Paint, Oil Companies Win Lead-Poison Fund Case

On Tuesday (April 30), the Sacramento Court of Appeals ruled that the assessment of about 2 cents per gallon of paint and a penny per gallon of gasoline is an unconstitutional tax on the companies. The fees on companies that made or distributed lead products began in 1991 after the legislature passed the Childhood Lead Poisoning Prevention Act (CLPPA). They totaled $12 million yearly .

"The decision is disappointing," said Ellen Widess, executive director of Lead-Safe California, a nonprofit organization seeking to curb lead hazards. "It is time for the state to commit to strong and uninterrupted programs to clean up lead hazards so children are not poisoned. It is also time for industries to show good faith by taking responsibility for past contamination, and not try to get a refund for any fees they have already paid."

In general, money the state collected by the state is deemed to be a fee if it is used only to regulate or benefit the paying parties. All other monies it collects are taxes.

"This 'fee' is imposed solely and simply to fund the Department of Health Services' childhood lead poison prevention program," said Sinclair's lawyer, Gene Livingston.

"It is not used to regulate the paint industry in any way. It does not regulate paint or how it is sold. In fact paint sold today doesn't contain lead, and hasn't for a number of decades. And it certainly provides no benefit to the paint industry. It benefits, perhaps, children, physicians and other people who are involved in the program."

But Sinclair and other producers of lead-based paint were being benefited, argued deputy attorney general William Carter, counsel for the Board of Equalization. "Treating children poisoned by lead-based paint reduces Sinclair's exposure to potential lawsuits."

Paint companies were assessed for about 14 percent of the fund; petroleum companies, about 85 percent. Gasoline was the main source of lead exposure for the general population in the 1970s, according to a recent report by the National Research Council. Regulations have virtually eliminated lead in gasoline, but large amounts of what exhaust pipes spewed remains in dust and soil.

"If paint is maintained, it poses no threat at all," said Livingston. "It's owners of property who let it become dilapidated and unpainted and uncared for, and that causes the problem."

Several courts throughout the country have indeed held landlords liable for not removing lead paint, with judgments as high as $7 million. The first such judgment in California came last year, when a Pomona jury awarded $150,000 to a couple whose 1-year-old daughter was exposed to lead from old, flaking paint in their apartment.

The Sinclair claim is the reincarnation of a case filed by the paint industry in 1993, in which paint companies and their industry organization tried to enjoin the collection of fund moneys. That case was dismissed, primarily because plaintiffs had not paid the fees and then exhausted remedies at the Board of Equalization. Also, "it's against the California constitution to enjoin the collection of a tax," Carter explained.

Medical intervention is recommended for blood-lead concentrations of 20 micrograms or higher, but county health departments can't keep up with lead-poisoning cases. They screen about 5.5 percent of California children, only about 10 percent of those eligible, said Dr. Rex Ehling, who directs the Department of Health Services' childhood lead poisoning prevention branch. (In general, children are eligible for screening if they live in households with incomes less than twice the poverty level.)

"The $12 million being collected is a drop in the bucket compared to what's needed," said Widess. That money paid only for treating children for lead poisoning, and not for screening children or for removing lead from their homes, Ehling said.

"This problem needs to be addressed," said Livingston. "But if it's a real serious health threat, then why didn't the legislature appropriate money out of general revenue? Why did they seek to impose these kinds of costs on an industry which hasn't sold any product containing lead for decades?"

State Senator Jack O'Connell (D - Santa Barbara) has drafted legislation to help control and eliminate lead hazards in homes. The Comprehensive Childhood Lead Poisoning Prevention Act of 1996 (SB 2080) is moving through Senate committees.