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AUSTIN, Texas-Knowledge of the presence of a toxic compound may be enough to trigger statutes of limitations in toxic tort cases when direct injury is alleged, the Texas Supreme Court has ruled.

A party does not need to be aware that contamination actually exceeds regulatory guidelines to start the clock in such cases, the court said.

That ruling also confirms that in toxic torts, the discovery rule exception to the statute of limitations only applies if the injury is "inherently undiscoverable" and the evidence of the injury is "objectively verifiable."

The July decision "follows decisions in other areas, but it is precedent-setting in a toxics and environmental scenario," said Kath-arine R. Latimer, a partner at Spriggs & Hollingsworth in Washington. Ms. Latimer represented a pesticide manufacturer in the case, Velsicol Chemical Corp. in Chicago.

The case concerns an action for damage that arose after several Houston apartment complexes were sprayed with the pesticide chlordane in April 1987. The action provoked significant media attention, and later in the month the apartments were investigated by the Texas Department of Agriculture.

"TDA found chlordane present on the exterior of the apartments and ordered its remediation. However, because the chlordane levels discovered inside individual apartments did not amount to contamination, TDA did not order remediation of the interior," court papers say.

In June 1987, several tenants filed the first of several lawsuits against Judwin Properties Inc., which managed the apartments. The tenants later added Velsicol, the pesticide manufacturer, as a co-defendant, and Judwin cross-claimed against Velsicol for contribution and indemnity for any settlement.

In May 1991, the city of Houston ordered a new investigation into levels of contamination after renewed media attention.

"Samples collected and analyzed by an environmental consulting firm revealed for the first time that the interior level of chlordane exceeded the 'contamination' guidelines," the Texas Supreme Court wrote in its opinion.

Judwin then amended its claims against Velsicol, suing for property damage and injury to a business.

Velsicol sought a summary judgment, arguing that Texas' two-year statute of limitations barred the suit. The trial court granted the summary judgment, but its decision was overturned on appeal.

The appeals court agreed with Judwin that the "discovery rule" allows the apartment manager to date any statute of limitations from the time that the contamination was found to exceed regulatory guidelines in 1991.

Texas' Supreme Court, however, disagreed.

"The discovery rule represents an attempt to balance society's interest to have disputes either settled or barred within a reasonable time in situations in which it is difficult for the injured party to learn of the negligent act," the court wrote.

It is only applicable if the injury is inherently undiscoverable and the evidence of the injury is objectively verifiable, court papers say.

"In 1987, Judwin knew that chlordane residues in the interior of the apartments were responsible for adverse press coverage and several tenant lawsuits," the court said.

The damage arose in April 1987 as a result of the presence of the chlordane, irrespective of the concentrations of the pesticide, the court papers say.

"Accordingly, we hold the injuries of which Judwin complains were not inherently undiscoverable and thus the discovery rule does not save those claims from limitations," the high court said.

The judgment eases the burden on defendants in toxic tort cases in Texas, Ms. Latimer said.

Plaintiffs must either seek to recover losses after contamination levels exceed regulatory standards or they must sue within two years of the original contamination that allegedly led to the property damage, she said.

"The court is saying that you can't have it both ways. It's one or the other," Ms. Latimer said.

Velsicol Chemical Corp. and Columbia Management Services Inc. dba CMS Exterminating Service vs. Judith Winograd et al., Supreme Court of Texas; No. 96-0861Texas