State v. Atlantic Richfield CompanyState v. Atlantic Richfield Company
William H. Sorrell, Attorney General, Scot L. Kline, Gavin J. Boyles, and Robert F. McDougall, Assistant Attorneys General, Montpelier, Matthew F. Pawa, Benjamin A. Krass and Wesley Kelman of Pawa Law Group, P.C., Newton Centre, Massachusetts, Robert J. Gordon, Robin Greenwald and William A. Walsh of Weitz & Luxenberg, P.C., New York, New York, and Scott Summy, Celeste Evangelisti and Carla Burke of Baron & Budd, P.C., Dallas, Texas, for Plaintiff-Appellant.
Ritchie E. Berger of Dinse, Knapp & McAndrew, P.C., Burlington, David J. Lender and Theodore E. Tsekerides of Weil, Gotshal & Manges LLP, New York, New York, and Deborah E. Barnard and Michael T. Maroney of Holland & Knight LLP, Boston, Massachusetts, for Defendants-Appellees Exxon Mobil Corporation, ExxonMobil Oil Corporation and Mobil Corporation.
¶ 1. Robinson, J. This interlocutory appeal calls upon us to decide whether
¶ 2. For purposes of a motion to dismiss, we assume all factual allegations in the complaint are true. Amiot v. Ames, 166 Vt. 288, 291, 693 A.2d 675, 677 (1997). Those allegations include the following.
¶ 3. Methyl tertiary butyl ether (MTBE) is a synthetic chemical that some refiners have blended into gasoline at timеs since 1979. Tert-butyl alcohol (TBA) is a degradation product of MTBE and for purposes of the complaint is included within the scope of “MTBE.” Studies link MTBE to a variety of adverse health effects, and it is a known animal carcinogen and possible human carcinogen. The chemical can render water undrinkable even in low concentrations.
¶ 4. MTBE contaminates the environment through releases, leaks, overfills, and spills from gasoline delivery facilities, as well as through releases associated with certain consumer activities such as using snowmobiles, motorized watercraft, or lawnmowers; operating junkyards; conducting vehicle maintenance; and operating repair facilities. Once released into the environment, MTBE migrates farther and faster through soil and groundwater, penetrates deeply into aquifers, resists biodegradation, and results in persistent contamination that is very costly to address.
¶ 5. Defendants are petroleum industry corporations including manufacturers, promoters, refiners, and marketers of MTBE
¶ 6. In 1990, after tremendous lobbying efforts by the petroleum industry, Congress mandated the use of reformulated gasoline (RFG) containing at least 2% oxygen by weight in areas with the worst ozone or smog problems. In 1992, the Environmental Protection Agency (EPA) created the Oxygenated Fuel Program, which required at least 2.7% oxygen by weight in gasoline in certain metropolitan areas to reduce carbon monoxide emissions during the fall and winter months. While the RFG program required the use of an oxygenate, it did not require that the oxygenate be MTBE.
¶ 7. The oil industry chose MTBE as the “oxygenate of choice” because it was the most inexpensive oxygenate to produce and offered defendants the highest profit margin of available oxygenates. As a result, MTBE production increased from 1.5 million barrels in 1980 to 75 million barrels in 1998. Much of the gasoline sold in areas under the RFG program exceeded the 2% or 2.7%
oxygenate requirements, and MTBE composed up to 15% of every gallon of gasoline used in those areas.
¶ 8. Throughout this period, defendants were aware that on a nationwide level gasoline was leaking from multiple sources, including underground storage tanks and the systems used for shipрing, storing, pumping, and using gasoline throughout the distribution chain. Defendants were or should have been aware that thousands of gallons of gasoline entered the soil annually due to underground storage tank release and leaks, overfills, mishandling, and vaporization from underground storage tanks. Defendants knew or should have known that releases associated with certain consumer activities such as operating motorized watercraft, snowmobiles, and lawnmowers would result in release of MTBE into the waters of the state. And, defendants were or should have been aware that MTBE contamination of groundwater was inevitable given MTBE‘s water-seeking properties, recalcitrance to biodegradation and bioremediation, and the long and ongoing history of releases of MTBE-containing gasoline into the environment.
