author: COFFRIN, Chief Judge.

text:
    Harmel OUELLETTE and Lila Ouellette, Clifton Browne and Edla Browne, Aldee Plouffe and Shirley Plouffe, individually, on behalf of themselves, and on behalf of all similarly situated plaintiffs, and H. Vaughn Griffin, Sr., Ardath Griffin, Alan Thorndike, Ellen Thorndike, Wesley C. Larrabee, Virginia Larrabee, F. Alfred Patterson, Jr., and Lois T. Patterson, Plaintiff-Intervenors, v. INTERNATIONAL PAPER COMPANY.
    Civ. A. No. 78-163.
    United States District Court, D. Vermont.
    Feb. 5, 1985.

      Peter Langrock, and Atty. Susan Eaton, Langrock, Sperry, Parker & Wool, Middle-Wry, Vt., for plaintiffs.
    John Chase, Asst. Atty. Gen., State of Ver., Montpelier, Vt., for plaintiff Class Member, State of Vermont.
    James Benkard, and Atty. Jamie Stern, Davis, Polk & Wardwell, New York City, and Austin Hart, Dinse, Erdmann & Clapp, Burlington, Vt., for defendant, International Paper Co.
   COFFRIN, Chief Judge.

Having dealt with the defendant’s objection to class certification in two previous opinions, we are now presented with defendant’s motion to dismiss plaintiffs’ cause of action concerning water pollution pursuant to Rules 12(c) and 56(b) of the Federal Rules of Civil Procedure. Although defendant’s motion was filed on June 22, 1981, the parties agreed (upon suggestion by the court) to await the Seventh Circuit’s decision in the litigation brought by the State of Illinois and an Illinois resident against cities in Wisconsin and Indiana for pollution of Lake Michigan. That decision has now been rendered, Illinois v. City of Milwaukee, 731 F.2d 403 (7th Cir.1984) (hereafter, “Milwaukee 7th Cir.”), cert. denied sub nom. Scott v. City of Hammond, _ U.S. _, 105 S.Ct. 979, 83 L.Ed.2d 981 (1985), and, as anticipated, has illuminated many of the important issues raised by defendant’s motion. Nevertheless, we depart somewhat from the conclusions drawn by the Seventh Circuit and, for the reasons below, deny defendant’s motion to dismiss.

Background

As certified in our opinion of October 29, 1982, plaintiff class consists of the State of Vermont as well as of various Vermont residents owning property in Vermont on or near the “South Lake” area of Lake Champlain. Defendant, a New York corporation, operates a paper mill near Ticonderoga, New York, on the shore roughly opposite plaintiffs’ property. In their complaint, plaintiffs allege two “Causes of Action” within which they incorporate numerous counts. The “First Cause of Action,” which defendant now seeks to dismiss, contains plaintiffs’ various claims and theories related to the alleged pollution of Lake Champlain by defendant’s Ticonderoga paper mill. The “Second Cause of Action,” which relates to plaintiffs’ claims for air pollution, is not at issue here.

Plaintiffs claim that discharges from defendant’s paper mill have fouled the waters around plaintiffs’ properties — which are used primarily for residential purposes but also for farming and some businesses such as marinas — interfering with the use and enjoyment of the property and, consequently, diminishing its value. Count I alleges that discharges from defendant’s mill into the waters of Lake Champlain constitute “a continuing nuisance;” Count II alleges that defendant has violated its National Pollutant Discharge Elimination System (NPDES) permit by discharging pollutants into Lake Champlain in excess of the amounts specified in the permit; Count III alleges that defendant’s discharges constitute an unreasonable riparian use; and Count IV alleges that defendant’s discharges were negligent. Plaintiffs seek money damages and an injunction ordering defendant to relocate its water intake system closer to the source of its waste discharge system.

Defendant responds (1) that its Ticonderoga paper mill has been operating pursuant to and in compliance with an NPDES permit, (2) that federal rather than state law controls disputes involving interstate water pollution, and (3) that Congress, in passing the Federal Water Pollution Control Act, 33 U.S.C. §§ 1251 et seq. (FWPCA), occupied the field of water pollution abatement, thereby barring any claim brought under federal common law for interstate water pollution. Relying on Milwaukee 7th Cir., supra, defendant claims that if Congress intended to allow any state common law action for abatement of pollution of interstate waters, it also intended that such a suit must be brought in the courts and under the laws of the state in which the discharge occurred. Defendant alternatively asserts that plaintiffs’ rights as riparian owners have been resolved in prior proceedings. Finally, defendant alleges that even if plaintiffs were entitled to bring a state common law action grounded in nuisance, plaintiffs’ failure to allege an injury different in nature from that suffered by the public in general deprives them of a cause of action for nuisance.

DISCUSSION

I. State Common Law and Interstate Water Pollution Disputes

A. Illinois v. City of Milwaukee

Because the issues in the case are similar to those which have arisen during the course of attempts by Illinois to control pollution of Lake Michigan emanating from various cities located outside of Illinois, we briefly recount the several opinions involved in the litigation reflecting these attempts.

In Illinois v. City of Milwaukee, 406 U.S. 91, 92 S.Ct. 1385, 31 L.Ed.2d 712 (1972) (Milwaukee I) Illinois sought leave to file a bill of complaint under the Supreme Court’s original jurisdiction against various Wisconsin cities and sewerage authorities. Illinois alleged that discharges of untreated sewage into Lake Michigan constituted a public nuisance. The Court, in denying Illinois leave to invoke its original jurisdiction, held that the federal common law of nuisance governed the dispute. Id. at 105, 92 S.Ct. at 1394 (“The question of apportionment of interstate waters is a question of ‘federal common law’ upon which state statutes or decisions are not conclusive.”) Although the Court held that, at the time of its decision, federal common law provided the basis for resolution of interstate water pollution disputes, it also recognized that “new federal laws and new federal regulations may in time pre-empt the field of federal common law of nuisance.” Id. at 107, 92 S.Ct. at 1395.

