Does a Recent Vermont Supreme Court’s Affirmation of Trial Court’s Dismissal of State’s Claims Against Groundwater Defendants Based on Limitations Really Mean Additional Claims?

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Potential groundwater contamination defendants may want to watch for additional claims after a recent Vermont Supreme Court decision affirming the dismissal of claims against groundwater defendants based on limitations.

This case involved alleged contamination of Vermont’s groundwater. The plaintiff was the State of Vermont and the defendants included at least 27 energy companies.

After years of alleged contamination as a result of Methyl tertiary butyl ether (MTBE) leaking into groundwater, the State of Vermont brought claims based on public nuisance, private nuisance, trespass, negligence, strict liability for design defect and defective product, strict liability for failure to warn, and civil conspiracy against multiple defendants. The trial court dismissed the case in favor of the defendants based on a six-year limitation statute.

The court gave a lengthy history on MTBE before launching directly into its analysis. According to the court, MTBE is bi-product of oil refining that was used as a chemical for blending into gasolines since 1979. MTBE pollutes the environment by leaks and spills from gas facilities and from recreational activities such as boating and snowmobiling. According to the court, the defendants heavily lobbied the Environmental Protection Agency (EPA) in 1990. Congress and the EPA then increased the required amounts of oxygen by weight into reformulated gases. The “industry” chose MTBE as the oxygenate based on its cheap cost and ability to give high profit returns. MTBE use soared to 75 million barrels from 1.5 million in 1998. The court stated that the defendants were aware or should have been aware that gas was leaking from multiple sources during this time. Further, the court noted that the defendants “knew or should have known” that MTBE was leaking in the water ways. The court even went as far as to mention that some defendants manufactured and distributed MTBE with actual knowledge that it would create a hazard in the water ways. Additional MTBE contamination continues to be found in Vermont despite being banned in that state.

Immediately after the court discussed MTBE history, it analyzed the state’s position. On appeal, the state argued that the statute created an exemption from the general limitations because 1) injury to state lands and public trust resources are exempt from the general limitations and 2) even of limitations applied the state’s claim accrued on June 9, 2008 when the statute became effective and 3) each individual claim accrued when the state learned of the injury, an issue not appropriate for a motion to dismiss. The Supreme Court was not persuaded and affirmed the dismissal.

In reasoning, the court concluded that the particular statute relied upon by the state does not create an exemption to the state even though enacted over two centuries ago. Specifically, the court noted that prior decisions involving the statute dealt with adverse possession claims with interests to “state property, or property dedicated to public, pious, or charitable use.” Additionally, the statute was meant to create a balance between public and private needs. However, nothing in the statute supports an exemption to limitations as the state presented. The court also rejected the argument that the state would be “powerless” to stop ongoing trespass or injury to state lands. Of interest, the court noted that the specific claims on appeal dealt with generalized injury to Vermont and did not address the specific sites of contamination.  The court pointed out that the discovery rule sets the clock on limitations to begin running once a plaintiff knows or should know of an injury. As for the state’s argument that another statute created a new cause of action based on the effective date of the statute, the court declined to rule. However, the court stated that it was unpersuaded by this argument as the state’s argument relied on inaccurate assumptions.

With Vermont having an immense amount of rural land and residents living in those areas, wells are a common source of drinking water. Based on the court’s ruling the first strike has been called against the state government in its efforts to prosecute general injury to its groundwater from MTBE. With the court noting additional MTBE finds after the ban, the chances for additional claims brought by property owners for well contamination are real and imminent. This is especially true as MTBE may move from locale to locale. Although the defendants prevailed on the first round, they may not find the same limitations defense on the next pitch. The stark outline of evidentiary issues with respect to the defendants’ knowledge of MTBE and its hazards creates some understandable concern on the part of those defendants.

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