¶ 9. Defendants did not perform toxicological tests before introducing MTBE into the stream of commerce, and instead attempted to convince the EPA that health testing was not needed. Despite their superior knowledge of the groundwater threat MTBE posed, certain defendants, beginning in the early 1980s, formed various task forces and committees for the purpose of concealing MTBE‘s actual threat, facilitating their MTBE use, and convincing the public and regulators that increasing concentrations of MTBE in gasoline was desirable. Certain defendants manufactured and distributed MTBE with
¶ 10. As a result of this concealment and widespread use, MTBE has contaminated wide swaths of groundwater across the United States, including Vermont. A September 1999 report by a special EPA Blue Ribbon Panel stated that MTBE is a “threat to the nation‘s drinking water resources,” “has caused widespread and serious contamination,” and is found in 21% of ambient groundwater tested in areas where MTBE is used.
¶ 11. MTBE has contaminated public drinking water supplies in Vermont, threatening Vermonters’ health, safety, and welfare. Despite Vermont‘s MTBE ban,2 contamination continues to be found in new locations in Vermont. Over the past six years, testing and monitoring has revealed for the first time MTBE contamination in groundwater that was not reasonably discoverable priоr to then. In some instances, the State has traced these detections to newly discovered leaks or other faults; in other cases MTBE‘s presence in the groundwater and/or soil was unknown and not reasonably discoverable until soil testing was prompted by some event; in other instances only the appearance of a petroleum odor in a well enabled the location of an underlying contaminant plume; and in some cases past releases only recently contaminated test and production wells.
¶ 12. To this day, MTBE plumes, which were released years ago, continue to migrate throughout the state, contaminating new locations and adversely impacting public and private drinking wells. Absent large-scale and expensive remediation, MTBE plumes will continue to migrate further contaminating new water sources and posing a public health risk.
¶ 13. On the basis of these allegations, the State sued defendants on June 5, 2014, advancing claims based on
¶ 14. Defendants moved to dismiss the complaint as time-barred under the general six-year statute of limitations for civil actions. See
¶ 15. In opposition, the State argued that: (1) its claims, which arise from injury to state lands and public trust resources, are
exempt from any limitations period, see
¶ 16. In January 2015, the superior court dismissed the State‘s claims insofar as the State alleged a generalized injury to the state‘s groundwater system as a whole. That the State was aware of the generalized injury more than six years before filing this action is undisputed.3 The trial court concluded that
¶ 17. The State then brought this interlocutory appeal of the trial court‘s dismissal of the State‘s claims based on generalized injury to the state‘s groundwaters. In particular, the trial court referred for interlocutory review questions concerning the applicability of
statute of limitations and the impact of the Legislature‘s passagе of
¶ 18. Both of the State‘s arguments raise questions of statutory interpretation, and wе review these questions of law anew, without deference to the trial court. Benson v. MVP Health Plan, Inc., 2009 VT 57, ¶ 4, 186 Vt. 97, 978 A.2d 33. We review each argument in turn.
I. 12 V.S.A. § 462
¶ 19.
¶ 20. The State‘s argument - that this section bars application of the general statute of limitations to its claims - rests on two assumptions, both оf which defendants contest, and both of which are essential to the State‘s argument. First, the State argues that this statute relating to “lands belonging to the state” applies to groundwater held by the state in trust for the public. Second, the State contends that the statute‘s bar to application of the statute of limitations extends beyond claims of adverse possession or prescriptive rights to claims based on environmental injuries.
¶ 21. Based on the history surrounding its enactment, our cases, the language of the statute, and policy considerations, we conclude that
¶ 22. The origins of
“Section 462 is Vermont‘s version of thе generally accepted, common-law rule that a claim of title or right by adverse possession does not lie against public lands. The principal policy consideration behind this rule is that it would be injurious to the public to allow adverse possession claims of lands dedicated to public use.”
Id. (quoting In re .88 Acres of Prop., 165 Vt. 17, 19-20, 676 A.2d 778, 780 (1996)). We explained that the goal of
¶ 23. We are not persuaded by the State‘s arguments that amеndments to
signal that the Legislature intended to exempt the State from operation of statutes of limitation with respect to any and all State claims that are in some way related to land. And the Legislature‘s 1862 elimination of a second sentence authorizing actions for ejectment or other possessory actions in connection with such lands notwithstanding any statute of limitations does not by itself demonstrate a legislative intent to expand the class of cases covered by the exemption beyond those relating to interests in land.