Illinois promptly brought suit in the United States District Court for the Northern District of Illinois alleging, inter alia, that discharge of sewage into Lake Michigan by the Wisconsin cities created a public nuisance under both federal and Illinois common law and that it violated Illinois statutes. After a trial, the district court found for plaintiffs and granted injunctive relief mandating changes in defendant’s sewage system. The Seventh Circuit affirmed but concluded that “it is federal common law and not State statutory or common law that controls in this case.” Illinois v. City of Milwaukee, 599 F.2d 151, at 177 n. 53 (7th Cir.1979).

Upon granting Milwaukee’s petition for certiorari from that decision, the Supreme Court concluded that, with the passage of the 1972 Amendments to the FWPCA, Congress had since occupied the field of water pollution control by establishing a comprehensive regulatory program supervised by an expert administrative agency. City of Milwaukee v. Illinois, 451 U.S. 304, 317, 101 S.Ct. 1784, 1792, 68 L.Ed.2d 114 (1981) (Milwaukee II). In so doing, Congress had supplanted any federal common law action for nuisance.

On remand, Illinois again pressed its claim for injunctive relief, this time on the basis of Illinois law. In a similar action, Illinois and a resident of Illinois, a Mr. W. Scott, brought-separate suits against the City of Hammond, Indiana, for pollution of Lake Michigan, alleging violations of Illinois statutory and common law. The suit was brought originally in Illinois state court but was later removed to the United States District Court for the Northern District of Illinois. Motion to remand the case to state court was denied. Illinois v. Sanitary District of Hammond, 498 F.Supp. 166 (N.D.Ill.1980).

After Illinois prevailed over Milwaukee at trial, and the district court in the suit against the City of Hammond denied a motion by defendants to dismiss Illinois’ state law claims, Scott v. City of Hammond, 519 F.Supp. 292, 298 (N.D.Ill.1981), the Seventh Circuit consolidated the two cases and considered the availability of a state law action seeking injunctive relief for the alleged creation of a public nuisance in interstate waters. Relying primarily on the Supreme Court’s decision in Milwaukee I, the Seventh Circuit held that pollution of interstate waters is a “controversy of federal dimensions, implicating the conflicting rights of states and inappropriate for state law resolution.” Milwaukee, 731 F.2d at 410. The only role for state law in such disputes, according to the Seventh Circuit, was that which was specifically authorized by the 1972 FWPCA, the governing federal law. Reviewing the FWPCA, the Seventh Circuit concluded that, despite the language of 33 U.S.C. § 1365(e) (the so-called “Saving Clause”) and § 1370(2) (the “state authority” provision), Congress had provided no authority for one state (State A) or its citizens to use its own common or statutory law as a means to halt pollution discharged from facilities located in another state (State B). The court, however, did express its belief that Congress had authorized suits by State A or its citizens in the courts of and under the laws of State B. Because Illinois had brought suit in its own courts and used its own law, the consolidated cases were remanded for dismissal. On January 21, 1985, the Supreme Court denied plaintiff’s petition for a writ of certiorari, Scott v. City of Hammond, _ U.S. _, 105 S.Ct. 979, 83 L.Ed.2d 981 (1985), thus terminating that litigation.

Understandably, defendant in this case urges that we adopt the analysis and conclusions of the Seventh Circuit. Milwaukee is an admirable attempt to deal with the difficult issues concerning the role of state law in controlling the pollution of interstate waters. It is clear that state law, in the absence of Congressional authorization, cannot control interstate water pollution controversies. Milwaukee I and II stand for the proposition that attempts by one state to halt discharge into interstate waters emanating from another state implicate uniquely federal concerns. When the issue is viewed as a problem of equitable apportionment — as it should be in the absence of a contrary expression by Congress — the competing and conflicting interests of states and their citizens for limited quantities of interstate water mandate resort to federal law. The issue presented by the instant case, therefore, is not whether Congressional legislation preempted state statutory and common law as it relates to interstate water pollution since, according to Milwaukee I, federal law has always governed such disputes. Rather, the controlling question is the extent to which Congress authorized, either expressly or implicitly, resort to state common law in a situation such as this.

We differ from the Seventh Circuit in our perception of the extent to which Congress authorized resort to state law in the FWPCA. The Act creates a comprehensive regulatory scheme, the goal of which is to eliminate the discharge of pollutants into navigable waters by 1985. 33 U.S.C. § 1251(a)(1). Despite extensive federal oversight, Congress’ express policy was to “recognize, preserve, and protect the primary responsibilities and rights of States to prevent, reduce, and eliminate pollution..,.” 33 U.S.C. § 1251(b). Commensurate with this policy, the role played by the states within the Act’s framework is an important one: states are expressly empowered to adopt or enforce any point source or water quality limitation or standards stricter than the minimum levels imposed by the Act, 33 U.S.C. §§ 1370(1), 1311(b)(1)(C), and to administer their own enforcement programs. 33 U.S.C. § 1319.

In addition to the powers afforded the states within the regulatory scheme imposed by the Act, Congress included a “saving clause” providing that “nothing in this chapter shall ... be construed as impairing or in any manner affecting any right or jurisdiction of the States with respect to the waters (including boundary waters) of such States.” 33 U.S.C. § 1370. Furthermore, the “state authority” section of the Act, 33 U.S.C. § 1365(e), similarly states that “[njothing in this section shall restrict any right which any person (or class of persons) may have under any statute or common law to seek enforcement of any effluent standard or limitation or to seek any other relief____” Plaintiffs contend that these two sections authorize the application of Vermont common law to remedy an injury caused by discharges of pollutants emanating from defendant’s paper mill in New York. We agree.

There are, perhaps, three ways to interpret the saving clause and state authority provision of the Act in light of Supreme Court decisions. Note, City of Milwaukee v. Illinois: The Demise of the Federal Common Law of Water Pollution, 1982 Wis.L.Rev. 627, 664-71. The most restrictive interpretation would be that Congress intended to save state common law only as it applied to waters which are outside of the FWPCA’s jurisdiction. Since as much as ninety to one hundred percent of the nation’s waters fall within the definition of “navigable waters” (to which the Act applies), id. at 666, this view of the Act would render state law practically meaningless. Furthermore, under this interpretation of the Act, a person injured by pollution in “navigable waters” would be unable to recover damages from the polluter since the Act does not provide a damage remedy for private actions. Middlesex County Sewerage Authority v. National Sea Clammers Association, 453 U.S. 1, 13-18, 101 S.Ct. 2615, 2622-2625, 69 L.Ed.2d 435 (1981). It is simply inconceivable that Congress intended to deprive a party injured by water pollution of all compensation for that injury. Such a result would be antithetical to the ends of the Act. It would also implicitly contradict Congressional intent as expressed in the Senate Report accompanying 33 U.S.C. § 1365(e):

It should be noted, however, that this section would specifically preserve any rights or remedies under any other law. Thus, if damages could be shown, other remedies would remain available. Compliance with requirements under this Act would not be a defense to a common law action for pollution damages.

S.Rep. No. 92-414, 92d Cong., 2d Sess. 81, reprinted in 1972 U.S.Code Cong. & Ad. News 3668, 3746-47 (emphasis added). That state law actions were preserved is clear; the question is the extent to which they were preserved.

A second possible interpretation of the saving clause and citizen suit provisions of the Act is that they preserve a state’s nuisance law only as it applies to discharges emanating from within that state or its boundary waters. This is the position suggested in Milwaukee. Although we find this view more plausible than the first, more restrictive interpretation, there is simply nothing in the Act which suggests that Congress intended to impose such limitations on the use of state law. We therefore adopt the third possible interpretation — that the Act authorizes actions to redress injury caused by water pollution of interstate waters through the laws of the state in which the injury occurred. We now set forth our reasons for departing from Milwaukee’s adoption of the second interpretation.

The Seventh Circuit — having concluded that, under Milwaukee I, state law remedies were inappropriate for the resolution of disputes such as that between Illinois and Milwaukee — reasoned that the saving clause could not preserve traditional state remedies since there was no right or jurisdiction to be saved. Milwaukee, 731 F.2d at 413. The court held that “[I]n the light of the structure of FWPCA and the potential conflict and confusion, we think Congress intended no more than to save the right and jurisdiction of a state to regulate activity occurring within the confines of its boundary waters.” Id. (footnote omitted).

Without any textual support in the Act, this conclusion appears to be post hoc speculation as to what Congress would have intended had it known at the time of the Act’s creation that the Supreme Court, in Milwaukee I, would hold that federal common law preempted state common law. The legislative history reveals, however, that at the time the FWPCA was formulated, state law rather than federal common law was applicable to interstate pollution disputes. As the Supreme Court noted in Milwaukee II:

It must be noted that the legislative activity resulting in the 1972 Amendments largely occurred prior to this Court’s [1972] decision in Illinois v. Milwaukee [Milwaukee I]. Drafting, filing of Committee Reports, and debate in both Houses took place prior to the decision. Only conference activity occurred after. It is difficult to argue that particular provisions were designed to preserve a federal common law remedy not yet recognized by this Court.
... During the legislative activity resulting in the 1972 Amendments, ... this Court’s decision in Ohio v. Wyandotte Chemicals Corp., 401 U.S. 493 [91 S.Ct. 1005, 28 L.Ed.2d 256] (1971), indicated that state common law would control a claim such as Illinois’. Wyandotte, like the present suit, was brought by a State to abate a pollution nuisance created by out of state defendants. The Court ruled that an “action such as this, if otherwise cognizable in federal district court, would have to be adjudicated under state law. Erie R. Co. v. Tompkins, 304 U.S. 64 [58 S.Ct. 817, 82 L.Ed. 1188] (1938).” Id., at 498-99 n. 3 [91 S.Ct. at 1009-10 n. 3]. The Court in [Milwaukee I] found it necessary to overrule this statement, see 406 U.S. at 102 n. 3 [92 S.Ct. at 1392 n. 3].

451 U.S. at 327 n. 19, 101 S.Ct. at 1797 n. 19.

The Court’s opinion as to the applicability of state law, Ohio v. Wyandotte Chemicals Corp., 401 U.S. 493, 500, 91 S.Ct. 1005, 1010, 28 L.Ed.2d 256 (1971)—which involved a dispute among several states and Canada concerning pollution of Lake Erie—was simply an expression of traditional tort law and choice of law principles existing at that time. The Supreme Court had previously summarized those principles in Young v. Masci, 289 U.S. 253, 53 S.Ct. 599, 77 L.Ed. 1158 (1933):

A person who sets in motion in one state the means by which injury is inflicted in another may, consistently with the due process clause, be made liable for that injury whether the means employed be a responsible agent or an irresponsible instrument. The cases are many in which a person acting outside the state may be held responsible according to the law of the state for injurious consequences within it. Thus, liability is commonly imposed under such circumstances for homicide, for maintenance of a nuisance, for blasting operations, and for negligent manufacture.

Id. at 258-59, 53 S.Ct. at 601 (citations omitted).

Given the state of the law during the time of the FWPCA’s framing, it is completely reasonable to assume that Congress believed that a plaintiff suffering in State A might sue under the laws of State A to recover for injuries sustained as the result of pollution emanating from State B. It thus seems inescapable that Congress, by passage of the FWPCA’s saving clause and state authority provisions, intended to preserve just such an action. In basing its decision on an incompatibility of state and federal law not yet recognized by Congress at the time of FWPCA’s creation, Milwaukee thus imposed artificial limitations on the right to bring a state common law nuisance action.

The Seventh Circuit’s position also creates a choice-of-law rule that deviates, without legislative authorization, from well-settled choice of law principles. Milwaukee would, in settling disputes over interstate pollution, mandate that, where state law was sought to be applied, courts apply the law of the state from which the pollution emanates regardless of the states’ choice-of-law principles. Yet the FWPCA provides no support for this deviation from the rule that, in a diversity case, a federal court must apply choice of law principles of the state in which the court sits. Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941).

