, remediate and/or remove the levels of PCBs in those discharges as
set forth in required permits by the National Pollutant Discharge Elimination System (“NPDES”),
pursuant to the Clean Water Act3.
Monsanto was the sole designer and manufacturer of PCBs from the 1930s – 1977, and therefore,
Plaintiffs argued, Monsanto should be liable for the ongoing harm to both people and property due
2 See https://www.epa.gov/pcbs/learn-about-polychlorinated-biphenyls#what
3 The Wisconsin Department of Natural Resources (“DNR”) acts as the United States Environmental Protection
Agency’s (EPA) agent in the permit process.
to the long-term impacts of PCBs. Plaintiffs also argued that Monsanto knew of PCBs’ danger as
far back as 1937, but continually failed to do anything to stop the widespread contamination and
danger to people, resources and the environment.4 By failing to remove or reduce the harmful
components, or warn the public of the dangers in using PCB-ladened products or the proper
disposal of such products, Plaintiffs alleged that Monsanto was liable for damages under the legal
theories of public nuisance, trespass, negligence and strict liability due to design defect and
withholding information from government regulatory authorities and the public regarding the
health risks posed by PCBs.
After the filing of the original action, the matter was certified as an “opt-out” class action with
notices mailed to potential class members in March 2022. As an “opt-out” class, any eligible
member that received a notice would automatically be included in the class unless that entity
specifically objected to inclusion and withdrew from the class by July 25, 2022. The only way a
county or municipality could preserve any future claims against Monsanto was to withdraw from
the class. As detailed below, many Wisconsin counties and municipalities were deemed eligible
class members, and only a few objected to inclusion and withdrew as a class member.
Prior to trial, the parties agreed to settle the claims. While not admitting any wrongdoing,
Monsanto has agreed to pay up to $550,000,000 as the total and maximum dollar amount they
will be obligated to pay to four different “Settlement Funds.” A list of Wisconsin counties and
municipalities receiving Settlement Funds is set forth in Exhibit A.
The Settlement Funds represent four (4) different allocations of settlement dollars that vary
based on the amount of damage sustained from Monsanto PCBs, with each fund having a
specific formula for calculation of payments: (1) the Monitoring Fund, which intends to pay for
PCB sampling and/or other mitigation efforts; (2) the TMDL (Total Maximum Daily Load)
Fund, which intends to compensate Plaintiffs for restitution and remediation efforts, including
mitigation of contaminated property, stormwater and/or stormwater systems; (3) the Sediment
Site Fund, which intends to compensate Plaintiffs for specific sites that have sedimentary
contamination from PCBs; and (4) Special Needs Funds, which are broken down into Part A to
pay for various litigation costs of the Plaintiffs that initiated the lawsuit and other litigation costs,
and Part B, which is a general fund that the court-appointed parties overseeing the settlement
distribution may “equitably allocate” as needed. These funds are described below while focusing
on the funds that impact Wisconsin’s counties and municipalities.
1. Monitoring Fund:
The Monitoring Fund totals $42,894,993.43 and provides a minimum payment to all class
members, thereby securing a release of future claims through payment of some compensation.5
The other funds set forth thresholds for payment, and any class member that does not meet
4 The Third Amended Complaint details Monsanto documents illustrating the company knew of the dangers of PCBs,
and attempted to restrict that information from the public. https://angeion-
public.s3.amazonaws.com/www.pcbclassaction.com/docs/201-
Plaintiffs'+Third+Amended+Complaint+for+Class+Actions.pdf
5 Only by ensuring payment to all class members could Monsanto secure waivers of all future claims from Plaintiffs
and class members.
another fund’s threshold is paid out of the Monitoring Fund. The purpose of the Monitoring
Fund is to pay for PCB sampling or any other mitigation efforts. The class member has sole
discretion how to use the funds, so long as the activities comply with applicable law.
Payments from the Monitoring Fund utilize the number of Phase I and Phase II permits in place
prior to June 24, 2020, and the population of the governmental unit, to determine the amount
paid. “Phase I” and “Phase II” permits refer to the National Pollutant Discharge Elimination
System (NPDES) Stormwater program’s 1990 Phase I and Phase II regulation of cities, towns,
boroughs, villages, townships, counties, and independent port districts. Phase I permits address
stormwater runoff from medium and large municipal separate storm sewer systems (MS4)
generally serving populations of 100,000 or bigger, construction activity disturbing five acres of
land or greater, and ten categories of industrial activity. Phase II permits address designated
small construction activities that require a general permit. Phase II permits also require MS4
operators to identify and implement stormwater discharge management controls.