¶ 24. Although we have never squarely considered the question, our decisions have consistently reinforced the understanding that
designed to protect “lands granted . . . for public, pious or charitable uses” from adverse possession claims).
¶ 25. Our longstanding understanding of
¶ 26. Moreover, sound policy considerations reinforce our longstanding interpretation. The time limits reflected in statutes of limitation “represent a balance, affording the opportunity to plaintiffs to develop and present a claim while protecting the legitimate interests of defendants in timely assertion of that claim.” Inv. Props., Inc. v. Lyttle, 169 Vt. 487, 492, 739 A.2d 1222, 1226-27 (1999). If
¶ 27. For the above reasons, we conclude the trial court properly interpreted
II. 10 V.S.A. § 1390
¶ 28.
it is the policy of the state that the groundwater resources of the state are held in trust for the public. The state shall manage its groundwater resources in accordance with the policy of this section, the requirements of subchapter 6 of this chapter, and section 1392 of this title for the benefit of citizens who hold and share rights in such waters. The designation of the groundwater resources of the state as a public trust resource shall not be construed to allow a new right of legal action by an individual other than the state of Vermont, except to remedy injury to a particularized interest related to water quantity protected under this subchapter.
¶ 29. We reject the State‘s argument that this statute created a new cause of action retroactively enforceable by the State for six years following the statute‘s effective date without regard to the date of the underlying injury or discovery thereof. We do not decide whether
¶ 30. The State‘s argument attempts to leverage the discovery rule far beyond its intended application. The State begins with the unremarkable observation that a cause of action accrues for limitations purposes only once the plaintiff “reasonably should discover the injury, its cause, and the existence of a cause of action.” Because the State could not have brought a claim under
¶ 31. The State‘s argument rests on the inaccurate assumption that the creation of a new statutory cause of action triggers the “accrual,” for statute of limitations purposes, of any and all claims under that statute - even in the absence оf any language in the statute indicating a legislative intent to allow retroactive application without any limitation as to the time the elements of the cause of action were known. The logical consequence of the State‘s position is that after the enactment of any statute or amendment creating a new cause of action, for a period of years defined by the applicable statute of limitations, the new statute has unlimited retroactive application to conduct and injuries that occurred, and were known, decades prior to its enactment. In this case, applying the State‘s approach, the State would be free to pursue a claim relating to the groundwaters of the state under
¶ 32. The discovery rule provides that the limitations clock does not begin running until the plaintiff knows or should know of the injury and cause, and does not relate to the enactment of new
statutory causes of action. We first adopted a general discovery rule in Cavanaugh v. Abbott Laboratories, 145 Vt. 516, 496 A.2d 154 (1985). At that time, we tied its contours to two statutes applying а discovery rule in specific settings, one of which provided that a cause of action accrues when the plaintiff “has knowledge or ought reasonably to have knowledge of having suffered the injury and of the cause thereof.” Id. at 525, 496 A.2d at 160 (citing
¶ 33. We have never suggested that the discovery rule addresses the circumstance of a newly enacted statute, or that the creation of a new cause of action starts the clock anew, without regard to the date of the injury, or when the plaintiff knew of the injury and its cause. And the State cites no case in which a court has so held. In a decision only a month after Lillicrap, this Court reiterated that a cause of action accrues when the plaintiff knows of or reasonably should have discovered the injury and its cause. W.R. Grace & Co., 152 Vt. at 291-92, 565 A.2d at 1357. When the Legislature passes a new law creating a cause of action, a plaintiff does not “discover” the existence of previously unknown cause of action - no cause of action previously existed! The concept of a “discovery” rule has no place in the analysis.
¶ 34. When the State filed its complaint on June 5, 2014, the general six-year statute of limitations precluded claims arising from injuries that were discovered more than six years before. Even if
¶ 35. For the above reasons, we affirm the trial court‘s determinations that
Affirmed.