Another factor weighing against the adoption of the position espoused in Milwaukee is that the conclusions reached are logically inconsistent. The Seventh Circuit concluded that the saving clause contained in the FWPCA could not save Illinois’ “right” to bring an action against Milwaukee under Illinois law since, according to Milwaukee I, there was no such right to be saved. Milwaukee I, however, did not distinguish between water pollution emanating from outside the forum state’s boundary waters and that emanating from within. That decision simply held that state law was ill-suited to resolve any dispute between two states concerning the pollution of interstate waters. There is nothing in Milwaukee I to suggest that the Supreme Court would have approved a suit by Illinois in the courts of and pursuant to the laws of Wisconsin. Using the Seventh Circuit’s own analysis, then, the FWPCA did not save Illinois’ right to sue in Wisconsin’s courts under Wisconsin law since there was no such right to be saved. The Seventh Circuit nevertheless suggested that Congress, by inclusion of the saving clause, must have meant to save state law as it applied to in state discharges.

This inherently contradictory conclusion was apparently an attempt by the court to reconcile the express language of the saving clause and accompanying legislative history with the problems which the court believed would result from the application of state law in interstate water pollution disputes. In the situation presented here, however, nothing in the application of traditional common law remedies for nuisance would, as a practical matter, interfere with the objectives of the Act. In fact, the opposite is true. Congress, in passing the Act, sought “to restore and maintain the natural chemical, physical, and biological integrity of the Nation’s waters” by eliminating the discharge of pollutants into navigable waters. S.Rep. 92-414, 92d Cong., 2d Sess. 81, reprinted in 1972 U.S.Code Cong. & Ad.News 3668, 3678. To this end, states’ imposition of compensatory damage awards and other equitable relief for injuries caused by discharges into interstate waters merely supplement the-standards and limitations imposed by the Act.

Defendant’s implied position is that application of state law principles might interfere with defendant’s “right” to discharge under its NPDES permit. Yet there is no indication that Congress ever intended that the NPDES permit confer an absolute right to discharge to the extent allowed by the permit. Since compliance with the Act does not constitute a defense to a common law action for damages, see S.Rep. 92-414, supra, Congress must have recognized that some uncertainty would result to dis-chargers of pollutants. The goal of the FWPCA is not finality; rather, it is the elimination of the discharge of pollutants.

Finally, we disagree with the defendant’s contention that application of state nuisance law in a situation such as this may lead to a “chaotic confrontation between sovereign states.” Unlike Milwaukee, the dispute here is between private parties. There is little or no possibility that this litigation will escalate into a conflict between different state entities.

Even disregarding the nature of the parties involved, the common law action involved here does not directly implicate the regulatory powers of the states in which the parties are located. Plaintiffs have not attempted to impose legislatively defined standards or limitations on defendant. Plaintiffs seek compensatory damages, the purpose of which, of course, is to compensate parties for injuries or for interference with the use and enjoyment of their property. Such damages may have an indirect regulatory effect, yet the discharger remains free to operate so long: as it pays for the injury it causes. Cf. Silkwood v. Kerr-McGee Corp., 464 U.S. 238, _, 104 S.Ct. 615, 629, 78 L.Ed.2d 443 (1984) (Blackmun, J., dissenting) (alleged contamination from federally-licensed nuclear facility; compensatory damages awarded under state law complement the federal regulatory standards, and are an implicit part of the federal regulatory scheme). Although an injunction to abate a nuisance has a direct impact on the polluter, it is designed primarily to redress a plaintiff’s particular injury. In this respect, any intrusion on the sovereignty of the polluter’s state is purely incidental. A state’s nuisance law develops not to regulate the activity of neighboring states but to protect the health, welfare, and property rights of its own residents. The application of state law in this situation is no more intrusive on the sovereignty of foreign states than the application of one state’s product liability law to a manufacturer located in another state. See e.g. Watson v. Employers Liability Corp., 348 U.S. 66, 75 S.Ct. 166, 99 L.Ed. 74 (1954), Bowles v. Zimmer Mfg. Co., 277 F.2d 868, 872-77 (7th Cir.1960).

Congressional authorization of state law in a situation such as this does not necessarily contradict the rationale employed by Milwaukee I: There the Court — relying on case law applied to disputes over the apportionment of interstate waters — held that state law action was an inappropriate means to resolve interstate water pollution disputes. But the Court also implicitly assumed that the discharge of pollutants, like the appropriation of water for personal consumption or reclamation, was simply another competing use of a limited resource. Federal law was necessary to effect an equitable means of “dividing the pie,” see Milwaukee. Since that opinion Congress, by the passage of the FWPCA, has expressly altered the assumptions on which Milwaukee I was based: although pollution is a competing use for interstate waters, it may no longer be considered a legitimate competing use. Thus it would appear that the Act has shifted the controlling issue from how to “divide the pie” to how best to eliminate the discharge of pollutants into the nation’s waters. Consideration of the express language of the saving clause and state authority provision of the Act, the legislative history, and the stated objectives of the Act inevitably leads one to the conclusion that Congress intended to authorize resort to state nuisance law in situations such as the instant one.

II. State Disposition of Plaintiffs’ Riparian Rights

In 1970, the State of Vermont brought an action in the United States Supreme Court against the State of New York and IPC alleging, inter alia, that IPC’s discharges into the air and water constituted a nuisance and a trespass. After the United States intervened, negotiations among the parties led to a consent decree which was ultimately rejected by the Supreme Court. State of Vermont v. State of New York, 417 U.S. 270, 94 S.Ct. 2248, 41 L.Ed.2d 61 (1974). The parties then stipulated to a settlement that included the filing of a Motion to Dismiss without Prejudice. The complaint was dismissed by the Court on October 29, 1974. 419 U.S. 955, 95 S.Ct. 246, 42 L.Ed.2d 260 (1974). Although the settlement agreements were apparently filed with the Stipulated Motion to Dismiss, the terms of the settlement were never before the Court.

There are two Agreements of Settlement in this case: one between the State of Vermont and IPC, (“Two-Party Agreement”), the other between the State of Vermont, the State of New York, IPC and the United States (“Four-Party Agreement”). Both Agreements provide:

This Agreement shall constitute a contract in settlement of No. 50, Original, but shall not constitute an adjudication or finding on any issue of fact or law, or evidence or admission by any party with respect to any such issue raised therein. In consideration of the mutual rights and obligations set forth, the following provisions are agreed to and accepted by the parties and shall be binding upon them respectively.

Both Agreements are thus purely contractual in nature. In exchange for certain concessions and money payments by IPC, the State of Vermont pledged, in both Agreements, not to

seek to recover from any party to No. 50, Original damages for harm to the South Lake, its waters, shores, adjacent acres ... allegedly suffered on or prior to the entry of an order dismissing the amended complaint in No. 50, Original for which the State of Vermont could have sought recovery in No. 50, Original.

11111(A)(2) of the Two-Party Agreement (the Four-Party Agreement contains a similar provision at 11 IV(A)(2)).

The State also agreed that, for a given time period, it would not support limitations more stringent than those contained in the Agreement. Yet the .Agreements also contained the following clause:

Nothing herein shall be construed as affecting any claims or rights of any citizens or residents of the State of Vermont that may exist against any party to No. 50, Original.

¶ IV(F) of the Two-Party Agreement (the Four-Party Agreement contains a similar provision, at ¶ VI(F)).

Defendant, relying on Badgley v. City of New York, 606 F.2d 358 (2d Cir.1979), contends that the plaintiffs here are bound by the state’s covenant not to sue contained in the Agreements. According to defendant, individual Vermont landowners were represented by the State of Vermont, and their riparian rights were fully adjudicated and settled under the terms of the Agreements. Plaintiffs’ water pollution claim, defendant reasons, should therefore be dismissed. We disagree.

In Badgley, owners of riparian land situated in Pennsylvania claimed that diversion, impoundment and manipulation of the headwaters of the Delaware River by the City of New York had caused a diminution in the value of their lands. The City countered that its conduct was authorized by the Supreme Court’s equitable apportionment of the Delaware River’s waters. See New Jersey v. New York, 347 U.S. 995, 74 5. Ct. 842, 98 L.Ed. 1127 (1954).

After a trial which resulted in a damage award for plaintiffs, the Second Circuit considered whether or not the district court had erred in holding that common law riparian rights in streams are not destroyed or altered when those streams have been apportioned by a Supreme Court decree involving the common law doctrine of equitable apportionment. The court concluded that Pennsylvania — as a party to a consent decree entered by the Supreme Court setting forth the rights of the riparian states along the Delaware, New Jersey v. New York, supra, and as a signer of the Delaware River Basin Compact, Pub.L. No. 87-328, 75 Stat. 688 (1961), had represented the rights of all its citizens. The terms of the decree and the compact were thus held conclusive upon all Pennsylvania residents and bound their rights. Badgley, 606 F.2d at 364.

A review of the Two- and Four-Party Agreements in the instant case, however, show that the settlement contracts to which the State of Vermont was a party differ in two important ways from the decree and compact to which Pennsylvania was a party.

First, a significant factor in Badgley was that an award of damages to plaintiffs in that case might have “hobble[dj or possibly even destroyed] the effect of Supreme Court decrees of Congressionally approved interstate water compacts”, Id. at 366. Here, however, although the settlement agreement resolved a dispute subject to the Supreme Court’s original jurisdiction, the Two- and Four-Party Agreements had received neither Supreme Court nor Congressional approval. By their express terms, the Agreements purport to be a contractual resolution of the controversy involving only the signing parties.

Second, and perhaps more important, the Delaware River decree and compact established “a comprehensive scheme of river regulation, all-inclusive as to all matters concerning the manipulation of the law of the undiverted portion of the Delaware River.” Id., 606 F.2d at 368 (emphasis added). In contrast, it appears from the Agreements in this case that the State of Vermont did not agree to a comprehensive allocation of discharge rights in the South Lake area but only to forbear from bringing suit against IPC or from proposing stricter limitations or conditions so long as IPC adhered to the limitations and conditions set forth. The “saving clause” in-eluded in both Agreements confirms this construction of the Agreements. Unlike the “saving clause” at issue in Badgley, the clause contained in the Two-Party Agreement specifically preserves any claims and rights of Vermont citizens and residents that may exist against any party to the Supreme Court proceeding. Only the most tortured construction of this clause would prevent Vermont residents from recovering for injuries sustained as a result of pollution emanating from IPC’s mill.

It seems clear that the State of Vermont bargained for a reduction of effluents in return for a limited covenant not to file suit itself — nothing more. The State of Vermont did not, therefore, dispose of plaintiffs’ riparian rights in signing the Two- and Four-Party Agreements.

III. Public Nuisance

Defendant contends that plaintiffs have not alleged that they suffered harm different in kind from that suffered by the public in general, a necessary element of a private action for public nuisance under both New York and Vermont common law. Roy v. Farr, 128 Vt. 30, 37, 258 A.2d 799, 803 (1969); Gibbons v. Hoffman, 203 Misc. 26, 115 N.Y.S.2d 632 (1952); Restatement (Second) of Torts § 821C at 94 (1979). Plaintiffs allege in their complaint, however, that the discharges from defendant’s mill “interfere with Plaintiffs’ use and enjoyment of their property and have decreased the market value and rental value of their property.” Such an allegation is sufficient to state a private cause of action for a “nuisance” which might generally be classified as “public.” See Hazen v. Perkins, 92 Vt. 414, 421-22, 105 A. 249 (1918) (where variations in lake depth caused by defendant’s dam “accentuated” adverse effects upon plaintiffs’ shore properties, injury was “special and distinct”, though injury was not substantial); see also W. Prosser, The Law of Torts § 88, at 588 (4th ed. 1971); 58 Am.Jur.2d, Nuisance § 111, at 675 (1971) (“Interference with the enjoyment and value of a person’s private property rights is a special injury [allowing] recovery from a public nuisance ... ”); Restatement (Second) of Torts § 821C, comments d and e (1979) (“When the public nuisance causes ... physical harm to [plaintiff’s] land ..., the harm is normally different in kind from that suffered by other members of the public ... ”).