Seventeen Wisconsin counties and 103 municipalities are eligible for payments from the
Monitoring Fund.6 The payments are broken down into four levels:
• $32,024.47 payment for Phase I permittees with a population equal to or
greater than 100,000 and Phase I independent port districts. There are no
Wisconsin counties and two municipalities7 in this classification.
• $22,024.47 for Phase I permittees with a population less than 100,000.
There are no Wisconsin counties and seven municipalities8 in this
classification.
• $27,024.47 for Phase II permittees with a population equal to or greater
than 100,000, and Phase II independent port districts. There are 11
Wisconsin counties9 and one municipality10 in this classification.
• $17,024.47 for Phase II permittees with a population less than 100,000.
There are six Wisconsin counties11 and 93 municipalities12 in this
classification.
2. TMDL Fund:
a. What is a TMDL?
A “TMDL” (Total Maximum Daily Load) is a calculation of the maximum amount of pollutant
that an impaired waterbody can receive on a daily basis and still meet water quality standards.
6 Kenosha County, Milwaukee County, Racine County and Sheboygan County are paid from the TMDL Fund, and
therefore not eligible for payment from the Monitoring Fund. North Bay is the only municipality eligible for payment
from both the Monitoring Fund and the TMDL Fund.
7 Milwaukee and Madison.
8 Brookfield, Fitchburg, Greenfield, Middleton, Monona, Pewaukee, and Stoughton.
9 Brown County, Dane County, Eau Claire County, Fond du Lac County, La Crosse County, Marathon County,
Outagamie County, Rock County, Washington County, Waukesha County, and Winnebago County.
10 Green Bay.
11 Calumet County, Chippewa County, Douglas County, Jefferson County, Ozaukee County, St. Croix County.
12 See attached Exhibit A.
The Clean Water Act requires all states13 to identify “impaired” waterbodies, meaning that the
waterbody is not able to meet the state’s water quality standards through technology-based
regulations and other required controls. Once an impaired waterbody is identified, a TMDL
must be developed for each impaired waterbody.
In Wisconsin, the DNR uses water quality standards and water quality monitoring, along with the
measured flow in a watershed, to calculate the current pollutant loads to a waterbody that does
not meet water quality criteria.14 The DNR uses computer modeling to calculate pollutant loads
using inputs such as weather, topography, soil types, and land use. With these and other data
inputs, the model simulates physical processes associated with the flow of water, sediment
movement, nutrient cycling, and crop growth. Models can also be used to predict impacts of
changes in land use, climate, and management practices on water quality. Once targets are set for
the waterbody, the TMDL is established by allocating the allowable load between the point
sources and the nonpoint sources, then adding a margin of safety. According to the DNR, the
analysis can be expressed as a formula:
TMDL = WASTELOAD ALLOCATION (WLA) + LOAD ALLOCATION (LA) + MARGIN OF SAFETY (MOS)
The wasteload allocation (WLA) is the total allowable pollutant load from all point sources such
as municipal, industrial, CAFOs, and stormwater. The load allocation (LA) is the allowable
pollutant load from nonpoint sources, such as agricultural, CAFO off-site land spreading, and
residential runoff. The margin of safety (MOS) accounts for uncertainty in the analysis.
Compliance with TMDL requirements occurs through the WPDES permit process for discharge
from point sources. Nonpoint source regulation is a more complex process. DNR’s current goal
of nonpoint source-related TMDL implementation “is to maximize opportunities for restoration
of impaired waters by prioritizing and targeting available programmatic, regulatory (such as
the NR 151 agricultural performance standards and manure management prohibitions), financial,
and technical resources.15
b. The TMDL Fund Compensation
The TMDL Fund totals $250,000,000 and provides payment class members that had a TMDL,
TMDL Alternative, or TMDL Direct-to-Implementation regulation promulgated or updated after
January 1, 2010, but before June 24, 2020, wherein a PCB is a named constituent.
