A Kentucky Court of Appeals panel has reversed a trial-court determination that trespass and nuisance claims filed by residents alleging damage from the ethanol emissions of nearby distilleries are preempted under the Clean Air Act (CAA). Merrick v. Brown-Forman Corp., No. 2013-CA-002048-MR (Ky. Ct. App., decided November 14, 2014). A federal court considering similar issues has also found that state law-based claims are not preempted. That ruling is summarized in Issue 519 of this Update.

In the Kentucky state-court proceeding, the circuit court dismissed the action, ruling that the “federal Clean Air Act preempts source state air quality tort claims of the type asserted by” the plaintiffs. They allege that the atmospheric ethanol the distilleries emit promotes the growth of “whiskey fungus” that causes a “pervasive black film covering virtually every outdoor surface,” which requires cleaning and power washing to remove. Plaintiff Bruce Merrick owns a company that makes stadium seating and claims that the whiskey fungus destroys any inventory stored out of doors and has “doubled the cost of replacing a commercial roof, and has otherwise caused substantial and ongoing pecuniary damages.” The complaint alleges negligence, nuisance and trespass claims and includes “an assertion that affordable and effective technology exists to capture or otherwise prevent the release of ethanol vapors.”

The defendants claimed that they comply with all federal laws, which preempt “all actions arising under state statutory and common law,” and that the fungus is naturally occurring in the environment. They filed a motion to dismiss, arguing that the state-tort claims arising from ethanol emissions, which are governed by the federal CAA, are preempted. Relying on a 2011 U.S. Supreme Court ruling finding that the CAA preempts federal common law claims, the circuit court concluded that the state-law tort claims were preempted because the plaintiffs had “not cited any authority decided since [then] that supports the argument that state tort claims are not preempted.”

The court of appeals found persuasive a 2013 Third Circuit Court of Appeals ruling that the CAA “does not preempt state common law claims based on the law of the state where the source of the pollution is located.” According to the court, the language in the case is “clear, unambiguous and subject to but one interpretation,” in contrast with a 2010 Fourth Circuit Court of Appeals decision, “which held with less clarity that conflict preemption principles ‘caution at a minimum against’ allowing state nuisance law to contradict joint federalstate air quality rules.” The court of appeals also noted that the circuit court erroneously placed the burden on the plaintiffs to demonstrate the absence of preemption and cited U.S. Supreme Court precedent placing the burden of persuasion on the party asserting federal preemption of state law. The court remanded the matter for further proceedings.