CONCLUSION

We find that the FWPCA authorizes actions to redress injury caused by water pollution of interstate waters under the common law of the state in which the injury occurred; that the State of Vermont did not dispose of plaintiffs’ riparian rights when it entered into settlement agreements with IPC and the State of New York; and that plaintiffs have set forth allegations of' harm sufficiently different in kind than that suffered by the general public to state a claim for nuisance. Accordingly, defendant’s motion to dismiss is hereby DENIED.

      . Ouellette v. International Paper Co., 86 F.R.D. 476 (D.Vt.1980); Ouellette v. International Paper Co., No. 78-163 (D.Vt. Oct. 29, 1982).

      . Illinois had also applied for certiorari, asserting that the Seventh Circuit erred in disregarding claims made by Illinois under Illinois’ statutory and common law. Yet the Supreme Court in Milwaukee II specifically declined to pass on this question since it was the subject of Illinois’ petition and not Milwaukee’s. Milwaukee II, 451 U.S. at 310 n. 4, 101 S.Ct. at 1789 n. 4. The Court subsequently denied Illinois’ petition. 451 U.S. 982, 101 S.Ct. 2313, 68 L.Ed.2d 839 (1981).

      . The district court certified its ruling for an interlocutory appeal under 28 U.S.C. § 1292(b).

      . See also Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 4, 96 S.Ct. 167, 168, 46 L.Ed.2d 3 (1975) ("A federal court is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but which have not commended themselves to the State in which the federal court sits.)

      . Although the State of Vermont, as a riparian landowner, has been included in the plaintiff class, see Ouellette v. International Paper Co., No. 78-163 (D.Vt. March 27, 1983), the State’s actions are presumably controlled by the settlement agreements previously entered into with IPC. See Section II, infra.

      . Moreover, the Agreements applied only as to harm suffered on or prior to October 29, 1974, the date of the Supreme Court’s Order of Dismissal, reported at 419 U.S. 955, 95 S.Ct. 246, 42 L.Ed.2d 260. See, e.g., ¶ III(A)(2) of the Two-Party Agreement, quoted supra, and ¶ IV(A)(2) of the Four-Party Agreement. Thus, even if we were to hold that the rights of private individuals within Vermont to bring this action extended no further than that of the state itself, we would still allow recovery for harm which occurred after that date.

      . The “saving clause" in the Delaware River Basin Compact addressed by the court in Badgley provided: "Nothing contained in this compact shall be construed as affecting or intending to affect or in any way to interfere with the law of the respective signatory position relating to riparian rights.” Id., 606 F.2d at 371. Not only is this not as specific as the clause in the instant case, but the court held that it was inconsistent with other clauses within the same compacts. Id.

      . Apparently a significant factor in Badgley was the court’s conclusion that the rights of riparian owners were not independent of the rights of Pennsylvania, but were merely derivative therefrom and therefore subject to change by Pennsylvania law. Badgley, 606 F.2d at 365. This does not alter our holding, however, since the saving clause at issue here could be viewed as a retained right of the state — that is, the clause retains the state’s right to have claims brought by its citizens and residents resolved by the courts. Viewed from either perspective, the clause clearly excepts claims brought by private citizens or residents from any bar of access to the courts.


source: Caselaw Access Project

author: TURK, Chief Judge.

license: Public Domain

text:
    Mary T. GRAHAME, Plaintiff, v. Margaret M. HECKLER, Secretary of Health and Human Services, Defendant.
    Civ. A. No. 84-0648(R).
    United States District Court, W.D.Virginia, Roanoke Division.
    Feb. 5, 1985.
    Henry L. Woodward, Legal Aid Society of Roanoke Valley, Roanoke, Va., for plaintiff.
    E. Montgomery Tucker, Asst. U.S. Atty., Roanoke, Va., for defendant.
   MEMORANDUM OPINION

TURK, Chief Judge.

Plaintiff has filed this action challenging the final decision of the Secretary of Health and Human Services refusing to waive recovery of an overpayment of supplemental security income benefits which had been paid to plaintiff as representative payee for her natural grandson and adopted son Raymond B. Grahame, III. The provisions for the recovery of overpayment for supplemental security income benefits are set forth under 42 U.S.C. § 1383(b)(1). Jurisdiction of this court is established pursuant to 42 U.S.C. § 1383(c), which incorporates 42 U.S.C. § 405(g). As reflected by the memoranda and argument submitted by the parties, the issues before this court are whether the Secretary’s final decision is consistent with the applicable statutory framework governing recovery of overpayments of supplemental security income benefits.

The plaintiff, Mary T. Grahame, is more than seventy years of age. Mrs. Grahame draws social security benefits on her deceased husband’s wage earner’s account. She also receives supplemental security income benefits. Some years ago, Mrs. Grahame adopted her grandson, Raymond Grahame, as her own child. Raymond Grahame reached the age of eighteen on September 19, 1979.

In 1974, Mrs. Grahame made application for supplemental security income benefits for Raymond Grahame as a disabled child. It was determined on initial consideration that Raymond Grahame was disabled due to a personality pattern disturbance. The record reveals that Mrs. Grahame qualified as Raymond Grahame’s representative payee and that she received the SSI benefits in his behalf.

In 1977, plaintiff was notified that the Social Security Administration had determined that Raymond Grahame’s disability ended in January of 1977 and that he would no longer be eligible for supplemental security income benefits. Mrs. Grahame appealed this decision on Raymond Grahame’s behalf and the case eventually reached an Administrative Law Judge for a de novo hearing and review. By decision dated June 8, 1978, the Law Judge found that Raymond Grahame remained disabled and that he continued to be entitled to supplemental security income benefits.

On July 29, 1980, Mrs. Grahame was notified that the Social Security Administration had determined that Raymond Grahame’s disability ended in January of 1980 and that he would no longer be eligible for supplemental security income benefits. Mrs. Grahame again appealed this decision and the case eventually reached an Administrative Law Judge for a de novo hearing and review. On February 24, 1981, the Law Judge held that Raymond Grahame was no longer disabled and that his entitlement to supplemental security income benefits ended in March of 1980. Mrs. Grahame did not seek further administrative review of the Law Judge’s decision.

It is undisputed that during the time in which she was appealing the termination of Raymond Grahame’s supplemental security income benefits, plaintiff opted to have the benefits continued pending a final administrative resolution of the matter. By virtue of plaintiff’s own testimony, it is undisputed that she understood that these interim benefits would have to be repaid if it was eventually determined that Raymond’s disability had in fact ended in January of 1980. (TR 24-25). The overpayment amounted to three thousand two hundred forty-two dollars and sixty cents ($3,242.60). It would appear undisputed that Mrs. Grahame expended this sum for Raymond Grahame’s benefit. The Social Security Administration undertook to recover the overpayment. The matter of recovery of overpayment eventually reached an Administrative Law Judge for consideration. The Law Judge ultimately determined that Mrs. Grahame and Raymond were not without fault in causing the overpayment and that recovery of the overpayment could not therefore be waived. See, gen., 42 U.S.C. § 1383(b)(1) and 20 C.F.R. § 416.550.

On June 2, 1982, the Social Security Administration notified Mrs. Grahame as representative for Raymond B. Grahame that the overpayment would have to be refunded immediately. Apparently, the overpayment could not be recovered from Raymond B. Grahame. On June 23, 1983, the Social Security Administration notified plaintiff as follows:

We have determined that you received $3,242.60 more in Supplemental Security Income payments on behalf of Raymond B. Grahame than you were due.
On your hearing decision dated May 26, 1982, Administrative Law Judge Toti ruled that you and Raymond were equally liable for this overpayment, that you have failed to show evidence of being without fault in causing the overpayment and that a repayment in full of all over-payments would be proper.
Since June 2, 1982, we have tried to secure an agreement with you regarding this overpayment. All such attempts have failed. Therefore, beginning August 1, 1983, we will withhold your monthly Supplemental Security Income check to recover the overpayment of $3,242.60 on the record of Raymond B. Grahame for which you were representative payee. (TR 61).

Mrs. Grahame disputed the determination that she was individually responsible for repayment of the amount which she had been overpaid as representative payee. She requested administrative reconsideration of this matter and her case eventually reached another Administrative Law Judge for a de novo hearing and review. In an opinion eventually adopted as the final decision of the Secretary by the Social Security Administration’s Appeals Council, the Law Judge held that Mrs. Grahame was overpaid $3,242.60; that she was not without fault in accepting the overpayment; that recovery of the overpayment would not defeat the purposes of the Act; and that it made no difference that Mrs. Grahame received the overpayment as a representative payee rather than in her own behalf. (TR 11).

After a review of the record and the applicable statutory and regulatory provisions, the court is constrained to conclude that the Secretary’s final decision is erroneous as a matter of law. Under 42 U.S.C. § 1383(b)(1), it is provided as follows:

Whenever the Secretary finds that more or less than the correct amount of benefits has been paid with respect to any individual, proper adjustment or recovery shall, subject to the succeeding provisions of this subsection, be made by appropriate adjustments in future payments to such individual or by recovery from or payment to such individual or his eligible spouse (or by recovery from the estate of either). The Secretary shall make such provision as he finds appropriate in the case of payment of more than the correct amount of benefits with respect to an individual with a view to avoiding penalizing such individual or his eligible spouse who was without fault in connection with the overpayment, if adjustment or recovery on account of such overpayment in such case would defeat the purposes of this subchapter, or be against equity or good conscience, or (because of the small amount involved) impede efficient or effective administration of this subchapter.

As to the method by which an overpayment is to be recovered, 20 C.F.R. § 416.570 provides as follows:

Where a recipient has been overpaid, the overpayment has not been refunded, and waiver of adjustment or recovery is not applicable, the overpayment is adjusted against any payment due the overpaid recipient or his eligible spouse (or recovery from the estates of either or both when either or both die before adjustment is completed). Adjustment will generally be accomplished by withholding each month a part of any benefit payable to the individual except that, when the overpayment is identifiable wholly or as part of the recipient’s non-excluded resources or where the overpayment results from the disposition of resources as provided by § 416.1240(b), the overpayment will be adjusted against any payments due the overpaid recipient or his eligible spouse before any further payment is made.

A review of the relevant statutory and regulatory provisions indicates that there is no specific authority by which the Secretary is permitted to recover an overpayment from a beneficiary’s representative payee. 42 U.S.C. § 1383(b)(1) specifically provides that such a recovery shall be made by appropriate adjustments in future payments “to such individual or his eligible spouse.” This statutory language is mirrored in 20 C.F.R. § 416.570. Similarly, the provisions governing the appointment and service of a representative payee give absolutely no indication that the representative payee may be held personally responsible for an overpayment. See, gen., 20 C.F.R. § 416.601 et seq. Under 20 C.F.R. § 416.641, it is provided that a payee may be held personally liable “if the payee misuses the beneficiary’s benefits.” There is no suggestion that such a misuse occurred in the instant case.

The court recognizes that in the case of Evelyn v. Schweiker, 685 F.2d 351 (9th Cir.1982), the United States Court of Appeals for the Ninth Circuit reached a different conclusion. In holding that an overpayment on behalf of a disabled minor could be recovered directly from the beneficiary’s mother and representative payee, the Ninth Circuit was concerned that representative payees might otherwise enjoy an unjust enrichment. Id. at 353. Analogizing to the permissible recovery of an overpayment from a deceased beneficiary’s estate, the Ninth Circuit held that Congress must have intended that a similar recovery could be had from a representative payee.

The court finds these arguments to be less than persuasive. While it is certainly true that Congress did not intend representative payees to be unjustly enriched because of an uncollectable overpayment, no such benefit will inure to the benefit of the representative payee if the payee expends all sums received on behalf of the beneficiary. If the payee does not use the benefits in this manner, other statutory and regulatory provisions provide for the direct recovery from the payee of any misused benefits. 20 C.F.R. § 416.651. In the instant case, there is no indication or suggestion that Mrs. Grahame misused the overpaid benefits. Indeed, it would appear' undisputed that plaintiff expended these sums for the benefit of Raymond Grahame. As will be discussed in more detail infra, the record establishes that Mrs. Grahame acted in what she believed to be her adopted son’s best interests when she sought to have the termination of his eligibility overturned. Given the earlier, unsuccessful attempt to terminate eligibility, Mrs. Grahame had every reason to believe that she was acting properly in causing the benefits to be continued during the administrative adjudication. In short, the court is simply unable to perceive any basis for concluding that Mrs. Grahame acted improperly. The public policy rationale underlying the decision in Evelyn v. Schweiker, supra does' not apply to the instant case.

The court also concludes that a recovery of an overpayment directly from a beneficiary’s estate is quite different than the direct recovery from a beneficiary’s representative payee. The recovery from a beneficiary’s estate is clearly reasonable, since it may be assumed that the beneficiary spent the overpayment for his own purposes. On the other hand, the representative payee is charged to expend all benefits for another person’s upkeep. The argument that the representative payee may be held personally responsible for an overpayment is not far removed from an assertion that the administrator of a deceased beneficiary’s estate should be held personally liable for an unrecoverable overpayment.

Even though the Secretary has held that Raymond Grahame is no longer disabled, it seems that Raymond Grahame is not so financially independent as to permit a recovery of the overpayment directly from him. Since it is undisputed that all the overpaid benefits were used solely for the benefit of Raymond Grahame, the court sees no basis for holding that this case is unlike any other in which the Secretary is unable to recover an overpayment directly from the beneficiary. The court holds that 42 U.S.C. § 1383(b) and 20 C.F.R. § 416.570 cannot be interpreted so as to permit the recovery of the overpayment directly from plaintiff.

Even assuming that 42 U.S.C. § 1383(b) can be applied so as to permit a recovery directly from a representative payee, the court is of the opinion that the facts in this case do not support the Secretary’s final decision. Under 42 U.S.C. § 1383(b)(1), it is provided that the Secretary will not recover overpayments in certain, specified circumstances. In implementing this statutory provision, 20 C.F.R. § 416.550 provides as follows:

Waiver of adjustment or recovery— when applicable.
Waiver of adjustment or recovery of an overpayment of supplemental security income benefits is applicable (see section 1631(b) of the Act) when:
(a) The overpaid individual was without fault in connection with an overpayment, and
(b) Adjustment or recovery of such overpayment would either:
(1) Defeat the purpose of title XVI, or
(2) Be against equity or good conscience, or
(3) Impede efficient or effective administration of title XVI due to the small amount involved.

As previously noted, the Administrative Law Judge found that Mrs. Grahame was not without fault in accepting the overpayment on behalf of Raymond Grahame, and that recovery of the overpayment would not defeat the purposes of the Act. The court concludes that these factual findings are not supported by substantial evidence.

It is undisputed that in opting to continue to receive benefits during the administrative appeal of the termination of Raymond Grahame’s benefits, Mrs. Grahame understood that the Secretary could require repayment of the benefits if the termination of eligibility was upheld. However, it appears to the court that if the Secretary wishes to hold plaintiff liable for the overpayment solely because of her status of representative payee, the question of “fault” must be evaluated in terms of the options which were available to Mrs. Grahame in her status as representative payee.

In determining to appeal the Secretary’s termination of Raymond Grahame’s supplemental security income benefits, plaintiff had reason to expect that the appeal might well result in the reinstatement of his eligibility. As noted above, the Secretary had previously attempted to terminate Raymond Grahame’s SSI eligibility. However, the administrative decision was overturned after a de novo hearing and review before an Administrative Law Judge. Thus, Mrs. Grahame had every reason to believe that another appeal would meet with success. Furthermore, it is essentially undisputed that the social security benefits which Mrs. Grahame personally received were not sufficient for the upkeep of two persons. Thus, acting in what she believed to be her son’s best interests and in a manner consistent with her responsibility as a representative payee, it is not unreasonable that Mrs. Grahame opted to have her son’s benefits continued during the administrative adjudication. It might be argued that Mrs. Grahame acted in her own best interests in determining to continue the benefits in that she would not have to share her already meager income with the son who she believed to be disabled. However, the Secretary now seeks to recover the overpayment from Mrs. Grahame not because she was the mother of the beneficiary but because she was his representative payee. Considering the matter from this perspective, the court believes that Mrs. Grahame would have been negligent had she handled the matter any differently than she did. Acting in her capacity of representative payee, the court finds that Mrs. Grahame was not at fault in taking any of the actions that she did.

It is undisputed that an adjustment of Mrs. Grahame’s personal social security benefits so as to permit a recovery of the overpayment would defeat the purpose of Title XVI. Mrs. Grahame is entitled to supplemental security income benefits only because her income through her regular social security benefits is very limited. Furthermore, given the circumstances of this case, it is obvious that the recovery of the overpayment from Mrs. Grahame is against equity and good conscience. For these reasons, the court concludes that the Secretary erred in refusing to waive the recovery of the overpayment in the instant case.

The court has concluded that the Secretary was without statutory or regulatory authority to recover the overpayment of supplemental security income benefits to Raymond Grahame through an adjustment of the social security benefits of his representative payee. Furthermore, even assuming that the Secretary had the legal authority to adjust the benefits of the representative payee, the court concludes that the Secretary’s factual findings in this matter are not supported by substantial evidence. Finally, the court concludes that the facts and circumstances in this case can only be interpreted so as to necessitate a waiver of recovery of the overpayment of supplemental security income benefits from the plaintiff, Mary T. Grahame. Accordingly, defendant’s motion for summary judgment must be denied. The final decision of the Secretary will be reversed with judgment entered in favor of the plaintiff, Mary T. Grahame. An appropriate judgment and order will be entered this day.

      . On November 6, 1984, the court requested that the defendant file a memorandum in this case. However, no such memorandum has been filed to date. As the court deems it inappropriate to withhold a decision in this matter any longer, the court will proceed to disposition without benefit of a government brief.

      . At the time of the administrative hearing, Mrs. Grahame received combined benefits in the amount of three hundred twenty-four dollars ($324.00) per month. (TR 69).

      . Of course, the court’s decision in this matter has no bearing on any additional efforts the Secretary may wish to make to recover the overpayment from the primary beneficiary, Raymond Grahame.