TMDL funds are intended to compensate recipients for restitution and remediation including
mitigation of contaminated property, stormwater, and/or stormwater systems, including
compliance with a TMDL. The allocation is determined by a specific algorithm developed to
measure the impact of damage.16 In addition, any TMDL Fund recipient that is a county and has
13 33 U.S.C. § 1251(a) collectively defines states, territories and authorized tribes as “states.”
14 See TMDL Overview at https://dnr.wisconsin.gov/topic/TMDLs/Overview.html
15 https://dnr.wisconsin.gov/topic/TMDLs/npstmdls.html
16 Paragraph 78(b) of the Settlement Agreement sets forth the algorithm: multiply (1) the total jurisdictional area
within any HUC 12 Watershed that contains and/or is immediately adjoining a 303(d) water body with a PCB TMDL,
by (2) the USGS Geodatabase Imperviousness of such jurisdictional area (known as “Weighted Imperviousness”).
Then, proportionally normalize1 all Weighted Imperviousness values to calculate a weighted, relative percentage for
a population of more than 2 million or a municipality with a population greater than 1 million
also receives a “Population Factor Award” of $2,000,000.
Four (4) Wisconsin counties and 14 municipalities are eligible for payments from the TMDL
Fund: Kenosha County, Milwaukee County, Racine County, Sheboygan County, Brown Deer,
Caledonia, Cudahy, Fox Point, Glendale, Grafton, Howard, Mequon, Mount Pleasant, North
Bay, Pleasant Prairie, Shorewood, Suamico, and Whitefish Bay. No Wisconsin counties or
municipalities received the $2,000,000 Population Factor Award given that none have the
requisite population.
The TMDL Fund does not have any specific oversight provisions or restrictions on the use of the
funds beyond the note that the funds are intended to “compensate Settlement Class Members for
restitution and remediation including mitigation of contaminated property, stormwater, and/or
stormwater systems, including compliance with a TMDL.”
3. Sediment Sites Fund:
The Sediment Sites Fund is allocated $150,000,000 and pays settlement class members that are
impacted by PCB-contaminated sediments due to stormwater contribution and runoff. It is
intended to compensate counties and municipalities for restitution and remediation, including
mitigation of contaminated property, stormwater and/or stormwater systems, including
compliance with regulatory processes. All eligible class members must apply to a court-
appointed “Special Master” for payments. The Special Master must “equitably allocate” funds
based on the totality and relativity of the specific PCB-caused factors, including past costs for
remediation and other mitigation, evidence of future costs to be incurred, and other important
factors deemed relevant by the Special Master.17
There are no Wisconsin counties or municipalities eligible to receive payment from the Sediment
Sites Fund.
4. Special Needs Fund:
The Special Needs Fund totals $107,105,006.57 and is separated into two parts: Special Needs
Fund Part A and Part B.18 Special Needs Fund Part A totals $57,105,000 and is designated to
each TMDL Fund Entity. Lastly, multiply (1) the weighted, relative percentage for each TMDL Fund Entity, by (2)
the total fund less Population Factor Awards. A 0.7 multiplier is applied to any TMDL Fund Entity with a population
of less than one hundred thousand (100,000). Otherwise:
17 See Settlement Agreement at ¶30.
https://angeion-public.s3.amazonaws.com/www.pcbclassaction.com/docs/2021-0617+%5B278-
2%5D+Class+Action+Settlement+Agreement.pdf
18 See Settlement Agreement at ¶80.
compensate the original Monsanto case Plaintiffs’ damages, costs and fees. Allocation is
completed by a Special Master appointed by the court and according to the terms of the
Settlement Agreement.
Special Needs Fund Part B totals $50,000,006.57 and may be available to Wisconsin counties
and municipalities because it is available to all settlement class members who apply and meet the
required criteria. Applicants must show the Special Master that “a significant regional, state, or
national benefit, cost, or contribution regarding 303(d) bodies of water impaired by PCBs
through stormwater and/or dry weather runoff, and such benefit, cost, or contribution is not
otherwise encompassed within any other part of this allocation.”19 As such, a county or
municipality may request funding for special circumstances that have not otherwise been
contemplated or addressed in the Settlement Agreement or with Settlement Funds. A requestor
must comply with the application requirements, which may be found after registering at
https://pcbclassaction.com/special-needs-funds-part-b.php and must submit the application by
April 28, 2024.
After receiving and reviewing all the applications, the Special Master is required to “equitably
allocate” the available funds in the Special Master’s sole discretion, and render determinations
based solely on the application and accompanying materials provided by the applicant. Appeals
may be made from the Special Master’s determinations.
II. Options for Settlement Funds
According to a release from the Special Master, Settlement Claim Members started receiving
checks from the Monitoring Fund and TMDL Fund in April 2023. It is unknown whether all
checks have been sent. The Special Needs Fund Part B proceeds will not be paid until the
application deadline passes, the Special Master renders determination on the distribution, and the
appeal time passes. Again, the deadline for Special Needs Fund Part B applications is April 28,
2024.
Once counties and municipalities receive the Monsanto case settlement funds, then what? As
stated above, the Monitoring Fund and TMDL Fund do not set forth any oversight mechanisms,
approval of spending processes, or reporting requirements once the funds are spent. The
Settlement Agreement does not include language giving a state oversight authority over the use
of funds.
So, what may the funds be used for? The Settlement Agreement specifically states that the
Monitoring Fund may be used to pay for “PCB sampling and/or any other mitigation efforts in
the Settlement Class Member’s sole discretion, as part of compliance with applicable law.”20
This is a broad grant of power for counties and municipalities to use the Monitoring Funds they
receive so long as that use is consistent with a mitigation effort under Wisconsin or other
applicable law.
19 See id. at ¶80(h).
20 Settlement Agreement at ¶77.
Unlike the Monitoring Fund recipients, TMDL Fund recipients do not have “sole discretion” to
use the funds for any sampling or mitigation efforts. However, no specific guidance is provided
and TMDL Fund recipients appear to have broad discretion when using the funds. The
Settlement Agreement states the TMDL Fund is “intended to compensate Settlement Class
Members for restitution and remediation including mitigation of contaminated property,
stormwater and/or stormwater systems, including compliance with TMDL.” Based on this
limited language, a county or municipality should look to any TMDL requirements, permit or
orders it may be subject to from DNR or EPA. The work a county or municipality is obligated to
do under such permits or orders would likely meet the threshold of “restitution and remediation”
of contaminated property to comply with TMDL.
At this time, there is no further guidance or known restrictions on the use of the Monitoring
Funds and the TMDL Funds. Once the Special Needs Fund Part B is released, recipients of
those funds will have to comply with the award requirements and the conditions proposed in the
award application.
While DNR has not promulgated any information or guidelines for use of the Settlement Funds,
DNR does oversee a clean-up and restoration project of the Lower Fox River which runs through
Brown County, Calumet County, Outagamie County and Winnebago County, which are all
settlement fund recipients.21 There is extensive PCB contamination in this area, and the
contamination has spread downstream to other areas, Lake Michigan, and then into all the Great
Lakes freshwater system, thereby making PCB remediation a large focus of this project. It is
unknown whether DNR will require use of TMDL Funds if a county, or a settlement fund
municipality located in one of those counties, is subject to the Lower Fox River Cleanup Project
mandates.
The Special Master has not provided any reporting requirements or other compliance obligations
at this time. Once the Special Needs Fund Part B is released, recipients of those funds will have
to comply with the award requirements and the conditions proposed in the award application.
Counties and municipalities are encouraged to contact their corporation counsel/municipal
attorneys to discuss specific questions regarding the use of Settlement Funds.
CONCLUSION
Wisconsin counties and municipalities have faced increased costs due to environmental
contamination for many years. The Monsanto case intends to compensate for some of those costs,
and for future costs, of remediating the long-term impacts of PCBs. However, Wisconsin counties
and municipalities should be mindful of how they spend any Monsanto Settlement Funds and
ensure that the funds’ use complies with the Settlement Agreement, all applicable Wisconsin laws,
and any specific WPDES permits or other orders they may be subject to.
21 https://dnr.wisconsin.gov/topic/FoxRiver/Background.html
If you have any questions surrounding this memorandum, please do not hesitate to contact the
Wisconsin Counties Association or League of Wisconsin Municipalities. Our respective
organizations appreciate the opportunity to be of service to our members.
EXHIBIT A
Wisconsin Counties and Municipalities Receiving Compensation
TMDL Fund Entities:
Class Member State Population TMDL Fund Allocation
Monitoring Fund Allocations: